TaxTMI 
TaxTMI 
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2022 (3) TMI 643
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..../-. A search operation u/s 132 of the Income Tax Act, 1961 (in short 'the Act') was undertaken at business premises and residential premises of the assessee on 14.09.2010. In response to notice u/s 153A of the Act issued on 22.10.2012, the assessee filed a letter on 21.01.2013 stating that the return filed u/s 139(1) on 30.09.2009 may be treated as return in response to notice u/s 153A of the Act. 3. During the course of assessment proceedings, the Assessing Officer observed from the capital account filed along with balance sheet that there is an addition to capital amounting to Rs. 20 Lakhs. He, therefore, asked the assessee to provide the source of addition to the capital. In absence of any proper explanation given by the assessee, the Assessing Officer made addition of Rs. 20 Lakhs u/s 69 of the Act. 4. From the various submissions made by the assessee, the Assessing Officer noted that there is an increase in the amount of unsecured loans of Rs. 15,06,50,000/- during the year, the details of which are as under:- S. No. Particulars Amount (Rs.) 1 Golden Buildmart Pvt. Ltd. 7,00,000 2 Santosh Singh 20,00,000 3 Surinder Yadav 4,50,000 4 Tirupati Real Tech P....
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....cer further noted that the assessee has claimed car expense in the Profit & Loss Account for the year under consideration and has not claimed any car expenses as personal expenses. Since, personal use of the cars and expenditures incurred cannot be ruled out, the Assessing Officer made addition of Rs. 51,750/- being 1/5th depreciation at Rs. 31,255/- and 1/5th of repair and maintenance at Rs. 20,495/- . Thus, the Assessing Officer determined the total income of the assessee at Rs. 19,19,39,700/-. 9. Before the Ld. CIT(A), the assessee made elaborate submissions and filed an application under Rule 46A of the Income Tax Rules, 1962 (in short 'the Rules) for admission of certain additional evidences. The Ld. CIT(A) forwarded the written submissions and additional evidences to the Assessing Officer for his examination and to submit his report. The copy of the remand report was provided to the assessee who filed a rejoinder to such remand report. 10. After considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, the Ld. CIT(A) sustained disallowance to the tune of Rs. 56,57,861/- out of addition of Rs. 1,16,57,861/- made by the As....
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....g Officer, rejoinder of the appellant and also the additional evidences filed under Rule 46A of the Income Tax Rules, 1962 during the course of appellate proceedings. I have also perused the case laws relied upon by appellant in support of its case. The impugned addition was made by the Assessing Officer on the ground that the appellant did not prove the credit worthiness of the creditors and the genuineness of the transactions in the context of section 68 of the IT Act, 1961, in respect of the credits appearing in the names of M/s Golden Buildmart P Ltd, Mr. Santosh Singh, Mr. Surinder Yadav and M/s Tirupati Real Tech P Ltd amounting to Rs. 15,06,50,000/-. In the course of the appeal proceedings, the appellant filed additional evidences in the form of chart giving name, address, PAN and the jurisdiction of the Assessing Officer with whom the said parties were assessed alongwith the confirmation of accounts, balance sheets, etc. All these evidences were sent to the Assessing Officer for his examination/ verification/enquiry and to send a report on the additional evidences filed by the appellant. On perusal of the remand report of the Assessing Officer on the issue of the unsecured ....
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....Delhi High Court in CIT vs. Winstral Petro Chemicals P Ltd in ITA No. 992/2010 dated 12.05.2010 wherein Hon'ble High Court held that where the identity, creditworthiness and genuineness of the transitions stands explained, there is no merit in making any addition in the hands of the appellant. 11.3 Therefore, the addition made amounting to Rs. 15,06,50,000/- is not sustainable and hence the same is liable to be deleted." 13. So far as the disallowance of Rs. 5,94,317/- made by the Assessing Officer u/s 40(a)(ia) of the Act is concerned, the Ld. CIT(A) deleted the same by observing as under:- "13. I have considered the facts, contents of the assessment order and written submissions of the appellant filed during the course of appellate proceedings and considered them judiciously on merits. I have also perused the copies of documents filed by the appellant in support of its submissions with regard to deduction of TDS and find that the appellant has placed on record sufficient documentary evidence exhibiting the deduction of TDS made by the appellant on said payment of Rs. 5,94,317/-. Therefore considering the complete facts of the case, I hold that the Assessing Officer was not j....
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....confirmed. The ground is dismissed." 16. Aggrieved with such part relief granted by the Ld. CIT(A), the Revenue is in appeal by raising the following grounds:- 1. That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 15,06,50,000/-which was added to the income of the assessee u/s 68 on account of unsecured loans. 2. That the commissioner of Income Tax (Appeals) has erred in law and on facts in deleting Rs. 15,06,50,000/- received by the assessee as unsecured loan, without appreciating the fact that the assessee has failed to prove the creditworthiness of the loans givers/providers. 3. That the commissioner of Income Tax (Appeals) has erred in law and on facts in deleting of Rs. 15,06,50,000/-by ignoring the fact that the AO has clearly commented in the Remand report that the perusal of bank statement showed circulatory transactions, typical of entry businesses and loan givers don't have the capacity to advance such loans. 4. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 60,00,000/-(out of Rs. 78,05,000/-) by treating as director's remuneration) which was added to....
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....No 153D/CC-09/Jagat group/2012-13/988dated 28/03/2013 was granted in a mechanical manner without application of mind and without analysing the very basic and primary facts of the case. The assessment order passed is hence void ab-initio. 2. The appeal filed by the ACIT Central Circle 18 Delhi after approval u/s 253(2) of I. T. Act from Pr.CIT against the order of Ld. CIT(A) also stated facts about addition u/s68 of I.T. Act which are patently wrong and any approval based on such facts is bad in law. So the appeal filed is suffering from inherent flaw about approval of Pr CIT taken on incorrect facts and hence not maintainable on this score 19. The ld. Counsel for the assessee submitted that the additional ground raised by the assessee in the Cross Objection is purely legal in nature. Relying on the decisions of the Hon'ble Supreme Court in the case of NTPC Ltd. vs CIT, reported in (1998) (229 ITR 383) (SC) and Jute Corporation of India Ltd. vs CIT (1991) 187 ITR 688 (SC), he submitted that the additional ground being purely legal in nature and all the material facts are already available on record, therefore, the additional ground raised by the assessee in the Cross Objection sh....
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....,00,000/- in the name of M/s Tirupati Realtech Pvt. Ltd. He submitted that a bare perusal of the account of above party will reveal that it included opening balance of Rs. 8 Crores and receipts during the year is only Rs. 6,75,00,000/-. He submitted that the Assessing Officer himself has added this amount of Rs. 8 Crores as unexplained in the earlier Assessment Year i.e. 2008-09. He submitted that had the approving authority applied his mind then, the addition of Rs. 8 Crores which was made in earlier Assessment Year 2008-09 and again in Assessment Year 2009-10, would have come to the conclusion that this is double addition. Referring to the copy of the remand report, which has been reproduced by the Ld. CIT(A) in his order, he submitted that the Assessing Officer himself has admitted that the assessee has taken loan amounting to Rs. 6,75,00,000/- instead of Rs. 14,75,00,000/- and Rs. 8 crores was opening balance. The mistake is apparent from record and needs to be rectified. The Ld. Counsel for the assessee strongly submitted that if the Addl. CIT(A) would have gone through the records, he would have noticed this blunder of double addition. He submitted that the addition is not of....
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.... filed by the Revenue is not maintainable on this score. 25.1. The Ld. Counsel for assessee submitted that after admitting in the remand report that the addition u/s 68 is incorrectly shown at 14,75,00,000/- in place of 6,75,00,000/- and needs rectification still the Revenue has not corrected the figure of addition in the grounds raised by them. The Ld. PCIT has approved the same without going through the assessment record which leads to the conclusion that no careful thought was given to verify the facts and grounds of appeal were framed on the basis of incorrect facts which was admitted in the remand report by the Assessing Officer. He submitted that the Ld. Addl. CIT who granted the approval has not gone through the grounds of appeal properly and merely signed mechanically by giving approval without application of mind. Hence, the appeal filed on this score is not maintainable and approval granted u/s 253(2) is void-ab-initio. 26. So far as the merit of case is concerned, the ld. Counsel for the assessee submitted that the Assessing Officer has already admitted the major mistakes. So far as the addition u/s 68 of the Act and disallowance u/s 40(a)(ia) of the Act is concerned, ....
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.... may advance the interest of natural justice, the same need to be admitted and considered. Therefore, the documents filed as additional evidence in the course of appeal proceedings are admitted for consideration and adjudication of the issues raised in the grounds of appeal. Accordingly, I proceed to adjudicate the issued raised in the grounds of appeal in the following paragraphs." 30. He accordingly submitted that the arguments advanced by the Ld. DR on this issue is not justified. Since, the Ld. CIT(A) had given full opportunity to the Assessing Officer and since these additional evidences go to the root of the matter for deciding the issue as per law, therefore, the Ld. CIT(A) was fully justified in admitting the additional evidences. 31. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the learned CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case, completed the assessment u/s 143(3)/153A of the Act on 28.03.2013 determining the total income of the assessee at Rs. 19,19,39,700/- as against the r....
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....e course of assessment. It is pertinent o mention here that during the course of assessment confirmation of accounts was submitted as appearing in the books of the assessee and the same were not verifiable during the course of assessment and even in remand proceedings assessee has failed to furnish any additional evidence except a chart showing names, addresses, PAN and AO's jurisdictions of the loaner parties. The assessee has failed to produce the bank statement of the above mentioned parties. In view of the above decision may be taken on merits of the case. However, from the perusal of assessment record and j confirmation of account it is found that the assessee has taken loan amounting to Rs. 6,75,00,000/- during the year under consideration instead of Rs. 14,75,00,000/- and Rs. 8,00,00,000/- was opening balance. The mistake is apparent from record and needs to be rectified. Additional evidences may be considered on merits subject to recommendation made regarding the admissibility of additional evidences in of para 2." 35. Similarly, while giving his report for disallowance u/s 40(a)(ia), the Assessing Officer has given his observation as under:- 3. Disallowance u/s 40(a)(....
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....in various decisions that the function to be performed by the Addl. CIT or CIT in granting previous approval requires an enquiry and judicial approach on the entire facts, material and evidence. It has been held that where any act or function requires application of mind and judicial discretion or approach by any authority it partakes and assumes the character and status of judicial or at least quasi judicial act, particularly because their Act or function is likely to affect the rights of affected persons. The approving authority is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. The said power cannot be exercised casually and in a routine manner. However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Ld. Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the addition of Rs. 8 Crores in respect of M/s Tirupati Real Tech Pvt. Ltd. and Rs. 7 lakhs in respect of M/s Golden Buildmart Pvt. Ltd. which are opening balances and the very same amounts were added in the preceding Assessment Y....
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....s not provided in earlier provisions for block assessments. The Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla [2016] 380 ITR 573 (Del.) considered the issue of abated and non-abated assessments and with regard to completed assessments held that the same can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment. It is also held in the same Judgment that in so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall have to be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on record by the A.O. Therefore, these were the mandatory provisions contained in Section 153A which shall have to be satisfied by the A.O. before proceeding to frame assessment in the cases of persons searched under section 132 of the I.T. Act, 1961. Further safeguard have been provided for framing th....
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....vs., Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that "Approval implies knowledge and, the exercise or discretion after knowledge." 11.4. The Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs., Land Acquisition Officer [2003] 5 SCC 83 wherein it has been held that : "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate the material on record in regard to the compensation payable. Otherwise, it would tantamount to blurring the distinction between Approving Authority and Appellate Authority". 11.5. The Hon'ble Gauhati High Court in the case of Dharampal Sa....
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....ce with the tax payer [Assessee] by granting protection against arbitrary or unjust or unsustainable exercise and decision by the A.O. creating baseless tax liability on the assessee and thus, the JCIT has to discharge his duty as per Law. Thus, granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act. 11.7. In the following Orders of various Benches of the Tribunal, it is held that while granting approval under section 153D, the JCIT shall have to peruse all the incriminating material and other seized material on record and proper procedure if have been adopted by the A.O. and appraisal report as well. The JCIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in Law. We may refer to such Orders as under. 11.8. Order of ITAT, Delhi Bench, Delhi in the case of M3M India Holdings vs., DCIT [2019] 71 ITR (Trib.) 451 (Del.) in which in paras 11 to 14 it ....
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....ave been found on record. On inspection of the record, it was found the approval was received by the assessing officer for the first time by Fax on 5th February 2014 [PB 48]. There is no other documentary evidence available on record. It is, therefore, clear that approval/sanction of the Addl. CIT was received after passing of the assessment order. Therefore, assessment order is illegal and bad in Law. The assessing officer was not in possession of the valid sanction/approval of Competent Authority before passing the assessment order. Learned Counsel for the Assessee submitted that the Tribunal can in fact call for production of the assessment record for itself to determine whether the satisfaction was received, before passing the assessment order by the Assessing Officer ? Reliance was placed upon the Judgment of the Allahabad High Court in the case of S K Gupta and Co. vs ITO 246 ITR 560 (All.). He has submitted that to the same effect there is another Judgment of the Allahabad High Court in the case of M.D. Overseas Ltd., vs., DGIT 333 ITR 407 (All.) He has, therefore, submitted that the approval in this case though not conveyed to the Assessing officer on time, but, is also giv....
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....ranted by Addl. CIT on 31st January 2014. She has submitted that the Addl. CIT, Chandigarh after going through the assessment record, correctly granted approval to the draft assessment order. She has submitted that Addl. CIT does not say that he has not gone through the material on record and also did not apply his mind before grant of approval in the matter. Ld. D.R, therefore, submitted that this ground of appeal of assessee may be dismissed. 13. We have considered the rival submissions. It is not in dispute that search and seizure action was taken in the case of the assessee on 30th January 2011. Therefore, assessing officer rightly proceeded against the assessee firm under section 153A of the Income Tax Act, 1961. The assessing officer also rightly passed the assessment order under section 153B(1)(b) of the Income Tax Act, 1961. Further, Section 153D of the Income Tax Act provides that "no order of assessment or reassessment shall be passed by the assessing officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of Section 153A or assessment year referred to in clause (b) of sub-section (1) of Section 153B e....
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.... the letter of the assessing officer dated 30th January 2014 were forwarded to the Addl. CIT, Chandigarh. No details/explanation were furnished as to on which date the assessment record was received by the Addl. CIT, Chandigarh. The assessee, on inspection of the record, intimated the assessing officer that no original approval under section 153D is available on record. Learned Counsel for the Assessee referred to PB 48, which is Fax message received on 5th February 2014, communicating the approval of Addl. CIT to the assessing officer. This Fax message is not legible. The Hon'ble Bombay High Court in the case of Pr. CIT vs. Smt. Shreelekha Damani (supra), held as under : IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 668 OF 2016 The Pr. Commissioner of Income Tax .. Appellant v/s. Smt. Shreelekha Damani. .. Respondent. Mr. A.R. Malhotra a/w Mr. N.A. Kazi for the appellant Mr. Jehangir Mistri, Senior Counsel a/w Mr. Atul Jasani for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. DATED : 27th NOVEMBER, 2018. P.C. 1. This appeal is filed by the Revenue challenging the judgment of Income Ta....
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....12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analyze the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961." 7. In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide....
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....icer at Faridabad on the very next day would lead to suspicion, in explanation of A.O. if any, valid draft order was transmitted to the Addl. CIT within the time or if the Addl. CIT has communicated the approval under section 153D to the Assessing Officer at Faridabad on 31st January 2014. These facts would clearly show that the action of the Addl. CIT, Chandigarh granting approval in this case was, thus, a mere mechanical exercise, accepting the draft order as it is, without any independent application of mind on his part. Nothing has been clarified during the course of hearing to the effect that if Addl. CIT has gone through the assessment record, before accepting the draft assessment order. Thus, there was no application of mind on the part of the Addl. CIT before granting approval. The Addl. CIT, Chandigarh has merely gone through the draft assessment order as per PB-47. Therefore, the contention of Learned Counsel for the Assessee is justified that the approval was granted in a most mechanical manner without application of mind and such approval was intimated to assessing officer only on 5th February 2014, after passing of the assessment order on 31st January 2014. The above d....
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....ich reads as under: "'153D. Prior approval necessary for assessment in cases of search or requisition.--No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B, except with the prior approval of the Joint Commissioner. Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case maybe, is required to be passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12) of section 144BA." 23. First of all, we observe that we are in agreement with the contention of ld CIT DR based on the judgment of Karnataka High Court in the case of Gopal S Pandit (supra), wherein, it was held that the provisions of section 153D of the Act do not require that any opportunity of hearing to be given to the assessee by the authority who has to approve the draft assessment order passed by the Assessing Authority. Therefore, there is no requirement of allowing opportunity of hearing to the ....
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....red to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record. 5. The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid." 26. In almost similar facts and circumstances, the Delhi Bench in M3M India Holdings (supra), the Tribunal in para 14 held thus: " 14. Considering the facts of the case in the light of above discussion, it is clear that assessee filed last reply before assessing officer at Faridabad on 29th January 2014 and according to Learned Counsel for the Assessee, it contained more than 500 pages. Therefore, it is difficult for the Assessing Officer at Faridabad to go through these voluminous papers and prepare a draft order on 30....
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....assessment order is vitiated and is null and void. We, accordingly, set aside the orders of the authorities below and quash the assessment order in the matter. Resultantly all additions stand deleted. In the result, Ground No.1.3 of the appeal of Assessee is allowed. " 27. Furthermore, ITAT Cuttack Bench in the case of Geetarai Panda (supra) in paras 24 to 26 held that when the approving authority could not apply his mind and has accorded the approval mechanically to meet the requirements of law, the requirement was merely a formality. The Co- ordinate Bench also held that the said Supervisory authority had a duty towards both the assessee as well as the revenue which was failed to be performed. The relevant paras 25 & 26 read as follows: " 25. In the instant case, we find that the supervisory authority has himself admitted that because of reasons stated by him, could not apply his mind and has accorded the approval mechanically to meet the requirements of law as the requirement was merely a formality. The said supervisory authority had a duty towards both the assessee as well as the Revenue which was failed to be performed in the instant case. 26. Further, we find that the a....
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....,390/- u/s.153A/143(3) . 2016-17 14,72,53,800/- u/s.143(3) Sd/- Joint Commissioner of Income Tax (Central), Bhubaneswar End: Record for the AY 2010-11 to 2016-17 (In Seven Folders) The approval granted in the case of Shilpa Seema Constructions Pvt Ltd., available at page 1 of paper book is as under: " OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX (CENTRAL), AAYAKAR BHAWAN ANNEXE. 4TH FLOOR. RAJASWA VMAR. BHUBANESWAR-751007 F.No .JCIT(Central) /BBSR/153D CC-1 BBSR/2017-18/ 3137 Date: 23.11.2017 To The Assistant Commissioner of Income Tax, Central Circle-1, Bhubaneswar. Sub: Approval of the Assessment orders u/s 153D of the LT. Act, 1961 in respect to the cases of M/s Shilpa Seema Construction P Ltd- Reg Ref: Your letter no. ACIT/CC-l/BBSR/Report/2017-18/8 dated 17.11.2017 seeking approval of draft assessment orders u/s 153D Approval is hereby accorded as per the provisions of section 153D of the I.T. Act for passing the assessment orders in respect to the following cases. Sl.No. Name of the Assessee PAN A.Y. Total Assessed Income (Rs.) Section under which order passed 1. M/s. Shilpa AAKCS2712E 2010-11 41,43,750/- u/s.153A/143(3....
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....A.R. in this regard hold the field. 32. Similarly letter dated 4.1.2019 issued by JCIT (Central), Bhubaneswar to the CIT (Audit & ITAT), Bhubaneswar is merely a covering letter supplying copy of the approval dated 23.11.2017, which cannot be treated as an explanation to the approval dated 23.11.2019 curbing the mistake in the procedure adopted by the JCIT while granting approval u/s.153D of the Act. On these subsequent letters/ correspondences, we are of the considered view that for adjudicating legal ground of assessees challenging the validity of approval u/s.153D of the Act dated 23.11.2017, we have to evaluate said approval apparently by considering the totality of facts and circumstances and the manner in which such approval has been granted. This cannot be improvised by way of subsequent exercise or correspondence between the approving authority and the AO or other officers. 33. In view of foregoing discussion, we are inclined to hold that the ld JCIT has granted approval under section 153D of the Act in a mechanical manner without application of mind to the relevant assessment records and draft assessment orders submitted before him by the AO for grant of approval u/s.15....
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....of approval u/s.153D of the Act. 36. In our humble understanding the provisions of section 153D of the Act has been introduced by the legislature in its cautious wisdom to make it mandatory on the supervisory authority/approving authority to discharge the duty towards both the assessee as well as revenue to follow the proper procedure and to apply his mind on the material, relevant evidences and other documents including materials found during search & post search investigations and explanation & supporting documents of the assessee to the issue show caused to him by the AO, on the basis of which the AO wants to pass or frame assessment or reassessment orders and after such exercise by perusing and going through the relevant assessment folders/files along with proposed draft orders and also by applying his mind has granted approval u/s.153D of the Act. This is the minimum required exercise by the approving authority before granting approval u/s.153D of the Act. The approving authority has undertaken any such exercise should be discernible from the order of the approval and the subsequent internal correspondence between the lower authorities have no relevance and the defects or om....
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....als found and unearthed during post search investigations and enquiries. Therefore, said provision provides and requires application of mind by the approving authority of the department which, in turn, provides safeguard to the both the parties i.e. revenue and the assessee. Therefore, the provisions of section 153D of the Act cannot be treated as a mere formality and mandate therein required to be followed by the approving authority in a judicious manner by due application of mind in a manner of cautious judicious or quasi judicial authority. This view has also been expressed by Pune Bench of the ITAT in the case of Akil Gulamali somji, in ITA Nos.455 to 458(Pune) of 2010 vide order dated 30.3.2012, wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. We also take respectful cognizance of the fact that the Hon'ble Bombay High Court in the case of Akil Gulamali Somji (supra) has concurred with the said findings and view taken by the Pune Tribunal that not following the provisions of section 153D of the Act will render the related order of assessment void. 39. In view of foregoing discussion, we....
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.... with assessments/reassessment orders have been perused or any discussion or consultation has been made with the AO prior to granting of approval u/s.153D of the Act. Accordingly, we are compelled to hold that the approval granted by the ld JCIT in the appeals under consideration has been granted in a mechanical manner without application of mind and that the assessments/reassessment orders passed by the AO on such approval are declared to be void and bad in law. We hold so. 41. In view of aforesaid discussion, we clearly find that approving authority has not applied his mind to the relevant assessment records and draft assessment orders prior to granting approval to the Assessing officer for passing assessment orders u/s.153A/143(3) of the Act. Therefore, the contention of Ld A.R. of the assessee is justified and sustainable that the approval was granted in most mechanical manner without application of mind and respectfully following the proposition rendered by Hon'ble Bombay High Court in the case of Smt. Shreelakha Damani (supra), the order of ITAT Delhi Bench in the case of M3M India Holdings (supra) and decision of ITAT Cuttack Bench in the case of Geetarani Panda (supra....
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....rch cases Orders of assessment and reassessment to be approved by the Joint Commissioner. 50.1 The existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. 50.3 Applicability-These amendm....
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....pproval. The Additional CIT has further noted that even the questionnaire as was required to be issued with the approval of Additional CIT, in view of CBDT instruction was not issued with his approval. He further observed that since, there was no time left to analyze the issue of draft order on merit, therefore, the said order is approved, as specifically mentioned in the said order, solely relying upon the undertaking obtained from the AO that he has taken due care while framing the assessment that all the observations made in the appraisal report relating to examination/investigation as also the issues identified in the course of examination of seized material have been carefully considered by the authority seeking approval. Thus, the sanctioning authority delegated his statuary duty to grant Approval, after due application of his mind, to the same subordinate AO , whose action the Additional CIT, was supposed to supervise and adopting a short cut in the matter obtained an undertaking from the subordinate AO, accepting it on face value that all the issues have been taken care off while framing the assessment by the AO, and that all the observations made in the appraisal report re....
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....et expired on 31.03.2015. Thus, in the case at hand despite availability of time, the Additional CIT has been taking excuse of limitation and has chosen to grant approval without application of his own mind but on the undertaking of the AO that "while completing the assessment as per the draft assessment order, all the observations made in the appraisal report relating to examination/ investigation as also the issues identified in the course of examination of seized material have carefully considered." In our view such a practice is required to be deprecated and we deprecate the same. 18. ITAT Mumbai Bench in the case of "Smt. Shreelekha Damani" (supra) (APB-130-137) annulled the assessment holding as under : "Coming to the facts of the case in hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, the Addl. Commissioner has showed his inability to analyze the issues of draft order on merit clearly stating that no much time is left, inasmuch as the draft order was placed before him on 31.12.2010 and the approval was granted on the very same day. Considering the factual matrix of the approval letter, we have no hesitation to hold that the approval....
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....goes to the root of the matter and could have been raised at any time. In result, no question of law arises. " 20. Similar view has been adopted by the Cuttack Bench in the case of Geetarani Panda (supra) (APB140-154) wherein following order passed under section 153D of the Act by the Additional CIT was subjected to challenge before the ITAT on the ground of non-application of mind. ITAT held as under : 23. In the instant case, the alleged approval letter dt. 27th March, 2015 of the Addl. CIT, Range-1, Bhubaneswar reads as under : "Despite a reminder given on 19th March, 2015 to submit the time barring draft assessment orders for approval under s153D on or before 23rd March, 2015, the draft orders in M/s. Neelachal CarboMetalicks (P) Ltd. Group of cases has been received in this office only on 26th March, 2015 in the afternoon. The draft orders having being submitted only 5 days before final orders are getting barred by limitation, I have no other option but to accord the approval to the same as the approval is statutorily required under s. 153D, even though there is no time left for undersigned to ensure that all the points raised in the appraisal report, the appellate proce....
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....ed the approval mechanically to meet the requirements of law as the requirement was merely a formality. The said supervisory authority had a duty towards both the assessee as well as the Revenue which was failed to be performed in the instant case. 21. It is the bounden duty of the Additional Commissioner of Income Tax to in accordance with the law, while discharging statutory functions an obligation is casted upon him by the Act to apply his mind while according the approval. There is a statutory duty on the Additional Commissioner of Income Tax with a corresponding obligation on him to examine the record and thereafter accord the statutorily required Approval. The reason for granting the Approval may not be subject matter of the challenge but the manner and the material on the basis of which the approval was granted can always be examined by the Tribunal to come to the conclusion whether the Approval was granted in a mechanical manner or after applying mind looking into the record. No evidences required to be appreciated as the approval is self-evident, i.e., that it was granted by the Additional Commissioner of Income Tax without application of mind and without looking into th....
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....he approval is granted by the superior authorities in mechanical manner without application of mind then the very purpose of obtaining approval is defeated. Moreover, where 4 clear days' time was available with the administrative authority, it was a half-hearted approval and as' such held as no approval in the eyes of law. Accordingly, we have no -hesitation in declaring that the Approval granted by the Additional CIT, Central, Kanpur on 27.03.2015 is no approval in the eyes of law and therefore, the assessment made by the AO based on such an approval is also declared to be null and void. 25. We, therefore, quash the Assessment orders under section 153A of the Act dated 31.03.2015 for Assessment Year 2009-10 & 2011-12 in ITA No.l06/Agra/2019, ITA No. 107/Agra/2019 and all collateral proceedings taken up in pursuance of the said Assessment orders also do not survive. As the Assessment orders itself are quashed all other issues challenging the merits of the addition, in respective appeals arising out of impugned assessment proceedings, are rendered to be academic and not adjudicated upon." 11.11. Order of ITAT, Agra Bench in the case of Shri Saurabh Agarwal vs., DCIT, Central....
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....ection 153D starts with the words "No order of assessment or reassessment shall be passed. ..". In other words, the language employed in the provision is couched in the negative and therefore, there is a prohibition against passing of an assessment or reassessment order, except with the prior approval of the Joint Commissioner. 10. In Shin Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. [2005] 7 SCC 234, the Supreme Court has observed that if the requirements of a statute which prescribes the manner in which something is to be done are expressed in negative language, that is to say, if the statute enacts that it shall be done in such a manner and in no other manner, it has been laid down that those requirements are in all cases, absolute, and that neglect to attend to them will invalidate the whole proceeding. In Vijay Narayan Thatte v. State of Maharashtra [2009] 9 SCC 92, the Supreme Court has held that it is well settled that when a statute is couched in negative language it is ordinarily regarded as peremptory and mandatory in nature. The Supreme Court, in some decisions has held that merely because a provision of law is couched in a negative language implying mandatory charact....
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....C, the A.O having jurisdiction over such other person (against which incriminating material has been found during the course of search conducted on a person) arose or re-assess income of such other person in accordance with the provisions of Sec. 153A. Sec. 153B talks about time limit for completion of assessment u/s. u/s. 153A, whereas S. 153D, talks about necessity of prior approval for framing assessment in case of search or requisition. We thus fully concur with the submission of the Ld. A.R. that provisions laid down u/s. 153D are very much applicable in case of assessment of income of any other person (i.e. the person other than the person searched). Now the issue for our adjudication is as to whether absence of obtaining prior approval u/s. 153D of Joint Commissioner of Income Tax, assessment made u/s. 153 C will make the assessment void or voidable/curable. For a ready reference, provisions laid down u/s. 153D of the Act are being reproduced hereunder : "153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [subsection (1) of] section 153A or....
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....equirements, or conditions although mandatory may be waived him if no public interest are involved and in such case, the act done still be valid even if the requirement or condition has not been performed. Here, before us, is not a case where consent of assessee will waive the condition of obtaining prior approval u/s. 153D of the Joint Commissioner of Income Tax by the A.O for framing assessment u/s. 153C/ 153A of the Act. Condition of prior approval of JCIT u/s. 153D has been put in public interest and not in the interest of a particular person. Thus it cannot be waived by particular person. The use of word "shall" raises a presumption that a particular provision is imperative but this prima facie inference may be reverted by other consideration such as object and scope of the enactment and consequence flowing from such construction. The revenue has not been able to rebut the above inference by pointing out other consideration like object and scope of the enactment and the consequence flowing from such construction before us. Clause 9 of Manual of Office Procedure, Volume II (Technical) February 2003 issued by Directorate of Income Tax on behalf of Central Board of Direct Taxes, ....
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....aft order together with objections. The only thing that remained to be done by the Income-tax Officer is to pass a final order in accordance with the directions given by the Inspecting Assistant Commissioner. The function of the income-tax Officer to make the final assessment under section 144B(5) of the Act is more in the nature of a ministerial function because he can pass the order only in accordance with the directions of the Inspecting Assistant Commissioner. He cannot vary or depart from the directions given by the Inspecting Assistant Commissioner. Moreover, the requirements of section 144B of the Act re mandatory. The Income-tax Officer has no option but to follow the same. He cannot make the final order on the basis of the draft order without forwarding the same to the Inspecting Assistant Commissioner along with the objections and without obtaining the directions of the Inspecting Assistant Commissioner. An assessment made by the Income-tax Officer in violation of the provisions of section 144B of the Act would be an assessment without jurisdiction. In the instant case, the admitted position is that on receipt of the draft order of assessment, the assessee did file object....
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....lity has occurred and to assess the appellants to a penalty, if any. Before the Hon'ble M.P. High Court in the case of Sardarilal Bhasin ( Supra), the issue was regarding applicability of prescribed limitation u/s. 275 in a penalty order passed after the case is remanded by an appellate authority. The Hon'ble Court was pleased to hold that the limitation prescribed u/s. 275 of the Act is not applicable to the penalty order passed after the case is remanded by an appellate Authority. In the case of Gayathri Textiles (Supra) non-obtaining of prior approval of I.A.C u/s. 271(1)(c) (iii) for direction for payment of penalty was held as procedurally defective. The provisions laid down u/s. 153D of the Act under consideration in the present case before us, are different as here the prior approval of Joint Commissioner is not required merely for direction for payment of the due amount of tax but overall approval of the assessment framed by the I.T.O. Thus, the cited decision is not applicable in the present case. In the case of Sara Enterprises (Supra), the issue was as to whether the bar of limitation contained u/s. 275 of the Act would attenuate or curtail the powers of CIT, ves....
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....ow, we will be examining whether the order passed by the JCIT/Addl. CIT in the case u/s. 153D was an administrative order or an order having civil, criminal or penal consequences. The similar provision was examined by the various high courts pertaining to section 158 BG, and after examining the scheme of Act had came to the conclusion that the prior approval provided under section 158 BG is administrative in nature. The Hon'ble Jurisdictional high Court in the matter of Dr. K.P. Singh [2014] 41 taxmann.com 406 (Allahabad) it was held as under ; "9. It may be mentioned that no opportunity is required while giving the approval by the CIT as per the rat o laid down in the case of Rishabchand Bhansali (supra), where it was held that being an administrative action, assessee is not entitled to opportunity of being heard. Further, in the case of Lakshmi Jewellary (supra), it was held that : "....the Commissioner of Income-tax before making an order approving the order of assessment made by the Assessing Officer in exercise of his powers under Section 158BG(a) need not give a hearing to the assessee". Similarly, in the case of Shree Rama Medical and Surgical Agencies (supra), it was ....
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....the order of assessment for the block period made by the Assessing Officer under clause (c) of section 158BC. Sub-section (2) of section 250 provides for a hearing of the appeal. Thus, the assessee is heard by the Assessing Officer before making the assessment order under section 158BC. If the assessee is aggrieved by the assessment order he had a remedy by way of an appeal under section 246A where also he is heard. There is no need therefore for the Joint Commissioner, to give a hearing before giving previous approval under section 158BG. Firstly, the statute does not provide for such a hearing; secondly, principles of natural justice also do not require such a hearing having regard to the fact that the assessee gets a hearing before the assessment and also a hearing if he files an appeal against the order of assessment; and thirdly the order passed by the Joint Commissioner granting previous approval under the proviso to section 158BG is in exercise of administrative power on being satisfied that the order of assessment has been made in accordance with the provisions of Chapter XIV-B. The previous approval is purely an internal matter and it does not decide upon any rights of the....
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....sessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of 51[subsection (1) of] section 153A or the assessment year referred to in clause (b) of subsection (1) of section 153B, except with the prior approval of the Joint Commissioner:] 52[Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the 53[Principal Commissioner or] Commissioner under sub-section (12) of section144BA.] [Authority competent to make the block assessment. 158BG. The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner 7 [or Deputy Commissioner] or an Assistant Director 7 [or Deputy Director], as the case may be : Provided that no such order shall be passed without the previous approval of- (a) the 8 [Principal Commissioner or] Commissioner or 8 [Principal Director or] Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, a....
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....right to assert that the assessment made is bad in law. Similarly if the approval is granted without application of mind which is discernible from the record then the said approval loses its character to be approval in the eyes of law. 4.9. We had already mentioned that the assessee is not entitled to any personal hearing before passing of the approval order by the authority under section 153D of the Act. But, while holding this in favour of the revenue, we cannot close our eyes and close the right of the assessee to challenge the approval granted by the superior authority in violation of the basic fundamental principle enshrined in the income tax Act as well as in general law whereby, it has been held that the authority while granting the approval should not grant the approval mechanically without even looking into the document and without applying its mind. 4.10. The right to challenge the approval, is also based on various principal including the non-application of mind by the superior authority or granting approval by an authority which is not vested with the power to grant the approval or the approval granted was after the passing of the assessment order in all these cases....
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....in Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634 1 (All.), it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee a....
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....We are, therefore of the view that even after the obligation to pay auditor's fees and incidental expenses has been taken over by the Central Government, civil consequences would still ensue on the passing of an order for special audit. 22. We shall now deal with the submission of learned counsel appearing for the revenue that the order of special audit is only a step towards assessment and being in the nature of an inquiry before assessment, is purely an administrative act giving rise to no civil consequence and, therefore, at that stage a pre-decisional hearing is not required. In Rajesh Kumar's case (supra) it has been held that in view of section 136 of the Act, proceedings before an Assessing Officer are deemed to be judicial proceedings. Section 136 of the Act stipulates that any proceeding before an Income-tax Authority shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of Indian Penal Code, 1860 and also for the purpose of section 196 of I.P.C. and every Income-tax Authority is a court for the purpose of section 195 of Code of Criminal Procedure, 1973. Though having regard to the language of the provision, we have some reservatio....
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....ng to an assessee and in the absence of any express provision in section 142(2A) barring the giving of reasonable opportunity to an assessee, the requirement of observance of principles of natural justice is to be read into the said provision. Accordingly, we reiterate the view expressed in Rajesh Kumar's case (supra)." 4.13. Further, the coordinate bench in the matter of Shreelekha Damani 88 Taxmann.com 383 had held as under : "11.9. This decision of the Tribunal was considered by Allahabad Bench of the Tribunal in the case of Verma Roadways v. Asstt. CIT [2000] 75 ITD 183 wherein also the assessee-appellant has challenged the validity of approval to the assessment order accorded by the CIT Kanpur. The Tribunal at Para-47 has held as under : "Coming to the aspect of the application of mind, while granting approval, we are of the view that requirement of approval presupposes a proper and thorough scrutiny and application of mind. In the case of Kirtilal Kalidas & Co. (supra), the I.T.A.T Madras Bench 'A' has observed that the function to be performed by the Commissioner in granting previous approval requires an enquiry and judicial approach on the entire facts, ma....
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.... light of the material relied upon by the Assessing Officer. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case there has been no application of mind by the Additional Commissioner before granting the approval'. 12. Coming to the facts of the case in hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, the Addl. Commissioner has showed his inability to analyze the issues of draft order on merit clearly stating that no much time is left, inasmuch as the draft order was placed before him on 31.12.2010 and the approval was granted on the very same day. Considering the factual matrix of the approved letter, we have no hesitation to hold that the approval granted by the Addl. Commissioner is devoid of any application of mind, is mechanical and without considering the materials on record. In our considered opinion, the power vested in the Joint Commissioner /Addl Commissioner to grant or not to grant approval is coupled with a duty. The Addl. Commissioner/Joint Commissioner is required to apply his mind to the proposals put up to him for approval in the light of the material....
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....of income tax on 27 March 2014 it is clearly mentioned that he has not applied its mind and he has not even look into the draft assessment order and he solely relied upon the undertaking of the assessing officer who had completed the assessment proceedings. He has also not gone into the record of investigation and seized material and has granted the approval without any meaningful discussion and going through the record. In our view such a practice is required to be deprecated and we deprecate the same. It is the duty of the additional Commissioner of income tax to apply his mind while according the approval and should not grant approval in a callous and clandestine manner. There is a statutory duty on the additional Commissioner of income tax with a corresponding obligation on him to examine the record and thereafter accord the approval. The reason for granting the approval may not be subject matter of the proceedings but the manner and the material on the basis of which the approval was granted can always be examined by the tribunal and also by the other courts to come to the conclusion whether the approval was granted in a mechanical manner or after applying mind looking into th....
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....) are also liable to be dismissed. 5. In the result, the appeals of the assessee are allowed and those of Revenue are dismissed." 11.12. The Order of ITAT, Delhi Bench in the case of Uttarakhand Uthan Samiti, Dehradun vs., ITO, Ward 45(5), New Delhi (supra) in which in paras 13 to 19.1 it was held as under : 13. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited by the parties. The only issue to be decided in the impugned appeals are regarding the validity of the assessment order in absence of proper approval necessary for assessment as per the provisions of section 153D. The provisions of section 153D read as under :- "153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of subsection (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner. Provided that nothing contained....
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....egarding - Please refer to your letters F.No. DCIT/CC/DDN/2014- 15/2338 dated 27.3.2015 and F.No. DCIT/CC/DDN/ 2014- 15/2339 dated 30.03.2015 on the above the above mentioned subject. 2. In the following case of DBIT Group' of ca.ses, prior approval u/s 153D of the Income Tax Act, 1961 is accorded for passing assessment orders u/s 153A/143(3) or 144 and 153C/143(3) of the I.T. Act, 1961 in respect of the assesses for the assessment years as mentioned below:- U/s. 153 A Sl.No. Name of the assessee PAN Asstt. Years 01 Smt. Seema Bansal AHBPB3579P 2007-08 To 2013-2014 02 Smt Bimal Bansal ADCPB1768R 2007-08 To 2013-2014 03 Drishti Builders AAIFA4643E 2012-13 to 2013-14 04 Sh. Sushil Kumar AQLPK2365D 2007-08 To 2013-2014 05 Sh Sunil Dandriyal ALTPD8489N 2007-08 To 2013-2014 06 Strategic Marketing AADFS8010M 2007-08 To 2013-2014 07 Sh. Ashok Mehta ABNPM2590F 2007-08 To 2013-2014 08 CKSR Animation pvt ltd AAECC0802F 2011-12 to 2013-14 09 Bharti Water Pvt Ltd AACCB5459M 2007-08 To 2013-2014 10 Chand sons education city pvt ltd AAECC0801G 2011-12 to 2013-14 11 Water wealth infra tech india pvt ltd./ A....
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....ft order by the Assessing Officer from the JCIT/Addl. CIT, Central Range Meerut. It is customary practice that staff go with file and after discussion/approval get it back." 17. A perusal of the above clearly shows that the approval was given in a mechanical manner by the Addl.CIT to the draft assessment orders passed by the AO. As mentioned earlier, the AO has submitted the draft assessment orders on 30th March, 2015 as per the order sheet entry which indicated that the AO was very much available in her office at Dehradun on 30th March, 2015. The Office of the Addl.CIT is situated at Meerut which is about 250 Kms from Dehradun. There is no other record to suggest that the files containing the draft orders were, in fact, moved from the office of the AO at Dehradun to the office of the Addl.CIT at Meerut who went through the same and has given approval with certain amendments. It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, ther....
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....ears in reference years. You are directed to ensure taking into account the seized documents/papers and comments in the appraisal report pertaining to AYs. The fact of initiation of penalty proceedings, wherever, applicable, must also be incorporated in last para of the order. The initiation of correct penalty provisions of I.T. Act u/s 271 (1)(c)/ 271AAB, as per facts of the ease, must be ensured. 3. This office reference no of approving the draft orders shall invariably be quoted in the assessment orders to be passed. A copy of final assessment orders passed in these cases should be sent to this office for record immediately on passing the assessment orders. 4. It must also be ensured that if any document in this case, pertains to any third party assessed with a different AO, the necessary information for taking necessary action must be sent to concerned AO immediately. 12. The salient points of the approval letter is as under: 1. It is a technical approval 2. The AO was directed to ensure that the comments in the appraisal report are duly ensured. 3. The penalty proceedings should be mentioned wherever applicable for the initiation of correct penalty provisions must ....
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....ate Tribunal ("the Tribunal" for short) dated 19th August, 2015. 2. Following question was argued before us for our consideration:- "Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that there was no 'application of mind' on the part of the Authority granting approval? 3. Brief facts are that the Tribunal by the impugned judgment set aside the order of the Assessing Officer passed under Section 153A of the Income Tax Act, 1961 ("the Act" for short) for Assessment Year 1 of 4 Uday S. Jagtap 668-16-ITXA15=.doc 2007-08. This was on the ground that the mandatory statutory requirement of obtaining an approval of the concerned authority as flowing from Section 153D of the Act, before passing the order of assessment, was not complied with. 4. This was not a case where no approval was granted at all. However, the Tribunal was of the opinion that the approval granted by the Additional Commissioner of Income Tax was without application of mind and, therefore, not a valid approval in the eye of law. The Tribunal reproduced the observations made by the Additional CIT while granting approval and came to the conclusion that the sa....
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....t the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises. 8. Accordingly, the Tax Appeal is dismissed." 15. Hence, keeping in view the facts and circumstances of the case and peculiarities of the instant case, owing to the judgment of the Hon'ble High Court, we hereby hold that the assessments completed by the DCIT do not stand in the eyes of law. Since the orders have been treated as null and void, any adjudication on other issues would be academic in nature only, hence refrained to do so. 16. In the result, the appeals of the assessees are allowed. (Order Pronounced in the Open Court on 04/07/2019)." 18. We find, the Jodhpur Bench of the Tribunal in the case of Indra Bansal & Ors ....
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....h/2016. Thus, all the three Cos and the nineteen appeals of the assessee, as aforesaid are allowed." (emphasis supplied by us) 19. Since the facts of the instant case are identical to the facts of the case cited (supra), therefore, respectfully following the decisions cited above, we hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. Accordingly, the orders passed by the AO are annulled and the ground raised by the assessee on this preliminary issue as per grounds of appeal No.4 and 5 are allowed. Since the assessee succeeds on this preliminary ground of validity of assessment order in absence of proper approval u/s 153D, the other grounds raised by the assessee do not require any adjudication being academic in nature. The appeal filed by the assessee is accordingly allowed. 19.1 Since facts of the other appeals are identical to the facts of the appeal for A.Y. 2008-09, therefore, following similar ....
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.... the above judgements, it was argued that the additional grounds be admitted on legal and jurisdictional grounds , allow the appeal, and quash the orders passed by Ld AO and Ld CIT(A). 10. The ld. DR argued that as per the Section 153D of the Act, the JCIT has duly approved the assessment orders after going through the draft assessment order given by the Deputy Commissioner of Income Tax, Central Range, Ghaziabad. It was also argued that there was no fix it format for according the approval and from the letter dated 30.12.2016, it can be gauged that approval has been duly given by the JCIT in accordance with the provisions of the Act. 11. We have heard the arguments of both the parties and gone through the record and documents filed before us. For ready reference the entire part of the letter of approval dated 30.12.2016 is reproduced as under: Subject: Prior approval u/s 153D in the cases of Cloud-9 & Sethi Group- regarding. Please refer to your office letter F. No. DCIT/ CC/ GZB/ S&S/153D 2016- 17/2904, 2908 & 2911 dated 28-12- 2016 & 30-12-2016 on the above mentioned subject. 2. In the following cases of Cloud-9 & Sethi Group, prior approval u/s 153D of the IT Act, 196....
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....rected to ensure that the comments in the appraisal report are duly ensured. 3. The penalty proceedings should be mentioned wherever applicable for the initiation of correct penalty provisions must be ensured. 4. After taking into consideration, the above points, a copy of the final orders passed be sent to the JCIT. 13. The Income Tax Act envisages prior approval of the JCIT before passing the assessment order. The provisions read as under: "No order of assessment or reassessment shall be passed by the assessing officer below the rant of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of Section 153A or assessment year referred to in clause (b) of sub-section (1) of Section 153B except with the prior approval of Joint Commissioner." 14. When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. The Act envisages that the JCIT's approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or ....
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....not a valid approval in the eye of law. The Tribunal reproduced the observations made by the Additional CIT while granting approval and came to the conclusion that the same suffered from lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record. 5. The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid. 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks :- "To, The DCIT(O....
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....s of the assessees are allowed." 12. It may be noted that provisions of Section 153D provides for approval in case of ["Each"] the assessment year. Therefore, each of the assessment year is required to be verified and approved by the JCIT being Approving Authority that it complies with Law as well as the procedure laid down. The assessee has filed details on record regarding returns filed under section 139 (1) for A.Ys. 2010-2011 to 2015-2016. It is also explained that there are un-abated assessments except A.Y. 2015-2016 in which the assessments have been abated. Therefore, for each un-abated and abated assessments, the authorities below and the Approving Authority [JCIT] shall have to verify the incriminating material found during the course of search or the seized material if pertain to the same assessment year and its basis. The assessee has explained above that these cases are coming up because of the assessments framed in the case of M/s. JIL and others prior to the search in the case of assessee. Therefore, all material was within the knowledge of the Income Tax Authorities prior to the search in the cases of the assessees. Therefore, for granting approval under section 15....
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....encies and double additions made by the A.O. in various assessment years. It may also be noted that in the present case the facts stated in the impugned orders are that the sales of liquor are made by M/s. JIL to M/s. MAPSCO and Singla Group of cases and that part of the sale proceeds have been transferred to the account of M/s. Alfa India instead of paying the entire sale consideration to M/s. JIL. Thus, the nature of total receipt/addition is the sale proceeds originally to be received by M/s. JIL. If the part of the sale proceeds which were to be received by M/s. JIL and when transferred to the account of M/s. Alfa India Ltd., the entire part sale receipts cannot be the income either in the hands of M/s. JIL or M/s. Alfa India or the Assessees who may be the conduit as argued before us. The A.O. has failed to consider the concept of real income for the purpose of determining the correct tax liability and correct determination of income of the assessees. We rely upon the Judgment of the Hon'ble Supreme Court in the case of Godhra Electricity Co. Ltd., 225 ITR 746 (SC). This fact is also not verified and considered by the JCIT while granting approval under section 153D of the I.T.....
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....r procedure and Law. It would show that even JCIT was not satisfied with the assessment proceedings conducted by the A.O. as per Law and records. 16. In some of the cases the approval was granted on the date the request was made for approval by the A.O. In all those cases merely draft assessment order and the assessment folders were available with the A.O. For example in the case of Shri Sanjay Duggal family, in the case of Ms. Kritika Talwar on the same date the approval was granted and that too merely on the basis of the assessment records and draft assessment order and in most of the cases approval has been granted either on the same day or on the next day. Further, there is no reference that seized material as well as appraisal report have been verified by the JCIT. It is not clarified whether assessment record is also seen by the JCIT. It may also be noted that even in some of the Talwar group of cases approval is granted prior to 30.12.2017 but in main cases of Shri Sanjay Duggal and Rajnish Talwar the approval is granted on 30.12.2017. Therefore, without granting approval in the main cases how the JCIT satisfied himself with the assessment orders in group cases which is al....
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....010 to 2013-2014 were completed under section 153A. Undisputedly no incriminating material/ adverse material was found during the course of search. Further on the basis of some statements made by Shri Sanjay Duggal and Rajnish Talwars, the issue of rebate and discount allowed to the distributors was examined and the A.O. in the case of M/s. JIL made protective disallowances of claim of rebate for A.Ys. 2009-2010 to 2013-2014 in a sum of Rs. 56,57,67,894/-. The A.O. passed the assessment orders under section 15A3 of the I.T. Act and the assessee filed appeal before the Ld. CIT(A) for all these years against this addition which have been deleted by the Ld. CIT(A) in A.Ys. 2009-2010 and 2010-2011 vide Order Dated 02.06.2017. He has submitted that the appeals of the Revenue are pending before the Tribunal for all these years. Learned Counsel for the Assessee, therefore, submitted that since assessee M/s. JIL is already in Departmental Appeal before the Tribunal, therefore, no direction be issued against the assessee as it may be prejudicial to the interests of the assessee. He has submitted that when the issue of rebate is already pending before the Tribunal and no seized material was ....