2022 (12) TMI 1021

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.... Brief facts of the case are that pursuant to a search and seizure operation under Section 132 of the Income Tax Act conducted on 31.8.2015, the assessee was required to file Income Tax returns under Section 153A of the Act. In response to the notice, assessee filed returns under Section 153A of the Act for the aforesaid assessment years on 14.07.2017, 14.07.2017 and 21.9.2017; respectively, which were originally e-filed on Form ITR-2 on 19.08.2016, 19.08.2016 and 22.08.2016; respectively. The assessments in this case were completed under Section 153A/143(3) of the Act by Dy. C.I.T., Central Circle-1, Kanpur vide order dated 31.12.2017 and various additions were made. It was submitted by the assessee that in search cases, the Assessing Officer before passing the assessment order, framed under Section 153A, 153C and 143(3), is required to take approval from the Joint C.I.T. under Section 153D of the Act, if the Assessing Officer is below the rank of Joint C.I.T. For the purpose of approval, the Approving Authority is required to see all search material including incriminating material, seized documents, appraisal reports, enquiries made by the investigation wing and various enqu....

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....ion 153D had been fulfilled in the present case. The prior approval under Section 153D was very much in operation when the assessments in question have been framed on 31.12.2017. The requirement of law, thus, has been fulfilled and the validity of the assessment orders in question cannot be questioned on the ground of alleged defect in obtaining prior approval under Section 153D of the Act as alleged by the assessee. Placing the judgement of High Court of Karnataka in (2012) 17 Taxmann.com 120 (Kar.), Commissioner of Income Tax, Bangalore vs. Smt. Annapoornamma Chandrashekar, it is argued that the meaning of word "approval" as defined in the Black's Law Dictionary, 6th Edition has been noted therein and with reference to the decision of the Apex Court in Ashok Kumar Sahu Vs. Union of India AIR 2006 SC 2879, it was observed therein that when the power of approval is rested in a higher authority and such higher authority approves an order of the lower authority, it means that he has gone through the order of the lower authority. The previous approval means, an act of confirming, ratifying, assenting, sanctioning or consenting to the Act or thing done by another/lower authority....

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.... year or years) referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return required to be furnished under Section 139. Section 153D relevant for our purposes is to be noted hereinunder: "Prior approval necessary for assessment in cases of search or requisition. 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 [sub-section (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 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 [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA. The Tribunal while quashing the assessment orders had relied ....

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.... by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. It was noted that the obligations of the approval of the Approving Authority serves two purposes: (i) On the one hand, he has to apply his mind to ensure the interest of the revenue against any ommission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year. (ii) On the other hand, superior authority is also responsible and duty-bound to do justice with the tax-payer by granting protection against arbitrary or creating baseless tax liability on the assessee. The Tribunal has further noted that the provisions contained in Sections 153A to Section 153D provide for separate notice to be given to assessee for assessment for each year as specified in Section 153A of the Act; the assessee has to file separate ITR for each year as specified in Section 153A of the Act; separate assessment orders are to be passed for each year as specified in Section 153A of the Act. It was observed that this is an important concept mentioned in Sectio....

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....mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval under Section 153D is pre-requisite to pass an order of assessment or re-assessment. Section 153D requires that the Assessing Officer shal....