TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 97
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....e Ld.AO invoking the provisions of section 56(2)(viia) of the Act which is highly unjustified, unwarranted, unsustainable, not proper on facts, dehors any incriminating material or documents seized in the course of search, based on presumptions & surmises, contrary to the principles of natural justice and not in accordance with the provisions of law. Hence, it is prayed that the addition of Rs.47,60,61,000/- may please be deleted. GROUND NO.III That the appellant craves leave to add, amend, alter or delete all or any of the grounds of appeal at the time of hearing of the appeal. 2. Further, the Registry has received an application from the direction of the assessee on 25.05.2022, wherein the assessee has sought for admission of additional grounds of appeal, which read as under :- 1. That the appellant filed the aforesaid appeal before the Hon'ble Bench on 3rd May, 2018 against the ex-parte Appellate Order passed by the Ld. Commissioner of Income Tax (Appeals) - 2, Raipur confirming the Assessment Order passed u/s,143(3) by the Asst. Commissioner of Income Tax, Central Circle - 2, Raipur. 2. Without prejudice to the Grounds of Appeal raised in the Form Of Appeal ....
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....rch and seizure action u/s 132 of the Income Tax Act, 1961 was conducted on the business and factory premises of various companies and concerns relating to Crest Topworth Group of cases at Raipur, Mumbai, Pune, Nagpur, Ahmedabad and other places on 10/10/2012. Simultaneously, the residential premises of the directors and key persons of various concerns of this Group were also covered for action u/s 132(1) of the Act. Since the various concerns and individuals are interconnected and have business associations, they have been clubbed under the overall name as 'Crest Topworth Group'. In connection to the search and seizure operation, the business premises of the assessee was also searched upon on 10.10.2012. Thereafter notice u/s.153A of the Act was issued to the assessee and in response to which the assessee has filed its return of income for the year under consideration declaring total income at Rs. Nil. During the search and seizure action, the AO found that the assessee has invested in the share of the company M/s Crest Steel and Power Ltd., and Topworth Pipes and Tubes Pvt. Ltd., in different F.Ys. Vide Part-B of the questionnaire u/s 142(1) dated 11.08.2014, the AO requested....
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...., invalid, illegal and bad in law, hence, deserves to be quashed. Ld AR also drew our attention to para 8 of the Assessment order, wherein the Ld AO has specifically referred to the date of submission by the assessee to queries of the Ld AO to explain regarding applicability of section 56(2)(via) of the Act, which was 05.11.2016. However, the draft assessment order as per the approval granted by the Ld JCIT were submitted to him on 03.11.2016. Ld AR on this count has put a question that how the orders could have drafted by the Ld AO and put up for the approval of Ld JCIT for approval U/s 153D without even considering the reply of the assessee which was not available with the Ld AO while the draft orders were put up for approval before the Ld JCIT. On this aspect itself ld AR argued that the Ld AO has prepared the order with prejudiced mind, without considering the submissions of the assessee. Ld AR further argued that it is apparent from records that the response of the assessee dated 05.11.2016 was considered by the Ld AO in its final order dated 08.11.2016 but it is not evident that the final amended draft order with assessee's submission was considered by the Ld JCIT before gran....
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....hi) (Pg.No.190 - 257 CLC) (xiv) Geetarani Panda v. Asst. CIT (2018) 194 TTJ 915 (ITAT Cuttack) (xv) Indra Bansal v. Asst. CIT [20181192 TTJ 968 (ITAT Jodhpur) (xvi) AAA Paper Marketing Ltd. Vs. ACIT (2017) 9ITR (Trib.)-OL 424 (ITAT Lucknow) (xvii) Rishabh Buildwell Pvt. Ltd. Vs. Dy.CIT(ITA No.2122/Delhi/2018, dated July 4, 2019)(ITAT Delhi) (xviii)M/s India Holdings Vs. DCIT (2019) 71ITR (Trib.) 451 (ITAT Del.) (xix) Uttarakhand Uthan Samiti Vs. ITO (2021) 86 ITR (Trib.) 695 (ITAT Delhi) (xx) Dilip Constructions (P) Ltd. vs. Asstt. CIT (2020) 203 TTJ (Ctk) 422 (Pg.No.258 - 292 CLC) (xxi) Rajesh Ladhani vs. Dy. CIT (ITA Nos. 106 to 108/Agra/2019) (ITAT Agra) (xxii) Shri Tarachand Khatri Vs. ACIT, Central Circle, Jabalpur in ITA No.21/JAB/2019 (Date of Order : 17.01.2020) (xxiii) Asstt. CIT vs. C.R. Mittal & Sons (HUF) [IT(SS)A No. 100/Jab/2014 (ITAT Jabalpur) (xxiv) Sahara India (Firm) v. CIT (2008) 300 ITR 403 (SC) (Pg.No.55 - 73 CLC) 11. On the other hand, ld. CIT-DR relied on the order of the ld. CIT(A) and submitted that the AO has passed the assessment order after getting approval from the JCIT vide dated 08.11.2016. Ld CIT-DR, in support of the c....
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....tal of the Department. The notice under section 148 of the Act is not vitiated on the ground that the paper containing approval under section 151 was received by the A.O. after issuing the notice. 44. In view of the foregoing discussion, we are of the considered opinion that the petitioner did not make a true and full disclosure of all the material facts and the A.O. had reason to believe that the petitioner's income for the relevant year had escaped assessment. The notice dated 22-03-2020 issued under section 148 of the Act as well as all the proceedings undertaken in consequence of the notice, including the order dated 25-01-2022 passed by the National Faceless Assessment Centre rejecting the petitioner's objections against the notice, do not suffer from any such illegality so as to warrant any interference by this Court in exercise of its extraordinary discretionary Writ Jurisdiction. 45. The Writ Petition lacks merits and is, accordingly, dismissed." 13. Carrying the argument further, Ld CIT-DR argued that in view of the aforesaid decision in the case of Sahara Credit Cooperative Society Ltd.(supra), there Lordships has clearly mandated that granting of approval ....
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....xamination of the seized documents, only on the presumption the approval cannot be granted. Thus, we hold the approval under section 153D of the Act has been granted in the case of the assessee was without application of mind, the same is invalid, bad in law and liable to be quashed. 15. Reliance can be placed on the case law relied on by the ld. AR of the assessee, in the following cases :- (i) Pr.CIT v. Subodh Agarwal in I.T.Appeal No.86 of 2022 (Date of Judgment: 12.12.2022) (Allahabad HC): "The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a 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 sub....
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....MI887 (Allahabad HC), wherein the similar findings were offered by the Hon'ble High Court of Allahabad as in the case of Subodh Agrawal (supra) and held as under :- Search and seizure-Assessment under s. 153A-Approval under s. 153D-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 approving authority before preparing the draft assessment order-In the instant case, the draft assessment orders in 123 cases placed before the approving authority on 30th Dec., 2017 and 31st Dec., 2017 were approved on 31st Dec., 2017, which not only included the cases of assessee but the cases of other groups as well-It is humanly impossible to go through the records of 123 cases in one day to apply independent mind to appraise the material before the approving authority-Conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record-No substantial question of law arises for consideration (iii) M/s.Goyal Energy & Steel Pvt. Ltd. v. ACIT, CC-2, Raipur in ITA ....
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....ders which was unsubstantiated and unsupported and consequently suffered from total non-application of mind. The relevant part of the order is extracted below; "11.5 At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/ her process of deriving satisfaction so as to exhibit his/her due application of mind. We may observe that Para 2 of the above approval letter merely says that "Approval is hereby accorded u/s. 153D of the Income-tax Act, 1961 to complete assessments u/s. 143(3) r.w.s. 153A of the I.T. Act in the following case on the basis of draft assessment orders..."which clearly proves that the Addl. CIT had routinely given approval to the AO to pass the order only on the basis of contents mentioned in the draft assessment order without any application of mind and seized materials were not looked at and/or other enquiry and examination was never carried out. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due....
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....3/CTK/2019 (Date of Order: 08.04.2022) (ITAT Cuttack), wherein the Tribunal has held that the assessment framed u/s.153A/143(3) of the Act is not sustainable without proper approval u/s.153D of the Act. The relevant observations of the Tribunal are as under :- 11. On perusal of the above two approvals given in the case of two different assessees, we found that both the approvals are similar to each other. In both the approval letter, the JCIT has simply mentioned that approval is hereby accorded as per provisions of Section 153D of the Act for passing the assessment order, therefore, the arguments of the ld. CIT-DR that facts and circumstances along with the approval given in Dilip Construction Pvt. Ltd. and in the case of Ritanjali Khatai are different, cannot be accepted. Accordingly, we are in complete agreement with the contention of ld. AR of the assessee that the issue is covered by the decision of coordinate bench of the Tribunal in the case of Dillip Construction Pvt. Ltd.(supra), wherein the relevant observations of the Tribunal are as under :- 31. Before we proceed, we find it appropriate to consider the contention of ld CIT DR wherein, he submitted that as per lette....
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.... noted above that there is no requirement of mandate of section 153D of the Act that an opportunity of hearing should be allowed to the assessee before grant of approval u/s.153D of the Act but at the same time, it is also a requirement of mandate of section 153D of the Act that the approving authority must apply his mind to the relevant assessment records and draft assessment order before granting approval u/s.153D of the Act. As the requirement of grant of approval by the Superior authority is not merely a formality but it is a mandate and requirement of provisions of the Act. 35. In our considered and humble opinion, no procedure for grant of approval has been provided u/s.153D of the Act and the Income tax Rules, 1962. However, when legislature has enacted some provision to be exercised by a higher revenue authority enabling the AO to pass assessment or reassessment orders in the search cases, then, it is the duty of the approving authority to exercise such power by applying his judicious, vigilant and cautious efforts. We are of the view that the obligation on the approval granting authority is of two folds, one the one hand, he has to apply his mind to secure inbuild for th....
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....rior to insertion of provision u/s.153D, there was no provision for taking approval in cases of assessment or reassessment where search and seizure operation was conducted u/s.133A of the Act. Therefore, in our considered view, the legislature wanted the assessment/reassessment of search and seizure cases should be made and orders should be passed with the prior approval of superior authority, which also means that the superior authority should apply his mind on the materials on the basis of which the AO is making or passing assessment orders and after due application of mind to material in the hands of department while initiating search proceedings, material found & seized during the course of search and also material or information unearthed or gathered during post search investigation and enquiry alongwith explanation, documentary evidence and other relevant material or information submitted by the assessee during search and assessment proceedings, the superior authority has to grant the approval u/s.153D of the Act for passing assessment/reassessment orders in the search cases. 38. Further, in our considered view, the approval u/s.153D of the Act cannot be treated as an offic....
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....g authority with a corresponding obligation on him to examine relevant record and assessment orders and thereafter grant the approval. We are cautious about that the reasons for granting approval may not be a subject matter of challenge or are not required to be mentioned in the order of approval but the manner and the material on the basis of which approval has been granted can be challenged by the assessee and following proper procedure and application of mind by the approving authority should be discernible from the order of approval. No other evidence or documents is required to be considered or appreciated as the approval should be self-speaking that it has been granted by the ld JCIT by following due procedure and due application of mind to the relevant records and orders. The scope and issue agitated by the assessee by way of legal ground in the present case is not that of grant of hearing or representation to the assessee at the time of granting approval but the main grievance and legal objection of the assessee is that the approving authority has granted approval without application of mind and without looking into the seized materials and investigation report and draft as....
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....pplication of mind and, thus, no valid approval has been granted by the ld JCIT before authorising the AO to pass assessment orders u/s.153A of the Act. Accordingly, all assessment orders are vitiated and thus same are void being bad in law. The requirement of mandate of section 153D of the Act has not been satisfied in both the cases and accordingly we hold that the all assessment orders are vitiated and thus same are void being bad in law. We, accordingly set aside the impugned orders of lower authorities and quash the assessment orders by allowing additional ground of the assessees in all appeals filed by both the assessees having identical and similar facts and circumstances. 12. Thus, respectfully following the above observations of the Tribunal and especially the fact that the approval u/s.153D of the Act given by the JCIT for passing assessment orders in case of assessee and other group concern is without application of mind as the JCIT has not mentioned in the approval orders that he has gone through the relevant assessment records/files/folders and draft assessment orders for granting approval, therefore, we hold that the impugned order passed by the CIT(A) affirming th....