TaxTMI 
TaxTMI 
2023 (4) TMI 97
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....ssly erred in confirming an addition of Rs.47,60,61,000/- made by the 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 Circ....
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....m business of investment in property (real estates), income from house property and income from other sources. A search 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 an....
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....Act on the strength of purported approval granted by the Ld. Joint Commissioner of Income Tax, Range-Central is void ab initio, 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....
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.... (xii) Vijay Kumar Mittal HUF v. ACIT 2021-TI0L-898-ITAT-Jabalpur (ITAT Jabalpur) (Pg.No.172 - 189 CLC) (xiii) ACIT v. Sh. Subash Dabas in ITA No.2399/Del/2016 (Date of Order : 25.11.2021) (ITAT Delhi) (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. CI....
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....pproval being received physically before issuing the notice and the A.O. can proceed to issue a notice under section 148 of the Act if the approving authority has granted his approval and the approval has been communicated to the A.O. in any manner - including by uploading the approval on the portal 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....
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.... clarified as to whether the assessment record in the case of the assessee has been seen by the JCIT or not. Therefore, the approval granted by the JCIT, Range-Central, Raipur in the case of the assessee is merely technical approval just to complete the formality and without application of mind as there was no examination 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 ....
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.... day to apply independent mind to appraise the material before the Approving Authority. The 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. (ii) Pr.CIT v. Sapna Gupta in I.T.Appeal No.88 of 2022 (Date of Judgment: 12.12.2022) 2022 (12) TMI887 (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 app....
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....the similar ground of appeal in granting bulk approval of the assessment under section 153A, in case of Arch Pharmalabs Ltd Vs ACIT (supra) held that the approval accorded under section 153D is without any occasion to refer to the assessment records and seized material, if any, incriminating the assessee and hence such approval is in the realm of an abstract approval of draft assessment orders 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 conten....
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....functionary approval under section 153D cannot termed as legitimate. The consequential assessment orders based on non-est approval under section 153D, thus are void-abinitio on this ground alone. Considering the facts that we have allowed the appeal on the legal issues therefore, consideration of appeal on merit have become academic. (iv) Ritanjali Khatai & Ors. v. ACIT, CC-1, Bhubaneswar in IT(SS) A.No.51 to 53/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, can....
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....sing the relevant assessment orders u/s.153A r.w.s 143(3) of the Act. 34. Considering the facts and circumstances of the case in the light of above discussion, it is amply clear that the AO vide latter dated 17.11.2017 requested the Approving Authority i.e. JCIT to grant approval u/s 153D of the Act and furnished relevant assessment records and draft assessment order before him for consideration prior to grant of approval. As we have already 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. Howe....
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....ns or non-application of mind cannot be cured or rectified by any other exercise or working undertaken by the approving authority after grant of approval and after passing the assessment orders u/s.153A of the Act by the Assessing officer. 37. The provisions of section 153D of the Act was inserted by the Finance Act, 2007 w.e.f. 1.6.2007. In our humble understanding of said provision, the legislative intent for insertion of said provision is clear inasmuch as prior 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 materi....
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....scussion, we reach to a logical conclusion that it is the duty of the approving authority to act in accordance with the mandate and provisions of law while granting approval and discharging statutory function lay on his shoulders by following proper procedure and also by applying his judicious and cautious mind to the relevant assessment folders/files and draft assessment orders while granting approval u/s.153D of the Act. This is not a formality but a statutory duty of the approving 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 d....
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....f Geetarani Panda (supra), we hold that no valid approval has been sanctioned or accorded by the ld JCIT before allowing the AO to pass the relevant assessment orders. From the relevant approval orders dated 23.11.2017, it is vivid that ld 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. These facts clearly show that the approval had been granted in a mechanical manner without application 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....
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.... the approval, whether same is done physically or through uploading the same on portal of the department makes no difference, however in the present case no such issue has been agitated, thus the same has no bearing on the issue to be decided herein. 18. In view of the above discussion and observations, respectfully following the decision of the Hon'ble High Court of Allahabad as well as orders of the coordinate benches of the Tribunal referred to above, in absence of any submission or decisions contrary to what has been emerged by the observations herein above, we do not have any reason to upheld the order of the authorities below, consequently we hold that the order of Ld CIT(A) in affirmation of the order of Ld AO u/s.153A r.w.s.143(3) of the Act is unsustainable and derives to be quashed and we do so. Accordingly, the assessment order in the case of the assessee u/s.153A r.w.s.143(3) of the Act stands cancelled. Thus, the legal ground raised by the assessee in the form of additional ground is allowed. Since, we have allowed the legal ground of the assessee, other grounds, though not argued by the ld AR, are not adjudicated upon. 19. In the result, the appeal of assessee i....