TaxTMI 
TaxTMI 
2023 (2) TMI 1145
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....Buildcon Pvt Ltd, Bhudeva Estates Pvt. Ltd., Witness Builders Pvt. Ltd., MDLR Resorts Pvt. Ltd., Pegasus Softech Pvt. Ltd, Saraswati Devi Goyal, Pradeep Kumar Agarwal, Ashutosh Developers (P) Ltd Versus ACIT, DCIT, Dy. CIT New Delhi And (Vice-Versa). ITA No. 3466/Del/2016, CO 263/Del/2016, CO 267/Del/2016, ITA No. 3451/Del/2016, Cross Objection No.253/Del/2016, ITA No. 3450/Del/2016, Cross Objection 252/Del/2016, ITA No. 3472/Del/2016, C. O. No.265/Del/2016, C.O.No.195/Del/2016, ITA No. 3470/Del/2016, 1554/Del/2018, 3461/Del/2016, 3462/Del/2016, 3083/Del/2016, 1978/ Del/2016, Co 201/Del/2016, ITA No. 1585/Del/2016, 1586/Del/2016, 2270/Del/2016, 3471/Del/2016, 3074/Del/2016, 6801/Del/2015, 3458/Del/2016, CO No.261Del/2016, ITA No. 1164/Del/2018, 2267/Del/2016, 1552/Del/2018, 1369/Del/2018, 6890/Del/2015, 697/Del/2017, 120/Del/2017, 1587/Del/2016, 704/Del/2017, 705/Del/2017, 1560/Del /2018, CO 106/Del/2018, ITA No. 698/Del/2017, 1588/Del/2016, 1981/Del/2016, 2272/Del/2016, 2271/Del/2016, CO 93/Del/2016, ITA No.3469/Del/2016, 3075/Del/2016, 1977/Del/2016, CO 199/Del/2016, ITA No.3079/Del/2016, 3080/Del/2016, 1288/Del/2018, 1291/Del/2018, 1550/Del/2018, 1558/Del/2018, 1557/Del/....
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....id ab initio. It is the say of the ld. counsel for the assessee that assessment records, seized material and appraisal report must be available before the approving authority and the approval must reflect the application of mind to the facts of the case and in the absence thereof, approval granted u/s 153D of the Act is not in accordance with law. 8. The ld. counsel for the assessee further pointed out that approval was granted on the same day i.e the day when the Assessing Officer sought approval from the Additional Commissioner of Income tax, Central Range - 2, New Delhi. The ld. counsel for the assessee further stated that approval should have been for each Assessment Year for each assessee, which is not the case in the present appeals/cross objections. 9. The ld. DR, in his written submissions, vehemently objected to the contention of the ld. counsel for the assessee that approval was given on the same date and, therefore, it is mechanical. It is the say of the ld. DR that the main allegation against this group of companies is that they suppressed sale consideration of land and properties to avoid tax. They received money in the form of advance from the buyer companies in....
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....es 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 6 ITA. No.4061/Mum/2012 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 requisitioned is made under section 132A.....
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....er to any seized material/assessment records or any other documents which could suggest that the Additional Commissioner of Income tax, Central Range - 2, New Delhi has duly applied his mind before granting approvals. 22. At this stage, it is paramount to note that all the orders framed by the Assessing Officer are pursuant to orders of the CIT u/s 264 of the Act. Therefore, the Additional Commissioner of Income tax, Central Range - 2, New Delhi should have been more cautious since his superior authority has set aside the assessment with specific directions. 23. Now, let us consider some analogous provisions in the Act. 24. Sec. 142(2A) of the Act reads as under: " If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts 7 ITA. No.4061/Mum/2012 about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Chief Commissioner or Commissio....
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.... 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 and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the section is not turned into an empty ritual. Needless to emphasise that before granting approval, the Chief Commissioner or the Commissioner, as the case may be,....
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....order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or an Assistant Director or Deputy Director, as the case may be: Provided that no such order shall be passed without the previous approval of-- (a) the Commissioner or the 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, after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets 10 ITA. No.4061/Mum/2012 requisitioned under section 132A, on or after the 1st day of January, 1997." 11.8. In this section also it is provided that the order cannot be passed without the previous approval. This section was thoroughly scrutinized by the Tribunal Madras Bench in the case of Kirtilal Kalidas & Co. Vs DCIT 67 ITD 573, at para-41 of its order the observations of the Tribunal are as under: "In these cases, the Commissioner has passed an order granting....
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....er the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in-builts safeguards to prevent arbitrary exercise of power by an 7 ITA Nos.534 & 611/M/04 Assessing Officer to fiddle with the completed assessment". The Hon'ble High Court further observed that: "what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the statement of the said parties, perhaps he would not have granted his approval, which was mandatory in terms of the proviso to sub-section (1) of section 151 of the Act as the action under section 147 was being initiated after the expiry of four years from the end of the relevant assessment year. The power vested in the Commissioner to grant or not to grant approval is coupled with a duty. The Commissioner is required to apply his mind to the pro....
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....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 upon its earlier decision in Navin Jain and Others (Supra) wherein a detai....
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....oval, 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 omission 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 Section 153A of the Act, which is peculiar to the scheme ....
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....n 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 shall obtain prior approval of the Jo....
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....d that the approval was mechanical. 32. There is another way of looking at the approval to show that it is not only mechanical but also devoid of any application of mind by the Additional CIT. The entire quarrel is in respect of share application money received and held to be unexplained cash credit. 33. Share application money has been received from the following parties: Sr. No. A) CURRENT LIABILITIES As at 31^st March, 2007 (Amount (Rs.) As at 31^st March, 2006 (Amount (Rs.) Share Application Money Received Common for assessment years 2007-08 and 2008-09 1 Believe Construction Pvt. Ltd. 4,00,000 ---- 2 Bhudeva Estates Pvt. Ltd. 4,33,00,000 ---- 3 Elite Buildwell Pvt. Ltd. 15,00,000 ---- 4 Vinman Estates Pvt. Ltd. 5,00,000 ---- 5 LKG Builders Pvt. Ltd. 8,00,000 ---- 6 MDLR Builders Pvt. Ltd. 4,00,000 ---- 7 MDLR Developers & Promoters Pvt. Ltd. 6,00,000 ---- 8 MDLR Estates Pvt. Ltd. 11,00,000 ---- 9 Nageshwar Builders Pvt. Ltd. 6,74,10,000 ---- 10 Om Shiv Buildtech Pvt. Ltd. 26,00,000 ---- 11 ShinestarBuildcon Pvt. Ltd. 10,57,50,....
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....000 1,20,00,000 18. KartikeyaBuildcon (P) Ltd. - 12,89,00,000 12,89,00,000 19. King Buildcon (P) Ltd. - 1,50,00,000 1,50,00,000 20. Shiv Ganesh Builders (P) Ltd. - 90,74,370 90,74,370 21. Shivgori Builders (P) Ltd. - 10,00,000 10,00,000 22. Witness Developers and Promoters (P) Ltd. - 2,00,000 2,00,000 Total 51,45,24,370 35. The factual matrix in respect of addition of Rs. 16,30,00,000/- is as under: Sr. No. Name of Company Amount as on Increase (Decrease) (Addition made) 31.03.2007 31.03.2008 Common for assessment years 2007-08 and 2008-09 1. ShivomBuildwell Pvt. Ltd. 35,00,000 45,00,000 10,00,000 2. Sunstar Builders Pvt. Ltd. 50,00,000 3,50,00,000 3,00,00,000 Share applicant for assessment year 2008-09 only 3. AkdantBuildtech Pvt. Ltd. - 12,15,00,000 12,15,00,000 4. MDLR Realtors Pvt. Ltd. - 5,00,000 5,00,000 5. Silicon Properties Pvt. Ltd. - 1,00,00,000 1,00,00,000 Total 85,00,00....
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.... 7 MDLR Developers & Promoters Pvt. Ltd. (48,74,330) 17,22,246 21.3.2013 (--) ITA (Assessee) 6,00,000 8 MDLR Estates Pvt. Ltd. (38,758) 30,34,426 8.3.2013 (31-42 of CPB-I) -- 11,00,000 9 Nageshwar Builders Pvt. Ltd. (81,510) 7,56,08,424 21.3.2013 (131-157 of CPB-I) Pending before CIT(A) 6,74,10,000 10 Om Shiv Buildtech Pvt. Ltd. 32,00,760 4,67,73,448 21.3.2013 (43-56 of CPB-I) ITA (Assessee) 26,00,000 11 ShinestarBuildcon Pvt. Ltd. (3,23,46,020) 35,02,52,721 18.3.2013 (57-68 of CPB-I) ITA (Assessee) 10,57,50,000 12 Shiv Ganesh Buildcon Pvt. Ltd. (36,690) 4,63,310 8.3.2013 --- 5,00,000 13 Witness Construction Pvt. Ltd. (37,790) 13,52,81,207 15.3.2013 (85-95 of CPB-I) ITA(Deptt) & (Assessee) 3,00,000 14 ShivomBuildwell Pvt. Ltd. 35,00,000 (Not assessed with same AO) 15 Sunstar Builders Pvt. Ltd. 50,00,000  ....