TaxTMI 
TaxTMI 
2023 (11) TMI 432
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment order passed u/s 153A is not sustainable in view of the fact that the proper procedure of law has not been followed by the Id authorities below while granting the approval u/s. 153D of the Act. Assessment order passed u/s 153A of the Act is liable to be quashed since the statutory and mandatory approval as required u/s 153D of the Act sought and granted was totally mechanical and ritualistic only." 3. The ld. counsel for the appellant assessee requested for admission of the additional legal ground under pretext that the legal ground does not require new facts to be investigated, and since it goes to the root of the matter, to decide the appeal, and therefore, the additional ground may be admitted in the light of the judgement of Honorable Supreme Court in the case of NTPC limited Vs. CIT 229, ITR 383. that the additional grounds of appeal raised is legal in nature and which goes to the root of the matter to decide the appeals which was inadvertently not included in the grounds of appeal and it is being purely legal ground based on the facts on the record. The Ld. DR failed to rebut the contention of the appellant. 4. Since, the additional is purely legal in nature and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tral Range, Jalandhar has directed that order sheet before issuing notice should be completed and orders should be uploaded in the ITBA portal well in time. We are enclosing herewith list of books, documents etc found and seized during search at page no. 11-13. Perusal of these pages will reveal that 2357 pages have been seized from 810, GTB Nagar, Jalandhar and 374 pages have been seized from H. No. 14-15, Guru Nanak Nagar, Model Town, Jalandhar. Total papers seized comes to 2731 papers. Assessee filed replies for all the assessment years and papers filed in replies comes to approximately 1000 papers. 4. That from the letter of the Assessing Officer and letter of Joint Commissioner of Income Tax, Central Range, Jalandhar your honor will observe that whole exercise of approval by Joint Commissioner of Income Tax, Central Range, Jalandhar and release of final assessment orders for all the years was completed within few hours which is practically not possible. Letter for approval of assessment orders was received in the office of Joint Commissioner of Income Tax on 31.12.2018, approval was granted on 31.12.2018 and assessment orders were also released on 31.12.2018. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Purpose of approval by senior authority is to ensure that the assessee is not prejudiced by irrelevant additions and at the same time assessment is framed by the Assessing Officer after proper enquiries/investigations. There is a statutory duty u/s 153D of the Act on the Joint/Addl. Commissioner of Income Tax to examine the assessment record and accord approval after through examination of seized material and proceedings conducted by the Assessing Officer which needs lot of time. The meaning of "approval" u/s 153D of the Act is that the Joint CIT is required to verify issues raised by the Assessing Officer in the draft assessment orders and apply his mind and to ascertain as to whether the entire facts have been properly appreciated by the Assessing Officer. He is also required to verify whether the required procedure has been followed by the Assessing Officer or not. Approval cannot be a mere discretion or formality but quasi-judicial function based on reasoning. 8. That assessment orders for all the years sent for approval, approval granted and final orders released on the same day clearly establish that approval granted u/s 153D of the Act is no approval in the eyes o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....153D of the Act on the same date. 10. From the above, it is evident that in the present case, the draft assessment orders in respect of 5 assessment years were sent by the AO vide letter No. CC-I/JAL/153B/CUCB/2018-19/1952 dated 30.12.2018 which was received in the office of the Joint CIT, Central, Range, Jalandhar the Competent Authority on 31.12.2018, which included the assessment of the Five cases of appellant assessee in respect of Five Different Assessment Years. All these Assessments were approved on same date i.e. 31.12.2018. In our view, it is humanly impossible to apply independent mind to satisfy the competent authority perse se to grant the approval u/s 153D of the Act on same date i.e. 31.12.2018 to complete the entire exercise of sending and receipt, of draft proposal, dispatch and deliver in the office of Competent authority and vice versa who had to go through the records and assessment orders of 7 Assessment Years in one day. Meaning thereby, the approval granted was a mechanical exercise of power, in the instant Assessments. 11. The Hon'ble High Court in the case of Pr. CIT and Anr. v. Subodh Agarwal dated 12.12.2022 [2022] 115 CCH 0528 All HC, while adjudica....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer shall obtain prior approval of the Joint Commissioner in respect of "each assessment year" referred to in Clause (b) of sub-section (1) of Section 153A which provides for assessment in case of search under Section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of "each assessment year" falling within six assessment years (and for the relevant assessment year or years), referred to in Clause (b) of sub-section (1) of Section 153A. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A. In the instant case, the draft assessment order in 38 cases, i.e. for 38 assessment years placed before the Approving Authority on 31.12.2017 w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before ACIT, Central, Kanpur on 27.03.2015 for first time and soon on same day it was granted - Prior to this date case was never discussed with authority granting approval - Even questionnaire as was required to be issued with the approval of ACIT, in view of CBDT instruction was not issued with his approval - Since no time was left to analyze issue of draft order on merit, order was approved solely relying upon undertaking obtained from AO that he has taken due care while framing assessment - Thus, sanctioning authority delegated his statuary duty to grant Approval, after due application of his mind, to the same subordinate AO, whose action ACIT, was supposed to supervise - ACIT without any consideration on merit in respect of issues on which addition was made granted Approval on undertaking of AO - This approach rendered Approval to be an eyewash and idle formality and such a mechanically granted Approval is no approval in eyes of law - Assessment orders u/s 153A quashed - Assessee's appeal allowed." 13. On similar facts, Recently, the Coordinate Bench in the case of "Shri Balwinder Singh Kohli vs. DCIT", in ITA No. 87/Asr/2017 vide it decision dated 21/06/2023 on the matter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 20. As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeals being in the nature of second appeal. No substantial question of law arises for consideration before us. 21. The Appeals are dismissed being devoid of merit.'' 8. In another case of "Principal Commissioner of Income-tax v. Subodh Agarwal"', [2023] 149 taxmann.com 373 Hon'ble Allahabad High Court vide para 18 and 20 of the judgment has held as under: 18. 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, lear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the case of 'ACIT vs. Serajuddin & Co.', [2023] 150 taxmann.com 146 (Orissa) vide paras17, 22, 23 and 25 held as under: 17. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself. In Sahara India (Firm) (supra), the Supreme Court explained as under: "8. 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, must have before him the mate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry requirement of section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves. 10. In the instant cases, the AO has submitted the draft assessment order on 20/03/2015 before the Approving Authority who had approved on same day i.e. 20/03/2015. In our view, it was humanly impossible to peruse records of all 5 cases in one day to apply independent mind to appraise material records. Further, the approving authority has not mentioned any indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. Even the approving authority has not written or repeated the words of the statute, in granting the approval u/s 153D of the Act. We are therefore of the considered view that mere endorsing a list of cases by signature with "rubber stamping" of the letter without mentioning even the words like 'seen' or 'approved' will not satisfy the requirement of the law for app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment orders are rendered void ab initio. Accordingly, the impugned order is held to be infirm, illegal and bad in law and same is as such quashed. 16. Since, the assessee has succeeded in the legal issue and the assessment has been held to be invalid, and therefore, we do not proceed to adjudicate the issue raised on merits in quantum addition. 17. The facts on the legal issue in I.T.A. Nos. 6 to 9/Asr/2020 are exactly similar to the facts in I.T.A. No. 5/Asr/2020. The proposal was send on 31/12/2018 and the Addl. CIT granted Approval u/s 153D of the Act on the same date i.e. 31/12/2018 in respect of 7 Assessment Years. Therefore, our observation and findings given in I.T.A. No. I.T.A. No. 5/Asr/2020 shall be applicable to the I.T.A. Nos. 6 to 9/Asr/2020 in mutatis mutandis, Ordered Accordingly. 18. In the result, the appeals of the assessee are allowed. Order pronounced in the open court on 26.07.2023 ============= Document 1 कारà¥à¤¯à¤¾à¤²à¤¯ उप आयकर आयà¥à¤•à¥à¤¤, केनà¥à¤¦à¥à¤°à¥€à¤¯ वृत १, आयतन ....