TaxTMI 
TaxTMI 
2024 (1) TMI 793
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....10.2021 stating that the search assessment was framed pursuant to the approval granted under section [u/s in short] 153D of the Income Tax Act, 1961 [hereinafter referred to as the "Act"] by the Learned Joint Commissioner of Income Tax, Central Range-4 Delhi [hereinafter referred to as the "ld. JCIT"] in a mechanical manner and accordingly, the entire search assessments deserve to be quashed. 4. We have heard the rival submissions and perused the materials available on record. At the outset, the additional grounds raised by the assessee go to the root of the matter and those being legal issues and facts relevant for their adjudication are already on record, we are inclined to admit those additional grounds and take up the same for adjudication first. A search and seizure operation u/s 132 of the Act was carried out on 23.7.2015 and on subsequent dates in different business and residential premises of Shri Deepak Agarwal and Shri Mukesh Kumar and other cases of Mukesh Kumar Group and Deepak Agarwal Group based at Delhi. According to the investigation wing, these groups were found to be interconnected with each other and with some group of entry operators providing accommodation e....
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....td 8834/del/2019 2012-13 21/11/2017 05/12/2017 Rs 4,660 15. Radhika Clothings Ltd 8856/del/2019 2012-13 10/07/2017 09/08/2017 Rs 1,21,310 16. Radhika Clothings Ltd 8857/del/2019 2013-14 10/07/2017 09/08/2017 Rs 3,57,660 17. Radhika Clothings Ltd 8858/del/2019 2014-15 10/07/2017 09/08/2017 Rs 3,08,050 18. Radhika Clothings Ltd 8859/del/2019 2015-16 10/07/2017 28/03/2017 Rs 1,71,060 19. Shridhar Portfolio Management Ltd 8862/del/2019 2011-12 02/09/2016 06/11/2017 Loss of Rs 47,252 20. Shridhar Portfolio Management Ltd 8863/del/2019 2013-14 02/09/2016 06/11/2017 Rs 4,87,400 21. Shridhar Portfolio Management Ltd 8864/del/2019 2014-15 02/09/2016 06/11/2017 Rs 3,22,670 22. Shridhar Portfolio Management Ltd 8865/del/2019 2015-16 02/09/2016 06/11/2017 Rs 14,43,320 23. Sperryn Gas Products Limited 8866/del/2019 2010-11 02/09/2016 06/11/2017 Rs 24,173 24. Sperryn Gas Products Limited 8867/del/2019 2011-12 02/09/2016 06/11/2017 Different figures noted in page 2 (Rs 24,173) and final income computation Rs....
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....822/del/2019 2012-13 29.12.2017 Rs 47,74,74,400 3. Mysore Finlease Pvt Ltd 8823/de/2019 2013-14 29.12.2017 Rs 2,46,60,870 4. Mysore Finlease Pvt Ltd 8824/del/2019 2014-15 29.12.2017 Rs 7,52,91,740 5. Mysore Finlease Pvt Ltd 8825/del/2019 2015-16 29.12.2017 Rs 4,28,397,667 6. Mysore Finlease PvtLtd 8826/del/2019 2016-17 29.12.2017 Rs 3,05,94,830 7. Deepak Agarwal 8827/del/2019 2010-11 29.12.2017 Rs 8,97,12,267 8. Deepal Agarwal 8828/del/2019 2011-12 29.12.2017 Rs 8,36,84,207 9. Deepak Agarwal 8829/del/2019 2012-13 29.12.2017 Rs 9,15,27,869 10. Deepak Agarwal 8830/del/2019 2013-14 29.12.2017 Rs 6,31,27,795 11. Deepak Agarwal 8831/del/2019 2014-15 29.12.2017 Rs 7,16,51,028 12. Deepak Agarwal 8832/del/2019 2015-16 29.12.2017 Rs 7,82,40,117 13. Deepak Agarwal 8833/del/2019 2016-17 29.12.2017 Rs 1,49,83,287 14. ShakumbhariAgrofarmPv tltd 8834/del/2019 2012-13 26.12.2017 Rs 69,00,000 15. RadhikaClothings Ltd 8856/del/2019 2012-13 29.12.2017 Rs 46,95,....
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....el/2019 2015-16 29.12.2017 Rs 47,54,276 40. Shridhar Portfolio management ltd 8861/del/2019 2010-11 Rs 14,20,09,896 6. It would be relevant to note that the approval u/s 153D of the Act had been accorded by the ld. JCIT within a short span of time of either one day or on the same day on which draft orders were forwarded to him. The details of various draft orders forwarded by the ld. AO to the ld. JCIT for various assessment years and the date of approval granted u/s 153D of the Act by the ld. JCIT for various assessees are tabulated hereunder:- S.No Name of assessee Relevant ITA number Assessment Year Date of forwarding of approval of "only" draft assessment orders Date of Final approval u/s 153D 1. Mysore FinleasePvt Ltd 8821/del/2019 2011-12 29.12.2017 29.12.2017 2. Mysore FinleasePvt Ltd 8822/del/2019 2012-13 29.12.2017 29.12.2017 3. Mysore FinleasePvt Ltd 8823/de/2019 2013-14 29.12.2017 29.12.2017 4. Mysore FinleasePvt Ltd 8824/del/2019 2014-15 29.12.2017 29.12.2017 5. Mysore FinleasePvt Ltd 8825/del/2019 2015-16 29.12.2017 29.12.2017....
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....9 2013-14 29.12.2017 29.12.2017 32. QED venture advisors private limited 8877/del/2019 2015-16 29.12.2017 29.12.2017 33. Brij Kishore 8878/del/2019 8788/del/2019 2010-11 2010-11 29.12.2017 29.12.2017 34. Brij Kishore (revenue sole appeal) 29.12.2017 35. Brij Kishore 8879/del/2019 2011-12 29.12.2017 29.12.2017 36. I-Tech insurance brokers Pvt Ltd 8880/del/2019 2010-11 28.12.2017 29.12.2017 37. I-Tech insurance brokers Pvt Ltd 8881/del/2019 2011-12 28.12.2017 29.12.2017 38. I-Tech insurance brokers Pvt Ltd 8882/del/2019 2014-15 28.12.2017 29.12.2017 39. I-Tech insurance brokers Pvt Ltd 8883/del/2019 2015-16 28.12.2017 29.12.2017 40. Shridhar Portfolio management ltd 8861/del/2019 2010-11 28.12.2017 29.12.2017 7. We find that the ld. JCIT granted approval of the draft assessment orders u/s 153D of the Act for 40 cases for various Asst Years in respect of assessments to be completed u/s 153A of the Act. The Ld. AR before us had raised a preliminary objection that the said statutory approval gra....
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....o be quashed as void ab initio. In support of this argument, the Ld. AR placed heavy reliance on the decision of the Hon'ble Orissa High Court in ITA Nos.39 to 45 of 2022 dated 15.03.2023 in the case ACIT, Circle 1(2), Bhubaneshwar vs. M/s Serajuddin & Co. and the decision of the Hon'ble Allahabad High Court in the case of PCIT vs. Subodh Aggarwal in Income-tax Appeal No.86/2022 dated 12.12.2022. 8. Per contra, the Ld. DR vehemently argued that the role of ld. JCIT, Central Range is totally different from the role of a JCIT in the normal range. He argued that in a Central Range, the ld. JCIT is involved in the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing and is involved with the Ld. AO from time to time while issuing various questionnaires to the assessee. The ld. JCIT in Central Range also examine the seized documents in detail immediately after receipt of the appraisal report and provides able assistance to the Ld. AO about the interpretation of the said seized documents while issuing questionnaires to assessee, examining the replies filed by the assessee and drawing conclusions thereon. Hence, it is very ....
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....time of receipt of appraisal report from the Investigation Wing, still, the ld. JCIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld. AO in the draft assessment order. The copy of the appraisal report submitted by the Investigation Wing to the Ld. AO and ld. JCIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from ld. JCIT u/s 153D of the Act. The ld. JCIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the Ld. AO as well as the ld. JCIT to even ignore the....
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....t together. We find that the reliance placed by the Ld. AR on the decision of the Hon'ble Orissa High Court in the case of ACIT, Circle 1(2), Bhubaneshwar vs. M/s Serajuddin & Co. in ITA Nos. 39 to 45 of 2022 dated 15.03.2023 is well founded. The question before the Hon'ble Orissa High Court is as under:- "Whether on the facts and circumstances the ITAT was correct in holding that the approving authority has not applied his mind for giving approval u/s 153D?" 12. In the case before the Hon'ble Orissa High Court, the approval of draft assessment orders was placed by the AO before the Addl.CIT on 27/29.12.2010 for seven assessment years. The approval was granted by the Addl. Commissioner for seven assessment years u/s 153D of the Act on 30.12.2010 by merely saying that the draft orders submitted by the officer in the above case for the seven assessment years are hereby approved. The Hon'ble Orissa High Court took note of this fact and quashed the search assessment and decided the issue in favour of the assessee by holding as under:- "22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft order....
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....udges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions Issued by the Board. (3) A show cause notice and....
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....ent order was granted under Section 153D for the assessment proceedings, by a letter dated 31.12.2017 in 38 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal. To answer the same, we are required to go through the relevant provisions of the Income Tax Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income Tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under Section 132, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, 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), 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 fa....
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....pproval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed 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 th....
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....t 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 above discussion made in the judgement of Tribunal dated 3.08.2021 in the case of Navin Jain Vs. Dy. C.I.T. (Supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under Section 153D of the Act would vitiate the entire proceedings in the instant case. For the reasoning given in the case of Navin Jain (Supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income Tax Act. 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 i....
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....es in one day to apply independent 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. 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 appeal being in the nature of second appeal. No substantial question of law arises for consideration before us. The Appeal is dismissed being devoid of merit." 14. Further, we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCIT vs. Anju Bansal in ITA 368/2023 order dated 13.07.2023 wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. The relevant operative part of the said order is reproduced below:- "12. This aspect was bro....