TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 35
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....No. 621, 968, 622, 969/ 970/Del/2012 are filed by the Revenue and the Cross Objections No. 110, 111, 112, 113 & 114/Del/2023 filed by the Assessee Janak Raj Gupta for the Assessment Years i.e. AY 2005-2006 to 2009-10 by challenging the order dated 30.11.2011, 30.11.2011, 13.11.2011 and 05.12.2011 respectively. The Revenue filed ITA No. 5213/Del/2011 for the AY 2009-10 and the Cross Objection No. 109/Del/2023 filed by the Assessee Shri. Brij Mohan Mahajan on the order of the Ld. CIT(A) dated 08.09.2011. 2. The grounds of appeal raised by the Revenue and in the grounds in Cross Objections of the Assessees are as under. "ITA No.621/Del/2012 for AY 2005-06 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,44,62,567/- made by the Assessing Officer on account of undisclosed income on the basis of documents obtained from bank. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that the AO was not correct in rejecting the books of accounts of the assessee. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 4. The a....
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....re. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. C.O.No.109/Del/2023 1. That the assessment order dated 30.12.2010 passed u/s 153A of the Income Tax Act, 1961 ("the Act") by the Assessing Officer ("A.O.") and the additions made therein are illegal, bad in law and without jurisdiction and the same are liable to be deleted. 2. That the assessment order passed under section 153A of the Act and the additions made are illegal, bad in law and without jurisdiction as no incriminating material was found from the assessee at the time of search. The additions are not made on the basis of incriminating material and as such the same are illegal, bad in law, and without jurisdiction. 3. That in view of the facts and circumstances of the case, and in law, the approval u/s 153D of the Income Tax Act, 1961 is mechanical and without any application of mind and is not a valid approval. Thus the impugned assessment order is illegal, bad in law, and liable to be quashed. 4. That the assessee/Respondent se....
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....o be deleted. 2. That the assessment order passed under section 153A of the Act and the additions made are illegal, bad in law and without jurisdiction as no incriminating material was found from the assessee at the time of search. The additions are not made on the basis of incriminating material and as such the same are illegal, bad in law, and without jurisdiction. 3. That in view of the facts and circumstances of the case, and in law, the approval u/s 153D of the Income Tax Act, 1961 is mechanical and without any application of mind and is not a valid approval. Thus the impugned assessment order is illegal, bad in law, and liable to be quashed. 4. That the assessee/Respondent seeks permission to raise additional grounds at the time of hearing. C.O.No.113/Del/2023 1. That the assessment order dated 30.12.2010 passed u/s 153A of the Income Tax Act, 1961 ("the Act") by the Assessing Officer ("A.O.") and the additions made therein are illegal, bad in law and without jurisdiction and the same are liable to be deleted. 2. That the assessment order passed under section 153A of the Act and the additions made are illegal, bad in law and without jurisdiction as no incrim....
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....ing additions in all the assessment years (2005-06 to 2009-10) in the case of Janak Raj Gupta and Company. 4. In the case of Shri Brij Mohan Mahajan, consequent to the very same search and seizure action dated 06/11/2008, notice u/s 142(1) of the Act was issued and questionnaire u/s 143(2) and 142(1) of the Act were also issued. In response, the assessee filed copy of return declaring income of Rs. 9,38,315/- for A.Y. 2009-10. The assessment order came to be passed on 30/12/20210 against the said Sh. Brij Mohan Mahajan by making additions. 5. Aggrieved by the respective assessment orders dated 30/12/2010, both the Assessees have approached the Ld. CIT(A) by challenging the same. The Ld. CIT(A) allowed all the appeals of the Assessees by deleting the addition made by the Assessing Officer by adjudicating the issues involved on merit. The details of the same are as under: Appeal No. Party Name Asst. Years Date of Order of CIT(A) ITA No.621/D/2012 Janak Raj Gupta & Co. 2005-06 30.11.2011 ITA No.968/D/2012 -Do- 2005-06 02.12.2011 ITA No.622/D/2012 -Do- 2006-07 30.11.2011 ITA No.969/D/2012 -Do- 2007-08 13.12.2011 ITA No.970/D/2012 -Do- 2008-09 05.12.2011 ....
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....he Act does not meet the requirement of law and hence Assessment Orders passed in consequence of such non-est approval is a nullity in law. The Assessment Orders thus passed are vitiated in law which illegality cannot be cured. In support of non-est approval, following contentions have been raised by the Ld. AR: (i) The approval accorded under section 153D of the Act 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. (ii) Approval granted hurriedly in a spur involving voluminous assessments spanning over 5 assessment years and thus only a symbolic exercise to meet the requirement of law. (iii) Total lack of objectivity in drawing satisfaction on objective material while giving a combined approval for 5 assessments and also without evaluating the nuances of each assessment year involved. (iv) The mundane action of Addl. CIT under S. 153D in a cosmetic manner gives infallible impression of approval on dotted line and thus....
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....laced before the approving authority i.e. Joint/Addl. Commissioner (designated authority giving approval to search assessments u/s. 153D of the Act). The approving authority is necessarily required to objectively evaluate such draft assessment order with due application of mind on various issues contained in such order so as to derive his/her conclusive satisfaction that the proposed action of AO is in conformity with subsisting law. The AO is obligated to pass the assessment order exactly, as per approval/directions of the designated authority. Inevitably, this evaluation is to be made on the basis of material gathered at time of search as well as obtained in the course of the assessment proceeding. The requirement of law is to grant approval not merely as a formality or a symbolic act but a mandatory requirement. 13. As observed, Section 153D of the Act bestows a supervisory jurisdiction on the designated authority in respect of search related assessment and thus enjoins a salutary duty of statutory nature. The designated superior authority is thus expected to confirm to the statutory requirement in letter and spirit. It is evident from the communication of AO and consequent app....
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....lf of assessee that the draft assessment orders are not available on record which allegation has not been rebutted. The draft assessment orders showing some marking / initials etc. could have given a valuable input on the applicability of mind and could throw some light on objectivity applied owing to total silence on any delineation on these aspects in the approval memo. 18. Based on solitary communication placed before us, it is ostensible that draft assessment orders were placed before the Addl. CIT on 30.12.2010 for the first time. It is axiomatic from the plain reading of approval memo that various assessment orders and the issues incorporated in the assessment orders, were never subjected to any discussion with the authority granting approval prior to 30.12.2010. It is evident from the CBDT Circular No. 3 of 2008 dated 12.03.2008 that the legislature in its highest wisdom made it obligatory that the assessments of search cases should be made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the Assessing officer is making the assessment and after due applicat....
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....eized 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 Draft Assessment Orders were approved, solely relying upon the implied undertaking obtained from the Assessing Officers in the form of draft assessment orders that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination/investigation of seized material and issues unearthed during search have been stately considered by the AO seeking approval. Thus, the sanctioning authority had in effect abdicated its statutory functions and delightfully relegated its statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed additions with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor appr....
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....at the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid. 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks : "To, The DCIT(OSD)1, Mumbai Subject: Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg. Ref: No. DCIT (OSD)1/ CR7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analise the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961." 7. In pl....
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....h inexplicable approval lacks legitimacy. Consequently, the impugned assessments relatable to search in captioned appeals are non-est and a nullity and hence liable to be quashed. 24. To sum up, in the case of both the Assessees i.e. M/s Janak Raj Gupta and Co. and Sh. Brij Mohan Mahajan, the approval of the draft order sent to Additional CIT u/s 153D of the Act only on 30.12.2010 and the same was approved by Additional CIT on 30.12.2010 and the final assessment order was also passed on the very same day ie: 30.12.2010, which has been mentioned in the sheet dated 30.12.2010 of both the assesses. Since all the order sheet entries for each assessment proceedings are identical the order sheet of one of the assessment years of the Assessees are reproduced for ready reference: M/s Janak Raj Gupta and Co: Sh. Brij Mohan Mahajan 25. Hence, there was not enough time left to examine the issues raised in the draft assessment orders on its merit by Additional CIT. Therefore, the orders were approved as it was submitted by the A.O. Therefore, for want of time, Additional CIT could not examine any issue arising out of the draft impugned order. Further, Additional CIT has granted the approva....