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TaxTMI 
TaxTMI 
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2024 (2) TMI 35
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....S., JM: The captioned five Appeals in ITA 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....
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....nd on facts in deleting the addition of Rs. 1,51,21,958/- made by the Assessing Officer on account of undisclosed income by holding that the seized documents was dumb in nature. 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 A....
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....hearing. C.O.No.112/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 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 ....
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....hich was duly served on the assessee and in response to notice, the assessee furnished return of income declaring the income at Rs. 4,94,778/-, Rs. 4,98,897/-, Rs. 5,28,658/-, Rs. 4,73,845/- and Rs. 1,59,835/- respectively for AY 2005-06 to 2009-10. The assessment orders came to be passed u/s 153A r/w/s.143(3) of the Act on 30/12/2010 by making 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 is....
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....asons mentioned in the application coupled with the affidavit. 8. For the reasons stated in the applications seeking for condonation of delay in filing the Cross Objections and considering the fact that the issue raised in the Cross Objections are being a legal one, the delay in filing the above captioned Cross Objections are condoned. 9. The Ld Counsel for the Assessees submitted that the approvals granted under S. 153D of the 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 asse....
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....ag-end of the limitation period on 30/12/2010 to meet the legal requirement imposed by section 153D of the Act. The Addl. CIT i.e. the superior authority, in turn, granted a combined and consolidated approval for all 5 assessment years in promptly on 30/12/2010 itself. For passing such assessment orders, the Assessing Officer is governed by S.153D of the Act, whereby the Assessing Officer should complete the assessment proceedings and prepare a draft assessment order which need to be placed 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. ....
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....in respect of any of the 5 assessment years. Apparently, the approval has been granted on a dotted line without any availability of reasonable time which firms up the belief towards non application of mind. Besides, the approval has been granted in a consolidated manner for all assessment years for which voluminous assessment orders were prepared. The whole sequence of action apparently appears to be illusory to merely meet the requirement of law as an empty formality. It is also alleged on behalf 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 sub....
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....M/s Janak Raj Gupta & Co. 2005-06 3,49,57,345/- 2 M/s Janak Raj Gupta & Co. 2006-07 5,37,84,235/- 3 M/s Janak Raj Gupta & Co. 2007-08 3,47,22,188/- 4 M/s Janak Raj Gupta & Co. 2008-09 2,83,50,215/- 5 M/s Janak Raj Gupta & Co. 2009-10 4,03,81,793/- 20. Plain reading of the letter of approval granted by the Addl. Commissioner, clearly depicts that the Addl. CIT had routinely given approval to the AO to pass the order only on the basis of letter of the Ld. A.O. without any application of mind and the seized 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 eff....
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....e observations made by the Additional CIT while granting approval and came to the conclusion that the same suffered from lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record. 5. The learned Counsel for the Revenue submitted that 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 dra....
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....al u/s 153D of the Act by expressing discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act. 23. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the plea raised by the Assessees in the Cross Objections against maintainability of hollow approval under S. 153D of the Act totally devoid of any application of mind. In our opinion the approvals so granted under the shelter of section 153D of the Act does not pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such 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 ....
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....assed in the respective years are quashed. 26. In view of prima facie merits found in the legal objections raised in the Cross objections filed by the Assessees, we do not consider it expedient to look into the aspects on merits of additions/disallowance as the legal objections on Section 153D of the Act has been answered in favour of the assessee. The other Grounds raised in the respective cross objections of the assessee have rendered in-fructuous, which do not need any separate adjudication. 27. In view of allowing the Ground No. 3 in the Cross Objections No. 110/Del/2023, 111/Del/2023, 112/Del/2023, 113/Del/2023, 114/Del/2023 and 109/Del/2023 filed by the Assessees by quashing the Assessment Orders as non-nest on the ground of invalid approval u/s. 153D of the Act, the Appeals of the Revenue in ITA No 621/Del/2012, 968/Del/2012, 622/Del/2012, 969/Del/2012, 970/Del/2012 & 5213/Del/2011 are dismissed. Order pronounced in open Court on 15^th December, 2023. ============= Document 1 OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 22, ROOM NO. 324, E-2, JHANDEWALAN EXTN. ARA CENTRE, NEW DELHI. F. No: ACIT/CC-22/Approval/2010-11/644 ....