TaxTMI 
TaxTMI 
2024 (12) TMI 186
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....after referred to as 'the Act') on 23.12.2011 declaring total income of Rs. 12,69,640/-. A search and seizure action u/s 132 of the Act was conducted in the premises of the assessee on 20.02.2019. In response to the notice u/s 153A of the Act, the assessee filed the return on 06.02.2021 declaring income of Rs. 12,69,640/- which was originally declared. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. The objection of the assessee against the notice issued u/s 153A of the Act was also disposed of by the Assessing Officer by passing a speaking order. 3. During the course of assessment proceedings the Assessing Officer noted that there was evidence / document found during the course of search indicating the suppression of professional receipts. The Assessing Officer referred to some of the sample pages of the diary seized which contained certain figures by omitting the last two digits. He noted that for the impugned assessment year the total receipts of the assessee were Rs. 64,92,750/- whereas the assessee ha....
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.... since the approval u/s 1530 granted by learned JCIT was without proper application of mind and accordingly, the asst order passed in consonance of the said approval be declared null and void. 2) The learned CIT(A) erred in confirming the addition of Rs 33,43,635/- on account of alleged unaccounted expenditure incurred on construction on hospital building without appreciating that no such addition was warranted on the facts of the case. 3) The learned CIT(A) erred in not appreciating that there was no concrete evidence that the assessee had actually incurred unaccounted expenditure on construction of hospital building and hence, the addition made may kindly be deleted 4] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal 7. The assessee has also raised the following additional grounds: The appellant in the above referred appeal requests for admission of the following Additional Grounds of Appeal which are raised without prejudice to the original ground of appeal :- 1] The assessee submits that the asst, order passed u/s 143(3) r.w.s. 153A is bad in law since the approval granted u/s 153D by th....
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....nal grounds raised by the assessee are admitted for adjudication. 12. The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the approval granted by the JCIT, Central Range dated 26.09.2021 which reads as under: "GOVERNMENT OF INDIA OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX (CENTRAL RANGE)-NASHIK ROOM NO-211, 2nd FLOOR, SHAISHOBHAN COMPLEX GADKAR CHOWK OLD AGRAROAD, NASHIK-422002 email: [email protected] Phone:02532314867/2575611 to 13 FAX : 2538994/2583884 No.Nsk/Jt.CIT/CR/CC-1/153D/2021-22/454 Dated: 26.09.2021 To, The Dy. Commissioner of Income Tax, Central Circle-1, Nashik. Sub: Approval of draft orders u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 for A.Y. 2009-10 to Α.Υ. 2018-19 & u/s 143(3) r.w.s 153B of the IT Act 1961 for A.Y. 2019-20 in the case of Dr. Amol Pramod Mahajan, [AJFFM4677F]-reg Ref: No.NSK/DCIT/CC-1/Draft Approval/2021-22/1341, dated. 26.09.2021. Please refer to the above. 2. Approval u/s. 153D of the IT Act, is granted as per documents available on records ....
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.... granted subject to compliance of certain conditions. Referring to the provisions of section 153D of the Act, he submitted that as per the said provisions, the Assessing Officer has to take prior approval before passing of the final assessment order and there is no power to the Assessing Officer to alter, amend, modify or re-work the order once the approval has been granted. Referring to the approval granted by the JCIT, he submitted that a perusal of the approval so granted shows that it is subject to compliance of various conditions which clearly proves that the approval granted is a conditional approval. He submitted that the approval u/s 153D of the Act is to be given on a standalone basis after perusing the records. However, in the present case, the said approval is a conditional one given on the very same day and secondly, it is a single approval for all the years. He submitted that the said approval by the JCIT nowhere deals with the merit of the case relating to the various additions made in the draft order and it does not contain as to why such approval is being granted. 14. Referring to the decision of the Pune Bench of the Tribunal in the case of Shri Santosh S. Mukta....
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...., 1961 by obtaining approval u/s 153D of the competent authority. The assessee /AR has raised additional grounds before the Hon'ble ITAT without prejudice to the original grounds of appeal with respect to the approval granted u/s 1530 of the Income-tax Act, 1001 [herein after referred to as the Act) All the approvals in respect of the draft orders u/s 143(3) rws 153A put up before the competent authority are similar in nature and therefore a joint submission is being submitted with respect to the challenge thereto 2. Say of the Revenue: 2.1 The main grouse of the assessee is that the approval granted u/s 153D of the Act was a conditional approval subject to the compliances stated therein and accordingly, the assessment orders passed on the basis of such invalid approval should be held to be null and void. 2.2 At the outset, it needs to be understood that the approval that is granted u/s 153D is to the assessment order u/s 143 (3) rws 153A based on the documents available on record and the discussions that continuously take place in the course of the assessment proceedings between the AO and the competent authority granting approval. That is, it is a conti....
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.... (ix) Wherever necessary, the AO shall forward 3rd party information to the AO of such party. (x) That the orders along with the demand notice and penalty notices may be served on the assessee before the last date prescribed for completion of assessment and acknowledgement to that effect shall be kept on record 2.4 As can be seen from para-2.3 above, the aforesaid directions referred therein are in the nature of a reiteration of the duties which the AO carries out in the course of assessment proceedings irrespective of any approval to be granted by the competent authority. That is to say, such acts on the part of the AO are intrinsic to the duties to be carried out by him/her and the reiteration in the letter granting approval u/s 153D is nothing but an administrative/supervisory advice to the AO and nothing more. It has got nothing to do with the approval that is required to be granted u/s 153D as per the provisions of the Act which would necessitate the competent authority to go through the material on record placed by the AO before the competent authority and examine its relevance with the draft assessment order, as also to note any omission or superfluo....
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....erned, he submitted that the Ld. CIT(A) has already given the justifiable reasons for not allowing the expenditure towards medicine which is a very elaborate and exhaustive. He accordingly submitted that the order of the Ld. CIT(A) should be upheld and the grounds raised by the assessee should be dismissed. 19. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. Before deciding the appeal on merit, we would first like to decide the additional grounds raised by the assessee. A perusal of the approval granted by the JCIT shows that he has given approval to the draft orders sent by the Assessing Officer on 26.09.2021 and the letter of the Assessing Officer to the JCIT reads as under: "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, NASHIK No.Nsk/DCIT/CC-1/Draft Approval/2021-22/1341 Dated: 26.09.2021 To, The Joint Comm....
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....ving authority. The ld. AR placed reliance primarily on the decision of Hon'ble High Court of Orissa in the case of M/s. Serajuddin & Co. (supra). The relevant portion of the said judgment is reproduced here-in-below for ready reference : "22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft orders having been perused by the Additional CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "see" or "approved" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of Section 158BG of the Act, it would equally a....
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....rcular 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 demand contrary to existing circulars of the Board are ab initio bad (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars." 25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory 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. 16. On careful reading of the above....
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....Orissa in the case of M/s. Serajuddin & Co. (supra) before the Hon'ble Supreme Court. The Hon'ble Supreme Court was pleased to dismiss the SLP (c) Diary No. 44989/2023. The relevant decision is reproduced as under : "SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 44989/2023 (Arising out of impugned final judgment and order dated 15-03-2023 in ITA No. 43/2022 passed by the High Court Of Orissa at Cuttack) ACIT, CIRCLE 1 (2) Petitioner(s) VERSUS M/S SERAJUDDIN AND CO. Respondent(s) (FOR ADMISSION and I.R. and IA No.232700/2023-CONDONATION OF DELAY IN FILING and IA No.232701/2023-EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT) Date: 28-11-2023 This petition was called on for hearing today. CORAM: HON'BLE MRS. JUSTICE B.V. NAGARATHNA HON'BLE MR. JUSTICE UJJAL BHUYAN For Petitioner(s) Mr. N Venkatraman, A.S.G. Mr. Raj Bahadur Yadav, AOR Mr. Udai Khanna, Adv. Mr. H R Rao, Adv. Mr. Akshat Singh, Adv. For Respondent(s) Mr. S. Ganesh, Sr. Adv. Mr. Ramesh Singh, Sr. Adv. Mr. Gaurav Khanna, AOR Mr. Venugopal Mohapatra, Adv. Ms. Natasha Sahrawat, Adv. ....
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.... No. 286/161/2006/ IT Inv.lI) dated-22.12.2D06. The replies received should be kept on record. A noting on all such issues should be made in the office note. e) All the office notes (not for assessee) along with the copies of the final assessment orders issued be forwarded to this office for records. f) All references contemplated u/s. 153C of the L T. Act promptly be forwarded to the Assessing Officer having jurisdiction over such other person along with me respective books of accounts, documents or assets seized or requisitioned under intimation to this office. g) Wherever, penalty proceedings u/s271(1)(c) are initiated, proper explanation below that section shall be invoked. In case penalties initiated u/s. 271AAA, the same should be invoked under the respective issue itself as well as at the bottom of the order. h) The Computation interest u/s 234A, 234B, 234C will be a part of the assessment order itself. i) Wherever, the A.O. found the provisions of the section 269SS / 269T are violated, separate proposal for initiation of penalty proceedings u/s. 271D / 271E should be submitted. j) Wherever necessary, A.O. should forward ....
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....nce the approval has been granted. In the present case as discussed above, the approval was granted subjected to compliance of conditions therein. 21. In the light of the above, we note that the AO vide paras 6.1, 6.2, 6.3 and 7 of assessment order observed that the important findings noted during the course of search u/s. 132 and the post search inquiries regarding unsecured loans relating to 49 assessments. On perusal of the letter dated 18-03-2016 vide No.ABD/ACIT/CC-1/2015-16/1702 issued by the AO requesting approval from JCIT shows that the AO requested the approval u/s. 153D of the Act in 49 assessments involving A.Ys. 2008-09 to 2014-15. The said request letter shows no proof of number of evidences, documents, statements of various persons were annexed in support of draft assessment orders. In this regard, the Hon'ble High Court of Allahabad in the case of Sapna Gupta reported in (2023) 147 taxmann.com 288 (Allahabad) held "it is humanly impossible to go through the records of 85 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefor....
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.....com 390 (Madhya Pradesh) which his at Page No. 160 of case laws paper book. On a careful examination of the same, we note that in pursuance of search, the assessments processed u/s. 143(1) of the Act were reopened by issuing a notice u/s. 148 of the Act on the basis of certain reasons recorded. The assessee objected to the same before the Assessing Officer, which was rejected. The Assessing Officer completed the assessment u/s. 143(3) r.w.s. 147 of the Act. The CIT(A) quashed the said reassessment by holding the action of JCIT in according sanction was without application of mind which was done in a mechanical manner. The ITAT upheld the order of CIT(A). The Hon'ble High Court of Madhya Pradesh dismissed the appeal of Revenue by observing no question of law involved warranting reconsideration. The relevant extract of the said decision as under for ready reference : "7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are la....
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.... on 21-03-2016 is invalid, consequently, the final assessment order dated 30-03-2016 passed u/s. 143(3) r.w.s. 153A of the Act is liable to be quashed. 24. Further, the Hon'ble Supreme Court in the case of Sahara India (Firm) reported in 300 ITR 403 (SC) at page No. 142 of the case laws paper book, while discussing the requirement of prior approval, opined that 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. The Hon'ble Supreme Court was pleased to hold 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. 25. In view of our discussion made here-in-above, considering the submissions of ld. AR, ld. DR, case laws relied on and respectfully following the decision of Hon'ble High Court of Orissa in the case of M/s. S....