AI Drafter 
TaxTMI 
TaxTMI 
2024 (5) TMI 1494
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.... was processed under section 143(1) of the Act. 3. On the basis of input out of search action carried by the Economic Offence Wing CID, Bangalore in M/s PSK Finance Solutions Pvt. Ltd. group at Bangalore on 05.08.2015, a search under Section 132A of the Act was conducted at the premises of PSK Finance Solutions Pvt. Ltd. at Bangalore and on the residential premises of the shareholders of the said company at Noida on 08.08.2015 wherein statement of one Mr. Naresh Mohan, Director of PSK Finance Solutions Pvt. Ltd. was also recorded by the Revenue Department under Section 132(4) of the Act on 08.08.2015 at his residential premises at Noida. Certain documents allegedly belonging to the appellant company were found and seized during the search action. Thereafter, the case of the appellant company was centralized with the Central Circle - 28, New Delhi. The case of the searched party namely the entity of PSK Group was also assigned with the same AO and the case of the search of Shri Naresh Mohan and Mithilesh Saxena, too. The Learned AO has recorded satisfaction and conveyed to the Learned AO of the appellant that the documents seized belong to the assessee. After recording the satisf....
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....of the common approval being granted by the Additional CIT dated 18.06.2018 along with other 6 matters of different assessment year. In this regard he has drawn our attention to the approval dated 18.06.2018 issued under the signature of the ACIT, Central Range - 7, New Delhi annexed at page 453 to the paper book filed before us. On the other hand the Ld Dr supported the order passed by the authorities below and submitted that the approval so granted is in accordance with law. 7. We have heard the rival submissions made by the respective parties and we have further considered the relevant materials available on record. 8. We have further perused the copy of the approval dated 18.06.2018 issued under the signature of the ACIT, Central Range - 7, New Delhi is annexed at page 453 to the paper book filed before us, the content whereof is as follows: 9. On this aspect the Learned AR submitted that the Common approval is itself bad in law since it has to be granted separately for each assessment year for each assessee and in absence of it, approval so granted is not in accordance with law. He further contended that the approval was granted on same day when the Learned Assessing ....
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....Commissioner are liable to be quashed. To support the said submission the Ld. Assessee's Representative relied on the order of the Co-ordinate Bench in the case of Shiv Kumar Nayyar Vs. ACIT in ITA No. 1282 to 1285/Del/2020 dated 26/07/2023 and also the Judgment of the Jurisdictional High Court in the case of Maruti Suzuki reported at 244 ITR 303. 7. The Ld. Departmental Representative submitted that there is no infirmity the approval granted u/s 153D of the Act and the Ld. Additional CIT has applied his mind and further submitted that the facts in the Judgments referred by the Assessee's Representative are distinguishable. The Ld. Departmental Representative further submitted that there is no format for recording the approval, therefore, the assessees Additional Ground is liable to be dismissed. 8. We have heard both the parties and perused the material available on record and gave out thoughtful consideration. For the purpose of adjudicating the issue in hand and for the ready reference the approval accorded by the Additional Commissioner of Income Tax, Central Circle, Range-7, New Delhi dated 21/12/2018 is reproduced as under: E-Z, Jhandewalan Extens....
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....izing the draft assessment. (Vivek Gupta) Additional Commissioner of Income Tax Central Range -7. New Delhi 9. On plain reading of the above appeal, it is found following:- (i) A common and consolidated approval has been granted for AY 2011- 12 to 2017-18 and there is no year wise reasoning in the said approval granted u/s 153D of the Act. (ii) There is only a reference of a letter F No. ACIT/CC-25/2018-19 dated 21.12.2018 of Assistant Commissioner of Income Tax, Central Circle-25, but there is no reference regarding the draft assessment order being sent for approval of the Additional Commissioner of Income Tax. (iii) The letter requesting accord of approval u/s 153D of the Act has been returned by the Assistant Commissioner of Income Tax on 21.12.2018, the Additional Commissioner of Income Tax granted the approval u/s 153D of the Act on the very same date i.e. on 21.1.2018 and the impugned assessment order has also been passed on 21.12.2018. (iv) The approval dated 21.12.2018 was not absolute, while granting the approval u/s 153D of the Act, the Additional Commissioner of Income Tax in Para 3 mentione....
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....144BA.] Rectification of mistake." 12. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. 13. At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/ her process of deriving satisfaction so as to exhibit his/her due application of mind. We may observe that the above approval letter issued by the Addl. Commissioner says that the approval has been granted subject to certain conditions. 14. Plain reading of the letter of approval gran....
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.... 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 draft order u/s 143(3)....
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....ct by expressing discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act. 17. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the arguments advanced by the Ld. the Assessee's Representative on the Aditional Ground of Appeal. In our considered 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 orders in the captioned appeals are non-est and a nullity and hence the same are quashed. 18. In view of prima facie merits found in the legal objections raised in the Addl. Grounds of the Assessees, we do not consider it expedient to look into the aspects on merits of additions/disallowance as the legal objections on sanction granted under Section 153D of the Act has been answered in favour of the Assessee. Thus the other Grounds raised in the Appeals of the Assessee in both the Appeals have rendered in- fructuous, which do not need any s....
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....el/2022 for A.Y. 2015- 16 arising out of the same assessment order dated 30.12.2018 has become infructuous which does not any separate adjudication. Hence, the same is dismissed. 14. In the combined result, appeal filed by the assessee is allowed and appeal filed by the Revenue is dismissed. This Order pronounced in Open Court on 31/05/2024 ============= Document 1 Office of the Additional Commissioner of Income Tax Central Range-7, Room No. 329 E-2, Jhandewalan Extension New Delhi F. No. Addl. CIT/CR-7/2018-19/30 453 Dated: 18.06.2018 To The Joint Commissioner of Income TaxiOSD) Central Circle-28. New Delhi Sub: Approval u/s 153D of the I.T. Act, 1961 in case of M/s Milleniur Vinimay Pvt. Ltd., PAN- AAECM5383R (M/s PSK Firance Solution Pvt. Ltd. Group), A.Ys. 2010-11 to 2016-17-reg. Please refer to your letter F. No. JCIT(OSD)/CC-28/2018-13/142 date 11.06.2018 or the above subject. 2. Approval is hereby accorded u/s 153D of the Income Tax Act, 1961 to the dre assessment orders in the following cases, on the basis of the detailed discussion wit you time to time, information available on record, facts mentioned i....