AI Drafter 
TaxTMI 
TaxTMI 
2021 (10) TMI 1448
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act to the order passed u/s 153A is without application of mind, purely in a mechanical manner, without appreciating the facts and not following the provisions/mandate of the section, which makes the order passed u/s 153A nonest, void abinitio bad in law, the same be quashed." 3. Learned CIT, D.R. had no objection to the admission of additional ground and since the ground is purely a legal ground and goes to the root of the matter, the same was admitted and assessee was asked to proceed with his arguments. 4. Learned counsel for the assessee, at the outset, submitted that a search & seizure operation u/s 132 of the I.T. Act was conducted on 31/08/2015 on Goldiee Group as well as Santosh Kumar Agarwal Group of cases and the assessee was required to file income tax return u/s 153A of the Act. In response to the notice, the assessee filed return u/s 153A of the Act on 17/04/2017 which was originally e-filed on Form ITR-2 on 04/04/2017. The assessment in this case was completed u/s 153A/143(3) of the Act by Dy. CIT, Central Circle-1, Kanpur vide order dated 31/12/2017 and various additions were made. It was submitted that as per the provisions of law, in search cases, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der made by subordinate authority and superior authority must ensure that the subordinate authority has followed due process of law and has not taken arbitrary decisions. It was submitted that under similar facts and circumstances, the Lucknow Bench of the Tribunal in the case of Shri Navin Jain vs. DCIT in I.T.A. No. IT(SS)A No. 639 to 641, vide order dated 31/08/2021 has decided the issue in favour of the assessee and therefore, it was prayed that in the present case also the additional ground of appeal may be allowed and assessment order be quashed. 6. Learned CIT, D.R., on the other hand argued that proper approval, as required under the provisions of section 153D, has been obtained by the Assessing Officer. It was submitted that the approval was taken well within the time before limitation and the higher authority has fully applied his mind to grant approval. It was submitted that though the Jt. CIT has not written in so many words about his satisfaction for granting approval but the fact remains that he has granted approval to the draft assessment order and only after that the Assessing Officer has passed the final assessment order and therefore, the additional ground of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] under sub-section (12) of section 144BA.]" 9.1 The above provisions of section 153D of the Act were inserted by Finance Act, 2007 with effect from 01/06/2007. In our humble understanding of the said provisions, we are of the opinion that the Legislature wanted the assessment/reassessment of the search cases should be made and order should be passed with the prior approval of superior authority. The word approval has not been defined in the Income Tax Act but the general meaning of word approval can be understood from Black Law of Dictionary which defines approval as: "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 9.2 Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee and documentary evidence and other relevant material, the superior authority has to grant approval u/s 153D for passing assessment/reassessment order in search cases. The approval u/s 153D of the Act cannot be treated mere formality only and the purpose of inserting this provision is two fold i.e. one before approving the senior authority will ensure that the assessee should be protected against the undue and irrelevant addition and disallowances and the approving authority will also ensure that proper enquiry or investigations are carried out by the Assessing Officer on the relevant materials including material in the hands of the Department. Secondly, the Assessing Officer also keeps in mind the interest of Revenue. Therefore, the said provision provides application of mind by the approving authority of the Department. Therefore, the provision of section 153D of the Act cannot be treated as mere formality and mandate therein is required to be followed by the approving authority in a judicious manner by due application of mind in a manner of a quasi judicial authority. We are cautious about the fact that reasons for granting approval may not be a subject matter of challenge ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on against arbitrary or creating baseless tax liability on the assessee. The provisions contained from section 153A to section 153D contain features by which the assessee is to be given separate notice for assessment for each year as specified u/s 153A of the Act. Secondly, the assessee has to file separate ITR for each year as specified in section 153A of the Act. Thirdly, separate assessment orders are to be passed for each year as specified in section 153A of the Act. There is an important concept mentioned in section 153A of the Act, abated and non abated which is peculiar to the scheme of section 153A of the Act. Keeping in view the above basic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that very important phrase as deployed in text of Section 153D, is "Each" assessment year. The word "Each" has been used extensively and this word needs to be given due weightage and adequate meaning and as such for each year separate approval is to be given under section 153D of the I.T. Act which is lacking in the present cases. There are many other provisions where statutory approval is required from higher authorities. Few of them ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. 50.3 Applicability-These amendments will take effect from the 1st day of June, 2007." 9.5 It is evident from the CBDT Circular that the legislature in its highest wisdom made it compulsory that the assessments of search cases should be made with the prior approval of superior a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2/2018 for the first time and on the same day approval was granted. As clearly mentioned in the approval under challenge, prior to this date the case was never discussed with the authority granting the approval. The Additional CIT without any consideration on merits in respect of the issues on which addition was made, granted the approval and such approval is an eyewash and idle formality and such a mechanically granted approval is no approval in the eyes of law. The entire gamete of law, as contemplated u/s 153D of the Act, has been considered by Delhi Bench of the Tribunal in a bunch of 52 appeals in I.T.A. No.1813/Del/2019 in the case of Sanjay Duggal and Others wherein the Hon'ble Bench vide order dated 19/01/2021 has quashed the assessment orders by holding that the approval granted u/s 153D of the Act was in a mechanical manner and thus cannot be held to be an approval as required u/s 153D of the Act. The relevant findings of the Tribunal are contained in para 11 onwards, which for the sake of completeness are reproduced below: "11. We have considered the rival submissions and perused the written submissions filed by the parties and considered the material on rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall have to be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on record by the A.O. Therefore, these were the mandatory provisions contained in Section 153A which shall have to be satisfied by the A.O. before proceeding to frame assessment in the cases of persons searched under section 132 of the I.T. Act, 1961. Further safeguard have been provided for framing the assessments under section 153A that prior approval shall be necessary for assessments in the cases of the search or requisitioned, under section 153D of the IT. Act. Section 153D of the I.T. Act is reproduced as under : "153D - No Order of assessment or re-assessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in Clause (b) of Sub- Section (1) of Section 153A or the assessment year referred to in Clause (b) of sub-section (ii) of Section 153B except with the prior approval of the Joint C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate tine material on record in regard to the compensation payable. Otherwise, it would tantamount to blurring the distinction between Approving Authority and Appellate Authority''. 11.5. The Hon'ble Gauhati High Court in the case of Dharampal Satyapal Ltd., vs., Union of India [2019] 366 ELT 253 (Gau.) Manu/GH/07070/2018 in para-28 has held as under : "When an Authority is required to give his approval, it is also to be understood that such Authority makes an application of mind as to whether the matter that is required to be approved satisfies all the requirements of Law or procedure to which it may be subjected. In other words, grant of approval and application of mind as to whether such approval is to be granted mus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se should be discernable from the Orders of the approval under section 153D of the I.T. Act." 9.7 Further we find that I.T.A.T. Cuttack Bench in the case of Geetarani Panda vs. ACIT in I.T.A. No.01/CTK/2019 vide order dated 05/07/2018 has held as under: "24. In our considered view, the provisions contained in Section 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the Statute by the Parliament are two folds. Firstly, the approval of the Senior Authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by Senior Authority will also ensure that proper enquiry or investigation are carried out by the Assessing Authority. Thus, the above provision provides for mental application of a Senior Officer of the Department, which in turn, provides safeguard to both i.e. Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed by the Pune Benches of the T....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... DCIT 136 Taxman 579 and Hon'ble High Court of Madras in the case of Sakthivel Bankers Vs Asstt. Commissioner 124 Taxman 227. 13.1. We have carefully perused the decisions placed on record by the Ld. DR. We find that all the decisions relied upon by the Ld. DR are misplaced inasmuch as all these decisions relate to the issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the Ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue. 14. Since we have annulled the assessment order, we do not find it necessary to decide the issues raised on merits of the case." 9.9 In this case, the Addl. Commissioner has showed his inability to analyze the issues of draft order clearly stating that no much time was left as the draft order was placed before him on 31/12/2010 and approval was granted on the same day. In the case before us the Addl. CIT has though not expressly expressed his inability to analyze the issues of draft order but it is abundantly clear that he had....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter dt. 30-3-2013 seeking approval of the draft assessment order. The date of receipt of this letter in the office of Joint Commissioner is indisputably on 31-3-2013 which is apparent from the date stamped on it by the office of the Joint Commissioner. Thus, this leaves no doubt that the letter requesting grant of approval and the granting of approval, both, are within one day of each other. This lends credence to the contention of the learned Authorized Representative that the draft assessment order was approved without much deliberation by the Joint Commissioner. Further, the time of the fax granting approval is 6.56 a.m. on 31-3-2013 which is prior to the office hours and, thus, it brings out a reasonable doubt that the approval was granted even before the letter requesting the approval was received in the office of the Joint Commissioner. Further, the response received by the assessee in response to his application under Right to Information Act, 2005 also establishes the correctness of the claim of the assessee that the assessment records were not before the Joint Commissioner when the approval was granted as the records were with the Range Office in Jodhpur whereas the approv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ority while granting the approval is expected to examine the entire material before approving the assessment order and further that whenever any statutory obligation is cast on any authority, such authority is legally required to discharge the obligation not mechanically, nor formally but by application of mind. Similarly, the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT & Anr. (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27: (2008) 300 ITR 403 (SC), while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held 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. Comi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the nineteen appeals of the assessee, as aforesaid, are allowed." 10. Similarly we find that Hon'ble Supreme Court in the case of 'Sahara India vs. CIT & Others' [2008] 216 CTR 303 (S.C.) : [2008] 7 DTR (SC) 27: [2008] 300 ITR 403 (SC) while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held 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. 11. In view of these facts and circumstances and in view of judicial precedents relied on by Learned A. R. Ground No.5 in appeals is allowed and the assessments orders are annulled. Rest of the grounds were not argued by Learned A. R. th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held 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 11. In view of these facts and circumstances and in view of judicial precedents relied on by Learned AR Ground No. 5 in appeals is allowed and the assessments orders are annulled ". 11. We find that at page 19 of the aforesaid Tribunal order dated 3.8.2021 in the case of 'Shri Navin Jain vs. Dy. CIT' in IT(SS)A Nos.639 to 641/LKW/2019, wherein the approval dated 30.12.2018 of the ACIT, Central, Kanpur has been reproduced, the name of the assessee, i.e., 'Naresh Kumar Jain' appears at serial number 24. 12. Therefore, as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssment order/2017- 8/1207 dated 31.12.2017 received alongwith case records pertaining to the cases as per the etails given below seeking approval U/s 153D of the Income Tax Act, 1961 in the following ases- St. Name of the Assessee PAN Assessment Case u/s No. Years Subodh Agarwal ABNPA4910B 2010-11 153A 2 -do- -do- 2011-12 153A 3 -do- -do- 2012-13 153A 4 -do- -do- 2013-14 153A 5 -do- -do- 2014-15 153A 6 -do- -do-y 2015-16 153A 7 -do- -do- 2016-17 143(3) 8 Brij Mohan Gupta ABVPG1652) 2010-11 153C 9 -do- -do- 2011-12 153C + 10 -do- -do- 2012-13 153C 11 -do- -do- 2013-14 153C 12 -do- -do- 2014-15 153C 13 -do- -do- 2015-16 153C 14 -do- -do- 2016-17 143(3) 15 Kanlpana Gupta ABVPG1654Q 2010-11 153C -do- 2011-12 153C 16 -do- 17 -do- -do- 2012-13 153C 18 -do- -do- 2013-14 153C 19 -do- -do- 2014-15 153C 20 -do- -do- 2015-16 153C -do- -do- 2016-17 143(3) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arma M/s. Prakash Industries AGIPS4954P AGIPS4954P AGIPS4954P 143(3) 2017-18 143(3) 2011-12 2012-13 153A 153A 2013-14 153A 11. Narendra Sharma 12. Narendra Sharma 13. Rohit Gupta 14 Rati Gupta 15 Ankita Gupta 16 Rashi Gupta 17 18 20 21 22 M/s. Mantora Oil Products (P) Ltd. M/s. Mantora Oil Products (P) Ltd. M/s. Mantora Oil Products (P) Ltd. M/s. Mantora Oil Products (P) Ltd. M/s. Mantora Agro Industries (P) Ltd. M/s. Mantora Agro Industries (P) Ltd. AACCM 1537B AACCM1537B 2017-18 143(3) 2011-12 2015-16 AIWPS6695R AIWPS6695R AEOPG5934E AGWPG6837D AMOPG6459K 2017-18 AABCM8155E 2011-12 AABCM8155E 2015-16 143(3) 153A 153A AABCM8155E 2016-17 153A AABCMS155E AGIPS4954P AGIPS4954P 153A AGIPS4954P 2016-17 153A AGIPS4954P 2017-18 143(3) AAJFP8017H 2017-18 143(3) 2016-17 153A 2017-18 143(3) 2017-18 143(3) AHLPG 1735E 143(3) 2017-18 143(3) 2014-15 2015-16 153A 2017-18 153A 153A '551 AEHPJ7904D 2015-16 153A 23 Naresh Kr. Jain 24 Naresh Kr. Jain AEHPJ7904....