TaxTMI 
TaxTMI 
2025 (3) TMI 650
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....asons and hence the same kindly be deleted. 2. The ld. CIT (A) further seriously erred in law as well as on facts of the case by not following the law laid down by the Apex Court holding that no addition is legally permissible in absence of any incriminating material found during the course of search in the case of an unabated/completed assessment and hence, in this case, in absence of any incriminating material found, the impugned addition deserves to be deleted in full. 3. Rs. 25,07,454/-: The ld. CIT (A) erred in law as well as on the facts of the case in confirming the addition/deduction made by the ld. AO of Rs. 25,07,454/- on account of alleged expenditure. The addition so made and confirmed by the ld. CIT (A) being contrary to the provisions of law and facts of the case, the same may kindly be deleted in full. The following is the chart of these expenditures : S.No. Heads of Expenses/Deductions Expense/Deduction sustained by CIT (A) 3.1 Travelling Expenses Rs. 3,00,000/- 3.2 Staff Welfare Rs. 3,00,000/- 3.3 Office Expenses Rs.11,02,093/- 3.4 Students Welfare Expenses Rs. 50,000/- 3.5 BD Expenses Rs. 5,00....
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....nt proceedings initiated by ld. AO which was under challenge before this Tribunal. The new legal plea does not require investigation into factual aspects before either accepting or rejecting the contentions. The appellant submits that the new plea go to the very basis of assuming jurisdiction for passing the assessment order u/s 143(3) read with section 153A/153B(1)(b) of the Income Tax Act, 1961. Consequently, as per the ratio laid down by the Hon'ble Apex Court in the case of NTPC vs. CIT (1998) 229 ITR 383 (SC) the new plea is admissible. Therefore, the additional grounds raised by the assessee can be adjudicated on the basis of the facts and material available on the assessment record. Thus when the additional grounds are not raising a new issue or plea, then in the facts and circumstances of the case, we admit the additional grounds raised by the assessee for adjudication on merit. Since the additional grounds raised by the assessee are purely legal in nature and goes to the root of the matter, therefore, first we take up for adjudication of the additional grounds. Since the additional grounds raised by the assessee are common for all the assessment years, we take up ITA No. 6....
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....nd, the relevant facts are that the impugned assessment order has been passed on dated 27.12.2019 without mentioning the DIN, ignoring the specific requirement made by binding Circular No. 19/2019 dated 14.08.2019. 5.1 In this regard the ld. AR for the assessee submitted his written submission as under : "1.1. It is submitted that in order to prevent instances where certain notices, orders, summons, letters and other correspondences which have been issued manually do not have proper audit trail of their communication despite various e-governance initiatives and computerization and to maintain proper audit trail of all the communications, the Central Board of Direct Taxes ("CBDT" in short) vide its Binding Circular No.19/2019 dated 14.08.2019 (DC-1-2) has made it obligatory on the part of the authorities below to essentially mention of Document Identification Number ("DIN" for short) and has directed that no communication shall be issued by any Income-Tax Authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval, etc. to the Assessee or any othe....
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....arly, in para 2 of the said circular, that the body of the communication, the order under s. 263 of the Act, must contain the fact and that the communication issued referred to the DIN without justifying as to how the non-compliance of the CBDT Circular dt. 14th Aug., 2019, which was noted by the Tribunal when it passed the main order. The Tribunal notes that this specific query was unable to be answered by the Revenue and therefore the learned Tribunal came to the conclusion that the order passed under s. 263 does not satisfy the requirement mandated by the CBDT circular. "7. Thus, we find no substantial question of law arises for consideration in this appeal. Accordingly, the appeal is dismissed." 2.2 Kindly refer Hexaware Technologies Limited vs ACIT & Ors. (WP no.1778/2023) (DC 5-47), wherein the notice u/s 148 was issued without DIN. The Hon'ble Court vide its order dated 04.05.2024 held as under: "31 As regards issue no.3, in the notice dated 27th August 2022 impugned in the petition, admittedly there is no DIN mentioned. It is petitioner's case that the notice is invalid and bad in law in view of the Circular No.19 of 2019 dated 14th August 2019 is....
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....ectfully following the above order of the Tribunal, since the DIN was not mentioned in DRP order dated 30.12.2021 which was mandatory as per CBDT Circular No.19 (supra) & in view of the facts noted above in regard to communications done with the assessee, we hold that the DRP directions dated 30.12.2021 is invalid in the eyes of law and shall be deemed to have never been issued as per Para 4 of the CBDT circular as the order is not conformity with Para 2 and Para 3. Accordingly, the DRP order dated 30.12.2021 is held to be null and void ab initio and quashed. Thus, the additional grounds No. 24 & 25 raised by the assessee on the legal issue are allowed." While holding so, the Hon'ble ITAT has firstly admitted the additional ground of Appeal in Para 5 and thereafter, followed the decision in the case of Intrado EC India Private Ltd. v. DCIT IT(TP)A No.239/Bang/2021. 2.5 Various other decisions are in the case of Bangalore Narayan Das vs. ITO (International Taxation) (2023) 226 TTJ (Bang) 66, Ankit Jain v. DCIT (2023) 155 taxmann.com 321 (Delhi - Trib.) and Deepak Kumar vs DCIT (2024) 159 taxmann.com 358 (Delhi - Trib.) 3. Supporting Case Laws - CBDT Instru....
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.... fails to catch him on account of the legislature's failure to express itself clearly. (c) It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. (d) In the matter of interpretation of charging section of a taxation statute, strict Rule of interpretation is mandatory and if there are two views possible in the matter of interpretation of a charging section, the one favorable to the assessee need to be applied. 4. In the instant case, since the impugned assessment order has been passed in the absence of DIN as aforesaid, hence the impugned assessment order may kindly be held as non-est / invalid and quashed." 6. On the other hand, Ld. DR for the Revenue has submitted that the matter as regards impact of non-mentioning of DIN number, as per instructions issued by CBDT is pending adjudication before the Hon'ble Supreme Court, and as such, there is no merit in the contention on behalf of the assessee-appellant. 7. We have heard rival contentions, perused the material on record and gone through the orders of the lower authorities. The first additional ground ....
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....eally considered the proposal, put forth before him, for getting his approval. The ld. Addl. CIT has simply stated that approval is granted, followed by a table which is nothing but simply showing basic details of the case. He is completely silent as to what made him grant such 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 requirements of the law. 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. 2.2 Moreover, it is contented that the provisions contained in S. 153D as enacted by the parliament cannot be treated as an empty formality. The provision has a 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 sen....
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....has examined the draft orders and finds that it meets the requirement of the law. 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 of CBDT becomes important. Although, it was in the context of s. 158BG, it would equally apply to s. 153D. It is an admitted position that the assessment orders are totally silent about the AO having written to the Addl. CIT seeking his approval or of the Addl. CIT having granted such approval. Interestingly, the assessment orders were passed on 30th Dec., 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. For all of the aforementioned reasons, the Court finds that the Tribunal 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 s. 153D and that such....
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....on Bench of Hon'ble Supreme Court dismissed the said SLP, uploading the judgment of Hon'ble High Court." 9. On the other hand, Ld. DR has referred to the approval dated 26.12.2019 accorded by Additional Commissioner of Income Tax, Central Range, Udaipur and contended that the same having been accorded in accordance with law, there is no merit in the contention raised by ld. AR for the appellant. The Ld. DR vehemently argued that the assessment proceeding is a continuous process and is completed under the active guidance and monitoring / supervision of JCIT/Addl.CIT. It is not a matter of application of mind in few days. The JCIT/Addl. CIT frequently goes through the seized documents and makes discussion from time to time with AO. 10. We have heard both the parties and perused the material available on record. Let us now examine whether in the aforesaid background of the scheme of the Act, whether the approval in terms of section 153D of the Act has been granted by the ld. Addl. CIT in a judicious way after due application of mind or not, in the instant case. Before us, the ld. A/R for the assessee has contended that the impugned assessment order is nullity, being without juri....
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....he Paper Book, as per which the concerned ACIT granted approval u/s 153D in 200 cases in a single day i.e on 26.12.2019. The ld. A/R submitted that it is humanly impossible to go through 200 assessment orders along with their all-search material including incriminating material, seized documents, appraisal report, enquiries made by the investigation wing and various enquiries made by the Assessing Officer in a single day. It was submitted that whenever a superior authority grants 'approval' to an 'order' of subordinate authority then the superior authority must apply his mind to all material on record, basis of order 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 the obligation of the approval of the approving authority is of two fold i.e. on one hand, he has to apply his mind to ensure the interest of the Revenue against any omission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year and on the other hand, superior authority is also responsible and duty bound to do justice ....
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.... vs. Anuj Bansal (2024) 165 taxman.com 3 (SC) 10.5 Coming to the contention of non-application of mind by the approving authority, at the outset, we note that the Hon'ble Orissa High Court in its judgment in the case of ACIT vs. Serajuddin & Co. (2023) 333 CTR (Ori) 228, considered a similar question of 'Approval', wherein the draft assessment orders were placed by the AO before the ld. Addl.CIT on 27/29.12.2010 for seven assessment years. The approval was granted by the ld. Addl. Commissioner for seven assessment years u/s 153D of the Act on 30.12.2010 by merely saying that the draft orders submitted by the officer in the above case for the seven assessment years are hereby approved. The Hon'ble Orissa High Court took note of this fact and quashed the search assessment and decided the issue in favour of the assessee by holding as under:- "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 m....
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....ial Leave Petition is dismissed. Pending application(s) shall stand disposed of." 10.6 Further, the Hon'ble Delhi High Court vide its judgment in case of PCIT vs. Anuj Bansal [(2024) 466 ITR 251] affirmed the decision of ITAT Delhi Bench, wherein the Coordinate Bench of ITAT Delhi held that the approval was granted without examining the assessment record or the search material and thus, was held as invalid and bad-in-law. The relevant extract of the said judgment is reproduced herein below : "13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: "17.1 However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs. 87,20,580/-. Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approve....
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....er Section 153D of the Act has to be granted for "each assessment year" referred to in clause (b) of sub-section(1) of Section 153A of the Act. It is beneficial to refer to the judgment of the Hon'ble Allahabad High Court in the case of Pr. CIT v. Sapna Gupta [2023] 147 taxmann.com 288/[2022 SCC On Line All. 1294]which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- "each assessment year" used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:- "13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper m....
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.... to in clause (b) of sub-section (1) of section 153A which provides for assessment in case of search under section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of "each assessment year" falling within six assessment years (and for the relevant assessment year or years), referred to in clause (b) of sub-section (1) of section 153A. The proviso to section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years(and for the relevant assessment year or years). 20. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under section 153A. " 10.8 Pertinently, this issue is also directly covered by the judgment of Coordinate Bench of the Tribunal, Jodhpur in the case of Indra Bansal & Ors. Vs ACIT in ITA Nos. 321 to 324, 279 to 281, 325 to 331 & 400 to 404/Jodh/2016 vide order dated 23.02.2....
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....sty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 22 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Joint Commissioner had adequate time with him so as to grant approval after duly examining the material prio....
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.....10 On an examination of the above documents, we also find that Assessing Officer, Kota sought approval from the approving authority i.e. Addl. CIT vide letter Udaipur dated 24.12.2019. The office of AO is located in Kota and the office of Addl. CIT is located in Udaipur, distance of which by road is about 280 Kms (approx.) and hence the same would have practically received by the Addl. CIT in the evening of 24th Dec 2019 only. Thereafter, 25th Dec 2019 was Christmas and thus, an official holiday. The very next date, on 26th Dec 2019, the Addl. CIT granted approval in instant case, along with 193 other cases. Therefore, the period of time available to Addl. CIT is only one day, which is not enough to look into all the facts and details of search proceedings, the detailed and voluminous orders containing number of evidences, documents, statements of various persons etc. Thus, it clearly suggests there was no sufficient time for the Addl. CIT to look into to all the evidences, documents, statements of various persons in one day i.e. 26.12.2019; as 25.12.2019 being Christmas holiday. Hence, the approval granted by the Addl. CIT clearly lacks any application of mind and the approval gr....