TaxTMI 
TaxTMI 
2025 (5) TMI 1578
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the assessment for the Assessment Year 2011-12 be taken as the lead case and the decision rendered thereon could be applied mutatis mutandis for other Assessment Years, in view of identical facts, except with variance in figures. 3. The assessee has raised the following grounds of appeal:- "1. That on the facts and circumstances of the case and in law, the Assessment Order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Income Tax Act, 1961 ("the Act") and the appeal order dated 14.06.2024 passed by the Ld. Commissioner of Income Tax (Appeals)-28, New Delhi, ("CIT (A)") confirming the order of the Ld. Assessing Officer are bad in law. 2. That the Ld. Assessing Officer has erred in assessing the total income of the appellant at Rs. 37,52,09,710/- as against the returned income of Rs. 29,11,950/- thereby making addition of Rs. 37,22,97,760/- to the returned income of the appellant under section 68 of the Act based on the contents of the so-called pen-drive received by the Investigation Wing from the Enforcement Directorate. 3. That the Ld. CIT (A) has erred in law by falling to appreciate that the case of the appellant i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t appreciating the fact and the applicable law that the case of the appellant does not fall within the ambit of 4th proviso to section 153A of the Act and therefore, the assessment initiated and the order passed for the impugned assessment year is invalid. 7. That the Ld. CIT(A) has erred in sustaining the order of the Ld. Assessing Officer, which admittedly is based on the findings of the Enforcement Directorate on the so-called pen-drive, statements taken by the Enforcement Directorate under the PMLA and charge sheet filed by them without making any independent enquiries. 8. That the Ld. CIT(A) has erred in not appreciating the fact that the entire case of the Income Tax Department is based on the case of the Enforcement Directorate which has not attained finality and therefore Income Tax Department is pre-judging the issue which is before the Trial Court and relying on the testimony and pen-drive of one Mr. Rajiv Saxena to the Enforcement Directorate who has been removed from his approver-ship status by the Enforcement Directorate on the grounds of being a manipulator and forger. 9. That, the addition made by the Ld. Assessing Officer and sustained by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t orders were passed under section 153A without seeking mandatory approval under section 153D of the Act. iii. Without prejudice to the aforesaid, the approval under section 153D of the Act is mechanical, without any application of mind, without perusing the records of the case and has been passed in a haste therefore the assessment orders passed by the Ld. AO under section 153A are void-ab-initio, jurisdictionally flawed, and deserve to be quashed. iv. That in view of the facts and circumstances of the case and in law, the approval under section 153D of the Act is a consolidated approval, which is not in accordance with the provisions of section 153D and in violation of mandatory procedure laid down by CBDT in Circular No. 03 of 2008 dated 12.03.2018." 5. We find that the aforesaid additional grounds are purely legal in nature. The Ld. AR also stated that the order of approval u/s 153D of the Act has not been provided by the department inspite of repeated requests. Vide order sheet dated 10.12.2024, we admitted the additional grounds of appeal being jurisdictional in nature and emanating from facts on record. After perusing the application for additional groun....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the charge sheets in the pendrive were only statutory documents and not incriminating. 9. The Ld. AO also relied on the statements of Mr. Nagesh Kumar Azad and Mr. R.P. Kashyap recorded u/s 132(4) of the Act during search on the assessee and statement of Mr. M.N. Khanna recorded u/s 50 of Prevention of Money Laundering Act (PMLA), stating that they confirmed the transactions in the pen drive handed over by the Enforcement Directorate. The Ld. AO further stated that statement of the assessee before the Enforcement Directorate by giving comments on the content of the excel sheets contained in the pen drive and before the Income tax Department refusing to even recognize the pen drive, constitutes incriminating evidence. In other words, the Ld. AO stated that before the ED, the assessee was able to decode certain transactions in the pen drive but before the Income Tax Department, the assessee denied the contents of the pen drive. 10. In the opinion of the lower authorities and the Ld. Special Counsel for the Revenue (hereinafter referred to as Ld. DR) before us, the contents noted in Paragraphs 7 to 9 above constitute incriminating materials found during the course of search on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the income tax search also comes out from the order of assessment at page 2; page 3, page 38, page 41 and the Remand Report dated 05.12.2023 furnished by the Ld. AO to the Ld. CIT(A) at pages 164, 179-180 and 196-197 of the Paper Book, wherein the Ld. AO has himself conceded that the pen drive was already available with the Investigation Wing before the conduct of search. In this regard, the Ld. AR drew the attention of the Bench to the following pages of the assessment order and the remand report of the Ld. AO dated 5.12.2023 submitted before the Ld. CIT(A) :- "Page 2 of assessment order "2. Sh. Sushen Mohan Gupta has been accused of laundering the proceeds of crime in Defence deal. The role of Sh. Sushen Mohan Gupta in the tainted Defence deal came into prominence after the accused-turned approver, Rajiv Saxena was deported from Dubai on 31.01.2019 by the Directorate of Enforcement and he handed over crucial documents and evidences belonging to Sh. Sushen Mohan Gupta to the Enforcement Directorate. These crucial documents and evidences were further handed over to the Income Tax Department." (Emphasis Supplied) Page 3 of assessment order "4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the said defence deal. His role in the Agusta Westland Defence deal came into prominence after the accused turned-approver, Rajiv Saxena was deported from Dubai and he handed over crucial documents and evidences belonging to Sushen Mohan Gupta which were subsequently shared with the Income Tax Department. Sushen Mohan Gupta is a US national but living and working in India. He has been accused of laundering the proceeds of crime in the said defence deal. He was arrested by the Enforcement Directorate on 25.03.2019. He was released on bail in the said case on 01.06.2019. His role in the Agusta Westland Defence deal came into prominence after Rajiv Saxena was deported from Dubai to India and he handed over crucial documents, information and evidences related to Sushen Mohan Gupta. ...... Thereafter, Rajiv Saxena tendered the diaries and loose sheets in original to the investigating officer in Enforcement Directorate on 02.03.2019 and the pen drive on 04.03.2019.... .... Based on the various notices issued to the assessee during the assessment proceedings and analysis of the replies filed by him, assessment u/s 153A of the Act was completed in the ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ohan Gupta becomes incriminating in nature based on the provisions of Explanation to Section 132 (4) of the Act". (Emphasis Supplied) Pages 196 to 197 of the Paper Book containing the Remand Report dated 5.12.2023 of the Ld. AO "Assessee in appellate proceedings has completely denied the contents of the pen drive received from ED and contested the additions made in his case based on its contents. Assessee has stated that the said pen drive was not received from him during the search action u/s 132 and cannot be used against him in income tax proceedings as it is not an incriminating material found during the course of search However, the original pen drive belonging to the assessee was recovered from the possession of the Sh. Rajiv Saxena by the ED. .................................................................................................... Further, this information related to handing over of pen drive was available with the department before the date of search in the case of Sushen Mohan Gupta. The information contained in the said pen drive was confronted to the assessee and his family members and connected employees during ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Ld. AR further contended that the supplementary charge sheet did not contain any new information other than that already contained in the pen drive handed over by the ED and, therefore, cannot be said to be incriminating evidence found during the course of the income tax search. It was further stated that the supplementary charge sheet is a statutory public document and merely contains allegations by the ED. According to the Ld. AR, even the charges have not been framed till date and trial is yet to begin and hence cannot constitute incriminating material found during search. The Ld. AR referred to the order of the Ld. CIT(A) in Para 8.4 thereon, wherein he has also held that the supplementary charge sheet is only a statutory document. Accordingly, the Ld. AR submitted that the same does not constitute incriminating evidence. 17. The Ld. AR further contended that Mr. Rajiv Saxena has since been removed from the status of being an approver in the parallel criminal proceedings, since he was found to be unreliable and untrustworthy. The Ld. AR referred to pages 286-352 of the paper book containing the application dated 18.10.2019 u/s 306 of the Cr. P.C Act by the ED who sought r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot be said to lead to the inference that whatever is being sought to be used against him is incriminating in nature. iii. The observation of the Ld. AO that different stand was taken by the assessee before different law enforcement agencies is itself contrary to the findings of the Ld. AO in the remand report and assessment order wherein he himself has stated that ownership of the pen-drive was denied by the assessee even before the ED. This is so stated in the remand report at para 3 at page 168 of the Paper Book. iv. It was further contended that the three persons namely, Mr. M.N. Khanna, Mr. R.P. Kashyap and Mr. Nagesh Kumar Azad were not the employees of the assessee and they were employed with other companies and none of them stated anything relating to the assessee in terms of any material or income or expenditure being incriminating in nature and not recorded in the books of account of the assessee. v. It was stated that Mr. Nagesh Kumar Azad did not state anything on the contents of the excel sheets and for that purpose Q. No. 42, referred to on page 434 of the Paper Book can be perused wherein he stated that he has no knowledge of the contents....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any case, do not incriminate the assessee under any stretch of imagination. Besides, none of the three persons have admitted to having incurred any expenditure outside the books of account. 21. The Ld. AR stated that the judgement of the Hon'ble Supreme Court in the case Abhisar (supra) is very clear and states that the material found must be incriminating i.e. should be reflective of undisclosed income or income not disclosed in the return of income by the assessee. According to the Ld. AR, the ratio decidendi of the Hon'ble Supreme Court in Abhishar Buildwell (supra) is to be followed in its letter and spirit and evidence by way of incriminating documents reflecting undisclosed income is a prime requisite for making assessment u/s 153A of the Act. 22. During the course of hearing and also in the written submissions dated 3.02.2025 filed by the Ld. DR, he started with a legal submission on how the judgment of the Hon'ble Supreme Court in Abhishar (supra) is to be read and took us to the texts in the cases of Commissioner of Customs v. Toyota Kirloskar, (2007) 5 SCC 371, Laxmi Devi V. State of Bihar, (2015) 10 SCC 241 & Behrens v. Bertram Mills Circus Ltd., [1957....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessment made u/s 153A of the Act is valid. He further contended that Mr. R.P. Kashyap's statement stands corroborated by the spreadsheets in the pen drive that have otherwise been fortified independent material unearthed and seized during the very same search initiated on 02.01.2020. 26. The Ld. DR has relied on the decision of Hon'ble Supreme Court in the case of Dayawanti v. CIT, 2016 SCC Online Del 5772, decision of Hon'ble Delhi High Court in the case of Anil kumar Bhatia [2013] 352 ITR 493 (Del), PCIT v. Nau Nidh Overseas Pvt. Ltd. [2017] 394 ITR 753 (Del), CIT v. Hotel Meriya, (2011) 332 ITR 537, B. Kishore Kumar v. DCIT, Central Circle IV(1), Chennai, [2014] 52 taxmann.com 449, B. Kishore Kumar was upheld in (2015) 62 taxmann.com 215 to support that statement also constitutes as material because it is made in the course of the search. 27. As far as the statement u/s 132(4) of the Act by the assessee and three other persons, Mr. M.N. Khanna, Mr. R.P. Kashyap and Mr. Nagesh Kumar Azad are concerned, the Ld. CIT (Appeals) has at Para 8.4.1 at Pages 152 to 154 of his order held that the contradictory statement given by the assessee before the ED and Income-tax Departm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he pen drive, the statement of Sh. M.N. Khanna, the Contractor was also recorded u/s 50 of the PMLA 2002 on 14.05.2019. In the statement of Sh. M.N. Khanna recorded u/s 50 of the PMLA 2002, he had admitted that the transactions mentioned in the spreadsheets Acc09, Acc011-15, Acc011 pertaining to FH Khanna/ FH Khanna Builders may be related to building material since the period and the entries shown to him related to renovations works at the farmhouse. During the course of search, statement of key employees of the group Sh. R.P. Kashyap and Sh. Nagesh Kumar Azad was also recorded u/s 132(4) of the Act. In the statement Sh. R. P. Kashyap, director of DMG Finance and Investments Pvt. Ltd., Horizon Aerospace (India) Pvt. Ltd. and Defsys Solutions Pyt. Ltd. admitted to having seen the excel files by the name of Acc.xIs, Acc09.xIs, Acc011 copy.xis, Acc011.xls and Acc011-15.xls which where part of the pendrive. He further stated that the name "RPK Ent" and "RPK hospt" as appearing in these files having the date wise records of the expenses were reimbursed to him which were incurred by him earlier for the meal and other arrangements for official visitors were the actually received....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecorded of key persons of the group. Further, in my view providing cross examination is not an absolute right. It is the prerogative of the AO who, considering the nature and necessity of allowing for cross examination, may decide for providing cross-examination. In my view, these are mere technical and procedural issues which have no bearing on the assessment made by the Assessing Officer. Hence, none of the issues raised by the assessee hold any merit and it is the substance rather than the form which would prevail. Hence, these grounds are also dismissed." 28. The issue of corroboration has been discussed by the Ld. CIT(A) at Para 11, Pages 169 to 192 of his order. The Ld. CIT(A) has stated at first Para at Page 191 of his order that even if the email, etc. and other documents relied upon to corroborate the entries in the five excel sheets are recorded in the books of account or are not incriminating, it does not make a difference and that the entries in the pen drive will be used for making the assessment. According to the Ld. CIT(A), the Ld. AO had been able to corroborate that the excel sheets in the pen drive pertain to the assessee. The relevant observations are reproduc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he basis of a statement was justified." 29. The Ld. DR relied on the order of the Ld. AO and the Ld. CIT(A) to state that the corroboration exercise also shows that the pen drive belongs to the assessee and, therefore, the additions so made were warranted in law. 30. We have heard the rival submissions and perused the materials available on record containing the written submissions made by both the sides and documents placed on record. We have also perused the judgments relied upon and placed by way of Paper Books by both the Counsels. The entire issue revolves around the five excel sheets contained in the pen drive on the basis of which additions to income have been made. It is very clear from the order of the Ld. CIT(A), that the pen drive containing the five excel sheets on the basis of which addition has been made was already available with the Investigation Wing of the Income-tax Department before the conduct of the search on the assessee on 2.1.2020. This, according to the Ld. CIT(A) has been admitted both in the assessment order at page 2 and Remand Report at page 2. 31. With respect to the 32GB pen drive found from Havelock Island, Andaman & Nicobar Islands, the Ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich is directly indicative of undisclosed income in the case of the assessee. The relevant operative portion of the said judgment of the Hon'ble Supreme Court is reproduced hereunder:- "11. "Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy." 14. ...................... (iv) "in case no incri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... drive was available with the Income-tax Department and was not found during the course of the income tax search conducted on 02.01.2020 u/s 132(1) of the Act and, therefore, would not be construed as incriminating evidence found during the course of the search as per the ratio of the judgment of the Hon'ble Supreme Court in the case of Abhisar (supra). As far as the existence of 5 excel sheets in the supplementary charge sheet found in the 32 GB pen drive at Havelock Island during the course of the search on the assessee is concerned, the Ld. CIT(Appeals) has dealt with the issue at page 152 para 8.4 of his order, reproduced above, wherein he has said that the supplementary charge sheet constitutes a statutory document. In our considered opinion, a chargesheet is only allegations leveled on a person by a regulatory authority and the same need to be tested in the trial court so as to make them evidence, much less incriminating evidence. Even this supplementary charge sheet was dated 22.5.2019 and the same was found with the assessee at the time of search conducted on 2.1.2020 at Havelock Island. Obviously the assessee had to possess a copy of chargesheet submitted in his case. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he relevant portion of the judgement in the case of Smt. Dayawanti (supra) is as under:- "17. The impugned order dealt with this aspect and concluded that the statement made under oath could be acted upon, especially since materials and documents were recovered during the search proceedings:- "...23. From a perusal of the aforesaid statement on 18.04.2006 it is manifest that it was not a case of mere surrender as claimed by the ld. counsel. On the contrary we find in Pg 60 & 61, Annexure 'A'3 and Pg 1 to 29 of AnnexureA-2 were found and seized from the assessee. Once confronted with the aforesaid seized documents it was admitted by Shri Abhay Gupta that the proprietorship concern of the assessee was engaged in unaccounted cash sales and purchases and therefore there was undisclosed income. Thus the necessary logical fall out of the aforesaid is that there was material found as a result of search on the assessee, showing unaccounted transactions. In our opinion, even the statement obtained whereby, the additional income of Rs. 3.5 crores was offered also constitutes material unearthed during search. The ld. counsel however has submitted that the said statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssment on the date of search, no additions could be made in the absence of any incriminating material found during the course of search. Hence the ratio decidendi laid down by the Hon'ble Supreme Court in the case of Abhishar Buildwell (supra) would squarely be applicable to the facts of the instant case. Accordingly, the additions made by the Ld. AO are hereby deleted on this legal issue. 40. We find that the assessee had also raised an additional ground challenging the mandatory approval being granted u/s 153D of the Act by the Learned Additional Commissioner of Income Tax (Ld. Addl. CIT in short) in a mechanical manner and without application of mind. The additional grounds raised by the assessee have already been admitted by us as they go to the root of the matter. The approval papers u/s 153D of the Act were also placed on record by the Ld. DR. 41. The Ld. AR assailed the validity of the approval granted by the Ld. Addl. CIT u/s 153D of the Act stating inter alia that the approval was mechanical in nature; granted without any application of mind; without perusing the records of the case, and passed in haste. The Ld. AR argued that the meaning of 'approval' or 'grant of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v. SubodhAgarwal reported in 149 taxmann.com 373 (Allahabad) e) PCIT vs. Sapna Gupta reported in 147 taxmann.com 288 (Allahabad) f) Pr. CIT AND Anr. V. Siddarth Gupta reported in 147 taxmann.com 305 (Allahabad). g) Delhi Tribunal in the case of Gurvinder Singh Duggal vs. ACIT in ITA No. 860/Del/2021 h) Delhi Tribunal in the case of MDLR Airline (P) Ltd. vs. DCIT; ITA No. 1420/Del/2023 i) Delhi Tribunal in the case of Kavita Jain v. DCIT Central Circle Karnal; ITA No. 3301/Del/2024 42. The Ld. AR submitted that the approval by the Ld. Addl. CIT was granted in a mechanical and perfunctory manner. To demonstrate this, he drew our attention to the letters dated 27.09.2021 and 29.09.2021, written by the Ld. AO to the Ld. Addl. CIT, seeking approval for the draft assessment orders for AYs 2010-11 to 2013-14 and AYs 2019-20 to 2020- 21 vide letter dated 27.09.2021, and AYs 2014-15 to 2018-19 vide letter dated 29.09.2021 which are enclosed in Pages 178 and 179 of Additional Ground Paper Book 1. He submitted that only the draft assessment orders, and nothing else, were sent to the Addl. CIT for her perusal although at the bottom of the letters....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reds of pages, let alone the assessment folders running into thousands of pages. The Ld. AR further drew our attention to the 97 assessment orders (including seven orders before us) as is evident from the index of Additional Ground Paper Book 1, which were passed u/s 153A of the Act and approved by the same Ld. Addl. CIT on 28.09.2021, 29.09.2021, and 30.09.2021. The Ld. AR argued that it could not have been humanly possible to go through the draft assessment orders, case records, including assessment folders, seized material, and appraisal reports, etc., of 97 cases pertaining to different assessee's in just two days. The Ld. AR further submitted that, apart from these orders, the Ld. Addl. CIT could have possibly approved several other orders on these dates pertaining to different searches involving different assessee's. 44. The Ld. AR then drew our attention to two other approval letters dated 29.09.2021 and 30.09.2021 enclosed in Pages 182 to 184 of Additional Ground Paper Book 1, whereby the same Ld. Addl. CIT approved 11 orders pertaining to two different assessee's in each letter. Referring to these approvals, the Ld. AR submitted that they are worded exactly the same as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d was placed on the following decisions:- a) PCIT vs. Shiv Kumar Nayyar reported in 163 taxmann.com 9 (Delhi HC) b) PCIT v. SubodhAgarwal reported in 149 taxmann.com 373 (Allahabad) c) PCIT vs. Sapna Gupta reported in 147 taxmann.com 288 (Allahabad) d) Pr. CIT AND Anr. V. Siddarth Gupta reported in 147 taxmann.com 305 (Allahabad). e) Delhi Tribunal in the case of M/s AKN Developers Pvt. Ltd. v. ACIT in ITA Nos. 8533 to 8537/Del/2019 order dated 31.12.2024; f) Delhi Tribunal in the case of Sanjay Duggal v. ACIT, Central Circle-4, New Delhi in ITA Nos. 1813 to 1818/Del/2019 dated 19.02.2021. 46. The Ld. AR drew our attention to Paragraph 9 of Chapter 3 of the Manual of Office Procedure, Vol. II, issued by the CBDT in February 2003 which is enclosed in Page 277 of the Additional Ground Paper Book 1. He submitted that the CBDT way back in the year 2003 had laid down the procedure for obtaining approval, which mandated that the Ld. AO submit the draft orders well in advance, preferably at least one month earlier, to provide the Ld. Addl. CIT with an adequate opportunity to examine the same judiciously before granting approval. He ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT need not be elaborate and that the approval, as given, sufficiently complies with the legal requirements. 48. The Ld. DR stated that the burden of establishing the non-application of mind is entirely on the assessee which has not been discharged and merely because there is similarity in language of approval, it could not be relied upon to urge non-application of mind in absence of concrete material. He further argued that in respect of approval in the cases of other assessee's granted on the same day, the assessee has not placed any material to show that those assessee have raised similar objection and if the Tribunal is to decide the matter in favour of the assessee, holding that there were lack of application of mind, it would have cascading impact on others. 49. As far as the issue of presumption u/s 114(e) of Indian Evidence Act is concerned, the Ld. AR, vide his submissions dated 21.02.2025, relied on the judgement of the Hon'ble Supreme Court in the case of Suresh Budharmal Kalani Alias Pappu Kalani v. State of Maharashtra reported in (1998) 7 SCC 337, wherein it was held that the presumption can be drawn only from facts and not from other presumptions by a proce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcle-13, New Delhi in ITA Nos. 594 to 598/Del/2023 b) M/s Ganesh Builders vs The DCIT Central Circle-1 Chandigarh in ITA No. 452/Chd/2022 c) Shri Krishna Educational Trust vs Dy. CIT Central Circle Dehradun in ITA No.167 to 172/DDN/2019 d) M/s. Maheshwari Coal Benefication & Infrastructure Private Limited. vs Dy. Commissioner of Income Tax in ITA Nos. 113 to 119/Nag./2024 e) Mysore Finlease Pvt Ltd vs ACIT in ITA No. 8821/Del/2019 f) Shiv Kumar Nayyar v. ACIT in ITA No.1078/Del/2021 g) Sanjay Kumar v. DCIT in ITA No.429/Del/2024 51. The Ld. AR, in his submission dated 21.02.2025, further stated that if such an approval is considered as approval for 'each assessment year, ' it would render the requirement of passing an order for 'each assessment year' with prior approval under section 153D nugatory. He further submitted that, regarding the issue of the summon to BOTPL on 29.09.2021 in the case of BOTPL and not the assessee, as contended by the Department, it is immaterial whether the summon was issued in the case of the assessee or BOTPL. The only material fact is that a summons was issued to BOTPL on 29.09.2021, which was men....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proceedings right from the time of receipt of appraisal report from the Investigation Wing and is involved with the Ld. AO from time to time while issuing various questionnaires to the assessee. The Ld. Addl. CIT in Central Range also examine the seized documents in detail immediately after receipt of the appraisal report and provides able assistance to the Ld. AO about the interpretation of the said seized documents while issuing questionnaires to assessee, examining the replies filed by the assessee and drawing conclusions thereon. Hence, it is very easy for the Ld. Addl. CIT to grant approval of the draft assessment order on the same day since he is involved with the assessment proceedings right from the inception. Accordingly, he argued that the objection raised by the Ld. AR has no force. Further, the Ld. DR vehemently argued that bare reading of provisions of section 153D of the Act talks only about existence of approval from the Ld. Addl. CIT. There is no mention of application of mind on the part of the Ld. Addl. CIT or the approving authority in the said section. The expression 'application of mind' is only provided by the judicial decisions and not provided in the statut....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... approval u/s 153D of the Act could be granted by the Ld. JCIT / Ld. Addl CIT without any application of mind. In any event, in our considered opinion, the CBDT guidelines relied upon by the Ld. DR does not have any statutory force. Hence the reliance placed thereon would not advance the case of the revenue. 54. The Ld. Addl CIT is supposed to examine the seized documents, questionnaires raised by the Ld. AO on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Ld. AO and the conclusions drawn by the Ld. AO vis- à-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, are to be performed by the Ld. Addl CIT in a judicious way after due application of mind. Even though as vehemently argued by the Ld. DR, the Ld. Addl CIT is involved with the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the Ld. Addl CIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut the statutory deadlines provided in the Act. In our considered opinion, if the arguments of the Ld. DR are to be appreciated that the Ld. Addl CIT need not apply his/her mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose. The law provides only the Ld. AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the Ld. Addl CIT to grant judicious approval u/s 153D of the Act to the draft assessment orders placed by the Ld. AO. 55. The Hon'ble Supreme Court in the case of M/S Sahara India (Firm), Lucknow vs CIT reported in 2008 (4) TMI 4 - Supreme Court, in para 6 observed as under:- "Similarly, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y another. The very act of approval means, the act of passing judgement, the use of discretion, and determining as an adjudication therefrom unless limited by the context of the Statute....... 41. It is the case of the appellants that despite repeated requests made to the Visitor of the CMJ University seeking approval for the appointment of the Chancellor, no action was forthcoming. Therefore, a letter was sent to the State on 1st April, 2010 stating that 'if the Visitor did not provide approval by 25th April 2010, it would be deemed as approval'. Since no response was received from the Visitor, the appellants acting in a bona fide manner assumed that such inaction/omission on part of the Visitor would tantamount to 'deemed approval' for the appointment of the Chancellor. This contention, in our opinion, lacks merit, has no substance and is thus untenable on the face of the record. 42. It is trite that in the absence of any statutory flavour, a provision cannot be interpreted to create a legal fiction in such eventuality, and creating a fiction through judicial interpretation may amount to legislation, which is exclusively the domain of legislature. In this regard....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provision cannot be construed as to provide for fiction in such an eventuality. More so, creating fiction by judicial interpretation may amount to legislation, a field exclusively within the domain of the legislature. (Vide Ajaib Singh v. Sirhind Coop. Marketing-cum-processing Service Society Ltd. (emphasis supplied) 43. After minutely going through the scheme of the Act, we do not find any deeming provision creating such legal fiction as was assumed by the appellants. Therefore, the contention of the learned counsel for the appellants that the failure of the Visitor to grant approval for appointment of the Chancellor would lead to a 'deemed approval' is totally misplaced and unsubstantiated by law. 44. Under the framework of the Act, it is clear that for the appointment of the Chancellor of the CMJ University, the Sponsor is not the sole authority, and the Visitor also plays a pivotal role. The Visitor is not merely a titular head and the appointment of any person as Chancellor by the Sponsor would attain validity only upon the approval of the Visitor. In the present case, it is an undisputed fact that the Visitor's approval was never granted for the appointment....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... entire record, including the seized material and appraisal reports, so as to assess the factual and legal aspects and ascertain that the entire material has been examined by the Ld. AO before preparing the draft assessment order. The approval proceedings are quasi-judicial in nature and require the Ld. Addl. CIT to apply his mind in a judicious manner. To enable the Ld. Addl. CIT to apply his mind judiciously, it is the bounden duty of the Ld. AO to place before him not only the draft assessment orders but also the entire case records, including the seized material and appraisal reports, well in advance, i.e., much before the time-barring date as prescribed in Paragraph 9 of Chapter 3 of the Manual of Office Procedure, Vol. II, issued by the CBDT in February 2003 which is enclosed in Page 277 of the Additional Ground Paper Book 1. The placing of records before the approving authority well in time has been emphasized by the Hon'ble Orissa High Court in the case of Serajuddin &Co. (supra) against which the SLP of the Department has already been dismissed by the Hon'ble Supreme Court reported in 163 taxmann.com 118 (SC). The relevant observations made by the Hon'ble Orissa High Court....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the present case. Upon reviewing the approval letter, we observe that the Ld. Addl. CIT, in granting approval to the draft assessment orders for the assessee pertaining to the 11 assessment years, i.e., AYs 2010-11 to AY 2020-21, merely states that the approval was accorded after perusing the draft assessment orders and case records, without providing any further details. There is nothing in the approval letter which could demonstrate that the Ld. Addl CIT had actually applied her mind before according approval to the draft assessment orders under section 153D. The bare minimum requirement of specifying what case records had been perused by the Ld. Addl. CIT before granting approval to the draft assessment orders was not complied with by her, let alone specifying the conclusions and reasons derived by her on the basis of such examination. There is no whisper in the approval about the seized material or the appraisal report having been perused by the Ld. Addl. CIT, despite these documents forming the basis of the search assessment proceedings. Moreover, it is also noticed that the draft assessment orders in the case of assessee for 11 years were submitted to the Ld. Addl. CIT only....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the issues involved and grants an omnibus approval without any discernible thoughtful process. This may be due to the Proforma approval used by the Ld. Addl. CIT to grant approvals, as demonstrated by the Ld. AR. We have carefully perused the approvals dated 29.09.2021 and 30.09.2021, placed before us by the Ld. AR, which were given in the cases of two other assessee's from the same group by the same Addl. CIT's office, as well as the approvals dated 29.03.2023 and 30.03.2023, granted by the same Addl. CIT's office in the cases of two other assessee's. We find that the language of all these approvals is identical. Therefore, we agree with the contentions of the Ld. AR that the approval granted in the case of the assessee is nothing but a Proforma approval, especially considering the fact that the language of the approval remains unchanged even after two years and despite the change in the person holding office. The omissions (in the form of unfound images in the uploaded order in ITBA portal though it was available in the manual order) and discrepancies in the order sheets of the assessment proceedings in the instant case, as pointed out by the Ld. AR, further demonstrates that as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed". 14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal." 63. We also noted that in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yyar reported in 163 taxmann.com 9 (Delhi HC) (supra) is reproduced below: "11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under 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 decision of the High Court of Judicature at Allahabad in the case of Pr. CIT v. Sapna Gupta [2023] 147 taxmann.com 288/[2022 SCC OnLine 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 re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. 16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- "10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proval granted by her to the draft assessment orders in the case of the assessee was made with due application of mind. However, we do not agree with the contentions of the Ld. DR, either factually or legally. We find that there is nothing in the letter that demonstrates application of mind by the Ld. Addl. CIT. Furthermore, none of the questionnaires attached to the letter pertain to the assessee, except for one, which also does not address any of the issues involved in the assessment of that year. Therefore, merely presenting a letter demonstrating correspondence between the Ld. AO and the Ld. Addl. CIT during the search assessment proceedings, without showing actual application of mind by the Ld. Addl. CIT before granting approval u/s 153D of the Act, which is a mandatory requirement under the law, does not assist the case of the revenue. Hence, when from the facts on record it clearly comes out that there was no application of mind by the Ld. Addl. CIT while granting approval in a mechanical manner u/s 153D of the Act, the benefit of presumption under section 114(e) of the Indian Evidence Act that all official acts are regularly performed is not available to the revenue in the ....