TaxTMI 
TaxTMI 
2025 (5) TMI 1788
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....3) of the I.T. Act, 1961, dated 15.03.2016 ITA No. 112/RPR/2025 2009-10 12.12.2024 ITA No. 113/RPR/2025 2010-11 12.12.2024 ITA No. 114/RPR/2025 2011-12 13.12.2024 ITA No. 115/RPR/2025 2012-13 16.12.2024 ITA No. 116/RPR/2025 2014-15 09.01.2025 3. At the outset, it is apprised by the Ld. Counsel of the assessee that the issues involved in the present appeals are common, interconnected and interwoven, inter alia arises from common order passed by Ld. AO, having identical facts for the years under consideration. Accordingly, for the sake of brevity all these matters are taken up together for hearing and are disposed of under this common order. 4. In order to adjudicate the issues involved in the aforesaid appeals, ITA No. 111/RPR/2025 for the AY 2008-09 has been taken up as the lead matter, wherein our observations and decision shall apply mutatis mutandis to the remaining appeals, i.e., ITA No. 112 to 116/RPR/2025. 5. The grounds of appeal raised by the assessee in ITA No. 111/RPR/2025 For AY 2008-09, challenging the impugned order, are extracted as under: 1. Ground 1: That Ld. AO erred in making adhoc addition of Rs. 56,500/- under various heads without properly a....
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....ice u/s 153A Income declared in return u/s 153A(Rs.) Income voluntarily disclosed during the search (Rs.) Additional Income offered by the assessee (Rs.) 2008-09 29.09.2008 523240 20.10.2015 523240 Nil Nil 2009-10 30.09.2009 856060 20.10.2015 856060 Nil Nil 2010-11 27.09.2010 923110 20.10.2015 923110 Nil Nil 2011-12 29.09.2011 1270150 20.10.2015 1270150 Nil Nil 2012-13 30.09,2012 6984210 20.10.2015 6984210 Nil Nil 2013-14 27.09.2013 17597520 20.10.2015 17597520 Nil Nil 2014-15 30.11.2014 25060 - - - - 7. Subsequently, statutory notices u/s 143(2) and u/s 142(1) along with detailed questionnaire are issued. In compliance, counsel of the assessee attended the office of Ld. AO from time to time and have furnished written submission with supporting documents, which were perused and placed on record by the Ld. AO. After deliberating upon the submissions of assessee, Ld. AO observed certain discrepancies and have pointed out certain issues qua the returned income of the assessee, therefore, have made following additions: (i) Sustained the additions made in the regular assessment u/s 143(3), w....
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....ents, Shri Praveen Jain, C.A. representing the assessee (in short "Ld. AR"), submitted and requested to first deliberate upon the legal / technical ground raised by the assessee i.e., ground no. 6 of the appeal which is common for all the years that the assessment was completed without obtaining proper / valid approval u/s 153D. To explain the issue, Ld. AR furnished a copy of approval u/s 153D along with synopsis regarding aforesaid technical ground. The submissions of assessee are extracted hereunder for the sake of completeness and to deliberate upon the issue: Sharda Steel Traders ITA 111 to 116/RPR/2025 Synopsis- Technical Ground Date of Hearing - 22/04/2025 1. Chronology of Events: S.No. Particulars Date 1 Survey Action u.s 133A 27.03.2014 2 Conversion to Search & Seizure Action u/s 132 29.03.2014 3 Notice u/s 153A issued on 01.06.2015 4 Submission of Draft Assessment Order 14.03.2016 5 Approval by Addl. CIT 14.03.2016 2. Peculiar features of Approval u/s 153D by Addl. CIT in the present case: 2.1. As per Para 1, Only Draft Assessment Order was submitted by AO for Approval. Thus, Assessment Records and Incriminating documents were not submitted alo....
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....f Judgment12.12.2022) (Allahabad HC) - Page 8 4. Amongst other Reliance is placed in the case of Ritanjali Khatai & Ors. v. ACIT, CC-1, Bhubaneswar in IT(SS) A.No.51 to 53/CTK/2019 (Date of Order: 08.04.2022) (ITAT Cuttack), wherein the Tribunal has held that: 35. In our considered and humble opinion, no procedure for grant of approval has been provided u/s.153D of the Act and the Income tax Rules, 1962. However, when legislature has enacted some provision to be exercised by a higher revenue IT(SS)A No.09/RPR/2018 authority enabling the AO to pass assessment or reassessment orders in the search cases, then, it is the duty of the approving authority to exercise such power by applying his judicious, vigilant and cautious efforts. We are of the view that the obligation on the approval granting authority is of two folds, one the one hand, he has to apply his mind to secure inbuild for the department against any omission or negligence by the AO in taxing right income in the hands of right person in the right assessment year and on the other hand he is also responsible and duty bound to do justice with the taxpayer/assessee by granting protection against arbitrary or unjust or unsust....
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....zure cases should be made and orders should be passed with the prior approval of superior authority, which also means that the superior authority should apply his mind on the materials on the basis of which the AO is making or passing assessment orders and after due application of mind to material in the hands of department while initiating search proceedings, material found & seized during the course of search and also material or information unearthed or gathered during post search investigation and enquiry alongwith explanation, documentary evidence and other relevant material or information submitted by the assessee during search and assessment proceedings, the superior authority has to grant the approval u/s. 153D of the Act for passing assessment/reassessment orders in the search cases. 38. Further, in our considered view, the approval u/s. 153D of the Act cannot be treated as an official formality but the provision has been inserted by the legislature with some specific and useful purpose. It is apparent that the purpose behind enactment of the said provision in the Statute by the legislature are of two folds viz (i) before approval, the Sr. Authority will ensure that the ....
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....ned in the order of approval but the manner and the material on the basis of which approval has been granted can be challenged by the assessee and following proper procedure and application of mind by the approving authority should be discernible from the order of approval. No other evidence or documents is required to be considered or appreciated as the approval should be self-speaking that it has been granted by the ld JCIT by following due procedure and due application of mind to the relevant records and orders. The scope and issue agitated by the assessee by way of legal ground in the present case is not that of grant of hearing or representation to the assessee at the time of granting approval but the main grievance and legal objection of the assessee is that the approving authority has granted approval without application of mind and without looking into the seized materials and investigation report and draft assessment/reassessment orders and this fact should be clearly discernible from the approval order and no other extraneous material/document can be seen in this regard. 40. In view of above, we are inclined to hold that if an approval has been granted by the approving ....
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..... The explanation given by the assessee, if any, would be a relevant factor. The approving authority was required to go through it. He could have arrived at a different opinion. He in a situation of this nature could have corrected the assessing officer if he was found to have adopted a wrong approach or posed a wrong question unto himself. He could have been asked to complete the process of the assessment within the specified time so as to save the Revenue from suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/or the entries made therein. While exercising its power, the assessing officer has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief Commissioner or the Commissioner, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given." 17. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justifiable. Where the approval is granted mechanically, it would vitiate the assessment order itself. In Sahara India (Firm) L....
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....stinction between a judicial act and an administrative act has withered away. Therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see: Maneka Gandhi v. Union of India (1978) 1 SCC 248 and S.L. Kapoor v. Jagmohan (1980) 4 SCC 379). 30. As already noted above, the expression "civil consequences" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and nonpecuniary damages. Anything which affects a citizen in his civil life comes under its wide umbrella. Accordingly, we reject the argument and hold that since an order under Section 142 (2A) does entail civil consequences, the rule audi alteram partem is required to be observed." 19. To the same effect, are the decisions of the Delhi High Court in Yum! Restaurants Asia Pte. Ltd. v. Deputy Director of Income Tax (supra) which dealt with the requirement under Section 151(2) of the Act for initiating proceedings under Section 147 read with 148 of the Act. It was observed as under: "11. The purpose of Section 151 of the Act is to introduce a supervisory chec....
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....me to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order. 23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 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. 24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under Section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004(165) E.L.T. 257 (S.C.) the Supreme Court observed as under: "Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench o....
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....ssessment framed by the AO u/s. 153A r.w.s.143(3) of the Act after getting approval from the JCIT, Range-Central, Raipur in view of the provisions of Section 153D of the Act, is valid and sustainable or not, as has been raised by the ld. AR of the assessee during the course of hearing in the form of additional ground. On perusal of the assessment order we found that the AO has made addition u/s. 56(2)(vii) of the Act under the head income from other sources as the assessee could not explain the source and details of the investment made by the assessee in M/s Crest Steel and Power Ltd. and Topworth Pipes and Tubes Pvt. Ltd. in different financial years. Before passing the assessment order, the AO has sought approval from the JCIT, Range-Central, Raipur vide letter dated 03.11.2016 in the case of the assessee along with other assessee's. The JCIT, Range- Central, Raipur has approved the draft assessment orders u/s. 153A r.w.s.143(3) of the Act vide letter dated 08.11.2016. Consequently, the AO has passed assessment order on 08.11.2016. On perusal of the approval given by the JCIT, Range-Central, Raipur, we found that the JCIT has given approval only on the basis of presumption that t....
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....l under Section 153D is pre-requisite to pass an order of assessment or re- assessment. Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of "each assessment year" referred 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). 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. In the instant case, the d....
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....emanating from the record have been verified and additions wherever required have been proposed." 23. Before us, the ld AR for the assessee vehemently argued that JCIT has granted approval under section 153D in a casual and mechanical manner and without any application of mind and that from the communication made to the JCIT by AO vide letter dated 14.12.2018, the AO had not made any iota of reference as to what are the seized materials nor furnishes any assurance with respect to approval and appraisal of all evidences and corresponding reply by the assessee. And that ld. JCIT approved the assessment order by presuming that the necessary opportunity has been given to the assessee and all the records, evidences and materials have been thoroughly verified. The JCIT granted bulk approval of 95 assessment orders which clearly defeats the intent and purpose behind insertion of section 153D brought in the statute by the Finance Act, 2007. 24. We find that the ld. JCIT while granting approval, presumed that Assessing Officer has given proper hearing to the assessee and thoroughly verified seized material and there are no adverse findings, satisfied himself that all the issues emanatin....
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....ted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and ca not be countenanced in law. 26. Similar view was taken by Coordinate bench of Delhi Tribunal in Sanjay Duggal & others (supra). 27. So far as the contention of ld CIT-DR that the assessment under section 153A is passed under the supervision of JCIT and that JCIT granted approval of the draft assessment after considering the material placed before him. We do not find any such satisfaction in the approval order that draft assessment after considering the material placed before him, rather the ld JCIT recorded that it is presumed that the AO granted proper opportunity to the assessee etc... 28. In view, of aforesaid discussion and respectfully following the decisions of coordinate benches in Sanjay Duggal & others (supra) ....
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....hority is mere an attempt to fill the gaps and procedural lacunas occurred in the procedure adopted by JCIT while granting approval under section 153D of the Act and, therefore, the contention of ld A.R. in this regard hold the field. 32. Similarly letter dated 4.1.2019 issued by JCIT (Central), Bhubaneswar to the CIT (Audit & ITAT), Bhubaneswar is merely a covering letter supplying copy of the approval dated 23.11.2017, which cannot be treated as an explanation to the approval dated 23.11.2019 curbing the mistake in the procedure adopted by the JCIT while granting approval u/s. 153D of the Act. On these subsequent letters/correspondences, we are of the considered view that for adjudicating legal ground of assessee's challenging the validity of approval u/s. 153D of the Act dated 23.11.2017, we have to evaluate said approval apparently by considering the totality of facts and circumstances and the manner in which such approval has been granted. This cannot be improvised by way of subsequent exercise or correspondence between the approving authority and the AO or other officers. 33. In view of foregoing discussion, we are inclined to hold that the ld JCIT has granted approval un....
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....rmality but it is a supervisory act which requires proper application of administrative and judicial skill by the authority on the application of mind and this exercise should be discernible from the order of approval u/s. 153D of the Act. 36. In our humble understanding the provisions of section 153D of the Act has been introduced by the legislature in its cautious wisdom to make it mandatory on the supervisory authority/approving authority to discharge the duty towards both the assessee as well as revenue to follow the proper procedure and to apply his mind on the material, relevant evidences and other documents including materials found during search & post search investigations and explanation & supporting documents of the assessee to the issue show caused to him by the AO, on the basis of which the AO wants to pass or frame assessment or reassessment orders and after such exercise by perusing and going through the relevant assessment folders/files alongwith proposed draft orders and also by applying his mind has granted approval u/s. 153D of the Act. This is the minimum required exercise by the approving authority before granting approval u/s. 153D of the Act. The approving ....
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....sessing Officer on all the relevant materials including material in hands of the department at the time of initiating search proceedings, material or documents found and seized during search operation and materials found and unearthed during post search investigations and enquiries. Therefore, said provision provides and requires application of mind by the approving authority of the department which, in turn, provides safeguard to the both the parties i.e. revenue and the assessee. Therefore, the provisions of section 153D of the Act cannot be treated as a mere formality and mandate therein required to be followed by the approving authority in a judicious manner by due application of mind in a manner of cautious judicious or quasi judicial authority. This view has also been expressed by Pune Bench of the ITAT in the case of Akil Gulamali somji, in ITA Nos.455 to 458(Pune) of 2010 vide order dated 30.3.2012, wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. We also take respectful cognizance of the fact that the Hon'ble Bombay High Court in the case of Akil Gulamali Somji (supra) has concurred ....
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....ve days time but from the order of approval, we are unable to see any exercise by the approving authority and even in the approval orders (supra), he has not mentioned that the relevant appeal folders/files alongwith assessments/reassessment orders have been perused or any discussion or consultation has been made with the AO prior to granting of approval u/s. 153D of the Act. Accordingly, we are compelled to hold that the approval granted by the ld JCIT in the appeals under consideration has been granted in a mechanical manner without application of mind and that the assessments/reassessment orders passed by the AO on such approval are declared to be void and bad in law. We hold so. 41. In view of aforesaid discussion, we clearly find that approving authority has not applied his mind to the relevant assessment records and draft assessment orders prior to granting approval to the Assessing officer for passing assessment orders u/s. 153A/143(3) of the Act. Therefore, the contention of ld A.R. of the assessee is justified and sustainable that the approval was granted in most mechanical manner without application of mind and respectfully following the proposition rendered by Hon'....
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....ur final view on the issue, this is pertinent to mention here that the case laws relied upon by the Ld CITDR are distinguishable on facts, have no bearing on the issue under discussion in the present appeal, thus the same are not of any help to the revenue to support their contentions. The judgment in the case of Bharat Krishi Kendra Vs Union of India (supra) was decided in favour of the revenue only on the reason that where "Joint Commissioner recorded satisfaction on proposal of Assessing Officer by mentioning that it is a fit case for issuance of notice, approval under section 151 giving details of approving authority as Principal Commissioner in itself will not make approval invalid", this is altogether on different footing than the facts of the present case, where approval was granted by the Ld JCIT himself but on the basis of certain presumptions without verifying the seized material by himself, even the responsibility of satisfaction was placed on shoulders of the AO. We therefor of the view that guidance of the Hon'ble Jurisdictional High Court of Chhatisgarh in the case of Bharat Krishi Kendra Vs Union of India (supra) cannot be adopted for deciding the issue in the pr....
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....16 12 Vijay Kumar Mittal HUF v. ACIT ITAT, Jabalpur 2021-TIOL-898-ITAT-Jabalpur 13 Shri Saurabh Agarwal & Ors. V. DCIT ITAT, Agra ITA No.263 to 267/AGR/2017 14 Shri Navin Jain & Ors. V. DCIT ITAT Lucknow IT(SS)Nos. 639 to 641/LKW/2019 15 Geetarani Panda v. Asstt. CIT ITAT Cuttack (2018) 194 TTJ 915 16 Indra Bansal v. Asstt. CIT ITAT Jodhpur (22018) 1192 TTJ 968 17 Rishabh Buildwell Pvt. Ltd. Vs. Dy. CIT ITAT Delhi ITA No.2122/Delhi/2018 18 M/s India Holdings Vs. DCIT ITAT Delhi (2019) 71 ITR 19 Uttarakhand Uthan Samiti Vs. ITO ITAT Delhi (2021) 86 ITR (Trib.) 695 20 Dilip Constructions (P) Ltd. Vs. Asstt. CIT ITAT Agra (2020) 203 TTJ (Ctk) 21 Rajesh Ladhani vs. Dy. CIT ITAT Agra (ITA Nos. 106 to 108/AGRA/2019) 22 Shri Tarachand Khatri Vs. ACIT, Central Circle, Jabalpur ITAT Jabalpur ITA No. 21/Jab/2019 23 Asstt. CIT vs. C.R. Mittal & Sons (HUF) ITAT Jabalpur IT(SS) A No.100/Jab/2014 14. Based on aforesaid submissions, referring to the approval granted u/s 153D dated 14.03.2016, in the present cases, vide communication number F.No. Addl.CIT /Central / Prakash Industries Group / RPR/2015-16 / 78 (copy extracted supra), it is contented ....
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....5. With the above-mentioned assertions, it was the prayer by Ld. AR that the approval u/s 153D granted in the present case was in mechanical manner, without considering the merits in proposed adjustment with reference to appraisal report, seized material collected in the Search & Seizure action, thus, it was a simpliciter approval without application of mind, which cannot be construed to be in accordance with the mandate of law. Accordingly, it is submitted that the Search assessment framed u/s 153A r.w.s. 143(3) of the Act dated 15.03.2016, on the strength of purported approval u/s 153D are void-ab-initio, invalid, illegal and bad in law, thus, are liable to be quashed. 16. Per contra, Shri S. L. Anuragi, Ld. CIT-DR representing the revenue have submitted that the issue / contention raised by the Ld. AR regarding validity of approval u/s 153D has been decided in favour of revenue by the Hon'ble Jurisdictional High Court of Chhattisgarh in the case of Hitesh Golchha vs. ACIT, Circle-1, Raipur in TAXC No.88/2024 dated 16.04.2024, wherein the observations of Hon'ble Court are as under: 3. He would submit that since the right is being protected under Section 153(D) of the Income Ta....
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.... and in furtherance to advance the rules of natural justice, opportunity is given to appellant assessee. 17. Taking support from the aforesaid judgment, it was the submission by Ld. CIT-DR that as per observations of Hon'ble Chhattisgarh HC, once the approval is granted u/s 153D, it can not be presumed that there was no application of mind as the approval need not be a detailed assessment order. It is further submitted by Ld. CIT-DR that in approval Ld. Approving Authority had mentioned that the case has also been discussed with the Ld. AO from time to time, therefore, it cannot be said that the draft assessment orders are approved without proper appreciation of the documents such as assessment records, seized material, appraisal report etc. In view of such facts and circumstances, it was the submission that the approval accorded in present matters was with due application of mind, cannot be construed to be merely a mechanical formality, therefore, the same deserves to be upheld and the issue raised by Ld. Counsel of the assessee is liable to be rejected. 18. We have considered the rival submissions, perused the material available on record and the judicial pronouncements referre....
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....e to subscribe with the claim of the revenue based on aforesaid judgment that an approval u/s 153D was granted following the provisions of the said section which is further enlightened by the Hon'ble Courts. We observe that, the facts of case considered in the said judgment and the appeal before us are distinguishable. From the judgment in the case of Hitesh Golchha (supra), as per para 4, Hon'ble High Court had observed that "the Joint Commissioner was satisfied on the basis of the documents on record that such approval was justified". Such observation clarifies that in the case of Hitesh Golchha (supra), there was no dispute about the submission of documents and records for verification to the approving authority while granting the approval u/s 153D, whereas, the facts in the instant case have a distinguishing feature, wherein there is no evidence to show that such relevant documents are submitted or made available to the approving authority at the time of approving the draft assessment orders for his perusal, verification and deliberation, therefore, we are unable to persuade or acknowledge the contention of the Ld. CIT-DR, that the judgment of Hitesh Golchha (supra) have any be....
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.... Authority cannot act merely as a rubber stamp while granting approval. 5.2 Pertinently, the aforesaid decision of the Hon'ble Orissa High Court has attained finality due to dismissal of the SLP filed by the Revenue by the Hon'ble Supreme Court. 5.3 In case of PCIT v. Anuj Bansal (supra), the Hon'ble Jurisdictional High Court has approved the view of the Tribunal in holding that where the approval is granted without examining the assessment records and seized material, that too a single approval in case of various assessee's and multiple assessment years, it does not meet the requirement of Section 153D of the Act. It is worth mentioning, the approval dated 21.03.2013, which is the subject matter under consideration in the present appeals was also under challenge before the coordinate Bench in case of MDLR Hotels Pvt. Ltd. & ors. Vs. Assistant Commissioner of Income Tax & ors. (supra). While dealing with the validity of the very same approval, the Coordinate Bench has held the approval to be invalid qua the assessment orders. The following observations of the Coordinate Bench in this context are of paramount importance: "13. We have given thoughtful consideration to the order....
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.... to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 50.3 Applicability- These amendments will take effect from the 1st day of June, 2007." 16. The Legislative intent is clear from the above, in as much as, prior to the insertion of Sec. 153D of the Act, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/ reassessments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their minds on the material on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authorities have to approve the assessment order. 17. The question before us is "has this been done in the present case". The language of the approval 18. In light of the afore-stated relevant provisions and legislative intent, approval dated 08.03.2013 is in respect of 62 assessment orders as exhibited at pages 136 and 137 of the Index to Convenience Compilation fu....
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....evious approval of the Chief Commissioner or Chief Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominated by the Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require." 25. In this section also the AO may direct the assessee to get the accounts audited by an Accountant with the previous approval of the Principal Chief Commissioner or Chief Commissioner. This provision has been elaborately considered by the Hon'ble Supreme Court in the case of Sahara India Vs CIT 169 Taxman 328 wherein at para-6, the Hon'ble Supreme Court observed as under: "A bare perusal of the provisions of sub-section (2A) of the Act would show that the opinion of the Assessing Officer that it is necessary to get the accounts of assessee audited by an Accountant has to be formed only by having regard to: (i) the nature and complexity of the accounts of the assessee; and (ii) the interests....
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....anting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer. The approval must reflect the application of mind to the facts of the case." 26. Thus, even the Hon'ble Supreme Court has clearly laid down that the approval must reflect the application of mind to the facts of the case. 27. Similarly, the Hon'ble High Court of Calcutta in the case of Peerless General Finance & Investment Co. Ltd. Vs DCIT 236 ITR 671 has made the following observations which are pertinent to the facts of the case in hand before us: "The factual matrix of the matter clearly shows that a proposal was made on March 10, 1998, and no prior approval therefore was granted by the Chief Commissioner of Income tax but merely one G.P. Agarwal was nominated. An argument has been advanced to the effect that by making such a nomination, approval will be deemed to have 9 ITA. No.4061/Mum/2012 been granted. The answer to the said contention must be rendered in the negative. The Chief Commissioner of Income tax before granting such approval must have before him the ....
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.... "In these cases, the Commissioner has passed an order granting approval under section 158BG of the Act through a single order passed on 31- 3-1997 without giving any reason whatsoever. As we have recorded elsewhere above, the draft assessment orders of the block period in all these cases were made on 31-3-1997 and on the very same day, i.e., on 31-3-1997 the Commissioner grants approval and that too without giving or recording any reasons whatsoever. The approval order does not disclose the points which were considered by the Commissioner and the reasons for accepting them. In our view, this is totally an unsatisfactory method of granting approval in exercise of judicial power vested in the Commissioner. 11.9. This decision of the Tribunal was considered by Allahabad Bench of the Tribunal in the case of Verma Roadways Vs ACIT 75 ITD 183 wherein also the assessee-appellant has challenged the validity of approval to the assessment order accorded by the CIT Kanpur. The Tribunal at Para-47 has held as under: "Coming to the aspect of the application of mind, while granting approval, we are of the view that requirement of approval pre-supposes a proper and thorough scrutiny and applicat....
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.... The Commissioner is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case there has been no application of mind by the Additional Commissioner before granting the approval." 30. The Hon'ble Allahabad High Court in the case of Siddharth Gupta ITA No. 90 of 2022 vide order dated 12.12.2-22 had the occasion to consider an identical issue. The most relevant findings /observations of the Hon'ble High Court read as under: "The submission is that the substantial question of law which arises for consideration before this Court is about the justification of the act of the Tribunal in ignoring the findings recorded by the Assessing Officer and setting-aside the assessment orders on the sole ground of defect in the approval to the draft assessment orders granted by the competent Approving Authority. Learned counsel for the Assessee, however, defended the order of the tribunal for the reasoning given therein. Considering the submissions of the learned counsels for the parties....
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....ailed discussion has been made with regard to the requirement of prior approval of superior authority on the draft assessment order under Section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word 'approval though has not been defined in the Income Tax Act but the general meaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due ....
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....sic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that an important phrase is employed in the text of Section 153D, which is "each assessment year". The reading of the provisions in Section 153A and 153D conjointly makes it clear that separate approval of draft assessment order for each year is to be obtained under Section 153D of the Income Tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the "approval" as defined in Black's Law Dictionary as also the decisions of the Apex Court in the case of Sahara India vs. CIT and Others (2008) 300 ITR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built 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 that the approval....
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.... 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). 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 orders under Section 153A. In the instant case, the draft assessment orders in 123 cases, i.e. for 123 assessment years placed before the Approving Authority on 30.12.2017 and 31.12.2017 were approved on 31.12.2017, which not only included the cases of respondent-assessee but the cases of other g....
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....21.03.2013 To, The Deputy Commissioner of Income Tax, Central Circle-15, Delhi New Delhi Sub: Approval u/s 153D of the Income tax Act in the MDLR Group of cases - reg. This is in reference to your letter no. DCIT/CC-15/153D-MDLR/12-13/3620 dated 21.03.2013 received this office 21.03.2013, letter No. DCIT/CC-15/153D-MDLR/12- 13/3623 dated 21.03.2013 received this office 21.03.2013 and letter no. DCIT/CC- 15/153D-MDLR/12-13/3624 dated 21.03.2013 received this office 21.03.2013, whereby you have submitted draft assessment order giving effect to order u/s 264 seeking approval u/s 153D of the IT Act, 1961 in the following cases:- Sl. No. Name of the assessee company PAN A.Y ORDER 1 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2002-03 u/s 144 r.w.s. 153A consequent upon order u/s 264 passed by the CIT setting aside the original assessment 2 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2003-04 -DO- 3 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2004-05 -DO- 4 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2005-06 -DO- 5 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2006-07 -DO- 6 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2007-08 -DO- 7 SHRI GOPAL KUMAR GOYAL AEFPG4870J 2008....
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....ecedents discussed herein above. Thus, in our view, the approval granted u/s 153D of the Act is invalid. Consequently, the assessment orders passed in pursuance to such approval are also invalid. Hence, deserves to be quashed. Accordingly, we do so. The impugned orders of learned First Appellate Authority are set aside. (emphasis supplied by us) 6. Since we have quashed the assessment orders while deciding the legal grounds raised by the assessee, the grounds raised on merits have become purely academic, hence do not require adjudication. 21. After a careful consideration of aforesaid facts, circumstances and material on record along with the judicial pronouncements referred to supra, we find substance in the contention raised by the Ld. AR that in absence of relevant documents i.e., assessment records and seized material, the approval granted by the approval authority with a rider that the draft assessment orders are gone through within the limited time available, thus, it cannot be said that there was due application of mind by the approving authority, as the relevant documents are not available to him, nor the revenue could establish by way of any material, evidence or submis....