TaxTMI 
TaxTMI 
2025 (5) TMI 1788
X X X X Extracts X X X X
X X X X Extracts X X X X
....08-09 12.12.2024 ACIT, Central-2, Raipur, u/s 153A/143(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. Gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e subject AY's, detailed as under: A.Ys. Date of filing of return u/s 139(1) Returned Income (Rs.) Date of filing of return by the assessee against notice 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellate Authority, therefore, the appeals of assessee are dismissed and the additions made by the Ld. AO are sustained. 10. Being dissatisfied with the decision of Ld. CIT(A), assessee preferred to avail the further remedial course of action available, therefore, had filed the appeals before us, which are under consideration in the present matters. 11. While initiating the arguments, 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 Conversio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al was stationed at Raipur, whereas Addl. CIT granting approval was stationed at Bhopal on the date of seeking/ granting Approval. 2.8. That approval has been granted vide same approval letter to other Assessee's also. 3. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case, which is missing in the present case. (Pr.CIT v. Subodh Agarwal in I.T. Appeal No.86 of 2022 (Date of 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing officer. 37. The provisions of section 153D of the Act was inserted by the Finance Act, 2007 w.e.f. 1.6.2007. In our humble understanding of said provision, the legislative intent for insertion of said provision is clear inasmuch as prior to insertion of provision u/s. 153D, there was no provision for taking approval in cases of assessment or reassessment where search and seizure operation was conducted u/s.133A of the Act. Therefore, in our considered view, the legislature wanted the assessment/reassessment of search and seizure 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 ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atutory function lay on his shoulders by following proper procedure and also by applying his judicious and cautious mind to the relevant assessment folders/files and draft assessment orders while granting approval u/s. 153D of the Act. This is not a formality but a statutory duty of the approving authority with a corresponding obligation on him to examine relevant record and assessment orders and thereafter grant the approval. We are cautious about that the reasons for granting approval may not be a subject matter of challenge or are not required to be mentioned 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 he....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before he passes an assessment order or reassessment order under Section 153A(1)(b) or 153B(2)(b) of the Act. 16. That such an approval of a superior officer cannot be a mechanical exercise has been emphasized in several decisions. Illustratively, in the context of Section 142(2-A) which empowers an AO to direct a special audit. The obtaining of the prior approval was held to be mandatory. The Supreme Court in Rajesh Kumar v. Dy. CIT (2007) 2 SCC 181 observed as under: "58. An order of approval is also not to be mechanically granted. The same should be done having regard to the materials on record. 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 understand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Section 196 of I.P.C. and every Income Tax Authority is a court for the purpose of Section 195 of Code of Criminal Procedure, 1973. Though having regard to the language of the provision, we have some reservations on the said view expressed in Rajesh Kumar's case (supra), but having held that when civil consequences ensue, no distinction between quasi judicial and administrative order survives, we deem it unnecessary to dilate on the scope of Section 136 of the Act. It is the civil consequence which obliterates the distinction between quasi judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction 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 nonpecuni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, 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 becomes important. Although, it was in the context of Section 1588G of the Act, it would equally apply to Section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time 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. Thes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves. * M/s Akshata Realtors Private Limited vs ACIT, Central Circle-2, Raipur in IT(SS)A No. 09/RPR/2018 dated 27.03.2023, wherein the coordinate bench of ITAT, Raipur has decided this very issue after discussing various judgments of the Hon'ble Courts and have observed as under: 14. We have considered the rival submissions and perused the record carefully. The issue before us is to decide as to whether the assessment 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 oth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....trative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record-No substantial question of law arises for consideration (iii) M/s.Goyal Energy & Steel Pvt. Ltd. v. ACIT, CC-2, Raipur in ITA No.240 to 243/RPR/2019 (Date of Order : 17.09.2021) (ITAT Raipur), wherein the approval granted by the JCIT was identical to the approval granted in the case of the present assessee, held as under : 22. On careful perusal of the approval order of JCIT, we find that the JCIT while granting approval on 22.12.2018 recorded that " it is presumed that the AO has - given proper opportunity of hearing to the assessee, thoroughly verified the seized material and that there is no adverse finding, satisfy himself that all issues 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 ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eized materials were not looked at and/or other enquiry and examination was never carried out. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination / investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/ her statutory functions and delightfully relegated his/her statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of ld. AR of the assessee that the issue is covered by the decision of coordinate bench of the Tribunal in the case of Dillip Construction Pvt. Ltd.(supra), wherein the relevant observations of the Tribunal are as under :- 31. Before we proceed, we find it appropriate to consider the contention of ld CIT DR wherein, he submitted that as per letter dated 19.12.2018, the JCIT, the approving authority had given approval for passing order u/s. 153A r.w.s 143(3) in both the cases after satisfying himself with the draft assessment orders. This letter has been written to the JCIT (Central) by approving authority i.e. JCIT (BPU) pertaining to the office communication regarding additional ground of appeal, which are being adjudicated but in view of approval order dated 23.11.2017, thus we are inclined to accept the contention of ld A.R. that this submission of approving authority 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), Bhuba....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a higher revenue 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 unsustainable exercise and decision by the AO crating baseless tax liability on the assessee and thus he has to discharge his duties as superior authority. Thus, granting approval u/s. 153D of the Act is not merely an official formality 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nvestigation 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 assessee should be protected against undue or irrelevant addition & disallowances in the assessment and (ii) the approving granting authority will also ensure that proper enquiry investigations are carried out by the Assessing 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 authority in a mechanical manner without application of mind then the very purpose of obtaining of approval u/s. 153D and mandate of enactment by the legislature will be defeated. In the present case, the approving authority, the ld JCIT got five 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bservations of the Tribunal and especially the fact that the approval u/s. 153D of the Act given by the JCIT for passing assessment orders in case of assessee and other group concern is without application of mind as the JCIT has not mentioned in the approval orders that he has gone through the relevant assessment records/files/folders and draft assessment orders for granting approval, therefore, we hold that the impugned order passed by the CIT(A) affirming the assessment order passed by the AO, is not unsustainable. Accordingly, we allow the ground No.2 of the assessee and cancel the assessment order framed u/s. 153A/143(3) of the Act. 16. In the present appeal, the JCIT, Range-Central Raipur has granted approval on the presumption basis, which in our opinion is not permissible. When the approval is not valid, then the assessment framed u/s. 153A r.w.s.143(3) of the Act in the case of the assessee is not sustainable. 17. Before concluding and offering our 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents by the Ld. AR, which for the sake of reference are listed as under: Sr. No. Particulars Court/ Tribunal Citation 1 Pr. CIT v. Subodh Agarwal Hon'ble Allahabad High Court I.T.A. No.86/Allahabad 2 M/s. Goyal Energy & Steel Pvt. Ltd. V. ACIT ITAT, Raipur ITA No. 240 to 243/RPR/2019 3 Arch Pharmalabs Ltd. V. ACIT ITAT, Mumbai (2021) 62 CCH 9 4 Mysore Bhaskara Pankaja Delhi vs ACIT Central Circle 15 ITAT, Delhi ITA No. 3823/DEL/2023 5 PCIT v. Smt. Shreelekha Damani ITBom.HC 2018-TIOL-2516-HC-MUMI 6 ACIT VS M S Serajuddin Co. Hon'ble Orissa High Court (2023) 116 CCH 0449 7 PCIT VS Anuj Bansal Hon'ble Delhi High Court (2023) 117 CCH 0050 8 The Pr. Commissioner of Income Tax vs Sapna Gupta Hon'ble Allahabad High Court I.T.Appeal No. 88 of 2022 9 Inder International v. ACIT ITAT, Chandigarh (2021) 35 NYPTTJ 374 10 Sh. Inder Pal Singh Arora v. DCIT ITAT Dehradun (2021)(6) TMI 933 11 ACIT vs. Sh. Subash Dabas ITAT, Delhi ITA No. 2399/Del/2016 12 Vijay Kumar Mittal HUF v. ACIT ITAT, Jabalpur 2021-TIOL-898-ITAT-Jabalpur 13 Shri Sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f approval u/s 153D dated 14.03.2016, wherein the approving authority had mentioned that "I have gone through the draft assessment orders within limited time available.", such admission by the approving authority itself indicates, that the approval was granted half-heartedly, to which the approving authority himself was not fully satisfied, thus, the same shall be treated as mere formality, in mechanical manner and without application of mind. Ld. AR further referred to the case of Ritanjali Khatai & Others. Vs. ACIT, CC- 1, Bhuvneshwar (supra), wherein the coordinate bench of ITAT, Cuttack, had observed that "it is the duty of approving authority to act in accordance with the mandate and provisions of law while granting approval and discharging statutory function lay on his shoulders by following proper procedure and also by applying his judicious and cautious mind to the relevant assessment folders / files and draft assessment orders while granting approval u/s 153D of the Act. This is not a formality but statutory duty of approving authority with a corresponding obligation on him to examine relevant record and assessment orders and, thereafter grant the approval". 15....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s there while granting the approval. It is the subjective satisfaction and the language of the (Annexure - 4) would show that on the basis of the document produced before the Joint Commissioner, he was convinced of the fact that such approval would be necessary as the statue mandate. 5. From perusal of the language of the letter (Annexure - 4), we cannot presume that there was no application of mind as the approval need not be a detailed assessment order. The presumption under Section 114 of the Evidence Act would follow when such official Act has been done in accordance with official procedure and will lead to presumption that due diligence was followed. Even otherwise, the order of the ITAT would reflect that the case of appellant was remanded back to the Assessing Officer for fresh adjudication of the issue. Further the liberty was given to the assessee to raise all such issues before the Revenue Authorities and furnish necessary information/evidences in support of his contention. When such right has already been reserved in favour of the assessee, to raise grounds, we do not find that any prejudice has been caused and in fact the ITAT has principally accepted the conte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....val after due application of mind to the material in the hands of department while initiating such proceedings, material found and seized during the course of search and also material or information unearthed or gathered during post search investigation and inquiry along with explanation, documentary evidence and other relevant material or information submitted by the assessee during the search and thereafter during the assessment proceedings. However, the revenue is squarely failed in substantiating this crucial aspect of the issue that the sanctioning authority had the opportunity or access to such documents while the draft assessment orders are approved, therefore, verification of relevant documents along with draft assessment orders whereas such documents are not submitted to the approving authority, cannot be think of. Therefore, the claim of revenue regarding application of mind by the sanctioning authority while examining the Draft Assessment Orders cannot be believed, as the relevant material was not available to him at the time of granting of approval. 19. Adverting to the judgment of Hon'ble Chhattisgarh High Court relied upon by the Ld. CIT-DR, in the case of Hitesh G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther the approval granted u/s 153D of the Act is in terms with the provisions contained therein and musters judicial scrutiny. 5.1 A reading of Section 153D of the Act makes it clear that no order of assessment or reassessment in a search-related case can be passed except with the prior approval of the Competent Authority. While interpreting the meaning of 'approval' in the context of Section 153D of the Act, it has been laid down by different courts and the Tribunal that though the word 'approval' has not been defined under the provisions of the Act, however, as per the dictionary meaning of the word and judicial interpretation, grant of approval means due application of mind on the subject matter of approval which satisfies all the legal and procedural requirements. In case of ACIT v. Serajuddin & Co. (supra), Hon'ble Orissa High Court, while interpreting the meaning of approval u/s 153D of the Act has observed that approval of a superior officer cannot be a mechanical exercise. His approval must indicate the thought process involved while granting approval. The approval must indicate that the Approving Authority has examined the draft assessment order and finds that it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Commissioner under sub-section (12) of section 144BA." 15. The Legislative intent can be gathered from the CBDT Circular No. 3 of 2008 dated 12.3.2008 which reads as under: "50. Assessment of search cases Orders of assessment and reassessment to be approved by the Joint Commissioner. 50.1 The existing provisions of making assessment and reassessment in cases where search has been conducted under 6 ITA. No.4061/Mum/2012 section 132 or requisition is made under section 132A. does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....D of the Act. All the requests for approval are exhibited at pages 123 to 135 of the Convenience Compilation. 21. Even the approval granted by the Additional Commissioner of Income tax, Central Range - 2, New Delhi does not refer to any seized material/assessment records or any other documents which could suggest that the Additional Commissioner of Income tax, Central Range 2, New Delhi has duly applied his mind before granting approvals. 22. At this stage, it is paramount to note that all the orders framed by the Assessing Officer are pursuant to orders of the CIT u/s 264 of the Act. Therefore, the Additional Commissioner of Income tax, Central Range - 2, New Delhi should have been more cautious since his superior authority has set aside the assessment with specific directions. 23. Now, let us consider some analogous provisions in the Act. 24. Sec. 142(2A) of the Act reads as under: "If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts 7 ΙΤΑ. No. 4061/Mum/2012 about the correctness of the accounts, multiplicity of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. 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 ver....
X X X X Extracts X X X X
X X X X Extracts X X X X
....echanically appointed Sri G. P. Agarwal, as a special auditor. The said order depicts a total non-application of mind on the part of the Assessing Officer as also the Chief Commissioner of Income-tax." 28. Another section relevant to the facts in issue is Sec. 158BG which read as under: "The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or an Assistant Director or Deputy Director, as the case may be: Provided that no such order shall be passed without the previous approval of-- (a) the Commissioner or the Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets 10 ITA. No.4061/Mum/2012 requisitioned under section 132A, on or after the 1st day of January, 1997." 11.8. In this section also it is provided that the ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Mumbai Bench in the case of Shri Amarial Bajaj in ITA No. 611/M/2004 wherein at para-8, the Tribunal has considered the decision of the Hon'ble High Court of Delhi Bench in the case of United Electrical Co. 258 ITR 317 which read as under: "The proviso to sub-section (1) of section151 of the Act provides that after the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in-builts safeguards to prevent arbitrary exercise of power by an 7 ITA Nos. 534 & 611/M/04 Assessing Officer to fiddle with the completed assessment" The Hon'ble High Court further observed that: "what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the statement of the said parties, perhaps he would not have granted his approval, which was mandatory in terms of the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, 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), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return required to be furnished under Section 139. Section 153D relevant for our purposes is to be noted herein under: "Prior approval necessary for assessment in cases of search or requisition. 153D.-No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner." Provided that nothing contained in this section shall apply where the assessment or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power It was noted that the obligations of the approval of the Approving Authority serves two purposes: (i) On the 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. (ii) On the other hand, superior authority is also responsible and duty-bound to do justice with the taxpayer by granting protection against arbitrary or creating baseless tax liability on the assessee. The Tribunal has further noted that the provisions contained in Sections 153A to Section 153D provide for separate notice to be given to assessee for assessment for each year as specified in Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income Tax Act. The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be grante....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal CIT has given approval in batches of 69, 62, 37, 54 and 24 assessment orders. As observed by the Hon'ble Allahabad High Court [supra) it is humanly impossible to go through the records of more than 50 cases in one day to apply independent mind to appraise the material before the Assessing Officer. Therefore, we have no hesitation to hold that the approval was mechanical." 5.4 Keeping in perspective the legal position enunciated in the judicial precedents discussed above, if we examine the facts of the present appeal, it is to be noted that the Assessing Officer, vide letters dated 21.03.2013 sent draft assessment orders in respect of six different assessee's for various assessment years for approval of the Additional Commissioner in terms of section 153D of the Act. Perusal of copies of the aforesaid letters placed in the paper book reveals that the Assessing Officer has simply sent the draft assessment orders without the assessment records and seized material. Interestingly enough, on the very same day i.e. 21.03.2013 the Additional Commissioner has granted approval u/s 153D of the Act in respect of six different assessee's involving multiple assessment years. App....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... AAECM0201E 2005-06 -DO- 18 M/S MDLR DEVELOPERS & PROMOTERS P LTD AAECM0201E 2006-07 -DO- 19 M/S MDLR DEVELOPERS & PROMOTERS P LTD AAECM0201E 2007-08 -DO- 20 M/S MDLR DEVELOPERS & PROMOTERS P LTD AAECM0201E 2008-09 -DO- 21 M/S NAGESHWAR BUILDERS P LTD AACCN0116B 2005-06 -DO- 22 M/S NAGESHWAR BUILDERS P LTD AACCN0116B 2006-07 -DO- 23 M/S NAGESHWAR BUILDERS P LTD AACCN0116B 2007-08 -DO- 24 M/S NAGESHWAR BUILDERS P LTD AACCN0116B 2008-09 -DO- The above draft orders as proposed are hereby accorded approval with the direction to sure that orders are passed well before the limitation. Further, the copies of the final orders passed be sent to this office for records. Sd/- (Shashi Bhushan Shukla) Addl. Commissioner of Income Tax, Central Range-2, New Delhi." 5.5 A careful reading of the approval granted u/s 153D of the Act clearly indicates that the Approving Authority has neither examined the assessment records nor the seized materials. In fact, the letter of the Assessing Officer seeking approval also makes it clear that only draft assessment order....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cannot constitute a valid approval, as per the mandate and settled position of law. Consequently, the assessment completed u/s 153A/143(3) dated 15.03.2016 on the foundation of an invalid approval are bad in law, invalid and liable to be quashed. Resultantly, the common assessment order dated 15.03.2016 stands quashed, and the impugned orders of Ld. CIT(A) assailed before us are set aside. 23. Since, the common assessment order dated 15.03.2016 has been quashed by us in adjudication of legal ground raised by the assessee challenging the validity of approval u/s 153D, the grounds on merits have become academic, therefore, not required to be adjudicated separately. 24. Resultantly, ITA No. 111/RPR/2025 of the assessee is allowed, in terms of our aforesaid observations. ITA No. 112 to 116/RPR/2025 25. As we have allowed the appeal of assessee in ITA No. 111/RPR/2025 for AY 2008-09 by quashing the assessment order u/s 153A r.w.s. 143(3) dated 15.03.2016, the remaining appeal from ITA No. 112 to 116/RPR/2025 for AY 2009-10 to 2014-15, emanating from the common assessment order, having identical facts, circumstances and grounds of appeals are also allowed on the same terms. ....