TaxTMI 
TaxTMI 
2025 (6) TMI 467
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....ubmitted that in search operation dated 19.11.2018, nothing incriminating was recovered. Approval letter dated 10.05.2021 has been examined by ITAT, Delhi in ITA No.3371/Del/2021 titled as "Mainee Steel Works Pvt. Ltd., New Delhi Vs. DCIT, Gurgaon" decided on 24.01.2025 was in favour of the appellant/assessee. 4. Learned Authorized Representative for the Department in written submissions submitted that Ld. CIT(A) vide his order, dated 28.06.2024, has rightly upheld the additions for the year under consideration while holding that the allegations of the assessee with respect to approval under Section 153D of the Act has no legs to stand and that the approval, the Range Head has looked into the records and applied by the assessee concerning the issue of approval of under Section 153D of the Act are without merit and may not be admitted. It is further submitted that Ld. AO requested approval from the Range Head under Section 153D of the Act, in the above mentioned appeals, vide his office letter being F. No. DCIT CC-II(GGN)/153D/2021-22/35 dated 22.04.2021. Ld. AO also proposed to make the assessment and accordingly forwarded the assessment records in the above-captioned appeals. T....
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....The alleged incriminating material referred are primarily in the nature of statement of third person prior or subsequent to search/survey proceedings. Guided by the principles laid down by the Abhisar Buildwell (P.) Ltd. (supra), Anand Kumar Jain (HUF) (supra) and Vikram Dhirani (supra), we find force in the legal plea placed on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment, additions/ disallowances made by the AO in all captioned appeals requires to be quashed. 14 We now advert to the other legal challenge vociferously raised on behalf of the assessee towards propriety of approval under s. 153D to the respective draft assessment orders placed before him by the Ld.AO. 14.1 The approval memo under s. 153D has been assailed on behalf the assessee. It would thus be in fitness to extract the copy of approval for ready reference. 14.2 With reference to the approval memo extracted above, it is the contention on behalf of the assessee that the combined approval granted for various AYs under s. 153D is plagued with substantive infirmities revealing gross non-application of mind and the assessment orders have....
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....is thus clearly is in the league of being mechanical and ritualistic approval rendering it expropriatory at the threshold. 14.3 The assessee thus contends that it is a gross case of an implied self confession of the Addl. CIT towards complete dependence on the process of assessment carried out by AO rendering it a 'technical approval' which in itself is fatal without anything more. 14.4 The assessee further contends that besides gross non application of mind discernible from such combined approval memo itself, assessment orders so approved are also marred by critical lapses and mistakes which remained unnoticed by the Addl. CIT. This shows that the Addl. CIT has not even cared to read the assessment orders but left every act to the wisdom of the AO. The assessee contends that the lapses / omissions committed as noticeable from the assessment orders have direct bearing on the process of reasoning adopted to come to conclusions on the ultimate additions/ disallowances. Some of the instances as may be observed are; AY Paragraph and Page No.of the Assessment Order Description and Comments Omission that the Ld. Additional Commissioner could have asked 20....
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....quiries summons u/s 131 of the Act dated 20.02.2018 were issued to certain entities........' Date mentioned as 20.02.2018 in the assessment order is prior to search date i.e. 19.11.2018. 14.4.4 Page 18 para 7.2 (AY 2013-14) read as 'the relevant extract of statement of Sh.Manoj Kumar Jain is reproduced herewith as under'. However no part of the statement has been reproduced. Such lapse remaining unnoticed yet again shows that the proposed assessment orders were not even read by the Ld.Addl.CIT. 14.4.5 Page 18 para 7.5 of the assessment order (AY 2013-14) reads as 'the reply of the above notice was provided by Mainee Steel Works Pvt.Ltd. which is as under' However, no part of the statement has been reproduced. 14.4.6 Page 23 of the of the order (AY 2013-14) reads as 'the statement of Sh.Surjit Singh in this regard is reproduced herewith as under'. However, no part of statement has been reproduced. 15. The assessee also contends that the order sheet maintained in the assessment order is also relevant to appreciate the sequence of events. The order sheet does not record any movement of files or any correspondence with Addl. CIT in the cours....
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....ment of prior approval under Section 153D of the Act. Hence, the AO should complete the assessment proceedings and prepare a draft assessment order which needs to be placed before the approving authority i.e. Joint / Addl. Commissioner (designated authority giving approval to search assessment under Sect ion 153D of the Act) for his perusal and prior approval. In view of the definitive judicial consensus available on the expectations from Competent Authority, such competent authority is necessarily required to objectively evaluate such draft assessment order with due application of mind on various issues contained in such order so as to derive his/ her diligent satisfaction that the proposed action of AO is in conformity with subsisting law and is also in accord with underlying factual matrix. The requirement of law to grant approval is consistently held to be not a merely as a formality or a symbolic act but a mandatory requirement. The AO is obligated is pass the assessment order exactly, as per approval / directions of the designated authority. It is not open to the AO to modify the assessment order without the knowledge and concurrence of the designated authority. 18.2....
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....he basis of seized materials, the superior authority is required to accord approval the respective Assessment order. The solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional/ Joint CIT concerned, with his experience and maturity of understanding, should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act enjoins due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. Long line of judicial precedents which provides guidance in applying the law has been quoted in the preceding para. The courts have repeatedly deprecated the pernicious practice of granting approvals by the supervisory autho....
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.... are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law. 19. In the light of foregoing discussions, we are unhesitatingly disposed to hold that the integrity and propriety of various assessments under captioned appeals based on such combined approval memo under s. 153D in question cannot be countenanced in law. 20. In view of legal objection answered in favour of the Assessee, the aspects of other objections on jurisdiction such as absence of DIN etc. or aspects of merits of additions/ disallowance does not call for separate adjudication. 21. The captioned appeals of the assessee in ITA No.3371 & 3375/Del/2024 [AY2013-14 to 2017-18] are allowed. ITA Nos.3376 to 3377/Del/2024 [Assessment years 2018-19 to 2019-20] [Mainee Steel Works Pvt.Ltd.] 22. One of the grounds in captioned appeals raises challenge to validity of approval under s. 153D. Similar other appeals discussed in preceding paras. 23. The approval memo under s....