TaxTMI 
TaxTMI 
2025 (1) TMI 1576
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....Appeals)-3, Bhopal on the following grounds of appeal: "1. On the facts and circumstances of the case and in law, the ld. CIT (A) has erred in sustaining addition of Rs. 1,77,86,577 on the count of excess stock of 'Sponge Iron' (i.e., raw material) computed by the ld. AO; when it is not actually weighed by search team; which is on the basis of `volume' taken randomly by the DVO at 925.01 on sampling method in place of correct volume of 249.580; books of account has not been rejected; alleged presumptive addition is invalid, unjustified in absence of any independent corroborative material evidence brought on record for unaccounted purchases of the alleged raw material, is liable to be deleted." 2. "On the facts and circumstances of the case and in law, the ld. CIT (A) has erred in sustaining addition of Rs. 1,77,86,577 on the count of alleged excess stock; while it is only based on DVO report without disposing off the objection raised before the DDIT(Inv.) against such arbitrary DVO report; while the search has been concluded on 26-10-17 and no excess stock has been found place in the 'Panchanama' drawn; no surrender has been made on that ....
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....roval for the assessee for AY18-19 (i.e., each assessee & each AY) & without following the proper procedure as mandated by law u/s 153D, 153A & 153B(1)(b); consequential search assessment made would be invalid and is liable to be quashed; relied on Shiv Kumar Nayyar (2024) (Del HC); Subash Dabas (2024) (Del HC); Sapna Gupta (2022) (All HC). Gr. No. 2 "On the facts & circumstances of the case and in law, addition made of Rs. 2,66,45,091 by the AO on account of alleged excess 'Sponge Iron' is unjustified; addition merely on estimation of income on alleged unaccounted purchase of 'Sponge Iron' (i.e., raw material); books of account not been rejected; sec 145(3) not been applied; assessment made u/s. 143(3); without rejecting books of account & without making assessment u/s. 144, estimation of income is not permissible in the eyes of law, is liable to be deleted; relied on Forum Sales (P) Ltd (2024) (Del HC); Marg Ltd (2017) (Mad HC); Anil Kumar & Co (2016) (Kar HC); Subhendu Kumar Subudhi (2022) (Ori HC)." Gr. No. 3: "On the facts & circumstances of the case and in law, addition made of Rs. 19,72,750 by the AO on ....
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....ially), Ground No. 3 and Ground No. 4 does not emanate from the impugned order of the CIT(Appeals), therefore, the same being based on misconceived facts are dismissed. 6. In so far the preliminary objection raised at Ground No. 5 is concerned, we are of the view that as the assessee company has assailed the sustainability of the addition of excess stock of "sponge iron" of Rs. 1,77,86,577/- sustained by the CIT(Appeals) vide its "Ground of appeal Nos. 1 & 2", therefore, the same would stand subsumed and be taken care of while adjudicating the said issue. 7. Apropos the preliminary objection raised by the assessee company vide Ground No. 1, we are of a firm conviction that the same stems out of Ground of appeal No. 3 raised by the assessee company in its appeal, and thus, would be considered while adjudicating the same. 8. Succinctly stated, the assessee company which is engaged in the business of manufacturing of sponge iron and MS Ingots/Billets was as on 24.10.2017 subjected to search and seizure proceedings u/s. 132 of the Act. The assessee company subsequent to the search proceedings had in compliance to notice issued by the A.O. u/s....
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....Value Consultants Pvt. Ltd. (M/s. RVCPL) which was based on the actual weighment of stock. The CIT(Appeals) was of the view that as the alleged difference in the valuation of the stock of pig iron and MS Billets of Rs. 19,72,750/- and Rs. 3,13,13,140/-, respectively, was worked out by the department's valuer without carrying out any actual weighment, thus, the same could not be sustained and was liable to be struck down. 11. Apropos the difference in the valuation of the sponge iron, the CIT(Appeals) observed that the same had occasioned for the reason that the department's valuer had not carried out any actual weighment of stock and had merely taken recourse to a sampling method. It was observed by him that the density of stock items was a key factor for determining the actual stock and the same varied from different lots/heaps. It was further observed by him that the A.O. ought to have considered the density calculated by the assessee's valuer i.e. M/s. Right Value Consultants Pvt. Ltd. ("RVCPL", for short) which was based on physical quantification of stock and not on the basis of a sampling method as was adopted by the department's valuer. Accordingly, the CIT(Appe....
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....9,72,750/- on account of excess stock of Pig Iron and Rs. 3,13,140/- on account of excess stock of Billets. During the course of search operation, physical inventory of raw material, finished goods, spare parts and consumable items were prepared and the same was got valued by the Registered Valuer in respect of factory premises of the appellant company located at Punj ipatra Gharghoda, Raigarh. The valuation Report was received from the registered valuer and the valuation of each item was compared with the stock declared by the assessee group. On comparison of each item of inventory as valued by the Registered Valuer with that stock declared by the appellant, it is found that some items are in excess which are given below:- Sl. No. Items As per physical verification As per Books Difference QTY. IN M.T. RATE PMT VALUE QTY. In M.T RATE PMT VALUE 1. MS Billets 20.33 25500 518415 8.05 25500 205275 313140 2. Sponge Iron 2278.3 14900 33946670 490.71 14900 7311579 26635091 3. Pig Iron 281.26 25000 7031500 202.35 25000 5058750 1972750 4. MS scrap 26.15 11000 ....
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....n account of such variation in stock as held by the CIT (A) was also not justified for the following reasons: (i) accurate weight of wheat, soyabean, unpressed cotton, cotton seeds, chana and cotton bales (rui) is not practically possible to estimate; (ii) due to weight loss, etc., there are chances of minor difference; (iii) the method adopted for weighment of stock by search party was not proper; (iv) no incriminating material was found during search 'which could prove that the assessee had purchased or sold the goods outside the books; (v) the difference in shortage was due to wrong estimation of loose commodities (vi) so far as shortage in bale (rui) is concerned, the difference in stock was on account of 256 quintals which was loaded in the trucks and 506.15 quintals which was received from Radha Ginning Factory, Harsood and this was evident from the sale bills and transport vouchers of cotton bales, affidavit, account and certificate of Radha Ginning Factory and other documents in respect of the sale of cotton bales which were in the PB filed before the Tribunal. It is, thus, clear that on the materials availa....
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....ing of stock is approx. 6,000 Sqfi. The nature of scrap stock, in terms of size & placing, is also haphazard. It is practically not possible to store 617.183 MT of scrap stock of haphazard shape in approx. 6,000 sq. ft. area. Besides this stock, scrap of PVC (high volume with low weight covering major area of available space) pertaining to wife's concern M/s. Saif Enterprises, weighing 30.767 MT was also lying. This fact was recorded in the statement and verified by the survey team during the survey operation. 13. Ld counsel for the assessee also contended that it was the duty of survey party to let the actual weighment of stock found during the course of survey proceedings, which was not done. It is at all not possible that exact 15 MT in 12 Trucks; 13 MT in 15 trucks; 13.5 MT in 13 trucks; 11.4 MT in 6 trucks of scrap can be loaded in the trucks. Even otherwise, looking to the nature of scrap of variety, at the same time each truck could not be loaded by net weight of 15 MT. It may be worth to note that while replying to question 15 of statement given during survey operation by Shri Shaman Ali that whenever the goods are purchased ....
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....s offered to tax are mentioned below 25. In the instant case also no other incriminating material was found during the course of survey relating to unaccounted stock, excess physical stock was calculated by Revenue authority on estimative and presumptive basis. The stock statement prepared by the survey team on the date of survey itself seems to be on a loose wicket since the remarks column mentioning about the weighment of stock in trucks do not correlate with any actual weighment slip and also the alleged unrecorded stock is practical impossible to be stored on the available space with the assessee. 26. We, therefore, in the given facts and circumstances of the case and respectfully following the decision referred hereinabove are of the considered view that ld. CIT (A) erred in confirming the addition made by the ld. AO for unrecorded stock of Rs. 84 lakhs merely on the basis of recorded statement and without basis of any material evidence and there the same needs to be deleted. 4.2.3 Therefore, judiciously following the cited decisions, the density calculated by M/s RVCPL is found to be correct as the same is based on actual weighment of stock. Th....
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....e same. The CIT(Appeals) was of the view that as the A.O. had taken the necessary approval from Jt.CIT(Central), Raipur vide the latter's letter F.No.JCIT(C)/RPR/153D/2019/348 dated 30.12.2019, therefore, it could safely be held that he had followed the proper procedure as was required per the mandate of law. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: "4.3 Ground No. 4:- Through these grounds of appeal the appellant has challenged legality of assessment order stating that no approval u/s. 153D was taken by the AO. On perusal of assessment order it is seen that the AO has taken necessary approval from JCIT(Central), Raipur vide letter F.No.JCIT(c)/RPR/153D/2019/348 dated 30.12.2019. Thus, the AO has followed proper procedure and approval' was taken u/s. 153D of the Act from competitive authority before passing the impugned assessment order, therefore plea raised by appellant has no merit and is therefore, rejected. Therefore, appeal on this ground is Dismissed." 15. Both the assessee company and the revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 16. We have heard th....
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....ssessee's (including the assessee company) was granted by the Jt. CIT, Range-Central, Raipur vide his letter dated 30.12.2019. Apart from that, the Ld. AR submitted that a perusal of the approval letter dated 30.12.2019 in itself revealed that the Jt. CIT, Range-Central, Raipur had not looked into the "draft assessment order" in the backdrop of the seized records and had merely presumed that the needful would have been done by the A.O. The Ld. AR to fortify his aforesaid claim had drawn our attention to Para 3 of the letter granting the approval u/s. 153D of the Act, dated 30.12.2019. The Ld. AR submitted that a similarly worded perfunctory approval that was granted by the Jt. CIT, Range-Central, Raipur had been quashed by the Tribunal for the reason that the same suffered from non-application of mind and was left dependent on a presumption of proper performance of duty by the A.O. Our attention was drawn to the orders passed by the Tribunal in the cases of, viz. (i) Goyal Energy & Steel P. Ltd. Vs. ACIT, ITA No. 244, 245/RPR/2019 dated 27.03.2023, Page No. 155 to 165 of APB; (ii) Goyal Energy & Steel P. Ltd. Vs. ACIT, ITA No. 246/RPR/2019 dated 17.09.2021, Page No. ....
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....Raipur by referring to an office letter No. F.No. Jt.CIT(Central)/RPR/Draft Assessment order/2016-17, dated 09.09.2016 had observed that it was being presumed by him that the A.O. had, viz. (i) given proper opportunity of hearing to the assessee; (ii) thoroughly verified the seized material; and (iii) satisfied himself that all the issues emanating from the record have been verified and the additions wherever required have been proposed; and, thus, based on such presumption granted the impugned approval and directed the A.O. to act accordingly. The Ld. AR submitted that the aforesaid letter dated 30.12.2019 (supra) revealed beyond doubt that the Jt.CIT (Central), Raipur without carrying out any verification of the seized material and independently applying his mind to the records before him, had based on a mere presumption that whatsoever needful was required to be done by the A.O. must have been done by him granted the approval u/s. 153D of the Act. 23. Apart from that, the Ld. AR submitted that the final assessment order passed by the A.O. u/s. 143(3) r.w.s. 153A, dated 30.12.2019 was not the one that was proposed by the A.O. vide the "draft assessment order" that was forwarde....
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....ee company directing it to submit its reply latest by 28.12.2019 (upto 2:00 pm) as to why an addition of Rs. 2,89,20,981/- towards difference in value of stock may not be made in its case u/s. 69 of the Act; and (iv) the reply filed by the assessee company to the aforesaid letters/SCNs on 27.12.2019, was once again forwarded by the A.O. on 30.12.2019 (date of grant of approval itself) to the Jt. CIT, Range-Central, Raipur for his approval u/s. 153D of the Act. The Ld. AR to fortify the aforesaid factual position had drawn our attention to the relevant pages of the assessee's "Paper Book" ("APB"), viz. (i) receipt of report of the department valuer on 27.12.2019 (Page 44 of APB), (ii) letter dated 27.12.2019 issued by the A.O. calling upon the assessee company to file its reply regarding the comments/letter of the department valuer, viz. M/s. Frontline Consultants Pvt. Ltd. by 27.12.2019 (upto 5:00 pm), Page 45 of APB, (iii) "Show Cause Notice" dated 27.12.2019 issued by the A.O. to the assessee company directing it to file its reply to the letter/comments of the registered/government valuer, viz. M/s. Frontline Consultants Pvt. Ltd. dated 27.12.2019 latest by 28.12.2019 (u....
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....12-19 to submit reply/ explanation up to 28-12-19 2.00 PM against the 'valuation made' by the 'Departmental Valuer', of the Inventories of the assessee-Co as on the date of search on 24-10-17, asking that the difference of stock amounting to Rs. 2,89,20,981, why it should not be added to its income and thereby time allowed up to 28-12-19 2.00PM; (copy enclosed. .) On 27-12-19, the ld. AO has also issued another letter to the assessee-Co to give/ submit reply with time allowed up to 27-12-19 5.00PM with respect to the alleged 'valuation' submitted by the Departmental Valuer (M/s. Frontline Consultants) to the ld. AO; 27-12-19 On 27-12-19, the assessee-Co has submitted counter reply/ written submission as against the letter/ query/ SCN dt. 27-12-19 by the ld. AO in respect of the 'valuation report of inventories' as submitted by the 'Departmental valuer' (M/s. Frontline Consultants) before the AO on 27-12-19 itself; (copy enclosed .......... ) Carrying his contention further, the Ld. AR submitted that the subsequent developments which in turn were based on the proceedings carried out by the A.O. from 27.12.2019 till 28....
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.... BBG India Ltd. Vs. DCIT, ITA No. 11 to 16/PUN/2023, dated 19.10.2023. The Ld. AR submitted that the Tribunal in its aforesaid order taking cognizance of the fact that the A.O. after obtaining approval of the Jt. CIT u/s. 153D of the Act had carried out certain rectification/improvements and passed the final assessment order, observed that the same was to be held as having been passed without obtaining the approval as required per the mandate of law. 26. Apropos the merits of the case, the Ld. AR submitted that as the Global Satellite Position (GSP) method which involves estimation of stock rather than actually counting/weighing the same was adopted by the department's valuer, viz. M/s. FCPL for valuation of the raw material, finished goods, spare parts and consumable items is not a correct method and had not been approved by the courts, therefore, the adverse inferences to the extent sustained by the CIT(Appeals) were liable to be vacated on the said count itself. The Ld. AR in support of his aforesaid contention had relied on the judgment of the Hon'ble High Court of Delhi in the case of CIT Vs. Bansal High Carbons (P) Ltd, 223 CTR 179 (Del) and that of the Hon'ble High C....
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.... 28. Rebutting the Ld. AR's claim that the A.O. after sending the "draft assessment order", dated 26.12.2019 to the Jt. CIT(Central), Raipur had thereafter at the latter's back continued with the assessment proceedings, and after receiving the letter from the department's valuer, dated 27.12.2019 called for the reply of the assessee company, but had without bringing the said subsequent chain of events to the notice of the Jt. CIT, (Central), Raipur framed the impugned assessment u/s. 143(3) of the Act, dated 30.12.2019, the Ld.DR submitted that the said averment was factually incorrect. Elaborating further on his contention, the Ld. DR submitted that though it is a matter of fact that the A.O. after forwarding the "draft assessment order" vide his letter dated 26.12.2019 to the Jt. CIT (Central), Raipur had received a letter dated 27.12.2019 (received on the same date) from the department's valuer viz. M/s. FCPL and, based on the same, had called for the comments of the assessee company vide his letter dated 27.12.2019, which, thereafter, was received on the very same date i.e. 27.12.2019, but all the said subsequent developments were brought by him to the notice of the Jt. CIT(....
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....ring letter of even date which was duly acknowledged by the latter's office, failed to come forth with any reply. Also, the Ld. DR on being queried that on what basis the present A.O. i.e. ACIT (Central), Bilaspur had vide his letter/written submission dated 07.10.2024 claimed that the "draft assessment order" was on 30.12.2019 forwarded to the Jt. CIT, (Central), Raipur vide a "pen-drive"; failed to come forth with any reply. Apart from that, the Ld. DR on being confronted with the fact that the Jt. CIT (Central), Raipur in his approval letter dated 30.12.2019 (supra) while granting approval u/s. 153D of the Act in the case of the assessee company a/w. three other entities, had referred to two letters received from the office of the DCIT (Central-2), Raipur i.e. dated 26.12.2019 and dated 28.12.2019, therefore, on what basis it was being claimed that the approval was granted by him after considering the fresh modified "draft assessment order"(revised), dated 30.12.2019 that was forwarded to him incorporating the addition of Rs. 2.89 crore (approx.) which was based on the developments/modifications post 26.12.2019, failed to come forth with any plausible explanation on the sai....
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.... for approval on 26.12.20219 have not been made available to the assessee in spite of their specific request. It has also been submitted by the Ld. AR that after submitting the draft assessment orders on 26.12.2019 to the Joint Commissioner of Income Tax (Central Range ), Raipur for approval, two more letters dated 27.12.2019 were issued to the assessee asking to make compliance on the same on or before 27.12.2019(5PM)/28.12.2019 (2PM). 6. It was the argument of the Ld AR that as the assessment proceeding were still going on after 26.12.2019 whether any revised / Fresh draft assessment order were submitted by the AO on or after 28.12.2019. Approval in terms of the provisions of Section 153D of the Act 7. The approval by the Joint CIT, Central, Raipur, has not been granted on the same/very next day of submission of draft assessment order and JCIT has granted approval proper application of mind without any hasty manner. In the letter approving the draft assessment order, it is mentioned that "Further, in view of this office letter No. JCIT(C)/ RPR/153D/2016-17 dated 09.09.2016 it is presumed that the AO has ● Given proper opportunity of heari....
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....l powers of the AO or creating any prejudice to assessee. 11. Approval u/s 153D is therefore purely an administrative function performed by Joint CIT, which is also borne out from the fact that the Joint. CIT can give directions to make assessment in a particular manner only u/s 144A of IT Act, which has not been invoked in this case. Both provisions u/s 153D and u/s 144A operate in different domains and are for different purposes, which further strengthens the position of law that 153D approval is only administrative in nature intended to ensure that there was no jurisdictional error or illegality or violation of principles of natural justice and that the procedural requirements are duly met before the assessment order is passed by AO. 12. In the Sahara Credit Cooperative IT(SS)A No. 09/RPR/2018 23 Society Ltd. Vs. DCIT/ACIT (supra) adjudicated by Hon'ble Allahabad High Court as this case discusses about the communication of approval in whatever mode. On the other hand, in the instant case, approval was granted by Ld JCIT Central) Raipur not only in written mode but also in oral mode from time to time. 13. In the realm of administrative approval....
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....CIT Central Raipur doesn't make the assessment order itself invalid, bad in law & non-est and is liable to be quashed as challenged by the assessee. 16. In Commissioner of Income Tax vs Bharatkumar Modi (2000), Hon'ble Bombay High court opined that a proceeding is a nullity when the authority taking it has no power to have seize in over the case. The omission of the assessing officer, in the present case, to confront the assessees with the material in his possession does not affect the ab initio jurisdiction enjoyed by the assessing officer in respect of the above proceedings. 17. Courts have even approved the service of notices / orders through emails or even social media such as WhatsApp etc. Hence, there can be no specific requirement for Range Head also to be physically present at the station where assessment records are physically available to be able to apply his / her mind on relevant material before granting the approval u/s 153D to the draft assessment order proposed by the AO. It is also not the case that the supervisory authority comes to know of the facts / details of assessment proceedings in any case only at the time when it receives the draf....
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....cial review is applicable only if the decision suffers from the vice of illegality, irrationality or procedural impropriety has been held by the Hon'ble Supreme court in the judgment of Municipal Council, Neemuch vs Mahadev Real Estate & Others (Civil Appeal Nos. 7319-7320 of 2019). 23. In this case the AO has issued letter dated 15-10-2019 with detailed questionnaire to the assessee asking him to submit his reply by 25-10-2019. In the letter, the AO has asked the assessee regarding the stock difference found during the search proceeding. The assessee has submitted its reply on 13-12-2019 where he had raised his objection regarding the valuation of stock. 24. On 27-12-2019 Frontline Consultation Pvt Ltd has submitted its report on "Valuation of Plant & Machinery and determination of quantity, Value of inventories, at different location in the case of NR TMT (INDIA) Pvt Ltd and NR Ispat & Power Pvt Ltd." Dated 27-12-2019. (Copy of the forwarding letter is enclosed) in response to the letter issued by the AO on 17-12-2019 (Copy enclosed). In the said letter Frontline Consultation Pvt Ltd has mentioned the following in the last para " the objection raise....
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....ality or procedural impropriety and such approval has duly met the requirement of law" 29 Therefore, in view of all the facts & circumstances of the case, it is seen that the AO has issued a show cause on 27-12-2019 after receiving a report from Frontline Consultation Pvt Ltd who has made valuation of the stock of the assessee company during the search regarding the objection made by the assessee company on the valuation report. The assessee had submitted its reply on 27-12-2019 and the AO after considering the reply of the assessee sent a revised draft assessment order to the Joint Commissioner of Income Tax, Central Range, Raipur for necessary approval. As the case was going to be time barred, the Joint Commissioner of Income Tax, Central Range, Raipur after carefully considering all the facts brought in the record after proper application of mind has given approval u/s 153D of the Act on 30-12-2019. Submitted for your kind perusal. Encl: As above Sd/- (Pradeep Kumar Swarnakar) Assistant Commissioner of Income-tax Central Circle, Bilaspur 31. On merits, the Ld. DR submitted that as the valuation of stock of the ass....
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....T-DR or the A.O. (who had joined virtually), which would reveal that the impugned fresh modified "draft assessment order" (revised) was again forwarded by the A.O. to the Jt. CIT (Central), Raipur for his approval u/s. 153D of the Act on 30.12.2019. Also, it was submitted by him that no material/evidence had been led by the Ld. CITDR or the A.O. (who had joined virtually) which would irrefutably establish that the subsequent chain of events i.e. post/after forwarding by him of the "draft assessment order" to the Jt. CIT (Central), Raipur on 26.12.2019 were brought to the latter's notice, viz (i) letter dated 27.12.2019 of the department valuer disposing off the objections that were earlier raised by the assessee company to its valuation of stock; (ii) issuance of letter/SCN, dated 27.12.2019 to the assessee company calling upon it to put forth its explanation to the observations of the department valuer; and (iii) reply filed by the assessee company objecting to the observations of the department valuer-which, thus, had resulted to passing of the final assessment order u/s. 143(3) of the Act, dated 30.12.2019 that was substantially at variance/difference from the "draft assessment ....
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....Raipur for his approval u/s. 153D of the Act, even otherwise, it was incomprehensible that though the same A.O. had not forwarded any fresh modified "draft assessment order" (revised) while simultaneously framing parallel assessments involving same set of facts in the case of the "sister concern", viz. NR Ispat & Power Pvt. Ltd. (supra), but at the same point of time had done so while framing the assessment in the case of the present assessee company. 34. Controversy involved in the present appeal lies in a narrow compass, i.e. (i) as to whether or not the A.O. had framed the assessment vide his order passed u/s. 143(3) of the Act, dated 30.12.2019 in absence of a valid approval of the Jt. CIT, Range-Central, Raipur u/s. 153D r.w.s. 153B(1)(b) of the Act?; and (ii) that as to whether or not the CIT(Appeals) is right in law and facts of the case in partially vacating/sustaining the addition made by the A.O. towards suppression in the valuation of sponge iron? 35. Before proceeding any further, we deem it fit to cull out the provisions of Section 153D of the Act as had been made available on the statute vide the Finance Act, 2007 w.e.f. 01.06.2007, as under: "153D. No ....
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....iated the assessment order. Further, we may herein observe that the Hon'ble Supreme Court in the case of ACIT Vs. Serajuddin & CO, SLP (Civil) Diary No. 44989/2023 dated 28.11.2023, had approved the order of the Hon'ble High Court of Orissa in the case of ACIT Vs. Serajuddin & Co. (2023) 454 ITR 312 (Orissa), wherein it was held that non-compliance with the requirements of Section 153D or granting approval without proper examination can lead to the invalidation of the assessment order. It was, thus, observed that a mere mechanical approval without proper examination and understanding of the draft assessment order or case records vitiated the assessment order. Based on the aforesaid settled position of law, we are of a firm conviction that an approval u/s. 153D of the Act granted after due application of mind and verifying the draft assessment order in the backdrop of the seized material is sine-quanon for framing of a valid assessment u/s. 143(3) r.w.s. 153B(b) of the Act. 37. We shall now in the backdrop of the aforesaid settled position of law deliberate upon the contentions advanced by the Ld. AR, based on which, he has assailed the validity of the assessment ord....
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....CN, both dated 27.12.2019 issued by the Dy.CIT, Central Circle-2, Raipur had on the same date, i.e. on 27.12.2019 filed its reply, Page 47-48 of APB. 40. Ostensibly, the aforementioned facts reveal that the A.O. after forwarding the "draft assessment order" vide his letter dated 26.12.2019 had thereafter continued with the assessment proceedings. As observed by us hereinabove, the A.O. after having forwarded the "draft assessment order", dated 26.12.2019 to the Jt. CIT (Central), Raipur for his approval u/s. 153D of the Act had, thereafter, received a letter of the department's valuer viz. M/s. FCPL, dated 27.12.2019 wherein the latter had dealt with the objections to the valuation of stock that were earlier raised by the assessee company. The A.O. had vide his letter/SCN dated 27.12.2019 confronted the aforesaid letter of the department valuer to the assessee company and had called upon it to furnish its reply within the specified time periods therein mentioned. In compliance, the assessee company had filed with the A.O. its reply on the same date i.e. on 27.12.2019, wherein the disposal of its objections to the valuation of stock by the department's valuer based on the latter'....
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....of the department that the fresh modified "draft assessment order" (revised) was forwarded by the A.O. to the Jt.CIT (Central), Raipur on 30.12.2019 is either discernible from the assessment record or had been placed before us by the Ld. DR. (B) Although the A.O. vide his letter dated 07.10.2024 (supra) had stated that a fresh modified "draft assessment order", dated 30.12.2019 (revised) was on the same date made available to the Jt. CIT, (Central), Raipur in a pen-drive, but we find that there is no mention of any such fresh modified "draft assessment order", dated 30.12.2019 (supra) in the letter dated 30.12.2019 of the Jt. CIT(Central), Raipur wherein approval was granted by him u/s. 153D of the Act. Rather, the Jt. CIT (Central), Raipur vide his letter dated 30.12.2019 had, inter alia, granted the approval to the A.O. for the "draft assessment order", dated 26.12.2019 that was forwarded in the case of the assessee company. There is nothing available on record which would reveal that either the modifications to the "draft assessment order", dated 26.12.2019 or the developments/subsequent sequence of events that had transpired based on the continuation of the assessment ....
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....hat was sought by the A.O, viz. (i) letter dated 26.12.2019 : the approval that was sought by the A.O. in the cases of (a) M/s. NR Ispat & Power Pvt. Ltd.; & (b) M/s. NR TMT (I) Pvt. Ltd., Page 17 of APB; (ii) letter dated 28.12.2019: the approval that was sought by the A.O. in the case of the other two entities, viz. (i) M/s. NRVS Steels Pvt. Ltd.; and (ii) M/s. Sambhavi Energy and Coal Beneficiation Pvt. Ltd. Interestingly, there is no mention in the approval letter of the Jt. CIT(Central), Raipur, dated 30.12.2019 that the DCIT(Central)-2, Raipur i.e. the A.O. had ever sought for any approval of a fresh modified "draft assessment order" (revised) dated 30.12.2019. (D) that on a close scrutiny of the report/written submissions dated 05.08.2024 filed by the A.O, we find that he had in his rebuttal of the claim of the assessee company that there was no application of mind by the Jt. CIT (Central), Raipur while granting approval u/s. 153D of the Act, dated 30.12.2019, had emphasized that the "draft assessment order" was forwarded to the Jt. CIT (Central), Raipur on 26.12.2019 and the latter had thereafter, granted the approval after 04 days i.e. on 30.12.2019 and not on the....
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.....2024 (supra) had rebutted the claim of the assessee company that his predecessor after having forwarded the "draft assessment order", dated 26.12.2019 had issued to the assessee company two letters, i.e. (i) letter dated 27.12.2019 asking it to make necessary compliance to the same on or before 27.12.2019 (before 05:00 pm); and (ii) "Show Cause Notice"(SCN), dated 27.12.2019 calling upon it to put forth an explanation latest by 28.12.2019 (before 02:00 pm). However, we find that the aforesaid rebuttal of the A.O. in itself is contradictory to the material available on record. We, say so, for the reason that it is a matter of fact borne from record that after the A.O. had forwarded to the Jt. CIT (Central), Raipur the "draft assessment order", dated 26.12.2019 for his approval u/s. 153D of the Act that he had thereafter on receiving the report of the department's valuer on 27.12.2019 issued a letter and a "Show cause notice" to the assessee company, viz. (i) letter dated 27.12.2019 wherein the assessee company was called upon to submit its comments to the valuation of the department's valuer, viz. M/s. FCPL on or before 27.12.2019 (05:00 pm), Page 45 of APB; and (ii) show cause not....
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....nt to forwarding of the "draft assessment order" vide his letter dated 26.12.2019 to the Jt. CIT, Range-Central, Raipur were thereafter brought to the latter's notice. As is discernible from the record, we find that the assessment proceedings continued by the A.O. after forwarding the "draft assessment order" to the Jt. CIT, Range-Central, Raipur for approval u/s. 153D of the Act vide his letter dated 26.12.2019 (received by the office of Jt. CIT on same date) were never brought to the latter's notice. For the sake of clarity, the proceedings continued by the A.O. after forwarding of the "draft assessment order" to the Jt. CIT, Range Central, Raipur on 26.12.2019 are chronologically culled out as under: Date Particulars 27.12.2019 Receipt by the A.O. of the letter/comments dated 27.12.2019 of the registered/department's valuer, viz. Frontline Consultants Pvt. Ltd. (FCPL), Page 44 of APB for A.Y. 2018-19; 27.12.2019 Letter dated 27.12.2019 issued by the Dy.CIT, Central Circle-2, Raipur to the assessee company, wherein a copy of the letter/comments, dated 27.12.2019 of the department's valuer, viz. M/s. Frontline Consultants Pvt. Ltd. on the objectio....
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..... CIT (Central), Raipur, viz. (i) receipt by the A.O. of a letter/comments of the registered/department's valuer, viz. M/s. Frontline Consultants Pvt. Ltd. dated 27.12.2019; (ii) letter dated 27.12.2019 issued by the Dy. CIT, Central Circle-2, Raipur to the assessee company calling upon it to offer its comments to the letter/comments dated 27.12.2019 of the registered /department's valuer, viz. M/s. Frontline Consultants Pvt. Ltd. by 27.12.2019 (upto 05:00 pm); (iii) the "Show Cause Notice" (SCN) dated 27.12.2019 issued by the Dy.CIT, Central Circle-2, Raipur calling upon the assessee company to furnish its reply that as to why the difference of stock amounting to Rs. 2,89,20,981/- may not be added to its income u/s. 69 of the Act latest by 28.12.2019 (upto 2:00 pm); and (iv) the reply dated 27.12.2019 of the assessee company filed with the A.O. wherein it had pointed out the discrepancies in the letter/comments dated 27.12.2019 of the registered/department's valuer, viz. M/s. Frontline Consultants Pvt. Ltd.; OR the impugned fresh modified "draft assessment order", dated 30.12.2019 incorporating an addition u/s. 69 of the Act of Rs. 2.89 crore (supra) towards ....
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....) on 30.12.2019 (i.e. on the date of grant of approval itself) to the Jt. CIT (Central), Raipur for his approval u/s. 153D of the Act, unlike the case of M/s. NR Ispat & Power Pvt. Ltd. (supra) wherein based on same set of facts qua the grant of approval u/s. 153D of the Act by the Jt. CIT (Central), Raipur, the assessments framed in the latter's case had been quashed by the Tribunal vide its order passed in the case of ACIT (Central)-2, Raipur Vs. M/s. NR Ispat & Power Pvt. Ltd., ITA No. 4, 6 to 10/RPR/2021 and CO Nos. 12 to 15 for AY(s) 2010-11 to 2013-14 & A.Y. 2018-19, dated 30.08.2024, inter alia, for the reason that the final assessment order, dated 30.12.2019 in the said case was found at variance as against the "draft assessment order" [forwarded to the Jt. CIT (Central), Raipur on 26.12.2019] thus, raises serious doubts as regards the veracity of the A.O's unsubstantiated claim of having forwarded a fresh modified "draft assessment order" (revised) on 30.12.2019 (i.e. on the date of grant of approval itself) to the Jt. CIT (Central), Raipur for his approval u/s. 153D of the Act in the case of the assessee company before us, viz. M/s. NR TMT (India) Pvt. Ltd. 47. We, thu....
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.... 600000 NR Ispat & Power Pvt. Ltd 90900000 Prithvi Dealcomm Pvt. Ltd 7500000 Singhai Vypaar Pvt Ltd. 664000 Vee Point Commerce Pvt. Ltd. 614000 Wise Mens Consultancy Pvt. Ltd. 500000 Unnati Commodeal Pvt. Ltd. 1000000 From above table, it is clear that except N.R Ispat & Power Pvt. Ltd. and M/s Seleno Steel Ltd. all other companies are Kolkata based shell companies, it is also amply clear that N.R Ferro and Power Pvt. Ltd was liquidated its investment for investment of N.R Ispat & Power Pvt. Ltd." d) Following text is appearing in the final assessment order on page no. 3 which is not appearing in the draft assessment order. "The entire amount is found to be invested into NR Ispat and Power Pvt. Ltd. and Maa Mahamaya Rolling Mill Pvt. Ltd. It acquired the 791200 equity shares of NR Ispat and Power Pvt. Ltd. valued at Rs. 9,89,00,000/- and 85,000 shares of Maa Mahamaya Rolling Mills Pvt. Ltd. valued at Rs. 85,00,000/- ". e) Figures appearing in the table under the heading 'Profit & Loss account' for column 'Mar 18' and 'Mar 17' in the final assessment order on page no....
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....term loans in order to earn interest. Such interest will be chargeable under section 56 of the I.T Act. The amount of interest received by the company flows from its investments and is its income and is clearly taxable even though the interest amount is earned by utilizing borrowed capital. The following ratio has been laid - '(i) Interest earned is of revenue nature and is to be taxed and accounting practice is not necessarily good law. (ii) Income attracts tax as soon as it accrues and interest income is always of revenue nature unless it is received by way of damages or compensation.' The stand of the department has been vindicated that wherever the receipts are from other sources which are not direct or incidental to the business activities are liable to be taxed. Therefore, the sum of Rs. 551039/-, 2883487/- and 4205306/- for A.Y 2016-17, 2017-18 and 2018-19 respectively which have been earned out of the surplus funds lying idle and kept as short term investment is hereby brought to the tax under the head 'income from other sources' and is not allowable to be set off against the general expenditure and other administrative expenditure. ....
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.... Scrap 26.15 11000 287650 26.15 11000 287650 0 5 Sillico Manganese 3.34 58000 193720 3.34 58000 193720 0 6 Total 41977955 13056974 28920981 The valuation report of the registered valuer was confronted to the assessee for its comments. In response thereto the assessee companies viz. NR Ispat & Power Pvt. Ltd., NR TMT (India) Pvt. Ltd. and Seleno Steel Limited vide their letters dated 26.01.2018 received on 29.01.2018 had sought certain information and documents in connection with the valuation done by the registered valuer, particularly the assessee has sought for the copies of the following documents and information: - (a) Survey base file data of all survey work. (b) Auto Cad Drawing soft and hard copy and measurement of raw material and finished product. (c) Initial level and final level of ground for quantity calculation purpose. (d)All pictures/photographs related to survey site of different angle. (e) Details quantity calculation sheet of all raw material and finished products. (f) Detail calculation sheet....
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....der was passed without approval of the concerned authority as required per the mandate of law. Also, we find that the ITAT, Pune in the case of BBG India Ltd. Vs. DCIT, ITA No. 11 to 16/PUN/2023, dated 19.10.2023, taking cognizance of the fact that the A.O. after obtaining the approval of the Jt. CIT u/s. 153D of the Act had thereafter carried out certain rectification /improvements and passed the final assessment order, observed that the said order was to be held as having been passed without obtaining the approval as per the mandate of law. 51. We are of a firm conviction that once the "draft assessment order" is approved by the Jt. CIT u/s. 153D of the Act, then the A.O. is rendered as functus officio and can only pass the final assessment order as approved by the Jt. CIT. An analogy in support of our aforesaid view can safely be drawn from the judgment of the Hon'ble Apex Court in the case of Panchmahal Steel Ltd. Vs. U.A. Joshi, ITO and another (1997) 225 ITR 458 (SC). In the present case before us the A.O. had come up with a final assessment order, which as observed by us hereinabove is found to be materially different from the "draft assessment order" that was ap....
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....in accordance with the official procedure, it will lead to a presumption that due diligence was followed. Apart from that, the Hon'ble High Court had observed that as the matter was remanded back to the file of the A.O. for fresh adjudication with a liberty to the assessee to raise the issue before the revenue authority and furnish necessary information/evidence in support of his contention, therefore, no prejudice was caused to him. 54. At this stage, we may observe that in the case of Hitesh Golchha Vs. ACIT, Central Circle-1, Raipur (supra), the assessee except for referring to the contents of the approval letter had failed to lead any evidence/material which could irrefutably prove to the hilt that the approval was mechanically granted in absence of any application of mind by the Jt. CIT. However, the facts involved in the present case before us are materially distinguishable. The A.O. in the present case after forwarding the "draft assessment order" vide his letter dated 26.12.2019, had thereafter continued with the assessment proceedings over the period, i.e. 27.12.2019 to 28.12.2019 and had passed the final assessment order which is found to be substantially different....
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....of Income tax (Central)-2, Raipur Anihramos Subject - Approval u/s 153D of the I.T. Act -N. R. and Indermani Groups - Regarding. Please refer to your letters in F.No. DCIT(C)-2/RPR/Search assessment/2019-20 dated 26.12.2019 and dated 28.12.2019. 2. The draft assessment orders u/s 153D and 143(3) in the following cases submitted vide above mentioned letter are hereby approved u/s 153D of the I.T. Act S.No. Name of the assessee PAN AY 1 N.R. Ispat & Power Pvt. Ltd. AACCN6591Q 2009-10 to 2018-19 2 N.R. TMT (India) Pvt. Ltd. AAECP8302P 2012-13 to 2018-19 3 NRVS Steels Pvt. Ltd. AAHCS4369L 2008-09 to 2018-19 4 Sambhavi Energy and Coal Benefication Pvt. Ltd. AALCS5140B 2012-13 to 2018-19 3. Further in view of this office letter no. F.No. JCIT(C)/RPR/Draft Asst. Order/2016-17/ dated 09.09.2016 it is presumed that the AO has - given proper opportunity of hearing has been given to the assessee . thoroughly verified the seized material and that there are no adverse findings · satisfied himself that all the issues emanating from the records have been verified and the additions wherever required have been proposed. 4. You may act accordingly. The co....