TaxTMI 
TaxTMI 
2025 (7) TMI 745
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.... 2016-17 as lead case. 3. The assessee has taken the following grounds of appeal in AY 2016-17 :- "1. That having regard to the facts and circumstances of the case and in law, though the addition by the ld AO of Rs. 8,02,35,847/- in the order passed u/s 153A/143(3) have been deleted, however the ld CIT (A) erred in confirming the business income from trading in fabric as unexplained expenditure u/s 69C of the Income Tax Act. Such act of the ld. Commissioner of Income Tax Act is arbitrary, against law and facts on record and is not sustainable on various legal and factual grounds. 2. That having regard to the facts and circumstances of the case and in law the adhoc addition confirmed by Ld. Commissioner of Income Tax(A) of Rs. 36,94,847/- towards assumed commission being 1.5% of total sale and purchase of fabric is arbitrary, against law and facts on record and is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case and in law the adhoc addition confirmed by Ld. Commissioner of Income Tax (A) of Rs. 19,46,450/- towards assumed expenses being 159% of profit from trading of fabric is arbitr....
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....DR for the Revenue has no objection of admitting the additional ground of appeal being purely legal issue. 7. Considered the rival submissions and material placed on record. We observed that the issues raised by the assessee in additional grounds go to the root of the matter challenging the jurisdictional issue. In the light of Hon'ble Supreme Court in the case of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC), we are inclined to admit the additional grounds and take up the same for adjudication herein below. 8. Before deciding the legal issue in dispute, we may gainfully reproduce the approval obtained/granted u/s. 153D of the Income Tax Act (for short 'the Act'), which read as under:- 9. At the time of hearing, Ld. AR of the assessee submitted that in all the aforesaid five appeals, common issue involved i.e. consideration of a legal issue with regard to mechanical approval taken under section 153D of the Act before passing the impugned assessment orders under section 153A/143(3) of the Act. He submitted that before adverting to the arguments in the instant matters, the assessee would seek to draw up a chronological sequence of events, leading up to the instant appeals be....
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....ent years are same", whereas, there were several issues in other assessment years, kindly see order of Hon'ble ITAT with regards to AY 2011-12 to 2015-16, more specifically in AY 2014-15 involving consideration of many other issues. Thus, the aforesaid finding of learned CIT(A) is factually incorrect and contrary to material available on record. It is further, submitted that "common approval" has been granted by learned Addl CIT instead of separate approval for each assessment year and that to without any application of mind and without perusing or discussing assessment records, which has been deprecated by various high courts and Tribunal's across the country. Reliance is placed on following case laws: Case Laws Pg No. of PB Copy of judgment of Hon'ble High Court of Delhi in the case of PCIT vs Shiv Kumar Nayyar reported in 163 taxmann.com 9 9-13 Copy o1 judgment of Hon'ble High Court of Delhi in the case of PCIT vs Anuj Bansal reported in 165 taxmann.com 2. 14-16 Copy of Judgment of Hon'ble High Court of Allahabad in the case of PCIT vs Sapna Gupta reported in 147 taxmann.com 288. 17-21 Copy of judgment of Hon'ble High C....
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....by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D of the Act. Such perfunctory approval has no legal sanctity in the eyes of the law. The decision of the co-ordinate bench in Shreelekha Damani vs. DCIT 173 TTJ 332(Mum.) which has been approved by jurisdictional High Court subsequently, reported in 307 CTR 218 affirms the plea of the Assessee, wherein the Hon'ble Bombay High Court held as under:- "1. This appeal is filed by the Revenue challenging the judgment of Income Tax Appellate Tribunal ("the Tribunal" for short) dated 19th August, 2015. 2. Following question was argued before us for our consideration: "Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that there was no 'application of mind' on the part of the Authority granting approval? 3. Brief facts are that the Tribunal by the impugned judgment set aside the order of the Assessing Officer passed under Section 153A of the Income Tax Act, 1961 ("the Act" for short) for Assessment Year 2007-08. This was on the ground that the mandatory statutory requirement of obtaining an approval of....
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....left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises. 8. Accordingly, the Tax Appeal is dismissed." 16. In the case of ACIT, Circle-1 (2) Vs. Seraj....
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....e approval dated 08.06.2018 that the same was a common and composite order whereas the Addl. Commissioner is required to verify and approve that each of assessment year is complied with as well as procedural laid down under the Act. Such fact clearly reveals non-application of mind on the part of the Learned Addl. Commissioner of Income Tax, Central Range-7, New Delhi. Thus granting approval for all the common years instead of approval under Section 153B for each assessment year separately de horse the rules. The said approval is found to have been given in a mechanical and routine manner. We find that the order issuing authority has not discharged its statutory duties cast upon him even by assigning cogent reasons in respect of the issues involved in the matter. Thus granting approval in the absence of due application of independent mind to the material on record for each assessment year in respect of the assessee's case separately vitiates the entire proceedings; the same is found to be arbitrary and erroneous and therefore, liable to be quashed. We are also inspired by the ratio laid down in the Judgment narrated hereinabove passed by the Hon'ble Jurisdictional ....
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....ein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together." 17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 in the case of the assessee. The said order also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal o....