TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 1489
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....ucted in the case of the assessee as well as various persons and concerns of the assessee on 28.5.2008. Notice u/s. 153A of the Act dtd. 11.3.2010 was served on the assessee. Notices u/s. 142(1) of the Act dtd. 19.5.2010, reminder dated 1.7.2010, and dated 21.7. 2010 were also issued. However, no return of income was filed in response to notice u/s. 153A of the Act. However, it seems that return of income was filed on 22.1.2004 i.e. before notice u/s. 153A of the Act was issued in the name of M/s. Md Serajuddin & Brothers, in which name, assessee was regularly assessee for A.Y. 2007-08 and earlier. The Assessing Officer issued various summons to the partners of the firm for personal appearance. However, except the appearance of Md Seraj Yusha, on one occasion i.e. on 9.9.2010, who on that date asked for 7 days time to comply with certain queries and no other partners appeared before the AO, as is reflected in the assessment order. However, various written submissions were filed by the assessee narrating the circumstances of the issue of notices by the AO, non-compliances, lack of jurisdiction, high handedness of the department and how the assessee was prevented opportunities to com....
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....IT Vs Smt. Sunita Dhadda, 2018 -406-ITR-0220- RAJ amongst others. d) Without giving any opportunity / show cause to the assessee firm to make a rebuttal on the inferences / findings / conclusions arrived at by the AO from her "examination" of seized materials and other information / information gathered behind the back of the assessee firm and treating the conjectures, surmises, wrong conclusions, mistaken beliefs and knowledge about the specialist business of mining as so called "evidences" in total disregards to the basic tenets of law of the land.' 6. With regard to Ground No. 1 of appeal i.e. mainly on the legal issues relating to principles of natural justice, ld. A.R. of the assessee submitted that the assessee was not provided with the xerox copies of all the statements recorded u/s. 132(4) of the partners, employees, associates of the assessee firm as well as statements of third parties which were utilized against it, the documents/material seized from third parties/accountant not being provided the assessee to cross-examine the witnesses, no show cause letter was issued by the A.O. in respect of such seized documents before making impugned additions, documents se....
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....e, ld. CIT DR in his written submission stated as under: "With regard to providing of with xerox copies of seized material and statements recorded u/s. 132(4)/133A, and referred to para 2.1 on pages 1 to 3 of the assessment order passed by the A.O. for AY 2008-09. It is submitted that from the sequence of events narrated by the A.O. in said paragraph clearly shows that the assessee firm had been provided with all the extracts of seized/impounded documents. In fact, the A.O. vide letter dated 31.08.2010 informed these facts to the assessee firm. It was also mentioned in said letter that in case, if any seized/documents had been left out, then it was free to intimate the same to the A.O. As there was no response from the assessee firm, the AO had ample reasons to believe that the assessee firm was having xerox copies of all the seized/impounded material. The A.O. also issued summons u/s. 131 of the Act on 31.08.2010 to Mr. Seraj Yusha, the. Managing partner and his statement was recorded on oath. In reply to question no. 2 (page-2 of assessment order for AY 2008-09), Mr. Seraj Yusha affirmed that they had received all the notices/letter issued by the Department. This would imply th....
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....uly, 2010 and on that basis, the accounts were being prepared. The assessee firm, its partners and authorized representatives avoided compliance before the A.O. and as a result, the assessment order was passed by the A.O. ex-parte u/s. 144 of the Act. It is quite baffling that the AR of the assessee has alleged violation of principles of natural justice by the A.O. and relied on a number of judgements whereas the facts of the present case are totally contrary to those present in such judgements. iii.) The assessee has challenged the action of the AO in making various additions on account of seized documents and third party's evidence without providing an opportunity of cross examination. At the outset, the AR or the partners of the assessee firm never sought an opportunity to cross-examine the witnesses (mainly its employees or relatives of the partners) before the A.O. Such a request was also not made before the CIT (Appeals). When the assessee firm and its partners avoided compliance before the AO, the question of granting an opportunity to cross-examine the witnesses shall not arise. Moreover it is conceivable that a mere denial by the assessee is not sufficient to rebut the....
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....ad disowned the making of gifts, were confronted and shown to be factually wrong, the same would have made no difference, as there was no natural love and affection and in its absence, the gifts were not genuine.. The appeal of the assessee was accordingly dismissed. Reverting back to the present case, the assessee firm never made any request to the AO to cross-examine the witnesses or for that matter also before the CIT (A) to cross-examine such witnesses. It is an argument just for the sake of the argument. Without prejudice to the above finding, the principles of natural justice do not require formal cross-examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence and is the creation of Court. It is part of legal and statutory justice and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law that the Revenue cannot rely on any evidence which has not been subjected to cross-examination (T. Devasahaya Nadar Vs. CIT (51 ITR 20)(Madras HC). Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable wh....
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....d on the decision of Hon'ble Supreme Court in the case of M. Pirai Choodi (supra) and also the decision of Hon'ble P&H High Court in the case of Smt Kusum Lata Thukral (supra). It has also been pointed out by ld. CIT DR that the Hon'ble P&H High Court in the case of Smt. Kusum Lata Thukral (supra) held that the question whether the denial of opportunity of cross examination resulted in violation of natural justice would depend upon the facts of each case. The object of cross examination is to test the veracity of the version given in examination-in-chief. Ld CIT DR also submitted that the Hon'ble Allahabad High Court in the case of Digvijay Chemicals Ltd (supra) held that it is not necessary that there must be always a cross examination of a witness before discarding its evidence. Therefore, the contention of the assessee placed in Ground No. 1 may kindly be dismissed. 12. On careful consideration of above rival submissions, we are of the view that as per principles of natural justice, all the materials, such as documentary evidence, statements recorded u/s. 132(4) of the Act, books of account and other materials found seized during the course of search and seizure operation ....
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.... natural justice. Therefore, in absence of such exercise by the assessee, the benefit of the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) and other decisions are not available to the assessee in the present case. Agreeing with the contention of ld. CIT DR and after considering the factual matrix of the case, we are compelled to hold that the assessee never sought an opportunity to cross examine on the persons and statements recorded during the course of search u/s. 132(4) of the Act before the AO during assessment proceedings. Therefore, this legal contention of the assessee has no legs to stand on the sound platform of legal jurisprudence including violation of principles of natural justice. Consequently, second part of Ground No. 1 being bereft of merits, is also dismissed. Hence, Ground No. 1 of the assessee is dismissed. 14. Ground No. 2 reads as under: "Without prejudice to the Ground no. 1, on the facts and circumstances of the case and in law, the assessment order passed by the A.O. is non-est in law as the A.O. had not complied with the provisions of sec. 153D of the Act and Ld CIT (Appeals) has grossly erred in holdin....
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....nder clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 50.3 Applicability- These amendments will take effect from the 1st day of June, 2007." 2.2 The copies of the following documents are available in PB-VI, Page nos. 2445 and 2446 :- a. Proposal dated 27/29.12.2010 sent by the AO to the Range Head seeking approval in respect draft assessment orders in the case of the appellant u/s 153A/143(3)/144/145(3) for the AYs 2003-04 to 2008-09 and u/s 143(3)/144/153B(B)/145(3) in respect AY 2009-10 (Page no. 2445 of PB-VI) b. Letter dated 30.12.2010 containing purported approval u/s 153D in respect of draft assessment orders u/s 153A/143(3)/144 for the AYs 2003-04 to 2008-09 and u/s 143(3)/153B(b)/144 for the AY 2009-10 (Page no. 2446 of PB-VI). Your Honours kind attention is invited to the copies of the said two documents so as to enable the Hon'ble Bench to examine whether the same are in terms the principles laid down in the case Dilip Construction (P) Ltd (supra)> 16. On above submissions, the ld. CIT DR submitted written reply/submissions as un....
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....sessment order, it was unable to agree with the counsel of the assessee on this point. In its opinion, it was not necessary to mention in the assessment order the fact that the approval had been granted. In para-46.4, it was further held that neither opportunity of being heard is required before granting approval nor the approval order is needed to be communicated to the assessee. Hence there was no need for the learned CIT(A), Bhubaneshwar to provide copy of such approval to the assessee firm. Reliance is also placed on the decision of Hon'ble Kerala High Court in the case of CIT vs. T. O. Abraham & Co. (12 taxmann.com 433) that non-mentioning of approval in the body of assessment order is not fatal and can be cured. iii) The approval granted under section 153D of the Act by the Supervisory officer (Additional/Jt. CIT) is merely an Administrative order and no civil or penalty consequences flow from such an order against the assessee. The approval of Supervisory officer is totally distinct from the assessment order and not required to be communicated. Hence it is not open for challenge before the Court of Law. Once the reasons for Administrative Approval are not required to b....
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....e approval. However there is no requirement under the law for granting the hearing to the assessee by the Additional/Jt. CIT prior to giving approval under section 153D of the Act for assessment under section 153A of the Act as held by the Honourable Karnataka High Court in the case of Gopal S. Pandit Vs. CIT (96 taxmann.com 233). The same view was expressed by the Hon'ble Mumbai Tribunal in the case of Rafique Abdul Hamid Kokani vs. Dy. CIT [2000] 113 Taxman 37 (Mag.), Hon'ble Karnataka High Court in the case of Rishabchand Bhansali vs. DCIT (267 ITR 577) and Hon'ble Madras High Court in the case of Sakthivel Bankers vs. ACIT (255 ITR 144) in relation to provisions of section 158BG. Hence this argument of the assessee is devoid of merit, vi.) The Judgement by the Hon'ble Mumbai Tribunal relied upon by the assessee in the case of Smt. Shreelekha Damani (88 taxmann.com 383) is distinguishable on facts. In para-10 of the decision (on page-3), it has been mentioned that the Addl. CIT, Central Range-7 had asked the AO to submit the draft orders for approval u/s. 153D on or before 24.12.2010. However the draft order was submitted on 31.12.2010 thereby he was left with ....
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....text, it was held by the Hon'ble Cuttack ITAT that the Addl. CIT had not applied his mind while granting mechanical approval u/s 15 3D (para-25 on page-10). However, in the present case, no such comments have been mentioned by the Addl. CIT, Range-1, Bhubaneswar while according approval. ix.) The Judgement of the Hon'ble Cuttack Tribunal relied upon by the assessee in the case of Smt. Geetarani Panda vs. ACIT (IT (SS)A No. 01/CTK/2017 dated 05.07.2018 is distinguishable on facts. In para-11 of the decision (on page-13), it has been mentioned that the Addl. CIT, Central Range-1 had given a reminder to the AO to submit the draft orders for approval u/s. 153D on or before 23.03.2015. However the draft order was submitted on 26.03.2015 thereby he was left with no time to ensure that all the points in the Appraisal Report, the appellate proceedings, audit inspection etc. have been duly taken into account and the enquiries/investigations required to be made, were actually made by the AO. In the end, he has also mentioned that these cases were never discussed with him. With these comments, the draft order was approved as required under the statute u/s 153D. Therefore in sai....
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....th no time to ensure that all the observations in the Appraisal Report relating to investigation and issues pertaining to seized material have been duly taken into account. In the end, he has also mentioned that these cases were never discussed with him and there is now hardly any time left for meaningful discussion. With these comments, the draft order was approved as required under the statute u/s 153D. Therefore in said context, it was held by the Hon'ble Agra ITAT that the Addl. CIT had not applied his mind while granting mechanical approval u/s 153D (para-4.14 on page-20 -second last page). Similar facts exist in the case of Shri Rajesh Ladhani vs. DCIT (ITA No. 106,107 & 108/Agra/2019 decided by Honourable Agra Tribunal (para-4 on page-4). However in the present case, no such comments have been mentioned by the Addl. CIT, Range-1, Bhubaneswar while according approval. xiii.) In the case of Shaw Wallace & Co. Ltd. vs. ACIT (68 ITD 148), it was held by the Hon'ble Kolkata Tribunal that even if there happens to be some mistake/irregularity in granting approval U/S. 158BG by the CIT, same is not fatal inasmuch as the resultant block assessment order remains very mu....
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....a procedural defect and as such the Tribunal was justified in holding that failure to obtain the previous permission from the IAC for imposing the penalty under section 271(1)(c) was only a procedural error and it was not fatal to the order of penalty passed under section 271(1)(c) and the Tribunal was right in remanding the matter back to the Department to pass fresh penalty order. Therefore the arguments of the assessee firm in this regard are not tenable and required to be rejected." 17. The assessee has also filed written rejoinder dated 25.11.2020 to above submissions of ld. CIT DR, which are as under: "2.1 In the Counter submitted by the Ld. CIT(DR), the ground of appeal taken by your appellant has been misstated. According to the Ld. CIT(DR), the ground of appeal is that approval has been granted by Additional CIT Range-1 Bhubaneswar under section 153D of the Act without application of mind in a mechanical manner. Though this is an ancillary issue discussed in the subsequence paras, without prejudice to the arguments on the facts of the case, the ground of appeal is as under :- "Without prejudice to the ground number 1, on the facts and circumstances of the case and in ....
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....ddressed to the Add. CIT, Range-1, Bhubaneswar seeking approval u/s 153D ii. Letter No. 5350 dated 30.12.2010 of the Add. CIT, Range-1, Bhubaneswar addressed to the AO communicating the so called approval u/s 153D During the course of Counter arguments on 26/02/2020, the Ld. CIT(DR) submitted duly certified copies of the two above mentioned documents. We would like to submit that these 2 documents do not appear to have any semblance to genuine official documents of such crucial importance. Neither the letter that is supposed to have been sent by the AO on 29/12/2010 has any inward number or the recipient's signature/initials in the office of the Additional Commissioner nor the letter that is supposed to have been received in the office of the AO on 30/12/2010 from the office of the Additional Commissioner has any signatures/initials of the recipient in the office of the AO or of the AO. Coupled with these facts on record, the fact that there is no mention either on the order sheet of the assessing officer or in the assessment orders renders these papers not having been exchanged in the normal course of official transactions. The issue of application of mind to volumino....
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....dated 30.12.2010 ? Your Honours, kind attention may be drawn to the so called approval dated 30.12.2010 u/s 153D which is without dated Receipt seal of the AO, initial of the concerned official and the initial of the AO. Your Honours, kind attention may be drawn to Paper Book Volume- VI pages from 2421 to 2433 containing certified copies of the relevant order sheets which do not reflect entries relating to the said two documents. The certified copies of the said two documents were not made available to the appellant up to 25.02.2020(certified copies made available by Ld. CIT(DR) on 26.02.2020) for which reason the appellant was only highlighting that in the impugned assessment orders the AO did not mention that "Prior approval u/s 153D was obtained from the Add. CIT, Range-1, Bhubaneswar". It may be mentioned that Order sheet is public document u/s 74 of Indian Evidence Act, 1872. As per section 35 of Indian Evidence Act, 1872 entry (or non-entry) in the order sheet of the Assessing Officer is itself a relevant fact. The fact that the AO did not mention in the impugned assessment orders that "Prior approval u/s 153D was obtained from the Add. CIT, Range-1, Bhubaneswar" need to b....
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....ned that order is passed with prior approval of Additional CIT, the order sheet of the AO did not show that the AO has sent any proposal for approval to the Additional CIT. According to paragraph 8.4 of the said order of the Honouble ITAT, "Learned Counsel for the Assessee filed copy of the order sheet of the A.O, which does not mention if A.O. has sent any proposal to the JCIT/Addl. CIT for obtaining prior approval before passing the impugned assessment order". On these facts, Honourable ITAT held that, "In view of the above discussion, we set aside and quash the entire impugned appellate orders. Resultantly, all the additions stand deleted. Additional ground of appeal of assessee is allowed." Your Honours, in the case of the appellant, neither there is any mention in the assessment order nor in the order sheet regarding the AO having taken prior approval of the concerned Additional CIT. The so called letter dated 29.12.2010 of the AO seeking approved u/s 153D is not mentioned in the relevant order sheets as already discussed. The decision of the coordinate Bench on similar material facts may kindly be considered. Assuming but not admitting that the impugned approval u/s 153D ....
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....red in the decision of coordinate Bench of the Honourable ITAT in the case of Pratibha Pipes & Structural Ltd. (case number B- 7 in the compendium of case laws volume 1(b)) and in the case of Rajesh Ladhani(case number B-12 in the compendium of case laws volume 1(b)). In Para 10 of Rajesh Ladhani case(supra), there is a reference to decision in the case of Sri Saurabh Agarwal [B-11 of compendium of case laws volume 1 (b)]. i. The decisions relied upon by the Ld. CIT(DR) have been discussed in the case of Sri Saurabh Agarwal(supra) which includes the following :- A. Hon'ble Karnataka High Court decision in the case of Gopal S. Pandit reiterated by Hon'ble ITAT, Mumbai in the case of Rafique Abdul Hamid Kokani. B. Hon'ble Karnataka High Court decision in the case of Rishabchand Bhansali. C. Hon'ble Madras High Court decision in the case of Saktivel Bankers. Ld. CIT(DR) relied upon decision of Gayatri Textiles of Hon'ble Karnataka High Court, which was discussed and distinguished in para-15 of Akil Gulamali Somji case [ B-3 of compendium of case laws volume 1 (b)]. In para 10 of the decision in the case of Rajesh Ladhani (supra) it is held that "We have....
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.... considering various judgments cited :- "The Income Tax Officer had no jurisdiction to impose penalty exceeding a sum of Rs. 10,000/- except with the approval of the Deputy Commissioner. Mr. Agarwal submitted that it is a question of fact. We are unable to accept this submission. It was the obligation of the Income Tax Officer to indicate in his order that he passed the order after obtaining requisite approval. Since the order passed by the Income Tax Officer does not contain the requisite recital, it has to be held that no such approval was obtained. The order itself is incompetent. An incompetent order is a nullity and the point as regards nullity can be taken at any stage. It can even be taken at the stage of execution. Even if the orders imposing penalty were not set aside by us, which we propose to do, the order could not have been executed. Therefore, the third question is answered in the affirmative." It is the humble submission of the appellant that the responsibility of the Range Head while according approval u/s 153D is of higher degree than a situation while according approval for collection of penalty. The decisions relied upon by the Revenue are misplaced consid....
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.....2016 Assessment order framed in absence of obtaining prior approval of JCIT is invalid as null and void as held in the case of Shri Jaykumar Uttamchand Pokarna ITAT Pune -ITA 549/PN 2011. dt. 5.10.2012. In para 2.7 of Rejoinder dated 25.11.2020 of the Appellant filed on 25.11.2020, the Appellant relied upon the decision of the Hon'ble ITAT Delhi in the case of Ajay Sharma,, New Delhi v. DCIT, Ghaziabad in ITA No. 3554/Del/2015 delivered on 14.02.2020, wherein though at the end of the assessment order the AO mentioned that order is passed with prior approval of the Addl. CIT, the order sheet of the AO did not show that the AO has sent any proposal for approval of the Addl. CIT. On these facts, Hon'ble ITAT quashed the entire impugned appellate orders. But in the case of the present Appellant there is no mention in the impugned assessment orders that prior approval u/s 153D was obtained. Again the order sheets of the AO on pages 2421 to 2433 of Paper Book- VI do not show that any proposal seeking approval u/s 153D was sent to the Addl. CIT. Furthermore, the order sheets of the AO on pages 2421 to 2433 of Paper Book- VI do not show that any approval u/s 153D was receive....
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....306/Del/2018, after considering Ground No. 5, it was held that approval accorded u/s 153D is mechanical and without application of mind. The concerned authority while granting the approval is expected to examine the entire material before approving the assessment order as held in the case of Verma Roadways v. ACIT (2000) 75 ITD 183 (All). As regards the present appeals . Letter No. 5360 dated 30.12.2010 of the Addl. CIT Range-1, Bhubaneswar addressed to the AO communicating the so called approval u/s 153D do not show that the relevant assessment records were returned back to the concerned AO. In the case of M/s. Rajat Minerals Pvt. Ltd. ITAT Ranchi 41 to 47/Ran/2019 dt. 20.1.2020 (Para 14.5), there was no reference to the assessment records also being sent together with the draft assessment orders is found in the order sheet for which approval u/s 153D was held as illegal. In the case of M/s. Rajat Minerals Pvt. Ltd. ITAT Ranchi ITS No. 41 to 47 /Ran/2019 dt. 20.1.2020 (Para 14.5), it was held that the Process of Approving 'Draft Assessment order' should not be purportedly carried out the exercise of granting approval in a baffling haste. The purported....
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....Arch Pharmalabs Ltd vs ACIT in ITA No. 6656/Mum/2017. Dtd.7 .4.2021 (v) MG Mettalloy Pvt Ltd vs DCIT in ITA No, 3306/Del/2018 for A.Y. 2015-16 order dated 23.8.2021. (vi) Rajat Minerals Pvt Ltd in ITA Nos. 41 to 47/Ran/2019 order dtd. 20.1.2020 (vii) Dillip Construction Pvt Ltd. In IT(ss) A Nos. 66 to 71/CTK/2018 dated 29.11.2019. 21. The arguments and contentions advanced by ld. CIT DR can be summarized on a few main points viz; (i) there is no requirement of law that the assessee should be given an opportunity before grant of approval u/s. 153D of the Act, (ii) it is not required to mention anything in the assessment order passed finally, (iii) the approval in the present case is valid as has been granted after due application of mind and by following due procedure of law. Ld CIT DR, during arguments, has relied on the following judgments: 1) Judgment of Hon'ble High Court of Kerala in the case of CIT vs T.O. Abraham and Co,. 238 ITR 501 (Ker) 2) Order of ITAT Allahabad in the case of Verma Roadways vs ACIT (2000) 75 ITD 183 (All) 3) Judgement of Hon'ble High Court of Kerala in the case of Gopal S. Pandit vs CIT< 96 TAXMANN.COM 233 (Ker) He also conte....
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.... of the Commissioner under sub-section (12) of section 144BA." 25. First of all, we observe that we are in agreement with the contention of ld. CIT DR based on the judgment of Karnataka High Court in the case of Gopal S Pandit (supra), wherein, it was held that the provisions of section 153D of the Act do not require that any opportunity of hearing to be given to the assessee by the authority who has to approve the draft assessment order passed by the Assessing Authority. Therefore, there is no requirement of allowing opportunity of hearing to the assessee before granting approval under section 153D of the Act. It is also not a contention of the assessee/appellant that they were not provided due opportunities of hearing before granting approval. 26. Before proceeding further, we also find it appropriate to consider the case laws relied by ld. representatives of both the sides. In the decision of Hon'ble Bombay High Court in the case of Smt. Shreelekha Damani (supra), as relied by assessee, referring to the operative part of the order of ITAT Cuttack in the case of Dilip Construction (supra), while granting approval, if the approving authority did not have enough time to analy....
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.... at Chandigarh on same day. In reply to RTI application, the assessing officer has reported that no record of mode of dispatch of assessment record to the Addl. CIT is available with the Assessing Officer. Similarly, no record is available as to how the draft order and assessment record have been received by Addl. CIT at Chandigarh. The Addl. CIT, Chandigarh did not mention in his approval dated 31st January 2014 (supra), if he has gone through the assessment record or that assessment record was produced before him. Since no details are available on record about the mode, through which, assessment record was transmitted by the assessing officer at Faridabad to Addl. CIT in Chandigarh and vice-versa by Addl. CIT, Chandigarh to Assessing Officer at Faridabad on the very next day would lead to suspicion, in explanation of A.O. if any, valid draft order was transmitted to the Addl. CIT within the time or if the Addl. CIT has communicated the approval under section 153D to the Assessing Officer at Faridabad on 31st January 2014. These facts would clearly show that the action of the Addl. CIT, Chandigarh granting approval in this case was, thus, a mere mechanical exercise, accepting the ....
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.... enquiry in respect of opening cash in hand. The assessing authority thereafter has never communicated his findings of the further enquiry to the supervisory authority and not taken the approval of justification of his findings. Thus, in our considered opinion, alleged approval letter dated 27.3.2015 of the Addl. CIT, Range-1, Bhubaneswar does not constitute the approval which is envisaged by the provisions of section 153 of the Act. Thus, following the decision of the Hon'ble Bombay High Court in the case of Akil Gulamali Somji (supra), we hold that the impugned order of assessment is void and bad in law. Therefore, the impugned order of assessment is hereby cancelled." 29. In this order, the Co-ordinate Bench of ITAT Cuttack has respectfully referred to the judgment of Hon'ble Bombay High Court in the case of Akil Gulamali Somji (supra), wherein, the Hon'ble High Court has concurred with the findings of ITAT Pune that not following the provisions of section 153D of the Act will render the related the order of assessment void. The ITAT Pune in this case held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. 30.....
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....drop of facts narrated in the preceding paras, it is the contention on behalf of the assessee that approval granted under S. 153D does not meet the requirement of law and hence assessment orders passed in consequence of such non-est. approval is a nullity in law. The assessment orders thus passed is vitiated in law which illegality cannot be cured. In support of charge of nonest approval, several contentions have been raised viz (i) the approval accorded under section 153D is without any occasion to refer to the assessment records and seized material, if any, incriminating the assessee and hence such approval is in the realm of an abstract approval of draft assessment orders which was unsubstantiated and unsupported and consequently suffered from total non-application of mind (ii) approval granted hurriedly in a spur involving voluminous assessments spanning over 7 assessment years and thus only a symbolic exercise to meet the requirement of law (iii) Total lack of objectivity in drawing satisfaction on objective material while giving a combined approval for 7 assessments and also without evaluating the nuances of each assessment year involved (iv) the mundane action of Addl. CIT u....
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....re us, it is ostensible that draft assessment orders were placed before the Addl. CIT on 29.12.2010 for the first time. It is axiomatic from the plain reading of approval memo that various assessment orders and the issues incorporated in the assessment orders, were never subjected to any discussion with the authority granting approval prior to 29.12.2010. It is evident from the CBDT Circular No. 3 of 2008 dated 12.03.2008 that the legislature in its highest wisdom made it obligatory that the assessments of search cases should be made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the Assessing officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval the respective Assessment order. Solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional CIT, 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 elem....
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....itional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be countenanced in law. 11.6 There are several decisions, which supports the view that approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D. 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.) and approved by jurisdictional High Court subsequently as reported in 307 CTR 218 affirms the plea of the Assessee. 11.7 Very recently, the co-ordinate bench in Sanjay Duggal & Ors (ITA 1813/Del/2019 & Ors; order dated 19.01.2021 has also echoed the same view after a detailed analysis of similar facts and also expressed a discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act. Hence, vindicated by the factual position as noted in preceding paras, w....
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....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 orders have been perused or any discussion or consultation has been made with the AO prior to granting of approval u/s. 153D of the Act. Accordingly, we are compelled to hold that the approval granted by the ld. JCIT in the appeals under consideration has been granted in a mechanical manner without application of mind and that the assessments/reassessment orders passed by the AO on such approval are declared to be void and bad in law. We hold so. 41. In view of aforesaid discussion, we clearly find that approv....
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....ER OF INCOME-TAX, CIRCLE-1(2), BHUBANESWAR. No. ACIT/C-1(2)//Approval/2010-11/5293 Dated, Bhubaneswar, the 27/29th December, 2010 To Sir, The Addl. Commissioner of Income-tax, Range-1, Bhubaneswar. Sub : Approval of draft orders u/s. 153D of the I.T. Act, 1961 in the case of M/s. Serajuddin & Co., 19A, British India Street, Kolkata (in Serajuddin Group of Cases) - matter regarding. Enclosed herewith kindly find the draft orders u/s. 153A of the I.T. Act, 1961 along with assessment records in the case of M/s. Serajuddin & Co., 19A, British India Street, Kolkata for kind perusal and necessary approval u/s. 153D. Sl.No. Name of the assessee Section under which order passed Asst. year 1. M/s. Serajuddin & Co., 19A, U/S. 153A/143(3)/144/145(3) British India Street, Kolkata 2003-04 2. -do- -do- 2004-05 3. -do- -do- 2005-06 4. -DO- -DO- 2006-07 5. -DO- -DO- 2007-08 6. -DO- -DO- 2008-09 7. -DO- U/S.143(3)/144/153B(B)/145(3) 2009-10 The above cases will be barred by limitation on 31.12.2010. Encl: As above. Yours faithfully, Circle-1(2), Bhubaneswar Sd/- Asst. Commissioner of Income-tax 33. In continuation, we also fin....
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..../s. 153D of the Act as per the mandatory requirements of the said provisions of the Act. Further, on careful and vigilant perusal of the assessment order dated 30.12.2010 for A.Y. 2003-04 and others related appeals, we are unable to see any mentioning by the AO about the approval u/s. 153D of the Act. Our attention was also drawn to the certified copies of note/order sheet relating to assessment year 2003-04 to 2009-10 (Assessee paper book-VI PAGES 2421 to 2450), wherein, we are unable to see any noting by the AO regarding issuing of request letter seeking approval u/s. 153D of the Act to the ld. ACIT and sending the assessment record alongwith draft assessment orders and receipt of approval letter dated 30.12.2010 from the ld. ACIT by the AO, Be that as it may, without commenting further thereon, we proceed to adjudicate as to whether the approval order dated 30,.12.2010 comply with the requirements of provisions of section 153D of the Act. 36. In the light of above discussion and after considering the attending facts and circumstances, wherein, approval u/s. 153D of the Act has been granted, it is vivid that the AO vide latter dated 29.12.2010 requested the Approving Authority i....
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....sustainable 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. As we have already noted above that there is no requirement of mandate of section 153D of the Act that an opportunity of hearing should be allowed to the assessee before grant of approval u/s. 153D of the Act but at the same time, it is also a requirement of mandate of section 153D of the Act that the approving authority must apply his mind to the relevant assessment records and draft assessment order before granting approval u/s. 153D of the Act. As the requirement of grant of approval by the Superior authority is not merely a formality but it is a mandate and requirement of provisions of the Act. 38. On careful reading of the provisions of section 153D of the Act, which was inserted by the Finance Act, 2007 w.e.f. 1.6.20....
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....ion of mind cannot be cured or rectified by any other exercise or working undertaken by the approving authority after grant of approval and after passing the assessment orders u/s. 153A of the Act by the Assessing officer. 40. In our considered view and understanding, 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 or 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 investigations and enquiries. Therefore, said provision provides and requires application of mind....
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....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 ostensible from the approval order and no other extraneous material/document can be seen in this regard. 42. In view of foregoing discussion, we clearly find that approving authority has not applied his mind to the relevant assessment records and draft assessment orders prior to granting approval to the Assessing officer for passing assessment orders u/s. 143(3)/144/153A of the Act dated 30.12.2010. Therefore, the contention of ld. A.R. of the assessee is justified and sustainable that the approval was granted in most mechanical manner without application of mind and respectfully following the proposition rendered by Hon'ble Bombay High Court in the case of Smt. Shreelakha Damani (supra), the order of ITAT Delhi Bench in the case of M3M India Holdings (supra), order of ITAT Mumbai in the case of Arch Pharmal....