TaxTMI 
TaxTMI 
2022 (1) TMI 1489
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....zure operation u/s. 132 of the Act was conducted 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 ....
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....vtar Singh Vs Income Tax Settlement Commission And Another, 2014-360-ITR-585-P&H and CIT 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 b....
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.... ii) Andaman timber Industries vs Commissioner of Central Excise, Kolkata-2015(324) ELT 641 (S.C.), 9. Replying to above, 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....
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....ded material. In response, the assessee firm filed letter dated 05.08.2010 stating that it had taken extracts of seized documents in July, 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 cro....
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....o test the veracity of the version given in examination-in chief. It was held that even if cross-examination was allowed and the donors who had 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 ev....
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....tunity to cross examine the various witnesses, thus the assessment order cannot be cancelled or quashed merely on these grounds. iii) Reliance has been placed 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 a....
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.... the assessee asked to cross examine but the same was not given by the AO and the statements were recorded at the back of the assessee in clear violation of principles of 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, ....
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....ceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under 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 d....
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....on'ble Allahabad ITAT in the case of Verma Roadways vs. ACIT (75 ITD 183) (para-45)that so far as the contention of the assessee that the approval did not exist before the passing of the assessment order or that the fact of granting of approval has not been mentioned in the assessment 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 flo....
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....Tax on behalf of CBDT, Deptt: of Revenue, Govt, of India is meant for internal guidance of the field officers. But it is not sacrosanct for the appellate authorities. Clause-9 of said Manual states that due opportunity of being heard should be given to the assessee by the supervisory officer giving the 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 taxm....
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....ection 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 said context, 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....
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....7 dated 06.09.2019 is distinguishable on facts. In para-2.2 of the decision (on page-1), it has been mentioned that the Addl. CIT, Central Range, Kanpur has mentioned that the AO had not discussed the issues with him at any stage and approval was sought through a letter sent by speed post without sending the assessment records thereby he was left with 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, ....
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.... the above findings, it is submitted that Hon'ble Karnataka High court in the case of Gayathri Textiles, vs. CIT (111 Taxman 123) held that in the instant case, the proceedings were validly initiated. The proceedings under section 271(1)(c)(iii) only require prior approval of the IAC for direction for payment of penalty and not for initiation of proceedings. It was 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 b....
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....0. Copies of these letters were supplied to the appellant from a different folder other than the assessment records of the assessing officer, but these copies were not certified. We have included them in our paper book-VI on page 2445-2446. We have also reproduced this information in the consolidated submission (CS). these letters are as under:- i. Letter No. 5293 dated 29.12.2010 of the AO addressed 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....
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....cts prevail in the case of the appellant, the approval under section 153D at best being in a mechanical manner and without due application of mind by the approving authority, the assessment orders be quashed. Your Honours, even at the risk of repetition, we may like to submit that the moot question also is whether the so called approval dated 30.12.2010 u/s 153D was obtained by the AO before passing the impugned assessment orders 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 obtaine....
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....o be read, subject to the facts directly presented for consideration and not affecting the matters which may lurk in the dark". In response to the above, the appellant would like to draw kind attention of the Honourable Bench to a recent decision of Honourable ITAT Delhi in the case of Ajay Sharma, New Delhi Vs. DCIT, Ghaziabad, ITA number 3554/Del./2015 delivered on 14th of February 2020. In this case, though the AO, at the end of the assessment order has mentioned 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 Honour....
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....53BD has later been made applicable to the proceedings under section 153D of the Act? A copy of this Circular has been reproduced in the consolidated submissions (CS). 2.10 The Ld. CIT(DR) had made a written submission on 26 February 2020 during hearing and has repeated some of his arguments in his Counter submitted now. Your Honours, while we have submitted our written note before the Honourable Bench on 26th February 2020, we would like to submit that the following decisions referred to by the Ld. CIT(DR) have been considered 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. Pandi....
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....ourt in the case of Sagar Dutta Vs Commissioner of Income-tax in GA 3223 of 2013, ITAT 176 of 2013, ITA 150 of 2009, the relevant portion of which is as under: "Learned Counsel for the Assessee submitted that the order imposing penalty does not disclose that prior approval of the Joint Commissioner was obtained in either of the two cases. He drew our attention to a judgment of this Court in the case of AWT No. 4 of 2003 and AWT No. 5 of 2003, dated 30-9-2013 {Indrajit Banerjee v. CWT to which one of us (Girish Chandra Gupta, J.) was a party wherein the following view was taken 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....
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....t is that the approval u/s 153D was not obtained by the AO before passing the impugned assessment order. The question of application of mind by the Range Head would arise, when prior approval u/s 153D is obtained. The compliance of section 153D requirement is absolute and therefore order passed by the Assessing Officer without approval of Joint Commissioner was held to be bad in law in the case of PCII v. Sunrise Finlease (P.) Ltd. 252 Taxman 407 (Guj)(HC). Followed by Mumbai bench of ITAT in ITA No. 4916 of 2016-M/s. Sumer Associates, dt 26.12.2018, ITAT Mumbai HiKlass Moving Picture Pvt. ITA No. 926 to 931/Mum/2013 dt. 30.9.2016 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 men....
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....ra). it was held that " As the legal objections on section 153D has been answered in favour of the assessee other objections relating to merits of additions/disallowances are infructuous and do not need any separate adjudication ". It is pertinent to state that in the case of Arch Pharmalabs Ltd.(supra). the legal objection on Section 153D was taken as an Additional ground of appeal for the first time before the Hon'ble ITAT whereas in the case of present appellant the legal objection on Section 153D was taken right before the first appellate authority. In Para- 19 of the decision dated 23.08.2021 of Hon'ble ITAT, Delhi in the case of MG Metalloy (P) Ltd. v DCIT in ITA No. 3306/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 communicatin....
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....er from ld. ACIT before passing the assessment order on 30.12.2010 (iv) from the order sheet/note sheet of AO, there is no mentioning of sending letter by the AO seeking approval alongwith relevant records and receipt of approval order u/s. 153D of the Act from the ld. ACIT by the AO and (v) there is no mentioning of receipt, perusal and return of assessment records in the approval order dated 30.12.2010. 20. Ld AR has placed vehement reliance on various case laws as under: (i) Order of Hon'ble Bombay High Court in the case of Smt. Shreelekha Damani (supra). (ii) order of ITAT Cuttack Bench in the case of Gita Rani Panda (supra) (iii) Mittal Road Ways Pvt Ltd. Vs ACIT IN it(ss) A No. 143/Jab/2014, dtd. 4.3.2021 (iv) 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. CI....
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....rocedure and approval granted by the ld. ACIT vide letter dated 30.12.2010, therefore, we find it appropriate to reproduce the relevant provisions of section 153D of the Act, which reads as under: "'153D. Prior approval necessary for assessment in cases of search or requisition.--No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B, except with the prior approval of the Joint Commissioner. Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case maybe, is required to be passed by the Assessing Officer with the prior approval 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 give....
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....ubmitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid." 27. Ld A.R. also drew our attention towards para 26 of order of ITAT Cuttack in the case of Dilip Construction (supra), wherein, the order of ITAT Delhi has been referred in the case of M3M India Holdings (supra), the Tribunal in para 14 held thus: "14. Considering the facts of the case in the light of above discussion, it is clear that assessee filed last reply before assessing officer at Faridabad on 29th January 2014 and according to Learned Counsel for the Assessee, it contained more than 500 pages. Therefore, it is difficult for the Assessing Officer at Faridabad to go through these voluminous papers and prepare a draft order on 30th January 2014, so that the draft order could be transmitted to the Addl. CIT 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. Th....
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.... not apply his mind and has accorded the approval mechanically to meet the requirements of law, the requirement was merely a formality. The Co- ordinate Bench also held that the said Supervisory authority had a duty towards both the assessee as well as the revenue which was failed to be performed. The relevant paras 25 & 26 read as follows: "25. In the instant case, we find that the supervisory authority has himself admitted that because of reasons stated by him, could not apply his mind and has accorded the approval mechanically to meet the requirements of law as the requirement was merely a formality. The said supervisory authority had a duty towards both the assessee as well as the Revenue which was failed to be performed in the instant case. 26. Further, we find that the approving authority has required the assessing authority to conduct further 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, R....
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.... prepare a draft assessment order which need to be placed before the approving authority i.e. Joint / Addl. Commissioner (designated authority giving approval to search assessments u/s. 153D of the Act). The approving authority is necessarily required to objectively evaluate such draft assessment order with due application of mind on various issues contained in such order so as to derive his/ her conclusive satisfaction that the proposed action of AO is in conformity with subsisting law. The AO is obligated to pass the assessment order exactly, as per approval/ directions of the designated authority. Inevitably, this evaluation is to be made on basis of material gathered at time of search as well as obtained in the course of the assessment proceeding. The requirement of law is to grant approval not merely as a formality or a symbolic act but a mandatory requirement. 11.2 In the backdrop 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 passe....
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....ently, the approval has been granted on a dotted line without any availability of reasonable time which firms up the belief towards non application of mind. Besides, the approval has been granted in a consolidated manner for all assessment years for which voluminous assessment orders were prepared. The whole sequence of action apparently appears to be illusory to merely meet the requirement of law as an empty formality. It is also alleged on behalf of assessee that the draft assessment orders are not available on record which allegation has not been rebutted. The draft assessment orders showing some marking / initials etc. could have given a valuable input on the applicability of mind and could throw light on objectivity applied owing to total silence on any delineation on these aspects in the approval memo. The records before us are totally muted. 11.4 Based on solitary communication placed before 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 ....
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....carried out. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination / investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/ her statutory functions and delightfully relegated his/her statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval ....
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....ial on the basis of which approval has been granted can be challenged by the assessee and following proper procedure and application of mind by the approving authority should be discernible from the order of approval. No other evidence or documents is required to be considered or appreciated as the approval should be self-speaking that it has been granted by the ld. JCIT by following due procedure and due application of mind to the relevant records and orders. The scope and issue agitated by the assessee by way of legal ground in the present case is not that of grant of hearing or representation to the assessee at the time of granting approval but the main grievance and legal objection of the assessee is that the approving authority has granted approval without application of mind and without looking into the seized materials and investigation report and draft assessment/reassessment orders and this fact should be clearly discernible from the approval order and no other extraneous material/document can be seen in this regard. 40. In view of above, we are inclined to hold that if an approval has been granted by the approving authority in a mechanical manner without applicat....
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....t been satisfied in both the cases and accordingly we hold that the all assessment orders are vitiated and thus same are void being bad in law. We, accordingly set aside the impugned orders of lower authorities and quash the assessment orders by allowing additional ground of the assessees in all appeals filed by both the assessees having identical and similar facts and circumstances." 32. In view of judgment of Hon'ble Bombay High Court and Co-ordinate Benches of the Tribunal, as noted above, and the requirements of a valid approval u/s. 153D of the Act, as vehemently relied by the assessee, when we judiciously and logically analyse the procedure adopted by ld. ACIT, while granting approval u/s. 153D of the Act, then, we find it necessary to reproduce verbatim the copy of the request letter of the AO to the ld. ACIT seeking approval u/s. 153D of the Act, filed by ld. CIT DR, which is as under: "GOVERNMENT OF INDIA, OFFICE OF THE ASST. COMMISSIONER 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, Bh....
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....peditiously on the assessee, submit a copy of final order to this office for record. Sd/- Addl. Commissioner of Income Tax, Range-1, Bhubaneswar 34. From the above correspondences between the AO and approval granting authority, we note that the AO has requested the ld. ACIT to grant approval u/s. 153D of the Act vide letter dated 30.12.2010 in all the cases by stating that "The draft orders u/s. 153A/143(3)/144 for the A.Y.2003-04 to 2008-09 & u/s. 143(3)/153B(b)/144 for the A.Y. 2009-10 submitted by you in the above case for the following assessment years are hereby approved" . 35. In the letter of approval, we are unable to see any mention by the approving authority that he has perused the relevant assessment records and draft assessment orders proposed to be passed by the Assessing Officer. The Assessing Officer issued letter seeking approval on 29.12.2010 and approval has been granted on 30.12.2010 that after a passage of one day only. From the approval order, as reproduced hereinabove. it is very much clear that the approving authority i.e. the ld. ACIT has not even bothered to mention that he has perused the relevant assessment records and dra....
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.... the requirement of mentioning regarding the approval u/s. 153D of the Act in the assessment orders has been dispensed with. Other contentions of ld. CIT DR regarding non-application of case law relied by the assessee are also not tenable in view of decisions of Hon'ble Bombay High Court and orders of Co-ordinate Benches of the Tribunal (supra). 37. In our considered and humble opinion, no procedure for grant of approval has been provided u/s. 153D of the Act and the Income tax Rules, 1962. However, when legislature has enacted some provision to be exercised by a higher revenue authority enabling the AO to pass assessment or reassessment orders in the search cases, then, it is the duty of the approving authority to exercise such power by applying his judicious, vigilant and cautious efforts. We are of the view that the obligation on the approval granting authority is of two folds, one the one hand, he has to apply his mind to secure inbuild for the department against any omission or negligence by the AO in taxing right income in the hands of right person in the right assessment year and on the other hand he is also responsible and duty bound to do justice with the taxpayer/asses....
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....roval u/s. 153D of the Act for passing assessment/reassessment orders in the search cases. 39. Further, the provisions of section 153D of the Act has been introduced by the legislature in its cautious wisdom to make it mandatory on the supervisory authority/approving authority to discharge the duty towards both the assessee as well as revenue to follow the proper procedure and to apply his mind on the material, relevant evidences and other documents including materials found during search & post search investigations and explanation & supporting documents of the assessee to the issue show caused to him by the AO, on the basis of which the AO wants to pass or frame assessment or reassessment orders and after such exercise by perusing and going through the relevant assessment folders/files alongwith proposed draft orders and also by applying his mind has granted approval u/s. 153D of the Act. This is the minimum required exercise by the approving authority before granting approval u/s. 153D of the Act. The approving authority has undertaken any such exercise should be discernible from the order of the approval and the subsequent internal correspondence between the lower authoritie....
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....ance with the mandate and provisions of law while granting approval and discharging statutory function lay on his shoulders by following proper procedure and also by applying his judicious and cautious mind to the relevant assessment folders/files and draft assessment orders while granting approval u/s. 153D of the Act. This is not a formality but a statutory duty of the approving authority with a corresponding obligation on him to examine relevant record and assessment orders and thereafter grant the approval. We are cautious about that the reasons for granting approval may not be a subject matter of challenge or are not required to be mentioned in the order of approval but the manner and the material on the basis of which approval has been granted can be challenged by the assessee and following proper procedure and application of mind by the approving authority should be discernible from the order of approval. No other evidence or documents is required to be considered or appreciated as the approval should be self-speaking that it has been granted by the ld. ACIT by following due procedure and due application of mind to the relevant records and orders. The scope and issue agitate....