TaxTMI 
TaxTMI 
2023 (5) TMI 1448
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....or Pvt. Ltd. A search u/s 132 of the act was carried upon one "Vaswani Group" of Bhopal including the said M/s Gurmukhadas Contractor Pvt. Ltd. and assessee from 20/12/2016 to 23/12/2016, pursuant to which the case of assessee was centralized in the jurisdiction of Ld. AO alongwith all other cases of the group. Thereafter, assessments of past six years from AY 2011-12 to 2016-17 were made u/s 153A read with section 143(3) and the assessment of search-year being AY 2017-18 was made u/s 143(3); all were done vide a consolidated assessment-order dated 26.12.2018 after making certain additions. Present appeals relates to AY 2012-13, 2016-17 and 2017-18 for which the assessee contested additions in first-appeal and succeeded partly. Now, both sides have come in the captioned appeals assailing the orders of lower authorities. 4. Originally the assessee/revenue has raised various grounds in the Appeal-Memo (Form No. 36) of respective appeals placed on record; the same are not re-produced for the sake of brevity. Thereafter, the assessee also filed "Additional Ground" in all appeals, received in the office of ITAT on 26.10.2021, copies held on record. This additional ground is identical....
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.... satisfaction in the approval-order, and (ii) the same is a product of non-application of mind; approval has been given in a mechanical manner without due diligence. According to Ld. AR, the impugned approval is nothing but an empty formality and thus not a valid approval as mandated u/s 153D of the Act. For the sake of immediate reference, the aforesaid proposal-letter dated 22.12.2018 and approval dated 25.12.2018 are scanned below: 8. Then, the Ld. AR straightaway submitted that in the case of M/s Shri Gumukhdas Contractors Pvt. Ltd., another person/assessee who was one of the entities subjected to same search/assessment proceeding and in whose case too, identical issue arose before ITAT Indore Bench in ITA No. 70 to 76/Ind/2020, DCIT Vs. M/s Shri Gurumukhdas Contractors Pvt. Ltd. order dated 14.12.2022 wherein the Hon'ble Co-ordinate Bench has, after extensive analysis of the proposal-letter and approval u/s 153D, held that there was no application of mind by same authority (Ld. Addl. CIT, Central, Bhopal) who has carried out exercise in utmost haste; in mechanical manner; not in terms of the mandate prescribed u/s 153D of the Act. Therefore, the Co-ordinate Bench has quashe....
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....oval u/s 153D of the IT Act, 1961. 2. The AO has certified that: • Proper opportunity of being heard was given to the assessee on all the issues. • All the issues emanating from the material available on record have been examined properly and are incorporated in the draft orders. • Relevant seized documents were verified before passing the draft orders and are kept in safe custody. 3. Subject to the above observations, the draft assessment orders are hereby approved, as required under the provisions of section 153D of the Income Tax Act in the following cases; S. No. Assessee PAN Draft order u/s A.Ys. 1 Prakash Assudani AEFPA8202H 153A 2011-12 to 2017-18 2 Lokesh Vaswani ADRPV6829J 153A 2011-12 to 2017-18 3 Shri Gurumukhdas Constractors Pvt. Ltd. AAHCS4756R 153A 2011-12 to 2017-18 4 Suresh Vaswani AAKPV6009J 153A 2011-12 to 2017-18 5 Sushil Vaswani AAKPV5987D 153A 2011-12 to 2017-18 4. It should be ensured that the final assessment orders are passed and served on the assessees well in time. A copy of the final assessment orders ....
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....er without any independent application of mind by the said Addl. CIT. It is clearly evident that the Addl. CIT has not verified and/or examined the relevant materials on record as already discussed by us herein above. The power to grant approval as mandated under Section 153D of the Act is not to be exercised casually or any routine manner rather the concerned authorities expected to grant approval upon examination of the entire materials before approving the draft order and the authority is legally required to apply due application of mind. 5.1 On this aspect, we have considered followings judgments relied upon by the Ld. AR: 5.1.1 In case of Navin Jain & Ors. Vs. DCIT, reported in [2021] 91 ITR 682 (Luck.-Trib.): The said Bench on identical issue has been pleased to observe as follows: "7. It was submitted that the rationale of word 'each' as specifically referred to in s.153D and s.153A deserves to be given effective/proper meaning so that the underlying legislative intent as per the scheme of assessment of ss.153A to 153D is fulfilled. It was submitted that Addl. CIT in these cases has granted approval for all the assesses for all assessment ....
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....rovisions of Section 153D also. Learned counsel for the assessee further placed reliance on Circular No. 3 of 2008 dated 12/03/2008 issued by CBDT whereby the CBDT has issued instructions regarding mandatory approval u/s 153D if the order is to be passed by Assessing Officer below the rank of Jt. CIT. It was submitted that the present cases were becoming time barring on 31/12/2018 and draft assessment orders has been made on 30/12/2018 and approval has been taken on 30/12/2018 and on the same day final assessment order has been passed and, therefore, clearly the CBDT instructions have been violated. In view of these facts and circumstances, it was submitted that approval has been given in a most mechanical manner without any application of mind and without any independent examination of seized material and other material on record. There is no mention about any incriminating material forwarded to Jt. CIT and there is no mention of the statements recorded at the time of search. It was submitted that the approval is granted in a hurried manner without looking into the serious lapses committed by the Assessing Officer and therefore, the approval u/s 153D is invalid and bad in law and ....
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....authority has fully applied his mind to grant approval. It was submitted that though the Jt. CIT has not written in so many words about his satisfaction for granting approval but the fact remains that he has granted approval to the draft assessment order and only after that the Assessing Officer has passed the final assessment order and therefore, ground No. 5 of the appeal be dismissed and appeals be heard on merits. 9. We have heard the rival parties and have gone through the material placed on record. We find that in these cases, in view of a search carried out on the Sigma Group, the assessments of various assessees were reopened and various assessees were required to file income tax returns as required under the provisions of section 153A of the Act. The search was conducted on 23/08/2016 which continued upto 25/08/2016 and therefore, assessment year 2017-18 became the search year and the years preceding the search year became the subject matter of reopening u/s 153A of the Act. The issue raised by Learned counsel for the assessee is that the approval granted by the Addl. CIT is bad in law as it is humanly impossible to go through documents exceeding 17,800 in a singl....
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....even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 2 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is I.T.(SS)A. Nos.639, 640, 641, 649, 642 & 651 apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Joint Commissioner had adequate time with him so as to grant approval after duly ex....
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.... 12. In nutshell, the appeals filed by the assessee are partly allowed." 5.1.2 In case of Sanjay Duggal (2021) (Del-Trib.) dt. 19.01.2021: The said Bench on identical issue has been pleased to observe as follows: "12. It may be noted that provisions of Section 153D provides for approval in case of "Each" assessment year. Therefore, each of the assessment year is required to be verified and approved by the JCIT being Approving Authority that it complies with Law as well as the procedure laid down. The assessee has filed details on record regarding returns filed under section 139(1) for A.Ys. 2010-2011 to 2015-2016. It is also explained that there are unabated assessments except A.Y. 2015-2016 in which the assessments have been abated. Therefore, for each unabated and abated assessments, the authorities below and the Approving Authority [JCIT] shall have to verify the incriminating material found during the course of search or the seized material if pertain to the same assessment year and its basis. The assessee has explained above that these cases are coming up because of the assessments framed in the case of M/s. JIL and others prior to the search i....
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....n some of the cases of the assessee. No steps have been taken by the A.O. for rectifying their mistakes when assessee filed petition for rectification under section 154 of the I.T. Act. Thus, there was inconsistencies and double additions made by the A.O. in various assessment years. It may also be noted that in the present case the facts stated in the impugned orders are that the sales of liquor are made by M/s. JIL to M/s. MAPSCO and Singla Group of cases and that part of the sale proceeds have been transferred to the account of M/s. Alfa India instead of paying the entire sale consideration to M/s. JIL. Thus, the nature of total receipt/addition is the sale proceeds originally to be received by M/s. JIL. If the part of the sale proceeds which were to be received by M/s. JIL and when transferred to the account of M/s. Alfa India Ltd., the entire part sale receipts cannot be the income either in the hands of M/s. JIL or M/s. Alfa India or the Assessees who may be the conduit as argued before us. The A.O. has failed to consider the concept of real income for the purpose of determining the correct tax liability and correct determination of income of the assessees. We rely upon the J....
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....2.2017 which were got approved on 30.12.2017 merely on the basis of draft assessment order. The JCIT in the approval Order Dated 30.12.2017 also mentioned that A.O. to ensure all the assessment proceedings are conducted as per procedure and Law. It would show that even JCIT was not satisfied with the assessment proceedings conducted by the A.O. as per Law and records. 16. In some of the cases the approval was granted on the date the request was made for approval by the A.O. In all those cases merely draft assessment order and the assessment folders were available with the A.O. For example in the case of Shri Sanjay Duggal family, in the case of Ms. Kritika Talwar on the same date the approval was granted and that too merely on the basis of the assessment records and draft assessment order and in most of the cases approval has been granted either on the same day or on the next day. Further, there is no reference that seized material as well as appraisal report have been verified by the JCIT. It is not clarified whether assessment record is also seen by the JCIT. It may also be noted that even in some of the Talwar group of cases approval is granted prior to 30.12.2017 but i....
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....t on 31/12/2010. 11.1 It may be pertinent to observe at this stage that the impugned assessment orders were passed u/s. 143(3) rws 153A of the Act for the AY 2003-04 to AY 2008-09 and for the AY 2009-10 u/s 143(3) of the Act pursuant to search carried out under s.132 of the Act. For passing such assessment orders, the Assessing Officer is governed by s.153D of the Act whereby the Assessing Officer should complete the assessment proceedings and 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 assessm....
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....otherwise. Except these two documents namely, a solitary communication from AO to the Addl. CIT dated 29/12/2010 and an in turn approval by Addl. CIT dated 31/12/2010, there is nothing else before us to gauge the facts differently. A bare glance at the approval so accorded makes it evident that such approval is generic and listless and accorded in a blanket manner without any reference to any issue in respect of any of the 7 assessment years. Apparently, 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 / intials etc. could have given a valuable input on the applicability of mind and could throw light on objectivity applied owing to t....
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..... 153D of the Income-tax Act, 1961 to complete assessments u/s. 143(3) r.w.s. 153A of the I.T. Act in the following case on the basis of draft assessment orders..."which clearly proves that the Addl. CIT had routinely given approval to the AO to pass the order only on the basis of contents mentioned in the draft assessment order without any application of mind and seized materials were not looked at and/or other enquiry and examination was never 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....
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....ds of appeal relates to validity of the additions under section 68 in absence of incriminating evidence found during search. The ld AR for the assessee submits that it is a matter of fact that the AO had passed a single consolidated order for all the years under assessment rather than passing separate orders for "each year" under section 153A. Further, the AO sought a consolidated approval for about 14 different assessee from different groups under her single letter dated 14.12.2018. At the time of assessment, the assessee furnished its reply on 14.12.2018 before the AO, wherein the assessee raised several objections and contentions against the proposed additions in show cause notice. The assessee was directed to file reply by 07.12.2018. The assessee filed its reply on 14.12.2018, which was duly accepted by AO, which is otherwise clearly discernable in para 3.7 of the assessment order. In the said reply the assessee explained the concept of abated and unabated assessment, proof of identity and existence of the investor Company, importance of cross-examination, etc. The Ld. AR for the assessee further submits that mere perusal of contents of approval granted under section ....
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..... ACIT IT(SS)A Nos. 66 to 71/CTK/2018. 13. In other alternative submissions the ld AR for the assessee submits that the AO passed a single order in a hasty manner to make the impugned addition, applying same facts to each of the assessment year without weighing the facts and legality of each assessment year under consideration, which is in complete violation of the statutory provisions of law and guidelines laid down by various courts and Special Bench of Tribunal. 14. The ld AR for the assessee submits that search action was carried out on assessee group on 17.01.2017. There was a marriage function in the Goyal family, which was at concluding stage. The search action continued till 2.00 am of 22.01.2017. The authorised officer obtained a confessional statement of Deepak Aggarwal, Director of the assessee company by putting pressure and coercion for surrender of share capital. The statement of the Deepak Aggarwal was not recorded in the presence of Panchas. Mr. Deepak Aggarwal retracted from his statement by filing affidavit before Sub-Divisional Magistrate, copy of which is filed. The ld.AR for the assessee retreated that no incriminating evidence qua the share c....
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....criminating material found during search; therefore, all such additions are liable to be deleted. The statement of the director of the assessee-company cannot be treated incrementing evidence. Even otherwise there is no evidentiary value of such statement, which was not recorded during the search proceeding. 18. We have considered the rival submissions of the parties and have gone through the order of the lower authorities. We have also perused the copy of the Panchnama dated 23.01.2017. There is no dispute that a search action was carried out on the assessee group on 17.01.2017. No incrementing evidence qua the share application money was found and recorded by the authorised officer in the Panchnama dated 22.01.2017 and 28.02.2017. A discloser statement of Director namely Deepak Aggarwal was recorded on 24.01.2017. The statement was retracted on 27.01.2017 by making sworn statement before Sub-divisional Magistrate. It is further admitted facts that on the date of search no assessment of AY 2011-12, 2012-13, 2014-15 & 2015- 16 was pending and/ or time limit for issuing notice under section 143(2) has already elapsed. Thus, any addition in the unabated assessment can only b....
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....ponse to the show cause notice dated 29.08.2018 filed its detail reply on 14.12.2018. In the said reply the assessee raised factual and legal issue. The reply of the assessee is duly acknowledged by AO in para 3.7 of his order. The AO sent the draft assessment order on 14.12.2018 itself to the officer of JCIT, vide reference No. F.No. ACIT (C) -2 RPR/153D/Goyel & Satya/2018-19 dated 14.12.2018, copy of which is placed on record. For proper appreciation of facts the contents of approval dated 22.12.2018 is extracted below: Office of the Jt.CIT (Central), Raipur Aayakar Bhawan, Civil Lines, Raipur 492001 Email: [email protected] Tel/Fax 2331044 F.No.JCIT(C)/RPR/153D/2018-19 Dated: 22-12-2018 To, The Asst. CIT (Central)-2, Raipur Subject - Approval under u/s 153D of the I.T.Act - Goyal, Satya & Gumber Group - Regarding. Please refer to your letter in F.No. ACIT(C)-2/RPR/153D/Goyal & Satya/2018- 19 dated 05/12/2018, F.No. ACIT(C)-2/RPR/153D/ Goyal & Sriram Gumber/ 2018-19 dated 07/12/2018 and F.No. ACIT(C)/RPR/153D/Goyal & Satya/2018-19 dated 14/12/2018. 2. The draft assessment orders u/....
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.... 95 assessment orders which clearly defeats the intent and purpose behind insertion of section 153D brought in the statute by the Finance Act, 2007. 24. We find that the ld. JCIT while granting approval, presumed that Assessing Officer has given proper hearing to the assessee and thoroughly verified seized material and there are no adverse findings, satisfied himself that all the issues emanating from the records have been verified and additions wherever required have been proposed. We further find that there is no independent application of mind on the part of ld. JCIT while granting the approval. 25. We find that coordinate bench of Mumbai Tribunal while considering the similar ground of appeal in granting bulk approval of the assessment under section 153A, in case of Arch Pharmalabs Ltd Vs ACIT (supra) held that 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. The ....
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....sessment after considering the material placed before him. We do not find any such satisfaction in the approval order that draft assessment after considering the material placed before him, rather the ld JCIT recorded that it is presumed that the AO granted proper opportunity to the assessee etc. 28. In view, of aforesaid discussion and respectfully following the decisions of coordinate benches in Sanjay Duggal & others (supra) and Archpharma Labs & Acrh Impex P Ltd (supra), we find convincing force in the submissions of the assessee that the approval granted by JCIT suffer from non-application of mind and depends on presumption of proper performance of duty by A.O. such per functionary approval under section 153D cannot termed as legitimate. The consequential assessment orders based on non-est approval under section 153D, thus are void-ab-initio on this ground alone. Considering the facts that we have allowed the appeal on the legal issues therefore, consideration of appeal on merit have become academic." 5.1.5 In the case of Inder International (2021) (Chandigarh-Trib) dtd. 7-6-21: The said Bench held as under: "14. In view of the above decisio....
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....as considered adequate by him to accord approval in all assessments involved. Manifestly, the Addl. CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Addl. CIT, Central has rendered the approval to be a mere formality and cannot be considered as actual approval in law. Hence, we quash the assessment framed u/s!53A on this additional ground alone. 16. Needless to say that we need not adjudicate the grounds raised on merits by the assessee as we have already quashed the assessment on jurisdictional issue that the statutory approval granted u/s!53D is without application of mind by the Addl.CIT. 17. In the result, the appeal of the assessee is allowed." 5.1.6 We have further carefully considered the judgment in case of Dharampal Satyapal Ltd. vs. UOI, reported in (2019) 366 ELT 253. While dealing with the identical issue, the Hon'ble Gauhati High Court has been pleased to observe as follows: "28. When an Authority is required to give his approval, it is also to be understood that such Authority m....
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....ace any cogent evidence to the effect of granting approval of the draft assessment order upon exercising adequate time and upon examining the materials needs to be considered in terms of the statutory provision. We do not find any proper application of mind by the Addl. CIT rather he has carried out exercise in utmost haste and that too in mechanical manner, not in terms of the mandate prescribed under Section 153D of the Act. The same is, therefore, not found to be sustainable. We have also discussed different judgments passed by different judicial forums on the identical issue and has been inspired to come to the conclusion as made by us hereinabove. We, therefore, set aside the approval granted by the ACIT (Central), Bhopal. The consequential impugned assessment orders on this nonest approval under Section 153D of the Act are, thus, void-ab-initio and on this score alone, the entire proceeding is, thus, quashed. This covers both abated and unabated assessments. Cross Objection Nos. 13 to 17/Ind/2021 and IT(SS)A Nos. 36 & 37/Ind/2020 filed by the appellant stand allowed. Consequently, departmental appeals become infructuous and thus dismissed as infructuous. Since, the additions ....
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....nces gathered were placed for its verification and the same were duly verified and/or examined by him as mandated u/s 153D of the Act. In the absence of compliance of the above mandate, the approval order dated 25.12.2018 passed u/s 153D of the Act becomes an empty formality without due process of law and, thus, not sustainable. The learned Addl. CIT, in fact, abdicated his statutory functions and delightfully relegated the statutory duty to his subordinate being the DCIT, Central-1, Bhopal adopting a shortcut method. Merely, an undertaking given by the Ld. AO was considered to be adequate by the Addl. CIT to accord approval in all assessments involved without considering any merit in the proposed adjustments with reference to appraisal report, incriminating material collected in search etc.; this is nothing but an approval by way of mere mechanical exercise accepting the draft assessment-order without any independent application of mind by Addl. CIT. Ld. AR submitted that the power to grant approval u/s 153D of the Act is not to be exercised casually or any routine manner, rather the concerned authorities are expected to grant approval upon examination of the entire materials befo....
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....nue's appeal for AY 2017-18 become infructuous and dismissed as such. 12. Resultantly, Assessee's appeals are allowed and Revenue's Appeal is dismissed. ============= Document 1 (2) Page 8 off 22 DEC 2019 Government of India विजà¥à¤žà¤¾ मंतà¥à¤°à¤¾à¤²à¤¯ (राजसà¥à¤µ विà¤à¤¾à¤—) Ministry of Finance (Department of Revenue) कारà¥à¤¯à¤¾à¤²à¤¯ उप आयकर आयà¥à¤•à¥à¤¤ (केनà¥à¤¦à¥à¤°à¥€à¤¯)-1, à¤à¥‹à¤ªà¤¾à¤² OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX-CENTRAL -1, BHUPAL कड़ा कर .- 204, अरेरा हिलà¥à¤¸, आयकर à¤à¤µà¤¨, होशंगाबाद रोड़, à¤à¥‹à¤ªà¤¾à¤² - 402011 Room No. - 204, Arera Hills, Aayakar Bhawan, Hoshangabad Read, Bhopal - 462011 Phone: 0755-2525344 E-mail - [email protected] F.No. DCIT-1/Central/HPL/153D/201....