TaxTMI 
TaxTMI 
2025 (8) TMI 1363
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.... assessee and the Revenue for the assessment year 2014-15, 2015-16, 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21 respectively, challenging the impugned separate orders passed by the first appellate authority, the details of which are tabulated below :- Sr. No. Appeal Number and Assessment Year Date of order passed by the first appellate authority Section under which first appellate authority has passed the Order First Appellate Authority 1. ITA no.239/Nag./2022 A.Y. 2016-17 - By Assessee Umesh Sadashiv Thakre 23/06/2022 153A r/w section 143(3) CIT(A)-3, Nagpur 2. ITA no.240/Nag./2022 A.Y. 2017-18 - By Assessee Umesh Sadashiv Thakre 23/06/2022 153A r/w section 143(3) CIT(A)-3, Nagpur 3. ITA no.241/Nag./2022 A.Y. 2018-19 - By Assessee Umesh Sadashiv Thakre 23/06/2022 153A r/w section 143(3) CIT(A)-3, Nagpur 4. ITA no.242/Nag./2022 A.Y. 2020-21 - By Assessee Umesh Sadashiv Thakre 30/06/2022 143(3) CIT(A)-3, Nagpur 5. ITA no.243/Nag./2022 A.Y. 2019-20 - By Assessee Umesh Sadashiv Thakre 23/06/2022 153A r/w section 143(3) CIT(A)-3, Nagpur 6. ITA no.244/Nag./2022 A.Y. 2017-18 - By Assessee Y....
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....ao Yamsanwar, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. We now proceed to decide the issues on merit. 3. For the purpose of this consolidated order, the appeal in respect of the assessee Shri Umesh Thakre, being ITA no.239/Nag./2022, for A.Y. 2016-17 is treated as the lead case. 4. Facts in Brief :- the assessee is an individual, engaged as a broker, labour contractor, cash handling agent, etc., for various persons. For the year under consideration, the original return of income under section 139(4) of the Income Tax Act, 1961 ("the Act") was filed on 12/04/2017, declaring total income at Rs. 2,69,020. On 25/06/2019, a search and seizure action under section 132 of the Act was conducted on Yamsanwar Group, of which the above assessees were a part of the search and seizure. Subsequent to search and seizure, statutory notices dated 16/09/2020, under section 153A of the Act issued for the assessment year 2016-17 in response to which the assessee filed his return of income on 05/12/2020 and subsequently assessment order dated 22/09/2021, was passed under section 143(3) r/w section 153A of....
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....dditional Commissioner of Income Tax (Central Circle), Range - 2, Nagpur had jurisdiction over the Assessee, therefore the Assessment Order passed without jurisdiction is bad in law, arbitrary, unjustified and deserves to quashed and set aside." 8. During the course of hearing, the learned Counsel, Shri Saket Raman Battad, Advocate, appearing on behalf of the assessee gracefully submitted that he is not pressing ground no.3 above challenging the jurisdiction. Consequently, ground no.3, stands dismissed as "not pressed". 9. Insofar as grounds no.1 and 2, as mentioned above are considered, the same are challenging the validity of the approval granted by the Department under section 153D of the Act, contending it to be passed without application of mind, thereby making the assessment void ab intio. 10. The learned Departmental Representative, Shri Sandipkumar Salunke, Commission of Income Tax being the Departmental Representative ("the learned D.R."), pointed out that this is the first time that these grounds have been raised. The learned D.R. submitted that the additional grounds must not be admitted at this stage. 11. Per contra, the learned Counsel for the assessee subm....
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.... not have been allowed, and thus there was non-application of mind by the Approving Authority. The learned Counsel for the assessee concluding his arguments finally submitted that the approval so granted by the Department under section 153D of the Act cannot be in a mechanical manner and the fact of application of mind by the Approving Authority must be evident from the approval order itself. He submitted that Office of Manual Procedure issued by the Central Board of Direct Taxes (CBDT), requires an Approving Authority to not only pass an order under section 153D after due application of mind, rather the Approving Authority must also grant opportunity of hearing to the assessee at least one month before time barring date. 15. The learned Counsel for the assessee further strongly relied on the decision of the Co-ordinate Bench of the Tribunal, Nagpur Bench, in Maheshwari Coal Benefication & Infrastructure Pvt. Ltd., reported in [2025] 171 taxmann.com 842 (order dated 26/12/2024), in which case exactly same order under section 153D has been passed by the same authority, having same format, and exhibiting similar non-application of mind by the Approving Authority. In support of his....
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....relied upon by both the learned Counsel for the parties. The present case demands in depth analysis of provisions of section 153D of the Act. To examine the issue, let us consider the approval dated 22/09/2021, so granted by the Department under section 153D of the Act, which is reproduced herein below :- SPACE LEFT BLANK PURPOSELY FOR ADJUSTMENT OF THIS PAGE Scanned copy of approval so granted by the Department under section 153D in respect of Shri Umesh Sadashiv Thakre, for the A.Y. 2016-17 Scanned copy of approval so granted by the Department under section 153D in respect of M/s. YRCE Educare Pvt. Ltd., for the A.Y. 2018-19 Scanned copy of approval so granted by the Department under section 153D in respect of Shri Atul Manoharrao Yamsanwar, for the A.Y. 2014-15 19. We Further find that exactly similar approval under section 153D of the Act have been granted by the Department for all the remaining 20 cases which are under consideration before us, but the only changes are made in the name of the assessee and the year of assessment. Apparently, accordingly to the learned Counsel for the assessee, the learned Addl. CIT has gran....
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....l function? To answer this question, let us consider Office of Manual Procedures that has been issued by the CBDT. The CBDT issued the Manual of Office Procedure in February 2003 in exercise of the powers conferred under section 119 of the Act. Para-9 of Chapter-3 of Volume-II (Technical) of the Manual reads as under:- "9. Approval for assessment: An assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/ADDL.CIT (For the period from 30-6-1995 to 31-12-1996 the approving authority was the CIT.). The Assessing Officer should submit the draft assessment order for such approval well in time. The submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering letter filed in the relevant miscellaneous records folder. Due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. Finally once such approval is granted, it must be in writing and filed in the relevant folder indicated above after making a due entry in the order-sheet. The assessment order can be passe....
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....ished written arguments on 11/02/2025. With the written arguments, the learned D.R. also furnished Affidavits of the Asst. CIT, i.e., the Assessing Officer, as well as Addl. CIT, i.e., the Approving Authority under section 153D of the Act. Sample scanned copy of the Affidavits is being produced below for ready reference :- SPACE LEFT BLANK PURPOSELY FOR ADJUSTMENT OF THIS PAGE 25. Broadly, we further find that in these Affidavits, the Approving Authority and ACIT have stated that there have been long discussions related to the group cases, and only after due process, the approval under section 153D was given. Thus, the learned D.R. contended that approval under section 153D was granted by the Department after due application of mind. However, we are of the considered opinion that these Affidavits are not acceptable for the following reasons:- i) Affidavit is a secondary source of evidence and not primary source. From plain reading of the approvals so granted by the Department under section 153D as enumerated above, it can be clearly inferred that there has been no application of mind while passing them, in fact they appear to be mere templates ....
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....on 153A/153C of the Act pursuant to search action, the same needs to be approved by superior authority. Thus, the whole point of a supervisor (Approving Authority) being saddled with the task of approving a draft order is that the orders must be reviewed "after" they are drafted, it is irrelevant how many times the case has been discussed before preparation of draft orders. The Affidavit does not even mention that "Draft Order" was prepared or discussed or perused. In the Affidavit, the Officers also say that the "proposal was received", Proposal for what? what records were perused? How were the conclusions drawn? What suggestions were made by the Approving Authority? There is no mention of these important factors in the Affidavits. Under similar circumstances challenging the validity of approval so granted by the Department under section 153D of the Act, similar submission was made before ITAT, Mumbai Benches, in the matter of M/s Utility Supply Pvt. Ltd. v/s DCIT [ITA no.3585/Mum./2024, vide order dated 03/04/2025. The Co-ordinate Bench rejected such submissions holding as follows:- "39. ... And therefore, the contention of Ld. DR to the effects "that the proced....
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....akes it abundantly clear that Affidavit can only be filed if the Bench asks for it. The relevant portion of the same is highlighted below:- "Production of additional evidence before the Tribunal 29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced." [Emphasis Supplied] v) At the outset, these Affidavits cannot be admitted in view of the provisions of Rule 29 r/w Rule-10 of ITAT Rules, 1963. But, even if we investigate the contents of the same, the whole idea of producing these Affidavits seems rather misleading, as besides words, there is no ment....
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....after, in Para 5, the learned D.R. stated - "If honourable Bench still believes that these documents should be provided to the assessee, the same may be done by Honourable Bench." x) This Tribunal is in no position to accept any document which is not given to the other side, and these documents are not related to national security, which require submission in sealed covers. These are simple documents related to the search case of the assessee itself. Relying on documents which the other side has not been examined is completely unjustified and unacceptable by us and/or the Tribunal. xi) During the course of hearing, the learned D.R. handed over the "confidential" document on the date of hearing itself. The learned Counsel for the assessee rightly pointed out that these two pages submitted by the learned D.R. are nothing, but deviation note. The first document is a letter addressed to Addl. DIT (Inv.) from Addl. CIT, Central Circle-2, Nagpur, dated 16/07/2021 in which it is being requested to arrange a meeting to discuss changes in deviation note. The second document is the minutes of the meeting dated 03/08/2021 formed in pursuance to the letter dated 16/07/2021, i....
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....hat the learned D.R. relied on the decision of the Co-ordinate Bench of the Tribunal, Mumbai Bench, in Usha Satish Salvi v/s ACIT, ITA no. 2439/Mum./2023, vide order dated 23/01/2025, (discussed in following paragraphs), wherein the Tribunal relied on the decision of the Co-ordinate Bench of the Tribunal, Mumbai Bench, in Prathibha Pipes and Structural Ltd. v/s DCIT, ITA no.3874 to 3876/Mum./2015, order dated 06/09/2019 and while going through this decision of the Tribunal, we find that the same as distinguishable in nature and is irrelevant in the facts and circumstances of the present case due to the following reasons:- i) Assessee alleged the assessment under section 153A has been completed in absence of approval under section 153D of the Act. The Tribunal observed that the approval under section 153D was found in the group files, and at Para 7 of the assessment order, also mentioned of passing of assessment after due approval under section 153D of the Act. Therefore, the ground of the assessee regarding absence of approval under section 153D does not stand; ii) Issue related to non-availability of approval under section 153D in the assessment record, and not "....
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....ing approval under section 153D; when, in fact, in Usha Salvi's case, the issue was related to "application of mind"; and iv) The issue of "application of mind" while granting approval under section 153D of the Act has been clearly established in the judgment of the Hon'ble Bombay High Court rendered in PCIT v. Smt. Shreelekha Damani (2018) 307 CTR 218 (Bom. HC), wherein the Hon'ble Bombay High Court upheld the Co-ordinate Bench decision of the Tribunal, Mumbai Bench, and the another judgment of the Hon'ble Orissa High Court rendered in ACIT v/s Serajuddin & Co., [2023] 150 taxmann.com 146 (Ori.), wherein the SLP filed by the Department was also dismissed by Hon'ble Supreme Court, which has not been even referred. Both judicial pronouncements relate to the issue of "Application of Mind", whereas Prathibha Pipes and Structural Ltd. (supra), which has been strongly relied on by the Hon'ble Bench, is related to absence of the approval under section 153D. 28. The learned D.R. further relied on the Co-ordinate Bench decision rendered in Bibhudatta Panda v/s ACIT, ITA no.76 to 81/Ctk./2022, vide order dated 01/02/2023. The said case is distinguishable in nature as compared to....
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....of the Section 153D of the Act in respect of the variation in the income between that as was determined in the draft assessment order as on 27.03.2015 and as determined in the assessment order dated 31.03.2015. There is no power available with the Addl. CIT to override the provisions of Section 153D of the Act and to direct the AO to do any further verification and to proceed with the assessment order without obtaining any further approval from the Addl. CIT. The Addl. CIT is a creature of statute and the statute binds him. The assessment order is a statutory document and it is bound by the rules of statute. This approval u/s.153D of the Act is an administrative act and if an administrative act has been prescribed in respect of the statutory document, such administrative act has to be done in respect of that statutory document. Failure of such act or the waiver of such act would lead to a statutory document being passed erroneously. Admittedly, such document does not become void ab initio. This being so, respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of Shiv Kumar Agrawal (supra) as also the coordinate bench of the Tribunal in the case of G....
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....ed out the mistake / error committed by the Assessing Officer in the alleged draft order i.e., for example - (a) The issue of "time barred by limitation" has not been cared by the Addl.CIT for the assessment year 2009-10 to 2011-12, since in this case, assessment has been made under section 153C due to search under section 132 was conducted upon a third party on 22/01/2019 and the Addl. CIT has not cared that the amended provisions of law under section 153A/153C by the Finance Act, 2017 (wef 01/04/2017) would only be applicable in the case of the present-assessee, since search under section 132 has been conducted upon the searched person on 22/01/2019, amended section 153A/153C wef 01/04/2017 has been completely ignored by the Addl. CIT while granting such mechanical approval in routine manner/stereo type on the same day itself (i.e., 31/03/2022) without even perusing / reading / verifying the assessment records / files of the assessee, the Addl.CIT has not even seen / perused the assessment records files wherein date of transmitting the documents is 21/01/2021 and not applied his mind to the fact that it would be deemed date of search and therefore, on his part, he has no....
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....ssessment made under section 153C for the assessment year 2009-10 to 2011-12 is time barred and there is a violation of first proviso to section 153C. There is also violation of provisions of Explanation-1 to section 153A which is not cared by the Addl.CIT. (b) That for the assessment year 2009-10 to 2013-14 which comes under "relevant AY / AYs" as per Explanation-1 to sec153A(1) and Addl.CIT has not cared that documents / material i.e., ledger accounts found in searched premises (i.e., Suresh Agrawal, Kolkata) has been transferred to the Assessing Officer of the assessee-Company on 21/01/2021 by way of consolidated satisfaction note recorded by the Assessing Officer of the searched person, which is in possession of the Assessing Officer of the assessee-Company, does not constitute "asset" as per fourth proviso to section 153A(1) and Explanation-2 of the fourth proviso which is sine qua non for issuing notice under section 153C for the "relevant AY/ AYs", there is a violation of fourth proviso to section 153A(1), which is not cared by the Addl.CIT while granting such mechanical approval. (c) More so, thereafter, the Addl.CIT has also not cared that the Assessing O....
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....hed person" i.e., the assessee-Company, which should have been the date of receiving the document from the Assessing Officer of the searched person, as he has not even recorded that he perused the assessment records/ files for the impugned years involved therein. He has not even verified that opening balances of loan accounts are also added by the Assessing Officer under section 68 which is invalid as per mandate of section 68, as only fresh credits during the year concerned are liable to be assessed under section 68, which is ignored by the Addl.CIT while granting such mechanical approval. He has not even cared that in the absence of required satisfaction note‟ for each year separately, entire assessment under section 153C would be vitiated. 60. In the present case before us, we noted that the Addl.CIT did not mention anything in the approval order passed under section 153D dt.31/03/2022, even though for each year separately, towards his process of deriving satisfaction so as to exhibit his due application of mind. The Addl.CIT has failed to satisfactorily record its concurrence. Even the approval granted by the Addl.CIT does not refer to any seized material/assessm....
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.... the aforesaid provisions, in consonance with the true spirit of the scheme, it is the bounden duty of the Assessing Officer to seek to place the draft assessment order together with copies of the satisfaction note/seized documents before the Addl.CIT well in time much before the due date of completion of search assessment. In the present case, approval under section 153D granted on the same day on 31/03/2022 on the basis of letter dated 31/03/2022 by the Assessing Officer for seeking approval, and thus, proper procedure has not been followed by the Assessing Officer as well as the Addl.CIT. 62. The Addl.CIT is supposed to examine the satisfaction note for the concerned year, seized documents, questionnaires raised by the Assessing Officer on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Assessing Officer and the conclusions drawn by the Assessing Officer vis-à-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, has to be performed by the Addl.CIT in a judicious way after due application of mind. ....
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....der section 153D to the draft assessment orders placed by the Assessing Officer. 66. We have gone through the approval granted by the Addl.CIT on 31/03/2022, the date mentioned in the table hereinabove under section 153D. The said approval letter clearly states that a letter dated 31/03/2022 was filed by the Assessing Officer before the Addl.CIT seeking approval of draft assessment order under section 153D. The Addl.CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 31/03/2022 for various assessment years in the case of the assessee. 67. There is no recording of satisfaction by the Addl.CIT in the impugned approval order as to whether the assessment records/ assessment folders/ files/ seized materials or any incriminating documents or other connected documents and papers/ various statements recorded under section 132(4) and section 131(1A) of the assessee or any other person/ appraisal report of the Investigation Wing of the Department/ materials on hand with the Department at the time of initiation of search or material evidences gathered were placed for its verification and the same were duly verified and/or examined by ....
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....he authorities below and have carefully perused all the relevant documentary evidences brought on record. We have also gone through each and every approval granted by the Addl.CIT, Cent-Range-2, New Delhi vis-a-vis, each and every proposal made by the DCIT, Cent-Cir-15, New Delhi. 14. The issue which we have to decide is, can these approvals be treated as fulfilling the mandate of sec 153D vis-a-vis legislative intent of the said sec in the statute. Sse 153D reads as under: 16. The Legislative intent is clear from the above, in as much as, prior to the insertion of sec 153D, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/ reassessments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their minds on the material on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authorities have to approve the assessment order. 19. Thus, the worthy Addl.CIT, Ce....
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....ely ritualistic and formal rather than meaningful. The relevant paragraph of the said decision reads as under:- "11. Sec 151 clearly stipulates that the CIT(A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression "approved" says nothing. It is not as if the CIT(A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the court is satisfied that the findings by the ITAT cannot be disturbed." 18. Further, this Court in Central India Electric Supply Co Ltd [2011] has taken a view that merely rubber stamping of "Yes" would suggest that the decision was taken in a mechanical manner. Paragraph 19 of the said decision is reproduced as under:- "19. In respect of the first plea, if the judgments in Chhugamal Rajpal (1971) (SC), Ch....
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....Rajpal in the case of Ess Advertising (Mauritius) SNC Et Compagnie [2021] (Del HC), wherein, while granting the approval, the ACIT has written- "This is fit case for issue of notice u/s 148. Approved", had held that the said approval would only amount to endorsement of language used in sec 151 and would not reflect any independent application of mind. Thus, the same was considered to be flawed in law. 21. The salient aspect which emerges out of the foregoing discussion is that the satisfaction arrived at by the prescribed authority u/s 151 must be clearly discernible from the expression used at the time of affixing its signature while according approval for reassessment u/s 148. The said approval cannot be granted in a mechanical manner as it acts as a linkage between the facts considered and conclusion reached. In the instant case, merely appending the phrase "Yes" does not appropriately align with the mandate of sec 151 as it fails to set out any degree of satisfaction, much less an unassailable satisfaction, for the said purpose. 22. So far as the decision relied upon the Revenue in the case of Meenakshi Overseas P Ltd is concerned, the same was a case where th....
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....re 2 additions made by the AO. The first addition was made qua cash deposited in the bank, amounting to Rs. 15,04,35,000. The second addition was made with regard to cash introduced via an entry operator i.e., one, Mr Vipin Garg. The amount added qua this aspect was pegged at Rs. 1,54,07,100. 11. Despite these additions, which would have taken the assessed income well beyond what was crystallised by the AO i.e., 1,65,07,560, the ACIT failed to notice the error. 12. This aspect was brought to the fore by the Tribunal in the impugned order. The Trib, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. 12.1. More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order. 13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: "17.1. However, in the present case, we have no hesitation in stating that there is complete non-....
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....Shiv Kumar Nayyar (2024) (Del HC), we had an occasion to deal with an almost identical issue i.e., grant of approval u/s 153D in a mechanical manner and without application of mind. The relevant discussion of the said decision in Para no.10 to 15, is reproduced hereunder as:- "13. Reliance can also be placed upon Serajuddin and Co (Ori HC) to understand the exposition of law on the issue at hand. Para no.22 of the said decision reads as under:- "22. As rightly pointed out by ld counsel for the assessee there is not even a token mention of the draft orders having been perused by the Addl.CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "see‟....
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....hanical manner. This is more so evident from the fact that the opening balance of unsecured loans of Rs. 8 crores was added by the AO, which is not a small amount and the number of unsecured loan creditors are only four and not very large. We find merit in the argument of the ld counsel for the assessee that the ld Addl.CIT received draft assessment order in 35 cases and approved all cases in one go on the same day and the AO not only passed the orders on the very same day but also prepared demand notices after completion of tax calculation and penalty notices etc. which is not possible within a span of few hours." 37. However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the ld Addl.CIT before granting the approval. Had there been application of mind, he would not have approved the addition of Rs. 8 crores in respect of M/s.Tirupati Real Tech Pvt Ltd and Rs. 7 1akhs in respect of M/s.Golden Buildmart P Ltd which are opening balances and the very same amounts were added in the preceding AY. Even the AO in his remand report has also admitted the mistake that the addition of an amount of Rs.8 crores, was the opening ....
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....he deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order." 14. During the course of arguments, ld counsel for the assessee apprised this Court that the SLP preferred by the Revenue against Serajuddin, came to be dismissed by the SC vide order dt. 28-11-23 in SLP(C) Diary no.44989/2023. 15. A similar view was taken by this Court in Anuj Bansal (Del HC), whereby, it was reiterated that the exercise of powers u/s 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval u/s 153D cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. 16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- "10. We have gone through the approval granted by the ld Addl.CIT on 30-12-18 ....
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....ip Construction P Ltd (2023) 7 NYPCTR 892 (Ori HC) held as under: "4. We find similarity in facts found in the case by the Trib. The approval does not even say the Jt.CIT had perused the files. As such, the contention sought to be raised in the appeal is covered by Serajuddin & Co (2023) (Ori HC). In the circumstances, the appeal and applications are dismissed." (viii) ACIT v. Serajuddin & Co (2023) 150 taxmann.com 146 (Ori HC) dt.15-3-23, concluded that- "16. That such an approval of a superior officer cannot be a mechanical exercise has been emphasized in several decisions. Illustratively, in the context of sec 142(2A) which empowers an AO to direct a special audit. The obtaining of the prior approval was held to be mandatory. Rajesh Kumar (2007) 2 SCC 181 (SC) observed as under: "58. An order of approval is also not to be mechanically granted. The same should be done having regard to the materials on record. The explanation given by the assessee, if any, would be a relevant factor. The approving authority was required to go through it. He could have arrived at a different opinion. He in a situation of this nature could have corrected the AO if....
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....the purpose of sec 196 of IPC and every IT Authority is a court for the purpose of sec 195 of Code of Criminal Procedure, 1973. Though having regard to the language of the provision, we have some reservations on the said view expressed in Rajesh Kumar's case, but having held that when civil consequences ensue, no distinction between quasi judicial and administrative order survives, we deem it unnecessary to dilate on the scope of sec 136. It is the civil consequence which obliterates the distinction between quasi judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away. Therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see: Maneka Gandhi (1978) 1 SCC 248 and SL Kapoor v. Jagmohan (1980) 4 SCC 379). 30. As already noted above, the expression "civil consequences" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. Anything which affects a citizen in h....
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.... 25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of sec 153D and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Addl.CIT resulting in vitiating the assessment orders themselves. (ix) SVP Southwest Industries Ltd v. DCIT (2024) (Mum-Trib) dt.30-4-24; ITA No.1275/ Mum/ 2022, which concluded as under: "39. Thus, the approval granted by the ld Addl.CIT is identically worded as approval considered by Seerajuddin & Co (2023) 150 taxmann.com 146 (Ori HC) as per para No.22 of that decision, where there was not even a token mention of the draft orders having been pursued by the Addl.CIT. The letter simply grants approval. The bare minimum requirement of the approving authority having to indicate what thought process involved is also missing in t....
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....d u/s 153D becomes an empty formality without due process of law and, thus, not sustainable. The ld Addl.CIT, in fact, abdicated his statutory functions and delightfully relegated the statutory duty to his subordinate being the Dy.CIT, 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 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 before approving the draft assessment-order and the authority is legally required to ensure due application of mind. Ld AR strongly contended that the Revenue does not have any evidence to show that the approval was granted with due diligence upon exer....
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....ng authority in the said sec. The expression "application of mind" is only provided by the Judicial decisions and not provided in the statute. Hence, the ld DR argued that literal interpretation is to be given to the sec 153D which does not provide for application of mind of the approving authority and hence, any other interpretation contrary to the same would only result in re-writing the law. 9. We find, as per the scheme, for framing search assessments, the ld AO can pass the search assessment order u/s 153A or u/s 153C only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the Jt.CIT in terms of sec 153D. This is a mandatory requirement of law. The said approval granting proceedings by the Jt.CIT is a quasi judicial proceeding requiring application of mind by the Jt.CIT judiciously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme, it is the bounden duty of the AO to seek to place the draft assessment order together with copies of the seized documents before the Jt.CIT well in time much before the due date of completion of search assessment. The Jt.....
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.... that the Jt.CIT need not apply his mind while granting approval of the draft assessment orders u/s 153D as it is not provided in sec 153D, then it would make the entire approval proceedings contemplated u/s 153D otiose. The law provides only the AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the Jt.CIT to grant judicious approval u/s 153D to the draft assessment orders placed by the ld AO. 10. Let us now examine whether in the aforesaid background of the scheme, whether the approval in terms of sec 153D has been granted by the Jt.CIT in a judicious way after due application of mind or not, in the instant case. 11. We have gone through the approval granted by the Jt.CIT on the date mentioned in the table hereinabove u/s 153D. The said approval letter clearly states that a letter dt.29-12-17 was filed by the ld AO before the Jt.CIT seeking approval of draft assessment order u/s 153D. The Jt.CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 29-12-17 for various AYs in the case of various assessees. In any event, whether is it humanly possible for an approving aut....
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....im at the time of granting of approval to the draft assessment order and 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 AO 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 statutory functions and delightfully relegated his statutory duty to the subordinate AO, whose action the Addl.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 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 Ad....
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....grant a simplicitor approval. This approach of the Addl.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. Shreelekha Damani (Mum-Trib) approved by jurisdictional HC subsequently as reported in 307 CTR 218 affirms the plea of the assessee. 11.7. Very recently, Sanjay Duggal (Del-Trib) dt.19-1-21 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 u/s 153D. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the plea raised by the assessee against maintainability of hollow approval u/s 153D totally devoid of any application of mind. The approval so granted under the shelter of sec 153D, does not, in our view, pass the test of legitimacy. The Assessment orders of various AYs as a consequ....
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....as to apply his mind to secure in build for the Department against any omission or negligence by the AO in taxing right income in the hands of right person and in right AY and on the other hand, Jt.CIT is also responsible and duty bound to do justice with the tax payer (Assessee) by granting protection against arbitrary or unjust or unsustainable exercise and decision by the AO creating baseless tax liability on the assessee and thus, the Jt.CIT has to discharge his duty as per Law. Thus, granting approval u/s 153D is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the Jt.CIT on the application of mind and this exercise should be discernable from the Orders of the approval u/s 153D. 11.7. In the following Orders of various Benches of the Trib, it is held that while granting approval u/s 153D, the Jt.CIT shall have to peruse all the incriminating material and other seized material on record and proper procedure if have been adopted by the AO and appraisal report as well. The Jt.CIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in....
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....pts 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 AO 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 Godhra Electricity Co Ltd (SC). This fact is also not verified and considered by the Jt.CIT while granting approval u/s 153D. It may be noted here that entire sale proceeds when cannot be added in the hands of M/s JIL as income which is also not done in the case of M/s. JIL, rightly so, how the same sale proceeds could be added as income in the hands of assessees u/s 68 is not understandable. Thus, the Approving Authority without application of mind and in a most mechanical and technical manner granted approval u/s 153D even without reference to any reason in the Order u/s 153D. We, even, otherwise failed to understand that in search cases how an approval can be granted to an AY which is required to be based only on incriminating material without verification of those material and its reference in the appraisal report. The Jt.CIT even in approval did not mentio....
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.... even in some of the Talwar group of cases approval is granted prior to 30-12-17 but in main cases of Shri Sanjay Duggal and Rajnish Talwar the approval is granted on 30-12-17. Therefore, without granting approval in the main cases how the Jt.CIT satisfied himself with the assessment orders in group cases which is also not explained. Therefore, the approval granted by the Jt.CIT in all the cases are merely technical approval just to complete the formality and without application of mind as neither there was an examination of the seized documents and the relevance of various observations made by the Investigation Wing in appraisal report. Thus, we hold the approval u/s 153D have been granted without application of mind and is invalid, bad in Law and is liable to be quashed." (i) SMW Ispat (P) Ltd v. ACIT (2024) 163 taxmann.com 119 (Pune-Trib) held as under: "15. Heard both the parties and perused the material available on record. Coming to the main contention of non-application of mind by the approving authority. The ld AR placed reliance primarily on Serajuddin & Co (2023) (Ori HC). The relevant portion of the said judgment is reproduced here-in-below for....
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....s and business concerns at the business and resi-premises of different members/ associate which is evident from para 1 of the assessment order. Admittedly, the AO sought approval u/s 153D in 49 assessment orders vide letter dt. 18-3-16 which is on record placed on by the ld DR on 9-10-23. The approving authority has to examine number of evidences, documents, statements of various persons etc. recorded which were necessarily to be taken into consideration while granting approval u/s 153D by the Jt.CIT. On an examination of the approval dt.21-3-16 which is on record placed by the ld DR on 9-10-23, we find no such indication of examination of evidences, documents, statements of various persons etc. at least, no reference whatsoever made by the Jt.CIT i.e., approving authority. Thus, we find the facts and circumstances in the present case are similar to the facts of the case before the Serajuddin & Co (2023) (Ori HC) and the ratio laid down therein is applicable to the present case. Therefore, the Jt.CIT granted approval u/s 153D mechanically without application of mind which resulting in vitiating the present final assessment order dt.30-3-16 u/s 143(3) rws.153A. 17. We find ....
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....o indicate that the CIT did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material." 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Jt.CIT, which accords sanction for issuing notice u/s 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to sec 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the ld appellate authorities and the law laid down in Arjun Singh (MP HC), we see no que of law involved in the matter, warranting reconsideration. 11. The appeals are, therefore, dismissed." 23. We find the Department of Revenue filed SLP before the Hon'ble SC against the decision of S Goyanka Lime & Chem....
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.... a) Ground no.4, in the appeal being ITA No.108/Nag./2024, A.Y. 2009-10, is allowed; b) Ground no.4, in the appeal being ITA No.109/Nag./2024, A.Y. 2010-11, is allowed; c) Ground no.4, in the appeal being ITA No.110/Nag./2024, A.Y. 2011-12, is allowed; d) Groundn no.4, in the appeal being ITA No.111/Nag./2024, A.Y. 2012-13, is allowed; and e) Ground no.3, in the appeal being ITA No.112/Nag./2024, A.Y. 2013-14, is allowed." 30. Thus, the power to grant approval under section 153D is not to be exercised casually or in a routine manner, rather the concerned authorities are expected to grant approval upon examination of the entire materials before approving the draft assessment order and the authority is legally required to ensure due application of mind. We also find that the Revenue does not have any evidence to show that the approval was granted with due diligence upon exercising adequate time and upon examining the materials needs to be considered in terms of the statutory provisions. Clearly, therefore, we hold that the approval so granted is violative of the mandate of section 153D and, therefore, not sustainable in the eyes of law. Con....
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....er, approving power and appellate powers are separate and distinct, and there should not be a mix-up of the said powers. 33. In the case of the State (Anti-Corruption Branch) Government of NCT of Delhi & Anr. v/s R.C. Anand & Another, [2004] 4 SCC 615, it has been held by the Hon'bble Supreme Court as under:- "The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence, including the transcript of the tape record, have been considered by the sanctioning authority. Consideration implies the application of the mind. The order of sanction must ex-facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority." 34. The Hon'ble Supreme Court in Chhugamal Rajpal v/s S.P. Chaliha [1971] 79 ITR 603 (SC), the issue relates to re-opening of assessment wherein the Hon'ble Court that the report submitted by the Income Tax Officer under secti....
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....manner alone and the Court would not accept it being done in some other manner." 38. As a measure of abundant caution, the Legislature consciously provided a rider for previous approval so that certain harsh provisions are not abused by the Lower Authorities in delivering justice, befalling any ipse-dixit conduct in the quasi-judicial process and frustrating intent of the law as the provision being an inbuilt protection against arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. 39. The Income Tax Act 1961, has categorically prescribed specific approval by the competent authority before obtaining jurisdiction for application of several proviso including section 153D of the Income Tax Act 1961. So, there is no space for mechanical and a baffling haste approach in discharging statutory obligation casted upon. Any abysmal conduct of statutory authority defies law and causes injustice. 40. The term "approval" being an expression indicates application of mind on the part of the higher authority. The Hon'le Supreme Court ....
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....t documents necessary for granting the approval. Vide Para-18 & 19, Hon'ble Supreme Court held as under:- "18. The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence have been considered by the sanctioning authority. Consideration implies application of mind. The order of sanction must ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority. 19. Since the validity of "sanction" depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not. The mind of the sanctioning authority should not be under pressure from any quarter nor should any ex....
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....d the exactly similar issue and has held as under:- "We find that only draft assessment orders were sent to JCIT without any assessment or search record. The approvals establishes that approving authority has granted the approvals, without reasons or depicting having applied an active mind to the issue involved and the material relied by the AO, but by merely mentioning "Following draft assessment orders are being approved", the impugned approval is granted. Now more particularly in the present set of facts where substantive additions were made in the hands of respondent and protective assessment were made in the hands of its Director respondent, had the competent authority been even aware of the fact of the protective and substantive assessments being made, then it was more likely to have been granted in one letter. Rather if the sequence number of letters granting approval is considered the approval was first granted in case of protective addition and then of substantive addition in case of the company. This certainly shows that unmindful of nature of material relied and nature of additions the approvals have been mechanically granted by the JCIT. ....
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....ant fact was not mentioned in the Affidavits filed by learned officers of the Income Tax Department. 49. The ratio of the present judgment shall apply mutatis mutandis to all the 21 appeals under consideration as the additional ground relating to 153D of the Act is raised in all the 21 appeals. The core issue revolves around the lack of due application of mind by the Approving Authority, as evident by the mechanical and template-driven approvals, which fail to reflect any substantive engagement with the draft assessment orders or seized material. We find that the approvals under Section 153D, being a mandatory judicial function rather than a mere administrative formality, require independent and judicious scrutiny, as mandated by the Manual of Office Procedure and reinforced by judicial precedents such as Serajuddin & Co. (supra) and Shreelekha Damani (supra). The affidavits and so-called "confidential" documents submitted by the Department are deemed inadmissible and irrelevant, lacking corroborative evidence to substantiate the application of mind. Furthermore, the submission of draft orders prior to the conclusion of investigations, as evident by subsequent notices issued to ....
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....HE ADDITIONAL COMMISSIONER OF INCOME TAX CENTRAL RANGE -2, NAGPUR Aayakar Bhavan, R.No.206, Telangkhedi Road, Civil Lines, Nagpur - 440 001 F.No. Addl. CIT/CR-2/NGP/153D/YRCE Educare/2021-22 0 Date: 18.08.2021 1 8 AUG 202K To. 757 The Asstt. Commissioner of Income-Tax Central Circle -2(1), Nagpur Sub .: Approval U/s 153D of the I.T. Act in the case of M/s YRCE Educare Pvt. Ltd., PAN: AAACY6482D for A.Y. 2018-19 - reg. Ref .: Letter F.No. ACIT.Cen.Cir-2(1)/NGP/Yamsanwar Gr./Draft/21-22 dated 29.07.2021 Please refer to the above. 2 I have perused the draft assessment order submitted by you in the case of M/s YRCE Educare Pvt. Ltd., PAN: AAACY6482D for A.Y. 2018-19 vide above referred letter. Accordingly, an approval u/s 153D of the I.T. Act is hereby accorded to pass the assessment order u/s 143(3) r.w.s. 153C for A.Y. 2018-19 in respect of the following case: Sr.No Name of the Assessee Section A.Y. 1. M/s YRCE Educare Pvt. Ltd .. PAN: AAACY6482D U/s 143(3) r.w.s. 153C of the I.T. Act. 1961 2018-19 mulatu (MILIND V. PATIL) Addl. Commissioner of Income-tax Central Range-2, Nagpur Document 3 ITA-250/2022 उप/सहाय....
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....s passed in the present case. I solemnly affirm that I am competent to file the present affidavit. Document 5 2. A copy of appraisal report in Yamsanwar group was received in this office and later various notices were issued to the assessee from time to time. The issues reported in the appraisal report were thoroughly discussed by the undersigned with Addl. CIT Central Range 2, Nagpur, before issue of notice. 3. Various notices/questionnaires, the submissions made by the assessee and seized material/other material, were discussed with the Addl. CIT Central Range 2, Nagpur continuously over an extended period of time. Thorough study was done to analyse all the issues raised in the Appraisal report. This was not a single day work but it spanned over several weeks right from receipt of appraisal report, issue of notices, discussion with Addl. CIT about the seized material, going through the submission of the assessee & discussing the same with the Addl. CIT from time to time. 4. It is further to confirm that the outcome of verification and the variation to the total income declared, if any, was discussed with Addl. CIT Central Range 2, Nagpur, issue wise as and when the same ha....
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....ent affidavit. 2. A copy of appraisal report in Yamsanwar group was received in this office and later various notices were issued to the assessee from time to time. The issues reported in the appraisal report were thoroughly studied by the undersigned and duly discussed with Dy. CIT Central Circle 2(1), Nagpur, before issue of notice. 3. The development in the present case i.e. the various notices/questionnaires issued, the submissions made by the assessee and seized material/other material, were discussed with the Dy. CIT Central Circle 2(1), Nagpur on real time basis. Due diligence was exercised to analyse all the issues raised in the Appraisal report. This was not a single day work but it spanned over several weeks right from receipt of appraisal report, issue of notices, discussion with DCIT about the seized material, going through the submission of the assessee & discussing the same with the DCIT from time to time. This was the continuous process spanning over several weeks. Document 8 4. It is further to confirm that the outcome of verification and the variation to the total income declared, if any, was discussed with Dy. CIT Central Circle 2(1), Nagpur, issue wise ....
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....िनारी हिलà¥à¤¸, बालाजी मंदिर के पास, नागपà¥à¤°-440006. F.No.CIT(Audit&ITAT)/Nag/Yamsanwar Group./ 2024-25 Date 17.03.2025 To The Registrar, Hon'ble ITAT Bench Nagpur. Sir. Sub :- Submission of copies of confidential letters having F.No. Addl CIT- CR-2/Yamsanwar Gr./AMY/ 2021-22 dated 16/07/2021 written by the then Addl.CIT .Central Range-2,NGP to Addl DIT (Inv) Nagpur and the confidential Deviation meeting held on 03/08/2021 at 11 a.m. in the office of Addl. CIT-reg . Kindly refer to the above. 1. The Yamsanwar Group includes the following assessee- Sr.No. Appeal No. Name of the Assessee 1 ITA 383 & 384/NAG/2023 M/s AVC Homes (PAN:AAZFM2044B) 2 ITA 239 TO 243/NAG/2022 UMESH THAKRE (PAN: ADTPT6214B) 3 ITA 244 TO 246/ NAG/2023 YRCE EDUCARE PVT LTD (PAN: AAACY6482D) 4 ITA 249 TO 256 AND ITA 259 TO 263/NAG/2022 ATUL YAMSANWAR (PAN: AAEPY4543Q) Document 10 5 ITA/238 & 264/NAG/2022 VISHWAS CHAKNALWAR (PAN: ABDPC0828J) 6 N.A. M/S A V REALITIES (PAN: ABFFA9554M) 2. With respect to the abovemen....
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....eedings u/s 132 was conducted in the case of assessee and various group of concerns. The Assessing Officer Le. ACIT-CC-2(1) has submitted a deviation note in the case of assessee which is self explanatory. 3. In view of the facts mentioned in the deviation note, some of the suggestions made by ADIT cannot be added. Accordingly, it is requested that the convenient time at the earliest may kindly be suggested for discussing the issue as per the above note. It may kindly be noted that the assesaments are getting time barred by limitation of time on 30.09.2021. The hard copy of the reconciliation annexure is enclosed herewith along with the deviation nute received from ACIT-CC-2(1) for your kind perusal and necessary action. Encl .: As above omra Mink Yours faithfully, ulatu (Milind V Patil) Addl. Commissioner of Income Tax, Central Circle-2, Nagpur 1 6 JUL 2021 अपर/ संयà¥à¤•à¥à¤¤à¤¾ आपूरà¥à¤•à¤° निदेशक (aride) formul, zeigt. depur for Information Copy to: The Pe mulatu Add !. Commissioner of Income Tax, Central Circle-2, Nagpur 1 6 JUL 2071 प....