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TaxTMI 
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2025 (9) TMI 1372
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....Y: 2009-10) The brief facts leading to the case are that the assessee before us, an individual, filed its return of income originally on 20.07.2010 declaring total income at Rs.1,37,940/- for the year under consideration. Subsequently, a search and seizure operation under Section 132 of the Act was conducted on Karan Luthra group of assessees on 14.03.2014. During the search operation some incriminating documents/informations relating to the assessee were claimed to have been found and seized. Thereafter a consequential search and seizure operation was conducted at the premises of the assessee on 29.04.2014. The case of the assessee thereafter, was centralized with central circle-8, New Delhi. by and under the order dated 19.08.2015 passed by the PCIT Delhi, under Section 127 of the Act. Notice under Section 153A dated 28.08.2015 was served upon the assessee directing the assessee to furnish a true and correct income for the year under consideration. Since nothing was forthcoming notice under Section 274 r.w.s 271 of the Act was issued and the assessee ultimately filed a letter dated 22.08.2016 stating that the return filed under Section 139(1) of the Act be treated as return fi....
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....le Apex Court in the case of Sambhaji vs. Gangabai, reported in (2008) 17 SCC 117 as further contended by him. 4. Such submissions made by the ld. A.R has not been able to be controverted by the Ld DR and having regard to the explanation rendered by the assessee in support of the delay in filing the application before us as narrated herein above seems to be genuine inasmuch as there is no change in the fact of the matter nor any additional evidence, rather issue involves purely on legal basis, we admit the additional ground of appeals raised by the assessee. 5. At the time of hearing of the instant appeal, the Ld. Counsel appearing for the assessee submitted before us that the proposal for approval under Section 153D of the Act in these matters were sought for by the ACIT, Central Circle-08, New Delhi from the Additional Commissioner of Income Tax, Central Range-02, New Delhi, on 27.12.2016 enclosing the draft assessment orders in the case of the assessee for Assessment Year 2009-10 to 2015-16. In this regard, he has drawn our attention to page 71 of the paper book filed before us. It was obtained by the assessee upon making application under RTI Act, 2005 dated 05.07.2021. H....
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....under Section 153D of the Act by the ACIT and the same was, therefore, held to be mechanical approval. 6. On the other hand, it was submitted by the Ld. D.R. that the range head is fully involved in guiding and supervising the assessment proceedings. Discussions and consultation between the AO and the range heads are sometimes not formally put in the form of letters on record. It is not the JCIT/Additional CIT is seeing issues for the first time which are in the draft order as alleged by the assessee. It was further contended by him that no government officer or even a layman will ever sign a legal paper/sensitive order without seeing and applying his/her mind where he can be held responsible/accountable later. 7. We have heard the rival submissions made by the respective parties, we have also perused the relevant materials available on records including the orders passed by the authorities below. The proposal for approval under Section 153D of the Act made by the ACIT Central Circle-8, New Delhi to the Additional Commissioner Income Tax, Central Circle-2, New Delhi dated 27.12.2016 appearing at page 71 of the paper book is reproduced herein below: OFFICE OF THE ASSISTA....
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....es not speak of movement of file. No mention of appraisal report been seen; no sanction has been given separately for each Assessment Year. Moreso, no reason has been assigned as to how the approval has been given neither indicating that the approving authority has examined the draft orders and found that it meets requirement of law. In a search matter before the order of assessment or re-assessment is passed, requirement of prior approval of superior officer is a mandatory requirement in terms of the provision of law particularly under Section 153D of the Act. The same equally must contain the reason for such approval and further that reflection of due application of mind made by the approving authority on the draft assessment orders in respect of search and seizure operation as placed before him is also necessary in the absence of which the same is nothing but a mechanical approval vitiates the entire assessment proceeding. In this regard, we have considered the judgment passed by the Hon'ble Apex Court as relied upon by Ld. A.R in the case of ACIT Vs. Serajuddin And Co. (supra) and also the order passed by the Hon'ble Orissa High Court dated 15.03.2023 against which the said app....
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....ther contended by the Assessee that the so-called approval of the Additional CIT under Section 153D of the Act had been granted in a mechanical manner without application of mind. Reference was made to the letter dated 29^th December 2010 of the AO addressed to the Additional CIT Range-1 seeking approval under Section 153D of the Act and the letter dated 30th December 2010 of the Additional CIT addressed to the AO communicating the approval. Reference was also made to the decision dated 29th November 2019 of the ITAT in IT (SS) A Nos. 66 to 71/CTK/2018 (Dillip Construction Pvt. Ltd. v. ACIT) which held the guidelines contained in the aforementioned Circular to be mandatory and binding on the Department. 7. The ITAT has, in the impugned order, referred to the decision of the Bombay High Court in Akil Gulamali Somji and other decisions of the ITAT to come to the conclusion that the approving authority did not apply his mind to the relevant assessment records or to the draft assessment orders prior to granting approval to the AO under Sections 143(3)/144/153A. The assessment orders were accordingly set aside. As a result, the cross appeals of the Revenue were held to be infru....
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.... shown by the Assessee, no interference with the assessment orders was warranted. Reliance was placed on the decisions in Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise Gauhati (2015) 8 SCC 519; Managing Director, ECIL v. B. Karunakar (1993) 4 SCC 727; Haryana Financial Corporation v. Kailash Chandra Ahuja (2008) 9 SCC 31; State Bank of Patiala v. S.K. Sharma (1996) 3 SCC 364; P.D. Agrawal v. State of Bank of India (2006) 8 SCC 776 and State of U.P. v. Sudhir Kumar Singh. It was then submitted that where initiation was valid but completion was not correct, the order may not be invalid but only irregular because the intervening irregularity is a curable one. Reliance was placed on the decision of the Kerala High Court in Panicker (CGG) v. CIT, (1999) 237 ITR 443 and CIT v. M. Krishnan (N) (1999) 235 ITR 386. It was submitted that mere technicality should not defeat justice. 9. On behalf of the Assessee submissions were made by Mr. Ramesh Singh, Senior Advocate; Mr. Sidhartha Ray, Senior Advocate; Mr. Ashok Kumar Parija, Senior Advocate as well as Mr. S. Ganesh, Senior Advocate. They drew attention of the Court to the relevant clauses of the CBDT Circula....
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....licable 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." 12. It must be noted at this stage that even prior to the introduction of Section 153D in the Act, there was a requirement under Section 158BG of the Act, which was substituted by a Finance Act 14 of 1997 with retrospective effect from 1st January 1997, of the AO having to obtain a previous approval of the JCIT/Additional CIT by submitting a draft assessment order following a search and seizure operation. 13. The CBDT issued the Manual of Office Procedure in February 2003 in exercise of the powers under Section 109 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 O....
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.... the Revenue from suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/ or the entries made therein. While exercising its power, the assessing officer has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief Commissioner or the Commissioner, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given." 17. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself. In Sahara India (Firm) Lucknow v. Commissioner of Income Tax (supra), the Supreme Court explained as under: "8. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provisi....
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....ces" 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 his civil life comes under its wide umbrella. Accordingly, we reject the argument and hold that since an order under Section 142(2A) does entail civil consequences, the rule audi alteram partem is required to be observed." 19. To the same effect, are the decisions of the Delhi High Court in Yum! Restaurants Asia Pte. Ltd. v. Deputy Director of Income Tax (supra) which dealt with the requirement under Section 151(2) of the Act for initiating proceedings under Section 147 read with 148 of the Act. It was observed as under: "11. The purpose of Section 151 of the Act is to introduce a supervisory check over the work of the AO, particularly, in the context of reopening of assessment. The law expects the AO to exercise the power under Section 147 of the Act to reopen an assessment only after due application of mind. If for some reason, there is an error that creeps into this exercise by the AO, then the law expects the superior officer to be able to correct that error. This explains why Section....
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....the 30th December, 2010 To The Assistant Commissioner of Income Tax, Circle-1(2), Bhubaneswar. Sub: Approval u/s 153D-in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata-Matter regarding. Ref: Draft Orders u/s 153A/143(3)/144 for the A.Y. 2003- 04 to 2008- 09 u/s.143(3)/153B (b)/144 of the A.Y.2009-10 in the case of above mentioned assessee. Please refer to the above The draft orders u/s 153A/143(3)/144 for the A.Y. 2003-04 to 2008-09 and 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: Assessment Year Income Determined (Rs) 2003-04 11,66,22,771 2004-05 36,46,80,016 2005-06 65,70,12,805 2006-07 60,02,65,791 2007-08 130,03,13,307 2008-09 274,68,87,069 2009-10 301,17,05,952 You are requested to serve these orders expeditiously on the assessee, submit a copy of final order to this office for record. Sd/- Addl. Commissioner of Income Tax, Range-1, Bhubaneswar 22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention....
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....a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute." (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A sh....
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....The Honble Delhi High Court passed orders in the following manner: "6. The appellant/revenue via this appeal seeks to assail the order dated 29.04.2022 passed by the Income Tax Appellate Tribunal [in short, "Tribunal'] 7. The Tribunal has via the impugned order set aside the additions made qua the income of the respondent assessee inter alia, on the ground that there was no application of mind by the Additional Commissioner of Income Tax (In short, "ACIT"] in granting approval under Section 153D of Income Tax Act 1961 [in short, the Act']. 8. To be noted, an assessment order was framed qua the respondent/assessee under Section 153A, read with Section 143(3) of the Act. 8.1. This order was carried in appeal by the respondent/assessee, right up till the Tribunal. 9. Insofar as the Assessing Officer (AO) was concerned, he made certain additions against the returned income. 9.1 The respondent had declared an income amounting to Rs 87,20,500/- However, while making the additions, strangely, the AO noted that the returned income was Rs. 11,00,460/-. 10. There were two additions made by the AO. The first addition was m....
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....d in the eyes of low. We therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in low and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed" [Emphasis is ours] 14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal." 15. While dismissing the SLP preferred by the revenue, the Hon'ble Apex Court obser....
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....the assessment orders passed by the Assessing Officer (hereinafter the 'AO') being vitiated and void-ab-initio. The relevant part of the finding in the draft order is reproduced hereunder: "16. Having heard the Ld. Counsels appearing for the parties, having regard to the fact and circumstances of the case, the order of approval issued by the Additional Commissioner of Income Tax appearing at page 72 of the paper book filed before us found to be invalid in view of this particular fact the said approval does not speak of movement of any file. Neither given approval for each year separately nor assigned any reason for such approval; the same is nothing but product of total non-application of mind by the order approving authority. Further, the impugned order of approval dated 27.12.2016 has been issued on the same day when the draft orders in respect of these assessment years have been placed before him and in hot haste the approval has been granted. The same does not establishes review of the assessment records and search materials by the Additional CIT too; the same, is, thus, a mechanical approval and hence the judgements relied upon by the Ld. AR as discussed above are fou....
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.... Krishnamurthy vs State of Karnataka AIR 2005 SC 2790 and State of Maharashtra vs. Ishwar PirajiKalpatri AIR 1996 SC 722 has held that even in cases where the sanction order does not demonstrate the independent perusal of material and does not carry recital of reasons in view of the statutory presumption under section 114(e) of the Indian Evidence Act, 1872 if it is established that all the relevant material were duly put up for perusal before the authority, then the sanction cannot be considered as vitiated. 4. The Ld. AR failed to demonstrate and establish that there was any other document(s), letter(s), internal correspondence folder(s), etc. available on the record other than those submitted by him before us, which might show that the Additional Commissioner of Income Tax (hereinafter, the 'Addl. CIT') was not involved actively in the search assessments. The documents submitted by Ld. AR are self-serving and cannot be termed exhaustive in drawing the inference that the Addl. CIT was not performing his official work with the application of mind in this case. 5. The documents produced before us which found scanned in the draft order were obtained, in the RTI Application, by....
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....drafting Questionaries, etc. Neither the AO nor the Addl. CIT works in isolation as far as search assessments are concerned. Basically, they work as team during the course of search assessments. The approval accorded by the Addl. CIT under section 153D of the Act is nothing but the culmination of day-to-day involvement of the AO and the Addl. CIT in search assessments. The fact is that the AO and the Addl. CIT works as team members and the AO works under the supervision of the Addl. CIT. The team work gets culmination by the approval under section 153D of the Act. Such involvement of the Addl. CIT in the search assessment is in routine in the Central Charges of the Income Tax Department where the search assessments are completed. It is not a case where the assessment records, other files, investigation folders, etc. of a search case change hands for the first time between the AO and the Addl. CIT at the time of approval of the search assessment. The detail mentioned above is based on my personal experience while working in each hierarchy (AO onwards) of the Central Charges of the Income Tax Department. 8. The Ld. AR, in counter, did not say anything and controvert the submission....
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....f the AO or creating any prejudice to assessee. In fact, while granting approval under section153D of the Act, the Addl. CIT does not act as a Reviewing/Appellate Authority to allow or disallow the additions proposed by the AO. 11. The manner of arriving satisfaction for granting administrative approval itself could not have been matter of adjudication in the draft order in view of ratio laid by the Hon'ble Supreme Court in the case of DGIT(Inv) Pune Vs. Space Wood Furnishers Pvt. Ltd. in Civil Appeal No.4394 of 2015 [para12]. Hence, I am not in agreement with the finding "With the aforesaid observation we, therefore, quash the impugned approval dated 27.12.2016." in the draft order on the simple reasoning that the approval is not a matter of adjudication before us. Respectfully, following the decision of the Hon'ble Supreme Court in the case of Space Wood Furnishers Pvt. Ltd. in Civil Appeal No.4394 of 2015 [para12] and Mumbai ITAT decision in the case of Pratibha Pipes & Structural Ltd. In ITA No. 3874/Mum/2015, I do not quash the approval granted by the Addl. CIT under section153D of the Act. 12. In view of the above, I am not inclined to concur with the finding in the dra....
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....nt exercise carried out as team lead by the Addl. CIT. The AO had worked under the supervision of the Addl. CIT. 14. The Ld. AR failed to cite any facts in the assessment order which may shown non-application of mind of the Addl. CIT while granting approval under section 153D of the Act. The Hon'ble High court of Delhi, in the case of Anuj Bansal (supra) has cited many instances of inaccuracy/ mistake/error/lapses, etc. in the approval under section 153D of the Act and the details mentioned in the assessment order to hold that there was non-application of mind of the Addl. CIT while granting approval under section 153D of the Act. however, here in the present case, the Ld. AR failed to demonstrate such instances of inaccuracy/mistake/error/lapses, etc. in the approval under section 153D of the Act and the details mentioned in the assessment order. Hence, the facts of this case are held distinguishable from the case of Anuj Bansal (supra). Therefore, I am of the considerable view that the decision of the Hon'ble High in the case of Anuj Bansal (supra) is not applicable in the present case. Rather, this case supports my view in view of the decision of the Hon'ble Delhi High Court ....
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....ch the decision was given and what was the point which had to be decided. No judgment can be read as if it is a statute. A word or a clause or a sentence in the judgment cannot be regarded as a full exposition of law. Law cannot afford to be static and therefore, Judges are to employ an intelligent interpretation in the use of precedents........." [Emphasis has been supplied] 17. The dismissal of SLP has no binding force in terms of Article 141 of the Constitution of India. Consequently, it has no binding precedent value, in contradiction with a reasoned order of the Hon'ble Supreme Court or an order passed in appeal. Reliance is placed on the decisions of the Hon'ble Supreme Court in the cases of Kunhayammed 245 ITR 360 and Khoday Distilleries Ltd. 104 taxmann.com 25 (SC)].The Hon'ble Supreme Court, in the case of State of Orissa and Another v. Dhirendra Sundar Das And Others - [(2019) 6 SCC 270 (SC)] has clarified this position with the following observations at Para 9.27: "9.27 It is a well settled principle of law emerging from a catena of decisions of this Court, including Supreme Court Employees' Welfare Association v. Union of India & Anr. and State of P....
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...., 2014. Consequently, for the assessment years 2009-10 to 2015-16, notices under Section 153A of the Act were issued by the Revenue to the assessee. The assessee, during the course of assessment proceedings, submitted that the original returns filed be considered as returns filed in response to notices under Section 153A of the Act. Accordingly, assessments were framed by the ACIT, Central Circle-8, New Delhi for the relevant assessment years 2009-10 to 2015-16 vide different orders dated 27th December, 2016 under Section 153A read with Section 143(3) of the Act. Aggrieved by the additions made by the Assessing Officer, the assessee preferred appeals before learned CIT(A) and learned CIT(A) also passed appellate orders for these above assessment years. Aggrieved against the appellate orders, assessee preferred appeals before the Tribunal. The assessee, vide letter dated 27th October, 2021, for these assessment years, raised additional ground in all these appeals. The ground as raised is identical and hence, I will take the ground raised in assessment year 2009-10, which reads as under:- "3. The CIT(A) has erred in law in confirming the addition made by the AO, without cons....
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.... October, 2021. Learned Counsel for the assessee made argument that as per the mandate of Section 153D of the Act, the approval is to be granted to the assessment order by the Additional CIT/JCIT after due application of mind. Learned Counsel for the assessee stated that this approval dated 27.12.2016 was granted in lieu of proposal sent by the Assessing Officer i.e. the Assistant Commissioner of Income Tax, Central Circle-08, New Delhi dated 27.12.2016. It means, according to learned Counsel, the Additional CIT granted approval of these seven draft assessment orders on the same date. He further explained that as per this proposal, the Assessing Officer, no assessments records, search materials, replies filed by assessee or any material related to these assessments was provided or examined by the Additional CIT. In view of these facts, learned Counsel argued that that this issue is now settled by the decision of Hon'ble Delhi High Court in the case of PCIT(Central)-2 Vs. Anuj Bansal - [2024] 165 taxmann.com 2 (Delhi) and PCIT Vs. Shiv Kumar Nayyar - [2024] 163 taxmann.com 9 (Delhi). Even this issue has been dealt with by Hon'ble Orissa High Court in the case of ACIT Vs. Serajud....
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.... eyes of law or not." She submitted that approvals under Section 153D of the Act are granted by the Joint/Additional CIT. However, in the present case, ACIT has been stated, which is incorrect, because ACIT is actually Assistant Commissioner of Income Tax and not Additional Commissioner of Income Tax. Without prejudice to the above, she drawn our attention to Paragraph 11 and 14 to 17 of the draft order of learned Accountant Member. She also produced copies of relevant guidelines enunciated by the Search & Seizure Manual and relevant SOPs for search assessments issued by the CBDT. She also referred to Appendix-V of the Assessment Manual issued by the Income-tax Department in regard to search and seizure assessments dated 22nd December, 2006 vide F.No.286/161/2006-IT(Inv.II). She particularly referred to Paragraph 1.3 and argued that the Range Head i.e., Additional CIT/JCIT is involved in scrutinizing the seized material and issuance of notices under Section 153A, 153C and 148 of the Act and also where assessment in other than the searched person is to be done. The relevant Paragraph 1.3 referred by her reads as under:- "1.3 On receipt of the appraisal report and seized ....
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....ary for assessments in search and seizure cases is introduced by the legislature by the Finance Act, 2007 with effect from 1st June, 2007. The relevant provisions of Section 153D read as under:- "153D. 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 sub-section (1) 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." 8. As argued by the learned Counsel for the assessee, in view of this provision, I noted that an important concept mentioned in Section 153A of the Act, which is peculiar to the scheme of search assessments. Keeping in view the basic fundamental features of search assessments i.e., Section 153A of the Act, if the provisions of Section 153D is scrutinized, it would become manifest that an important phrase is employed in the text of Section 153D, which is "each assessment year". The bare reading of Section 153D of the Act makes it clear that separate approval of draft assessment order in each year is to be obtained. The Hon....
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....ears). 20. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under section 153A. 21. In the instant case, the draft assessment order in 85 cases, i.e. for 85 assessment years placed before the Approving Authority on 30-12-2017 was approved on same day i.e. 30-12-2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 85 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record." 9. In the present case before me also, as is evident from the copy of approval, as reproduced above, granted by the Additional CIT, is for all the six assessment years vide one approval. Hence, on this count also, the approval granted by the Additional CIT is bad in law and consequent asse....
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....accompanied by any assessment folder, seized material or any other related documents for completion of assessment. It means that before the Additional CIT, only a proposal vide letter F.No. ACIT/Central Cir.- 08/2016-17/1311 dated 27th December, 2016 was sent by the Assessing Officer. In the given facts, whether this approval granted by the Additional CIT is mechanical or there is due application of mind or not. 12. I have gone through the case law of Hon'ble Orissa High Court in the case of Serajuddin & Co. (supra), wherein Hon'ble High Court has considered the meaning of approval and what must contain while granting of approval as discussed by Hon'ble Supreme Court in the case of Rajesh Kumar Vs. DCIT - [2006] 157 Taxman 168 (SC), wherein Hon'ble Supreme Court, in the context of Section 142(2A) of the Act which empowers the Assessing Officer to direct a special audit and obtaining a prior approval, has explained the approval 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 authori....
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....le. Hon'ble Supreme Court has considered where approval granted is mechanical and it would vitiate the assessment order itself. Hon'ble Supreme Court, in the case of Sahara India (Firm) Vs. CIT - [2008] 169 Taxman 328 (SC), has considered this issue as under:- "8. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty ritual. Needless to emphasize that before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer. The approval must reflect the application of mi....
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....of the Act. Hon'ble Delhi High Court observed as under:- "11. The purpose of section 151 of the Act is to introduce a supervisory check over the work of the AO, particularly, in the context of reopening of assessment. The law expects the AO to exercise the power under section 147 of the Act to reopen an assessment only after due application of mind. If for some reason, there is an error that creeps into this exercise by the AO, then the law expects the superior officer to be able to correct that error. This explains why section 151(1) requires an officer of the rank of the Joint Commissioner to oversee the decision of the AO where the return originally filed was assessed under Section 143(3) of the Act. Further, where the reopening of an assessment is sought to be made after the expiry of four years from the end of the relevant AY, a further check by the further superior officer is contemplated." 17. Further, Hon'ble Delhi High Court in the case of PCIT Vs. Shiv Kumar Nayyar - [2024] 163 taxmann.com 9 (Delhi) and PCIT(Central-2) Vs. Anuj Bansal - [2024] 165 taxmann.com 2(Delhi), has considered the identical issue wherein it was emphasized that approval was grant....
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.... 374 ITR 595 (SC) and Mumbai ITAT decision in the case of Pratibha Pipes and Structural Ltd. in ITA No.3874/Mum/2015. She also relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. - [2002] 256 ITR 1(Delhi). She also relied on the decision of Hon'ble Supreme Court in the case of Kunhayammed Vs. State of Kerala - [2000] 245 ITR 360(SC) and Khoday Distilleries Ltd. Vs. Mahadeshwara Sahakara Sakkare Karkhane Ltd. - [2019] 104 taxmann.com 25(SC). 19. I noted that the case law cited by the learned CIT-DR of Spacewood Furnishers (P) Ltd. (supra) relates to warrant of authorization issued under Section 132 of the Act for carrying of search by the Income-tax Department and whether the assessee has right to inspection of documents or communication of reasons for belief at the stage of issuing of authorization. Hon'ble Supreme Court has categorically said No but also said that the requisite material may have to be disclosed at the stage of commencement of assessment proceedings. Hence, this case cannot be equated with the present controversy regarding approval under Section 153D of the Act. Regarding the case law of this Tribunal in....
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....based on my personal experience while working in each hierarchy (AO onwards) of the Central Charges of the Income Tax Department." The second aspect considered by the learned Accountant Member is that approval under Section 153D of the Act by the Additional CIT is merely administrative in nature to safeguard internal checks and balances without affecting the quasi-judicial powers of the Assessing Officer and creating any prejudice to the assessee. It was further noted by the learned AM that while granting approval under Section 153D of the Act, the Additional CIT does not act as a reviewing/appellate authority to allow or disallow the additions proposed by the Assessing Officer. 21. I note the above observations of learned Accountant Member and is of the view that assessment proceedings or any proceedings under the Act before the Assessing Officer which affect the levy of tax on the subject are judicial in nature. It is well-settled that the Assessing Officer upon whom jurisdiction has been conferred to make all orders judicially, has to act independently. The Assessing Officer, while framing assessment, cannot act on the advice given by an outsider even though he may be an auth....
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....is Additional CIT/JCIT or the instructions issued by the CBDT under Section 119 of the Act or what has been decided by the appellate authorities as mentioned in the Act. He has also to follow the precedence established by Hon'ble High Courts or the Supreme Court. The proceeding under Section 153D for granting approval is entirely different from the process of making assessment. Once draft assessment is prepared, the process of approval starts under Section 153D of the Act. Then the authority prescribed under Section 153D i.e., the Additional CIT/JCIT has to apply his mind for grant of approval after verifying the assessment records, seized records, etc. 22. I noted that the common thread discussed by Hon'ble Orissa High Court in the case of Serajuddin & Co. (supra), by Hon'ble Delhi High Court in the case of Anuj Bansal (supra) and by Hon'ble Allahabad High Court in the case of Sapna Gupta (supra) is that the requirement of previous approval of assessment by the Additional CIT/Joint CIT in terms of provisions of Section 153D of the Act being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said h....
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....authority i.e., by the Additional CIT. Now, in view of the above discussion and legal position, I answer the question as under:- Question framed by the Bench Answer to the Question As to whether under the present facts and circumstances of the matters, the approval granted by the ACIT, dated 27.12.2016 under Section 153D of the Income Tax Act, 1961 are sustainable in the eyes of law or not. In the given facts and circumstances of the case and discussion carried above, the approval granted by Additional CIT dated 27.12.2016 u/s 153D of the Act is not sustainable in the eyes of law. In terms of the above, I concur with the decision of learned Judicial Member quashing the above assessments. The matter shall now be placed before the regular Bench for passing appropriate orders in accordance with the majority opinion. PER BENCH: These appeals were filed by the assessee against the orders all dated 31.07.2018 passed by the CIT(A)-31, New Delhi, arising out of the orders passed by the ACIT, Central Circle-8, New Delhi under Section 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as to 'the Act') for the assessment years 2009-10 to 2014-15. ....