TaxTMI 
TaxTMI 
2024 (7) TMI 1699
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....ll other remaining appeals. 2. Grounds of appeal raised by the assessee for AY 2009-10 read as under: "1. For that the impugned order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad in law, facts and procedure. 2. For that the Ld. CIT(A) ought to have held that the order of assessment being passed in utter disregard to the provisions of section 1530 of the Act and hence, the same is bad in law and untenable. 3. For that the Ld. CIT(A) ought to have held that the order of assessment being passed without serving any valid notice under section 143(2) of the Act, the same is without jurisdiction and bad in law. 4. For the Ld. CIT(A) ought to have hold that the order of assessment was passed by the Ld. AO in gross violation of principles of natural justice and consequently, the same was unsustainable and bad in law. 5. For that the Ld. CIT(A) was not justified in confirming the arbitrarily made addition to the extent of Rs. 4,04,113/- (70% of Rs. 5,77,304/-) under the head "Income from House Property" which amounts to double addition. 6. For that the Ld. CIT(A) was not justified in confirming arbitrarily....
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....and the same will be dealt in the subsequent paras. It is submitted that in the order sheet the date of issuing notice is mentioned as 16.12.2016 but the return of income was filed on 22.12.2016. So, on one hand when the return has been filed on 22.12.2016 then how can the notice u/s. 143(2) of the Act was issued on 16.12.2016 which itself proves that no valid notice u/s. 143(2) of the Act was issued after filing the return which thus vitiates the validity of the assessment proceeding in question. Subsequently, as regards the approval u/s. 153D of the Act is concerned, it is submitted that in the assessment order there is no reference about approval, if any, taken in accordance to Sec. 153D of the Act. However, at the time of hearing on the previous dates, Ld. DR has furnished copy of approval u/s. 153D of the Act. Referring to such approval letter it is submitted that in such approval letter, reference is there to draft assessment order framed u/s. 153C of the Act whereas the assessments have been framed u/s. 153A of the Act. It itself proves that there has been no application of mind by the authority giving approval u/s. 153D of the Act and the basic purpose for which section 153....
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....ments and a copy of it is sent to his Range Head and the PCIT after perusing the ACTION NOTE discusses the case with the AO and if any shortcomings are there in the action note, they directs the AO to incorporate the same in the action note. Only then the AO starts the proceeding with the issuance of notices and detailed questionnaire, base upon the action note. Further, during the assessment proceedings the AO discusses the issues involved in the case with the JCIT and time and again, the JCIT is apprised about the development of the case and the JCIT advises the AO when and where required. Then when the AO and the Range Head are of the opinion that they are on the verge of finalization of the assessment, the AO prepares a draft Assessment order along with the records puts before the JCIT for his approval. The JCIT then having full knowledge about the issues relating to the assessment proceedings and after due application of mind and on the basis of the appraisal report, action note and seized material, approves the Draft Assessment order. Considering the above fact and also the Range head being in possession of the Appraisal Report which he has gone through it s....
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....u/s. 153C of the Act is carried out in case of person other than person referred in Sec. 153A of the Act. Assessment proceeding u/s. 153A and 153C are completely different proceedings. It thus indicates that Ld. Addl. CIT has not properly examined the assessment records and the draft assessment order before granting approval u/s. 153D of the Act. We also notice that in the assessment order there is no mention about the approval, if any, received by the AO u/s. 153D of the Act. Before us, ld. Counsel for the assessee has indicated various mistakes, mis-match, anomalies and wrong figures in the assessment order which shows that when such draft assessment orders were sent to the Addl. Commissioner, same have not been examined by him at all and only mechanical approval was given for the sake of formality. Some of such mistakes referred by the Ld. Counsel for the assessee in the written submission are stated below: "iv) That further, at para no. 2 of the order of assessment for AY 2010-11, the Short Term Cap Gain shown by the assessee in the return of income has been stated at Rs. 44,43,433/-. Thereafter, in para 5.1 of the same Assessment Order, the Short Term Capital Gain sho....
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.... to the draft order. vi) In the order of assessment for AY 2010-11, at para no. 4, in the table made for Rental Income of Chitrakatha Complex, in the last entry, rental income of Ananda Education, it has been stated that the same has commenced from 01- 12-2009. The relevant previous year being F.Y. 2009-10, rental income of only 4 months (01-12-2009 to 31-03-2010) could have been taken, i.e. Rs. 92,520/- (Rs. 23,130 X 4). But, the same has been taken at Rs. 2,77,560/- (Rs. 23,130 X 12), which is apparently erroneous. This shows that the Id. Approving Authority has not read the draft order otherwise he could not have granted his approval to this apparent error in the impugned order. vii) Still further, In Table made in the order of assessment in AY 2010-11 for Rental Income of Chitrakatha Complex, in respect of Dishnet Wireless Ltd. annual rent has been erroneously calculated at Rs. 45,000/- (Rs. 5,000 X 12) which actually comes to Rs. 60,000/-. This error is not limited to this assessment year but the same is in orders of all the assessment years 2010- 11 to 2015-16). Similarly, annual rent in respect of Sanyog Networks Pvt. Ltd. has been calcula....
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....rther, in the very same para it has been observed that the business turnover shown by the assessee was of Rs. 32,00,000/-. But absolutely no reason has been given for not grating credit for the disclosed business turnover. The Id. Approving Authority would not have granted his approval to such unreasoned and non-speaking order, if he would have read the same and applied his own independent mind to it. xi) That in the order of Assessment Year 2012-13, at para 4, rent from Dishnet Wireless Ltd. (item no. 2 of the table) has been stated to be upto 30-06-2011. Thus, only three months (01.04.11 to 30.06.11) falls in the relevant assessment year which works out to Rs. 15,000/- (Rs. 5,000 X 3). However, the said rent received has been taken for entire 12 months and no reason for the same has been stated. Similarly, in item no. 10 of the very same table, rent from Pinnacle Ventures India Ltd. has been calculated at Rs. 16,000/- per month for 600 sq. ft. @ Rs. 26/- per sq. ft. The actual working of 600 sq. ft. @ Rs. 21/- per sq. ft. comes to Rs. 15,600/-. The same error is also in all subsequent years. The above apparent errors also point out that the Id. Approvin....
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....has not read the order before giving his approval. xv) That in the order of Assessment Year 2013-14, at para 4, it has been stated that rent from Dishnet Wireless Ltd. (item no. 2 of the table) was up to 30-06-2011. Still, thereafter, rental income from the said party has been taken in the year under consideration. The relevant previous year is 01.04.2012 to 31.03.2013. Similar contradiction is also in the order of assessment of AY 2014-15 and 2015-16. Absolutely, no reason for this contradiction has been stated in any of the orders. xvi) That in the order of assessment of AY 2013-14, at para no. 2 it has been stated that 'Short Term Capital Loss' shown by the assessee is loss of Rs. 66,298/-. Thereafter, in para 14, while computing total income, under the head 'Income from Capital Gains', the amount shown by the assessee has been taken at NIL. No reason for this apparent inconsistency has been stated in the impugned order of assessment. xvii) Still further, in para 8 of the order of assessment for AY 2013-14, it has been stated that as because the assessee has disclosed additional income in the returns filed u/s 153A, he has more funds in....
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....ess income of Rs. 1,90,160/- and additions have been made for the sake of making addition. This shows that the draft order of assessment not received due application of mind by the approving authority. xx) That at para 9 of the assessment order for AY 2014-15, total income of the assessee has been calculated. Under the head 'Income from Other Sources - 8 items have been stated. The total of those 8 amount actually comes to Rs. 31,63,927/- but the same has been erroneously stated at Rs. 31,48,801/-. This also proves that the Id. Approving Authority has not read the draft order carefully and applied his mind to it before granting his approval. xxi) That for the Assessment Year 2015-16, para no. 2 of the impugned order, states that interest income shown by the assessee is Rs. 29,544/-. At para no. 12 while computing total income, the said interest income of Rs. 29,544/- has not been included and brought to tax. Further, no reason has been stated for excluding the said taxable interest income. This proves that the Id. Approving Authority has not read the draft order before granting his approval." 11. All the above mistakes/inconsisten....
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....al power vested in the CIT. It, therefore, follows from the above authoritative decisions that an approval order of a quasi-judicial nature without reasons is a wholly defective order in the eye of law." 3. Sahara India (Firm) v. CIT (2008) 300 ITR 403 (SC) While discussing the requirement of prior approval of CCIT in section 142(2A) of the Act, opined that: - "The requirement of prior approval of chief CIT or CIT being an inbuilt protection against any arbitrary or unjust exercise of power by the AO, casts a very heavy duty on the said high ranking authority to see that the requirement of previous approval is not turned into an empty ritual.. The approval must reflect the application of mind to the facts of the case." 4. The Hon'ble High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. reported in (2015) 56 taxmann.com 390 (MP) has held as under: - "We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am Satisfied". In the case of Arjun Singh vs. Asstt. DIT (2000) 246 ITR 363 (MP), the same question has been ....
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....h now requires to be adjudicated is whether the Approval so granted in this case can be treated as valid in view of the mandate of the provisions of Sec. 153-D of the Act vis-à-vis the legislative intent of inserting the said section in the statute. Section 153-D read as under: "No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of section 153A or the assessment year referred to in clause (b) of subsection (1) of section 153B, except with the prior approval of the Joint Commissioner. Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case maybe, is required to be passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12) of section 144BA." 12. The Legislative intent can be gathered from the CBDT Circular No. 3 of 2008, dated 12.3.2008 which read as under: "50. Assessment of search cases Orders of assessment and reassessment to be approved by the Joint Commissioner 50.1 The existing provisions of making assessment and ....
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....ny, it should stand for itself and should be self-defending. 14. In the above background of law and in the light of Order dated 27.03.2015 passed under section 153D of the Act, which gives legality to the impugned Assessment order, question which arises for our consideration is whether the said Approval granted by the Additional CIT, Central, Kanpur vide his order dated 27.03.2015 can be held to be granted after due application of mind and can be held to be valid in the eye of law? 15. To decide the above issue, order dated 27.03.2015 passed by the Additional CIT was again carefully perused. The contents of the Approval, as reproduced in Para 4, speak for itself loud and clear. The following inferences are inevitable from the bare reading of the said order. Draft Assessment orders were placed before the Additional CIT, Central, Kanpur on 27.03.2015 at 3.50 PM for the first time and soon on the same day it was granted. As clearly mentioned in the Approval under challenge, that prior to this date the case was never discussed with the authority granting the approval. The Additional CIT has further noted that even the questionnaire as was required to be issued with th....
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....he Act r.w.s 153A of the Act in the case of M/s Siddh bhumi Alloys Ltd. for Assessment Year 2006-07 is bad in law and deserve to be annulled, thus, we ordered accordingly. Finally additional ground of appeal raised by the assessee by way of Rule 27 of the ITAT Rules in ITA No. 321/Lkw/2016 for the Assessment Year 2006-07 is allowed." 17. From the approval order dated 27.03.2015 of the Addl. CIT, we find that the Ld. AR has rightly pointed out that in the facts of case of AAP Paper Marketing Limited (supra) there may be some justification for the qualified approval in view of the fact that the limitation in that case was getting expired on the day when the draft assessment orders were put up before the Additional CIT, Central Circle, Kanpur for his approval. However, to the disadvantage of the revenue in the case on hands there can be no little justification for qualified approval as the proposal for approval was put up before the Additional CIT on 27.03.2015 at 3.50 PM and at the same time it was granted, without any application of mind on the pretext that limitation is going to get expired on 31.03.2015. Thus, in the case at hand despite availability of time, the Addition....
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.... plain terms, the Addl. CIT recorded that the draft order for approval under s. 153D of the Act was submitted only on 31st Dec. 2010. Hence, there was not enough time left to analyze the issue of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Addl. CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statue does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Addl. CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time....
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.... senior authority will also ensure that proper enquiry or investigations are carried out by the assessing authority. Thus, the above provision provides for mental application of a senior officer of the Department, which in turn, provides safeguard to both i.e., Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed by the Pune Benches of the Tribunal in the case of Akil Gulamali Somji vs. ITO in ITA Nos. 455 to 458 (Pune) of 2010, order dt. 30th March, 2012, wherein it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. The Hon'ble Bombay High Court in the case of CIT vs. Akil Gulamali Somji in IT Appeal (L) No. 1416 of 2012, order dt. 15th Jan., 2013 concurred with the view of the Tribunal that not following of the provisions of s. 153D of the Act will render the related order of assessment void. 25. In the instant case, we find that the supervisory authority has himself admitted that because of reasons stated by him, could not apply his mind and has accorded the approval mechanically to....