TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1061
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....lso explained the contents of the same therein; (ii) when the diary has been owned by a third party, the diary cannot be considered as belonging to the assessee as per the settled law; (iii) no amount mentioned therein was ever given by the appellant; and (iv) also ignoring the explanation of each entry given by him in the affidavit without examining him. Thus, the addition so made ignoring the said affidavit without bringing any adverse evidence on record should be deleted. 2. The CIT(A) erred in law and on facts in confirming the addition of Rs 42,98,086/- as unexplained expenditure u/s 69C of the Act being the amounts mentioned in a diary seized from his office premises as expenses incurred by the appellant during his election campaign ignoring: (i) that the said diary did not belong to the appellant; (ii) the appellant never incurred the said amount during his election campaign in his constituency as the Expenditure Observer appointed by the Election Commission never challenged the same; (iii) the genuineness of the contents of the replies or the credibility of the evidence placed by the Appellant before him; and (iv) the evidences placed on record to show that the sai....
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....orting documents and then accepting the same that contents against appellant. In absence of specific diaries which were contradictory. Accepting of contents of a third-party diary without independent corroboration was against law as laid down by the Hon'ble Supreme Court in Common Case [2017] 77 taxmann.com 245 (SC) and CBI Vs. V.C. Shukla [1998] 3 SCC 410 and thus apparent from record. 9. As per ratio of judgment in Shri Rashesh Manhar Bhansali vs. Addl. Commissioner of Income Tax, supra, it is well settled principles of law that non-consideration of detailed submissions would result in a mistake apparent from record in the order. 10. In view of above material facts and well settled principles of law, impugned order dated 02.07.2024 being unsustainable in law is set aside. The appeal is restored to its original number. The Registry is directed to fix the appeal for hearing on out of turn basis on 21.07.2025." 4. The relevant facts giving rise to this recalled appeal are that the assessee along with Corporate International Financial Services Ltd. group of cases were searched under Section 132 of the Income Tax Act, 1961 ('Act') on 10.10.2018. The assessee h....
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....the assessee wherein various items like flex board, Pamphlets/leaflets, Stickers, Halwai for food, purchasing Rassi, calendar vendor, Caps (Topi) for AAP, Flags etc. are written which establishes that the expenses are incurred on election material by the assessee out of his undisclosed income. Further, the diary found from the office of assessee means that the assessee has control over the diary and the same must have been prepared by Shri Rohit Sharma under the supervision and on the direction of assessee. The dairy contains details of expenses made during the election held in New Delhi in FY 14-15 in which the assessee contested election and was candidate from AAP party. Further, in the reply and affidavit filed by the assessee, it is stated by the assessee that shri Rohit Sharma is volunteer of Aam Aadmi Party and he contributed in many activities of the said election for promoting AAP. Although as per law and on facts, it is proved that diary belongs to assessee and even if consider that diary is of Sh. Rohit Sharma but the same was definitely maintained on the direction of assessee and the expenses incurred on these election materials have been made out of his undisclosed inco....
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....n made in accordance with the provisions of Chapter XIV-B. The previous approval is purely an internal matter and it does (SIC-not) decide upon any rights of the assessee. The It. CIT, while examining the matter under the proviso to Section 1588G does not examine or adjudicate ирon the rights or obligations of the assessee, but only considers whether the AD has fulfilled the requirements of Chapter XIV." 31. In view of the above, the allegation of the appellant that the Additional Commissioner of Income Tax has granted the approval u/s 153D in mechanical manner and without application of mind has no meaning as the approval is an administrative action which is required to be based on existence of set of circumstances and on subjective satisfaction as per the provisions of the Act. Further approval u/s 153D being an official act provided under the statute, it is to be presumed that before according approval, the Range Head has looked into the records, applied his mind and he did not find any reason to disapprove the order passed by the Assessing Authority and thereafter he has accorded approval." 9. On merit, the Ld. CIT(A) observing as under dismissed the app....
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....on the same page. 15. Thus, the claim of the appellant that the contents of the diary do not pertain to him Is Incorrect. The affidavit of the author Shri Rohit Sharma is also a false affidavit. 16. In the diary there is mention of both receipts and payments. It is like running account wherein both the payments in cash as well as cheque has been mentioned. 17. If the diary is found, it is the duty of the author to explain the contents of the diary. The source of money received and the purpose of expenditure has to be explained by the author. In this case, the author has not been able to satisfactorily explain the contents of each entry. If Rs. 2,00,000/- Is received on 02.01.2015 (as mentioned in the diary), it is the duty of the author to explain the source of cash so received. The author cannot do cherry picking and absolve himself from the legal responsibility of not explaining the entire contents of the diary." 18. On the diary page with date 13 February 2015, there is mention of the appellant Shri Kallash Gahlot (referred as KG Sir) for various issues like speak with KG Sir for buses arrangement for 14th program; Mail sent to KG sir w.r.t 14....
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....and arguments has to be supported by cogent evidences. However, in the impugned case, no evidence has been furnished by the appellant. Infact, the appellant has shifted the burden of evidence on Shri Rohit Sharma, a small-time employee who happened to write the contents of the diary. Shri Rohit Sharma is witness of the appellant but has miserably failed to explain the entire contents of the document. Therefore, the arguments of the appellant are not acceptable evidences. 26. In view of the above discussion, it is held that the Assessing Officer was justified in making addition of Rs. 42,98,086/- In the case of the appellant. 27. The appellant has not been able to explain the source of funds for making expenditure of Rs. 42,98,086/-. Therefore, the Assessing Officer was justified Invoking the provisions of section 69C read with section 115BBE in the impugned case. 28. In view of the above, ground nos. 1 to 7 are dismissed." 10. The Ld. AR argued that the approval was given mechanically and without application of mind. It was submitted that the procedure prescribed by CBDT in the Office Procedure Manual Volume-II (Technical) was not followed by the Ld. A....
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....few group cases, wherein search under section 132 of the Act conducted, were centralized. The Ld. Joint/Additional CIT/Range Head was actively involved in assessments of all search cases from beginning. It was submitted that in search and seizure assessments, the Ld. AO, as normal practice, discussed the cases and took guidance. The Ld. CIT-DR drew our attention to following paras of the guidelines for assessments in search and seizure cases issued by the CBDT vide F. No. 286/161/2006-IT (Inv.-11) dated 22.12.2006 which highlighted the consultative approach between the AO and the Range Head in search and seizure assessments: "Para 1.3 On receipt of the appraisal report and seized material, the Assessing Officer and Range Head should jointly scrutinize the appraisal report and seized material and prepare an Examination Note to decide: i. Cases where notices u/s 153A of the Income-tax Act, 1961 (the Act) are required to be issued. ii. Cases where notices u/s 153C of the Act are required to be issued. iii. Cases where notices u/s 148 of the Act are required to be issued. iv. Cases where seized material pertains to persons other than those w....
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....f assent, usually given after an act is done, ratifying or confirming it. It is in the nature of post-facto recognition or confirmation. Approval often refers to supervisory/confirmatory consent by the higher authority. Whereas, Sanction is mandatory and jurisdictional without which, the proceedings are invalid. Sanction is more than mere approval. The Hon'ble Supreme court in the cases of Marathwada University v. Seshrao Balwant Rao Chavan, (1989) 3 SCC 132, Life Insurance Corporation of India v. Escorts Ltd., (1986) 1 SCC 264 and Kalpanath Rai vs State (1997) 8 SCC 732 have held that "approval" generally conveys a sense of confirmation of an act already done, while "sanction" conveys a prior permission or authorization before the act is done. The Hon'ble Supreme court in the case of Regional Manager v. Pawan Kumar Dubey, AIR 1976 SC 1766 have held that the approval and sanction are not synonymous. The context and statutory language wherein these words used determine the scope of these words; "sanction" and "approval". The word 'approval' instead of 'sanction' has been used in section 153D of the Act. 15. The power to make assessment is confined to the AO only. ....
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....approval order passed under section 153D of the Act. In the instant case, nothing has been placed on record to suggest that the Ld. AO and the Ld. Addl. CIT didn't go through the relevant seized material and other material available in their possession/records including the appraisal reports. The allegation of non-application of mind has been made merely on the basis of absence of recitals of these acts in the body of the approval order under section 153D of the Act. 17. The Hon'ble Orissa High Court in the case of Sirajuddin & Co. (supra), which in turn had relied upon the decision of the Hon'ble Supreme Court in case of Rajesh Kumar (2007) 2 SCC 181, which was in respect of direction of the AO under section 142(2A) of the Act for special audit and Yum Restaurants Asia Pte. Ltd. 397 ITR 665, which was in respect of sanction under section 151(2) of the Act for initiating proceedings under section 147 of the Act. The orders under sections 142(2A) and or 151(2) of the Act for initiating proceedings under section 147 of the Act are sanction orders issued to confer jurisdiction to the AO, which directly affect the rights & liabilities of the assessee under the Act, unlike the approv....
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....Department by its lower authorities may be, at most, misconduct/insubordination. Hence, it may be irregular in office decorum but it will not invalidate any statutory function performed under the Act as it has no legal sanctity under the Act. 21. The Approving Authority under section 153D of the Act does not act as an Appellate Authority to reduce/enhance/allow/disallow any addition proposed in the draft assessment order while giving approval as the Addl. CIT is not empowered to do so under section 153D of the Act. In other word, the Range Head cannot give any direction which may create any additional liability beyond what was proposed in the draft assessment order. That is why the opportunity of being heard is not mandated under section 153D of the Act. Thus, no prejudice can be caused to the assessee while granting approval under section 153D of the Act; therefore, the assessee cannot claim violation of natural justice. The 'application of mind' of the Range Head under section 153D of the Act has to be seen qua the procedure only as per the SOPs issued by CBDT and not qua the recitals about his own actions in relation to what was seen by him or how did he reach the sat....
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....uthority under section 153D of the Act are from beginning after receipt of the Appraisal Report as inbuilt in the SOPs and mere absence of its recitals in the order under section 153D of the Act cannot infer otherwise as 'non-application of mind' of the Range Head under section 153D of the Act. Neither the AO nor the Range Head/Addl. CIT/Joint CIT/Approving Authority under section 153D of the Act works in isolation as far as search assessments are concerned. Basically, they work as team during the course of search assessments. 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. 23. In cases of Smt. Shreelekha Damani (2019) 307 CTR 218 (Bom), Sunrise Finlease (P) Ltd (2018) 403 ITR 512 (Guj) and PPC Business & Products (P) Ltd. (2017) 398 ITR 71 (Del), the Hon'ble High Court has held that the approval under section 153D of the Act is administrative in nature. It does not require elaborate reasoning. The absence of detailed discussion in the approval under section 153D of the Act does not make the assessment....
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....necessary to see what were the facts in the case in which 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] 25. The Ld. AR has not brought any material before us to demonstrate that the Range Head/Addl. CIT/Joint CIT/Approving Authority under section 153D of the Act had not any occasion to discuss the case at any point of time or peruse the incriminating material including the Appraisal Report which already was endorsed to his office of by the search conducting Assistant/Deputy Director of Income Tax (Investigation). The Ld. AR has also not brought any material before us to demonstrate that the SOP was substantively not followed by the Range Head while approving the assessment under section 153D of the Act and how it led to serious prejudice affecting the rights & liabilities of the assessee. The word 'each assessment year' in section 153D of....
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....y Shri Rohit Sharma. The issue in dispute here is that by whom the expenses mentioned in the diary incurred and belonged to. The material available on the record and circumstantial evidence clearly pin-point that the expenses mentioned therein were not incurred for the election purpose and for the exclusive benefit of the appellant assessee. Owning of part expenses in absence of any corroboratory material by Shri Rohit Sharma the author of the diary in affidavit is prima-facie inadmissible as Shri Rohit Sharma is of meagre income and have not any source to meet such expenditure without any purpose. In the affidavit, Shri Rohit Sharma stated that only an amount of Rs. 10,95,700/- was incurred for promotion of AAM ADMI PARTY and its candidates in west Delhi constituencies; however, the AAM ADMI PARTY has not admitted so to have source it and have accounted for. In the said diary, we notice that payments have been actually done as evident from the narration therein. There are instances of payment by cheque/banking channels also. Hence, the said expenses cannot be claimed estimates of expenses. We notice that the affidavit Shri Rohit Sharma does not contain and own all the details ment....