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2025 (11) TMI 1598
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.... 2018-19 -do- 3. 2740/Del/2023 - 2015-16 -do- 2. At the time of hearing, it was stated that the issues involved in all the appeals filed by the revenue and cross objections raised by the assessee for captioned assessment years are common, interlinked and arising from the search action on the assessee and other persons. Hence, all these cases have been heard together and accordingly, adjudicated by this common order. 3. First we take appeal of the revenue assessee in ITA No.2699/Del/2023 and cross objections filed by the assessee in CO No. 162/Del/2023 both for Assessment year 2016-17. 4. Brief facts of the case are that a search and seizure operation was carried out by the Investigation Wing, Meerut in the case of Kohli Tent group of cases on 03.05.2018. Thereafter proceedings u/s 153C of the Act were initiated in the case of assessee by issued of notice u/s 153C on 15.02.2021. In response thereto, assessee filed return of income on 23.02.2021, declaring income of Rs. 29,88,500/ -. Thereafter, notices u/s 143(2) and 142(1) with questionnaire were issued and served upon the assessee which were duly complied with by the assessee and detailed submissions ....
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....and on facts. (b)The appellant craves leave to add, alter or amend any/ all of the grounds of appeal before or during the course of the hearing of the appeal. 7. The assessee in the cross objections filed has taken following objections: 1) "That in the facts and circumstances of the case and in law the Ld.CIT(Appeal) while adjudicating Ground No.2 of appeal erred in upholding initiation of proceedings under section 153C of Income Tax Act as Valid. 2) That in the facts and circumstances of the case and in law the Ld. CIT(Appeal) while adjudicating Ground No.1 of appeal erred in upholding the order passed under section 153C of Act in absence of any incriminating material for the year under consideration as is also evident from the records and orders passed in the case of Umrao Hotels and Resorts Put. Ltd. 3) That in the facts and circumstances of the case and in law the Ld. CIT(Appeal) while adjudicating Ground No.1 of appeal erred in upholding the order passed under section 153C of Act in absence of requisite satisfaction, as mandated under the provisions of section 153C of Income Tax Act. 4) That in the facts and circumstances of the ....
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....s. 13) That in the facts and circumstances of the case and in law, upholding of extrapolation in absence of any material justifying such action and computing income based thereon is perverse of record, arbitrary and contrary to law. 14) That in the facts and circumstances of the case and in law, Ld. CIT(A) erred in estimating total income of the Respondent at 10% of the suppressed business receipts by ignoring the fact that separate addition has been made based on documents found. 15) That in the facts and circumstances of the case and in law, Ld. CIT(A) failed to appreciate that assessment framed is contrary to scheme of assessment under the Act and is self contradictory in view of the fact that Ld Assessing officer while accepting books of accounts of respondent maintained under section 145 of Act made addition based on extraneous material. 16) That the Respondent craves leave to add, alter or amend any / all of the grounds of cross objections before or during the course of hearing of the appeal." 8. Before us, in support to cross objection No. 12 regarding validity of approval granted u/s 153D of the Act, the Ld.AR for the assessee submits ....
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....ld the concurrent jurisdiction and that the assessment is a continuous process involving administrative as well statutory roles being donned by the Addl. CIT. And it is incumbent on the approving authority to examine and monitor the assessments which can't be denied if the same is not reduced in writing at every point of time till the finalization of the assessment. The approval of the approving authority underlines that he has examined the assessment records, relevant copies of seized documents and the relevant issues arising from the material on record judiciously in independent manner by way of due application of mind. It would not be out of place to mention here that the appellant has not come out with any case that there is case of non-application of mind. The appellant has to positively prove that there is a case of non-application of mind in light of the submission that the approval u/s 153D is an administrative approval. Here, it would not be out of place to highlight that the relevant seized documents in a case are always part of the assessment records as per practice, and requirement of the work. They are not kept separately as relevant seized material is frequently r....
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.... based of factual matrix of a particular case. Further, it has been held that approval cannot be reduced to a mechanical exercise and approving authority is required to apply his/her independent mind while granting such an approval. Thus, all the cases have been decided on this point by Hon'ble Tribunal and Hon'ble High court in light of peculiar facts of those cases only. Some of such peculiar facts of such cases are outlined here in under to emphasize upon distinguishing nature of facts of instant cases from those cases .: Case Name and Citation Peculiar Facts of cases in mentioned in first col. Distinguishing facts of the instant case HIGH COURT OF DELHI in the case of PCIT vs. Anuj Bansal ITA 368/2023 Dated July 13,2023 -No Assessment records were sent along with draft assessment order -There were infirmities in the figures of Original Return of income and Assessed income. -Addl. CIT did not apply his mind as he did not notice such errors/infirmities. Appellant has not been able to prove that its case and facts are in alliance with the cited case. Further, there is nothing on the record to suggest that in the instant case of the assessee, ther....
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....essing Officer bound to dispose of the same by a speaking order. The judgment is very clear that before proceeding with the assessment proceedings, the Assessing Officer has to pass a speaking order. Therefore, the Assessing Officer is bound to pass an order and thereafter only further proceedings could be taken for passing the assessment order. It would not suffice by giving reasons to the objections in the assessment order, in view of the judgment in GKN Driveshafts (India) Ltd.'s case (supra). 15. The applicant has raised two contentions in this appeal. (a) The assessment order passed in violation of the law laid down by the Supreme Court is void and it cannot be ratified by remitting the matter to the Assessing Officer, (b) The assessment order was passed just one day prior to the period of limitation and therefore, it would not be possible to pass a fresh order after giving disposal to the objections. 16. It is not in dispute that there is no statutory requirement to pass an order taking into account the statement of objections filed by the assessee after receiving the reasons for invoking Section 147 of the I.T. Act. The Hon'ble Sup....
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....re indicated in the GKN Driveshafts (India) Ltd.'s case (supra) would not make the order void or non-est. Such a violation in the matter of procedure is only an irregularity which could be cured by remitting the matter to the authority. Later, the Hon'ble Supreme Court also dismissed the SLP raised in the matter. 6. Further, reliance is also placed on the judgment of Hon'ble Kerala High Court in OP(C) No. 340 of 2019 against the order in IA 3123/2018 in OS 125/2018 of II Additional Sub Court, Ernakulam dated 23.06.2022, wherein it is held that the: "5. Courts should endeavor to dispose of a case on merits rather than on default." The Apex Court in the case of Improvement Trust, Ludhiyana vs Ujagar Singh & Ors on 09.06.2010 in Civil Appeal NO. 2395 of 2008 also held that: "......After all, justice can be done only when the matter is fought on merits and in accordance with law rather to dispose it of on such technicalities and that too at the threshold. Both sides had tried to argue the matter on merits but we refrain ourselves from touching the merits of the matter as that can best be done by the Executing Court which had deni....
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....istinguishable from the fact all those cases where Hon'ble Courts and Hon'ble Tribunal have held approval under section 153D as a mechanical approval without due application of mind by the approving authority. Moreover, content of the approval letter clearly establishes that while granting approval, the approving authority had considered facts of the case, assessment records and seized documents and had applied his mind independently. In view of the above it is respect to submitted to kindly take on record the above objections and reject the contention of the assessee on this ground and uphold the order of assessing officer." 11. Heard the contentions of both the parties and perused the material available on record. Before going further, we first consider the approval granted by ld. Adl. CIT, Central Range-4, New Delhi in the case of assessee which is reproduced as under: 12. The Additional CIT, Central Range while granting approval, needs to examine all the material including the assessment records, full appraisal report and seized material pertaining to each Assessment Year with reference to the addition proposed by the AO for which approval is sought and t....
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....fficer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. *** 19. 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." [Emphasis supplied] 12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for "each assessment year" for "each assessee" separately. 13. Reliance can also be placed upon the decision of the Orissa High Court in the case o....
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....ther 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 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval fo....
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....;ble High Court inter-alia observed that there is not even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgement in the case of ACIT vs Serajuddin & Co. was dismissed as reported in (2024) 163 taxmann....
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....cases. According to the Manual, the Assessing Officer should submit the draft assessment order for such approval well in time along with docketed in the order sheet, a copy of the draft assessment order, covering letter filed in the relevant miscellaneous records folder. Even, it is noted that 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. It is further noted that once such approval is granted, it must be in writing and filed in the relevant folder indicating above after making due entry in the order sheet. This is the mandate provided in the office manual of the Department. In view of above, I am of the view that the 'approval', as mandated u/s 153D of the Act, signifies a product of human thoughts based on the given set of facts and interpretation of the applicable law. It provides equality in treatment and thus prevents bias, prejudice and arbitrariness. It also prevents and avoids inconsistent and divergent views. The power of approval to the specified authority i.e., Superior authority has been envisaged with the objectives that no illeg....
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....said observations, the cross objections taken by the assessee are allowed. In the final result, all the COs filed by the assessee are allowed and all the appeals of the revenue are dismissed. Order pronounced in the open Court on 17.10.2025. ============= Document 1 190 OFFICE OF THE ADDL. COMMISSIONER OF INCOME TAX. CENTRAL RANGE-4, NEW DELHI Room No. 249, 2" Floor, ARA Centre, E-2, Jhandewalan Extension, New Delhi - 110055 Phone No. 011-23593272: E-Mail I.D .: [email protected] F.No. Addl. CIT/C.R-4/Approval 153D/2021-22/2.99 Date: 25.06.2021 To. The Assistant Commissioner of Income-tax, Central Circle - 16, New Delhi Subject: Approval u/s 153D of the I.T. Act. 1961 for making assessment u/s 153A of the I.T. Act. 1961 in the case of Kohli Tents Pvt. Ltd.(PAN :- AAECK1713F) pertaining to 'Kohli Tent Group of Cases' - reg. Please refer to your letter F.No ACIT/CC-16/153D/2021-22/167 dated 21.06.2021 whereby you have submitted draft assessment order, seeking approval u/s 153D of the I.T. Act, 1961 in the case of Kohli Tents Pvt. Ltd.(PAN :- AAECK1713E), for Assessment Years 2013-14 to 2018-19 u/s 153A/143(3) & 2019-20 u/s 143(3) r.w.s 1....