TaxTMI 
TaxTMI 
2025 (12) TMI 344
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....e while upholding the Assessment Orders without appreciating that Assessment order as uploaded on the ITBA portal is incomplete, thus, the same is illegal and bad in law whereas the physical order issued without mentioning Document Identification Number (DIN) in the body of the Order has no sanctity in the eyes of law. Therefore, the Assessment Order passed online as well as physically is bad in law and may please be quashed. 2. That the Commissioner of Income Tax (Appeals) has erred in law and facts of the case while upholding the Assessment Orders without appreciating that the same is barred by limitation under section 153B of the Income Tax Act, 1961 as the online order have not been uploaded entirely within the limitation prescribed under section 153B of the Act whereas the physical order have not been dispatched within said time limit. As such, the Assessment Order passed online as well as physically is barred by limitation and may please be quashed. 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and facts of the case while upholding the assessment framed under section 153A read with section 143(3) of the Income Tax Act, 1961 in absence....
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....has erred in law and facts of the case while confirming the addition of Rs. 1,24,26,157/- u/s 69A of the Income Tax Act, 1961 on account of alleged unaccounted income received under the garb of exempted LongTerm Capital Gains in violation of the principle of natural justice being made on the basis of ex-parte material and statement of third parties without confronting said material and statements with the Appellant in its entirety and providing opportunity of cross examination. As such, the addition of Rs. 1,24,26,157/- is bad in law and may please be deleted. 9. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and facts of the case while sustaining the addition of Rs. 3,72,784/- u/s 69C of the Income Tax Act, 1961 made on account of alleged commission estimated at the rate of 3% of the alleged illegitimate longterm capital gain considering the same as accommodation entry without any tangible basis or evidence. As such, the addition of Rs. 3,72,784/- is bad in law and may please be deleted. 10. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and facts of the case while considering the purchased consideration of Rs. 1,12,000/- p....
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....er Section 153C of the Act, but not under Section of 153A r.w. Section 143(3) of the Act. Thus submitted the A.O. committed error in faming the Assessments under Section 153A of the Act. The Ld. AR relied on the Orders of the Tribunal in the case of Gulshan Investment Pvt. Ltd. JCIT(OSD), Central Circle-1, Noida,in ITA No. 3872/Del/2024 and other connected matters dated 16/04/2025, Trilok Chander Chaudhary Vs. ACIT in ITA No. 5870/Del/2017 dated 20/08/2019 and Om Prakash Tantia Vs. DCIT in ITA No. 4737/Del/2018 dated 07/03/2025 and other connected matters decided the issue in favour of Chaudhary in ITA No. 5870/Del/2017. Thus, sought for allowing Ground No. 3 of the Assessee's Appeals. 7. Per contra, the Ld. DR relying on the orders of the lower authorities, submitted that the additions have been rightly made under Section 153A of the Act as the statement of Mr. Raj Kumar Modi corroborated and coupled with the seized Documents, constitute 'incriminating material', which were made has basis for making addition by the A.O., therefore the Ground No. 3 of the Assessee in all the appeals are devoid of merits, thus, sought for dismissal of Ground No. 3. 8. We have heard both the pa....
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....ch was alleged as controlled and managed by Sh. Jagdish Purohit, whose statement were also recorded u/s 132(4) during the course of search carried out in his case independently in the year 2015 and made sole basis for making addition in the hands of the assessee company. C. Further an addition of Rs. 75.00 lacs was also made for unsecured loan received from M/s SukumaInfosolutions Pvt. Ltd. by holding that the loner has no creditworthiness without referring to any incriminating material found as a result of search in the case of the assessee. 14.2. Under the category "C" above, an addition of Rs. 75.00 lacs was made by holding the unsecured loan received from M/s SukumaInfosolutions Pvt. Ltd. as unexplained however, from the perusal of the assessment order or the appellate order, it is seen that in nowhere the lower authorities had referred any incriminating material found as a result of search in the case of assessee indicating this loan as bogus. The order passed u/s 153A of the Act is for Ay 201314 which is unabated and completed year. The Hon'ble Supreme Court in the case of Abhisar Buildwell (supra) has held that the addition u/s 153A should be made based on ....
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.....5. It is also seen that both Shri Raj Kumar Modi and Shri Jagdish Purohit are not at all related to the assessee company in any manner and therefore, they are foreign parties with respect to the assessee company. The Ld. CIT(A) confirming the action of the AO in using such statements in the hands of the assessee company for making addition in the order passed u/s 153A. The ld. CIT(A) relied upon the judgments of Hon'ble Allahabad High Court in the case of Tapasya Projects Ltd. Vs. ACIT [2009] Tax LR 30, wherein the Hon'ble Court has held as under "The word person as used in Section 153A cannot be given a restricted interpretation so as to exclude the servants and agents of that person because of the obvious undesirable result to which such strict interpretation would lead. Thus, the search conducted on the premises of the directors has to be treated to be a search initiated in respect of the petitioner company." 14.6. From the perusal of the observations of the Hon'ble High Court, we find that the Hon'ble High Court has held that the company could be considered as searched in case where the search was carried out on its servant and agents such as Director of the ....
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....Year 2018-19 and not for any Assessment Year before us. Also such chat was since found from the mobile phone of third person, the same cannot be made basis of the additions in the assessment completed u/s 153A of the Act. 14.9. It is also seen that the Assessing Officer in para 4.6 of the order has referred that the statement of Sh. Raj Kumar Modi wherein in reply to question No. 80 he identified Sh. Anoop Jain, Director of the assessee company as one of the beneficiary of LTCG of more than 35 Crores. From the perusal of the assessment order, it is seen that no addition with respect to long term capital gain is made in the case of assessee, therefore, these statements are not relevant to the facts of the instant case. 14.10. In the instant case, the best course of action would be u/s 153C after following the procedure of recording of satisfaction to this effect as provided by the Hon'ble Supreme Court in the case of Calcutta Knitwears (supra). The assessing officer should have completed the proceedings initiated in terms of the notice issued u/s 153A of the Act for the year under appeal since it is an unabated assessment year, and then must followed the procedure ....
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.... 14.11. On perusal of the above provision read with relevant Notes on Clause to the Finance Bill 2015, it is clear that any information or entry found in any document seized pertaining / relating to a person other than the person searched from the searched premises as was referred u/s 153A of the Act was to be handed over by the investigation wing to the AO of such other person (searched) and then that AO of the searched person shall handover the same to the AO of the person not searched who thereafter was to proceed against such other non-person by issuing a notice u/s 153C of the Act and then to assess / reassess income of such other not searched person. 14.12. The Hon'ble Jurisdictional High Court in the case of PCIT (Central)-3 vs. Anand Kumar Jain (HUF) {ITA 23, 26- 31/2021] has held as under: "Even if a search was conducted upon the premises of the assessee, if the AO was relying upon the incriminating material found from the search of third party, then the same cannot be used for assessment u/s 153A and AO should have restored to section 153C of the Act. 14.13. The Co-ordinate Bench of ITAT in the case of Trilok Chand Chaudhary, New Delhi vs ....
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....uld not be assessed in the said assessment order passed u/s 153A of the Act but it could be considered for the purpose only and only in a separate assessment order by taking recourse to the mandatory and special non obstante provisions of the section 153C of the Act and then to pass a separate assessment order u/s 153A r.w.s. 153C of the Act. Had recourse to section 153C of the Act been adopted by the revenue, then it would be in accordance with the decision of the Hon'ble Supreme Court in the case of Calcutta Knitwears (supra). Admittedly, no money, bullion, valuable article or thing or property which was not disclosed or would not be disclosed was found during the search carried out by the department in the case of the assessee. Under these circumstances, by respectfully following the decisions of Hon'ble Jurisdictional High Court in the case of Anand Jain, HUF (supra) and coordinate benches of the Tribunal in various cases, we hold that no addition could be made in the assessment completed u/s 153A of the Act on the basis of statements of third party recorded during the search in their own case and the incriminating material, if any, found during the course of search of ....
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....reported in 163 taxmann.com9 dated 15/05/2024 in ITA No. 285/2024 (CMP No. 28994/2024) and other Judicial pronouncements, sought for allowing the Appeal and prayed for quashing the assessment order. 14. Per contra, The Ld. Department's Representative submitted that the role of the Ld. ACIT, Central Range is totally different from the role of an ACIT in the normal range. The Central Range, the ld. ACIT is involved in the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing and is involved with the Ld. AO from time to time while issuing various questionnaires. The ld. ACIT in Central Range also examined the seized documents in detail in respect of each Assessment Years immediately after receipt of the appraisal report and provided able assistance to the Ld. AO about the interpretation of the said seized documents while issuing questionnaires to Assessees, examining the replies filed by the Assessees and drawing conclusions thereon. Thus, submitted that it is very easy for the ld. ACIT to grant approval of the draft assessment orders on the same day since the Ld. ACIT is involved with the assessment proceedings right from ....
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....ws cited. The legal objection of transgression of requirement of approval under s. 153D of the Act is in question which has the effect on the very substratum of the assessments and consequential appellate proceedings. 17. For the purpose of deciding the issue of legality or otherwise of approval accorded u/s 153D of the Act and the consequential assessment proceedings, we shall straightway advert to the approval accorded u/s 153D of the Act. For the sake of ready reference, the approval accorded under Section 153D of the Act dated 30/09/2021 by the Addl. CIT, Central Range-Meerut addressed to the Joint Commissioner of Income Tax (OSD), Central Circle-1, Noida is reproduced hereunder:- 18. On a bare perusal of the approval dated 30/09/2021 addressed by Addl. CIT, Central Range-Meerut to the Joint Commissioner of Income Tax (OSD), Central Circle-1, Noida, it emerges that the approval has been accorded on the very same day of seeking the approval u/s 153D of the Act and the assessment orders have been also passed on the very same day i.e. on 30/09/2021 in respect of four Assessment Years involved in the present Appeals. The Addl. CIT, has not uttered a word on the subject matter....
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....rocedure has been followed by the Assessing Officer 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 decis....
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....ted that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act 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 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 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 ve....
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.... the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. 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 ....