TaxTMI 
TaxTMI 
2025 (9) TMI 1718
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....he approval given by the Ld. JCIT to the Draft Assessment Order, and as per the contentions of ld. Sr. Counsel the approval was given u/s 153D of the Act without application of mind. As for convenience the relevant ground raised in the appeal of assessee is reproduced here below; Re: Approval given by the Ld. JCIT to the Draft Assessment Order was without application of mind. 2. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO without appreciating that the draft Assessment Order was approved by jurisdictional JCIT- Range 8, Delhi (now Range-7) mechanically, without application of mind and in violation of Section 153D of the Act. 2.1. Because the Ld. CIT(A) has erred in law on the facts of the casein confirming the Assessment Order passed by Ld. AO on the basis of approval given by the jurisdictional JCIT-Range 8, under Section 153D of the Act without mentioning DIN in accordance with CBDT Circular No. 19/2019 dated 14.08.2019. 3. On hearing both the sides on this issue, the relevant facts that transpire are that assessee's return of income was selected for scrutiny and assessment p....
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....recorded, the AO has drawn conclusions leading to the additions of Rs. 4,01,14,250/- u/s 28 of the Act Rs. 51,51,000/- u/s 69A of the Act and Rs. 29,06,780/- u/s 69AC of the Act. The assessee has challenged the same before the ld. CIT(A), where the assessee had succeeded partly as the Ld. CIT(A) has restricted the additions u/s 69C of Rs.62,75,991/- and accordingly both sides are in appeal. 5. Then from the copies of approval made available at pages 3-12 of the paper book, we observe that the approval for all the AYs for which assesse was show caused for search assessment u/s 153A, are similar in format and content. As for further convenient discussion, the approval given u/s 153D for AY 2013-14 is scanned and reproduced below; 6. At the same time it is relevant to take note of fact as to how, this issue has been considered and dismissed by the ld. CIT(A) by following observations in para 22 of the order, which is reproduced as under :- "22. Ground No. 2 and Additional ground.2: The appellant challenges the assessment as being in violation of section 153D, alleging that the approval granted by the JCIT was mechanical and lacked application of mind. The AO explicitly ....
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....of the present assessee, the approval was sought on 28.03.2022 and approval has been granted on 30.03.2022, thus, there was sufficient opportunity with competent authority to further go into the draft assessment orders. 9. However, leaving apart the contentions of ld. Sr. Counsel that tenor of approval does not show application of mind or that multiple approval were granted so to presume that there was not application of mind what we find after taking into consideration, the copy of approval granted for relevant assessment years, is that approving authority has mentioned that the impugned letter of approval that the approval has been granted to the draft assessment order 'as amended'. This phrase 'as amended' is quite ambiguous, and actually nothing could be explained or justified by ld. DR for using these words and thus rather than helping the case of Revenue and Ld. DR, it puts the case of the Revenue in docks as there is nothing in letter dated 28.03.22 by the AO to mention that at any stage before 28.03.22, there was any communication between the two authorities. The AO merely mentions that cases of assessee for AYs 2011-12 to 2021 are being put up for approv....
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.... is given which is without any detailed working and bifurcation. The said table is extracted here as under from AO's order: - Assessment Year Amount (in Rs.) 2011-12 6,99,67,910/- 2012-13 2,69,06,780/- 2013-14 11,87,34,210/- 2014-15 19,45,74,000/- 2015-16 4,84,67,930/- 2016-17 1,98,61,880/- 2017-18 1,89,44,720/- 2018-19 7,59,26,530/- 2019-20 6,65,35,410/- 2020-21 9,65,03,710/- 2021-22 63,39,100/- Total 74,27,62,170/- Since, the working is not available on records till date, I am constrained decide on the basis of available facts on record. Even appellant denied have received any bifurcation of the same. Thus, the only recourse is to rely and peruse the available records. ii. As per assessment order, the AO made an addition of Rs. 2,69,06,780/-based on excel data 'MyData xIsx' and 'Sunnyxisx' which contain various of payments have been made for personal expenses. Appellant contended that there is no basis of calculation of unexplained expenditure, which is correct." 11.1 This shows that AO has made certain conclusions which are not even substantiated from the analys....
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....quiring any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; and by Finance Act, 2009, clause (c) was inserted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service." 13. Further it can be observed that in para 1.5 the objectives of the Manual are mentioned which states that the aim of this Manual is to apprise the user of "basic legal provisions relating to digital evidence in Income-tax Act and other laws including Information Technology Act and Indian Evidence Act." 14. Then, we would like to reproduce from this Manual as to how the Board perceived the relevance of various provisions of the different statutes and how specifically referred to the provisions of section 65A and 65B of the Indian Evidence Act, 1872 an....
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....ted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service. 2.7.3 Under Indian Evidence Act there are several references to documents and records and entries in books of account and their recognition as evidence. By way of the THE SECOND SCHEDULE to the Information Technology Act Amendments to the Indian Evidence Act have been brought in so as to, incorporate reference to Electronic Records along with the document giving recognition to the electronic records as evidence. Further, special provisions as to evidence relating to electronic record have been inserted in the Indian Evidence Act, 1872 in the form of section 65A & 65B, after section 65. These provisions are very important. They govern the integrity of the electronic record as evidence, as well as, the process for creating electronic record. Importantly, they impart faithful output of computer the same evidentiary value as original without further proof or production of original. Accordingly, while handling any digital evidence, the procedure has to be....
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....ity of the data before any court of law. ● The Key digital evidences retrieved if deleted along with the description of the same, in case of business application software, a note on how the business application software is and the technical details of all critical components. ● Whether these digital evidences have been confronted to the assessee under any section of the law? The relevant portions of the statement under various sections of Income Tax Act should be included in the order. ● Circumstantial evidences and other key physical evidences seized/impounded should be linked to the digital evidence. Usually the physical evidences like loose papers, sheets gives details of one particular transaction, while the digital evidences may help in unearthing the entire consolidated data for the whole year. Such digital evidences should be linked to the physical evidences seized during the course of search to establish the genuineness of the data and also to quantify to the total unaccounted income. "9.6 Handling the digital evidence at a later stage In the Income Tax Department, the digital evidence stored is used in the asse....
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....e Act by observing that the approval under s. 153D of 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 justifiable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is no 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 manua....
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....ificantly, the import of the phrase- "each assessment year" used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under :- "13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the requi....
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....apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the Assessing Officer should submit the draft assessment order" well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii)the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order." [Emphasis supplied] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated28.11.2023 in SLP (C) Diary no. 44989/2023. 15. A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated 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 formalit....