TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 1483
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....ble Supreme Court in the case of NTPC Limited vs. CIT 229 ITR 383 (SC). The additional ground of appeal taken by the assessee reads as under: "Because the approval given by the JCIT u/s 153D of the Act to the order passed u/s 153A is without application of mind, purely in a mechanical manner, without appreciating the facts and not following the provisions/mandate of the section, which makes the order passed u/s 153A nonest, void abinitio bad in law, the same be quashed." 3. Learned CIT, D. R. had no objection to the admission of additional ground and since the ground is purely a legal ground and goes to the root of the matter, the same was admitted and assessee was asked to proceed with his arguments. 4. Learned counsel for the assessee, at the outset, submitted that a search & seizure operation u/s 132 of the I.T. Act was conducted on 31/08/2015 on Goldiee Masala as well as Santosh Kumar Agarwal Group of cases and the assessee was required to file income tax returns u/s 153A of the Act. In response to the notice, the assessee filed returns u/s 153A of the Act on 14/07/2017, 14/07/2017 and 21/09/2017 respectively which were originally e-filed on Form ITR-2 on 19/08/2....
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....ssment orders on a single day. It was further submitted that besides the documents seized from assessee, there were seized documents belonging to other groups also, the approval of which has also been given through the same approval letter. Therefore, it was submitted that it is humanly not possible to examine voluminous loose papers and many more papers of various assessee in a single day. It was submitted that whenever a superior authority grants 'approval' to an 'order' of subordinate authority then the superior authority must apply his mind to all material on record, basis of order made by subordinate authority and superior authority must ensure that the subordinate authority has followed due process of law and has not taken arbitrary decisions. It was submitted that under similar facts and circumstances, the Lucknow Bench of the Tribunal in the case of Shri Navin Jain vs. DCIT in I.T.A. No. IT(SS) A No. 639 to 641, vide order dated 31/08/2021 has decided the issue in favour of the assessee and therefore, it was prayed that in the present case also the additional ground of appeal may be allowed and assessment order be quashed. 6. Learned CIT, D.R., on the oth....
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....f the Act, it would be appropriate to first visit the provisions of section 153D of the Act, which for the sake of completeness are reproduced below: "SECTION 153D. Prior approval necessary for assessment in cases of search or requisition [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 [sub-section (1) of section 153A] or the assessment year referred to in clause (b) of sub-section (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 may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] under sub-section (12) of section 144BA.]" 9.1 The above provisions of section 153D of the Act were inserted by Finance Act, 2007 with effect from 01/06/2007. In our humble understanding of the said provisions, we are of the opinion that the Legislature wanted the assessment/reassessment of the search cases s....
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.... granted must co-exist and, therefore, where an Authority grants an approval it is also to be construed that there was due application of mind that the subject matter approved and satisfies all the legal and procedural requirements." Therefore, from the definition of approval as per above authorities, its meaning with respect to approval u/s 153D means that the superior authority should apply his mind on the material on the basis of which the Assessing Officer is making or passing assessment order and after due application of mind to material in the hands of the Department and after going through the explanation by the assessee and documentary evidence and other relevant material, the superior authority has to grant approval u/s 153D for passing assessment/reassessment order in search cases. The approval u/s 153D of the Act cannot be treated mere formality only and the purpose of inserting this provision is two fold i.e. one before approving the senior authority will ensure that the assessee should be protected against the undue and irrelevant addition and disallowances and the approving authority will also ensure that proper enquiry or investigations are carried out by th....
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....when the Legislature has enacted the provision to be exercised by the higher authority to pass assessment order in the search cases then it is the duty of the Jt. CIT to exercise such power by applying his judicious mind. The obligation of the approval of the approving authority is of two fold i.e. on one hand, he has to apply his mind to ensure the interest of the Revenue against any omission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year and on the other hand, superior authority is also responsible and duty bound to do justice with the tax payer by granting protection against arbitrary or creating baseless tax liability on the assessee. The provisions contained from section 153A to section 153D contain features by which the assessee is to be given separate notice for assessment for each year as specified u/s 153A of the Act. Secondly, the assessee has to file separate ITR for each year as specified in section 153A of the Act. Thirdly, separate assessment orders are to be passed for each year as specified in section 153A of the Act. There is an important concept mentioned in section 153A of the Act, ....
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.... to take appropriate note of year-wise income as computed. The legislative intent Section can behind 153D be discerned/gathered from the CBDT Circular No.3/2008 dated 12.03.2008 in which it is highlighted that approval of the approving authority is mandatory. For the sake of completeness, the contents of Circular No. 3/2008 are reproduced below: "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 reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previo....
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....oval of which has also been granted along with assessee on the same day through the same approval letter. Therefore, keeping in view huge number of documents involved, it is humanely impossible for a person to apply his mind on all cases individually and that too in a single day. For the sake of completeness, the said approval dated 30/12/2018 has been made part of this order and is reproduced below: The contents of the approval speaks for itself loud and clear. The following inferences are inevitable from the bare reading of the said order. The draft assessment orders were placed before the Additional CIT, Central, Range- Kanpur on 30/12/2018 for the first time and on the same day approval was granted. As clearly mentioned in the approval under challenge, prior to this date the case was never discussed with the authority granting the approval. The Additional CIT without any consideration on merits in respect of the issues on which addition was made, granted the approval and such approval is an eyewash and idle formality and such a mechanically granted approval is no approval in the eyes of law. The entire gamete of law, as contemplated u/s 153D of the Act, has been consid....
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....o see whether there are abated or non-abated assessments which was not provided in earlier provisions for block assessments. The Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla [2016] 380 ITR 573 (Del.) considered the issue of abated and non-abated assessments and with regard to completed assessments held that the same can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment. It is also held in the same Judgment that in so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall have to be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on record by the A.O. Therefore, these were the mandatory provisions contained in Section 153A which shall have to be satisfied by the A.O. before proceeding to frame assessment in the cases of persons searched under section 132 of th....
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....admitting propriety or excels or to pleas with." 11.3. The Hon'ble Supreme Court of South Carolina in State vs., Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that "Approval implies knowledge and, the exercise or discretion after knowledge." 11.4. The Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs., Land Acquisition Officer [2003] 5 SCC 83 wherein it has been held that : "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate tine material on record in regard to the compensation payable. Otherwise, it would tantamount to blurr....
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.... the A.O. in taxing right income in the hands of right person and in right assessment year and on the other hand, JCIT is also responsible and duty bound to do justice with the tax payer [Assessee] by granting protection against arbitrary or unjust or unsustainable exercise and decision by the A.O. creating baseless tax liability on the assessee and thus, the JCIT has to discharge his duty as per Law. Thus, granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act." 9.7 Further we find that I.T.A.T. Cuttack Bench in the case of Geetarani Panda vs. ACIT in I.T.A. No.01/CTK/2019 vide order dated 05/07/2018 has held as under: "24. In our considered view, the provisions contained in Section 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the Statute by the Parliament a....
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....ally and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. Commissioner before granting the approval. Therefore, we have no hesitation to hold that the assessment order made u/s. 143(3) of the Act r.w. Sec. 153 A of the Act is bad in law and deserves to be annulled. The additional ground of appeal is allowed. 13. The ld. Departmental Representative has strongly relied upon the decision of the Tribunal Mumbai Bench in the case of Rafique Abdul Hamid Kokani Vs DCIT 113 Taxman 37, Hon'ble High Court of Karnataka in the case of Rishabchand Bhansali Vs DCIT 136 Taxman 579 and Hon'ble High Court of Madras in the case of Sakthivel Bankers Vs Asstt. Commissioner 124 Taxman 227. 13.1. We have carefully perused the decisions placed on record by the Ld. DR. We find that all the decisions relied upon by the Ld. DR are misplaced inasmuch as all these decisions relate to the issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the Ld. Counsel has never argued that the assessee was not....
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.... Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises." 9.11 Similar are the findings of I.T.A.T. Jodhpur Bench in the case of Indra Bansal & Ors. vs. ACIT in I.T.A. Nos. 321 to 324 in which the Tribunal held as under: "6. We have heard the rival contentions and have perused the material on record. The main contention of learned Authorised Representative is that reasonable time was not available with the Joint Commissioner for the grant of necessary approval as envisaged under section 153D of the Act. We have perused the forwarding letter dt. 30-3-2013 seeking approval of the draft assessment order. The date of receipt of this letter in the office of Joint Commissioner is indisputably on 31-3-2013 which is apparent from the date stamped on it by the office of the Joint Commissioner. Thus, this leaves no doubt that the letter requesting grant of approval and the granting of approval, both, are within one day of each other. This lends credence to the contention of the learned Authorized Representative that the draft assessment order was approved without much deliberation ....
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....83 (All) held that while granting approval, Commissioner is required to examine the material before approving the assessment order. In this case, Tribunal, Allahabad Bench was examining the issue of approval under section 158BG of the Act and it opined that the object for entrusting the job of approval to a superior and a very reasonable (sic-responsible) officer of the rank of Commissioner is that he with his ability, experience and maturity of understanding can scrutinize the documents, can appreciate its factual and legal aspects and can properly supervise the entire progress of assessment. Tribunal, Allahabad Bench held that the concerned authority while granting the approval is expected to examine the entire material before approving the assessment order and further that whenever any statutory obligation is cast on any authority, such authority is legally required to discharge the obligation not mechanically, nor formally but by application of mind. Similarly, the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT & Anr. (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27: (2008) 300 ITR 403 (SC), while discussing the requirement of prior approval of Chief Co....
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....T (supra), we hold that the Joint Commissioner has failed to grant approval in terms of section 153D of the Act i.e., after application of mind but has rather carried out exercise in utmost haste and in a mechanical manner and, therefore, the approval so granted by him is not an approval which can be sustained. Accordingly, assessments in three COs and nineteen appeals of the assessee(s), on identical facts, are liable to be annulled as suffering from the incurable defect of the approval not being proper. Accordingly, we annul the assessment orders in CO Nos. 8 to 10/Jodh/2016 and ITA Nos. 325 to 331/Jodh/2016. Thus, all the three COs and the nineteen appeals of the assessee, as aforesaid, are allowed." 10. Similarly we find that Hon'ble Supreme Court in the case of 'Sahara India vs. CIT & Others' [2008] 216 CTR 303 (S.C.) : [2008] 7 DTR (SC) 27: [2008] 300 ITR 403 (SC) while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection....
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....y impossible If an ACIT cannot express his opinion on a single case in one day how another ACIT can express his opinion in 67 cases in a single day. 9.10 The Hon'ble Bombay High Court has dismissed the appeal of the Department filed against the above order of the Mumbai Tribunal in the case of Shreelekha Damani vide judgment dated 27/11/2018. The findings of Hon'ble Bombay High Court are reproduced below: 10 Similarly we find that Hon'ble. Supreme Court in the case of 'Sahara India vs. CIT & Others' [2008] 216 CTR 303 (S.C.): [2008] 7 DTR (SC) 27: [2008] 300 JTR 403 (SC) while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held that the approval must be granted only on th....
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....rounds do not survive for adjudication. 11. In the result, all the appeals of the assessee stand allowed. (Order pronounced in the open court on 07/10/2021) ============= Document 1 Government of India Office of the Addi. Commissioner of Income Rx ( Lentra) Range), Kanpur 7/81-8, Ground Floor Tilak Nagar, Kanpur-208002 Phone & Fax;0512 2550079 . 0512-2548611 Sted: 30/12/2019 KAS AddLOFT (CR)/KNP/Approval u /> 15SD/2 017-18/14 3 The Dy. Commissioner of Income Tax, Central Circle-1, Kanpur. Sab: Approval U/s_153D for the assessment proceedings completed It 153A/153/143(3) of the I.T.Act-1961- reg - Please refer to your letter bearing F. NO. DCIT/CC-1/KNP/Draft Assesame Order/Goldiee Gr./2017-18/ 1187 Dated 29.12.2017 and F.No.DCIT/CC-1/Draft Assessme Order/153D/2017-18/1184 dated 29.12.2017 respectively received alongwith case recor pertaining to the cases as detailed in the said letter seeking approval U/s 153D of the Income Tax Act, 1961. 02 The approval u/s-153D of the income Tax Act, 1961 is accorded in the following cases :- No Name of the Assessee PAN Assessment Years Case u/s 1 Manoj Kumar Agarwal ACFPA8077Q 2010-11 153A -do -do- 2013-....
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....umari ADKPK9950E 2013-14 153A 73 -do- -do- 2014-15 153/ 74 Ajay Makhija AIPPK7830B 2013-14 153/ 75 -do- -do- 2014-15 153A 76 Nidhi Makhija AHDPM6079P 2013-14 153/ 77 -do- -do- 2014-15 153/ 78 Nirmala Kumari AIPPK7814B 2013-14 153A 79 -do- -do- 2014-15 153/ 80 Rakesh Kumar ACVPK6802B 2013-14 153/ Peeyush Makhija BGGPM9415G 2014-15 153/ 82 Sanjay Kumar ABAPK0671L 2013-14 153A 83 Hira Lal Makhija / ABLPA5618B 2013-14 153A 84 Babu Lal \ AAEPL8035A 2013-14 153A 85 -do- do- 2016-17 143(3) Meena Kumari 03. A copy of the final order issued in the above cases should be sent to this office for record. ARRahman (Tanvir Roshan Rahman) Addl. Commissioner of Income Tax (Central Range), Kanpur Encl: Case records. L vernment of India ffice of the 7/81-B,Ground Floor Tilak Nagar, Kanpur-208002 Phone & Fax:0512-2550079 0512-2548611 Addl. Commissioner of Income Tax (Central Range), Kanpur No Add.CIT (CR)/KNP/Approval u/s 153D/2 017-18/1 462- Dated: 31/12/2017 The Dy. Commissioner of Income Tax, Central Circle-I, Kanpur . Sub: Approval U/s 153D for the assessment proceedings completed u/s 153A/153C/143(3) of the I.T.Act-1961....
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....oned matter, the approval u/s 153D of the Income Tax Act, 1961 in the following cases is hereby accorded as per the details given below :- S. No Name of the Assessee PAN A.Y. Section 1. M/s Baij Nath Ram Kishore Jewellers (P) Ltd AADCB0064F 2017-18 143(3) 2 M/s. Baij Nath Jewellers AALFB7203P 2017-18 143(3) 3 Shri Prakash Chandra Sharma AGIPS4954P 2011-12 153A 4 Shri Prakash Chandra Sharma AGIPS4954P 2012-13 153A 5 Shri Prakash Chandra Sharma AGIPS4954P 2013-14 153A 6 Shri Prakash Chandra Sharma AGIPS4954P 2014-15 153A 7 Shri Prakash Chandra Sharma AGIPS4954P 2015-16 153A 8 Shri Prakash Chandra Sharma AGIPS4954P 2016-17 153A Shri Prakash Chandra Sharma AGIPS4954P 2017-18 143(3) 10 M/s. Prakash Industries AAJFP80 17H 2017-18 143(3) 11 Narendra Sharma AIWPS6695R 2016-17 153A 12 Narendra Sharma AIWPS6695R 2017-18 143(3) 13 Rohit Gupta AHLPG1735E 2017-18 143(3) 14 Rati Gupta AEOPG5934E 2017-18 143(3) 15 Ankita Gupta AGWPG6837D 2017-18 143(3) 16 Rashi Gupta AMOPG6459K 2017-18 143(3) 17 M/s. Mantora Oil Products (P) Ltd. AABCM8155E 2011-12 153A 18 M/s. Mantora Oil Products (P) Ltd. AABCM8155E 2015-16 153A 19 M/s. Mantora Oil Pr....