TaxTMI 
TaxTMI 
2021 (8) TMI 1446
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.... the approval granted by the learned Addl. CIT, Central Kanpur u/s 153D of the I.T. Act is mechanical in nature and without proper application of mind, therefore, the same is illegal and non-est and consequential assessment made on the basis thereof is also illegal and deserves to be annulled." 3. Learned counsel for the assessee, at the outset, submitted that a search & seizure operation u/s 132(1) of the I.T. Act was conducted on 23/08/2016 to 25/08/2016 on Sigma Group and various assessee's of the group were required to file income tax returns u/s 153A of the Act. In response to the notices, the assessee filed returns u/s 153A of the Act for the years, other than the search year u/s 153A and in the year of search the regular returns were filed. The assessments in these cases were completed u/s 153A/143(3) of the Act by Dy. CIT, Central Circle-2, Kanpur vide order dated 30/12/2018 and various additions were made. It was submitted that as per the provisions of law, in search cases, the Assessing Officer before passing assessment order framed u/s 153A, 153C and 143(3) is required to take the approval from Jt. CIT u/s 153D of the Act if the Assessing Officer is below the rank....
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....lso been given through the same approval letter. Therefore, it was submitted that it is humanly not possible to examine more than 17,800 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 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. Inviting our attention to the meaning of the word `approval' as defined in Black Law D....
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....CIT. Learned counsel for the assessee submitted that it is a trite law that for granting approval u/s 153D of the Act, the approving authority shall has to apply independent mind to the material on record for each assessment year in respect of each assessee separately. 7. It was submitted that the rationale of word 'each' as specifically referred to in section 153D and section 153A deserves to be given effective/proper meaning so that the underlying legislative intent as per the scheme of assessment of section 153A to 153D is fulfilled. It was submitted that Addl. CIT in these cases has granted approval for all the assessee for all assessment years through a single approval letter which is against the intent of law and therefore, also the approval given by Addl. CIT is non est and consequential assessment made on this basis of such approval is illegal and deserves to be annulled. Learned counsel for the assessee in this respect relied on a judgment of Hon'ble Allahabad High Court in the case of Mohd. Ayub vs. Income Tax Officer 346 ITR 30 where non issue of separate notice u/s 148 for each year were held to be invalid. Learned counsel for the assessee submitted that ....
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....re is no mention of the statements recorded at the time of search. It was submitted that the approval is granted in a hurried manner without looking into the serious lapses committed by the Assessing Officer and therefore, the approval u/s 153D is invalid and bad in law and consequent assessment order needs to be quashed and reliance in this respect was placed on the order of Delhi Bench of the Tribunal in the case of Sanjay Duggal and Others vs. ACIT in I.T.A. No.1813/Del/2019 wherein vide order dated 19/01/2021 the entire law relating to section 153D has been discussed and after relying on a number of case laws, the Tribunal has allowed the appeals of the assessee and has quashed the assessment order. It was submitted that in that case also, through a single letter, the approval was granted in a number of cases. Further reliance was placed on the order of Ranchi Bench of the Tribunal in the case of Rajat Minerals Pvt. Ltd. vs. DCIT wherein sanction u/s 153D was granted in 28 cases and Tribunal allowed the appeals of the assessee by quashing the assessment orders. Further reliance was placed on the order of Mumbai Tribunal in the case of Pr. CIT vs. Shreelekha Damani wherein the p....
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....ar became the subject matter of reopening u/s 153A of the Act. The issue raised by Learned counsel for the assessee is that the approval granted by the Addl. CIT is bad in law as it is humanly impossible to go through documents exceeding 17,800 in a single day and then grant approval on the same day. Since the controversy involved here is with respect to approval u/s 153D of 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 a....
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....thority is required to give his approval, it is also to be understood that such Authority makes an application of mind as to whether the matter that is required to be approved satisfies all the requirements of Law or procedure to which it may be subjected. In other words, grant of approval and application of mind as to whether such approval is to be 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....
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....hether the entire facts have been properly appreciated by the Assessing Officer. The Jt. CIT is also required to verify whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. Thus, the approval cannot be a mere discretion or formality but quasi judicial function based on reasoning. In our view, 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 fo....
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....ent cases Jt. CIT has given approval u/s 153D of the Act for all the years altogether involved in search and the approving authority in a mechanical manner and as an idle formality has granted approval. In one line the approving authority has given blank go ahead to pass order under section 153A without even taking minimum possible pains to take appropriate note of year-wise income as computed. The legislative intent behind Section 153D can 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....
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....sessee, during the proceedings before us had filed a chart showing number of documents seized during search belonging to the group totaling 15,800 pages. Besides the above documents, replies filed by assessee belonging to the group consisted of about 200 pages and in fact there were documents belonging to other group also, the approval 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: 9.6. 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. Th....
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....n provisions of Section 153A are applicable in a case of assessee, A.O. shall have to give separate notice of each assessment year and assessee shall have to be directed to file return of income for each year and separate orders shall have to be passed for each assessment year. In Section 153A of the I.T. Act, the A.O. shall have to 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 ass....
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....ionary is - "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, 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 Adjudica....
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....essment order in search cases, then, it is the duty of the JCIT to exercise such powers by applying his judicious mind. We are of the view that the obligation of the approval of the Approving Authority is of two folds ; on one hand, he has to apply his mind to secure in build for the Department against any omission or negligence by 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 da....
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....the power vested in the Joint Commissioner/Addl Commissioner to grant or not to grant approval is coupled with a duty. The Addl Commissioner/Joint Commissioner is required to apply his mind to the proposals put up to him for approval in the light of the material relied upon by the AO. The said power cannot be exercised casually 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 a....
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....ted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. 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 Commissi....
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....CIT was mechanical and had been passed without considering the material on record and was, therefore, devoid of any application of mind. The impugned assessment order was annulled. Similarly, Tribunal, Allahabad Bench in Verma Roadways v. Asstt. CIT (2001) 70 TTJ (All) 728; (2000) 75ITD 183 (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 obl....
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....issioner in a mechanical manner without proper application of mind. Accordingly, respectfully following the ratio of the Co-ordinate Benches of Mumbai and Allahabad as afore-mentioned and also applying the ratio of the judgment of the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT (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) whil....
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....Shri Prakash Chandra Sharma AGIPS4954P 2015-16 153A Shri Prakash Chandra Sharma AGIPS4954P 2016-17 153A 9 Shri Prakash Chandra Sharma AGIPS4954P 2017-18 143(3) 10 M/s. Prakash Industries AAJFP8017H 2017-18 14.3(3) 11 Narendra Sharma AIWPS6695R 2016-17 153A Narendra Sharma AIWPS6695R 2017-18 143(3) 13 Rohit Gupta AHLPG1735E 2017-18 14.3(3) 14 Rati Gupta AEOPG5934E 2017-18 14.3(3) 15 Ankita Gupta AGWPG6837D 2017-18 14.3(3) 16 Rashi Gupta AMOPG6459K 2017-18 14.3(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 Products (P) Ltd. AABCM8155E 2016-17 153A 20 M/s. Mantora Oil Products (P) Ltd. AABCM8155E 2017-18 14.3(3) 21 M/s. Mantora Agro Industries (P) Ltd. AACCM 1537B 2011-12 153A 22 M/s. Mantora Agro Industries (P) Ltd. AACCM1537B 2015-16 153A 557 23 Naresh Kr. Jain AEHPJ7904D 2015-16 153A 24 Naresh Kr. Jain AEHPJ7904D 2017-18 143(3) 25 Naveen Jain / ABQPJ7801B 2015-16 153A 26 Naveen Jain / ABQPJ7801B 2016-17 153A 27 Naveen Jain ABQPJ7801B 2017-18 143(3) 28 Smt. Shrimati Jain AEHPJ7818B 2015-16 153A ....