TaxTMI 
TaxTMI 
2026 (1) TMI 35
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....see's appeal) -do- -do- -do- 3. 1233/Del/2022 (Revenue's Appeal) 10.03.2022 14.04.2021 143(3)/ 147 of the Income Tax Act, 1961 4. 656/Del/2022 (Assessee's appeal) -do- 14.04.2021 -do- 5. 1234/Del/2022 (Revenue's Appeal) -do- 23.08.2018 143(3) r.w.s. 153C of the Income Tax Act, 1961 6. 657/Del/2022 (Assessee's appeal) -do- -do- -do- 7. 874/Del/2022 (Revenue's Appeal) 23.02.2022 -do- 143(3) of the Income Tax Act, 1961. 8. 658/Del/2022 (Assessee's appeal) -do- -do- -do- 9. 875/Del/2022 (Revenue's Appeal) -do- -do- -do- 2. First we take cross-appeals filed by the Revenue in ITA No. 873/Del/2022 and the assessee in ITA No. 655/Del/2022 for AY 2012-13. ITA No. 873/Del/2022 [Revenue's appeal] ITA No. 655/Del/2022 [Assessee's appeal] [Assessment Year 2012-13] 3. Both the appeals have common issues; therefore, they are taken together for consideration. 4. Brief facts of the case are that assessee company has filed its return of income on 30.09.2012 declaring total income at INR 7,55,65,980/-. The assessment was completed u/s 143(....
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....liable to be quashed. 3. That the Ld. Commissioner of Income Tax (Appeals)-4, Kanpur has erred in law and on facts in sustaining the validity of the impugned Assessment Order despite the facts that the order under section 127 of the Income Tax Act, 1961 dated 13.07.2016 was passed without following the laid down the procedure as contemplated under section 127 of the Income Tax Act, 1961, therefore, the said order under section 127 of the Income Tax Act, 1961 is illegal, unsustainable in law and consequently the impugned reassessment order is also illegal, void ab- initio and liable to be quashed. 4. That the Ld. Commissioner of Income Tax (Appeals)-4, Kanpur has erred in law and on facts in sustaining the validity of the impugned reassessment Order ignoring the facts that the Ld. A.O. recorded reasons on surmises conjectures on borrowed satisfaction and on mere change of opinion therefore the initiation of proceedings under section 147 is illegal and unsustainable in law and consequently the impugned reassessment order is void ab initio and liable to be quashed. 5. That the Ld. Commissioner of Income Tax (Appeals)-4, Kanpur has erred in law and on facts i....
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....t in the facts and circumstances of the case be granted." 8. In Ground of appeal No.1 raised by the assessee is not pressed hence, dismissed. 9. Ground of appeal Nos. 2 to 7 and 9 to 11 raised by the assessee are legal grounds wherein the assessee has challenged the reassessment proceedings initiated u/s 148 of the Act. 10. Ld.AR for the assessee submits that sole basis for re-opening the assessment is Special Audit Report in the case of the assessee which is evident from the copy of the reasons recoded wherein AO has clearly stated that based on the Special Audit Report, it was found that certain payments were made on which no TDS was deducted u/s 194C/194J of the Act. Ld. AR submits that all the necessary details have already been examined during regular assessment proceedings and the order was passed u/s 143(3) of the Act. Ld. AR further submits that other issues on which satisfaction of escapement of income was recorded, no adverse inference was drawn after verification of the facts submitted by the assessee. Ld. AR submits that regarding non-payment of TDS on various expenses, in the original assessment proceedings carried out u/s 143(3) of the Act after inquiries and....
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....ting income escaping assessment proceedings u/s 147 of IT Act on the basis of information available with him and accordingly sanction under section 151 of the Income Tax Act, 1961 has been granted by Pr. CIT(Central), Kanpur in accordance with law. Thereafter notice u/s 148 of IT Act has been issued and the income escaping assessment proceedings have been completed u/s 147 of IT Act by following all the provisions of law and the order has been passed u/s 147/143(3) of IT Act on 18.10.2019. Under these circumstances, I hold that the proceedings under section 147 of the Income Tax Act, 1961 have been correctly initiated and completed as per law hence these Grounds of appeal are summarily dismissed. 6.4. In the additional ground of appeal no. (i), the appellant has objected the order passed u/s 127 of the IT Act dt. 13.07.2016. In this regard, it is observed that from the facts of the case as brought out by the appellant itself, it has been found that all the procedures as laid down by law appear to have been followed. Further since no appeal lies against the same in this office, hence this ground of appeal is hereby summarily dismissed." 14. Before us, Ld.AR for the asses....
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.... Court has held that such amendment is prospective in nature and cannot be applied prior to AY 2015-16. 18. In view of the above, we hereby confirmed the disallowance of INR 1,72,862/- (3,92,862-2,20,000) u/s 40(a)(ia) of the Act. The Ground of appeal No.8 raised by the assessee is partly allowed. 19. In the result, appeal of the assessee is partly allowed. ITA No.873/Del/2022 [Assessment Year 2012-13] (Revenue's Appeal) 19. The Revenue has raised following grounds of appeal:- 1. "On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 2,82,38,711/- on account of disallowance of cash payment u/s 40A(3) of the IT Act. 1961 without considering the facts that bills and vouchers regarding purchase of meat/live stock as produced by the assessee during assessment proceedings are not proper as no signature was made on some vouchers further, in the instant case the alleged suppliers from whom it received raw material/meat/live stock are not producers and working like traders/brokers. Further, as per Circular Nos 04/2006 dated 29.03.2006, benefit of rule 6DD of Income Tax Rules, 1962 shall only....
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....AO has not invoked the provisions of section 40A(3) of the Act and found that all the payments made in cash are in accordance and within the limits specified u/s 40A(3) of the Act, without specifying any instance or without bringing on record any vouchers where signatures of the recipients were missing, no adhoc disallowance could be made. Ld.CIT(A) has deleted the disallowance by making following observations in para 6.6 & 6.7 of impugned order: 6.6 "In the Ground of appeal no. (vii), the appellant has challenged the addition of Rs. 2,82,38.711/- being 5% of the cash payment of Rs. 56,47,74,231/-. In this regards the AO observes that on perusal of statement on records, it is found that the assessee has made payment through RTGS as well as cash to the persons from whom purchase is made. He states that it is not understandable as to why cash was paid to them in spite of the fact that they have maintained bank A/c. However, the assessee stated that the cash payment was made strictly on the insistence of the suppliers. The AO further states that on verification of some vouchers it is found that no signature was made. However the did not communicate these discrepancies to the ....
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....he reasons recorded for reopening the assessment. The payments to few individuals were doubted however, no adverse inference was taken on such payments by the AO after making verification of the records. In view of these facts, we find no error in the order of ld. CIT(A) in deleting the adhoc made and accordingly, we uphold the order of Ld. CIT(A). Therefore, Ground of appeal No.1 raised by the Revenue is dismissed. 24. Ground of appeal No.2 raised by the Revenue is with respect to the deletion of disallowance of INR 5,91,620/- out of business promotion expenses and Ground of appeal No.3 is with respect to deletion of disallowance of INR 1,00,000/- out of tour & travel expenses. 25. Heard the contentions of both parties and perused the material available on record. From the perusal of the assessment order, we find that AO has made the disallowance solely for the reason that personal nature of expenses cannot be ruled out and there were certain self-made vouchers prepared for payment of these expenses. Therefore, the genuineness of these expenses was not fully accepted by the AO. Ld. CIT(A) has deleted these disallowances by making following observations in para 6.8 & 6.9 of t....
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....the Ground of appeal no. (ix), the appellant challenges the adhoo disallowance of Rs. 1,00,000/- out of total claim of tour and travelling expenses of Rs 22,05,818/- The AO observes that last year expenses of Rs. 14,93,1217 were incurred under ther head of tour and travels expenses, however the same is increased to Rs. 22,05,818/- However the AR submitted that no specific defect could be pointed out by the AO and this disallowance has been made on purely on adhoc basis. The AR submits that turn over of this year has substantially increased in comparison to last year and it has become Rs 504,57,85,607/- as against the last years turn-over of Rs. 228,59,31,053/- It has further been submitted that no expense under the head of tour and travel has been incurred other than business purpose and the AO could not disprove this premise and hence the disallowance on adhoc basis is uncalled for. I have carefully perused the findings of the AO and the submission of the AR, various case laws relied upon by the AR fully support the submission of the appellant that no adhoc disallowance can be made when no specific defect could be found by the AO. Under these circumstances, the disallowance of Rs.....
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....ficer of Rs. 6,07,64,411/- on account of disallowance of cash payment u/s 40A(3) of the LT Act. 1961 without considering the facts that the assessee had not filed the complete addresses of the suppliers/sellers and therefore, the genuineness of the purchase cannot be verified. Further the conclusion of the Ld. CIT(A) that no adhoc disallowance or any disallowance u/s 40A(3) of IT Act should be made when appellant was fulfilling all the requisite conditions of Income Tax Rule 6DD(e)(ii), is also not acceptable as in the instant case some of the alleged suppliers from whom it received raw material/meat/live stock were not producers and working like traders/brokers. Also, the assessee could not produce confirmations of all the suppliers to verify that the cash purchases were genuine. Hence, the disallowance of part of purchase to avoid leakage of revenue is justified. 2. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 8,43,877/- on account of disallowance of business promotion expenses without considering the facts as brought out in the assessment order. It is categorically mentioned in the asse....
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....r reliefs as your honour may deem fit in the facts and circumstances of the case be granted." 31. Before us, both parties have accepted that the facts involved in the issues raised in the cross-appeals filed by assessee and revenue are identical to the facts in above decided cross appeals for AY 2012-13 in ITA Nos. 873/Del/2022 & 655/Del/2022, except for the amounts of additions/disallowances. 32. As admitted by both the parties, the facts and circumstances of the present appeals and observations made by the AO and Ld. CIT(A) in both the assessment years are identical therefore, by following the observations made by us while dismissing the appeal of the assessee as well as Revenue in ITA No.655/Del/2022 [Assessee's appeal] and 873/Del/2022 [Revenue's appeal] for AY 2012-13 which are Mutatis Mutandis applied to the facts of the present case, all the grounds of appeal taken in both the cross-appeals filed by the Revenue and the assessee are dismissed. 33. In the result appeal of the assessee and of the revenue are dismissed. ITA No.1234 & 874/Del/2022 (Revenue's Appeal) ITA No.657 & 658/Del/2022 (Assessee's Appeal) [Assessment Years 2015-16 & 2016-17] 34. Now we ....
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.... 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, Meerut in the case of assessee which is reproduced as under: 40. The Additional CIT, Range Meerut 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 additions proposed by the AO for which approval is sought and the draft assessment order and after considering all the material should accord the approval. It is further provided that approval has to be granted for each assessment year separately. From the perusal of the approval letter as reproduced above, it is seen that common approval was given for both the assessment years vide single order. 41. The Hon'ble Delhi High Court in the case of Shiv Kumar Nayyar in ITA No.285/2024 [TS-343-HC-2024-Delhi] has held that the approval u/s 153D of the Act has to be granted for each Assessment year independently. The relevant observations of the judgement of Hon'ble High Court are as under:- "11. A plain reading of the af....
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....nt 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 of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:- "22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income- tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has exam....
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....0.12.2018 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 for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has gra....
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....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.com 118 (SC). 43. The hon'ble Delhi High Court in the case of PCIT vs Anuj Bansal in ITA No.368/2023 (Delhi) has held that the approval granted under s. 153D of the Act, if granted mechanically, will vitiate the assessment order itself. 44. Recently the Hon'ble Third Member at ITAT, Delhi in the case of Dheeraj Chaudhary Vs. ACIT in ITA Nos. 6158 to 6160/Del/2018 after considering all the judgements relied upon by the ld. CIT DR and further after detailed analyzing the provisions of section 153D, power and independence of assessing authority and the CBDT manual referred by the revenue has held that the common approval granted for various year and for various assessee without making any reference....
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....hat 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 illegality or biasness, to either of the sides i.e., the assessee or the Revenue, remains. 23. In the present case before me, the above procedure is not at all followed as is evident from the proposal sent by the Assessing Officer as reproduced in Paragraph 10. It means that the approval granted is mechanical in manner and without application of mind by the approving authority i.e., by the Additional CIT. 45. Such mechanical approval cannot be sustainable in law in the light of judicial dicta available. The approval memo is totally silent on the issues involved and has granted omnibus approval without any thoughtful process being discernible. A single approval u/s 153D has been accorded in respect of two Assessment Years through single order on the req....
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...., the appeal filed by Revenue is dismissed. 54. In the result, appeal of the Revenue is dismissed. 55. In the final result, all appeals of the Revenue in ITA Nos. 873, 1233, 1234, 874 & 875/Del/2022 [AYs 2012-13, 2013-14, 2015-16, 2016-17 & 2017-18] respectively are dismissed and appeals of the assessee in ITA Nos. 655, 656, 657, 658/Del/2022 [AYs 2012-13, 2013-14, 2015-16 & 2016-17] respectively are also dismissed. Order pronounced in the open Court on 19.12.2025. ============= Document 1 851 OFFICE IF THE ADDL. COMMISSIONER OF INCOME TAX CENTRAL RANGE, BHANSHALI GROUND, MEERUT. Phone-0121-2403191, Fax-0121-2510082 Dated: 23-08-2018 F. No. Addl.CIT/CR/MRT/Approval/153D/2018-19/ TO. The Dy. Commissioner of Income Tax, Central Circle, Ghaziabad. Subject: Approval u/s 1530 in the cases of M/s Mirha Exports Pvt. Ltd. Regarding. Please refer to your office letter F. No. DCIT/CC/GZ8/153D/2018-19/1191 dated 23.08.2018 on the above mentioried subject. Please refer to our discussion in the under mentioned cases on 23.08.2018 In my office chamber. In the following cases of M K Group, prior approval u/s 153D of the IT Act, 1961 is accorded for passing asses....