TaxTMI 
TaxTMI 
2024 (12) TMI 1813
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....assed in consequences thereof is bad in law. He has relied upon the judgment passed by the Hon'ble Apex Court in the case of National Thermal Power Corporation Vs CIT, reported in {229 ITR 383(SC)} as for the first time this ground has been raised. He has further submitted that since this ground involves the question of law and no new facts are required to be brought on record and further that this is a jurisdictional ground raised by the assessee goes to the root of the matter, the additional ground of appeal be admitted and adjudicated. The Ld. DR has not been able to controvert such submissions made by the Ld. AR. Having regard to the entire aspect of the matter and relying upon the judgment passed by the Hon'ble Apex Court in the case of NTPC Vs. CIT (supra) this ground of appeal is admitted. ITA No. 8533/Del/2019 AY: 2010-11 2. The facts of the case are that a search and seizure operation under Section 132 of the Income Tax Act, 1961 was carried out on 11.09.2013 and 17.09.2013 in the case of AKN Group and the assessee before us was also covered. During the course of search carried out in different premises located in India in AKN Group, documents and data sto....
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.... granting approval rather it is a mechanical approval. Since, no record was forwarded to the Senior Officer while seeking approval under Section 153D of the Act, without examining those documents, the approval cannot be said to be a valid one. As the approval has been granted within a day upon receiving the letter seeking approval and the approval since a consolidated one in respect of all the Assessment Years 2010-11 to 2014-15, the same is granted mechanically without application of mind. In that view of the matter the approval is invalid and deserves to be quashed as was the ultimate submission made by the Ld. AR. 7. On the other hand, the Ld. DR relied upon the order of approval dated 31.03.2016 passed for Assessment Year 2009-10 to 2015-16. 8. The Ld. Counsel appearing for the assessee relied upon the following judgments :- 1. (i) Principal Commissioner of Income-tax Vs. Anuj Bansal, reported in 165 taxmann.com 3 2. (ii) Principal Commissioner of Income-tax (Central)-2 Vs. Bansal, reported in ITA 368/2023 (Hon'ble High Court of Delhi) [13.07.2023) 3. (i) Principal Commissioner of Income-tax Vs. Shiv Kumar Nayyar, reported in 163 taxmnan.com....
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....ed before him and the approval so granted is, therefore, does not prove application of mind by the Ld. Addl. CIT rather the same has been granted in a mechanical manner. Moreso, the approval has been granted by the Addl. CIT on 31.03.2016 as a consolidated one. 10. In a search matter before the order of assessment or reassessment is passed, requirement of prior approval of superior officer is a mandatory requirement in term of the provisions of law particularly under Section 153D of the Act. 11. The same equally must contain the reasons for such approval and further that reflection of due application of mind made by the approving authority on the draft assessment orders in respect of search and seizure operation as placed before him is also necessary, in the absence of which the approval is nothing but a mechanical approval, vitiates the entire assessment proceeding. 12. In this regard, we have considered the judgment passed by the Hon'ble Apex Court as relied upon by Ld. A.R in the case of ACIT Vs. Serajuddin And Co. (supra) and also the order passed by the Hon'ble Orissa High Court dated 15.03.2023 against which the said appeal was preferred by the Revenue depart....
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....Assessee that the so-called approval of the Additional CIT under Section 153D of the Act had been granted in a mechanical manner without application of mind. Reference was made to the letter dated 29th December 2010 of the AO addressed to the Additional CIT Range-1 seeking approval under Section 153D of the Act and the letter dated 30th December 2010 of the Additional CIT addressed to the AO communicating the approval. Reference was also made to the decision dated 29th November 2019 of the ITAT in IT (SS) A Nos. 66 to 71/CTK/2018 (Dillip Construction Pvt. Ltd. v. ACIT) which held the guidelines contained in the aforementioned Circular to be mandatory and binding on the Department. 7. The ITAT has, in the impugned order, referred to the decision of the Bombay High Court in Akil Gulamali Somji and other decisions of the ITAT to come to the conclusion that the approving authority did not apply his mind to the relevant assessment records or to the draft assessment orders prior to granting approval to the AO under Sections 143(3)/144/153A. The assessment orders were accordingly set aside. As a result, the cross appeals of the Revenue were held to be infructuous and disposed of ....
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....e, no interference with the assessment orders was warranted. Reliance was placed on the decisions in Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise Gauhati (2015) 8 SCC 519; Managing Director, ECIL v. B. Karunakar (1993) 4 SCC 727; Haryana Financial Corporation v. Kailash Chandra Ahuja (2008) 9 SCC 31; State Bank of Patiala v. S.K. Sharma (1996) 3 SCC 364; P.D. Agrawal v. State of Bank of India (2006) 8 SCC 776 and State of U.P. v. Sudhir Kumar Singh. It was then submitted that where initiation was valid but completion was not correct, the order may not be invalid but only irregular because the intervening irregularity is a curable one. Reliance was placed on the decision of the Kerala High Court in Panicker (CGG) v. CIT, (1999) 237 ITR 443 and CIT v. M. Krishnan (N) (1999) 235 ITR 386. It was submitted that mere technicality should not defeat justice. 9. On behalf of the Assessee submissions were made by Mr. Ramesh Singh, Senior Advocate; Mr. Sidhartha Ray, Senior Advocate; Mr. Ashok Kumar Parija, Senior Advocate as well as Mr. S. Ganesh, Senior Advocate. They drew attention of the Court to the relevant clauses of the CBDT Circular dated 12th March 20....
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....f assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 50.3 Applicability- These amendments will take effect from the 1st day of June, 2007." 12. It must be noted at this stage that even prior to the introduction of Section 153D in the Act, there was a requirement under Section 158BG of the Act, which was substituted by a Finance Act 14 of 1997 with retrospective effect from 1st January 1997, of the AO having to obtain a previous approval of the JCIT/Additional CIT by submitting a draft assessment order following a search and seizure operation. 13. The CBDT issued the Manual of Office Procedure in February 2003 in exercise of the powers under Section 109 of the Act. Para 9 of Chapter 3 of Volume-II (Technical) of the Manual reads as under: "9. Approval for assessment: An assessment order under Chapter XIV- B can be passed only with the previous approval of the range JCIT/ADDL.CIT (For the period from 30-6-1995 to 31-12-1996 the approving authority was the CIT.). The Assessing Officer should subm....
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.... suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/ or the entries made therein. While exercising its power, the assessing officer has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief Commissioner or the Commissioner, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given." 17. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself. In Sahara India (Firm) Lucknow v. Commissioner of Income Tax (supra), the Supreme Court explained as under: "8. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbui....
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....infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. Anything which affects a citizen in his civil life comes under its wide umbrella. Accordingly, we reject the argument and hold that since an order under Section 142 (2A) does entail civil consequences, the rule audi alteram partem is required to be observed." 19. To the same effect, are the decisions of the Delhi High Court in Yum! Restaurants Asia Pte. Ltd. v. Deputy Director of Income Tax (supra) which dealt with the requirement under Section 151 (2) of the Act for initiating proceedings under Section 147 read with 148 of the Act. It was observed as under: "11. The purpose of Section 151 of the Act is to introduce a supervisory check over the work of the AO, particularly, in the context of reopening of assessment. The law expects the AO to exercise the power under Section 147 of the Act to reopen an assessment only after due application of mind. If for some reason, there is an error that creeps into this exercise by the AO, then the law expects the superior officer to be able to correct that error. This explains why Section 151 (1) requir....
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.... To The Assistant Commissioner of Income Tax, Circle-1(2), Bhubaneswar. Sub: Approval u/s 153D-in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata-Matter regarding. Ref: Draft Orders u/s 153A/143(3)/144 for the A.Y. 2003- 04 to 2008-09 u/s.143(3)/153B (b)/144 of the A.Y.2009-10 in the case of above mentioned assessee. Please refer to the above The draft orders u/s 153A/143(3)/144 for the A.Y. 2003-04 to 2008- 09 and u/s. 143(3)/153B(b)/144 for the A.Y. 2009-10 submitted by you in the above case for the following assessment years are hereby approved: Assessment Year Income Determined (Rs) 2003-04 11,66,22,771 2004-05 36,46,80,016 2005-06 65,70,12,805 2006-07 60,02,65,791 2007-08 130,03,13,307 2008-09 274,68,87,069 2009-10 301,17,05,952 You are requested to serve these orders expeditiously on the assessee, submit a copy of final order to this office for record. Sd/- Addl. Commissioner of Income Tax, Range-1, Bhubaneswar 22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft ord....
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....Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute." (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice a....
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....r of Income Tax (In short, "ACIT"] in granting approval under Section 153D of Income Tax Act 1961 [in short, the Act']. 8. To be noted, an assessment order was framed qua the respondent/assessee under Section 153A, read with Section 143(3) of the Act. 8.1. This order was carried in appeal by the respondent/assessee, right up till the Tribunal. 9. Insofar as the Assessing Officer (AO) was concerned, he made certain additions against the returned income. 9.1 The respondent had declared an income amounting to Rs 87,20,500/- However, while making the additions, strangely, the AO noted that the returned income was Rs. 11,00,460/-. 10. There were two additions made by the AO. The first addition was made qua cash deposited in the bank amounting to Rs. 15,04,35,000/-. The second addition was made with regard to cash introduced via an entry operator i.e. one, Mr. Vipin Garg The amount added qua this aspect was pegged at Rs.1,54,07,100/-. 11. Despite these additions, which would have taken the assessed income well beyond what was crystallised by the AO i.e. 1.65,07,560, the ACIT failed to notice the error. 12. This aspect was....
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.... is accordingly allowed" [Emphasis is ours] 14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal." 17. The SLP preferred by the revenue, was dismissed by the Hon'ble Apex Court. 18. Upon considering the entire aspect of the matter, we find that the approval has been granted not separately for each assessment year for the assessee whereas as per the provision of Section 153D of the Act the stipulated condition is this that no order of assessment or reassessment shall be made by an Assessment Officer below the rank of Joint Commissioner in respect of each assessment year referred to in Clause (b) of Sub Section....
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....d above are found to be rightly applicable. Respectfully relying upon the ratio laid down by the Hon'ble Apex Court in these matters mentioned above, in the case in hand the approval since granted mechanically, without application of mind by the Additional Commissioner that too without assigning any reason, in our considered view is invalid and thus deserves to be quashed. 20. With the aforesaid observation we, therefore, quash the impugned approval dated 31.03.2016. The assessment orders are also, therefore, vitiated and thus, quashed. The assessee's appeal, is, therefore, allowed. As the appeal is allowed on this ground all other grounds taken by the assessee become academic and no order needs to be passed. 21. In the result, all the appeals preferred by the assessee on this common ground are allowed. Order pronounced in the open court on 19.12.2024. ============= Document 1 Office of the Additional Commissioner of Income Tax Central Range-7, Room No. 329 E-2, Jhandewalan Extension New Delhi Dated: 31.03.2016 F. No. Addl. CIT/CR-7/2015-16// To 1363 The Asstt. Commissioner of Income Tax Central Circle-26, New Delhi Sub: Approval u/s 153D of the In....