M/S. BARAGARH RICE MILLERS CONSORTIUM PVT. LTD,GOVINDPUR vs. DCIT, CENTRAL CIRCLE, SAMBALPUR

Shri P.K.Mishra, ld AR appeared for the assessee and Shri Abani Shri P.K.Mishra, ld AR appeared for the assessee and Shri Abani Shri P.K.Mishra, ld AR appeared for the assessee and Shri Abani Kanta Nayak, ld CIT DR appeared for the revenue. Kanta Nayak, ld CIT DR appeared for the revenue.

It was submitted by ld AR that the assessee is in the business of rice milling. It was the submission that a search & seizure operation u/s.132 of the Act was conducted on 21.8.2013 in the residential premises of Maharaja Group of cases at Baragarh. Simultaneously there was survey operation conducted in the office premises belonging to the group company. As certain incriminating material had been found in the course of search on Maharaja Group, assessment had been proposed u/s.153C in the case of the assessee for the assessment years 2011-12, 2012-13 and 2013-14. It was the submission that for the assessment year 2014-15, as it was the search year, assessment had been completed u/s.143(3) of the Act. It was the submission that the assessment came to be completed u/s.143(3) on 21.3.2016 and for completion of the assessment, necessary prior approval from the Joint Commissioner of Income Tax, Central Range, Bhubaneswar u/s.153D had been obtained on 31.3.2016. Ld AR has placed before us the copy of the approval of the Joint Commissioner of Income Tax, Central Range, Bhubaneswar, which is extracted herein below:

It was the submission that perusal of the said approval clearly shows that the JCIT, Central Range, Bhubaneswar has not applied his mind at all and same was granted in a mechanical manner. It was the submission that in view of the judgment of Hon’ble Jurisdictional High Court of Orissa in the case of M/s. Serajuddin & Co. Kolkata in & 45 of 2022 order dated 15.3.2023, wherein the Hon’ble Jurisdictional High Court in paras 21 to 24 has held as under:

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 CIT. 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 examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere “rubber stamping” of the letter seeking sanction by using similar words like ‘see’ or ‘approved’ will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of Section 158BG of the Act, it would equally apply to Section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO 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.

In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. 24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under Section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 (165) E.L.T. 257 (S.C.) the Supreme Court observed as under:

It was the submission that in view of the principles laid down by the Hon’ble Jurisdictional High Court of Orissa in the case of Serajuddin & Co. (supra) the approval having been granted in a mechanical manner, same is not a valid approval and consequential assessment is liable to be quashed.

In reply, ld CIT DR vehemently supported the order of the Assessing Officer as well as ld CIT(A).

We have considered the rival submissions. The facts in the present case clearly shows that a perusal of prior approval granted by the JCIT, Central Range, Bhubaneswar clearly mention that “putting up the draft on the last date itself defeats the purpose of the approval by the JCIT” He further goes on to mention that “considering the time limitation for completion of the assessment being 31.3.2016, approval is hereby accorded for technical reasons in respect of the following cases”. Now the fact that the approval has been granted for technical reasons itself shows the non- application of mind and the mechanical manner in which the JCIT has granted the approval. Further, the fact that the draft orders had been put on the last date of the completion of the assessment as specifically mentioned by the JCIT, thereby not giving time to JCIT to read, understand and make up his mind much less examine the evidence in support of the assessment clearly shows that there is absolutely non-application of mind by the JCIT before granting of the approval. This being so, respectfully following the principles laid down by the Hon’ble Jurisdictional High Court of Orissa in the case of Serajuddin & Co. (supra), which we have already extracted the relevant paragraph, as the approval has been granted in a mechanical manner and only for technical reasons, the approval granted is held to be invalid and consequential assessment quashed.

In the result, appeal of the assessee stands allowed.