RISHI RAJ JAIN,NEW DELHI vs. ACIT, CENTRAL CIRCLE-13, DELHI

5. Thereafter, the chartered Accountant informed the applicant that the penalty proceedings has been initiated against the addition which was confirmed by the CIT(A) vide order dated. 22.07.2022 and enquired about the status of any appeal filed before ITAT against that CIT(A) order.

6. The applicant informed to the CA that the order was submitted to his office on the same day i.e., on 22.07.2022 for necessary action. Thereafter, the CA probe the issue from his office and informed the applicant that the office staff who had received the order forgot to inform and submit the same to him due to which no action could be taken and hence appeal was not filed before ITAT. He further advised the applicant to immediately file the appeal before ITAT along with the condonation of delay against the order dated. 22.07.2022 passed by the CIT(A)

Rishi Raj Jain v. ACIT A.Y. 2018-19 7. Thereafter, the applicant immediately took steps to file the appeal and filed the appeal on 20.02.2024, thus there is a delay in filing of appeal by 526 days..

8. Your honour in view of the above mentioned facts, circumstances and reasons set out hereinabove, it is humbly submitted that there is no negligence on the part of the applicant for delay in filing of appeal. The delay in filing of the appeal has occurred due to the mistake of the office staff of the chartered Accountant which is unintentional and beyond the control of the applicant.

For A.Y. 2018-19 the assessee filed its return of income on 29.03.2019 declaring income of Rs. 2,23,40,900/-. The Case was selected for Scrutiny. During assessment proceedings, the AO rejecting the contention of the assessee that he had declared jewelry worth Rs. 4,54,22,541/- which was materially in excess to the AO completed the assessment under Section 143(3) of the Act at Rs. 2,82,69,050/- by making addition of Rs.59,28,150/- on account of unexplained jewellery under Section 69B read with section 115BE of the Act. Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) who by and under the impugned order dated 22.07.2022 dismissed the appeal by confirming the addition made by the Ld. AO. Hence, the instant appeal before us.

5. By and under an application dated 6.10.2024 the assessee sought to raise the following additional ground of appeal:

“On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the order passed by the AO despite that the consequent reassessment framed under section 143(3) r.w.s. 153B(1)(b) is in violation of mandatory provision of section 153D of the Act and as such is bad in the eyes law. That the purported approval u/s 153D of the Act is illegal, bad in law and also without application of mind.”

6. The additional ground sought to be raised being legal ground and since going to the root of the matter and having regard to the judgment passed by the Hon’ble Apex Court in the case of National Thermal Power Corporation (NTPC) v. CIT (229 ITR 383), the same is admitted and is addressed at the very threshold of the matter. here under:

“This is an appeal filed by assessee against the CIT(A) order dated 22.07.2022 passed under section 250 of the Act, confirming the addition of Rs. 59,25,150/- made by the AO on account of jewellery seized during the course of search treating the same as unexplained invoking the provision of section 69B r.w.s 115BBE of the Act. Legal Issue - Additional Ground No. 7 - Approval u/s 153D of the Act granted in a mechanical manner, It should necessarily reflect due application of mind 1. In this regard, it is important to refer the relevant provision of the Act. Relevant portion of section 153D is reproduced below for ready reference- "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 2 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 4[Principal Commissioner or] Commissioner under sub-section (12) of section 144BA.)"

2. Based on the above, it can be concluded that 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 mandatory prior approval in accordance to the provision of section 153D of the Act.

3. The Assessee respectfully submits that the Assessment Order passed by the Learned Assessing Officer is liable to be quashed, as the mandatory Rishi Raj Jain v. ACIT A.Y. 2018-19 requirement of prior approval under Section lied within its true spirit. The facts leading to this contention are as follows: ➤ To sought approval under section 153D, the Assessing Officer forwarded a draft assessment order to Additional CIT(A), Central range-4, New Delhi (hereinafter "the approving authority"), vide letter dated 29-12-2019. ➤ On the very same day, i.e., 29.12.2019, the Additional Commissioner of Income Tax, Central Range-4, New Delhi, granted approval under Section 153D in the case of the assessee vide a common approval letter, which covered not only the assessee's case but also three other assesses ➤ Further, It is most relevant and significant to bring to the kind attention of the Hon'ble Bench that on the same day i.e. on 29-12-2019, the Additional CIT, Central range-4, New Delhi, granted approval for 178 cases alone. ➤ Thus, approvals of 182 days (178+4) granted by Additional CIT in a single day, including the present case of the assessee. ➤ Furthermore, it is pertinent to point out that the letter forwarded by the Assessing Officer to the approving authority specifically mentioned that the draft assessment order was being submitted under Section 143(3) of the Act. However, the final assessment order has erroneously been passed under Section 143(2) of the Act, which is procedurally incorrect and legally untenable. This inconsistency reflects a clear and apparent mistake on the face of the record, further reinforcing the conclusion that the assessment proceedings were carried out in a hurried and mechanical manner, without adherence to the prescribed legal framework.

4. Based on the above facts, the assessee submits that the approval granted under Section 153D is not a mere formality. Various Courts have repeatedly held that such approval must be preceded by due and independent application of mind by the approving authority. The mandate of Section 153D necessitates a conscious, considered, and deliberate examination of the assessment records, seized material, appraisal report, and issues involved in the case before granting approval.

6. Furthermore, a perusal of the approval letter in the present case reveals that it does not record any satisfaction or note any reasons demonstrating that the approving authority bad examined or considered the appraisal report, assessment records, or seized documents relevant to the assessee's case. There is a complete absence of any reference to the specific facts or issues involved in the assessment years under consideration. The approval, therefore, appears to be stereotyped and lacking the statutory rigor required under Section 153D.

7. In view of the above, it is respectfully submitted that the approval granted under Section 153D in the present case suffers from serious procedural irregularity and legal infirmity. Consequently, the assessment order passed on the strength of such defective approval is bad in law and deserves to be quashed.

The approval under Section 153D of the Act was granted by the same Additional CIT, Central Range-4, New Delhi. The approval was granted on the same date, i.e., 29.12.2019.

The approval was issued through a common letter covering 178 cases of 29 assessees on a single day, including the assessee in the present case.

Rishi Raj Jain v. ACIT A.Y. 2018-19 The approval lacked any reference to appraisal reports, seized material, or draft assessment orders, and did not demonstrate application of mind, as required by law.

9. The assessee's case is factually and legally indistinguishable from the facts in the Mysore Bhaskara Pankaja case: The same approving authority (Addl. CIT, Central Range-4, New Delhi) granted approval. Approval was granted on the exact same date (29.12.2019). A common approval letter was issued for multiple cases, including that of the assessee. The letter was generic, lacking any reference to the specific seized material or draft assessment order. No evidence of independent or case-specific application of mind exists in the record.

10. Based on the request of the A.O. dated 28.12.2019, the Additional CIT granted approval on the very next day i.e. on29/12/2019. It is axiomatic from the plain reading of approval memo that various assessment orders and the issues incorporated in the assessment orders, were never subjected to any discussion with the authority granting approval prior to29.12.2019. As per the CBDT Circular No. 3 of 2008 dated 12.03.2008, the legislature in its highest wisdom made it obligatory that the assessments of search cases should be Rishi Raj Jain v. ACIT A.Y. 2018-19 made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the Assessing officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval of the respective Assessment order. Solemn object of entrusting the duty of Approval of assessment in search case is that the Additional CIT, with his experience and maturity of understanding should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending, if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard.

11. Furthermore, above judgement of Mysore Bhaskara Pankaja v. ACIT affirmed in the case of GD Goenka Pvt. Ltd. v. ACIT [2024 (11) TMI 83] dated 29.10.2024 wherein the Tribunal quashed the assessment orders passed under Section 153A of the Act on the ground that the approval granted under Section 153D by the same Additional CIT, Central Range-4, New Delhi, on the same date (29.12.2019), was found to be mechanical, perfunctory, and devoid of any application of mind. The Tribunal held that such consolidated approvals-covering a large number of assessees and multiple assessment years within an unreasonably short time frame-were legally unsustainable and rendered the resultant assessments non-est and invalid in law. The present case, being identically situated, squarely falls within the ambit of this authoritative precedent. Relevant findings reproduced hereunder: 10.Identical dispute emanating from the same approval memo in question came up for adjudication in the case of Mysore Bhaskara Rishi Raj Jain v. ACIT A.Y. 2018-19 Pankaja (supra) wherein the Coordinate Bench of Tribunal has discredited the validity of the approval granted under Section 153D of the Act in identical circumstances. It was held therein that the approval so granted suffers from vice of non-application of mind and consequently non-est in law.

11. In consonance with the view taken in Mysore Bhaskara Pankaja (one of the parties appearing in the approval memo), we hold that approval granted under Section 153D of the Act under challenge do not meet the requirement of law contemplated under Section 153D of the Act. The Assessment Orders passed in consequence of mechanical approval thus, are rendered non-est and invalid in the eyes of law and hence requires to be quashed.

12. Consequently, the additions/disallowances made in such invalid Assessment Orders do not call foradjudication on merits.

12. In view of the above facts, since the assessee forms part of the same Goenka Group search and the assessment years, as well as the approval process, are identical, the aforesaid two authoritative rulings apply with full force to the present case. The purported approval dated 29.12.2019 does not constitute a valid statutory act under Section 153D of the Act, and the consequential assessment order is, therefore, a nullity in the eyes of law.

13. Above contention of the assessee further supported by the following judicial pronouncements in this regard:- ➤ Hon'ble ALLAHABAD HIGH COURT THE PR. COMMISSIONER OF INCOME TAX AND ANOTHER VERSUS SIDDARTH GUPTA Dated: 12-12-2022 wherein Approving Authority granted approval u/s 153D of the Act in respect of 117 cases on a single day and Hon'ble High Court observed that whether it is humanly impossible to go through the records of 117 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. The relevant para of the judgment is reproduced below for ready reference:

Rishi Raj Jain v. ACIT A.Y. 2018-19 In the instant case, the draft assessment orders in 117 cases, i.e. for 117 assessment years placed before the Approving Authority on 30.12.2017 and 31.12.2017 were approved on 31.12.2017, which not only included the cases of respondent assessee but the cases of other groups as well. It is humanly impossible to go through the records of 117 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. ➤ HON'BLE SUPREME COURT VIDE ITS ORDER DATED 09.08.2024 dismissed the SPECIAL LEAVE PETITION IN THE ABOVE REFERRED CASE. ➤ Case of the assessee is covered by the judgement of HON'BLE DELHI HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX-15 VERSUS SHIV KUMAR NAYYAR 2024 (6) TMI 29 - DATED 15.05.2024 wherein hon'ble court held as under: 16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draftassessment orders were sent, has observed as under:- "10. We have gone through the approval granted by the Id. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the Id. AO before the Id. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The Id. Addl.CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 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 Id. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the Id.

Rishi Raj Jain v. ACIT A.Y. 2018-19 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 Id. 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 granted a single approval for all assessment years put together."

8. The matters relates to approval granted under Section 153D of the Act. The approval which has been challenged before us as non-est, mechanical and, therefore, liable to be quashed is also the crux of the submission made by the Ld. Senior Counsel for the assessee.

9. At the very threshold of the matter, the Ld. Sr. counsel Shri Ved Jain, appearing for the assessee, submitted that the issue is squarely covered in favour of the assessee as in identical group of matters, the Co-ordinate Bench has been pleased to quash the assessment by holding the approval granted by the concerned authority as mechanical and bad in law. A copy of the said judgment passed by the Co-ordinate Bench dated 10.07.2024 rendered in the case of Mysore Bhaskara Pankaja vs. ACIT (ITA No. 3823/Del/2023 – 2024(7) TMI 1134 –ITAT Delhi) has also been filed before us wherein the assessment in the identical search conducted CIT, Central Range-4 Delhi having been issued in case of 58 assessees in consolidated order on 29.12.2019 i.e. on a single day the same was found to be mechanical. While dealing with the factual and legal aspects of the matter the Co- ordinate Bench has been pleased to observe as follows:

“8. We have heard both the parties and perused the material available on record. As could be seen from the assessment order and the material produced before us, the Assessing Officer sent the letter of approval to Additional CIT on 28/12/2019 and the Additional CIT granted the approval u/s 153D of the Act for 178 6 Mysore Bhaskara Pankaja Vs. ACIT cases of 29 Assessees in a single approval letter. The Approval Letter dated 29/12/2019 is produced as under:- ……………. .

10. Based on the request of the A.O. dated 28.12.2019, the Additional CIT granted approval on the very next day i.e. on 29/12/2019. It is axiomatic from the plain reading of approval memo that various assessment orders and the issues incorporated in the assessment orders, were never subjected to any discussion with the authority granting approval prior to 29.12.2019. As per the 10 Mysore Bhaskara Pankaja Vs. ACIT Rishi Raj Jain v. ACIT A.Y. 2018-19 CBDT Circular No. 3 of 2008 dated 12.03.2008, the legislature in its highest wisdom made it obligatory that the assessments of search cases should be made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the Assessing officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval of the respective Assessment order. Solemn object of entrusting the duty of Approval of assessment in search case is that the Additional CIT, with his experience and maturity of understanding should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self- defending. There are long line of judicial precedents which provides guidance in applying the law in this regard.

11. There are several decisions, which supports the view that approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D of the Act. Such perfunctory approval has no legal sanctity in the eyes of the law. The decision of the co- ordinate bench in Shreelekha Damani vs. DCIT 173 TTJ 332(Mum.) which has been approved by jurisdictional High Court subsequently, reported in 307 CTR 218 affirms the plea of the Assessee, wherein the Hon’ble Bombay High Court held as under:- “1. This appeal is filed by the Revenue challenging the judgment of Income Tax Appellate Tribunal ("the Tribunal" for short) dated 19th August, 2015.

4. This was not a case where no approval was granted at all. However, the Tribunal was of the opinion that the approval granted by the Additional Commissioner of Income Tax was without application of mind and, therefore, not a valid approval in the eye of law. The Tribunal reproduced the observations made by the Additional CIT while granting approval and came to the conclusion that the same suffered from lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record.

5. The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid.

Rishi Raj Jain v. ACIT A.Y. 2018-19 "To, The DCIT(OSD)1, Mumbai Subject: Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg. Ref: No. DCIT (OSD)1/ CR7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analise the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I. T. Act, 1961."

8. Accordingly, the Tax Appeal is dismissed.”

12. In the case of ACIT, Circle-1 (2) Vs. Serajuddin and Co. the Hon’ble Supreme Court in SLP (Civil) Dairy No. 44989/2023 vide order dated Rishi Raj Jain v. ACIT A.Y. 2018-19 28/11/2023 dismissed the Appeal filed by the Department of Revenue against the order dated 15/03/2023 in passed by the Hon’ble High Court of Orissa at Cuttack, wherein the Hon’ble High Court had quashed the Assessment Order on the ground of inadequacy in procedure adopted for issuing approval u/s 153D of the Act by expressing discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act.

13. Hence, considering the above facts and circumstances, we find considerable force in the plea raised by the Assessees in the Ground No. 1 of the Appeal which is against erroneous approval granted under Section 153D of the Act. In our opinion the approvals so granted under the shelter of section 153D of the Act does not pass the test of legitimacy. Thus, the impugned Assessment order in consequence to such inexplicable approval lacks legitimacy. Consequently, the impugned assessment in captioned appeal is non-est and a nullity and hence liable to be quashed accordingly, the impugned assessment order and the order of the Ld. CIT(A) is hereby set aside by allowing Ground No. 1 of the Assessee.

14. Since we have allowed the Ground No. 1 and set aside the assessment order itself, the other grounds on merits have become in-fructuous, which requires no adjudication.

10. On the other hand, the Ld. DR relied upon the order passed by the authorities below.

Order pronounced in open court on 16.07.2025.