DEEPAK KUMAR,GAZIABAD vs. ACIT , DELHI
Income Tax Appellate Tribunal, DELHI “B” BENCH: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL[Assessment Year : 2021-22]
PER MANISH AGARWAL, AM :
The present appeal is filed by assessee against the order dated 17.01.2024 passed by Ld. Commissioner of Income Tax (A)-
27,
New
Delhi
[“Ld.CIT(A)”]
in Appeal
No.CIT(A),
Delhi-
27/10014/2020-21 u/s 250 of the Income Tax Act, 1961 [“the Act”]
arising out of assessment order dated 18.08.2022 passed u/s 153A r.w.s. 143(3) of the Act pertaining to Assessment Year 2021-22. 2. Brief facts of the case are that assessee is an individual and based on the information received from Office of CISF, Majlis Park
Metro Station, New Delhi that cash of INR 29 Lakhs was found from the possession of the assessee, a search and seizure operation was conducted u/s 132 of the Act on 31.12.2020 in the case of the assessee. During search in the statements recorded, the assessee stated that this cash was received by him from Shri Vinod Kumar on the direction of Shri Rajesh Kumar and cash was to be delivered to Shri Rajesh Kumar at his office at 2215/4, 2nd Floor, Chah
Indara, Bhagirath Palace, Chandni Chowk, Delhi. However, no person appeared during the course of search proceedings to confirm this fact and thus cash was seized. In post search investigation, these persons were confronted wherein it was accepted that they know Shri Deepak Kumar (the assessee) but have no idea about the cash of INR 29 Lakhs found from the assessee. The case of the assessee was centralized and notice u/s 142(1) of the Act issued on 24.02.2022 for filing the return of income. In response, the assessee e-filed his ITR on 09.03.2022, declaring income of INR 17,51,950/-.
Thereafter, notices were issued from time to time which were complied with by the assessee and the source of the cash was explained as out of sale of jewellery, gifts received on wedding and past savings. AO has not accepted the explanation given by the assessee and made addition of INR 29.00 Lakhs as unexplained money u/s 69A of the Act and invoked the provision of section 115BBE of the Act. The said order was passed u/s 153A r.w.s.
143(3) of the Act after obtaining the approval from Add. CIT, Central
Range-5, New Delhi dated 18.08.2022. 3. Against this order, assessee filed an appeal before Ld.CIT(A), who after considering the submissions, dismissed the appeal of the assessee.
Aggrieved by the order of Ld. CIT(A), assessee filed an appeal before the Tribunal by taking following grounds of appeal:- 1 “That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 22.08.2022 passed by the Ld. Assessing Officer under section 153A read with section 143(3) of the Act without appreciating that the same was without juri iction.
That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 22.08.2022 passed by the Ld. Assessing Officer under section 153A read with section 143(3) of the Act in violation of the principles of natural justice.
That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 22.08.2022 passed by the Ld. Assessing Officer under section 153A read with section 143(3) of the Act without application of mind to the material on record.
That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 22.08.2022 passed by the Ld. Assessing Officer under section 153A read with section 143(3) of the Act making addition of Rs. 29,00,000/- to the income of the appellant under section 69A of the Act.
That the CIT(A) on facts and in law erred in not deleting the interest levied by the Ld. Assessing Officer under section 234B and 234C of the Act.
The appellant craves for leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.
That all the grounds are without prejudice to each other.”
Ground of appeal No.1 is with respect to the validity of the assessment order passed u/s 153A r.w.s.143(3) of the Act and juri iction thereof.
Before us, Ld.AR for the assessee submits that search was carried out in the case of assessee on 31.12.2020 u/s 132 of the Act therefore, in terms of section 153A of the Act, FY 2020-21 relevant to AY 2021-22 is the search year for which the order should be passed u/s 143(3) of the Act and six preceding Assessment Years relevant to previous year in which the search is conducted or requisition is made should be completed u/s 153A which in the instant case, would be AYrs 2015-16 to 2020-21. Ld.AR submits that the assessment order under challenge was passed u/s 153A r.w.s. 143(3) which is contrary to the provisions of law and therefore, the same deserves to be hold bad in law. He further submits that the approval granted by Addl. CIT was also for assessment completed u/s 153A r.w.s. 143(3) thus, there is no independent application of mind on the part of the Addl. CIT who simply approved draft assessment sent by the AO without even taking pains to look into the section under which assessment order is proposed to be passed. Ld.AR further placed reliance on the judgement of Hon’ble Allahabad High Court in the case of CIT(Central) vs Shri Raj Kumar Jaiswal & Smt. Rekha Jaiswal and Shri Rak Dayal Jaiswal, 2017 (2) TMI 1276 and submitted that the order passed by the AO is without juri iction, therefore, the same deserves to be hold bad in law.
Per contra, Ld.CIT DR for the Revenue supports the orders of the lower authorities and submits that mere mentioning the wrong section in the assessment order is a typographical error which could be rectified u/s 292BB of the Act for which entire order cannot be hold as bad in law. He thus submits that the order passed u/s 153A r.w.s. 143(3) of the Act was well within the juri iction and in accordance with law and therefore, he prayed for the confirmation of the same. 8. Heard the contentions of both the parties and perused the material available on record. From the perusal of the assessment order, it is clearly evident that AO has passed the said order u/s 153A r.w.s. 143(3) of the Act. It is further seen that in the approval letter signed by Addl. CIT, Central Range-5, New Delhi, he also referred the letter of the AO dated 17.08.2022 alongwith which AO submitted draft assessment order for seeking approval for the assessment order for AY 2020-21 u/s 153A r.w.s. 143(3) of the Act. The approval granted by Addl. CIT dated 18.08.2022 is reproduced as under:-
From the perusal of eh above approval, it is seen that in para 3 of the said approval, the Addl.CIT had granted approval for the order to be passed u/s 153A r.w.s 143(3) of the Act. This being so, we are not in agreement with the argument of Ld.CIT DR that it is typographical error rather the approval given by Adl. CIT was in mechanical manner without even looking to the section under which the order is proposed to be passed by AO.
8.1 The Hon'ble Orissa High Court in the case of ACIT vs
Serajuddin & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act. The Hon’ble Orissa High Court made wide ranging observations towards the manner and legality of approval under s. 153D of the Act. The Hon'ble High Court inter- alia observed that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justifiable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is not even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that 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).
2 The Hon’ble Allahabad High Court in the case of CIT(Central) vs Shri Raj Kumar Jaiswal & Smt. Rekha Jaiswal and Shri Rak Dayal Jaiswal (supra) has held that where search is conducted during FY 2005-06 relevant to AY 2006-07, the assessment cannot be completed u/s 153A of the Act as the concept of block assessment as defined in section 158B of the Act included the period upto the date of search and the year of search is to be assessed u/s 143(3) of the Act.
3. Therefore, in view of the above facts and by respectfully following the order of the hon’ble high courts, in our considered opinion, assessment order passed u/s 153A r.w.s. 143(3) of the Act for the search year is not in accordance with the provisions of law and, therefore, is bad in law. Further the approval granted by ld. Adl. CIT is mechanical approval, thus, applying the ratio of judgements delivered as noted above, the assessment order based on ritualistic approval stands vitiated and thus, quashed by allowing Ground of appeal No. 1 of the Assessee.
Since we have allowed the legal ground of appeal taken by the assessee thus other grounds of appeals become academic and thus not adjudicated. 10. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 02.06.2025. (SATBEER SINGH GODARA)
JUDICIAL MEMBER
Date:- 28.08.2025
*Amit Kumar, Sr.P.S*