S. P. SINGLA CONSTRUCTIONS PRIVATE LIMITED,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CHANDIGARH

आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ,चÖडीगढ़
IN THE INCOME TAX APPELLA TE TRIBUNAL
CHANDIGARH BENCH, ‘B’, CHANDIGARH

BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT &
DR KRINWANT SAHAY, ACCOUNTANT MEMBER

ITA Nos.140 to 145/CHD/2024
A.Ys. : 2013-14 to 2018-19

S.P. Singla Constructions
Private Limited,
1006-1007, 10thFloor, Pearls,
Best Height-1,
Netaji Subhash Place,
Pitampura,
New Delhi
Vs.
बनाम

The DCIT,
Central Circle-1,
Chandigarh

èथायीलेखासं./PAN No: ABBPM9387N
अपीलाथȸ/APPELLANT

Ĥ×यथȸ/REPSONDENT

Stay Nos 16 to 20/Chd/2024
( In ITA Nos. 141 to 145/CHD/2024)
A.Ys. : 2014-15 to 2018-19

S.P. Singla Constructions Private
Limited,
1006-1007, 10thFloor, Pearls,
Best Height-1,
Netaji Subhash Place,
Pitampura,
New Delhi
Vs.
बनाम

The DCIT,
Central Circle01,
Chandigarh

èथायीलेखासं./PAN No: ABBPM9387N

(HYBRID MODE)

Ǔनधा[ǐरतीकȧओरसे/Assessee by : Shri Ashwani Kumar, CA,
Shri Aditya Kumar, CA
Ms. Muskan Garg, CA and Ms. Deepali Aggarwal, CA

राजèवकȧओरसे/ Revenue by : Smt. Kusum Bansal, CIT DR

सुनवाईकȧतारȣख/Date of Hearing

:
01.01.2025
उदघोषणाकȧतारȣख/Date of Pronouncement
:
17.01.2025

140-Chd-2024 & Others –
S.P. Singla Constructions

आदेश/Order

PER BENCH:

These six appeals by Revenue are arising out of common order of Commissioner of Income Tax (Appeals)-5, Ludhiana in appeals Nos.
10329/120627/11070/11314/11718/10621/CIT(3)/GGN/2012-13/2013-
14, 2014-15/2015-16/2016-17/2017-18 dated 10.01.2024. Assessments were framed by DCIT, Central Circle-1, Chandigarh for the assessment years
2013-14 to 2018-19 vide orders u/s 143(3) read with section 153A of the Income Tax Act, 1961 (in short 'the Act') of even date 02.07.2021. 2. At the outset, ld. Counsel for the Assessee stated that he want to argue legal issue raised by the Assessee first i.e. with regard to the approval granted by Addl.CIT u/s 153D of the Act which is mechanical in nature and hence assessments deserves to be quashed. For this issue, the ld. Counsel for the Assessee drew our attention to Grounds raised by the Assessee in all the six appeals i.e. Ground No.6. This issue is raised in all these appeals are identical. Hence, we will take the Grounds and facts from assessment year
2013-14 in ITA No. 140/Chd/2024 and will decide this common issue in all six years.

140-Chd-2024 & Others –
S.P. Singla Constructions before passing the impugned order was mechanical in nature and deserved to be quashed.”

140-Chd-2024 & Others –
S.P. Singla Constructions

Sl. No.
Relevant section (s) of IT / Act
Issue
Ground of appeal

That the assessment framed is bad and in facts in as much as the approval granted by Learned
Additional
Commissioner before passing the impugned assessment order was mechanical in nature and thus the whole assessment is liable to be quashed.

Similarly, the Assessee also raised this ground in other years and CIT(A) has reproduced the ground on this issue in this common order.

E-mail.Chandigarh.dcit.cen1@incometax.gov.in Phone 0172-2544217
No. DCIT/CC-I/CHD/2023-24/581

Dated 7.11.2023

140-Chd-2024 & Others –
S.P. Singla Constructions

The Commissioner of Income tax (Appeals-3).
Gurgaon.

(Through Proper Channel)

To Sir.

Sub : Submission of remand report in matter of appellate proceedings in the case of M/s. S.P,
Singla Construction Pvt. Ltd. - PAN: AAGCS5773B for the AY 2013-14 to 2018-19 -regarding -

Kindly refer to your office letter No. CIT(A)-3/GGN/2023-
24/135 dated 22.08.2023 wherein the undersigned has been directed to submit remand report in respect of supplementary submissions filed for the AY 2013-14 to AY 2018-19 by the appellant (M/s. S.P. Singla Construction Pvt. Ltd.) before your good office.

The report is submitted for your kind consideration.

Yours faithfully, (Dr. Ankit Kumar Aggarwal)
Dy. Commissioner of income tax.
Central Circle-I,
Chandigarh”

140-Chd-2024 & Others –
S.P. Singla Constructions

“To,

The Commissioner of Income Tax (Appeals)-3
Gurgaon

Sub : M/s S. P. Singla Constructions Private Limited,

Panchkula ...

Assessment Years 2013-14 to 2018-19 ... PAN :
AAGCS5773B

Sir,

Reference your letter dated 16.11.2023 along with Remand Report of the Learned Assessing Officer dated
07.11.2023. ………………………………………………………………..

Further the approval u/s 153D is statutory in nature granted pursuant to the specific provisions of section 153D and is not a mere administrative exercise.

The power of "approval"
vested in the Addl
Commissioner u/s 153D entails an application of mind while perusing the assessment record, the issues raised by the Assessing Officer and the procedure followed in making the assessment.

Accordingly, since it arises from a specific provision of law the approval granted u/s 153D falls within the purview of "approvals" and within the scope of the "Assessee or any other person", as envisaged in Circular No. 19/2019 issued by Central Board of Direct Taxes.

The act of granting approval u/s 153D Of the Act is not a mere internal process related to the administrative functioning of the Department, but a quasi-judicial function mandated by specific provisions of the Act with an underlying requirement of it being based on due application of mind and cogent reasoning. In fact, it was also the 140-Chd-2024 & Others –
S.P. Singla Constructions argument of the appellant that the approval so passed was without any application of mind, to which there has been no response.

The approval postulated in section 153D of the Act is a manifestation of the legislative intent to make it part of the statutory process that, considering the underlying complexities, assessments in search cases should made with the prior approval of the superior authority by due application of mint to the materials and other circumstances.

This being the situation, approval u/s 153D by an income-tax authority is reflective of the act of conforming, rectifying, sanctioning or convention to an act or thing done by another authority in exercise of a statutory mandate and is not an internal administrative process of the Department but the exercise of a quasi-judicial function.

…………………………………………………………………..

It is, thus, prayed that keeping in view the import of submissions made above, the appeal may kindly be adjudicated accordingly.

Thanking you,
Yours faithfully ( Ashwani Kumar)
C.A. Counsel for the appellant
End.: As above
Dated : 22.11.2023”

140-Chd-2024 & Others –
S.P. Singla Constructions

INCOME TAX DEPARTMENT
Office of Deputy Commissioner of Income ta, , C.R. Building, Ground Floor, Sector 17-E,
Chandigarh

Phone 0172-2544217 Fax 2544217 E-
Email.Chandigarh.dcit.cen1@incometax.gov.in No. DCIT/CC-I/CHD/2021-22/285

Dated 15.06.2021

To Addl. Commissioner of Income Tax,
Range Central, Chandigarh

Sir,

Sub: Draft assessment order in the case of M/s S.p.Singla
Construction Pvt Ltd, 1006-1007, 10th Floor, Pearls Best Height-1,
NetajiSubhas Place, Pitampura, Delhi (PAN AAGCS5773B) for the A.Y. 2016-17 – Regarding.

Kindly find enclosed herewith draft assessment order in the aforementioned case for the A.Y. 2016-17 framed u/s 143(3) r.w.s
153A of the Income Tax Act, 1961. Your kind approval under section 153D for passing of assessment orders in this case is solicited. Assessment record of the Assessee is also forwarded for your kind perusal.

Yours faithfully, Deputy Commissioner of Income
Tax,
Central Circle-1, Chandigarh

Encl: As above.”

140-Chd-2024 & Others –
S.P. Singla Constructions

140-Chd-2024 & Others –
S.P. Singla Constructions

Para 1.3
On receipt of the appraisal report and seized material, the Assessing Officer and Range Head should jointly scrutinize the appraisal report and seized material and prepare an Examination Note to decide.

Para 2.2 If considered necessary, issue of directions u/s 144A of the Act should be given by the Range
Head.

Para 3.2 The final show cause notice should be prepared in consultation with the Addl. CIT.

140-Chd-2024 & Others –
S.P. Singla Constructions with him periodically and seeks his guidance. In this case, it is relevant to mention here that both the AOs and Addl. CIT are situated in the same building (in adjacent rooms to each other). Thus from facts of the case, it is evident that draft assessment order is not put before the Addl. CIT by the AO at the last stage of the assessment proceedings; rather the AO prepares the draft order in consultation, discussion and under direct guidance taken periodically from the Addl. CIT.
It is also relevant to mention here that issues involved in the draft assessment orders for all the above assessment years from 2013-14 to 2018-19 were common in nature; all the draft assessment orders were common in nature. Therefore, the Addl. CIT was to go through the common issues involved for various years and accordingly, it cannot be said that just because the Addl. CIT accorded the approval in just one day; therefore, the said approval was mechanical in nature and without application of mind. In the facts of the case, the Addl.
CIT was seized of various issues covered in the draft assessment orders right from beginning of the assessment proceedings. The approval u/s 153D for various assessment years were accorded after due examination and verification by the Range Head. Therefore, the allegation of the appellant that the approval was granted in a mechanical manner is without any substance.

Reliance is placed on the judgment of Hon'ble Karnataka High
Court in the case of Rishabhchand Bhansali v. DCIT, 267 ITP
577, wherein it is held as under:

"4.2
…….thirdly the order passed by the Joint
Commissioner granting previous approval under the proviso to section 158BG is in exercise of administrative power on being satisfied that the order of assessment has been made in accordance with the provisions of Chapter XIV-B. The previous approval is purely an internal matter and it does not decide upon any rights of the assessee. The Joint

140-Chd-2024 & Others –
S.P. Singla Constructions

Commissioner, while examining the matter under the proviso to section 158BG does not examine or adjudicate upon the rights or obligations of the assessee, but only considers whether the Assessing Officer has fulfilled the requirements of Chapter XIV".

Aggrieved, the Assessee is in appeal before Tribunal.
7. Before us, ld. Counsel for the Assessee filed copies of approval granted in each of the years i.e. the approval granted by Addl. CIT for these six assessment years. The ld. Counsel for the Assessee drew our attention to the approval and stated that the draft assessment order was sent to JCIT on 15.6.2021 along with assessment record to seek the approval of the JCIT u/s 153D of the Act which was granted by JCIT on 19.6.2021. The ld.
Counsel for the Assessee stated and read out the approval, which is in Hindi language and the same is being reproduced from A.Y. 2013-14 as under: -

140-Chd-2024 & Others –
S.P. Singla Constructions

140-Chd-2024 & Others –
S.P. Singla Constructions

“Sub :-Draft Assessment Order in the case of M/s SP Singla
Construction Pvt.Ltd., 1006-1007, 10th Floor Pearls Best
Height-1, Netaji Subhas Place Pitampura, Delhi (PAN-
AAGCS5773B) for the A.Y. 2013-14 – Regarding-

Kindly find enclosed herewith draft assessment order in the aforementioned case for the A.Y. 2013-14 framed u/s 143(3) r.w.s. 153A of the Income Tax Act, 1961. Your kind approval under section 153D for passing of assessment orders in this case is solicited. Assessment record of the assessee is also forwarded for your kind perusal.”

140-Chd-2024 & Others –
S.P. Singla Constructions

140-Chd-2024 & Others –
S.P. Singla Constructions

140-Chd-2024 & Others –
S.P. Singla Constructions but he cannot direct the AO as to how assessment in a particular manner is to be made and which document is to read and how. He cannot be a party to framing of assessment because assessment is always framed by the Assessing Officer under the scheme of Income Tax Act. The assessment process is mentioned in the provisions of section 153A of the Act, which means that the assessment is to be framed by the Assessing Officer only being a quasi-judicial authority. From the very provision of section 153A of the Act, it is clear that the assessment is a domain of only the Assessing
Officer and not any other authority under the Income Tax Act. Now, on facts, whether in the present case the JCIT can interfere in the regular assessment. We noted that this issue is dealt by Delhi Tribunal in ITA
No.2503 & 2693/Del/2017 and C.O. No.9/Del/2022 in the case of SEH
Realtors Pvt.Ltd., Order dated 23rd July, 2024, wherein the entire scheme is discussed in paragraph Nos. 8 to 10, as under :-

“8. We find as per the scheme of the Act, for framing search assessments, the Ld. AO can pass the search assessment order u/s 153A or u/s 153C of the Act only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the ld. JCIT, in terms of section 153D of the Act. This is a mandatory requirement of law. The said approval granting proceedings by the ld. JCIT is a quasi judicial proceeding requiring application of mind by the ld. JCIT judiciously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme of the Act, it is the bounden duty of the Ld. AO to seek to place the draft assessment order together with copies of the seized documents before the ld.
JCIT well in time much before the due date of completion of search assessment. The ld. JCIT is supposed to examine the seized documents, questionnaires raised by the Ld. AO on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Ld. AO and the conclusions drawn by the Ld.
AO vis- à-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, are to be performed by the ld.
JCIT in a judicious way after due application of mind. Even though as vehemently argued by the Ld. CIT-DR, the ld. JCIT is involved with the search

140-Chd-2024 & Others –
S.P. Singla Constructions assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the ld. JCIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld.
AO in the draft assessment order. The copy of the appraisal report submitted by the Investigation Wing to the Ld. AO and ld. JCIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from ld. JCIT u/s 153D of the Act.
The ld. JCIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation
Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the Ld.
AO as well as the ld. JCIT to even ignore the conclusions drawn in the appraisal report by the Investigation Wing and take a different stand in the assessment proceedings, the fact of ld. JCIT getting involved in the search assessment proceedings right from the receipt of copy of appraisal report, as argued by the Ld. CIT DR, has no substance. In other words, irrespective of the conclusions drawn in the appraisal report by the Investigation Wing, both the Ld. AO and the ld. JCIT are supposed to independently apply their mind in a judicious way before drawing any conclusions on the contents of the seized documents while framing the search assessments. As far as the argument of the Ld. CIT DR that the details were normally filed by the assessee at the last moment is concerned, the ld. AO has got every right to reject the said replies if not filed within the stipulated time. It is not the case of the revenue that the details were filed by the assessee in the instant case at the last moment.
Even if it is so, as stated above, it is the prerogative of the ld. AO to accept the said letter containing details or reject the same as it was not filed within the stipulated time. On the contrary, if the ld. AO himself grants time to the assessee to furnish the details till the last moment, then no fault could be attributed to the assessee. In such circumstances, the only irresistible conclusion that could be drawn is that the ld. AO is not serious about the statutory deadlines provided in the Act. In our considered opinion, if the arguments of the Ld. CIT DR are to be appreciated that the ld. JCIT need not apply his mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose. The law provides only the Ld. AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the ld.
JCIT to grant judicious approval u/s 153D of the Act to the draft assessment orders placed by the Ld. AO.

140-Chd-2024 & Others –
S.P. Singla Constructions

JCIT on 27.03.2015 u/s 153D of the Act. The said approval letter clearly states that a letter dated 27.03.2015 was filed by the Ld. AO before the ld.
JCIT seeking approval of draft assessment order u/s 153D of the Act. The ld.
JCIT has accorded approval for the said draft assessment order on the very same day i.e. on 27.03.2015 for various assessment years for 232 files on a single day. In any event, whether is it humanly possible for an approving authority like the ld. JCIT to grant judicious approval u/s 153D of the Act for all the assessment years on a single day is the subject matter of dispute before us. Further, we find that similar issue has been addressed by the Hon'ble Juri ictional High Court in the case of PCIT vs. Anju Bansal in ITA
368/2023 order dated 13.07.2023 wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. The relevant operative part of the said order is reproduced below:-

"12. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error.

"17.1 However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs.87,20,580/-, Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560/- had he applied his mind. The addition of Rs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes .

140-Chd-2024 & Others –
S.P. Singla Constructions opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act.

In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 143(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed".
[Emphasis is ours]

Stay Application Nos.16 to20/Chd/2024
(in ITA Nos.141 to145/Chd/2024):-

140-Chd-2024 & Others –
S.P. Singla Constructions

आदेशकȧĤǓतͧलͪपअĒेͪषत / Copy of the order forwarded to :
1. अपीलाथȸ/ The Appellant
2. Ĥ×यथȸ/ The Respondent
3. आयकरआयुÈत/ CIT
4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयआͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH
5. गाड[फाईल/ Guard File
आदेशानुसार/ By order,

सहायकपंजीकार/