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Facts
A search under Section 132 of the Income Tax Act was conducted on the premises of S.P. Singla Constructions Pvt. Ltd. Assessments were framed under Section 153A read with Section 143(3). The assessee challenged the approval granted by the Additional Commissioner of Income Tax under Section 153D, alleging it was mechanical and without application of mind.
Held
The Tribunal held that the approval granted by the Additional Commissioner under Section 153D was a mechanical exercise without due application of mind. This rendered the assessment orders invalid. Consequently, the appeals were allowed.
Key Issues
Whether the approval granted by the Additional Commissioner under Section 153D of the Income Tax Act was validly granted with due application of mind, or if it was a mechanical exercise that vitiates the assessment order.
Sections Cited
132, 153A, 143(3), 153D, 139(5), 80IA, 143(2), 142(1), 144A, 158BG, 292B, 144BA
AI-generated summary — verify with the full judgment below
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.
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 and will decide this common issue in all six years.
3. The relevant Ground No. 6 reads as under:- “6. That the Learned CTT(A) gravely erred in upholding the validity of the assessment order particularly when the approval granted by the beamed Additional Commissioner of Income Tax u/s 153D of the Income Tax Act, 1961 140-Chd-2024 & Others – S.P. Singla Constructions 3 before passing the impugned order was mechanical in nature and deserved to be quashed.”
Brief facts are that a search u/s 132 of the Act was conducted at the business and residential premises of S.P. Singla Constructions Pvt. Ltd along with other S.P. Singla Group of cases on 09.08.2018. Search warrant u/s 132 of the Act were executed in the name of Assessee in various premises, which are mentioned in the assessment order as well as the order of the CIT(A) at pages 2 and 3. For A.Y. 2013-14 the Assessee filed its original return of income on 30.09.2019 declaring an income of Rs. 31,45,39,190/- and the same was revised u/s 139(5) of the Act on 21.08.2014 declaring an income of Rs. 31,45,39,190/-. Accordingly, notice u/s 153A of the Act, in consequent to the search conducted, was issued and in response to notice u/s 153A of the Act, the Assessee e-filed its return of income on 02.12.2019 declaring at Nil income after claiming deduction of Rs. 31,45,39,191/- u/s 80IA of the Act. Notices u/s 143(2) and 142(1) of the Act were issued through ITBA system. The A.O. finally completed assessment u/s 143(3) r.w.s. 153A of the Act vide order dated 02.07.2021 assessing the income at Rs. 31,45,39,191/- Aggrieved, the Assessee preferred appeal before ld. CIT(A).
Before CIT(A), the Assessee raised the issue of approval granted by Addl. CIT u/s 153D of the Act and stated that the approval granted by Addl. CIT is mechanical in manner. The CIT(A) has reproduced the ground raised by the Assessee at page 4 of his order. The relevant page reads as under:
140-Chd-2024 & Others – S.P. Singla Constructions 4 Relevant Issue Ground of appeal Sl. No. section (s) of IT / Act 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.
The CIT(A) dealt with this issue as under:-
38.2 The appellant has challenged the approval given by Addl. CIT u/s l53D of the Act being mechanical in nature. Reliance was placed upon the decision of Hon'ble ITAT Chandigarh in the case of Inder International vs. ACIT ITA No. 1573/CSD/2018……………… 38.3. The above submissions were forwarded to the AO on 22.08.2023 to furnish remand report on the merits of the issues involved. The AO made available his report on 08.11.2023 which is reproduced as under:- “GOVERNMENT OF INDIA INCOME TAX DEPARTMENT Office of Deputy Commissioner of Income tax, Central Circle-1, Chandigarh Room No. G-03, C.R Building, Sector 17-E, Chandigarh 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 5 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.
2. The undersigned has considered the issue raised by the appellant in supplementary submissions filed before your good office. The relevant issue is that the Addl. CIT’s approval u/s 153D is issued without generating DIN in this case.
……………………………………………………….
The report is submitted for your kind consideration.
Yours faithfully, Sd/- (Dr. Ankit Kumar Aggarwal) Dy. Commissioner of income tax. Central Circle-I, Chandigarh”
38.4. The above report of the AO was made available to the appellant on 16.11.2023. In response to the same the submission of the appellant dated 23.11.2023 is reproduced as under:-
140-Chd-2024 & Others – S.P. Singla Constructions 6 “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 7 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 Sd/- ( Ashwani Kumar) C.A. Counsel for the appellant End.: As above Dated : 22.11.2023”
38.5. On consideration of facts of the case and material available on record, on this issue is found that the AO has forwarded the draft assessment orders to the Addl. CIT on 15.06.2021 alongwith assessment record to seek the approval u/s 153D of the Act which was accorded on 19.06.2021. The copies of the letters sent by the AO to the Addl. CIT and Addl. CIT to AO wherein approval was accorded are reproduced as under for reference for one of the assessment years for example 2016-17: “GOVERNMENT OF INDIA 140-Chd-2024 & Others – S.P. Singla Constructions 8 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, Sd/- Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh Encl: As above.”
140-Chd-2024 & Others – S.P. Singla Constructions 9 140-Chd-2024 & Others – S.P. Singla Constructions 10 38.6 It is worthwhile to reproduce certain paras of the guidelines for assessments in search and seizure cases issued by the CBDT vide F.No. 286/161/2006-IT (Inv.-II) dated 22.12.2006 which highlight the consultative approach between the Assessing Officer and the Range Head in search and seizure assessments.
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.
38.7 In view of the above the allegation of the appellant that the approval was a mechanical exercise without application of mind on his part is not correct as in Central Charges all search and seizure assessments are regularly supervised and monitored by the Range Heads periodically. The AO and the Range Head both have followed the instructions /guidelines of the Board for completion of the search and seizure assessments and the assessment order was finalized by the A.O. after obtaining approval u/s 153D of the Act from the Range Head. From the perusal of contents of the letter of the AO sent to the Addl. CIT and draft assessment order, it is observed that the AO has forwarded the assessment record with the same. The Addl. CIT has considered the issues involved in the draft assessment order and made the perusal of assessment record. The allegation of the appellant that the action of the Addl. CIT, Chandigarh in granting approval was a mere mechanical exercise without any independent application of mind is without any basis. It is stated that in the Central Charges group cases where search u/s 132 of the Act conducted, are centralized. The Addl. CIT as Range Head is actively involved in assessment of all such cases from beginning and at all stages of search and seizure assessment. The Assessing Officer discusses various issues 140-Chd-2024 & Others – S.P. Singla Constructions 11 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.
38.8 Without prejudice to the above, the approval granted by the Addl. CIT is in the nature of administrative power. The Range Head while examining the matter u/s 153D 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 section 153A.
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 12 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 38.9 In view of the above the allegation of the appellant that the Addl. CIT, Gurgaon has granted the approval u/s 153D in mechanical manner and without application of mind has no meaning as the approval is an administrative action which is required to be based on existence of set of circumstances and on subjective satisfaction as per the provisions of the Act. Further, approval u/s 153D being an official act provided under the statute, it is to be presumed that before according approval, the Range Head has looked into the records, applied his mind and he did not find any reason to disapprove the order passed by the Assessing Authority and thereafter he has accorded approval.
38.10 In the given facts of the case, it can be said that the Addl. CIT has applied his mind on the issue involved and has accorded his approval in accordance with the provisions of the Act. Such approval cannot be said as mechanical and without application of mind. Accordingly, such ground of appeal is hereby dismissed for AYs 2013-14 to 2018-19.”
Aggrieved, the Assessee is in appeal before Tribunal.
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 13
The relevant letter dated 15.6.2021 by virtue of which draft assessment was transmitted to the Addl. CIT by the Assessing Officer is also enclosed and the relevant portion reads as under: - 140-Chd-2024 & Others – S.P. Singla Constructions 14 “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.”
9. The ld. Counsel for the Assessee stated that the CIT(A) erred in pointing out that the Addl. CIT has applied his mind by supervising and monitoring all the search and seizure case periodically. The ld. counsel argued that the approval under section 153D of the Act starts from the day of drafting of assessment order. He pointed out the relevant provision of section 153D, which reads as under:- “Prior approval necessary for assessment in cases of search or requisition. 153D. 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 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 Principal Commissioner or Commissioner under sub-section (12) of section 144BA”
140-Chd-2024 & Others – S.P. Singla Constructions 15 10. In view of the above provision, the ld. Counsel for the Assessee stated that the CIT(A) has explained the procedure contained in Instruction No. F.No. 286/161/2006-IT(Inv.II) dated 22.12.2006 wherein, the procedure as to how the assessment of search and seizure cases is to be completed. The ld. Counsel for the Assessee referred the entire instructions. He also referred to another Instruction No. F.286/57/2002-IT (Inv. II) dated 03.07.2002 issued by CBDT.
The ld. Counsel stated that these instructions carry procedure which is to be adopted for completing block assessments and it does not talk about approval to be granted by the Addl. CIT /Joint CIT. He stated that the CIT(A) while adjudicating this issue has only discussed the same procedure that the JCIT being Range Head was involved in the entire process of assessment. He argued that the Legislature in its wisdom has introduced this provision by the Finance Act, 2007 w.e.f. 01.06.2007 for prior approval of search assessment order by higher authority like JCIT. Learned Counsel argued that the act of granting approval under Section 153D of the Act is not a mere internal process relating to the administrative functioning of the Department but is a quasi-judicial function mandated by the provisions of the Act with an underlying requirement of it being based on due application of mind and cogent reasoning. Hence, he argued that from the very approval, it is very clear that the approval granted by the JCIT was mechanical in nature and deserves to be quashed.
140-Chd-2024 & Others – S.P. Singla Constructions 16 12. On the other hand, the ld. CIT DR Smt Kusum Bansal supported the order of CIT(A) and argued that the CIT(A) is correct in adjudicating the issue that the approval granted by JCIT u/s 153D of the Act is after application of mind for the reason that the JCIT being Range Head and all search and seizure assessments are regularly supervised and monitored by the Range Heads as well as concerned PCIT. She argued that the Assessing Officer as well as the Range Head, both, has to follow the instructions for completing assessment in search cases as per instructions of CBDT canvassed by the ld. Counsel for the Assessee. The ld. CIT DR pointed out from the letter written by DCIT, Central Circle-1, Chandigarh dated 15.06.2021 that the draft assessment order in the case of Assessee was sent and enclosures were assessment records. She argued that JCIT vide approval dated 19.06.2021 has gone into the assessment records and that is part of the approval granted by the JCIT that the concerned assessment record in Volume I without pagination is returned herewith. She argued that once the approval is granted by the JCIT after examining the assessment record, it is the proper compliance of provisions of section153D of the Act. In the present case, she stated that approval u/s 153D of the Act is after due examination of records including seized material as well as verification by JCIT i.e. the Range Head. Hence, she supported the order of the CIT(A) on this issue.
13. We have heard the rival contentions and gone through the facts and circumstances of the case. We have gone through the order of CIT(A) who has adjudicated this issue and the relevant findings of the CIT(A) are 140-Chd-2024 & Others – S.P. Singla Constructions 17 produced above in the above para 6 of this order. We have gone through this order and noted that CIT(A) has discussed the entire search procedure and how assessment in the search cases are to be carried out in terms of CBDT Instruction F. No. 286/161/2006-IT (Inv.II) dated 22.12.2006 and F No. 286/57/2002-IT (Inv.II) dated 03.7.2002.
The Assessee before us has filed the details of approval granted by JCIT u/s 153D of the Act and the relevant record, the relevant dates and events mentioned by the assessee, which reads asunder;- AY Date of Date of Date of Order No of pages in Sending Approval by the Order Additional Assessment Commissione Order r 2013-14 15/06/2021 19/06/2021 02/07/2021 103 2014-15 15/06/2021 19/06/2021 05/07/2021 135 2015-16 15/06/2021 19/06/2021 06/07/2021 237 2016-17 15/06/2021 19/06/2021 06/07/2021 298 2017-18 15/06/2021 19/06/2021 09/07/2021 244 2018-19 15/06/2021 19/06/2021 12/07/2021 419 2019-20 15/06/2021 19/06/2021 12/07/2021 343
These are simplicitor admitted facts. From the above chart, the ld. counsel has pointed out that JCIT had received the search material which is running into 10000 or more pages seized during the course of search and thereafter the explanations filed by the Assessee during the assessment proceedings. Even the assessment orders for these assessment years running from 103 minimum to419 of maximum pages. We noted that the JCIT being Range Head may be supervisory head for search assessments 140-Chd-2024 & Others – S.P. Singla Constructions 18 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 & 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 19 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.
Let us now examine whether in the aforesaid background of the scheme of the Act, whether the approval in terms of section 153D of the Act has been granted by the ld. JCIT in a judicious way after due application of mind or not, in the instant case. We have gone through the approval granted by the ld. 140-Chd-2024 & Others – S.P. Singla Constructions 20 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 Jurisdictional 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. 12.1 More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order.
In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: "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 . 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (supra). In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl. CIT, in our 140-Chd-2024 & Others – S.P. Singla Constructions 21 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]
14. In this appeal, we are required to examine whether any substantial question of law ari ses 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."
10. The ld. AR also placed on record the recent decision of Hon‟ble Jurisdictional High Court in the case of PCIT vs Shiv Kumar Nayyar reported in 163taxmann.com9 (Del) wherein it was held that where order of approval u/s 153D of the Act for relevant assessment year was granted by Additional Commissioner who had granted approval for 43 cases on a single day without perusing the draft assessment orders at all and without an independent application of mind, impugned assessment order was rightly declared to be illegal by Tribunal.”
16. In view of the above, we are of the view that the power of approval under Section 153D of the Act 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 with JCIT under Section 153D of the Act entails an application of mind while perusing the assessment records, seized records, replies of assessee and issues raised by the AO and the procedure followed for framing of assessment order. The act of granting approval under Section 153D of the Act is not a mere internal process relating to administrative functioning but is a quasi-judicial function mandated by specific provisions of the Act with an underlying requirement of it being based on due application of mind. This being the situation, the approval to be granted under Section 153D of the Act for passing of the 140-Chd-2024 & Others – S.P. Singla Constructions 22 assessment order by the JCIT is reflective of the Act of confirming, rectifying, sanctioning or convention to an act or thing done by another authority in exercise of the statutory mandate and is not an internal administrative process of the Department but the exercise of a quasi-judicial function. As in the present case, the assessee filed set of assessment orders, demand notice and the computation sheet issued by the same Assessing Officer and the approval granted by the JCIT under Section 153D of the Act, which clearly remarks as “2. इस संदभ� म�, आयकर अ�ध�नयम क� धारा 153D के तहत उपरो�त करदाता के मामले म� �नधा�रण वष� 2016-2017 के �ा�प �नधा�रण आदेश (Draft Assessment Order) को अनुमो�दत �कया जाता है। 3. �नधा�रण �रकॉड 1 volume (�बना �म सं�या) म� वा�पस �कया जाता है ।”
From the above noting (which are in Hindi), means that simplicitor approval of draft assessment order by the JCIT under Section 153D of the Act is clearly without application of mind as no verification of assessment records, seized material or the replies of the assessee were considered by the JCIT while granting approval. Hence, the approval is mechanical in nature and does not stand to the scrutiny of law. Hence, we quash the assessment order framed in consequence to approval granted under Section 153D of the Act.
Accordingly, this issue of assessee’s six appeals is allowed.
Stay Application Nos.16 to20/Chd/2024 (in to145/Chd/2024):-
As we have already allowed the assessee’s appeals on jurisdictional issue, the present stay applications have become infructuous and are, accordingly, dismissed.