DCIT,CENTRAL CIRCLE-2, LUCKNOW, LUCKNOW vs. RAKESH KUMAR PANDEY, GONDA

(A) For the sake of convenience and brevity these appeals and Cross Objections (“COs” for short) pertaining to the same assessee are hereby disposed of through this consolidated order. Grounds taken in these appeals and COs are as under:

, A.Y. 2021-22 (Revenue’s Appeal) , A.Y. 2020-21 (Revenue’s Appeal) C.O.No.27/Lkw/2024, A.Y. 2021-22 (Assessee’s C.O.) C.O.No.28/Lkw/2024, A.Y. 2020-21 (Assessee’s C.O.) , A.Y. 2014-15 (Assessee’s Appeal) , A.Y. 2015-16 (Assessee’s Appeal) , A.Y. 2016-17 (Assessee’s Appeal) , A.Y. 2017-18 (Assessee’s Appeal) , A.Y. 2018-19 (Assessee’s Appeal) , A.Y. 2019-20 (Assessee’s Appeal) , A.Y. 2022-23 (Assessee’s Appeal) , A.Y. 2015-16 (Revenue’s Appeal) , A.Y. 2016-17 (Revenue’s Appeal) , A.Y. 2022-23 (Revenue’s Appeal) I.T.(SS)A. No.460 /Lkw/2025, A.Y. 17-18 (Revenue’s Appeal)

(A.1) The Cross Objection vide C.O.No.28/Lkw/2024 has been filed by the assessee, beyond time limit prescribed under section 253(3) of IT Act. The assessee has submitted application for condonation of delay in filing of the Cross Objection; pleading that the delay was unintentional and beyond the control of the assessee and has requested to admit the Cross Objection for hearing. The learned Departmental Representative for Revenue did not express any objection to assessee’s application for condonation of delay in filing of the Cross Objection. In view of the foregoing, and in specific facts and circumstances of the present Cross Objection before us, the delay in filing of this Cross Objection is condoned; and the Cross Objection is admitted for hearing, on merits.

(B) In the course of appellate proceedings in Income Tax Appellate Tribunal, (“ITAT” for short), following paper book were filed from the assessee’s side:

(B.1) Further, a consolidated synopsis, common for all the appeals and COs before us, was filed from assessee’s side; which is reproduced below for the ease of reference:

“Before, The Hon’ble ITAT, Lucknow Bench ‘A’, Lucknow Hon’ble Members, Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B)

Subject:-Consolidate Synopsis: 1.

& 398/LKW/2025 (D) AY 2015-16 3. (A) & 399/LKW/2025 (D) AY 2016-17 4. ITA No 350/LKW/2025 (A) & 460/LKW/2025 (D) AY 2017-18 5. ITA No 351/LKW/2025 (A) AY 2018-19 6. ITA No 352/LKW/2025 (A) & 402/LKW/2025 (D) AY 2019-20 7. ITA No 608/LKW/2024 (D) & CO 28/LKW/2024 AY 2020-21 8. ITA No. 557/LKW/2024 (D) & CO 27/LKW/2024 AY 2021-22 9. ITA No 353/LKW/2025 (A) & 405/LKW/2025 (D) AY 2022-23 In above said pending appeals filed by Appellant and Revenue substantially issues are common, therefore, consolidated synopsis are prepared based on issues involved w.r.t. respective year. Issue No. 1 – AY 2014-15 TO AY 2022-23 1. That a search and seizure operation u/s 132 of the Income Tax Act was carried out on 05.02.2022 on the business and residential premises of M/s Alok Construction being proprietary concern of Appellant. The assessee is Government Contractor and during the relevant period, the assessee engaged in proprietorship business of construction of road etc. in semi urban area from contract work provided by the UPPWD, under the name and style of M/s Alok Construction.

2. The books of accounts for relevant year were regularly maintained and audited and ITRs alongwith TAR. were filed within due date in respective years with following financial details:-

AY Turnover Profit Assessee AO CIT(A) Remark % of % of % of Profit Profit Profit 2014-15 9,95,21,021 16,42,215 1.65 11% 7% Year of inception of proprietary business. 2015-16 13,45,79,821 81,66,298 6.07 11% 7% 2016-17 48,75,65,110 2,74,84,960 5.64 11% 7% Erstwhile Scrutiny u/s 143(3) dated 14.12.2011 by JAO and adhoc addition of Rs. 25,00,000/- 2017-18 61,73,38,236 3,84,84,570 6.23 11% 7% 2018-19 24,44,22,212 1,58,87,444 6.50 11% 7% Erstwhile Scrutiny u/s 143(3) dt. 23.04.2021 by NeFAC and adhoc addition of Rs. 25,00,000/- and 43B disallowances of Rs. 2,57,43,209/-, Ld. CIT(A) allowed the appeal against original order. 2019-20 68,80,79,147 4,52,65,423 6.58 11% 7% 2020-21 1,59,98,27,836 10,07,00,526 6.29 11% 7% 2021-22 1,68,08,35,131 17,03,38,176 10.13 11% 10.13% Addition on extra profit deleted. 2022-23 2,82,59,71,973 28,50,48,173 11% 9.68% Addition on extra profit deleted. That during the course of search proceeding in statement recorded u/s 132(4), dated 05/06.02.2022 assessee admitted following – That percentage of net profit shown of M/s Alok Construction is approximately 6% of its turnover. However, usual profit shown by other business entities of similar business is approximately 8%. (Q/Ans-17) That due to certain deficiency/incompleteness of records etc. it was admitted that percentage of profit shown (i.e. 6%) by assessee is below the usual profit (i.e. 8%). To cover up such suppressed income in preceding yearsupto AY 2020-21 assessee offered 10% net profit rate for AY 2021-22 and 2022-23 resulting to which additional income offered 16-17 crores approximately. Further, assessee while offering additional income has stated that additional income is offered to cover deficiencies in records for relevant year and preceding years and to cover unproven sundry creditors/remission of liabilities, apart from investment in properties. Further, no adverse inference may be drawn w.r.t. extra profits and seized documents for years prior to AY 2021-22. Further, at the time of the search proceeding for AY 2020-21 was under progress and issues arising from the search operation was also covered by Ld. AO in assessment proceedings. During the course of the assessment proceeding, assessee has provided all relevant information as required time to time with regard to purchase of material, business expenses and reconciliation of sales with VAT/GST return. However, AO only on usual observation of Tax Auditor in form 3CB has invoked provision of section 145(3) of the Act and estimated income according to provision of sec. 144 of the Act. It is relevant to mention that these are the general observation made by Auditor in TAR without adverse finding on particular transactions and figures, which are year wise reproduced for ready reference.

Observation of Auditor in TAR AY Para/ Page Observation of AO Remarks of Assessment Order 2014-15 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 22.09.2014, in Form No. 3CB has commented as follows: “a. Records necessary to verify personal nature of expenses not maintained by the assessee. b. Proper stock records are not maintained by the assessee. c. Valuation of closing stock is not possible. d. Figures shown under the head of Sundry Debtors, Sundry Creditors, Loans & Advances, Provisionsetc are subject to reconciliation and confirmation. Figures shown under the head of closing stock and cash in hand are physically verified by the proprietor of the firm. Fixed Assets as shown in the balance sheet are subject to verification. Details of TDS deducted and deposited could not be verified due to non- availability of receipts and challans. However, the assessee is liable for deduction of tax. The assessee did not provide information regarding deductions to be claimed under Chapter VI-A. e. GP ratio is not ascertainable from the financial statements prepared by the assessee. 2015-16 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 22.09.2015, in Form No. 3CB has commented as follows: “a. GP ratio is not ascertainable in such type of business. b. We have not found any documentary records available with the assessee to verify payments through account payee cheque. c. We have not found any record to verify personal nature expenses incurred by the management. d. We have not been provided with the stock records by the assessee. e. Valuation of closing stock is not possible as no proper records of stock has been maintained by the assessee and the value of the closing stock has been certified by the assessee himself. f. Balances of Sundry debtors and Sundry creditors are subject to verification. 2016-17 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 25.05.2016, in Form No. 3CB has commented as follows: “a. GP ratio is not ascertainable in such type of business. b. We have not found any documentary records available with the assessee to verify payments through account payee cheque. c. We have not found any record to verify personal nature expenses incurred by the management. d. We have not been provided with the stock records by the assessee. e. Valuation of closing stock is not possible as no proper records of stock has been maintained by the assessee and the value of the closing stock has been certified by the assessee himself. f. Balances of Sundry debtors and Sundry creditors are subject to verification. 2017-18 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 28.09.2017, in Form No. 3CB has commented as follows: “a. GP ratio is not ascertainable in such type of business. b. We have not found any documentary records available with the assessee to verify payments through account payee cheque. c. We have not found any record to verify personal nature expenses incurred by the management. d. We have not been provided with the stock records by the assessee. e. Valuation of closing stock is not possible as no proper records of stock hasbeen maintained by the assessee and the value of the closing stock has been certified by the assessee himself. f. Balances of Sundry debtors and Sundry creditors are subject to verification. 2018-19 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 22.09.2018, in Form No. 3CB has commented as follows: “a. GP ratio is not ascertainable in such type of business. b. We have not found any documentary records available with the assessee to verify payments through account payee cheque. c. We have not found any record to verify personal nature expenses incurred by the management. d. We have not been provided with the stock records by the assessee. e. Valuation of closing stock is not possible as no proper records of stock has been maintained by the assessee and the value of the closing stock has been certified by the assessee himself. f. Balances of Sundry debtors and Sundry creditors are subject to verification. 2019-20 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 28.10.2019, in Form No. 3CB has commented as follows: “a. GP ratio is not ascertainable in such type of business. b. We have not found any documentary records available with the assessee to verify payments through account payee cheque. c. Expenditure by way of personal nature was Nil as explained by the Assessee. However, the extent of personal use in case of cacr running and maintenance, Telephone Expenses etc. if any could not be ascertained for want of record. d. We have not been provided with the stock records by the assessee. Item wise Quantitative details of stock could not be furnished due to nature of business and large number of items. So, we are unable to give item wise quantitative details of stock in Para 35(b) of Form 3D. e. Valuation of closing stock is not possible as no proper records of stock hasbeen maintained by the assessee and the value of the closing stock has been certified by the assessee himself. f. Balances of Sundry debtors and Sundry creditors are subject to verification. 2020-21 4.1 / 2 4.1 follows: The Auditor, in his audit report dated 21.12.2020, in Form No. 3CB has commented as "a. GP ratio is not ascertainable in such type of business. b. Balances of Sundry Debtors and Sundry Creditors are subject to verification. c. The assessee has not obtained TAN, thus, we, are unable to comment on TDS provisions. d. We have not been provided with the stock records by the assessee. Item wise Quantitative details of stock could not be furnished due to nature of business and large number of items. So, we are unable to give the item wise quantitative details of stock in Para no. 35(b) of Form 3D. e. Valuation of closing assessee stock is not possible as no proper records has been maintained by the assessee and the value of the closing stock has been certified by the itself." 2021-22 4.1 / 2 4.1 follows: The Auditor, in his audit report dated 08.03.2022, in Form No. 3CB has commented as a. It is not possible to ascertain GP ratio in such type of business. b. As explained to us, entity has not maintained quantity wise reconciliation of stock. c. Sundry debtor, creditors and loans & advances are as per books of account only and are subject to reconciliation and confirmation. 2022-23 6.1 / 2 & 3 6.1 The Auditor, in his audit report dated 30.09.2022, in Form No. 3CB has commented as follows: “a. It is not possible to ascertain GP ratio in such type of business. b. Expenditure related to personal nature could not be ascertained for want of record. c. It is not possible for us to verify whether all loans and deposit taken or accepted u/s 269SS and the payments in excess the specified limit in section 269T have been made otherwise than by account payee cheque or account payee bankdraft, as the necessary evidence are not in possession of the assessee. The management certifies that all payments in excess of limit prescribed were made through account payee cheque/drafts or RTGS/NEFT. d. As explained to us, entity has not maintained quantity wise reconciliation of stock, however physical verification of stock has been conducted at the year end.

In this regard, it is relevant to mention that prior to date of search for AY 2016-17 & 2018-19 case of the appellant was completed under scrutiny by JAO & FAO respectively where assessment was completed u/s 143(3) after due verification of record. It is also relevant to mention that during the course of the search no incriminating material was found w.r.t. justification of enhancement of profit percentage. On the other side documents found and seized for different years of above said period were duly reconciled with either recorded in books of account relates to business of assessee or personal investments relates to investment in construction of house properties. In the assessment order of above said period the Ld. AO has not brought any single instance of incriminating material on the basis of which addition could have been made w.r.t. business income of assessee in support to justify increase profit percentile. In the assessment order the observation of the AO while estimating net profit @ 11% of Gross Receipt was simply based on Net Profit occurred by assessee @ 10.13% for AY 2021-22 in compliance of statement u/s 132(4) held during the search, higher percentage of profit for AY 2021-22 to AY 2022-23 only. The Ld. AO was highly unjustified while increasing the profit percentage and making the addition for AY 2014-15 to AY 2020-21 where no incriminating material was found w.r.t. addition made in these years. Reliance is placed on AbhisarBuildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)(For AY 2014-15 to AY 2019-20) Further, while estimating the profit percentile at 11% AO made reliance on profit estimated @11% in AY 2021-22 which is highly unjustified. In AY 2021-22 assessee himself offered profit percentile around 10% as per statement held u/s 132(4) for AY 2021-22 & AY 2022-23, with prior condition no adverse inference is drawn in years prior to AY 2021-22. Therefore, the whole additions on account of increase in profit percentile was made based on the statement of assessee which is not sustainable in the peculiar circumstances and in the eyes of law.

Reliance is placed on the followings:- • Principal Commissioner of Income-tax, (Central)-1 v. Forum Sales (P.) Ltd.* [2024] 160 taxmann.com 93 (Delhi) HIGH COURT OF DELHI “24. The series of judgments referred to hereinabove clearly allude to the settled position of law that the books of account have to be necessarily rejected before the AO proceeds to the best judgment assessment upon fulfillment of conditions mentioned in the Act. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee.

29. Admittedly, the addition of income as discussed in questions (B), (C) and (D) on estimate basis has been done without rejecting the books of account. In view of the aforesaid, we find that no substantial question of law arises in the present appeals.

• The Division Bench of the High Court of Bombay in the case of Pr. CIT v. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94/267 Taxman 429/2019 SCC OnLineBom 13359, had an occasion to consider the said question and the same was accordingly answered as under:- "11. We note that the books of account of the respondent were rejected by the Commissioner of Income-tax (Appeals) under section 145(3) of the Act. However, the Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of account to disregard the same. We note that the Commissioner of Income-tax (Appeals) in his order while rejecting the books of account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of the books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the respondent's records which would warrant rejection of the books and making a best judgment assessment. Thus, on facts the view taken by the Tribunal is a possible view. Therefore, no substantial question of law arises. Thus not entertained." • (Commissioner of Income-tax – I v. Sahu Construction (P.) Ltd.* [2014] 42 taxmann.com 419 Allahabad) “21. In the case of CIT v. Gian Chand Labour Contractors [2009] 316 ITR 127/[2008] 167 Taxman 265 (Punj. &Har.)], it was observed that no further separate deduction is allowable as per Sections 29, 144 and 145 of the Act. Relevant portion of the judgment reads as under:— "Section 145 of the Income-tax Act, 1961 provides for computation of income under section 29 on the basis of books of account and methods of accounting regularly followed by the assessee. However, where the Assessing Officer is not satisfied with the correctness or completeness of the books, he may reject them and estimate the income to the best of his judgment in accordance with the provisions of Section 144 of the Act. When an estimate is made to the best judgment of an Assessing Officer, he substitutes the income that is to be computed under section 29 of the Act. Once best judgment assessment is made by fixing a rate of net profit, the assessee's claim for deduction on account of expenses cannot be deemed to have been ignored. The net profit rate is applied after taking into consideration all factors and it accounts for all the deductions which are referred to under section 29 and are deemed to have been taken consideration while making such estimate." • Commissioner of Income-tax, Allahabad v. Target Construction Co. Ltd.*[2015] 55 taxmann.com 294 (Allahabad) IT: Where in case of government contractor engaged in construction of roads books of account was rejected, Tribunal, relying upon profit rates of preceding three years, was justified in estimating profits earned by assessee during relevant years at 5 percent of gross receipts Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (GP rate) - Assessment years 2004-05 and 2005-06 - Assessee-company was carrying out contract of construction of roads awarded by Government - Due to various discrepancies in books of account, Assessing Officer rejected same and estimated profit at 10 per cent of gross receipts - Tribunal relying upon profit rates of preceding three years, reduced profit earned during relevant year to 5 per cent of gross receipts - Where since assessee had not done any private construction work during assessment years in question, impugned order passed by Tribunal did not require any interference - Held, yes. [Paras 5 and 6] [In favour of assessee] • M/s OmshreeAgrotech Private Ltd. IT(SS)A No. 45 to 50/ PUN/2022 Held that book of accounts cannot be rejected only on surmise and lower profit declared by assessee. • Shri Ramesh Singh Ranavs DCIT Range-4, Lucknow Held that the action of the Ld. CIT(A) is justified for restricting the addition @ 6.5% of the net profit. As he has also considered the past history and also the reason as to why the net profit was estimated at 5%. It is pointed out that gross business receipts were high in that year comparing to the year under appeal. The assessee did not point out any infirmity in adopting such rate by filing credible evidence. The grounds raised in this appeal of the assessee lack merit, hence dismissed. • Manoj Gupta vs ACIT, Range-3, Lucknow Held where sales and purchase are verified books of account cannot be rejected and profit cannot be estimated. Further estimation of profit may be made only on the basis of always on past history only. It is also relevant to mention that in identical facts of AY 2020-21, AO estimated the net profit at 11% and at first appellate level vide order u/s 250 dated 08.08.2024 vide DIN ITBA/APL/S/250/2024-25/1067435183(1) profit was estimated at 7% after following observation:- 7.12 Considering the aforementioned discussion, case laws specially the judgment of Hon’ble HIGH COURT OF ALLAHABAD in the case of Commissioner of Income-tax, Allahabad v. Target Construction Co. Ltd and the fact that depreciation of Rs. 14,99,267/- has already been disallowed, the net profit rate of 11% applied by the Assessing Officer is too high when appellant has shown comparatively higher profit margin of 10.13% and 9.68% in subsequent years i.e. A.Y. 2021-22 and A.Y. 2022- 23 to cover up the deficiencies of unproved sundry creditors/remission of liabilities found during search proceeding. Therefore, I am of the considered view that it would be justified to apply net profit rate of 7% on the total turnover of Rs. 1,59,98,27,836/- which works out at Rs. 11,19,87,949/-. Since the appellant has shown income from business at Rs. 10,07,00,526/-, thus, the difference in profit works out at Rs. 1,12,87,423/-. Thus, the addition to the tune of Rs. 1,27,86,690/- (Rs. 1,12,87,423 + Rs. 14,99,267/-) deserved to be confirmed. Therefore, the addition to the extent of Rs. 1,27,86,690/- is confirmed and remaining addition of Rs.6,24,93,846/- (7,52,80,536-1,27,86,690) made by the Assessing Officer is hereby deleted. Thus, these grounds of appeal are partly allowed. Issue No. 2 – AY 2014

15. Ld. CIT(A)-3 sustained the addition Rs. 1201000/- (Rs. 4346000- 3135000) That assessee has acquired lease hold plot measuring at 781.40 sqm. situated at Khata no. 192/2,Gata no. 447/2, (Part) Civil line, Gonda purchased by assessee for consideration was Rs. 31,45,000/- from Smt. Pushplata Saran, Shri. Saurabh Saran, Shri. Shobhit Saran and Shri.Shresh Saran on 04/10/2013 against stamp duty value at Rs. 92,76,000/-. Thereafter, the said lease property was converted into freehold through registered deed on 24/10/2017. During the assessment proceeding of AY 2014- 15, AO has referred the valuation of said property u/s 50C/142A in response to which Valuation Officer, Allahabad has estimated the FMV of lease property as on 04/10/2013 at Rs. 43,46,000/- against actual consideration of Rs. 31,45,000/- vide valuation report dt. 14/06/2024. In this regard it is relevant to mention that assessee has already made payment of Rs. 31,45,000/- through banking channel in FY 2009-10, therefore, stamp duty value in 2009 was to be applied as per provision of sec. 56(2) of the Act. However, Valuation Officer erred on facts and law while applying the stamp duty value of 2009 and indexing thereafter. Resulting to which FMV is over valued. Further, in 2009 stamp duty value of said property was at Rs. 3000 per sq.mts. The said fact is overlooked by VO. Therefore if rate 2009 may be applied than the FMV of the land will be at Rs. 2344200/- (3000 X 781.4 sq. mtr) and cost of boundary wall Rs. 680000/- aggregatingRs. 3024200/- against the consideration of Rs. 3145000/-therefore the actual sale consideration is over & above the value of property being FMV as per provision of 56(vi)(2) without any revenue effect.

Therefore, addition sustained to the extent of Rs. 12,01,000/- u/s 56(2)(vii)(b) may kindly be deleted. Issue No. 3 – AY 2015-16 Ld. CIT(A)-3 sustained the addition Rs. 4738700/- (Rs. 7738700- 3000000) That assessee has acquired lease hold plot measuring at 1279.06 sqm. situated at Khata no. 192/2,Gata no. 447/2, (Part) Civil line, Gonda for consideration of Rs. 30,00,000/- against value for stamp duty of Rs. 1,84,26,000/- from Smt. Pushplata Saran, Shri. Saurabh Saran, Shri. Shobhit Saran and Shri.Shresh Saran on 02/02/2015. The said property was in continuation of property transaction held with same seller in AY 2014-15, where advance are given for adjacent of property of same Gata. However whole advance given in FY 2009-10 was absorbed in property acquired in AY 2014-15. During the assessment proceeding of AY 2015-16, AO has referred the valuation of said property u/s 142A in response to which Valuation duty value of said property was at Rs. 3000 per sq.mts. The said fact is overlooked by VO and estimated the FMV at Rs. 77,38,700/-. Therefore if rate 2009 may be applied than the FMV of the land will be at Rs. 32,61,603/- [2,550 (3,000+300- 750) X 1279.06 sq. mtr] and cost of boundary wall Rs. 3,67,500/- aggregating Rs. 36,29,103/- against the consideration of Rs. 30,00,000/-. Therefore difference between FMV of property and actual sale consideration is of Rs. 6,29,103/- only. However, Ld. CIT(A) sustained the addition to the extent of Rs. 47,38,700/- being difference between FMV estimated by VO at Rs. 77,38,700/- (-) Rs. 30,00,000/-. Therefore, addition sustained by ld. CIT(A) at Rs. 47,38,700/- on such footing may be restricted to Rs. 6,29,103/-. Issue No. 4 – AY 2015-16 Addition u/s 68 source of introduction of Capital in Firm M/s Alok Construction Rs. 34,25,339/- That AO made addition of Rs. 34,25,339/- amount added in capital a/c inadvertently and bank balance was also increased by Rs. 34,25,339/- being contra entry on debit side. The said mistake was rectified in immediately following year on 1st April, 2015 when mistake came into the knowledge of appellant while finalizing the books/ audit. The Ld. AO ignoring the documents placed on record made addition only on surmise and against the CBDT circular no. 14 of 1955 dated 11.04.1955. The Ld. CIT(A) considering the peculiar facts of the case of relevant year when mistake occurred of AY 2016-17 when mistake was rectified both the cases were completed under scrutiny and no adverse inference was drawn by AO on rectification of such transaction in AY 2016-17 and deleted the addition. Issue No. 5 – AY 2020-21, 2021-22 & 2022-23

3. That assessee has acquired residential property situated at 57, Laxmanpuri, Lucknow on 17.08.2015 in which residential house was constructed by assessee and such construction was carried out in the period of AY 2020-21 to till the date of search 05.02.2022 ( AY 2022-23) and made investment of Rs. 2,99,44,455/-. During the assessment proceeding investment in construction of house property was referred to Valuation Cell, Income Tax office, Lucknow, the Ld. VO estimated the cost at Rs. 3,33,69,100/- against investment made by assessee at Rs. 2,99,44,455/-, the year wise breakup is as under:-

AY Amount of Estimated cost Difference Difference in Difference in Investment (Valuation percentile based on percentile based on (Assessee) Officer) estimation by Investment by Valuation Office Assessee A B C D E F 2020-21 17552000 19559400 2007400 10.26% 11.43% 2021-22 8235000 9176800 941800 10.26% 11.43% 2022-23 4157455 4632900 475445 10.26% 11.43% Total 29944455 33369100 3424645 10.26% 11.43%

4. The Valuation Officer has allowed deduction on account of self supervision, purchase of bulk material and being state government registered contractor only 7.5% instead of 10% which usually allowed by Valuation Department. Further on site existing old house was situated carrying area of 260.223 i.e. 2800sqft which is dismantled and use in new building value considered for old building material at Rs. 5,53,042/- by Valuation Officer was on very lower site.

5. The Ld. CIT(A) while sustaining the addition in respective years being difference between amount of investment made towards construction of house and estimation made by Valuation Officer has considered difference in percentile on the basis of investment made by Appellant. On the other side the difference in percentile liable to be computed on the basis of estimation made by Valuation Officer. Further, assessee himself is a Civil Contractor &Engineer, therefore, difference is of 10.26% which is near to 10% liable to be ignored. Reliance is placed on: i. Hon’ble Allahabad High Court in case of Tulsiani Constructions & Developers Ltd [2014] 42 taxmann.com 410 (Allahabad)has discussed the decision of Hon'ble Madhya Pradesh High Court in case of CIT v. Abeeson Hotels (P) Ltd 2004 191 CTR (MP) 263 and allowed difference upto 10%of estimated FMV by Valuation Department is within tolerance limit, no addition is warranted. In said case difference in percentile @ 10.47% was computed on the basis of estimation made by VO and Hon’ble MP High Court has dismissed the appeal of Revenue. ii. That Jurisdictional Hon’ble ITAT in case of M/s Dr. BhimRaoAmbedkar Educational Society ITA No. 658/LKW/2012. In said case difference in percentile @ 6.58% was computed on the basis of estimation made by VO and Hon’ble ITAT Lucknow Bench has rejected the appeal of Revenue. Issue No. 6 – AY 2020-21 & 2021-22 6. That assessee has acquired residential property situated at 192/2, Civil Lines, Gonda on 24.10.2017 in which residential house was constructed by assessee and such construction was carried out in the period of AY 2020-21 to AY 2022-23. Further at the time of search construction activities were under progress and as on date of search on 05.02.2022 investment in said property was at Rs. 12460146/- however investment in construction during 07.02.2022 to 31.03.2022 was at Rs. 2035960/- therefore aggregate investment till 31.03.2022 was Rs. 14496106/- against said investment VO estimated value at Rs. 15624800/-. These facts and details were submitted to VO. Initially VO in his report considered investment of assessee at Rs. 12460146/-. Considering the glaring mistake assessee filed rectification in Valuation Report to VO and sent copy to the AO also on 09.08.2023.Thereafter VO in Valuation Report (Rectified) on 25.08.2023 has correctly considered investment of assessee at Rs. 14496104/-. The yearwise detail of investment in property is as under:

FY AY Amount of Estimated Difference Difference in Difference in percentile percentile Investment cost based on based on (Assessee) (Valuation estimation by Investment Cell) Valuation by Assessee Office A B C D E F G 2019-20 2020-21 2241054 2415546 174492 7.22% 7.78% 7.78% 2020-21 2021-22 9620392 10369454 749062 7.22% 7.78% 2021-22 2022-23 2634660 2839800 205140 7.22% Till date of Search 05.02.2022 Rs. 598700 From 07.02.2022 to 31.03.2022 Rs. 2035960 Total 14496106 15624800 1128694 7.22% 7.78% In AY 2022-23 Ld. AO vide Scrutiny Order vide DIN ITBA/AST/S/143(3)/2023-24/1063757561(1), dt31.03.2024 did not draw adverse inference on investment in above said property however on identical facts in AY 2020-21 & AY 2021-22, he made addition of Rs.174492/- and Rs.749062/- which itself is below 10% of value estimated by VO in respective years, which is against the facts of the case and related law. Further Ld. CIT(A) has deleted the addition on this issue in AY 2020-21 & AY 2021-22. Reliance is placed on iii. Hon’ble Allahabad High Court in case of Tulsiani Constructions & Developers Ltd [2014] 42 taxmann.com 410 (Allahabad)has discussed the decision of Hon'ble Madhya Pradesh High Court in case of CIT v. Abeeson Hotels (P) Ltd 2004 191 CTR (MP) 263 and allowed difference upto 10%of estimated FMV by Valuation Department is within tolerance limit, no addition is warranted. In said case difference in percentile @ 10.47% was computed on the basis of estimation made by VO and Hon’ble MP High Court has dismissed the appeal of Revenue. iv. That Jurisdictional Hon’ble ITAT in case of M/s Dr. BhimRaoAmbedkar Educational Society ITA No. 658/LKW/2012. In said case difference in percentile @ 6.58% was computed on the basis of estimation made by VO and Hon’ble ITAT Lucknow Bench has rejected the appeal of Revenue. Issue No. 7 – AY 2020-21 Disallowances of Agriculture Income in tune of Rs. 37,00,000/- That in the relevant assessee and his family earned agricultural income in tune of Rs. 52,00,000/-. Further, during the course of assessment proceedings detail of agricultural income was submitted as under:- 1. That as regard to gross agriculture income of Rs.52 Lacs earned by assessee along with his family members, it is relevant to mention, relevant year while filing of ITR, assessee has incorporated inadvertently agricultural income of rest of his family members who were non-filer of ITR for relevant year in absence of any other taxable income. Income of the all family members are under:

Agriculture Income Land Holding S.N. Name & PAN Shri Surya Narayan Pandey (PAN-BWPPP5138L) Rs. 8,90,000/- 5.3815 Hect. a) (Father) Smt. Rajkumari w/o Surya Narayan Pandey Rs. 2,30,000/- 1.3597 Hect. b) (PAN/Aadhar-243864686286) (Mother) Smt. LalitaPandey (PAN-BWPPP5188L) (Spouse) Rs. 1,10,000/- 0.6340 Hect. c) Rakesh Kumar Pandey (PAN: ATIPP6520B) Rs. 34,30,000/- 20.176 Hect. d) Total Rs. 46,60,000/- Further, while declaring agricultural income for relevant year of whole family, assessee offered the same on its Gross Value could not deduct agricultural expenses which was around Rs. 5,40,000/- incorporated in drawings, therefore, net agricultural income was at Rs. 46,60,000/- of assessee as well as other family members. Hence it is relevant to mention while assessing the agriculture income pertaining to assessee only may kindly be incorporated in total income for rate purposes. That as regard to agriculture income it is reiterated that such income was earned on sharing basis through many agriculturist (labour basis) who performed agriculture activities on agriculture land of assessee and also sold seasonal agriculture crop in open market and thereafter shared the revenue in cash mode as per terms with assessee periodically, confirmation of all these parties are already placed on record along with their address & identity proof which are open for verification. Further these are small agriculturist are not assessed to tax because of their agriculture income exempt from tax however such queries may be raised directly from them and they are ready to appear before your good self, if required. Hence agriculture income net of agriculture expenses pertaining to assessee at Rs. 34,30,000/- may kindly be accepted. However, the Assessing Officer made addition of Rs. 52,00,000/- being gross agricultural income of appellant as well as his family members ignoring the confirmation alongwith supporting documents provided related to person who carried out agricultural activities and shared agricultural income with assessee and confirmation of other family members for their agricultural income incorporate in the hands of appellant. Further, this bonafide mistake occurred during Covid period when assessee could not properly coordinate his consultant and reconcile agricultural income which was not part of audited financial statement and books of account and reported separately. The agricultural income of relevant year and preceding and subsequent year assessed by revenue is as under:-

AY Agricultural income as Disallowances Remarks per ITR 2022-23 22,12,500 - Assessment completed u/s 144 of the Act 2021-22 12,60,000 - Assessment completed u/s 144 of the Act 2020-21 52,00,000 52,00,000 Assessment completed u/s 144 of the Act 2019-20 15,42,683 - Assessment completed u/s 147 of the Act 2018-19 16,52,848 - Assessment completed u/s 147 of the Act The ld. CIT(A) considered allowed the agricultural income at Rs. 15,00,000/- and sustained the addition of Rs. 37,00,000/- only on adhoc basis considering the agricultural income of other years, without considering the peculiar facts of the case and documents placed on record.

Since, additions sustained by Ld. CIT(A) is purely on estimated basis of Rs. 37,00,000/- may kindly be deleted. Issue No. 8 – AY 2020-21 Disallowances of deduction claimed u/s 80C of Rs. 1,50,000/- on repayment of housing loan That in the relevant year assessee has repaid housing loan (ICICI Bank loan a/c no. LBLUC00004351237) etc. for the house self occupied at 57, laxmanpuri, Lucknow which was eligible for deduction u/s 80C. However, CIT(A) did not allow such deduction and sustained the disallowances of Rs. 1,50,000/- which liable to be deleted considering the peculiar facts of the case and related law. Issue No. 9 – AY 2020-21 Addition u/s 68 Gift from father Sh. S.N. PandeyRs. 1,00,000/- The Ld. AO made addition of Rs. 1,00,000/- being gift received by Appellant from his father Shri Surya Narayan Pandey only on assumption and surmise ignoring the documents placed on record. The Ld. CIT(A) has deleted the addition of Rs. 1,00,000/- being bonafide gift received from his father Shri Surya Narayan Pandey (PAN- BWPPP5138L)who is agriculturist and given such gift on the occasion of construction of residential house under construction and native place Gonda considering the supporting documents placed on record and genuineness of transaction. Issue No. 10 – AY 2021-22 Disallowance of claimed deduction u/s 54F of the Act – Rs. 68,98,817/- That in the relevant year assessee has sold residential land measuring 300 sq. mtr. on 20.05.2020, part of 447/2, Chawni Bazar (Civil Lines), Pargana- Tehsil, Gonda for consideration of Rs. 9,00,000/- Stamp Duty value Rs. 82,35,000/- to his son AlokPandey (PAN-CZZPP5325B). Considering the provision of Sec. 50C, the liability of Long Term Capital Gain was computed amounting to Rs.68,98,817/- and claimed deduction u/s 54F of the Income Tax Act against the investment made in house property situated at 57, Laxmanpuri, Indira Nagar, Lucknow. However, Ld. AO rejected the claim of assessee on following ground being details filed in ITR in AL schedule:- i. opp. VikasBhawan, Pant Nagar, Civil Lines, Gonda ii. Balrampur iii. Poly opp. VikasBhawan, Pant Nagar, Civil Lines, Gonda iv. 57, Laxmanpuri, Indira Nagar, Lucknow Ignoring the submission of assessee and details furnished in AL schedule were having duplicate entry at Sl. No. iii w.r.t. Sl. No. i. Further, property mentioned at Sl. No. i was under construction in AY 2021-22 and reference to Valuation Cell was also made and also part of assessment order where such property was completed in AY 2022-23. Further, property mentioned at Sl. No. ii relates to joint property in which only temporary erection only (teen shed) is on portion of assessee not habitable. Therefore, assessee was eligible to claim deduction u/s 54F of the Act. The Ld. CIT(A) considering the facts and circumstances of the case and in accordance with law has allowed the appeal. Issue No. 11 – AY 2021

22. Addition due to Non deduction of TDS on payment of Rs. 3074000 @ 30% i.e. 922200/- in violation of the provision of section 40a(ia) In relevant year Ld. AO made addition of Rs. 9,22,200/- on account of payment of such expenses on which tax was not deducted aggregating Rs. 30,74,000/- as reported by Auditor in TAR and on other side estimated the profit @11%. The ld. CIT(A) on one side deleted the estimated profit addition but sustained the addition on account of expenses on which tax was not deducted in tune of Rs. 9,22,200/-. That since the Ld. AO rejected the books of accounts after invoking the provision of sec. 145(3) and made assessment u/s 144 of the Act, there may not be in scope for such technical disallowances. Hence, addition of Rs. 9,22,200/- may not be sustained.

Issue No. 12 – AY 2021-22 Addition due to violate the provision of section 40A(3) Rs. 9,65,000/- In relevant year Ld. AO made addition of Rs. 9,65,000/- after invoking the provision of section 40A(3) being cash payment exceeding Rs. 10,000/- against certain head of expenses and on other side estimated the profit @11%. The ld. CIT(A) on one side deleted the estimated profit addition but sustained the addition on account of expenses on which tax was not deducted in tune of Rs. 9,65,000/-. That since the Ld. AO rejected the books of accounts after invoking the provision of sec. 145(3) and made assessment u/s 144 of the Act, there may not be in scope for such technical disallowances. Hence, addition of Rs. 9,65,000/- may not be sustained. Reliance is placed on Commissioner of Income-tax v. BanwariLalBanshidhar[1998] 229 ITR 229 (ALL.)

Issue No. 13 – AY 2021-22 Disallowances of deduction claimed u/s 80G Rs. 7,03,000/- on donation of Rs. 14,06,000/-, being donation given to UP Wrestling Association Rs. 6,00,000/- and Ram JanamBhumiRs. 8,06,000/- That the Ld. CIT(A) has allowed the deduction of Rs. 3,00,000/- against the donation in tune of Rs. 6,00,000/-. However, sustained the disallowances of Rs. 4,03,000/- against donation of Rs. 8,06,000/- paid to Ram JanamBhumi. The said donation is eligible u/s 80G and may kindly be allowed as deduction claimed.

Issue No. 14 – AY 2022-23 Addition u/s 69A – Cash found Rs. 43,12,800/- That during the course of search cash amounting Rs. 35,31,800/- from business/residential place at 57, Laxmanpuri, Lucknow and cash amounting Rs. 7,81,000/- at Village Devarda, Belsar, Gondawere found and out of which Rs. 34,00,000/- and Rs. 7,00,000/- were seized. During the course of search as well as assessment proceedings assessee informed nature and source of eligibility of cash. During the assessment proceeding assessee has submitted cash found at Lucknow were out of bank withdrawal immediately before the date of search from SBI (a/c no. 34788366126) and relates to business of assessee and cash found in Village were out of agricultural income. Further, cash found and seized in tune of Rs. 41,00,000/- were duly recorded in books of account and part of Audited Financial Statement. The assessment is being completed u/s 143(3) of the Act and no adverse finding is given by AO on such transaction w.r.t. source of availability of fund of cash seized on contra heads. Therefore, addition made was deleted by Ld. CIT(A). Issue No. 15 - AY 2014-15 to AY 2019-20Identical Legal Grounds AY 2014-15 (GOA-1 & 5) AY 2015-16 (GOA-1 & 5) AY 2016-17 (GOA-1 & 4) AY 2017-18 (GOA-1 & 4) AY 2018-19 (GOA-1 & 4) AY 2019-20 (GOA-1 & 4) 1. Because the Ld CIT (A) has erred in dismissing the ground of appeal challenging the proceedings u/s 148 initiated by the AO in violation of applicable law and without finding any incriminating material during search u/s 132 of the Act and also without satisfying the conditions mentioned in section 149 of the Act. The assessment based on illegal proceedings initiated u/s 148 is liable to be quashed.

2. Because the assessment order passed by AO, after prior approval of Range Head dated 21.03.2024 (AY 2019-20 – 22.03.2024) is not accordance with law and peculiar facts of the case and ratio laid down by Hon’ble Courts.

That appellant has filed applications for above years on 03.10.2025 alongwith requisite fees (copy enclosed before Ld. AO (DCIT/AC, Central Circle-2, Lucknow) for inspection of case record and certified copy of order sheet including approval copy while initiating reassessment proceeding. In response to which department has provided copy of order sheet on 24.10.2025. In which reasons are not recorded while issuing notice u/s 148 and approval taken from specified authority were also not provided. Though the case was selected for income escaping assessment of assessee covered by sec. 132 and Assessing Officer while issuing notice u/s 148, shall be deemed to have information. However, no material is available on record how income is being quantified alleging escaped assessment amount to or is likely to amount Rs. 50 lakhs or more where three years have been elapsed from end of relevant assessment year in compliance of provision section 149(1)(b) of the Act, while issuing notice u/s 148 the Act. Further during the course of search no incriminating material was found with reference to above said years which could suggest income escaping assessment in assessment order AO has also not discussed/demonstrated about any seized document found during search while drawing any adverse inference. Therefore proceeding initiated u/s 148 of the Act is not accordance with Law. Reliance is also placed on Principal Commissioner of Income-tax, Central-3 vs. AbhisarBuildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC).

Further in above cases notices u/s 148 were issued on 17.03.2023 by ACIT/DCIT (CC-II), Lucknow however which is not accordance with law after the amendment made u/s 151A of the Act. Central Board of Direct Taxes vide NOTIFICATION New Delhi, the 29th March, 2022 18/2022/F. No. 370142/16/2022-TPL(Part1)has notified, notice u/s 148 from such date was liable to be issued through automated allocation in accordance with RMS formulated by Board Faceless manner. Therefore notice issued by JAO was not accordance with law after such notification hence whole assessment is liable to be quashed.

Recently, Hon’ble Mumbai High Court in case of PrakashPandurangPatil [2025] 177 taxmann.com 552 (Bombay) after following the Division bench judgment of Hon’ble Mumbai high Court in case of Hexaware Technologies Limited held as under:- “9. In the light of the above discussion, and when there is no dispute that the Jurisdictional Assessing Officer (JAO) had no jurisdiction to issue the impugned order and the impugned notices, the writ petition is required to be allowed. It is accordingly allowed in terms of prayer clause (b) and (d), which reads thus:- "(b) To issue a writ of Mandamus or direction or order in the nature of Mandamus or writ of Certiorari or any other writ under Article 226 of the Constitution of India, setting aside the impugned order under section 148A(d) dated 05.04.2022. (d) To issue a writ of Mandamus or direction or order in the nature of Mandamus or writ of Certiorari or any other writ under Article 226 of the Constitution of India, declaring that the consequential notice dated 05.04.2022 issued under section 148 as invalid."

2. That AO has not issued the notice u/s 148 of the Act for relevant year alike he issued for AY 2019-20 & AY 2020-21. Since the case of assessee was transferred to Central Circle because of search in the case of other person u/s 132 of the Act, therefore while assessing the income of appellant notice u/s 148 of the Act was directly issued without conducting enquiry, providing opportunity as provided u/s 148A, of the Act, which provides:- Provided that the provisions of this section shall not apply in a case where,— (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (not the case of appellant) (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (not the case of appellant nothing is mentioned in assessment order about money etc.) (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 26b[relate to, the assessee; or (Covered by said clause in AY 2019-20 & AY 2020-21) (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. ] (N.A.) Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.] The above applicable provision was obligatory on the part of AO to record satisfaction with prior approval of PCIT/CIT while issuing the notice u/s 148 of the Act which is safeguard to appellant because such assessee is deprived of enquiry/opportunity as provided u/s 148A of the Act. It transpires AO without issuing notice u/s 148 directly selected the case for scrutiny only misinterpreting Board Circular No. F.NO. 225/81/2022/ITA-II, dt. 03.06.2022:- S.No. Parameter Procedure for compulsory selection 2 Cases pertaining to search & seizure/requisition 2.2 Search & The cases shall be selected for scrutiny with prior administrative approval of Pr. CIT/Pr. seizure/requisition on or after 01.04.2021: DIT/CIT/DIT concerned, who shall ensure that Assessments in cases arising such cases are transferred to Central Charges u/s from search & seizure 127 of the Act within 15 days of service of notice actions/requisitions u/s u/s 143(2)/142(1) of the Act by the Assessing Officer concerned. 132/132A conducted on or after 01.04.2021, for returns pertaining to A.Y. 2021-22.

The above guidelines was issued after detailed (Master) guidelines for compulsory scrutiny of cases during FY 2022-23 on 11-05-2022 vide FNo. 225/81/2022/ITA-II. However para-2 of Sl. No-2 being cases pertaining to search & seizure, substituted guidelines were issued on 03.06.2022 discussed above, since erstwhile guidelines at para-2, covers only search cases, where conducted upto 31-03-2021. Therefore guidelines issued on 03.06.2022 covers in para-2 as under:- 2.1 Search & seizure/requisition prior to 01.04.2021 (Not Our Case) 2.2 Search & seizure/requisition on or after 01.04.2021 (discussed above) It is relevant to mention the detailed (Master) guidelines dt. 11.05.2022 at Para-4 of Sl. No.-2 also covers search cases where search conducted on or after 01.04.2021 under the heading cases in which notice have been issued u/s 148 of the Act with following details:- S.No. Parameter Procedure for compulsory selection 4 Cases in which notices u/s 148 of the Act have been issued Cases where return is either (i) Cases, where notices u/s 148 of the Act have been furnished or not furnished in issued pursuant to search & seizure/survey actions response to notice u/s 148 of the conducted on or after the 1st day of April, 2021: Act. These cases shall be selected for compulsory scrutiny with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned who shall ensure that such cases, if lying outside Central Charges, are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act calling for information by the Assessing Officer concerned.

Therefore the above guidelines itself proves that search cases where search conducted on or after 01.04.2021 liable to be covered by 147 to 151 provisions. Since for relevant year AY 2021-22 notice was not issued u/s 148 of the Act, therefore Ld. AO was liable to first issue notice u/s 148 after recording the satisfaction on documents/information available with him found during the search of other person with prior approval of PCIT/CIT. The issuance of notice u/s 148 is not tantamount to selection of case of scrutiny for making regular assessment but being a pre-condition for search assessment where search held in case of other person on or after 01.04.2021. It is reiterated the case for the relevant year of appellant is neither normal scrutiny assessment where only notice u/s 143(2) was liable to be issued for making assessment u/s 143(3) nor it is normal reassessment proceeding covered by provision of section 147 to 151 where time for issuance of notice u/s 143(2) was left. Since the case of the assessee has already been considered as search case by Revenue in AY 2019-20 & AY 2020-21 while issuing notice u/s 148 directly without compliance of u/s 148A proceedings therefore for AY 2021-22 which is not a year of search notice could not have been issued directly u/s 143(2) with administrative approval depriving assessee legal safeguards provided u/s 148 of the Act. Further during the course of assessment proceeding vide reply dt. 20.12.2024 (Pg. no. 184 of paperbook filed on 09.05.2025) Appellant raised issue for not issuing notice u/s 148 for the relevant year which AO did not address in Assessment Order. It is also relevant to mention if case of the appellant is considered as non- search case while selecting the case for scrutiny under procedure of compulsory selection, AO was liable to demonstrate in the Assessment Order, under which category case is selected as per scrutiny guidelines, which he failed to do so.

The intent of such guidelines to issue administrative order for selecting the case under scrutiny not to bypass legal obligation of AO to take approval from PCIT/CIT as defined in proviso of section 148 of the Act. It is also pertinent to mention where search conducted on or after 01.04.2021 covered by section 147 to 151 are special provisions for search assessments which supersede the General provision of assessment and vice versa is not possible. Therefore the Ld. AO while issuing the notice u/s 143(2) without issuance of notice u/s 148 went against the well established principal of law "Generaliaspecialibus non derogant"is a Latin legal maxim that means "general provisions do not derogate from special provisions," or "general laws do not override specific laws". In essence, it dictates that when a general rule conflicts with a specific rule, the specific rule takes precedence. This principle is used in statutory interpretation to resolve conflicts between laws, ensuring that the more precise and relevant provision is applied. The Board itself substituted the guidelines dt. 03.06.2022 para no-2.2 in which erstwhile only AY 2021-22 was mentioned after realising the mistake, deleted such assessment year in substituted guidelines dt. 26.09.2022 with following details:- 2. With reference to the above, I am directed to state that Sl No. 2.2 of para-2 of CBDT’s Guidelines dt. 03.06.2022 shall be substituted as under:- S.No. Parameter Procedure for compulsory selection 2 Cases pertaining to search & seizure/requisition Search & seizure/requisition on or The cases shall be selected for scrutiny with prior 2.2 after 01.04.2021: Assessments in administrative approval of Pr. CIT/Pr. DIT/CIT/DIT cases arising from search & concerned, who shall ensure that such cases are transferred seizure actions/requisitions u/s to Central Charges u/s 127 of the Act within 15 days of 132/132A conducted on or after service of notice u/s 143(2)/142(1) of the Act by the 01.04.2021. Assessing Officer concerned.

After the above changes it transpires search cases for compulsory scrutiny where search conducted on or after 01.04.2021 in case of other person, are to be selected for scrutiny issuing notice u/s 143(2), only after issuing of notice u/s 148 of the Act, during the FY 2022-23 once assessee files the ITR in response to notice u/s 148 of the Act and thereafter to be transferred to Central Charge. The intent of substituted guidelines dt. 26.09.2022 to carry out process of selection of cases for scrutiny during whole year of FY 2022-23, which could be possible only after issuance of notice u/s 148 of the Act, where ITR filed in FY 2021-22 or earlier years for AY 2021-22 and preceding years, OTHERWISE in normal course notice u/s 143(2) could have been issued till 30.06.2022, where ITR filed during FY 2021-22. Thus directing the issuance of notice u/s 148 in scrutiny guidelines is not possible as it is a statutory provisions and cannot be override by any guidelines whatsoever.

3. That as a matter of fact the assessment of appellant/assessee company for two previous assessment years i.e. A.Y. 2019-20 & 2020-21 has been completed under the provisions of section 148/147 of the Act and after following due procedure which includes proper approval from Statutory Prescribed Authority before issuing notice u/s 148 of the Act and also Approval u/s 148B of the Act. Prescribed Procedure of recording satisfaction as per procedure u/s 148A of the Act has also not been followed by the Assessing Authority before framing a search assessment against the appellant/assessee company.

4. That the search assessments framed by the Assessing Officer also lacks of proper approval u/s 148B of the Act behind the veil of framing assessment u/s 143(3) of the Act only. Had the Assessing Officer taken proper route to frame a search assessment he would have obtained to necessary approvals from the prescribed authorities, one at the time of issuing notice u/s 148 of the Act and second at the time of finalization for assessment u/s 148B of the Act which could entail proper justice to the appellant/assessee company.

CASE LAWS 1. CBDT Circular F.No.286/2/2003-IT(Inv) dated 10/03/2003 2. CBDT Circular F.No.286/98/2013-IT(Inv-II) dated 18/12/2014 3. CIT vs. Dilbagh Rai Arora [2019] 104 taxmann.com 371 (Allahabad) 4. CIT vs. Mantri Share Brokers (P.) Ltd. [2018] 96 taxmann.com 279 (Rajasthan) 5. CIT vs. Smt Malti Mishra [2013] 38 taxmann.com 160 (Allahabad)/[2014] 221 Taxman 25 6. Pr.CIT vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC) 7. Pr.CIT vs. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94 (Bombay) 8. CIT vs. Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) 9. Pr.CIT vs. Rohit Karan Jain, ITA/5/2023 (Gauhati High Court) 10. ACIT vs. Kuber Khadyan Pvt. Ltd. (ITAT Delhi Bench) 11. KC Raju Multi Specialty Hospital vs. DCIT (ITAT ‘A’ Bench Bangalore) (B.2) Further, year-wise synopsis was also filed from the assessee’s side; containing narration of important papers in year-wise paper books referred to in foregoing paragraph (B) of this order; The same is reproduced below:

Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) Date of Search: 05.02.2022 10.

(A) & 398/LKW/2025 (D) AY 2015-16 12. (A) & 399/LKW/2025 (D) AY 2016-17 13. ITA No 350/LKW/2025 (A) & 460/LKW/2025 (D) AY 2017-18 14. ITA No 351/LKW/2025 (A) AY 2018-19 15. ITA No 352/LKW/2025 (A) & 402/LKW/2025 (D) AY 2019-20 16. ITA No 608/LKW/2024 (D) & CO 28/LKW/2024 AY 2020-21 17. ITA No. 557/LKW/2024 (D) & CO 27/LKW/2024 AY 2021-22 18. ITA No 353/LKW/2025 (A) & 405/LKW/2025 (D) AY 2022-23 AY Notice u/s Order Remarks 148 Passed 2013-14 17.03.2023 28.03.2024 1. Unabated Year, no incriminating material and all seized documents w.r.t. business were reconcile with regular books (nothing is mentioned in Assessment Order & no addition on the basis of seized document) 2. Three years elapsed from end of relevant year while issuing notice u/s 148, no information in possession of AO in document/evidence represented in form of asset, expenditure or entry which has escaped assessment amount of fifty lacs or more (Noting is mentioned in Assessment Order about reason of reopening of case and during inspection nothing found in case record about alleged escaped income of fifty lacs or more, addition made solely based on percentile of income declared in AY 2021-22 & AY 2022-23 only under statement u/s 132(4)) 17.03.2023 2014-15 28.03.2024 ---do--- 17.03.2023 ---do--- 2015-16 28.03.2024 17.03.2023 ---do--- 2016-17 27.03.2024 17.03.2023 ---do--- 2017-18 26.03.2024 17.03.2023 ---do--- 2018-19 28.03.2024 22.02.2023 2019-20 28.03.2024 1. Unabated Year, no incriminating material and all seized documents w.r.t. business were reconcile with regular books (nothing is mentioned in Assessment Order & no addition on the basis seized document) 2. On the basis of deemed information for relevant year notice u/s 148 was issued within three years from end of relevant year. addition made solely based on percentile of income declared in AY 2021-22 & AY 2022-23 only under statement u/s 132(4) 2020-21 143(2) 25.08.2023 Regular scrutiny was converted into search case issued on 29.06.2021 SCN Not issued under progress as on date of search 2021-22 143(2) issued 25.08.2023 SCN Not issued on 28.06.2022 2022-23 143(2) issued 31.03.2024 SCN Not issued on 144A Application not dealt in Assessment Order 22.02.2023 Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2014-15 Reply dt. Page of PB Description Remarks 11-05-2023 48 General 05-09-2023 49 General 08-02-2024 50-52 General Bank Statement, Turnover reconciliation 26-02-2024 SCN issued NP Rate applied @11% not mentioned in SCN 11-03-2024 53-57 General & Seized document VAT, Seized document with regular books reconciliation with regular books 16-03-2024 58 Request for reference to VO 16-03-2024 59 Bank statement summary 20-03-2024 Portal block for reply Draft Order Sent to Range Head for approval (as per paper book of Revenue of AY 2016-17) 21-03-2024 Approval Granted for Order (as per paper book of Revenue u/s 147/143(3) of AY 2016-17) 28-03-2024 Assessment Order u/s 147/144 Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2015-16 Reply dt. Page Description Remarks 06-09-2023 54 General Turnover reconcile with 26AS 08-02-2024 55-57 General Bank accounts submitted 26-02-2024 49 SCN NP Rate applied @11% not mentioned in SCN 11-03-2024 58-67 General & Seized document Property transaction & with regular books reconciliation with sale with VAT Return 15-03-2024 68 General Reconciliation of bank and drawings 16-03-2024 69 Request for reference to VO 20-03-2024 Portal block for reply Draft Order Sent to Range Head for approval (as per paper book of Revenue of AY 2016-17) 21-03-2024 Approval Granted for Order (as per paper book of Revenue u/s 147/143(3) of AY 2016-17) 28-03-2024 70 Assessment Order u/s 147 Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2016-17 Reply dt. Page Description Remarks 06.09.2023 49 General 01.02.2024 50-52 General Bank Statement, Turnover reconciliation& copy of order u/s 143(3) 26.02.2024 44-45 SCN issued NP Rate applied @11% not mentioned in SCN 11.03.2024 53-54 General& Property detail VAT, Request for reference to VO 16.03.2024 55 General 16.03.2024 56 General 20-03-2024 Portal blocked for reply Draft Order Sent to Range Head for approval (as per paper book of Revenue of AY 2016-17) 21-03-2024 Approval Granted for Order (as per paper book of Revenue u/s 147/143(3) of AY 2016-17) 27-03-2024 Assessment Order u/s 147/144 SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2017-18 Reply dt. Page Description Remarks 06.09.2023 53 General 01.02.2024 54-56 General Bank Statement, Turnover reconciliation& copy of order u/s143(1) 12.03.2024 57-63 General & Property detail, Request for reference to Seized document detail VO,insurance policy,VAT, Seized document reconciliation with regular books 15.03.2024 64 Capital Gain detail 16.03.2024 65 General 20-03-2024 Portal blocked for reply Draft Order Sent to Range Head for approval (as per paper book of Revenue of AY 2016-17) 21-03-2024 Approval Granted for Order (as per paper book of Revenue u/s 147/143(3) of AY 2016-17) 26-03-2024 Assessment Order u/s 147/144 Note: SCN Not issued SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2018-19 Reply dt. Page Description Remarks 06.09.2023 62 General 08.02.2024 63-65 General Bank Statement, Turnover reconciliation 26.02.2024 57-58 SCN issued NP Rate applied @11% not mentioned in SCN 12.03.2024 66-70 General & Property GST, Request for reference to Detail,Seized document VO Seized document with regular books reconciliation with regular books 15.03.2024 71-72 General Breakup of payable of FS 16.03.2024 73 General 20-03-2024 Portal blocked for reply Draft Order Sent to Range Head for approval (as per paper book of Revenue of AY 2016-17) 21-03-2024 Approval Granted for Order (as per paper book of Revenue u/s 147/143(3) of AY 2016-17) 28-03-2024 Assessment Order u/s 147/144 Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2019-20 Reply dt. Page Description Remarks 06.09.2023 81 General 08.02.2024 82-84 General Bank Statement, Turnover reconciliation 26.02.2024 76-77 SCN issued NP Rate applied @11% not mentioned in SCN 12.03.2024 85-92 General, Property Detail, GST Turnover reconciliation, Seized document Request for reference to VO reconciliation Seized document reconciliation with regular books 15.03.2024 93 General Breakup of payable of FS 16.03.2024 94 General Detail & confirmation of Unsecured loan 21.03.2024 95 General GST& ITC reconciliation 21-03-2024 Portal blocked for reply 28-03-2024 Assessment Order u/s 147/144 Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2020-21 Reply dt. Page Description Remarks 17.03.2022 61-62 General 22.03.2022 63 General 26.08.2022 64-65 General GST & ITC reconciliation 02.09.2022 66-68 General 02.09.2022 69 General Detail & confirmation of Unsecured loan 05.09.2022 70-71 General &detail of Seized Seized document reconciled document with regular books 08.09.2022 72 General 08.09.2022 73 General 31.07.2023 74-77 General Sanctity of Additional income to AO and Range Head 11.08.2023 78-82 General Bank Statement – Request for deviation note to Investigation Wing 14.08.2023 83-84 General Agriculture income 16.08.2023 85-86 General GST & ITC reconciliation 17.08.2023 87 General List of sundry creditors of FS 21.08.2023 88-89 General Agriculture income 22.08.2023 90-92 General & Property Detail Details of unsecured loan of FS Request for reference to VO 23.08.2023 93 General Details of unsecured loan of FS with confirmation 25.08.2023 Assessment Order u/s 144 Note: SCN Not issued Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2021-22 Reply dt. Page Description Remarks 29.11.2022 60 General 29.11.2022 61-65 General Bank statement, GST reconciliation Turnover reconcile with 26AS 13.12.2022 66-70 General & Seized document Seized document reconciliation reconciliation with regular with regular books books 13.12.2022 71-74 General & Property detail Gift, Request for reference to VO 11.08.2023 75-77 General Bank accounts and submission on difference of property valuation 14.08.2023 78-79 General Turnover reconcile, agricultural income, chapter VIA deduction 16.08.2023 80-81 General & Property detail Request for reference to VO 21.08.2023 82 General GST reconciliation, cash withdrawal details and detail of sundry creditors 25.08.2023 Assessment Order u/s 144 Note: SCN Not issued Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2022-23 Reply dt. Page Description Remarks 24.11.2023 78 General Turnover reconcile with 26AS 31.01.2024 79-83 General GST reconciliation &Bank accounts submitted 01.03.2024 84-86 General Detail of cash found and request for deviation note 12.03.2024 87-114 General & Seized document Seized document reconciliation with regular books 28.03.2024 115-116 General Request for direction u/s 144A to Range Head 28.03.2024 117-127 General List of sundry creditors of FS and affidavit 16.03.2024 128-135 General & detail of property Request for reference to VO 31-03-2024 136-145 Assessment Order u/s 143(3) Note: SCN Not issued (B.2.1) Moreover, revised consolidated synopsis was also filed from the assessee’s side, which is reproduced below for the ease of reference:

Before, The Hon’ble ITAT, Lucknow Bench ‘A’, Lucknow Hon’ble Members, Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) Subject:-Consolidate Synopsis: 1.

& 398/LKW/2025 (D) AY 2015-16 3. (A) & 399/LKW/2025 (D) AY 2016-17 4. ITA No 350/LKW/2025 (A) & 460/LKW/2025 (D) AY 2017-18 5. ITA No 351/LKW/2025 (A) AY 2018-19 6. ITA No 352/LKW/2025 (A) & 402/LKW/2025 (D) AY 2019-20 7. ITA No 608/LKW/2024 (D) & CO 28/LKW/2024 AY 2020-21 8. ITA No. 557/LKW/2024 (D) & CO 27/LKW/2024 AY 2021-22 9. ITA No 353/LKW/2025 (A) & 405/LKW/2025 (D) AY 2022-23 In above said pending appeals filed by Appellant and Revenue substantially issues are common, therefore, consolidated synopsis are prepared based on issues involved w.r.t. respective year. Issue No. 1 – AY 2014-15 TO AY 2022-23 7. That a search and seizure operation u/s 132 of the Income Tax Act was carried out on 05.02.2022 on the business and residential premises of M/s Alok Construction being proprietary concern of Appellant. The assessee is Government Contractor and during the relevant period, the assessee engaged in proprietorship business of construction of road etc. in semi urban area from contract work provided by the UPPWD, under the name and style of M/s Alok Construction.

8. The books of accounts for relevant year were regularly maintained and audited and ITRs alongwith TAR. were filed within due date in respective years with following financial details:- AY Turnover Profit Assessee AO CIT(A) Remark % of % of % of Profit Profit Profit 2014-15 9,95,21,021 16,42,215 1.65 11% 7% Year of inception of proprietary business. 2015-16 13,45,79,821 81,66,298 6.07 11% 7% 2016-17 48,75,65,110 2,74,84,960 5.64 11% 7% Erstwhile Scrutiny u/s 143(3) dated 14.12.2011 by JAO and adhoc addition of Rs. 25,00,000/- 2017-18 61,73,38,236 3,84,84,570 6.23 11% 7% 2018-19 24,44,22,212 1,58,87,444 6.50 11% 7% Erstwhile Scrutiny u/s 143(3) dt. 23.04.2021 by NeFAC and adhoc addition of Rs. 25,00,000/- and 43B disallowances of Rs. 2,57,43,209/-, Ld. CIT(A) allowed the appeal against original order.

2019-20 68,80,79,147 4,52,65,423 6.58 11% 7% 2020-21 1,59,98,27,836 10,07,00,526 6.29 11% 7% 2021-22 1,68,08,35,131 17,03,38,176 10.13 11% 10.13% Addition on extra profit deleted. 2022-23 2,82,59,71,973 28,50,48,173 11% 9.68% Addition on extra profit deleted. That during the course of search proceeding in statement recorded u/s 132(4), dated 05/06.02.2022 assessee admitted following – That percentage of net profit shown of M/s Alok Construction is approximately 6% of its turnover. However, usual profit shown by other business entities of similar business is approximately 8%. (Q/Ans-17) That due to certain deficiency/incompleteness of records etc. it was admitted that percentage of profit shown (i.e. 6%) by assessee is below the usual profit (i.e. 8%). To cover up such suppressed income in preceding yearsupto AY 2020-21 assessee offered 10% net profit rate for AY 2021-22 and 2022-23 resulting to which additional income offered 16-17 crores approximately. Further, assessee while offering additional income has stated that additional income is offered to cover deficiencies in records for relevant year and preceding years and to cover unproven sundry creditors/remission of liabilities, apart from investment in properties. Further, no adverse inference may be drawn w.r.t. extra profits and seized documents for years prior to AY 2021-22. Further, at the time of the search proceeding for AY 2020-21 was under progress and issues arising from the search operation was also covered by Ld. AO in assessment proceedings. During the course of the assessment proceeding, assessee has provided all relevant information as required time to time with regard to purchase of material, business expenses and reconciliation of sales with VAT/GST return. However, AO only on usual observation of Tax Auditor in form 3CB has invoked provision of section 145(3) of the Act and estimated income according to provision of sec. 144 of the Act. It is relevant to mention that these are the general observation made by Auditor in TAR without adverse finding on particular transactions and figures, which are year wise reproduced for ready reference. Observation of Auditor in TAR AY Para/ Page Observation of AO Remarks of Assessment Order 2014-15 5.1 / 2 & 3 5.1 The Auditor, in his audit report dated 22.09.2014, in Form No. 3CB has commented as follows: “a. Records necessary to verify personal nature of expenses not maintained by the assessee. b. Proper stock records are not maintained by the assessee. c. Valuation of closing stock is not possible. d. Figures shown under the head of Sundry Debtors, Sundry Creditors, Loans & Advances, Provisionsetc are subject to reconciliation and confirmation. Figures shown under the head of closing stock and cash in hand are physically verified by the proprietor of the firm. Fixed Assets as shown in the balance sheet are subject to verification. Details of TDS deducted and deposited could not be verified due to non- availability of receipts and challans. However, the assessee is liable for deduction of tax. The assessee did not provide information regarding deductions to be claimed under Chapter VI-A. e. GP ratio is not ascertainable from the financial statements prepared by the assessee. In this regard, it is relevant to mention that prior to date of search for AY 2016-17 & 2018-19 case of the appellant was completed under scrutiny by JAO & FAO respectively where assessment was completed u/s 143(3) after due verification of record. It is also relevant to mention that during the course of the search no incriminating material was found w.r.t. justification of enhancement of profit percentage. On the other side documents found and seized for different years of above said period were duly reconciled with either recorded in books of account relates to business of assessee or personal investments relates to investment in construction of house properties. The detail of compliance made during assessment proceeding is as under: AY 2014-15 Reply dt. Page of PB Description Remarks 11-05-2023 48 General 05-09-2023 49 General 08-02-2024 50-52 General Bank Statement, Turnover reconciliation 26-02-2024 SCN issued NP Rate applied @11% not mentioned in SCN 11-03-2024 53-57 General & Seized document VAT, Seized document with regular books reconciliation with regular books 16-03-2024 58 Request for reference to VO 16-03-2024 59 Bank statement summary 20-03-2024 Portal block for reply Draft Order Sent to Range Head for approval (as per paper book of Revenue of AY 2016-17) 21-03-2024 Approval Granted for Order (as per paper book of Revenue u/s 147/143(3) of AY 2016-17)

28-03-2024 Assessment Order u/s 147/144 In the assessment order of above said period the Ld. AO has not brought any single instance of incriminating material on the basis of which addition could have been made w.r.t. business income of assessee in support to justify increase profit percentile. In the assessment order the observation of the AO while estimating net profit @ 11% of Gross Receipt was simply based on Net Profit occurred by assessee @ 10.13% for AY 2021-22 in compliance of statement u/s 132(4) held during the search, higher percentage of profit for AY 2021-22 to AY 2022-23 only. The Ld. AO was highly unjustified while increasing the profit percentage and making the addition for AY 2014-15 to AY 2020-21 where no incriminating material was found w.r.t. addition made in these years. The relevant para of Assessment Order is as under: 5. From the perusal of record, it is seen that against total receipts of Rs. 9,95,21,021/-, net profit of Rs. 16,42,215/- has been shown by the assessee which gives net profit rate of 1.65%. During the course of assessment proceedings, the assessee was required to produce books of accounts, bills/vouchers relating to the expenses claimed vide notice u/s 142(1) of the Income Tax Act, 1961 dated 04.10.2023, 20.11.2023, 28.11.2023, 29.01.2024, 05.02.2024, 26.02.2024, 05.03.2024 and order sheet entries dated 01.03.2024, 07.03.2024 and 12.03.2024. No books of accounts, bills/ vouchers were produced by the assessee despite ample opportunities given to him. Not only that, during the course of search proceedings, post search proceedings also, books of accounts, bills/vouchers were neither found norproduced. In view of above and following discrepancies, books of account of assessee are not reliable: 5.1 The Auditor, in his audit report dated 22.09.2014, in Form No. 3CB has commented as follows: “a. Records necessary to verify personal nature of expenses not maintained by the assessee. b. Proper stock records are not maintained by the assessee. c. Valuation of closing stock is not possible. Page 2 of 6 ATIPP6520B- RAKESH KUMAR PANDEY A.Y. 2014-15 ITBA/AST/S/147/2023-24/1063514529(1) d. Figures shown under the head of Sundry Debtors, Sundry Creditors, Loans & Advances, Provisions etc are subject to reconciliation and confirmation. Figures shown under the head of closing stock and cash in hand are physically verified by the proprietor of the firm. Fixed Assets as shown in the balance sheet are subject to verification. Details of TDS deducted and deposited could not be verified due to non availablility of receipts and challans. However, the assessee is liable for deduction of tax. The assessee did not provide information regarding deductions to be claimed under Chapter VI-A. e. GP ratio is not ascertainable from the financial statements prepared by the assessee. 5.2 During the year under consideration, the assessee has shown sundry creditors to the tune of Rs. 77,28,457/-. During the assessment proceedings, vide notice u/s 142(1)of the Income Tax Act, 1961 dated 04.10.2023, the assessee was required to furnish detailed list of Sundry Creditors with name, complete address, amount, PAN along with ledger accounts. The assessee vide reply furnished the list of sundry creditors with name, address and outstanding amount due to them at the end of the financial year. To verify the creditworthiness and genuineness of sundry creditors, notice u/s 133(6) of the Income Tax Act, 1961 was sent to some of the creditors on test check basis. No reply from any of the entities was received. Some of the notices were returned unserved. The assessee during the course of search proceedings also accepted in his statement that he is surrendering additional income to cover unproven sundry creditors/remission of liabilities. 5.3 Violation of provisions contained in section 40A(3) of the Income Tax Act, 1961 cannot be ruled out as substantial amount of payments are found to have been made in cash. 5.4 The possibility of incurring expenditure which are prohibited by law and constitute an offence, as per Explanation 1 to section 37 of the I.T. Act, 1961, can also be not ruled out as the assessee has failed to produce even a single bill or voucher in support of his claims, made in ITR. The issues as discussed above may be the reasons for assessee having resorted to non-production of books of accounts including cash book, party ledger etc bills/ vouchers and other supporting documents. In view of these facts, it is clear that the trading results shown by the assessee are not open to verification and are hence not reliable. Considering the overall facts of the case & violation of provisions of sections of Income Tax Act, 1961 in several instances, as discussed above, the book result Page 3 of 6 ATIPP6520B- RAKESH KUMAR PANDEY A.Y. 2014-15 ITBA/AST/S/147/2023-24/1063514529(1) shown are rejected as per provision of section 145(3) of the Income Tax Act, 1961 and accordingly income from construction business is estimated according to provision of section 144 of the IT Act, 1961. After considering the facts and circumstances of the case and the fact that the assessee has himself disclosed net profit rate @10.13% from contract business in the A.Y. 2021-22, net profit rate of 11% is applied on the turnover shown for this assessment year i.e. A.Y. 2014-15 against net profit rate of 1.65% disclosed by the assessee during the A.Y. 2014-15. As the assessee has shown the turn-over at Rs. 9,95,21,021/- for the FY relevant to assessment year 2014-15, the Net Profit calculated @ 11% as per above discussion, works out at Rs.1,09,47,312/-. Since the assessee has shown income from business at Rs. 16,42,215/-, the difference of net profit works out to Rs.93,05,097/-. Accordingly, this amount is added to the income for theyear under consideration. (Addition: Rs. 93,05,097/-)

However Ld. CIT(A) has restricted the estimated profit @ 7% ignoring the peculiar facts of the case, related law only on assumption & surmise with following observation:

7.10 The appellant has placed his reliance in the case of M/s A.B. Construction ACIT, Circle-Gonda, wherein the Hon’ble ITAT, Lucknow bench vide its order has held as under:- “7. We have heard rival contentions and perused the entire material available on record. We find that as per various Tribunal's orders noted by the CIT(A) in this Para of his order, the Tribunal has confirmed N. P. rate of 7% in some cases and 7.5% and 9.6% also in some other cases. Ld. CIT(A) has adopted the N. P. rate of 7% being lowest net profit adopted by the Tribunal as per the judgments noted by him. The CIT(A) in his para 5.2 relied on the various cases to estimate the profit of the assessee at Rs.40,47,077/- @ 7% of gross receipts of Rs.5,78,15,398/-. In the present case, it is noticed that the CIT(A) applied the net profit rate of 7% on the basis of decisions of the ITAT Lucknow Bench and Allahabad bench estimate the profit of the assessee at Rs.40,47,077/- @7% of gross receipts of Rs.5,78,15,398/. Under these facts and circumstances of the case, we are of the considered opinion that adoption of suitable net profit rate should be decided on the basis of facts of each case and therefore, after considering the facts of the present case, we hold that adopting @ 6% rate of net profit of gross receipts of Rs.5,78,15,398/- in the present case will meet the ends of justice. We hold accordingly.” 7.11 Considering the aforementioned discussion, case laws specially the judgment of Hon’ble HIGH COURT OF ALLAHABAD in the case of Commissioner of Income-tax, Allahabad v. Target Construction Co. Ltd, the net profit rate of 11% applied by the Assessing Officer is too high when appellant has shown comparatively higher profit margin of 10.13% and 10.09% in subsequent years i.e. A.Y. 2021-22 and A.Y. 2022- 23 to cover up the deficiencies of unproved sundry creditors/remission of liabilities found during search proceeding. I am of the considered opinion that for the year under consideration it would be justified to apply net profit rate of 7% on the total turnover of Rs. 9,95,21,021/- which works out at Rs. 69,66,471/-. Since the appellant has shown income from business at Rs. 16,42,215/-, thus, the difference in profit works out at Rs. 53,24,256/-. Thus, the addition to the tune of Rs. 53,24,256/- deserved to be confirmed. Therefore, the addition to the extent of Rs. 53,24,256/- is confirmed and remaining addition of Rs. 39,80,841/- made by the Assessing Officer Page 49 of 55 ATIPP6520B- RAKESH KUMAR PANDEY A.Y. 2014-15 ITBA/APL/S/250/2024-25/1075190753(1) is hereby deleted. Thus, these grounds of appeal are partly allowed.

Reliance is placed on AbhisarBuildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)(For AY 2014-15 to AY 2019-20) Further, while estimating the profit percentile at 11% AO made reliance on profit estimated @11% in AY 2021-22 which is highly unjustified. In AY 2021-22 assessee himself offered profit percentile around 10% as per statement held u/s 132(4) for AY 2021-22 & AY 2022-23, with prior condition no adverse inference is drawn in years prior to AY 2021-22. Therefore, the whole additions on account of increase in profit percentile was made based on the statement of assessee which is not sustainable in the peculiar circumstances and in the eyes of law. Reliance is placed on the followings:- • Principal Commissioner of Income-tax, (Central)-1 v. Forum Sales (P.) Ltd.* [2024] 160 taxmann.com 93 (Delhi) HIGH COURT OF DELHI “24. The series of judgments referred to hereinabove clearly allude to the settled position of law that the books of account have to be necessarily rejected before the AO proceeds to the best judgment assessment upon fulfillment of conditions mentioned in the Act. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee.

30. Consequently, we do not find any merit in the case of the Revenue and have no reason to interfere with the view taken by the ITAT. Therefore, the appeals stand dismissed. Pending application(s), if any are also disposed of.” • The Division Bench of the High Court of Bombay in the case of Pr. CIT v. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94/267 Taxman 429/2019 SCC OnLineBom 13359, had an occasion to consider the said question and the same was accordingly answered as under:- "11. We note that the books of account of the respondent were rejected by the Commissioner of Income-tax (Appeals) under section 145(3) of the Act. However, the Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of account to disregard the same. We note that the Commissioner of Income-tax (Appeals) in his order while rejecting the books of account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of the books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the respondent's records which would warrant rejection of the books and making a best judgment assessment. Thus, on facts the view taken by the Tribunal is a possible view. Therefore, no substantial question of law arises. Thus not entertained." • (Commissioner of Income-tax – I v. Sahu Construction (P.) Ltd.* [2014] 42 taxmann.com 419 Allahabad) “21. In the case of CIT v. Gian Chand Labour Contractors [2009] 316 ITR 127/[2008] 167 Taxman 265 (Punj. &Har.)], it was observed that no further separate deduction is allowable as per Sections 29, 144 and 145 of the Act. Relevant portion of the judgment reads as under:— "Section 145 of the Income-tax Act, 1961 provides for computation of income under section 29 on the basis of books of account and methods of accounting regularly followed by the assessee. However, where the Assessing Officer is not satisfied with the correctness or completeness of the books, he may reject them and estimate the income to the best of his judgment in accordance with the provisions of Section 144 of the Act. When an estimate is made to the best judgment of an Assessing Officer, he substitutes the income that is to be computed under section 29 of the Act. Once best judgment assessment is made by fixing a rate of net profit, the assessee's claim for deduction on account of expenses cannot be deemed to have been ignored. The net profit rate is applied after taking into consideration all factors and it accounts for all the deductions which are referred to under section 29 and are deemed to have been taken consideration while making such estimate." • Commissioner of Income-tax, Allahabad v. Target Construction Co. Ltd.*[2015] 55 taxmann.com 294 (Allahabad) IT: Where in case of government contractor engaged in construction of roads books of account was rejected, Tribunal, relying upon profit rates of preceding three years, was justified in estimating profits earned by assessee during relevant years at 5 percent of gross receipts Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (GP rate) - Assessment years 2004-05 and 2005-06 - Assessee-company was carrying out contract of construction of roads awarded by Government - Due to various discrepancies in books of account, Assessing Officer rejected same and estimated profit at 10 per cent of gross receipts - Tribunal relying upon profit rates of preceding three years, reduced profit earned during relevant year to 5 per cent of gross receipts - Where since assessee had not done any private construction work during assessment years in question, impugned order passed by Tribunal did not require any interference - Held, yes. [Paras 5 and 6] [In favour of assessee] • M/s OmshreeAgrotech Private Ltd. IT(SS)A No. 45 to 50/ PUN/2022 Held that book of accounts cannot be rejected only on surmise and lower profit declared by assessee. • Shri Ramesh Singh Ranavs DCIT Range-4, Lucknow Held that the action of the Ld. CIT(A) is justified for restricting the addition @ 6.5% of the net profit. As he has also considered the past history and also the reason as to why the net profit was estimated at 5%. It is pointed out that gross business receipts were high in that year comparing to the year under appeal. The assessee did not point out any infirmity in adopting such rate by filing credible evidence. The grounds raised in this appeal of the assessee lack merit, hence dismissed. • Manoj Gupta vs ACIT, Range-3, Lucknow Held where sales and purchase are verified books of account cannot be rejected and profit cannot be estimated. Further estimation of profit may be made only on the basis of always on past history only. It is also relevant to mention that in identical facts of AY 2020-21, AO estimated the net profit at 11% and at first appellate level vide order u/s 250 dated 08.08.2024 vide DIN ITBA/APL/S/250/2024-25/1067435183(1) profit was estimated at 7% after following observation:- 7.12 Considering the aforementioned discussion, case laws specially the judgment of Hon’ble HIGH COURT OF ALLAHABAD in the case of Commissioner of Income-tax, Allahabad v. Target Construction Co. Ltd and the fact that depreciation of Rs. 14,99,267/- has already been disallowed, the net profit rate of 11% applied by the Assessing Officer is too high when appellant has shown comparatively higher profit margin of 10.13% and 9.68% in subsequent years i.e. A.Y. 2021-22 and A.Y. 2022- 23 to cover up the deficiencies of unproved sundry creditors/remission of liabilities found during search proceeding. Therefore, I am of the considered view that it would be justified to apply net profit rate of 7% on the total turnover of Rs. 1,59,98,27,836/- which works out at Rs. 11,19,87,949/-. Since the appellant has shown income from business at Rs. 10,07,00,526/-, thus, the difference in profit works out at Rs. 1,12,87,423/-. Thus, the addition to the tune of Rs. 1,27,86,690/- (Rs. 1,12,87,423 + Rs. 14,99,267/-) deserved to be confirmed. Therefore, the addition to the extent of Rs. 1,27,86,690/- is confirmed and remaining addition of Rs.6,24,93,846/- (7,52,80,536-1,27,86,690) made by the Assessing Officer is hereby deleted. Thus, these grounds of appeal

are partly allowed. Issue No. 2 – AY 2014-15 Ld. CIT(A)-3 sustained the addition Rs. 1201000/- (Rs. 4346000-3135000) That assessee has acquired lease hold plot measuring at 781.40 sqm. situated at Khata no. 192/2,Gata no. 447/2, (Part) Civil line, Gonda purchased by assessee for consideration was Rs. 31,45,000/- from Smt. Pushplata Saran, Shri. Saurabh Saran, Shri. Shobhit Saran and Shri.Shresh Saran on 04/10/2013 against stamp duty value at Rs. 92,76,000/-. Thereafter, the said lease property was converted into freehold through registered deed on 24/10/2017. During the assessment proceeding of AY 2014-15, AO has referred the valuation of said property u/s 50C/142A in response to which Valuation Officer, Allahabad has estimated the FMV of lease property as on 04/10/2013 at Rs. 43,46,000/- against actual consideration of Rs. 31,45,000/- vide valuation report dt. 14/06/2024. The relevant para of Assessment Order is as under:

7. During the year under consideration, the assessee was found to have purchased an immovable property bearing Khata No. 192/2, Gata No. 447/2, Civil Line, Gonda on 04.10.2013. On perusal of sale deed, it was noticed that the sale consideration of the property was Rs. 31,45,000/- (Stamp duty amount Rs. 6,55,000/-) and market value of the property is Rs.92,76,000/-. The difference between sale consideration and market value of the property is found to be of Rs. 61,31,000/-. During the assessment proceedings, the assessee was required to show cause vide notice dated 26.02.2024 as to why the difference in market value and sale consideration of the property amounting to Rs. 61,31,000/- may not be added u/s 56(2)(vii)(b) of the Income Tax Act, 1961. No satisfactory reply has been submitted by the assessee. Page 4 of 6 ATIPP6520B- RAKESH KUMAR PANDEY A.Y. 2014-15 ITBA/AST/S/147/2023-24/1063514529(1) Accordingly, difference amount of Rs. 61,31,000/- between market rate and sale consideration of the property is added to the total income for the year under consideration u/s 56(2)(vii)(b) of the Income Tax Act, 1961. (Addition : Rs.61,31,000/-)

In this regard it is relevant to mention that assessee has already made payment of Rs. 31,45,000/- through banking channel in FY 2009-10, therefore, stamp duty value in 2009 was to be applied as per provision of sec. 56(2) of the Act. However, Valuation Officer erred on facts and law while applying the stamp duty value of 2009 and indexing thereafter. Resulting to which FMV is over valued. Further, in 2009 stamp duty value of said property was at Rs. 3000 per sq.mts. The said fact is overlooked by VO. Therefore if rate 2009 may be applied than the FMV of the land will be at Rs. 2344200/- (3000 X 781.4 sq. mtr) and cost of boundary wall Rs. 680000/- aggregatingRs. 3024200/- against the consideration of Rs. 3145000/-therefore the actual sale consideration is over & above the value of property being FMV as per provision of 56(vi)(2) without any revenue effect. However Ld. CIT(A) sustain the addition to the extent of Rs. 12,01,000/- ignoring the peculiar facts of the case and related law with following observation, which may kindly be deleted: 8.5 Considering the above case laws wherein the Hon’ble Courts directed to the Assessing Officer that valuation estimated by the Departmental Valuation Officer has to be adopted being binding in nature, therefore, I am of the view that the difference of sale consideration of Rs. 31,45,000/- and Rs. 43,46,000/- which is the value estimated by the Valuation Officer deserves to be added to the total income of the appellant. Thus, the addition of Rs. 12,01,000/- (43,46,000 - 31,45,000) is hereby confirmed and remaining addition of Rs. 49,30,000/- is hereby deleted. Thus, this ground of appeal is partly allowed.

Issue No. 15 - AY 2014-15 to AY 2019-20Identical Legal Grounds AY 2014-15 (GOA-1 & 5) AY 2015-16 (GOA-1 & 5) AY 2016-17 (GOA-1 & 4) AY 2017-18 (GOA-1 & 4) AY 2018-19 (GOA-1 & 4) AY 2019-20 (GOA-1 & 4)

3. Because the Ld CIT (A) has erred in dismissing the ground of appeal

challenging the proceedings u/s 148 initiated by the AO in violation of applicable law and without finding any incriminating material during search u/s 132 of the Act and also without satisfying the conditions mentioned in section 149 of the Act. The assessment based on illegal proceedings initiated u/s 148 is liable to be quashed.

4. Because the assessment order passed by AO, after prior approval of Range Head dated 21.03.2024 (AY 2019-20 – 22.03.2024) is not accordance with law and peculiar facts of the case and ratio laid down by Hon’ble Courts. LdCIT(A) has not allowed the legal issues with following observations: 6.4 I have carefully considered the written submission of the appellant and relevant facts of the case. As per explanation 2 of the section 148 of the Act, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. It is undisputed fact that a search and seizure operation u/s 132 of the Act, was carried out on the business and residential premises of M/s Alok Construction Prop. ShriRakesh Kumar Pandey on 05.02.2022. Substantial number of documents in the form of loose papers, registers and computer hard disk etc. were seized/impounded during these operations. The Page 25 of 55 ATIPP6520B- RAKESH KUMAR PANDEY A.Y. 2014-15 ITBA/APL/S/250/2024-25/1075190753(1) case of the assessee was also covered under this operation. It is undisputed fact that search was conducted upon the appellant, thus, as per the explanation 2 of the section 148, the Assessing Officer would be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the appellant. For the sake of clarity, Explanation 2 of the section 148 of the Act is reproduced hereunder:- “Explanation 2.—For the purposes of this section, where,— (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) 97 [***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee 98[ where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.” 6.5 Thus, after recording reason and getting due approval from the DGIT (Inv), notice u/s 148 of the Act was issued by the Assessing Officer. The ratio of the case laws relied upon by the appellant are not applicable in the present case as in the present case notice u/s 148 of the Act was issued consequent upon the search whereas the case law relied upon by the appellant are not related to search. In view of the discussion, I find no merit in the ground raised by the appellant and accordingly this ground of appeal is dismissed. That appellant has filed applications for above years on 03.10.2025 alongwith requisite fees (copy enclosed before Ld. AO (DCIT/AC, Central Circle-2, Lucknow) for inspection of case record and certified copy of order sheet including approval copy while initiating reassessment proceeding. In response to which department has provided copy of order sheet on 24.10.2025. In which reasons are not recorded while issuing notice u/s 148 and approval taken from specified authority were also not provided. Though the case was selected for income escaping assessment of assessee covered by sec. 132 and Assessing Officer while issuing notice u/s 148, shall be deemed to have information. However, no material is available on record how income is being quantified alleging escaped assessment amount to or is likely to amount Rs. 50 lakhs or more where three years have been elapsed from end of relevant assessment year in compliance of provision section 149(1)(b) of the Act, while issuing notice u/s 148 the Act. Further during the course of search no incriminating material was found with reference to above said years which could suggest income escaping assessment in assessment order AO has also not discussed/demonstrated about any seized document found during search while drawing any adverse inference. Therefore proceeding initiated u/s 148 of the Act is not accordance with Law. Reliance is also placed on Principal Commissioner of Income-tax, Central-3 vs. AbhisarBuildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC).

Further in above cases notices u/s 148 were issued on 17.03.2023 by ACIT/DCIT (CC-II), Lucknow however which is not accordance with law after the amendment made u/s 151A of the Act. Central Board of Direct Taxes vide NOTIFICATION New Delhi, the 29th March, 2022 18/2022/F. No. 370142/16/2022-TPL(Part1)has notified, notice u/s 148 from such date was liable to be issued through automated allocation in accordance with RMS formulated by Board Faceless manner. Therefore notice issued by JAO was not accordance with law after such notification hence whole assessment is liable to be quashed. Recently, Hon’ble Mumbai High Court in case of PrakashPandurangPatil [2025] 177 taxmann.com 552 (Bombay) after following the Division bench judgment of Hon’ble Mumbai high Court in case of Hexaware Technologies Limited held as under:- “9. In the light of the above discussion, and when there is no dispute that the Jurisdictional Assessing Officer (JAO) had no jurisdiction to issue the impugned order and the impugned notices, the writ petition is required to be allowed. It is accordingly allowed in terms of prayer clause (b) and (d), which reads thus:-

(b) To issue a writ of Mandamus or direction or order in the nature of Mandamus or writ of Certiorari or any other writ under Article 226 of the Constitution of India, setting aside the impugned order under section 148A(d) dated 05.04.2022. (d) To issue a writ of Mandamus or direction or order in the nature of Mandamus or writ of Certiorari or any other writ under Article 226 of the Constitution of India, declaring that the consequential notice dated 05.04.2022 issued under section 148 as invalid.

10. We make it clear that having disposed of this petition on the ground of non-compliance with Section 151A of the Act, we have not expressed any opinion on the other issues as raised in the Writ Petition, which are expressly kept open.” Further, SLP of Revenue Diary No. 39689 / 2025 (dated 18.08.2025) in case of PrakashPandurangPatil are dismissed by Hon’ble Supreme Court on ground of delay as well as merits. Recently Apex Court in case of Deepanjan Roy SLP Civil Diary No. 33956/2025 (dated 16.07.2025) has dismissed the SLP of Revenue.

(B.3) In addition; written submissions in the nature of revised year-wise synopsis were also filed from the assessee’s side, vide letter dated 27/11/2025, relevant portion of which is reproduced below for the ease of reference:

27.11.2025 Before, The Hon’ble ITAT, Lucknow Bench ‘A’, Lucknow Hon’ble Members, Ref: RAKESH KUMAR PANDEY (PAN:ATIPP6520B) (Heard on 27.11.2025) Subject:- Revised Consolidate Synopsis for following years& correction in Issue no. 17 - AY 2021-22 of consolidated synopsis submitted on 20.11.2025 1.

(A) & 398/LKW/2025 (D) AY 2015-16 3. (A) & 399/LKW/2025 (D) AY 2016-17 4. ITA No 350/LKW/2025 (A) & 460/LKW/2025 (D) AY 2017-18 5. ITA No 351/LKW/2025 (A) AY 2018-19 6. ITA No 352/LKW/2025 (A) & 402/LKW/2025 (D) AY 2019-20 7. ITA No 608/LKW/2024 (D) & CO 28/LKW/2024 AY 2020-21 8. ITA No. 557/LKW/2024 (D) & CO 27/LKW/2024 AY 2021-22 9. ITA No 353/LKW/2025 (A) & 405/LKW/2025 (D) AY 2022-23 As per direction issued by Hon’ble Bench during hearing on 27.11.2025, I am submitting herewith Revised Consolidate Synopsis for above years. Further, in consolidated synopsis submitted on 20.11.2025 carrying some glaring mistakes against Issue No. 17, which is also corrected and rectified copy is also enclosed.

RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2014-15) - ITA 347/LKW/2025 FACTS:Date Of Search 05.02.2022 a) Original Return Filed on 30.11.2014 at Total Income of Rs.1542210/- b) Notice issued u/s 148 issued on 17.03.2023, ITR u/s 148 filed on 02.09.2023 at Rs. 1542210/- c) Order passed u/s 147 dt. 28.03.2024 at total income Rs. 17078307/- d) Ld. CIT(A)-3 passed order u/s 250 on 28.03.2025 Sl. Description AO Ld. CIT(A) Hon’ble ITAT- Remarks No. ITA (Pg. No. 60-65 of (Pg. No. 173-227 of Issue/Pg. Paper Book(PB)dt. Paper Book(PB)dt. 347/LKW/2025 No. of (filed by 01.10.25 01.10.25 Consolid Assessee) ated Synopsis (CS) 20.11.25 1 Profits estimated @11% on turnover 99521021 i.e. 9305097 5324256 Rs. 5324256 Consolid 10947312 reduced by declared profit Rs. 1642215. (Para-5 of Order, Pg. (Addition sustained) (In Dispute) ated Addition made Rs. 9305097/- Issue 61-63 of PB) (Para-7.10 of Order, No. 01 (Statement u/s 132(4) Pg. 221 of PB) Q-27, Pg No. 108 of (Pg. No. Further Ld. CIT(A) has restricted to estimation of PB) 14-23 of profit @ 7% i.e. Rs. 6966471/- and after reducing CS) declared profit Rs. 1642215/-. Addition Sustained Rs. 5324256/- and relief provided Rs. 3980841/-. (No Penalty levied) 2 Disallowances of deduction claimed u/s 80C 100000 Partly allowed Not Disputed NA Ld. CIT(A)-3 directed to AO allow deduction after verification (Penalty levied) 3 Addition u/s 56(2)(vii)(b) 6131000 1201000 In Dispute Consolid Purchase of property Khata No. 192/2 , Gata No. (Addition Sustained) ated (Para-7 of Order, Pg. 447/2 Civil Lines, Gonda for Rs. 3145000/- Stamp Issue 63 of PB) (Para-8.5 of Order, Duty Value Rs. 9276000/- difference added Rs. Pg. 226 of PB) No. 02 6131000/- (Valuation Report (Pg. No. Matter was referred to Valuation Cell valued FMV Pg. No. 112-113 of 23-24 of vide Report dt. 14.06.2024 at Rs. 4346000/- PB) CS) (Submission CIT(A) Pg. No. 95/96, 111- 114 of PB) Ld. CIT(A)-3 sustained the addition Rs. 1201000/- (Rs. 4346000-3135000)

4 Other Legal Issues: Not Dealt Not Allowed In Dispute Consolid 1. Issuance of Notice u/s 148 not accordance ated (Para-6.4 & 6.5 of Issue Order, Pg. 197-198 with law, No incriminating material found, No. 15 of PB) relates to relevant year and Notice issued u/s (Submission CIT(A) (Pg. No. 148 without satisfying the condition Pg. No. 78 of PB) 31-33 of mentioned u/s 149(1)(b) of the Act CS) 2. Approval dt. 21.03.2024 from Range Head is also not accordance with law RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2015-16)- ITA 348/LKW/2025 (A) & ITA 398/LKW/2025 (R) FACTS: Date of Search -05.02.2022 e) Original Return Filed on 30.09.2015 at Total Income of Rs. 8166297/- f) Notice issued u/s 148 issued on 17.03.2023, ITR u/s 148 filed on 02.09.2023 at Rs. 8166300/- g) Order passed u/s 147 dt. 28.03.2024 at total income Rs. 33664121/- h) Ld. CIT(A)-3 passed order u/s 250 on 28.03.2025 Sl. Description AO Ld. CIT(A) Hon’ble Hon’ble ITAT Remarks No. (Pg. No. 70- (Pg. No. 190- ITAT ITA ITA Issue/Pg. No. 348/LKW/2 398/LKW/2025 75 of Paper 247 of Paper of 025 (filed by (filed by Book(PB)dt. Book(PB)dt. Consolidated 01.10.25 Assessee) Revenue) 01.10.25 Synopsis (CS) 20.11.25 1 Profits estimated @11% on Rs.6637482 Rs.1254289 Rs. 1254289 Rs. 5383193/- Consolidated turnover 134579821 i.e. (Para-5.4 of (Addition (In Dispute) (in dispute) Issue No. 01 14803780/- reduced by sustained) Order, Pg. (Pg. No. 14- declared profit Rs. 8166298. 72-73 of PB) (Para-7.16 of 23 of CS) Addition made Rs. (Statement u/s Order, Pg. 240 6637482/- 132(4) Q-27, of PB) Pg No. 120 of PB) Further Ld. CIT(A) has restricted to estimation of profit @ 7% i.e. Rs. 9420587/- and after reducing declared profit Rs. 8166298/- Addition Sustained Rs. 1254289/-, relief provided Rs. 5383193/- (No Penalty levied) 2 Addition u/s 56(2)(vii)(b) Rs.15435000 Rs.4738700 Rs. 4738700 Rs. 10696300 Consolidated Purchase of property Khata (Addition (In Dispute) (in dispute) Issue No. 03 (Para-6 of No. 192/2 , Gata No. 447/2 Sustained) Order, Pg. 73 (Pg. No. 24 of Civil Lines, Gonda for Rs. of PB) (Para-8.5 of CS) 3000000/- Stamp Duty Order, Pg. 244 Value Rs. 18435000/- of PB) difference added Rs. (Valuation 15435000/- Report Pg. No. Matter was referred to 124-127 of PB) Valuation Cell, VO report (Submission dt 30/09/24 estimated FMV CIT(A) Pg. No. at 7738700/- 106-107 of PB) (No Penalty levied) Ld. CIT(A)-3 sustained the addition Rs. 4738700/- (Rs. 7738700-3000000) (No Penalty levied) 3 Addition u/s 68 source of 3425339 Rs. 3425339 - Rs. 3425339 (in Consolidated introduction of Capital in (Addition dispute) Issue No. 4 (Para-7 of Firm M/s Alok Deleted) Order, Pg. (Pg. No. 25 of Construction. 73-74 of PB) (Para-9.4 of CS) (No Penalty levied) AO Order, Pg. 246 of PB) recommended Ld. CIT(A)-3 deleted the (Ledger copy for addition Rs. 3425339/- of drawing and withdrawal of (No Penalty levied) bank of FY appeal for 2015-16 Pg. low tax effect No. 185-186 of PB) 4 Other Legal Issues: Not Dealt Not Allowed In Dispute Consolidated 3. Issuance of Notice u/s Issue No. 15 (Para-6.4 of Order, Pg. 216 (Pg. No. 31- 148 not accordance with law, No of PB) 33 of CS) incriminating material (submission CIT(A) Pg. No. found, relates to 88-90 of PB) relevant year and Notice issued u/s 148 without satisfying the condition mentioned u/s 149(1)(b) of the Act 4. Approval dt. 21.03.2024 from Range Head is also not accordance with law RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2016-17)ITA 349/LKW/2025 (A) & ITA 399/LKW/2025 (R) FACTS: Date of Search -05.02.2022 i) Original Return Filed on 31.03.2017 at Total Income of Rs.27784960/- j) Notice issued u/s 148 issued on 17.03.2023, ITR u/s 148 filed on 02.09.2023 at Rs. 27784960/- k) Order passed u/s 147 dt. 27.03.2024 at total income Rs. 5,36,32,161/- l) Ld. CIT(A)-3 passed order u/s 250 on 28.03.2025 Sl. Description AO Ld. CIT(A) Hon’ble ITAT Hon’ble ITAT Remarks No. ITA ITA (Pg. No. 60-64 (Pg. No. 109- Issue/Pg. No. of 349/LKW/2025 399/LKW/2025 of Paper 157 of Paper Consolidated Book(PB)dt. Book(PB)dt. (filed by (filed by Revenue) Synopsis (CS) Assessee) 20.11.25 01.10.25 01.10.25 1 Profits estimated @11% on turnover Rs.25697201 Rs.6194596 Rs. 6194596 Rs. 19502605/- (In Consolidated 487565110 i.e. 53632162/- reduced (Addition (In Dispute) Dispute) Issue No. 01 (Para-5.4 of by declared profit Rs. 27934961. Order, Pg. 62- sustained) (Pg. No. 14-23 Addition made Rs. 25697201/- 63 of PB) (Para-7.15 of of CS) (Statement u/s Order, Pg. 132(4) Q-27, No. 156 of Pg No. 106- PB) 108 of PB) Further Ld. CIT(A) has restricted to estimation of profit @ 7% i.e. Rs. 34129557/- and after reducing declared profit Rs. 27934961/-. Addition Sustained Rs. 6194596/-, relief provided Rs. 19502605/- (No Penalty levied) 2 Disallowances of deduction claimed Rs.150000 Partly allowed Not Disputed Not Disputed NA u/s 80C Ld. CIT(A)-3 directed AO to allow deduction after verification (Penalty levied)

3 Other Legal Issues: Not Dealt Not Allowed In Dispute NA Consolidated 5. Issuance of Notice u/s 148 not Issue No. 15 (Para-6.4 of accordance with law, No Order, Pg. (Pg. No. 31-33 No. 132-133 of CS) incriminating material found, of PB) relates to relevant year and Notice issued u/s 148 without satisfying the condition mentioned u/s 149(1)(b) of the Act 6. Approval dt. 21.03.2024 from Range Head is also not accordance with law RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2017-18) ITA 350/LKW/2025 (A) & ITA 460/LKW/2025 (R) FACTS: Date of Search -05.02.2022 m) Original Return Filed on 06.11.2017 at Total Income of Rs.38334570/- n) Notice issued u/s 148 issued on 17.03.2023, ITR u/s 148 filed on 02.09.2023 at Rs. 38334570/- o) Order passed u/s 147 dt. 26.03.2024 at total income Rs. 67907206/- p) Ld. CIT(A)-3 passed order u/s 250 on 07.04.2025 Sl. Description AO Ld. CIT(A) Hon’ble ITAT Hon’ble ITAT Remarks No. ITA ITA (Pg. No. 66- (Pg. No. Issue/Pg. 70 of Paper 350/LKW/2025 460/LKW/202 115-163 of No. of (filed by 5 (filed by Book(PB)dt. Paper Consolid 01.10.25 Assessee) Revenue) Book(PB)dt. ated 01.10.25 Synopsis (CS) 20.11.25 1 Profits estimated @11% on Rs.29422636 Rs. 4729106 Rs. 4729106 Rs.24693530/- Consolid turnover 617338236 i.e. (Addition (In Dispute) (In dispute) ated (Para-5.4 of 67907206/- reduced by sustained) Issue No. Order, Pg. declared profit Rs. 38484570. 01 68 of PB) (Para-7.14 Addition made at Rs. (Statement of Order, (Pg. No. 29422636/- u/s 132(4) Q- Pg. 161-162 14-23 of 27, Pg No. of PB) CS) Further Ld. CIT(A) has 112-114 of restricted to estimation of PB) profit @ 7% i.e. Rs. 43213676/- and after reducing declared profit Rs. 38484570/-. Addition Sustained at Rs. 4729106/-, relief provided Rs. 24693530/- (No Penalty levied) 2 Disallowances of deduction Rs.150000 Addition Not Disputed NA NA claimed u/s 80C Confirmed Ld. CIT(A)-3 confirmed the disallowance of deduction claimed u/s 80C. (Penalty levied) 3 Other Legal Issues: Not Dealt Not Allowed In Dispute NA Consolid 7. Issuance of Notice u/s ated (Para-6.4 of Issue No. 148 not accordance with Order, Pg. 15 138-139 of law, No incriminating PB) (Pg. No. material found, relates to 31-33 of relevant year and Notice CS) issued u/s 148 without satisfying the condition mentioned u/s 149(1)(b) of the Act 8. Approval dt. 21.03.2024 from Range Head is also not accordance with law RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2018-19)ITA 351/LKW/2025 (A) FACTS: Date of Search -05.02.2022 q) Original Return Filed on 30.10.2018 at Total Income of Rs.15611370/- r) Notice issued u/s 148 on 17.03.2023, ITR u/s 148 filed on 02.09.2023 at Rs. 15611370/- s) Order passed u/s 147 dt. 28.03.2024 at total income Rs. 26760368/- t) Ld. CIT(A)-3 passed order u/s 250 on 31.03.2025 Sl. Description AO Ld. CIT(A) Hon’ble ITAT Remarks No. ITA (Pg. No. 94- (Pg. No. 143- Issue/Pg. No. 351/LKW/2025 98 of Paper 189 of Paper of (filed by Book(PB)dt. Book(PB)dt. Consolidated Assessee) 01.10.25 01.10.25 Synopsis (CS) 20.11.25 1 Profits estimated @11% on Rs.10998998 Rs.1222109 Rs. 1222109 Consolidated turnover Rs.244422212/- i.e. (Addition (In Dispute) Issue No. 01 (Para 5.4 of 26886443/- reduced by declared sustained) order Pg. 96- (Pg. No. 14-23 profit Rs. 15887445/-. Addition 97 of PB) (Para-7.14 of of CS) made Rs. 10998998/- (Statement Order, Pg. u/s 132(4) Q- 189 of PB) 27, Pg No. Further Ld. CIT(A) has restricted 140-142 of to estimation of profit @ 7% i.e. PB) Rs. 17109554/- and after reducing declared profit Rs. 15887445/-. Addition Sustained Rs. 1222109/-, relief provided Rs. 9776889/-. (No Penalty levied) 2 Disallowances of deduction Rs.150000 Partly Not Disputed NA claimed u/s 80C allowed Ld. CIT(A)-3 directed AO to verify then allow deduction. (Penalty levied) 3 Other Legal Issues: Not Dealt Not Allowed In Dispute Consolidated 9. Issuance of Notice u/s 148 not (Para-6.4 of Issue No. 15 Order, Pg. (Pg. No. 31-33 accordance with law, No of CS) 166-167 of incriminating material found, PB) relates to relevant year and Notice issued u/s 148 without satisfying the condition mentioned u/s 149(1)(b) of the Act 10. Approval dt. 21.03.2024 from Range Head is also not accordance with law RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2019-20)ITA 352/LKW/2025 (A) & ITA 402/LKW/2025 (R) FACTS: Date of Search -05.02.2022 u) Original Return Filed on 31.10.2019 at Total Income of Rs.45187530/- v) Notice issued u/s 148 on 22.02.2023, ITR u/s 148 filed on 18.05.2023 at Rs. 45187530/- w) Order passed u/s 147 dt. 28.03.2024 at total income Rs. 75760810/- x) Ld. CIT(A)-3 passed order u/s 250 on 31.03.2025 Sl. Description AO Ld. CIT(A) Hon’ble Hon’ble Remarks No. ITAT ITA ITAT ITA (Pg. No. (Pg. No. 144- Issue/Pg. No. 96-100 of 188 of Paper 352/LKW/20 402/LKW/2 of 25 (filed by 025 (filed by Paper Book(PB)dt. Consolidated Assessee) Revenue) Book(PB)d 01.10.25) Synopsis (CS) 20.11.25 t. 01.10.25 1 Profits estimated @11% on Rs.304232 Rs.2900117 Rs. 2900117 Rs.2752316 Consolidated turnover 688079147 i.e. 83 (Addition (In Dispute) 6 Issue No. 01 75688706/- reduced by declared (Para-5.2 sustained) (In Dispute) (Pg. No. 14- profit Rs. 45265423. Addition of Order, (Para-6.14 of 23 of CS) made Rs. 30423283/- Pg. 98-99 Order, Pg. of PB) No. 186-187 (Statement of PB) u/s 132(4) Further Ld. CIT(A) has Q-27, Pg restricted to estimation of profit No. 141- @ 7% i.e. Rs. 48165540/- and 143 of PB) after reducing declared profit Rs. 45265423/-. Addition Sustained Rs. 2900117/-, relief provided Rs. 27523166/- (No Penalty levied) 2 Disallowances of deduction Rs.150000 Partly Not Disputed Not NA claimed u/s 80C allowed Disputed Ld. CIT(A)-3 directed AO to verify and then allow deduction. (Penalty levied) 3 Other Legal Issues: NA NA In Dispute NA Consolidated 11. Issuance of Notice u/s 148 Issue No. 15 (Pg. No. 31- not accordance with law, 33 of CS) No incriminating material found, relates to relevant year and Notice issued u/s 148 without satisfying the condition mentioned u/s 149(1)(b) of the Act 12. Approval dt. 22.03.2024 from Range Head is also not accordance with law RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2020-21)ITA 608/LKW/2025 (R) & CO 28/LKW/2024 (A) FACTS: Date of Search -05.02.2022 y) Original Return Filed on 31.12.2020 at Total Income of Rs.100540530/- z) Order passed u/s 144dt.25.08.2023 at total income Rs. 183452950/- aa) Ld. CIT(A)-3 passed order u/s 250 on 08.08.2024 Sl. Description AO Ld. CIT(A) Hon’ble ITAT Hon’ble ITAT CO Remarks No. ITA 28/LKW/2024 (Pg. No. 111- (Pg. No. 270- Issue/Pg. No. 608/LKW/2024 (filed by Assessee) 121of Paper 350of Paper of (filed by Book (PB) dt. Book (PB) dt. Consolidated Revenue) 22.04.25) 22.04.25) Synopsis (CS) 20.11.25 1 Profits estimated @11% on Rs.75280536 Rs. 12786690/- Rs. 62493846/- Rs. 12786690/- Consolidated turnover 1,59,98,27,836 i.e. (Para-4.1 of (Addition (In Dispute) (In Dispute) Issue No. 01 17,59,81,062/- reduced by sustained ) Order, Pg. (Pg. No. 14-23 declared profit Rs. 112-115 of PB) (Para-7.10 of of CS) 10,07,00,526/-. Addition (Statement u/s Order, Pg. No. made Rs. 75280536/- 132(4) Q-27, 337-338 of PB) Pg No. 363- 365) Further Ld. CIT(A) has restricted to estimation of profit @ 7% i.e. Rs. 111987949/- and after reducing declared profit Rs. 100700526/-. Addition Sustained Rs. 11287423/- and depreciation Rs. 1499267/- aggregating Rs. 12786690/-, relief provided Rs. 62493846/- (No Penalty levied) 2 Addition u/s 69 difference Rs.2007400 Rs. 2007400/- Rs. 2007400/- Consolidated in construction of house (Para-5 of (Addition (In Dispute) Issue No. 05 property at 57, Laxmanpuri, Sustained) Order, Pg. (Pg. No. 25-26 Lucknow by Appellant Rs. 115-116 of PB) (Para-8.3 of of CS) 17552000/- and while Order, Pg. No. estimated by DVO at Rs. 339 of PB) 19559400/-. Addition made (Valuation at Rs. 2007400/- Report Pg. No. (19559400-17552000) 208-214 of PB) Ld. CIT(A)-3 has sustained the addition Rs. 2007400/- (No Penalty levied) 3 Addition u/s 69 difference Rs.174492 Rs. 174492/- Rs. 174492/- Consolidated in construction of house Addition (In Dispute) Issue No. 06 (Para-6 of property at Khata No. 192/2 Deleted Order, Pg. (Pg. No. 26-27 , Gata No. 147/2 Civil 116-117 of PB) (Para-9.3 of of CS) Lines, Gonda by Appellant Order, Pg. No. Rs. 22,41,054/- and while 341 of PB) estimated by DVO at Rs. (Revised 24,15,546/-. Addition made Valuation at Rs. 1,74,492/- Report Pg. No. (1,56,24,800-1,24,60,146) 238-243 of PB) Ld. CIT(A)-3 has deleted the addition Rs. 174492/- (No Penalty levied) 4 Disallowances of Rs.5200000 Rs. 3700000 Rs. 1500000 Rs. 3700000 Consolidated Agriculture Income in tune (Addition (In Dispute) (In Dispute) Issue No. 07 (Para-7 of of Rs. 52,00,000 Sustained) Order, Pg. (Pg. No. 27-29 Ld. CIT(A)-3 sustained the 118-120 of PB) (Para-10.4 of of CS) addition of Rs. 3700000 and Order, Pg. 347 provide relief at Rs. of PB) 1500000/- (Penalty levied) 5 Disallowances of deduction Rs.150000 Rs. 150000 Rs. 150000 Consolidated claimed u/s 80C (Addition (In Dispute) Issue No. 08 (Para-9 of Ld. CIT(A)-3 sustained the Sustained) Order, Pg. 120 (Pg. No. 29 of of PB) CS) addition. (Para-12.3 of (Penalty levied) Order, Pg. 349 of PB) 6 Addition u/s 68 Gift from Rs.100000 Allowed Rs. 100000 Consolidated father Sh. S.N. Pandey Rs, (In Dispute) Issue No. 09 (Para-8 of (Para-11.3 of 100000/- Order, Pg. 120 Order, Pg. 348 (Pg. No. 29 of of PB) CS) Ld. CIT(A)-3 deleted the of PB) Addition and allowed the claim. (NA) 7 Other Legal Issues: Not Dealt Not Allowed NA In Dispute Consolidated 13. Where scrutiny case Issue No. 16 (Para-6.2 of (notice u/s 143(2) Order, Pg. 317 (Pg. No. 33 of CS) of PB) issued before search i.e. dt. 29.06.2021) suomoto considered as search case.

14. While passing the order Extension of time provided in explanation 1(xii) of sec. 153 was not allowed.

15. Prior Approval from Range Head was not taken u/s 148B of the Act when case was considered as search case.

RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2021-22)ITA 557/LKW/2025 (R) & CO 27/LKW/2024 (A) FACTS: Date of Search -05.02.2022 bb) Original Return Filed on 11.03.2022 at Total Income of Rs.16,95,42,000/- cc) Order passed u/s 144dt.25.08.2023 at total income Rs. 19,54,25,567/- dd) Ld. CIT(A)-3 passed order u/s 250 on 26.07.2024 Sl. Description AO Ld. CIT(A)( Hon’ble ITAT Hon’ble Remarks No ITA ITAT CO Paper Book Issue/Pg. No. of . (PB) dt. 557/LKW/2024 27/LKW/202 Consolidated (filed by 4 (filed by 31.12.24) Synopsis (CS) Revenue) Assessee) 20.11.25 1 Profits estimated @11% Rs.14553688 Rs. 14553688/- Rs. 14553688/- Consolidated on turnover (Relief (In Dispute) Issue No. 01 (Para-4 of 1,68,08,35,131 i.e. provided) Order, Pg. 2 (Pg. No. 14-23 of 17,59,81,062/- reduced of (Para-7.12 of CS) by declared profit Rs. Assessment Order, Pg. 69 18,48,91,864/-. Order (AO)) of CIT(A) Addition made Rs. (Statement Order) 1,45,53,688/- u/s 132(4) Q- (Submission Further Ld. CIT(A) has 27, Pg No. CIT(A) Para-B deleted the addition of 158-160 of Pg. No. 86-95 Rs. 1,4553688/- PB) of PB) (NA) 2 Addition u/s 69 Rs.941800 Rs. 941800/- Rs. 941800/- Consolidated difference in (Addition (In dispute) Issue No. 05 (Para-5 of construction of house Sustained) Order, Pg. 3- (Pg. No. 25-26 of property at 57, 4 of AO) (Para-8.3 of CS) Laxmanpuri, Lucknow Order, Pg. 70- by Appellant Rs. 71 of CIT(A) 8235000/- and while Order) estimated by DVO at (Submission Rs. 9176800/-. Addition CIT(A) Para-C made at Rs. 941800/- Pg. No. 95-99 (9176800-8235000) of PB) Ld. CIT(A)-3 has sustained the addition Rs. 941800/- (No Penalty levied) 3 Addition u/s 69 Rs.749062 Rs. 749062/- Rs. 749062/- Consolidated difference in (Addition (In dispute) Issue No. 06 (Para-6 of construction of house Deleted) Order, Pg. 5- (Pg. No. 26-27 of property at Khata No. 6 of AO) (Para-9.8 of CS) 192/2 , Gata No. 147/2 Order, Pg. 75 Civil Lines, Gonda by of CIT(A) Appellant Rs. Order) 9620392/- and while (Submission estimated by DVO at CIT(A) Para-D Rs. 10369454/-. Pg. No. 99-103 Addition made at Rs. of PB) 749062/- (10369454- (Valuation 9620392) Report Ld. CIT(A)-3 has (rectified) dt. deleted the addition Rs. 25.08.2023 Pg. 749062/- No. 111-115 of (NA) PB) 4 Disallowance of Rs.6898817 Rs. 6898817/- Rs. 6898817/- Consolidated claimed deduction u/s (Addition (In Dispute) Issue No. 10 (Para-7 of 54F of the Act Deleted) Order, Pg. 6- (Pg. No. 29-30 of 8 ofAO) (Para-10.4 of CS) Order, Pg. 78 Ld. CIT(A)-3 has of CIT(A) deleted the addition of Order) Rs. 6898817/- (Submission (NA) CIT(A) Para-E Pg. No. 103- 107 of PB)

5 Addition due to Non Rs.922200 Rs. 922200/- Rs. 922200/- Consolidated deduction of TDS on (Addition (In dispute) Issue No. 11 (Para-8 of payment of Rs. 3074000 Sustained) Order, Pg. 8 (Pg. No. 30 of CS) @ 30% i.e. 922200/- in Not Pressed (If of AO) (Para-11.3 of violation of the Order, Pg. 79 order of Ld. provision of section of CIT(A) CIT(A) is 40a(ia) sustained Order) Ld. CIT(A)-3 has disputed by (Submission sustained the addition of Revenue on CIT(A) Para-F Rs. 922200/- Pg. No. 107- business profit (No Penalty levied) 109 of PB) % estimated by AO deleted by Ld. CIT(A)) 6 Addition due to violate Rs.965000 Rs. 965000/- Rs. 965000/- Consolidated the provision of section (Addition (in dispute) Issue No. 12 (Para-9 of 40A(3) Sustained) Order, Pg. 9 (Pg. No. 30 of CS) Ld. CIT(A)-3 has Not Pressed (If of PB) (Para-12.3 of sustained the addition of Order, Pg. 80 order of Ld. Rs. 965000/- of CIT(A) CIT(A) is sustained (No Penalty levied) Order) disputed by (Submission Revenue on CIT(A) Para-F Pg. No. 107- business profit 109 of PB) % estimated by AO deleted by Ld. CIT(A)) 7 Disallowances of Rs.150000 Rs. 150000 - - NA deduction claimed u/s (Addition (Para-10 of 80C Deleted) Order, Pg. 9 Ld. CIT(A)-3 has of AO) (Para-13.3 of deleted the addition. Order, Pg. 81 (NA) of CIT(A) Order) 8 Disallowances of Rs.703000 Rs. 403000 Rs. 403000 Consolidated deduction claimed u/s (Addition (in dispute) Issue No. 13 (Para-11 of 80G Rs. 703000/- being Sustained) Order, Pg. 9 (Pg. No. 30-31 of donation given to UP of AO) (Para-14.4 of CS) Wrestling Association Order, Pg. 83 Not Pressed Rs. 600000/- and Ram of CIT(A) JanamBhumiRs. Order) 806000/- (Submission Ld. CIT(A)-3 has CIT(A) Para-H deleted the addition Rs. Pg. No. 109- 300000 and Rs. 110 of PB) 403000/-sustained.

(Penalty levied) 9 Other Legal Issues: Not Dealt Not Allowed NA In Dispute Consolidated 17. BECAUSE such Issue No. 17 (Para-6.2 of case was search Order, Pg. 49 (Pg. No. 33-37 of case, Ld. AO has of CIT(A) CS) issued notice u/s Order) 143(2) without (Submission compliance of CIT(A) Para-A provision of sec. Pg. No. 85-86 148, proceedings of PB) initiated not accordance with law.

18. While passing the order Extension of time provided in explanation 1(xii) of sec. 153 was not allowed.

19. Prior Approval from Range Head was not taken u/s 148B of the Act when case was considered as search case.

20. Board Instruction/Circular not followed by Ld. AO/Approving Authority.

RAKESH KUMAR PANDEY PAN:ATIPP6520B (AY 2022-23)ITA 353/LKW/2025 (A) & ITA 405/LKW/2025 (R) FACTS: Date of Search -05.02.2022 ee) Original Return Filed on 05.11.2022 at Total Income of Rs.284718380/- ff) Order passed u/s 143(3) dt.31.03.2024 at Total Income of Rs. 315465369/- gg) Ld. CIT(A)-3 passed Order u/s 250 on 28.03.2025 Sl. Description AO Ld. CIT(A) Hon’ble Hon’ble Remarks No ITAT ITA ITAT ITA (Pg. No. 136- (Pg. No. 193- Issue/Pg. . 353/LKW/ 405/LKW/20 144 of Paper 243 of Paper No. of 2025 (filed 25 (filed by Book(PB)dt. Book(PB)dt. Consolidat 01.10.25 by Revenue) 01.10.25 ed Assessee) Synopsis (CS) 20.11.25 1 Profits estimated @11% on Rs.25808744 Rs. 25808744/- Not Rs. Consolidat turnover 2825971973 i.e. (Addition Disputed 25808744/- ed Issue (Para-6 of 310856917/- reduced by deleted) (in Dispute) No. 01 Order, Pg. declared profit Rs. 137-139 of (Para-6.7 of (Pg. No. 285048173. Addition made PB) Order, Pg. 236- 14-23 of Rs. 25808744/- (Statement 237 of PB) CS) u/s 132(4) Q- Further Ld. CIT(A) has 27, Pg No. deleted the said addition Rs. 177-179 of 25808744/- PB) (NA) 2 Addition u/s 69 difference in Rs.4,75,445 Rs. 4,75,445/- Rs. NA Consolidat construction of house Addition 4,75,445/- ed Issue (Para-7 of property at 57, Laxmanpuri, Sustained (In No. 05 Order, Pg. Lucknow by Appellant Dispute) No. 139-140 (Para-7.2 of (Pg. No. Rs.41,57,455/- and while of PB) Order, Pg. 237- 25-26 of estimated by DVO at 238 of PB) CS) Rs.46,32,900/-. Addition made at Rs. 4,75,445/- (4632900-4157444) Ld. CIT(A)-3 has sustained the addition Rs. 4,75,445/- (No Penalty levied) 3 Disallowances of deduction Rs.150000 - - - - claimed u/s 80C CIT(A)-3 deleted the Allowed Not NA NA disallowances and allowed Disputed the claim. (NA) 4 Addition u/s 69A – Cash Rs.43,12,800 Rs.43,12,800 Not Rs. 4312800/- Consolidat found (Addition Disputed (in Dispute) ed Issue (Para-9 of Deleted) No. 14 Ld. CIT(A)-3 deleted the Order, Pg. addition No. 141-143 (Para-9.4 of (Pg. No. 31 (NA) of PB) Order, Pg. 240 of CS) of PB) 5 Other Legal Issues: Not Dealt Not Allowed In Dispute NA Consolidat 21. Approval dt. 30.03.2024 ed Issue No. 18 from Range Head not (Pg. No. 37 accordance with law of CS)

RefBefore, The Hon’ble ITAT, Lucknow Bench ‘A’, Lucknow Hon’ble Members, Ref: SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) Subject:- Revised Consolidate Synopsis for AY 2021-22 (Issue No. 17) - (D) & CO 27/LKW/2024 AY 2021-22 Issue No. 17 - AY 2021-22 1. That it is relevant to mention since the search was conducted on or after 01/04/2021, while framing the assessment order, the provisions of section 147 to 151 was required to be followed as per law amendment took place by Finance Act, 2021. Erstwhile assessment in case of search cases were covered by 153A / 153C of the Act, where search conducted till 31/03/2021. Therefore the Ld. AO was under obligation to follow provisions of section 147 to 151 while making assessment of appellant considering search case. By Finance Act, 2024 procedure of search assessment has again been changed where search conducted on or after 01/09/2024 and NOW covered by block assessment u/s 158BC/BD of the Act, accordingly following sub-section-3 has been inserted in section 152 by Finance Act, 2024:- [ (3) Where a search has been initiated under section 132 or requisition is made under section 132A, or a survey is conducted under section 133A [other than under sub-section (2A) of the said section], on or after the 1st day of April, 2021 but before the 1st day of September, 2024, the provisions of sections 147 to 151 shall apply as they stood immediately before the commencement of the Finance (No. 2) Act, 2024.

2. That AO has not issued the notice u/s 148 of the Act for relevant year alike he issued for AY 2019-20 or earlier years. Since the case of assessee was transferred to Central Circle because of search conducted u/s 132 of the Act, therefore while assessing the income of appellant notice u/s 143(2) of the Act was directly issued without following the procedure laid down in sec. 148 where AO shall be deemed to have information case covered by Explanation 2(i) of Sec. 148 and liable to obtain approval Specified Authority. Further, section 148A is not applicable in relevant year which provides:- Provided that the provisions of this section shall not apply in a case where,— (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (case of appellant) (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (not the case of appellant nothing is mentioned in assessment order about money etc.) (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, 26b[relate to, the assessee; or (not the case of appellant nothing is mentioned in assessment order about money etc.) (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. ] (N.A.) Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.] The above applicable provision was obligatory on the part of AO to record satisfaction with prior approval of Specified Authority, while issuing the notice u/s 148 of the Act which is safeguard to appellant because such assessee is deprived of enquiry/opportunity as provided u/s 148A of the Act. It transpires AO without issuing notice u/s 148 directly selected the case for scrutiny only misinterpreting Board Circular No. F.NO. 225/81/2022/ITA-II, dt. 03.06.2022:- S.No. Parameter Procedure for compulsory selection 2 Cases pertaining to search & seizure/requisition 2.2 Search & seizure/requisition on The cases shall be selected for scrutiny with prior or after 01.04.2021: Assessments administrative approval of Pr. CIT/Pr. DIT/CIT/DIT in cases arising from search & concerned, who shall ensure that such cases are transferred seizure actions/requisitions u/s to Central Charges u/s 127 of the Act within 15 days of 132/132A conducted on or after service of notice u/s 143(2)/142(1) of the Act by the 01.04.2021, for returns pertaining Assessing Officer concerned. to A.Y. 2021-22. The above guidelines was issued after detailed (Master) guidelines for compulsory scrutiny of cases during FY 2022-23 on 11-05-2022 vide FNo. 225/81/2022/ITA-II. However para-2 of Sl. No-2 being cases pertaining to search & seizure, substituted guidelines were issued on 03.06.2022 discussed above, since erstwhile guidelines at para-2, covers only search cases, where conducted upto 31-03-2021. Therefore guidelines issued on 03.06.2022 covers in para-2 as under:- 2.1 Search & seizure/requisition prior to 01.04.2021 (Not Our Case) 2.2 Search & seizure/requisition on or after 01.04.2021 (discussed above) It is relevant to mention the detailed (Master) guidelines dt. 11.05.2022 at Para-4 of Sl. No.-2 also covers search cases where search conducted on or after 01.04.2021 under the heading cases in which notice have been issued u/s 148 of the Act with following details:- S.No. Parameter Procedure for compulsory selection 4 Cases in which notices u/s 148 of the Act have been issued Cases where return is either (i) Cases, where notices u/s 148 of the Act have been furnished or not furnished in issued pursuant to search & seizure/survey actions response to notice u/s 148 of the conducted on or after the 1st day of April, 2021: Act. These cases shall be selected for compulsory scrutiny with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned who shall ensure that such cases, if lying outside Central Charges, are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act calling for information by the Assessing Officer concerned.

Therefore the above guidelines itself proves that search cases where search conducted on or after 01.04.2021 liable to be covered by 147 to 151 provisions. Since for relevant year AY 2021-22 notice was not issued u/s 148 of the Act, therefore Ld. AO was liable to first issue notice u/s 148 after recording the satisfaction on documents/information available with him found during the search with prior approval of Specified Authority. The issuance of notice u/s 148 is not tantamount to selection of case of scrutiny for making regular assessment but being a pre-condition for search assessment where search held u/s 132 /132A on or after 01.04.2021. It is reiterated the case for the relevant year of appellant is not normal scrutiny assessment where only notice u/s 143(2) was liable to be issued for making assessment u/s 143(3), within specified time limit of following year, subsequent to the year in which return is filed. Since the case of the assessee has already been considered as search case by Revenue in AY 2019-20 and earlier years while issuing notice u/s 148 directly without compliance of u/s 148A proceedings therefore for AY 2021-22 which is not a year of search notice could not have been issued directly u/s 143(2) without administrative approval, depriving assessee legal safeguards provided u/s 148 of the Act. It is also relevant to mention if case of the appellant is considered as non-search case while selecting the case for scrutiny under procedure of compulsory selection, AO was liable to demonstrate in the Assessment Order, under which category case is selected as per scrutiny guidelines, which he failed to do so. The intent of such guidelines to issue administrative order for selecting the case under scrutiny not to bypass legal obligation of AO to take approval from DGIT/PDIT/PCIT etc. as defined in proviso of section 148 of the Act. It is also pertinent to mention where search conducted on or after 01.04.2021 covered by section 147 to 151 are special provisions for search assessments which supersede the General provision of assessment and vice versa is not possible. Therefore the Ld. AO while issuing the notice u/s 143(2) without issuance of notice u/s 148 went against the well established principal of law "Generaliaspecialibus non derogant"is a Latin legal maxim that means "general provisions do not derogate from special provisions," or "general laws do not override specific laws". In essence, it dictates that when a general rule conflicts with a specific rule, the specific rule takes precedence. This principle is used in statutory interpretation to resolve conflicts between laws, ensuring that the more precise and relevant provision is applied. The Board itself substituted the guidelines dt. 03.06.2022 para no-2.2 in which erstwhile only AY 2021-22 was mentioned after realizing the mistake, deleted such assessment year in substituted guidelines dt. 26.09.2022 with following details:- 2. With reference to the above, I am directed to state that Sl No. 2.2 of para-2 of CBDT’s Guidelines dt. 03.06.2022 shall be substituted as under:- S.No. Parameter Procedure for compulsory selection 2 Cases pertaining to search & seizure/requisition 2.2 Search & seizure/requisition on or The cases shall be selected for scrutiny with prior after 01.04.2021: Assessments in administrative approval of Pr. CIT/Pr. DIT/CIT/DIT cases arising from search & concerned, who shall ensure that such cases are transferred seizure actions/requisitions u/s to Central Charges u/s 127 of the Act within 15 days of 132/132A conducted on or after service of notice u/s 143(2)/142(1) of the Act by the 01.04.2021. Assessing Officer concerned. After the above changes it transpires search cases for compulsory scrutiny where search conducted u/s 132/132A on or after 01.04.2021, are to be selected for scrutiny issuing notice u/s 143(2), only after issuing of notice u/s 148 of the Act, during the FY 2022-23 once assessee files the ITR in response to notice u/s 148 of the Act and thereafter to be transferred to Central Charge. The intent of substituted guidelines dt. 26.09.2022 to carry out process of selection of cases for scrutiny during whole year of FY 2022-23, which could be possible only after issuance of notice u/s 148 of the Act, where ITR filed in FY 2021-22 or earlier years for AY 2021-22 and preceding years, OTHERWISE in normal course notice u/s 143(2) could have been issued till 30.06.2022, where ITR filed during FY 2021-22. Thus directing the issuance of notice u/s 148 in scrutiny guidelines is not possible as it is a statutory provisions and cannot be override by any guidelines whatsoever.

3. That as a matter of fact the assessment of appellant for preceding assessment years i.e. A.Y. 2019-20 & earlier years has been completed under the provisions of section 148/147 of the Act and after following due procedure which includes proper approval from Statutory Prescribed Authority before issuing notice u/s 148 of the Act and also Approval u/s 148B of the Act.

4. That the search assessments framed by the Assessing Officer also lacks of proper approval u/s 148B of the Act behind the veil of framing assessment u/s 143(3) of the Act only. Had the Assessing Officer taken proper route to frame a search assessment he would have obtained to necessary approvals from the prescribed authorities, one at the time of issuing notice u/s 148 of the Act and second at the time of finalization for assessment u/s 148B of the Act which could entail proper justice to the appellant.

5. That it is therefore respectfully submitted that the appellant has been deprived of its legal rights under the Income Tax Act while dragging it to search assessment and the present assessment framed u/s 143(3)/144 of the Act is illegal and liable to be quashed.

(C) We take appeal vide (assessment year 2015- 16) first. In this case, assessment order dated 28/03/2024 was passed under section 147 of the I. T. Act whereby the assessee’s total income was determined at Rs.1,70,78,307/- as against the returned income of Rs.15,42,210/-. In the aforesaid assessment order, an addition of Rs.93,05,097/- was made by enhancing the net profit rate disclosed by the assessee. The Assessing Officer applied net profit rate of 11%. The Assessing Officer enhanced the net profit rate disclosed by the assessee on mainly two grounds. Firstly, she took note that the assessee had disclosed net profit rate of 10.13% in Assessment Year 2021-22. Secondly, she observed that possibility of expenses claimed that would be partly disallowable under section 40A(3) of the I. T. Act and as per Explanation 1 to Section 37 of I. T. Act could not be ruled out. The learned CIT(A) reduced the net profit rate from 11% (as applied by the Assessing Officer) to 7%, thereby confirming the addition to the tune of Rs.54,24,256/-. The remaining amount of Rs.39,80,841/- out of the total addition made by the Assessing Officer on this account was deleted by the learned CIT(A). The assessee has appealed against the order of learned CIT(A) sustaining the aforesaid amount of Rs.39,80,841/-. On perusal of records, it is found that in the assessee’s statement recorded under section 132(4) of the Act, at the time of search conducted under section 132 of the Act, the assessee offered to disclose net profit @10% for Assessment Year 2021-22 and Assessment Year 2022-23 on estimated turnover of Rs.170 crores and Rs.220 crores respectively. However, there was no such offer made by the assessee for any earlier assessment years. The assessee has honoured the offer made in the aforesaid statement recorded under section 132(4) of the I. T. Act and has disclosed net profit rate of more than 10% in assessment year 2021-22. However, merely on this basis, Revenue authorities cannot enhance net profit rate for earlier years. As far as disallowance under section 40A(3) of I. T. Act and disallowance as per Explanation 1 to section 37 of I. T. Act are concerned; the Assessing Officer has not pointed to even a single claim of the assessee that attracts either of these disallowances. Moreover, the Assessing Officer has not pointed out any incriminating material found at the time of search in the assessee’s premises, conducted under section 132 of the I. T. Act.

(C.1) At the time of hearing, the learned A.R. for the assessee placed reliance on written submissions, referred to in foregoing paragraphs (B), (B.2), (B.2.1) and (B.3) of this order. He further drew our attention to the fact that the assessee had invoked the jurisdiction of the Addl. CIT for issue of direction under section 144A of the Act objecting to the Assessing Officer’s idea of using the net profit rate disclosed by the assessee for assessment year 2021-22 and assessment year 2022-23, in estimating net profit for earlier years also. The petition of the assessee under section 144 of the Act and annexures thereto are reproduced below for the ease of reference:

To, Additional CIT, Central Range, Income Tax Office, Lucknow. Ref: Rakesh Kumar Pandey (Prop. Alok Construction) Vill. & Post- Devarda, Near Belsar, Gonda (UP) India PAN: ATIPP6520B Sir, Subject: Reg. direction u/s 144A of the Income Tax Act for AY 2022-23.

In reference to the above said matter, it is hereby submitted as under:

1.

1. That during the course of the search, assessee offered additional income in AY 2021-22 & AY 2022-23 over & above the usual profit of civil contract business to cover up possible deficiencies in maintenance of record till the date of search and other adverse observations of the search party. The such additional income was approx..Rs. 16-17 Crore arising out of additional income offered in these two years and which includes remission/cessation of old business liabilities (sundry creditors) and accordingly considered as income in financial statement of AY 2022-23 in tune of Rs. 9,89,66,810/- and credited in P&L account under the head ‘Old balance written off’.

2. That during the course of assessment proceedings query dated 23.03.2024 has been asked why the entry of Rs. 9,89,66,810/- credited to the P & L A/c should not be treated as unexplained credits in the hands of assessee and taxed accordingly. In response to which assessee has submitted detailed reply of even date along with affidavit on subject matter.

3. In this regard it is reiterated that the additional income offered in AY 2021-22 & AY 2022-23 with higher profit has been misinterpreted by the Department and unusual rate of profit without any basis, has been applied in AY 2020-21 & earlier years without considering the peculiar facts and maintaining the sanctity of additional income offered during the search.

4. In this regard it is also relevant to mention that old accumulated liability under the head sundry creditors in tune of Rs. 9,89,66,810/- written off and credited in P&L a/c alleged as unexplained credits, which is part of opening balance as on 01/04/2021 of Rs. 45,51,69,292/- and very much relates to the FY 2020-21 & prior years, and duly covered in additional income offered during the search. Further detail of such sundry creditors has already been placed on record during assessment proceeding of AY 2020-21 and having the roots from business of assessee. Therefore same cannot be considered as unexplained credits.

5. It is also relevant to mention, additional income offered during the search on which assessee has paid tax in AY 2021-22 & AY 2022-23, was on the basis to cover deficiencies in maintenance of record from AY 2014-15 onwards. However income of AY 2014-15 to AY 2020- 21 has been taxed with higher rate of profit, which was offered only for AY 2021-22 & AY 2022-23 to cover deficiencies from AY 2014- 15 to AY 2020-21 has resulted addition in many folds due to misinterpretation of additional income offered during the search. Further AO is alleging to add remission/cessation of business liability already credited in P&L account, as an unexplained credit will result to the same income to be assessed being more than two times hence violating the principle of double jeopardy and spirit of relevant provision of law and contrary to peculiar facts of the case.

3. That during the course of the search assessee offered additional income in AY 2021-22 & AY 2022-23 over & above the usual profit of civil contract business to cover up possible deficiencies in maintenance of record till the date of search and other adverse observations of search party. The such additional income was approx.. Rs. 16-17 Crore arising out of additional income offered in these two years and which includes remission/cessation of old business liabilities and accordingly considered as income in financial statement of AY 2022-23 in tune of Rs. 9.89,66,810/- discussed above. Therefore at this juncture no other cognizance may be taken of income already offered to tax and alleged as unexplained credit.

5. That it appears roots of basis on which additional income was offered for AY 2021-22 & AY 2022-23 has become the reason for making addition in earlier years & relevant year in many folds, therefore assessee is filing an affidavit on subject matter which may kindly be taken on records. 6. That it is therefore requested that the Credit Entry of Rs. 9,89,66,810/- shown in the P & L a/c pertaining to cessation of old business liabilities may kindly be accepted as such, which is part of the additional income already declared by the assessee under bonafide belief. 7. Further if your good self is still drawing any adverse inference, kindly provide reasonable opportunity to submit the same.

(C.1.1) However, the Addl. CIT did not issue any direction to the Assessing Officer, and also did not dispose of the assessee’s petition under section 144 of the I. T. Act. Further the learned A.R. for the assessee also highlighted that no incriminating material was found from the assessee’s premises at the time of search under section 132 of the Act, and therefore, no addition could have been made to income disclosed by the assessee as per well settled position of law as decided by Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Abhisar Buildwell (P.) Ltd. [2023] 149 Taxmann.com 399 (SC) and in the case of Dy. CIT vs. U. K. Paints (Overseas) Ltd. [2023] 150 Taxmann.com 108 (SC). He also drew our attention to the fact that Co-ordinate Bench of ITAT, Lucknow has followed the aforesaid orders of Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Abhisar Buildwell (P.) Ltd. [2023] 149 Taxmann.com 399 (SC) and in the case of Dy. CIT vs. U. K. Paints (Overseas) Ltd. [2023] 150 Taxmann.com 108 (SC) in many decisions and, therefore, the issue is squarely covered in favour of the assessee.

(C.1.2) The learned A.R. for the assessee also placed reliance on CBDT Circular F.No.286/2/2003-IT(Inv) dated 10/03/2003 and Circular F.No.286/98/2013-IT(Inv-II) dated 18/12/2014. Moreover, he also placed reliance on the decided precedents reported at CIT vs. Dilbagh Rai Arora [2019] 104 taxmann.com 371 (Allahabad), CIT vs. Mantri Share Brokers (P.) Ltd. [2018] 96 taxmann.com 279 (Rajasthan), CIT vs. Smt Malti Mishra [2013] 38 taxmann.com 160 (Allahabad)/[2014] 221 Taxman 25, Pr.CIT vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC), Pr.CIT vs. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94 (Bombay), CIT vs. Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh), Pr.CIT vs. Rohit Karan Jain, ITA/5/2023 (Gauhati High Court), ACIT vs. Kuber Khadyan Pvt. Ltd. (ITAT Delhi Bench), KC Raju Multi Specialty Hospital vs. DCIT (ITAT ‘A’ Bench Bangalore). The relevant portions of these CBDT Instructions and decided precedents are reproduced below for the ease of reference:

"SHRI RAKESH KUMAR PANDEY (PAN:ATIPP6520B) AY 2014-15 TO AY 2022-23 A. Board Instruction- Confession of Additional Income during search etc.

2. F. No. 286/98/2013-IT (Inv-II) date 18.12.2014 Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light.

I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.

In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely.

B. No addition only on the basis of statement u/s 132(4) of the Act 1. Commissioner of Income-tax v. DilbaghRaiArora [2019] 104 taxmann.com 371 (Allahabad).

21. Therefore, the case law relied upon by the Appellant is of no help. The case in hand the assessee-respondent has given documents, material and explained threadbare with regard to amount of Rs. 24 crores but the assessing authority has mechanically made the addition of Rs. 7 crores and added back the same amount only on the basis of statement having been made by the assessee which is not permitted. 2. [2018] 96 taxmann.com 279 (Rajasthan)[05-09-2017] Commissioner of Income-tax-1 v. Mantri Share Brokers (P.) Ltd

11. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. SLP of revenue is dismissed. 3. 2013] 38 taxmann.com 160 (Allahabad)/[2014] 221 Taxman 25 Commissioner of Income-tax II v.Smt. Malti Mishra 12. In the instant case, there is no concealment on the part of the assessee regarding the transactions. All the transactions were duly disclosed. If the income as per law is exempted, then the offer of the assessee is meaningless as the law will prevail and will supersede the "offer" made by the assessee. In the instant case, surrender was to buy the peace as the assessee is not an expert in income tax matter. The Department cannot take the advantage of the ignorance of the assessee as per CBDT CirculrNo.14(XL-35)/1955 dated 01.04.1955 mentioned in Parekh Bros. v. CIT [1984] 150 ITR 105/[1983] 15 Taxman 539 (Ker.)

C. No incriminating material – No Addition – In unabated years (AY 2014-15 to AY 2019-20) [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC) Principal Commissioner of Income-tax, Central- 3v.AbhisarBuildwell (P.)Ltd.*

D. Section 145(3) wrongly invoked Principal Commissioner of Income-tax-3v.Swananda Properties (P.) Ltd.* [2019] 111 taxmann.com 94 (Bombay)

11. We note that the books of accounts of the Respondent were rejected by the CIT (A) under section 145(3) of the Act. However, the Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of accounts to disregard the same. We note that CIT (A) in his order while rejecting the Books of Account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the Respondent's records which would warrant rejection of books and making a Best Judgment Assessment. Thus, on facts the view taken by the Tribunal is possible view. Therefore, no substantial question of law arises. Thus not entertained.

17. The Supreme Court has observed in the case of CIT v. A. Raman & Co. [1968] 67 ITR 11 that the law does not oblige a trader to make maximum profit, he can make, out of his trading activity. Income on which he can be taxed is only the income he has earned. So also recently, the Supreme Court in the case of S.A. Builders v. CIT [2007] 158 Taxman 74/288 ITR 1 has observed that no businessman can be compelled to maximize his profits. Therefore, in view of the above, this question as proposed also does not give rise to any substantial question of law. Thus not entertained.

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “A”, LUCKNOW ITA No. 355/LKW/2020

12. Ground no. 2 of the Department appeal, relates to disallowance on account of differences in balances of Sundry Creditors as shown by the assessee and as confirmed by the Sundry Creditors on enquiry by the Assessing Officer. As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and order that in the event of such re-conciliation being made to satisfaction of the Assessing Officer, addition should not be made on this account. This ground of appeal is allowed for statistical purposes.

13. The third ground of the Revenue’s appeal relates to the raising of additional grounds, as the need arises. Since no additional grounds have been raised, the ground is dismissed, as not pressed.

14. Coming to the appeal filed by the assessee, on the issue of the Ld. CIT(A) applying the net profit rate of 8% and upholding the addition to the extent of Rs.18,89,682/-, we observe that the Ld. CIT(A) has not pointed out any defects in the books of account of the assessee, which could form the basis for rejection of the books of the assessee under section 145(3) of the Act. All he has pointed out, is that the assessee has not produced the books of account as per the request of the Assessing Officer and at the time of appellate proceedings. However, perusal of the appellate order does not show that the Ld. CIT(A) called for production of the books of account in the course of appellate proceedings. The failure to produce of the books of account can be a good ground for presuming the books of account are not maintained and even presuming the books of account have not & 444/LKW/2020 Page 9 of 10 been audited, which in return invite consequential penalty proceedings. But to our mind, it would not constitute sufficient reason to hold that the books were incomplete or incorrect. We note that the Ld. CIT(A) has himself recorded the fact that VAT Authorities have examined and confirmed the sales and purchases of the assessee. In the circumstances, in the absence of finding any fault in the accounts of the assessee, in our opinion the rejection of the books and estimation of the profit @ 8% would not be justified. In any case, the 8% profit is presumptive tax for civil contractors having turnover less than of Rs. 2 crores. The turnover of the assessee is over Rs.7 crores. In the circumstances, a rate not bearing any relation to the history of the assessee’s case or any comparable case cannot be justified. In the circumstances, we find it fit to delete the addition made on account of estimation of net profit and to restore the rate of net profit to that disclosed by assessee in the return. Ground no. 1 of the assessee’s appeal is accordingly allowed.

15. Ground no. 2 of the assessee’s appeal relates to not appreciating the previous order of the ITAT in the assessee’s own case. After considering the arguments presented, we observe that res-judicata does not apply to income tax proceedings and each year has to be decided upon the facts of the case in that year. Therefore, Ld. CIT(A) was not bound to follow the rate of profit deemed reasonable by the ITAT in a particular year. However, as we have already held earlier, a rate cannot be estimated without reference to the history of the assessee’s case or comparable cases. Hence to the extent that the Ld. CIT(A) estimated the same without reference to the history of the assessee’s case, ground of appeal is partly allowed.

16. The third ground agitates the failure of the Ld. CIT(A) to consider the VAT assessment and the fact that the assessee &444/LKW/2020 Page 10 of 10 supplied only to PSUs, which was the reason for higher estimation of income by him. In deciding ground no. 1, we have already observed that the Ld. CIT(A) has considered the VAT assessment and we observe that he has also recorded the fact of the purchases of the assessee being verifiable as they were from PSUs. However, since the estimation of income by him is at variance with these findings recorded by him in his order, the same is not maintainable. Accordingly, this ground of appeal is allowed.

12. Ground no. 2 of the Department appeal, relates to disallowance on account of differences in balances of Sundry Creditors as shown by the assessee and as confirmed by the Sundry Creditors on enquiry by the Assessing Officer. As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and order that in the event of such re-conciliation being made to satisfaction of the Assessing Officer, addition should not be made on this account. This ground of appeal

is allowed for statistical purposes.

13. The third ground of the Revenue’s appeal relates to the raising of additional grounds, as the need arises. Since no additional grounds have been raised, the ground is dismissed, as not pressed.

14. Coming to the appeal filed by the assessee, on the issue of the Ld. CIT(A) applying the net profit rate of 8% and upholding the addition to the extent of Rs.18,89,682/-, we observe that the Ld. CIT(A) has not pointed out any defects in the books of account of the assessee, which could form the basis for rejection of the books of the assessee under section 145(3) of the Act. All he has pointed out, is that the assessee has not produced the books of account as per the request of the Assessing Officer and at the time of appellate proceedings. However, perusal of the appellate order does not show that the Ld. CIT(A) called for production of the books of account in the course of appellate proceedings. The failure to produce of the books of account can be a good ground for presuming the books of account are not maintained and even presuming the books of account have not & 444/LKW/2020 Page 9 of 10 been audited, which in return invite consequential penalty proceedings. But to our mind, it would not constitute sufficient reason to hold that the books were incomplete or incorrect. We note that the Ld. CIT(A) has himself recorded the fact that VAT Authorities have examined and confirmed the sales and purchases of the assessee. In the circumstances, in the absence of finding any fault in the accounts of the assessee, in our opinion the rejection of the books and estimation of the profit @ 8% would not be justified. In any case, the 8% profit is presumptive tax for civil contractors having turnover less than of Rs. 2 crores. The turnover of the assessee is over Rs.7 crores. In the circumstances, a rate not bearing any relation to the history of the assessee’s case or any comparable case cannot be justified. In the circumstances, we find it fit to delete the addition made on account of estimation of net profit and to restore the rate of net profit to that disclosed by assessee in the return. Ground no. 1 of the assessee’s appeal is accordingly allowed.

is partly allowed.

16. The third ground agitates the failure of the Ld. CIT(A) to consider the VAT assessment and the fact that the assessee & 444/LKW/2020 Page 10 of 10 supplied only to PSUs, which was the reason for higher estimation of income by him. In deciding ground no. 1, we have already observed that the Ld. CIT(A) has considered the VAT assessment and we observe that he has also recorded the fact of the purchases of the assessee being verifiable as they were from PSUs. However, since the estimation of income by him is at variance with these findings recorded by him in his order, the same is not maintainable. Accordingly, this ground of appeal is allowed.

17. In the result, both appeals of the department and the assessee are partly allowed.

2. THE GAUHATI HIGH COURT Case No. : ITA/5/2023 THE PRINCIPAL COMMISSIONER OF INCOME TAX v. ROHIT KARAN JAIN Mr.Keyal has submitted that in the present case, the Assessing Officer has invoked Section 153A of the Income Tax Act on the basis of the incriminating material only and not otherwise. It is contended that the finding recorded by the Commissioner, Income Tax (Appeals) as well as by the ITAT to the effect that no incriminating material was available to the Assessing Officer to invoke the power provided under Section 153A is perverse and therefore, the same is liable to be interfered with.

15. We have considered the submission made on behalf of the learned counsel for the appellants and perused the material available on record.

16. On a perusal of the material available on record, we are of the view that the Commissioner of Income Tax (Appeals) as well as ITAT, after carefully scrutinizing the material collected by the Assessing Officer, has recorded a finding of the fact that other than the retracted statement no other evidence/material was relied upon by the Assessing Officer to invoke the addition. The Commissioner of Income Tax (Appeals) and the ITAT were of the view that the said piece of evidence, i.e. retracted statement cannot be termed as incriminating material.

17. Taking into consideration the above fact, we are of the view that the said finding of fact recorded by the Commissioner of Income Tax (Appeals) as well as ITAT is not liable to be interfered with in this appeal since this Court can only exercise jurisdiction when any substantial question of law arises.

18. In view of the above discussion, it is held that the present appeal does not involve any substantial question of law and therefore, the same is dismissed, being devoid of merit.

9.4 The relevant paragraph of the decision of the Hon’ble Hon’ble Delhi High Court in the case of HarjeevAgrawal(supra) also reproduced as under: “20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words “evidence found as a result of search” would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation.

21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded.

22. In CIT v. Sri Ramdas Motor Transport Ltd.: (1999) 238 ITR 177 (AP), a Division Bench of Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below: "A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such per son under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub- section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle."

24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee.

25. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 3699 ITR 171 (T & AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. The relevant extract from the said judgement is quoted below: “17. The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under section 94 of the Code of Criminal Procedure by operation of sub-section (13) of section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent.” “18. It is not without reason that Parliament insisted that the recording of statement must be in relation to the seized and recovered material, which is in the form of documents, cash, gold, etc. It is, obviously to know the source thereof, on the spot. Beyond that, it is not a limited licence, to an authority, to script the financial obituary of an assessee.” “19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even if there is no other material. If, on the other hand, the statement is retracted, the Assessing Officer has to establish his own case. The statement that too, which is retracted from the assessee cannot constitute the basis for an order under section 158BC of the Act.”

9.5 In view of the above finding of the Hon’ble Delhi High Court statement of Sh. MulchandMalu under section 132(4) of the Act alone cannot be considered as incriminating material unless any corroborating incriminating material is found during the course of the search from the premises of the assessee.

9.6 As far as the decision in the case of Sh. B Kishore Kumar (supra) is concerned Hon’ble Supreme Court has dismissed the SLP filed by the assessee against the decision of Hon’ble Madras High Court (decision reported in 52 taxmann.com 449), wherein the Hon’ble Court has held that where the assessee himself has stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on the basis of the admission without be scrutinizing documents. The relevant finding of the Hon’ble High Court is reproduced as under: “6. With regard to the undisclosed income of Rs.52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of undisclosed income of Rs.52,73,920/- is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue.

7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in C1T v. GirishChaudhary, [2008] 296 1TR 619/163 Taxman 608 to plead that loose sheets of papers should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during the search on admitted facts. The entire exercise by the department to bring to tax undisclosed income, we find has been generous and simple. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the Tribunal.”

9.7 Thus, we find that in the above decision addition has been sustained on the basis of the statement recorded of the assessee himself and not based on the statement of any third-party. The facts of above case are distinguishable from the facts of the assessee.

9.8 In view of the above facts and circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute. Following the finding of the Hon’ble Delhi High Court in the case of Kabul Chawal (supra), we, accordingly, uphold the same. The ground No. 1 of the appeal of the Revenue is accordingly dismissed.

4. IN THE INCOME TAX APPELLATE TRIBUNAL‘A’ BENCH, BANGALORE KC Raju Multi Specialty Hospital v. The Dy. Commissioner of Income Tax, 11.2 Thus, both the Hon’ble Supreme Court and the CBDT have made it clear that in unabated assessments, additions can only be made on the basis of incriminating material unearthed during search and not merely on confessions or extrapolations. It is the admitted position that the year under consideration is unabated assessment year which was also not disputed by the learned DR of the revenue at the time of hearing. 11.3 Applying the above settled legal position to the facts of the present case, we find that the only seized document was a draft profit and loss account for A.Y. 2017-18, which does not pertain to this year. There was no incriminating material found for the present year. The entire addition rests on the statement of the partner recorded during search, which was later retracted. In light of the CBDT circulars, such confessions cannot be the sole basis for assessment. Moreover, as held in AbhisarBuildwell (supra), additions in unabated years are permissible only if supported by incriminating material. None exists here. The extrapolation by the AO from one year to another, without material for the relevant year, is against the settled law. Therefore, the addition of ₹48 lakhs made by the AO and sustained by the CIT(A) cannot be upheld. Hence, the addition of ₹48 lakhs is hereby deleted. Thus, the ground of appeal of the assessee is allowed.

- 1054/Bang/2025 Page 7 of 8 . 11.4 Regarding the issues raised by the assessee on merit of the case, we note that the appeal of the assessee has been decided in its favour on technical ground. Therefore, we are of the view that no separate finding is required to be given with respect to the grounds of appeal raised on merit of the case. As such, the learned AR and the DR also agreed not to adjudicate the issue raised by the assessee on merit of the case if the technical issue is decided in favour of the assessee. Accordingly, we dismiss the same as infructuous.

12. In the result, the appeal of the assessee is hereby partly allowed. Coming to 1053 and 1054/Bang/2025, appeals by the assessee for the AYs 2014-15 to 2016-17

13. The facts of the cases on hand are identical to the facts of the case discussed above, therefore, respectfully following the same, the appeals of the assessee are hereby partly allowed.

14. In the result, all the appeals of the assessee are hereby allowed.

F. Condition laid down u/s 149(1)(b) of the Act w.r.t. alleged escapement of 50 lacs or more represented in form of asset, expenditure or entry in books does not satisfied (AY 2014-15 to AY 2018-19)

Note : During assessment proceedings of A.Y 2022-23 appellant filed application for direction u/s 144A to Range Head and also filed submission to A.O. of even date with affidavit to maintain sanctity of statement help u/s 132(4) during search and additional income may be lifted to A.Y. 2021-22 and 2022-23 Where he has already honoured additional income incorporated in respective years and paid due tax.”

(C.2) The learned Departmental Representative placed reliance on the assessment order, and impugned appellate order of learned CIT(A).

(C.2.1) We have heard both sides. We have perused materials on record. On perusal of the assessment order, it is found that the Assessing Officer has based her estimation of net profit rate @11%, following the disclosed net profit rate of the assessee for assessment year 2021-22. She has no other material to support the aforesaid act of enhancing the net profit rate disclosed by the assessee. We have already commented on this, in the foregoing paragraph. Further, in our view, the statement recorded under section 132(4) of the Act, at the time of search under section 132 of the Act is in itself, not an incriminating document. In fact it is not a document found/seized at the time of search. It is a document prepared by the search party of the Income-tax Department at the time of search under section 132 of the Act. The statement under section 132(4) is to record prima facie response of the assessee to the questions that arise in the mind of the search party/the authorized officer. It may include the prima facie response of the assessee to documents/assets found at the time of search under section 132 of the Act; but such prima facie response of the assessee recorded in statement under section 132(4) of the Act cannot be said to be, in itself, an incriminating document. For this conclusion, we take strength from the aforesaid precedents reported at CIT vs. Dilbagh Rai Arora [2019] 104 taxmann.com 371 (Allahabad), CIT vs. Mantri Share Brokers (P.) Ltd. [2018] 96 taxmann.com 279 (Rajasthan), CIT vs. Smt Malti Mishra [2013] 38 taxmann.com 160 (Allahabad)/[2014] 221 Taxman 25, Pr.CIT vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC), Pr.CIT vs. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94 (Bombay), CIT vs. Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh), Pr.CIT vs. Rohit Karan Jain, ITA/5/2023 (Gauhati High Court), ACIT vs. Kuber Khadyan Pvt. Ltd. (ITAT Delhi Bench), KC Raju Multi Specialty Hospital vs. DCIT (ITAT ‘A’ Bench Bangalore). As no incriminating material was found at the assessee’s premises at the time of search under section 132 of the Act, there is nothing in support of the action of the Assessing Officer in enhancing the net profit rate from what was disclosed by the assessee in the return of income. Merely because the assessee has earned and disclosed higher rate of net profit in a later year, it does not automatically lead to conclusion that the assessee has earned similarly higher rate of net profit in earlier years also. The matter is also squarely covered by the orders of Hon'ble Supreme Court reported at Principal Commissioner of Income-tax vs. Abhisar Buildwell (P.) Ltd. [2023] 149 Taxmann.com 399 (SC) and in the case of Dy. CIT vs. U. K. Paints (Overseas) Ltd. [2023] 150 Taxmann.com 108 (SC) wherein it was held by Hon'ble Supreme Court that no addition can be made if no incriminating material was found from assessee’s premises, at the time of search under section 132 of the I. T. Act. Co-ordinate Bench of ITAT, Lucknow has followed these precedents in numerous orders, including Shashi Agarwal vs. DCIT [2024] 167 taxmann.com 687 (Lucknow-Trib); Ocean Dream Infrastructure Pvt. Ltd. vs. DCIT (order dated 21/01/2025 in & 147/Lkw/2023); Blue Nile Infratech Pvt. Ltd. vs DCIT (order dated 13/02/2025 in IT(SS)A. Nos.698 to 700/Lkw/2024). In view of the foregoing, it is held that the action of the Assessing Officer in enhancing the rate of net profit from what was disclosed by the assessee to 11% is without any merit. The act of the Assessing Officer in enhancing the net profit is merely by way of guess work, conjecture, surmises and imagination. The submissions made from the assessee’s side, as contained in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order; and the discussion in foregoing paragraphs (C) and (C.1) of this order support the case of the assessee. Accordingly, we direct the Assessing Officer to accept the net profit disclosed by the assessee.

(D) The second addition made by the Assessing Officer in assessment year 2014-15 is an amount of Rs.61,31,000/- under section 56(2)(vii)(b) of the Act. The Assessing Officer noted that the sale consideration of the immovable property at Gonda was Rs.31,45,000/- whereas the market value of property was Rs.92,76,000/-. The Assessing Officer added Rs.61,30,000/- to the assessee’s income noting that the assessee did not file satisfactory reply to show cause notice dated 26/02/2024. However, the Assessing Officer has not discussed in the assessment order, why the response of the assessee was not found to be satisfactory. She has made the addition in a summary manner without discussing through a speaking order, the reasons for not accepting the assessee’s reply. In the impugned appellate order, the learned CIT(A) noted that Departmental Valuation Officer had valued the property at Rs.43,46,000/-. The learned CIT(A), sustained the addition of Rs.12,01,000/- (difference of Rs.43,46,000 minus Rs.31,45,000) and remaining addition of Rs.49,30,000/- was deleted. The assessee has filed appeal against the decision of learned CIT(A) sustaining the aforesaid amount of Rs.12,01,000/-. At the time of hearing; the learned A.R. for the assessee drew our attention to written submissions on this issue, as contained in foregoing paragraphs (B.1), (B.2) and (B.2.1) of this order; to highlight the fact that, Free Market Value of the property, including cost of land along with cost of construction of boundary wall aggregated to Rs.30,24,200/- which was less than the sale consideration of Rs.31,45,000/-; and Free Market Value determined by Departmental Valuation Officer (D.V.O.) was erroneous. Thus, he contended, actual sale consideration being more than Free Market Value; the entire addition made by the Assessing Officer on the basis of erroneous valuation report of D.V.O. should be deleted. The learned Departmental Representative relied on the impugned order of learned CIT(A), and on the assessment order. After hearing both sides and perusing materials on record, we are satisfied with the submissions made from the assessee’s side. Hence, we direct the Assessing Officer to delete the entire aforesaidaddition of Rs.61,30,000/-.

(E) In the appeal for assessment year 2014-15, the assessee has also disputed the validity of approval granted by the Assessing Officer under section 147/143(3) of the Act. At the time of hearing before us, learned A.R. for the assessee relied on written submissions on thi issue, which are referred to in the foregoing paragraphs (B.1), (B.2) and (B.2.1) of this order. The learned Departmental Representative supported the impugned appellate order of the learned CIT(A) and the assessment order passed by the Assessing Officer. The aforesaid approval was granted by the Assessing Officer under section 148B of the Act. For this purpose, the Assessing Officer had sent proposed draft assessment orders vide letter No. ACIT/CC- II/Lko./Approval(Assessment)/2023-24/431 dated 20/03/2024; whereby the Assessing Officer had sought approval for proposed assessment orders in the case of six different assessees belonging to two different groups (Alok Construction Group and Raj Group). The total number of draft assessment orders for which approval was sought by the Assessing Officer was 12, pertaining to seven different assessment years from 2013-14 to 2022-23. The approval was granted by the Addl. CIT on the very next day i.e. on 21/03/2024. The time gap between sending of draft assessment orders by the Assessing Officer (on 20/03/2024) and approval granted by the Addl. CIT (on 21/03/2024) was too short for the Addl. CIT to exercise due application of mind for the purpose of giving approval. It is an obvious inference that approval was given by the Addl. CIT in a mechanical manner, without due application of mind; because, having regard to the enormity of materials to be considered for the purpose of giving approval, including assessment record, appraisal report, seized material, statement recorded during and after search under section 132 of the Act, etc; was so much that it was humanly impossible for the Addl. CIT to exercise due application of mind within such a short time for the purpose of giving approval to so many draft assessment orders, under section 148B of the Act.

(E.1) The provision regarding approval under section 148B of the Act for post search assessments are akin to provisions under section 153D of the Act for granting of approval to post search assessments. In the cases of Minto Developers Pvt. Ltd. vs. ACIT (order dated 30/09/2025 in and in the case of Jyoti Mediservices Pvt. Ltd. vs. DCIT (I.T.A. No.113, 114, 115/Alld/2025, vide order dated 21/11/2025; we have passed detailed orders regarding validity of approval to post search assessments, given by the Addl. CIT under section 153D of the Act. The relevant portion of the aforesaid order dated 21/11/2025 in the case of Jyoti Mediservices Pvt. Ltd. vs DCIT (supra) passed by us, which also contains relevant parts of our order in the case of Minto Developers Pvt. Ltd. vs. DCIT (supra), is reproduced as under:

“(B.2.1) We have heard both sides. We have perused materials on record. The aforesaid order dated 30/09/2025 in the case of Minto Developers Pvt. Ltd. (supra) was delivered by us after detailed discussion of submissions made by the two sides, careful perusal of materials on record and due consideration of numerous precedents which included binding precedents also. The relevant portion of our order in the case of Minto Developers Pvt. Ltd. (supra) is reproduced below for the ease of reference:

“(F) At the time of hearing, representatives of both sides agreed that appeals of Minto Developers Pvt. Ltd. (I.T.A. No.337/Lkw/2018 for A.Y. 2009-10) may be taken as the lead case as regards the legal issue whether the assessments were passed by the Assessing Officer after obtaining valid approval of JCIT. They submitted that the facts and circumstances for all the other appeals on this issue were in para materia and the decision in the case of Minto Developers Pvt. Ltd. would apply mutatis mutandis to remaining cases also. Accordingly, we first take up the appeal of Minto Developers Pvt. Ltd. (I.T.A. No.337/Alld/2018 for A.Y.2009-10).

(F.1) As regards validity of approval given by JCIT u/s 153D of the Act, the learned Counsel for the assessee drew our attention to approval letter No.Jt.CIT/CR/VNS/Approval u/s 153D/JJGroup/2017-18/304 dated 31/07/2017 whereby approvals were given for 11 different assessees for a total of 63 assessments pertaining to numerous assessment years. The aforesaid letter is reproduced below for the ease of reference:

(F.1.1) The learned Counsel for the assessee challenged the validity of approval granted u/s 153D of the Act on many grounds. To begin with, he contended that the approvals were given without due application of mind. In this regard he drew our attention to the fact that the draft assessment orders were sent to the JCIT by the Assessing Officer vide letter F.No.ACIT/CC/Approval/Alld/2017-18/352 dated 28/07/2017. He further drew our attention to the fact that the next two days, i.e. 29th & 30th July, 2017 were closed holidays on account of Saturday and Sunday. Thereafter, the JCIT gave approval u/s 153D of the Act vide aforesaid letter dated 31/07/2017 in the case of aforesaid 11 assessees for a total of 63 assessments pertaining to different assessment years in the cases of the aforesaid 11 different assessees. It was the contention of the learned Counsel for the assessee that considering the enormity of seized materials, digital data, submissions of the assessees, appraisal report provided by the Investigation Wing of Income Tax Department, reports under Rules 9 and 9A of ITSC(P) Rules, and other materials including assessment records, it was humanly impossible for the JCIT to exercise due application of mind before granting approval to the Assessing Officer for 63 assessments pertaining to 11 different assessees for various assessment year; vide aforesaid common approval letter dated 31/07/2017, sufficiently in time on 31/07/2017 for the letter of approval to reach the Assessing Officer along with seized materials, digital data, submissions of the assessees, appraisal report provided by the Investigation Wing of Income Tax Department, reports under Rules 9 & 9A of ITSC(P) Rules and other materials including assessment records to reach the Assessing Officer on 31st July 2017 itself from Varanasi (where JCIT was stationed) to Allahabad (where the Assessing Officer was stationed) in order to also enable the Assessing Officer to pass the assessment order on 31/07/2017 itself, which was the last date for passing assessment order (after which the assessments would have been barred by limitation).

(F.1.2) The learned Counsel for the assessee then challenged the aforesaid approval given u/s 153D of the Act on the basis that the JCIT did not grant approvals u/s 153D of the Act through separate approval letters for separate assessment years for each assessment orders pertaining to each of the aforesaid assessees. He contended that the JCIT was required to issue separate letters of approval for each assessment year for each assessee. The approvals granted u/s 153D for the aforesaid assessments pertaining to different assessment years for the aforesaid 11 assessees through a common letter do not meet this requirement, the learned Counsel for the assessee submitted.

(F.1.3) Next, the learned Counsel for the assessee challenged the validity of the approval granted u/s 153D of the Act, contending that the approvals were granted by JCIT vide aforesaid common letter dated 31/07/2017 in a non speaking manner. The letter did not contain any writeup of JCIT himself indicating that the approvals were granted for the aforesaid 63 assessments after proper application of mind. He contended that contents of the approval letter should include discussion to show that the JCIT had considered all the issues in the proposed draft assessment order, and had applied his mind independently before granting approval instead of giving approval in a summary and non speaking way, in the manner of rubber stamping whatever draft assessment order was sent by the Assessing Officer. He further submitted that this showed that the approvals were granted in a summary, routine, perfunctory and mechanical manner, as an idle formality; and that approvals were not based on independent application of mind by the JCIT.

(F.1.4) The learned Counsel for the assessee also submitted that the JCIT was required, u/s u/s 153D of the Act, to approve not only the additions proposed by the Assessing Officer; but was also required to approve the assessment order in entirety, contending that the assessment order proposed by the Assessing Officer was required to be approved word by word. In the present case, the learned Counsel for the assessee submitted, the JCIT, vide order sheet dated 25/07/2017, had observed that certain corrections were needed in the draft orders and had directed the Assessing Officer to resubmit the draft orders after making necessary corrections, as discussed with him, latest by 28/07/2017. The JCIT had further directed the Assessing Officer to resubmit the draft orders after corrections, through official e-mail address. Therefore, learned Counsel for the assessee submitted even till 25/07/2017, there was no finality to the assessment order. The state of affairs was conditioned and tentative.

(F.1.4.1) Moreover, the learned Counsel for the assessee submitted, there was common order sheet for all the cases of Jeevan Jyoti Group which consisted of several assessees and the assessments pertained to seven assessment years in the case of each assessee. However, the learned Counsel for the assessee submitted, there was no record, either in the order sheet or elsewhere, as to what corrections were directed to be made by JCIT in the draft assessment orders sent by the Assessing Officer vide aforesaid letter dated 18/07/2017 which was received in the office of the JCIT on 19/07/2017. He contended that considering large number of assessees and multiple assessments for different assessment years; it was impossible for the JCIT to remember what corrections were directed by him in the absence of any record and therefore, it was impossible for him to satisfy himself whether the second draft assessment orders were prepared after carrying out the corrections as per the directions given on 25/07/2017. In the absence of such satisfaction, the approval given u/s 153D of the Act were in the nature of rubber stamping and suffered from infirmity on the ground of having been given without due application of mind.

(F.1.5) The learned Counsel for the assessee further submitted in this connection that the direction of the JCIT to send the second draft of the proposed assessment order by e-mail by 28/07/2017, was not complied with by the Assessing Officer and instead only physical copies were submitted by the Assessing Officer. In the absence of compliance of the directions of the JCIT, the learned Counsel for the assessee submitted, the approvals granted by the JCIT vide aforesaid common approval letter dated 31/07/2017 were vitiated. The learned Counsel for the assessee also contended that the omission to send the second draft of the proposed assessment order by e-mail, pointed to the likelihood that the proposed second drafts of the assessment orders were not even ready by 28/07/2017 and hard copies of the second drafts of the assessment order may have been sent to the JCIT later, possibly on 31/07/2017, which was the next working day; leaving the JCIT with no time to exercise due application of mind before giving approvals u/s 153D of the Act, on 31/07/2017 itself.

(F.6) The learned Counsel for the assessee further submitted that CBDT has directed the Assessing Officers, in Search Manual, to seek the approval from the approving authority at least one month before the time barring date. In this connection, he drew our attention to order of Lucknow Bench of ITAT in the case of Navin Jain and Others vs. DCIT (order dated 03/08/2021 in IT(SS)A Nos. 639 – 641/Lkw/2019) in which, at paragraph 7 of the order, this direction of CBDT is noted. For the ease of reference; para 7 of the aforesaid order dated 03/08/2021 of ITAT is reproduced below:

7…………Learned counsel for the assessee submitted that granting of approval u/s 153D is a huge task which involves the verification by the approving authority to examine as to which year is unabated and which year is abated and the relevance vis-à-vis seized material. Learned counsel for the assessee further invited our attention to CBDT manual of Office Procedure Volume-II (Technical) placed at pages 995 and 996 of paper book wherein the CBDT has directed that Assessing Officer should submit the draft assessment order for approval from the approving authority well in time. Such manual says that the Assessing Officer should seek approval from the approving authority at least one month before the time barring date. While going through CBDT manual placed at paper book pages 995 & 996, it was observed that this manual was printed in February 2003 and therefore, Learned counsel for the assessee was asked as to how it is applicable to the provisions of section 153D of the Act which came into existence w.e.f. 01/06/2007. Learned counsel for the assessee in this respect submitted that this manual is applicable to the provisions of section 158BG of the Act and which are para materia to the provisions of section 153D of the Act. It was further submitted that Mumbai Tribunal in the case of Shreelekha Damani, vide order dated 19/08/2015, while deciding similar issue u/s 153D, has relied on the case laws relied for deciding the issue of approval u/s 158BG of the Act and therefore this manual is applicable to provisions of Section 153D also………………..

The learned Counsel for the assessee further submitted that the aforesaid order dated 03/08/2021 of ITAT has been referred to and approval by Hon'ble Allahabad High Court in the case of Pr.CIT vs. Sapna Gupta (order dated 12/12/2022 in Income Tax Appeal No. 88 of 2022) reported at Pr.CIT vs. Sapna Gupta 147 taxmann.com 288 (Allahabad) and also in the case of Pr.CIT vs. Siddharth Gupta (order dated 12/12/2022 in Income Tax Appeal No. 90 of 2022) reported at Pr.CIT vs. Siddarth Gupta [2023] 147 taxmann.com 305 (Allahabad). The learned Counsel for the assessee submitted that the Hon'ble Orissa High Court also, in the case of ACIT vs. M/s Serajuddin & Co. (in order dated 15/03/2023 in – 45 of 2022) reported at ACIT vs. Serajuddin & Co. [2023] taxmann.com (Orissa) has in paragraphs 13 and 24 of the order; took the aforesaid direction of CBDT into consideration and held that since CBDT, has powers for issuing such guidelines u/s 119 of I.T. Act; the same was certainly binding on the Department. The learned Counsel for the assessee further submitted that the aforesaid orders of Hon'ble Allahabad High Court in the case of Pr.CIT vs. Siddarth Gupta (supra) and Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Co. (supra) were challenged by Revenue in Hon'ble Supreme Court through separate SLPs; but both SLPs were dismissed by Hon'ble Supreme Court vide order dated 09/08/2024 (in the case of Pr.CIT vs. Siddharth Gupta) in SLP(C) Diary No. 43280/2023 and order dated 28/11/2023 in SLP(C) Diary No.44989 of 2023 respectively. He drew our particular attention to paragraphs 13 and 24 of the aforesaid order of Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Co. (supra) which are reproduced below for the ease of reference:

The fact that such approval has been obtained should Also be mentioned in the body of the assessment order itself.

In the present case, the learned Counsel for the assessee submitted, the first draft of proposed assessment order was sent by the Assessing Officer to the JCIT vide letter dated 18/07/2017 which was received in the office of JCIT on 19/07/2017. The limitation date, after which assessment would become time barred was 31/07/2017; therefore, the Assessing Officer was required to seek the approval of JCIT by 30/06/2017. The second draft of the proposed assessment order was sent by the Assessing Officer to the JCIT vide letter dated 28/07/2017. Both the draft orders were sent by the Assessing Officer to JCIT after 30/06/2017; in violation of the aforesaid direction of CBDT, the learned Counsel for the assessee submitted.

(F.6.1) The learned Counsel for the assessee submitted that Hon'ble Delhi High Court , in the case of Pr.CIT vs. Shiv Kumar Nayyar (order dated 15/05/2024 in and CM Appeal 28994/2024) reported at [2024] 163 taxmann.com 9 (Delhi) considered the aforesaid order of Hon'ble Allahabad High Court in the case of Pr.CIT vs. Sapna Gupta (supra) and order of Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Co. (supra); and expressing agreement with the Hon'ble Allahabad High Court and Hon'ble Orissa High Court; upheld the order of Delhi Bench of ITAT quashing the assessment order.

(F.7) In view of the foregoing, the learned Counsel for the assessee submitted that the assessment should be quashed in the present appeal also.

(G) Learned Departmental Representatives contended that it was not required on the part of the JCIT to issue separate letters for giving approval to different assessment years. They submitted that the assessees also, from time to time, provided their written submissions through common letter. They further submitted that it was permitted under law to issue common notice and to pass common assessment orders for several assessment years in the case of a particular assessee. They further submitted that logically therefore, it should also be permissible to give approval u/s 153D of the Act for several assessments pertaining to an assessee. In this regard they drew our attention to the provisions under section 158BG of the Act (which were applicable upto 31/05/2007) and relied on the following case laws:

(i) [2003] 263 ITR 550 (SC), ACIT vs. Velliappa Textiles Ltd. (ii) [2002] 255 ITR 144 (Madras), Sakthivel Bankers vs. ACIT (iii) [2004] 267 ITR 577 (Karnataka) Rishabchand Bhansali vs. DCIT (iv) [2000] 243 ITR 425 (AP) (v) [2001] 252 ITR 712 (Madras), Lakshmi Jewellery vs. DCIT (H) Learned Departmental Representatives further contended that the approval u/s 153D of the Act was akin to approval u/s 274(2) of the Act and further that the approval u/s 274(2) of the Act was held to be a procedural requirement which did not go to the root of the jurisdiction of the Assessing Officer to levy penalty. In this regard they placed reliance on the case of Sardar Harinder Singh vs. ITAT [1996] 219 ITR 257 (All). They also contended that no infirmity can be attributed in the statutory approvals even when it was not recorded in so many words. They placed reliance on the case of Prem Chand Shaw (Jaiswal) vs. ACIT [2016] 383 ITR 597 (Calcutta) and contended that mere fact that the additional Commissioner did not record his satisfaction in so many words, would not render invalid the sanction granted under section 151(2) when the reasons on the basis of which sanction was sought for could not be assailed. They relied on the order in the case of Chhagan Chandrakant Bhujbal vs. Income Tax Officer 136 taxmann.com 24 (Bombay) for the proposition that the small time gap between the proposal received for approval/sanction and approval/sanction accorded would not mean that there was non-application of mind in granting approval/sanction. Learned Departmental Representatives also relied on the case laws reported at 243 ITR 674 (Karnn) Gayathri Textiles vs. CIT, 1 SOT 281 (Jodh) Ratan Lal Dalmia vs Income Tax Officer; 230 ITR 301 (MP) CIT vs. Vijay Dall Mills; 292 ITR 281 (Ker) G. Manoharan vs. ACIT and 44 taxmann.com 311 (Cal) Sagar Dutta vs. CIT for the proposition that even absolute absence of the JCIT’s approval u/s 274(2) did not mean inherent lack of jurisdiction on the Assessing Officer so as to render his order ab initio void but to decide the matter afresh after obtaining the JCIT’s approval. Learned Departmental Representatives also placed reliance on the case laws in 40 ITR 298 (SC) Guduthur Bros vs. Income Tax Officer, 180 ITR 84 (MP) Prabhudayal Amichand vs. CIT and 222 ITR 401 (MP) CIT vs. Damodaras Murari Lal for the proposition that the irregularity supervened not at the initial stage, but at a later stage of the proceedings would not lead to nullity. Learned Departmental Representatives further placed reliance on the case law in Mahendra Mills Ltd. vs. Appellate Assistant Commissioner 99 ITR 135 (SC) for the proposition that a decision is a precedent on its own facts; that each case presents its own features; and that Income Tax authorities and Tribunals are supposed to apply the ratio of a decision to the facts of particular cases with due care and discernment. They also placed reliance on the case laws in the cases of 155 ITR 120 (SC) Distributors (Baroda) (P.) Ltd. vs UOI and 130 Taxman 218 (Cuttack)(Mag.) Orissa State Civil Supplies Corpn. Ltd. vs DCIT for the proposition that the Tribunal has liberty of applying its mind afresh. Learned Departmental Representatives also placed reliance on the cases of 199 ITR 1 (SC) CIT vs. Assam Travels Shipping Service, 63 ITR 232 (SC) Hukumchand Mills Ltd. vs CIT and 53 ITR 225 (SC) CIT vs. Kanpur Coal Syndicate; for the proposition that ITAT has power to remand/remit the matter back to the authorities below in appropriate cases. They further placed reliance on the case laws in the cases of 448 ITR 594 (SC) New Noble Educational Society vs. CCIT; 262 ITR 278 (SC) Pandian Chemicals Ltd. vs. CIT and 100 ITR 698 (SC) Raja Jagdambika Pratap Narain Singh vs. CBDT for the proposition that where a word used in the statute is unambiguous/unequivocal and capable of only one meaning, the legislation has to be given effect of the word in its own terms and there is no scope for importing any rule of interpretation. Learned Departmental Representatives also placed reliance on the precedents in the cases of 438 ITR 288 (SC) CIT vs. Mohammed Meeran Shahul Hameed and 362 ITR 673 (SC) CIT vs. Calcutta Knitwears for the proposition that a provision of the Act is to be read as it is and nothing is to be added or taken away from it. Learned Departmental Representatives placed further reliance on 266 ITR 1 (SC) Prakash Nath Khanna vs CIT and 121 ITR 535 (SC) CIT vs. National Taj Traders for the proposition that casus omissus should not be readily inferred. Learned Departmental Representatives also relied on the case laws in [1963] 48 ITR 1 (SC) Gursahai Saigal vs. CIT and [1955] 27 ITR 20 (SC) India United Mills Ltd. vs. Commissioner of Excess Profits Tax for the proposition that rule of construction applies only to a taxing provision (which creates a charge for the tax) but, not to the machinery provision for making the assessment. They also relied on the [2004] 271 ITR 401 (SC) for the proposition that rule of construction is to be applied only when there is an ambiguity. Learned Departmental Representatives also relied on orders of Mumbai Bench of ITAT in the cases of Pratibha Pipes & Structurals Ltd. vs. DCIT 173 taxmann.com 147 (Mumbai-Trib) and Usha Satish Salvi vs. ACIT (order dated 23/10/2025 in – 4239/Mum/2023) and also on order of Cuttack Bench of ITAT in the case of Bibhudutta Panda vs. ACIT (order dated 01/02/2023 in I.T.A.

Nos. 76 – 81/CTK/2022) in which grounds raised by the assessee against validity of approval granted u/s 153D of the I.T. Act were dismissed.

(H.1) Learned Departmental Representatives also submitted that procedural irregularity was not fatal if jurisdictional issue was established. Further, learned Departmental Representatives submitted that fiscal acts should be interpreted in a way which enables functioning of the Act and does not frustrate the Act. Learned Departmental Representatives submitted furthermore, that there was no statutory form prescribed for granting approval u/s 153D of the Act and therefore, the approval given u/s 153D of the Act in the present case did not suffer from any infirmity. Learned Departmental Representatives moreover submitted that the draft assessment order sent by the Assessing Officer to the JCIT vide aforesaid letter dated 28/07/2017 was the second draft order; that the first draft order was sent by the Assessing Officer along with the letter dated 18/07/2017, which was received by the then JCIT (Shri Abhay Kumar Thakur) on 19/07/2017; that the earlier JCIT, who held charge from 15/09/2016 to 20/07/2017 (who received the original draft assessment orders) did not give approval u/s 153D of the Act; but the approval u/s 153D of the I.T. Act was given by the new incumbent (Shri Giriraj Parikh) who took charge on 21/07/2017. They submitted that the new incumbent called the Assessing Officer for discussion, that the discussion between the JCIT and the Assessing Officer took place on 25/07/2017; that after the discussion, the JCIT gave certain directions to the Assessing Officer and the Assessing Officer forwarded the second draft assessment order along with the aforesaid letter dated 28/07/2017, which was approved by the JCIT u/s 153D of the I.T. Act, on 31/07/2017. They also submitted that the Assessing Officer had sent, along with the aforesaid letter dated 18/07/2017, the assessment records and a pen drive (of 8GB capacity) containing seized materials, digital data, submissions of the assessees, appraisal report provided by the Investigation Wing of Income Tax Department and other materials of assessment records; which remained in the office of the JCIT till 31/07/2017 when the JCIT gave approvals u/s 153D of the Act vide aforesaid common letter dated 31/07/2017. They submitted that although the new incumbent, in the office of JCIT (Shri Giriraj Parikh) took charge on 20/07/2017, he immediately came into action regarding the matter of giving approvals u/s 153D of the Act immediately and the approval was given vide aforesaid letter dated 31/07/2017 after due application of mind. Learned Departmental Representatives also submitted that the earlier incumbent in the office of the JCIT (Shri Abhay Kumar Thakur) had visited Allahabad for discussion with the Assessing Officer on multiple occasions and had also stayed in the guest house of the Income Tax department a couple of times. Learned Departmental Representatives also submitted that although the second draft of the proposed assessment orders were not sent to the JCIT by e-mail, the physical copies were indeed sent to the JCIT on 28/07/2017 itself along with the aforesaid letter dated 28/07/2017 with an Inspector of the income tax department, named Mr. Agrahari. Learned Departmental Representatives produced the concerned Inspector, Mr. Agrahari, in person before us, who stated in his oral testimony that the second drafts of the proposed assessment orders were physically carried by him from Allahabad to Varanasi and were handed over to the JCIT on 28/07/2017 itself.

(H.1.1) Learned Departmental Representatives contended emphatically that whether the JCIT had given approval u/s 153D of the Act after due application of mind, was a question of fact and the answer would depend on facts and circumstances of each case. They contended that a conclusion arrived at in a particular case that the approvals were given u/s 153D of the Act without application of mind, did not act as a precedent (being a question of fact) in another case; and conclusion as to whether there was due application of mind in a particular case was to be decided for each case, based on the specific facts of the particular case; and the conclusion was to be arrived at independent of conclusion arrived at in any other case. Learned Departmental Representatives also submitted that the earlier incumbent in the office of JCIT (Mr. Abhay Kumar Thakur) had issued directions u/s 144A of the Act in June 2017, which also enabled him to develop familiarity with the case. Moreover, they contended that the limited time available with the Assessing Officer and the JCIT for the process of approval u/s 153D of the Act was partly attributable to the assessees, as the assessees had sought adjournment of hearing till 12/07/2017. Moreover, they contended that the direction of CBDT to Assessing Officer to seek approval of the approving authority at least one month before the time barring date was directory and not mandatory. They also submitted that although the JCIT, who gave approval, took charge of office on 20/07/2017 which may have been just a few days before limitation date for passing assessment order, the association of the predecessor JCIT (Shri Abhay Kumar Thakur) with the Assessing Officer was part of institutional memory which was reflected in the final approval given vide aforesaid common approval letter dated 31/07/2017 by the next incumbent in the office of JCIT who succeeded him. In view of the submissions made, Learned Departmental Representatives pleaded that the validity of approval given u/s 153D of the Act by the JCIT should be upheld. In their alternate submissions, Learned Departmental Representatives pleaded that the matter regarding approval u/s 153D of the I.T. Act should be restored back to the file of the approving authority (i.e. Addl. CIT/JCIT) for fresh view to be taken; in case it was found that the approval granted u/s 153D of the I.T. Act suffered from infirmities or were invalid. In order to support their submissions, Learned Departmental Representatives drew our attention to the affidavit of Shri M. L. Meena, ACIT, the Assessing Officer. The affidavit of Shri M. L. Meena dated 13/08/2025 is reproduced below for the ease of reference:

(I) The learned Counsel for the assessee, in his rejoinder, countered the submissions made by learned Departmental Representatives emphatically. He submitted that affidavit of the Assessing Officer and the Departmental Inspector are de void of any credibility. He submitted that it was an important and material fact to be noted that the JCIT who gave approval u/s 153D of the IT Act, and who had since superannuated, did not file any affidavit/statement in support of Revenue’s contentions. Since it was the JCIT who gave approval, and he did not support Revenue’s stand; the version of Assessing Officer and Inspector, who still working in the Department and were under the control and discipline of Department; must be rejected. In this regard he contended that the affidavit and personal testimony of Departmental Inspector were self-serving documents and it was aimed at covering omissions and mistakes of Departmental authorities. He also contended that the affidavit and personal testimony of the Departmental Inspector are not supported by any documentary evidence. Further he submitted that the Assessing Officer was not competent to state on oath about the conduct of some other officer specially his senior officer. In particular he referred to paragraph-7 of the affidavit of the Assessing Officer wherein he has stated that Shri Giriraj Parikh, JCIT, came into action right since his joining on 21/07/2017. The deponent Assessing Officer has further stated that the JCIT perused all the relevant records/materials already available in his office, which included appraisal report, the report under Rule 9 of Income Tax Settlement Commission (Procedure) Rules, 1997 [”ITSC(P) Rules” for short], the report of the Addl. CIT dated 12/01/2016, the orders and directions u/s 144A of the I.T. Act etc. The learned Counsel for the assessee also drew our attention to paragraph 8 of the affidavit wherein the deponent Assessing Officer has stated that the JCIT, examined the entire materials (pre existing in the JCIT’s office and also considering those submitted along with letter dated 18/07/2017). The learned Counsel for the assessee further drew our attention to para 10 of the affidavit of the deponent Assessing Officer wherein he has stated that the JCIT granted approval u/s 153D of the Act after further perusal and close examination of all the relevant materials. The learned Counsel for the assessee contended that the deponent Assessing Officer has made statements in the affidavit regarding these materials about which only the JCIT had personal knowledge and the deponent Assessing Officer could not have personal knowledge, information and belief. Further he submitted that in paragraph-9 of the affidavit of the deponent Assessing Officer and in the personal testimony of the Departmental Inspector, it has been stated that the Inspector handed over draft orders to Shri Giriraj Parikh, JCIT on 28/07/2017 along with letter No.ACIT/CC/Approval/All./2017/18/352 dated 28/07/2017. However, no documentary evidence, such as acknowledgement from the office of the JCIT is available on record and no such documentary evidence has been produced by Revenue. The learned Counsel for the assessee also contended that the affidavit of the deponent Assessing Officer has been made on 13/08/2025 after more than 8 years since 31/07/2017 on which approval was given by the JCIT u/s 153D of the Act. He contended that it was impossible for the deponent Assessing Officer to remember the facts of the case including specific dates and specific letter numbers; which are found in the affidavit; after such substantial lapse of time; and similarly, it was impossible for the Inspector to remember things in such specific details after such a long time. In view of these facts and circumstances, the learned Counsel for the assessee submitted that the affidavit of the deponent Assessing Officer and the personal testimony of the Departmental Inspector should be rejected being completely de void of any credibility.

(I.1) Learned Counsel for the assessee also submitted that the contention of Revenue that the Assessing Officer was in regular supervision of the earlier incumbent in the office of the JCIT (Shri Abhay Kumar Thakur) and that Shri Abhay Kumar Thakur regularly discussed with the Assessing Officer, monitored/supervised the progress of the assessment proceedings and extended guidance to the Assessing Officer was entirely irrelevant because it was not Shri Abhay Kumar Thakur who gave approval u/s 153D of the Act. He submitted that it was Shri Giriraj Parikh, JCIT, who took charge on 21/07/2017 who, on 31/07/2017 gave approval u/s 153D of the Act and the validity of the approval u/s 153D of the Act is to be examined regardless of whatever was done and whatever happened when Shri Abhay Kumar Thakur, the earlier incumbent before Shri Giriraj Parikh, held office. He also submitted that 21/07/207 was Friday and before 31st July 2017 (on which approval was given u/s 153D of the Act) there were only five working days (excluding Saturdays and Sundays which were closed holidays). The learned Counsel for the assessee also submitted that although it is contended by Revenue that the letter dated 18/07/2017 containing initial draft of the assessment order was accompanied with a pen drive (8GB capacity), the note and order sheet of the office of the JCIT dated 19/07/2017, does not make a mention of any pen drive accompanying the aforesaid letter. The notes and order sheet merely mentioned the receipt of letter of the Assessing Officer, and makes no mention of pen drive. Further he submitted that the letter dated 18/07/2017 of the Assessing Officer also does not contain any description of the contents of the pen drive and merely mentions at the bottom of the letter, in hand writing “Pen Drib 1 pees. 8GB” . He also drew our attention to the report of an expert (included in the paper book, filed by the assessee) in which it has been mentioned that there were approximately 40,434 seized documents, 7 CPUs, 26 HDDs and one laptop seized during the search u/s 132 of the Act. The expert has opined that the storage of this data would require a memory of 200GB and that it was impossible to store it on a pen drive of 8GB capacity. The learned Counsel for the assessee also submitted that in any case there was no evidence from record that the JCIT did even examine the contents of the pen drive and also that the letter dated 18/07/2017 did not in any case provide any description of the contents of the pen drive. In the absence of any description of the contents of the pen drive in letter dated 18/07/2017 of the Assessing Officer and in the absence of any reference to pen drive in the notes and order sheet of the office of the JCIT, the claim of Revenue that a pen drive was sent along with letter dated 18/07/2017 carried no value or relevance for the issue at hand, the learned Counsel for the assessee contended. For the ease of reference, the aforesaid letter dated 18/07/2017 of the Assessing Officer is reproduced below:

(I.2) The learned Counsel for the assessee submitted further that the reliance of the learned Departmental Representatives on precedents of Hon'ble Courts, pertaining to section 158BG of the Act to draw equivalence with section 153D of the Act deserved to be rejected outrightly because section 158BG pertained to block assessment order in which, under the mandate of law the Assessing Officer was required to pass one assessment order for the block period consisting of multiple years; whereas under section 153D of the Act, separate approvals are to be given by the approving authority for separate assessment orders pertaining to different assessment years for each assessee. The learned Counsel for the assessee stated that the contention of the learned Departmental Representatives that there was no statutory form prescribed for granting approval u/s 153D of the Act also deserved to be rejected because in any case the approval is to be granted u/s 153D of the Act after due application of mind of the approval authority and the approval given by the approving authority should be done in a speaking manner and not in a summary manner. The learned Counsel for the assessee submitted that the contention of the learned Departmental Representatives that the assessee had sought adjournment of hearing till 20/07/2017 is misleading. He pointed out that the reports under Rule 9 and 9A of ITSC(P) Rules were already on the record of the Assessing Officer, which contained all the information sought for by the Assessing Officer. Moreover, in any case, whether the assessee delayed the assessment proceedings or not is wholly irrelevant for the purpose of examining the validity of approval of the proposed draft assessment order, under section 153D of the Act. He contended that the Assessing Officer was at liberty to proceed with ex-parte order if he considered that there was default on the part of the assessee in providing information or in making compliance with the notices. The learned Counsel for the assessee also submitted that direction of CBDT to Assessing Officer to seek approval of the approving authority at least one month before the time barring date was mandatory on the Assessing Officer. He also contended that the association of the JCIT/Addl CIT with the Assessing Officer till the time of preparation of the draft assessment order has no significance for considering the validity of the approval given u/s 153D of the Act because the statutory requirement of approval u/s 153D of the Act cast a separate duty upon the approving authority which was de hors any other role and responsibility of the approving authority. He also submitted that the contention of the learned Departmental Representatives that the association of the predecessor JCIT (Shri Abhay Kumar Thakur) with the Assessing Officer was part of institutional memory, deserved to be rejected for the aforesaid reason. In view of the submissions and contentions presented before us by learned Counsel for the assessee, he submitted that the approval granted by the JCIT was invalid and suffered from the infirmity, because it was humanly impossible for the JCIT to apply his independent mind to total of 63 assessments pertaining to 11 different assessees for different assessment years having regard to enormity of the seized materials, digital data, submissions of the assessees, appraisal report provided by the Investigation Wing of Income Tax Department, reports under Rules 9 & 9A of ITSC(P) Rules, and other materials including assessment records. The learned Counsel for the assessee submitted that although it has been contended in the affidavit of the Assessing Officer and in the submissions of the learned Departmental Representatives that the JCIT sent approvals u/s 153D of the Act to the Assessing Officer on 31/07/2017 through e-mail and Whatsapp, there was no evidence on record that any such e-mail or Whatsapp was sent by the JCIT; and also no print out of such e-mail/Whatsapp communication has been adduced from the side of the Revenue at any stage. In this regard, he also relied on the various paper books, referred to in foregoing paragraph (E) of this order, and on the compilation of the case laws/decisions referred to in foregoing paragraph (E) of this order.

(J) We have heard both sides, patiently; we have also diligently perused the materials on record. We have been presented many precedents/case laws; and many propositions; which are either of general nature, or which pertain to specific issues other than the specific matter of validity of approval u/s 153D of the IT Act. It is settled position of law that specific principles and provisions of law prevail over general principles/provisions of law. It is also settled position of law that principles and provisions of a particular matter or issue, prevail over principles and provisions of another matter or issue; for taking a decision on the former matter or issue. Therefore, the specific propositions, precedents and case laws in the context of validity of approval u/s 153D of the Act have stronger force than those propositions and precedents pertaining to general propositions or pertaining to specific issues other than validity of approval u/s 153D of the IT Act. Moreover, although the learned Departmental Representatives have placed reliance on some orders of ITAT (Bombay Bench and Cuttack Bench), orders of Hon'ble Supreme Court, Hon'ble Allahabad High Court which is the jurisdictional High Court, and orders of other Hon'ble High Courts, such as Hon'ble Orissa High Court and Hon'ble Delhi High Court; prevail over orders of Bombay Bench and Cuttack Bench of the Tribunal.

(J.1) In the case of ACIT, Circle-1(2), Bhubaneswar vs. Serajuddin & Co. (supra), it was held as under:

(J.1.1) Further, in the case of Pr.CIT (Central) & Anr. Vs. Siddarth Gupta (supra), Hon'ble Allahabad High Court held as under:

(J.1.1.1) SLPs filed by Revenue against aforesaid order of Hon'ble Orissa High Court in the case of ACIT vs. Serajjuddin & Co. 150 taxmann.com 146 (Orissa)/454 ITR 312 (Orissa) and aforesaid order of Hon'ble Allahabad High Court in the case of PCIT vs. Siddharth Gupta 147 taxmann.com 305 (Allahabad)/ 450 ITR 534 (Allahabad); have been dismissed by Hon'ble Supreme Court in decisions at ACIT vs. Serajuddin and Co. 163 taxmann.com 118 (SC) and vide order dated 09/08/2024 in SLP(C) Diary No.43280/2023 in the case of Pr.CIT vs. Siddharth Gupta, respectively.

(J.1.2) Similarly, in the case of Pr.CIT & Anr. Vs. Sapna Gupta (supra), Hon'ble Allahabad High Court held as under:

(J.1.3) Moreover, in the case of Pr.CIT vs. Shiv Kumar Nayyar (supra), Hon'ble Delhi High Court held as under:

10. Before embarking upon the analysis of the factual scenario of the instant appeal, we deem it apposite to examine the underlying Judicial pronouncements discussed hereinabove, we are unable to find Any substantial question of law which would merit our consideration.

(J.1.3.1) In the case reported at Pr.CIT vs. Anuj Bansal 165 taxmann.com 2 (Delhi)/466 ITR 251 (Delhi) also, Hon'ble Delhi High Court upheld the order of ITAT quashing assessment order on the ground that there was absence of application of mind by the approving authority in granting approval u/s 153D of IT Act. The SLP filed by Revenue against this order of Hon'ble Delhi High Court has been dismissed by Hon'ble Supreme Court in Pr.CIT vs. Anuj Bansal 165 taxmann.com 3 (SC). Similar view has also been taken by Hon'ble Delhi High Court in the cases reported at Pr.CIT vs. Pioneer Tour Planner (P.) Ltd. 160 taxmann.com 652/ 465 ITR 356 (Delhi) and in Pr.CIT vs. MDLR Hotels (P.) Ltd. 166 taxmann.com 327 (Delhi).

(J.1.4) In the case of Pr.CIT vs. Subodh Agarwal [2023] 149 taxmann.com 373 (Allahabad High Court); Hon'ble Allahabad High Court held as under:

(J.1.5) We are also cognizant of the order of Lucknow Bench of ITAT in the case of Standard Frozen Foods Exports Pvt. Ltd. vs. DCIT in IT(SS)A No.41 & 41/Lkw/2022, which has been authored by us and order of Lucknow Bench of the ITAT in Quality Structures Pvt. ltd. vs DCIT in IT(SS)A No.679 & 680/Lkw/2019, which is co-authored by one of us (the Judicial Member). In these orders, we have already taken view regarding validity of approval u/s 153A of the Act and relevant portions are reproduced as under:

Standard Frozen Foods Exports Pvt. Ltd. vs. DCIT (supra)

“(D) We have heard representatives of both sides. We have also perused the materials on record carefully.

(D.1) The first limb of the contention raised by the learned Counsel for the assessee is on the legal ground that statutory approval given to the Assessing Officer for the assessment orders was not based on application of mind. It was the case of the learned Counsel for the assessee that approval was given by Addl. CIT in a mechanical manner within a short period of time during which it was humanly impossible for the Addl. CIT to go through exhaustive assessment records, search & seizure materials and to thereafter give approval after due application of mind. The learned Counsel for the assessee submitted that the Addl. CIT gave approval to 110 cases in two days which included; 48 cases on 27/12/2019 and 62 cases on 28/12/2019. These cases included approvals given for assessment orders which are subject matters of the present batch of appeals before us. The learned Counsel for the assessee further drew our attention to the fact that approval No. 1490 was requested by the Assessing Officer for 16 cases on 28/12/2019 and approval was given by the Addl. CIT on the same day i.e. on 28/12/2019. He further drew our attention to the fact that approval No. 1488 was requested by the Assessing Officer for 15 cases on 26/12/2019 and approval was given by the Addl. CIT on the very next day i.e. on 27/12/2019. He also drew our attention to the fact that draft assessment orders were sent by the Assessing Officer for approval to the Addl. CIT at the fag end of the assessment proceedings on 26/12/2019 and 28/12/2019 though the assessments were going to be barred by limitation barely a few days later, on 31/12/2019. Placing reliance on the order of Hon'ble Allahabad High Court in the case of Pr. CIT vs. Subodh Agarwal, of 2022, dated 12/12/2022 and order of Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Co. (supra) and further on the order of Hon'ble Delhi High Court in the case of Pr. Commissioner of Income Tax vs. Shiv Kumar Nayyar (supra), learned Counsel for the assessee submitted that the assessment orders passed by the Assessing Officer, based on mechanical approval given by the Addl. CIT, without due application of mind, lacked legal validity and deserved to be quashed. He also placed reliance on the orders of Income Tax Appellate Tribunal in the case of Khoday Ehshwarsa and Sons vs. DCIT, & 1080/Bang/2024 dated 20/09/2024 and in the case of Sanjay Duggal and Others, and in the case of Quality Structure Pvt. Ltd. vs. DCIT, IT(SS)A No. 679 & 680/Lkw/2019. The learned CIT, D.R. for Revenue submitted that it was the normal practice that the Assessing Officer and the Addl. CIT/Jt. CIT engage in periodical discussion over a long period of time. Therefore, it was possible for the Addl. CIT to grant approval to draft assessment order after application of mind even though time available was short. In his rejoinder, learned Counsel for the assessee submitted that there is nothing on record to show that there was discussion between the Assessing Officer and Addl. CIT. In response to specific query from Bench whether the assessees were responsible for the delay on the part of the Assessing Officer in submission of draft assessment orders to the Addl. CIT at the fag end of the limitation period; and if so, whether the submissions made by the assessee would still be good on merits, learned Counsel for the assessee submitted that the delay on the part of the Assessing Officer in submission of the draft assessment orders to the Addl. CIT was due to the fact that assessment proceedings were taken up in haste by the Assessing Officer after lapse of substantial duration of time available during the limitation period. He further submitted that the assessees made compliance with the notices of the Assessing Officer even though sufficient time was not given by the Assessing Officer. Therefore, he contended that the delay on the part of the Assessing Officer in submission of the draft assessment order to the Addl. CIT was entirely attributable to Revenue and to the Assessing Officer in particular; and further, that the assessees were in no way responsible for the delay. After hearing both sides, we are of the view that the issue in dispute is squarely covered by the order of the Hon'ble Allahabad High Court in the case of Pr. CIT vs. Subodh Agarwal, of 2022, dated 12/12/2022, order of Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Co. (supra) and order of Hon'ble Delhi High Court in the case of Pr. Commissioner of Income Tax vs. Shiv Kumar Nayyar (supra), in favour of the assessee. Further the issue in dispute is also squarely covered in favour of the assessee by the orders of the Income Tax Appellate Tribunal in the case of Khoday Ehshwarsa and Sons vs. DCIT, I.T.A. No.1079 & 1080/Bang/2024 dated 20/09/2024 and in the case of Sanjay Duggal and Others, I.T.A. No.1813/Del/2019 and in the case of Quality Structure Pvt. Ltd. vs. DCIT, IT(SS)A No. 679 & 680/Lkw/2019 (supra). In view of the foregoing, we set aside the impugned appellate orders of learned CIT(A) deserve to be set aside; and the assessment orders passed by the Assessing Officer deserve to be annulled.

(D.2) The second limb of the contentions made by the learned Counsel for the assessee on behalf of the appellant assessees was that in the following cases, no incriminating material was found in the course of search conducted u/s 132 of the IT Act:

Appeal Number Assessment year Appellant IT(SS)A No.41/Lkw/2022 2012-13 Standard Frozen Foods Exports Pvt. Ltd. IT(SS)A No.42/Lkw/2022 2013-14 Standard Frozen Foods Exports Pvt. Ltd. IT(SS)A No.43/Lkw/2022 2016-17 Standard Frozen Foods Exports Pvt. Ltd. IT(SS)A No.44/Lkw/2022 2017-18 Standard Frozen Foods Exports Pvt. Ltd. IT(SS)A No.46/Lkw/2022 2012-13 Standard Agro Vet Pvt. Ltd. IT(SS)A No.47/Lkw/2022 2013-14 Standard Agro Vet Pvt. Ltd. IT(SS)A No.48/Lkw/2022 2014-15 Standard Agro Vet Pvt. Ltd. IT(SS)A No.49/Lkw/2022 2015-16 Standard Agro Vet Pvt. Ltd. IT(SS)A No.55/Lkw/2022 2014-15 Sachin Verma IT(SS)A No.57/Lkw/2022 2016-17 Sachin Verma IT(SS)A No.54/Lkw/2022 2012-13 Sachin Verma IT(SS)A No.56/Lkw/2022 2015-16 Sachin Verma IT(SS)A No.58/Lkw/2022 2017-18 Sachin Verma IT(SS)A No.50/Lkw/2022 2015-16 Kamal Kant Verma IT(SS)A No.51/Lkw/2022 2016-17 Kamal Kant Verma IT(SS)A No.52/Lkw/2022 2017-18 Kamal Kant Verma Further, he submitted that in the aforesaid cases, the assessments were unabated. Therefore, he contended, following the order of Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P) Ltd. (supra), no additions could be made in the assessment orders passed by the Assessing Officer in the aforesaid assessment orders. The learned CIT D.R. for Revenue placed reliance on the orders of the Assessing Officer and the impugned appellate orders of the learned CIT(A) on this issue. After hearing both sides, we are of the view that the issue is squarely covered in favour of the assessees as far as aforesaid assessments are concerned, by order of Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P) Ltd. (supra). Accordingly, the additions made in the aforesaid assessment orders deserve to be deleted.

(D.2.1) In view of the foregoing, we are of the view that the additions made in the assessment orders pertaining to the present bunch of 19 appeals cannot be upheld. In the light of the discussion in foregoing paragraph (D.1) and (D.2) of this order, we are also of the view that the assessment orders passed by the Assessing Officer in the present batch of 19 appeals lack validity in law; and that the additions made cannot be upheld. In view of the foregoing, we set aside the impugned appellate orders passed by the learned CIT(A) and we annul corresponding assessment orders for various assessment years pertaining to various assessees in present batch of 19 appeals being disposed of through this consolidated order.”

Quality Structures Pvt. Ltd. vs. DCIT (supra)

“10. We have heard the rival parties and have gone through the material on record. We find that in this case, in view of a search carried out on the Sigma Group, the assessments of various assessees were reopened and various assessees were required to file income tax returns as required under the provisions of section 153A of the Act. The search was started on 23.8.2016 and it continued upto 25.8.2016, and therefore, the assessment year 2017-18 became the search year and the years preceding the search year became the subject matter of reopening under section 153A of the Act. Since the controversy involved herein is with regard to the approval under section 153D of the Act, it would be appropriate to first visit the provisions of section 153D of the Act, which, for the sake of completeness are reproduced below: 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.

in this regard by the assessee was allowed, and the assessment orders were annulled by us. While allowing the Ground raised by the assessee, the Tribunal had also considered various cases laws, including that of the Hon'ble Supreme Court. For the sake of ready reference, the findings of the Tribunal in that case are reproduced as under:

9. We have heard the rival parties and have gone through the material placed on record. We find that in these cases, in view of a search carried out on the Sigma Group, the assessments of various assessees were reopened and various assessees were required to file income tax returns as required under the provisions of section 153A of the Act. The search was conducted on 23/08/2016 which continued upto 25/08/2016 and therefore, assessment year 2017-18 became the search year and the years preceding the search year became the subject matter of reopening u/s 153A of the Act. The issue raised by Learned counsel for the assessee is that the approval granted by the Addl. CIT is bad in law as it is humanly impossible to go through documents exceeding 17,800 in a single day and then grant approval on the same day. Since the controversy involved here is with respect to approval u/s 153D of the Act, it would be appropriate to first visit the provisions of section 153D of the Act, which for the sake of completeness are reproduced below: "SECTION 153D. Prior approval necessary for assessment in cases of search or requisition [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.]" 9.1 The above provisions of section 153D of the Act were inserted by Finance Act, 2007 with effect from 01/06/2007. In our humble understanding of the said provisions, we are of the opinion that the Legislature wanted the assessment/reassessment of the search cases should be made and order should be passed with the prior approval of superior authority. The word approval has not been defined in the Income Tax Act but the general meaning of word approval can be understood from Black Law of Dictionary which defines approval as: "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 9.2 The Hon'ble Supreme Court of South Carolina in State vs. Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that approval implies knowledge and, the exercise or discretion after knowledge. 9.3 Further Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer [2003] 5 SCC 83 has held as under: "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate tine material on record in regard to the compensation payable. Otherwise, it would tantamount to blurring the distinction between Approving Authority and Appellate Authority''.

9.4 Further Hon'ble Gauhati High Court in the case of Dharampal Satyapal Ltd., vs., Union of India [2019] 366 ELT 253 (Gau.) Manu/GH/07070/2018 in para-28 has held as under : "When an Authority is required to give his approval, it is also to be understood that such Authority makes an application of mind as to whether the matter that is required to be approved satisfies all the requirements of Law or procedure to which it may be subjected. In other words, grant of approval and application of mind as to whether such approval is to be granted must co- exist and, therefore, where an Authority grants an approval it is also to be construed that there was due application of mind that the subject matter approved and satisfies all the legal and procedural requirements." Therefore, from the definition of approval as per above authorities, its meaning with respect to approval u/s 153D means that the superior authority should apply his mind on the material on the basis of which the Assessing Officer is making or passing assessment order and after due application of mind to material in the hands of the Department and after going through the explanation by the assessee and documentary evidence and other relevant material, the superior authority has to grant approval u/s 153D for passing assessment/reassessment order in search cases. The approval u/s 153D of the Act cannot be treated mere formality only and the purpose of inserting this provision is two fold i.e. one before approving the senior authority will ensure that the assessee should be protected against the undue and irrelevant addition and disallowances and the approving authority will also ensure that proper enquiry or investigations are carried out by the Assessing Officer on the relevant materials including material in the hands of the Department. Secondly, the Assessing Officer also keeps in mind the interest of Revenue. Therefore, the said provision provides application of mind by the approving authority of the Department. Therefore, the provision of section 153D of the Act cannot be treated as mere formality and mandate therein is required to be followed by the approving authority in a judicious manner by due application of mind in a manner of a quasi judicial authority. We are cautious about the fact that reasons for granting approval may not be a subject matter of challenge or not required to be mentioned in the order of approval but the manner and material on the basis of which approval has been granted can be challenged by the assessee. The scope and issue agitated by the assessee by way of legal ground in the present cases is not that of granting of approval but the main grievance of the assessee is that the approving authority has granted approval without application of mind and without looking into the seized material. We are inclined to hold that if an approval has been granted by the approving authority in a mechanical manner without application of mind then the very purpose of obtaining approval u/s 153D of the Act and mandate of enactment by the Legislature will be defeated. It is a trite law that for granting approval u/s 153D of the Act, the approving authority shall have to apply independent mind to the material on record for each assessment year in respect of each assessee separately. The rationale of word "Each" as specifically referred to in Section 153D and Section 153A deserves to be given effective/proper meaning so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. The meaning of 'approval', as contemplated u/s 153D of the Act, is that the Jt. CIT is required to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind and to ascertain as to whether the entire facts have been properly appreciated by the Assessing Officer. The Jt. CIT is also required to verify whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. Thus, the approval cannot be a mere discretion or formality but quasi judicial function based on reasoning. In our view, when the Legislature has enacted the provision to be exercised by the higher authority to pass assessment order in the search cases then it is the duty of the Jt. CIT to exercise such power by applying his judicious mind. The obligation of the approval of the approving authority is of two fold i.e. on one hand, he has to apply his mind to ensure the interest of the Revenue against any omission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year and on the other hand, superior authority is also responsible and duty bound to do justice with the tax payer by granting protection against arbitrary or creating baseless tax liability on the assessee. The provisions contained from section 153A to section 153D contain features by which the assessee is to be given separate notice for assessment for each year as specified u/s 153A of the Act. Secondly, the assessee has to file separate ITR for each year as specified in section 153A of the Act. Thirdly, separate assessment orders are to be passed for each year as specified in section 153A of the Act. There is an important concept mentioned in section 153A of the Act, abated and non abated which is peculiar to the scheme of section 153A of the Act. Keeping in view the above basic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that very important phrase as deployed in text of Section 153D, is "Each" assessment year. The word "Each" has been used extensively and this word needs to be given due weightage and adequate meaning and as such for each year separate approval is to be given under section 153D of the I.T. Act which is lacking in the present cases. There are many other provisions where statutory approval is required from higher authorities. Few of them are noted like in Section 151 and Section 274 etc., respectively dealing with the approvals on reopening cases and penalty cases. When Section 153D is juxtaposed with Section 151 and Section 274, most important differences which is peculiar to Section 153D is the word "Each". Word each is not used in Section 151 and Section 274 and the word "Each" is specially and consciously referred to in Section 153D so that assessee-wise and year-wise application of mind on the part of the approving authority is there which is in accordance with the overall scheme of Section 153A to Section 153D of the I.T. Act. Hon'ble Allahabad High Court in the case of Shri Mohd. Ayub vs. ITO [2012] 346 ITR 30 (Alld) dealt with non issue of separate notice under section 148 of the I.T. Act and held it to be invalid because each assessment year was to be taken as an independent unit of assessment and therefore, if the above settled position is tested with the provisions of Section 153D, it would emerge that when in a case where requirement of separate notice under section 148 of the I.T. Act was given absolute primacy therefore, in the context of Section 153D of the I.T. Act (where each word is expressly used and which is a year centric special scheme of assessment with concept of abated/non-abated assessments) there is absolute necessity of separate approval for each year and for each assessee. In the present cases Jt. CIT has given approval u/s 153D of the Act for all the years altogether involved in search and the approving authority in a mechanical manner and as an idle formality has granted approval. In one line the approving authority has given blank go ahead to pass order under section 153A without even taking minimum possible pains to take appropriate note of year-wise income as computed. The legislative intent behind Section 153D can be discerned/gathered from the CBDT Circular No.3/2008 dated 12.03.2008 in which it is highlighted that approval of the approving authority is mandatory. For the sake of completeness, the contents of Circular No. 3/2008 are reproduced below: "50. Assessment of search cases Orders of assessment and reassessment to be approved by the Joint Commissioner. 50.1 The existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. 50.3 Applicability-These amendments will take effect from the 1st day of June, 2007."

9.5 It is evident from the CBDT Circular that the legislature in its highest wisdom made it compulsory that the assessments of search cases should be made with the prior approval of superior authority, so that the superior authority could apply his mind on the materials and other circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority have to approve the assessment order. The object of entrusting the duty of approval of assessment in search cases is that the Jt. CIT, with his experience and understanding could scrutinize the seized documents and any other material forming the foundation of assessment. It is an elementary law that whenever any statutory obligation is casted upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. The approval granted under section 153D of the Act should necessary reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self defending. In the above background of law and in the light of order dated 30.12.2018 passed under section 153D of the Act, which gives legality to the impugned assessment orders, question which arises for our consideration is whether the approval granted by the Additional CIT, Central, Kanpur vide his order dated 30.12.2018 can be held to be granted after due application of mind and can be held to be valid in the eyes of law. Learned counsel for the assessee, during the proceedings before us had filed a chart showing number of documents seized during search belonging to the group totaling 15,800 pages. Besides the above documents, replies filed by assessees belonging to the group consisted of about 200 pages and in fact there were documents belonging to other group also, the approval of which has also been granted along with assessees on the same day through the same approval letter. Therefore, keeping in view huge number of documents involved, it is humanely impossible for a person to apply his mind on all cases individually and that too in a single day. For the sake of completeness, the said approval dated 30/12/2018 has been made part of this order and is reproduced below:

The contents of the approval speaks for itself loud and clear. The following inferences are inevitable from the bare reading of the said order. The draft assessment orders were placed before the Additional CIT, Central, Range- Kanpur on 30/12/2018 for the first time and on the same day approval was granted. As clearly mentioned in the approval under challenge, prior to this date the case was never discussed with the authority granting the approval. The Additional CIT without any consideration on merits in respect of the issues on which addition was made, granted the approval and such approval is an eyewash and idle formality and such a mechanically granted approval is no approval in the eyes of law. The entire gamete of law, as contemplated u/s 153D of the Act, has been considered by Delhi Bench of the Tribunal in a bunch of 52 appeals in in the case of Sanjay Duggal and Others wherein the Hon'ble Bench vide order dated 19/01/2021 has quashed the assessment orders by holding that the approval granted u/s 153D of the Act was in a mechanical manner and thus cannot be held to be an approval as required u/s 153D of the Act. The relevant findings of the Tribunal are contained in para 11 onwards, which for the sake of completeness are reproduced below: "11. We have considered the rival submissions and perused the written submissions filed by the parties and considered the material on record. It is an admitted fact that search and seizure action were carried-out in the cases of the assessees on 29.12.2015. Section 153A have been inserted into the Income Tax Act w.e.f. 01.06.2003. Prior to that there were provisions contained under section 158BC being the special procedure for assessment of search cases. Thus, the provisions of Section 153A to 153D are applicable in the case of assessees. According to Section 153A of the I.T. Act, there should be a search initiated under section 132 of the I.T. Act and panchanama drawn, the A.O. shall have to issue notice to the assessee requiring him to furnish the return of income within the specified time in respect of each assessment year falling within six assessment years. The A.O. shall assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Provided that the A.O. shall assess or re-assess the total income in respect of each assessment year falling within such six assessment years. It is further provided that assessment or re-assessment, if any, relevant to any assessment year falling within the period of six assessment years referred to in this Section pending on the date of initiation of the search under section 132 or making of requisition under section 132A as the case may be, shall abated. Thus, when provisions of Section 153A are applicable in a case of assessee, A.O. shall have to give separate notice of each assessment year and assessee shall have to be directed to file return of income for each year and separate orders shall have to be passed for each assessment year. In Section 153A of the I.T. Act, the A.O. shall have to see whether there are abated or non- abated assessments which was not provided in earlier provisions for block assessments. The Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla [2016] 380 ITR 573 (Del.) considered the issue of abated and non-abated assessments and with regard to completed assessments held that the same can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment. It is also held in the same Judgment that in so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall have to be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on record by the A.O. Therefore, these were the mandatory provisions contained in Section 153A which shall have to be satisfied by the A.O. before proceeding to frame assessment in the cases of persons searched under section 132 of the I.T. Act, 1961. Further safeguard have been provided for framing the assessments under section 153A that prior approval shall be necessary for assessments in the cases of the search or requisitioned, under section 153D of the IT. Act. Section 153D of the I.T. Act is reproduced as under : "153D - No Order of assessment or re-assessment 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 (ii) 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 Commissioner under sub- section (12) of section 144BA.". 11.1. It is an admitted fact that in all the above appeals assessments under section 153A have been framed by ACIT, Central Circle, New Delhi, therefore, prior approval of the JCIT in respect of each assessment year referred to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by the A.O. in the present cases in respect of each assessment years under section 153A/153B of the I.T. Act, 1961, except with the prior approval of the Joint Commissioner. Learned Counsel for the Assessee has argued that the approval under section 153D have been granted by the JCIT without going through the seized material, appraisal report and other material on record. Thus, the approval is granted in a most mechanical manner and without application of mind. Therefore, same is invalid, bad in Law and void ab initio and as such all assessments under section 153A got vitiated and as such A.O. was not having jurisdiction to pass the assessment orders under section 153A of the I.T. Act, 1961. 11.2. The meaning of the word "Approval" as defined in Black Law Dictionary is - "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 11.3. The Hon'ble Supreme Court of South Carolina in State vs., Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that "Approval implies knowledge and, the exercise or discretion after knowledge."

11.4. The Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs., Land Acquisition Officer [2003] 5 SCC 83 wherein it has been held that : "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate tine material on record in regard to the compensation payable. Otherwise, it would tantamount to blurring the distinction between Approving Authority and Appellate Authority''. 11.5. The Hon'ble Gauhati High Court in the case of Dharampal Satyapal Ltd., vs., Union of India [2019] 366 ELT 253 (Gau.) Manu/GH/07070/2018 in para-28 has held as under : "When an Authority is required to give his approval, it is also to be understood that such Authority makes an application of mind as to whether the matter that is required to be approved satisfies all the requirements of Law or procedure to which it may be subjected. In other words, grant of approval and application of mind as to whether such approval is to be granted must co- exist and, therefore, where an Authority grants an approval it is also to be construed that there was due application of mind that the subject matter approved and satisfies all the legal and procedural requirements." 11.6. Therefore, in the cases of search, assessment orders whether framed under section 153A or 153C, the Joint Commissioner [Approving Authority] is required to see that whether the additions have been made in the hands of assessee are based properly on incriminating material found during the course of search, observations/comments in the appraisal report, the seized documents and further enquiries made by the A.O. during the course of assessment proceedings. Therefore, necessarily at the time of grant of approval of the assessment made by the A.O, the Joint Commissioner is required to verify the above issues, apply his mind that whether they have been properly appreciated by the A.O. while framing the assessment orders or not. The JCIT is also required to verify whether the required procedure have been followed by the A.O. or not at the time of framing of the assessments. Thus, the approval cannot be a mere discretion or formality, but, is mandatory being Quasi Judicial function and it should be based on reasoning. In our view, when the legislature has enacted some provision to be exercised by the higher Revenue Authority enabling the A.O. to pass assessment order or reassessment order in search cases, then, it is the duty of the JCIT to exercise such powers by applying his judicious mind. We are of the view that the obligation of the approval of the Approving Authority is of two folds ; on one hand, he has to apply his mind to secure in build for the Department against any omission or negligence by the A.O. in taxing right income in the hands of right person and in right assessment year and on the other hand, JCIT is also responsible and duty bound to do justice with the tax payer [Assessee] by granting protection against arbitrary or unjust or unsustainable exercise and decision by the A.O. creating baseless tax liability on the assessee and thus, the JCIT has to discharge his duty as per Law. Thus, granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act." 9.7 Further we find that I.T.A.T. Cuttack Bench in the case of Geetarani Panda vs. ACIT in vide order dated 05/07/2018 has held as under: "24. In our considered view, the provisions contained in Section 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the Statute by the Parliament are two folds. Firstly, the approval of the Senior Authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by Senior Authority will also ensure that proper enquiry or investigation are carried out by the Assessing Authority. Thus, the above provision provides for mental application of a Senior Officer of the Department, which in turn, provides safeguard to both i.e. Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed by the Pune Benches of the Tribunal in the case of Akil Gulamali Somji vs ITO, in IT Appeal Nos.455 to 458 (Pune) of 2010 order dated 30.3.2012, wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. The Hon'ble Bombay High Court in the case of CIT-II Vs Shri Akil Gulamali Somji, in Income Tax Appeal (L) No.1416 of 2012 order dated 15.1.2013 concurred with the view of the Tribunal that not following of the provisions of section 153D of the Act will render the related order of assessment void." 9.8 Further we find that I.T.A.T. Mumbai Bench in the case of Shreelekha Dammani vs. DCIT in vide order dated 19/08/2015 has decided the issue in favour of the assessee by holding as under: "12. Coming to the facts of the case in hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, the Addl. Commissioner has showed his inability to analyze the issues of draft order on merit clearly stating that no much time is left, inasmuch as the draft order was placed before him on 31.12.2010 and the approval was granted on the very same day. Considering the factual matrix of the approval letter, we have no hesitation to hold that the approval granted by the Addl. Commissioner is devoid of any application of mind, is mechanical and without considering the materials on record. In our considered opinion, the power vested in the Joint Commissioner/Addl Commissioner to grant or not to grant approval is coupled with a duty. The Addl Commissioner/Joint Commissioner is required to apply his mind to the proposals put up to him for approval in the light of the material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. Commissioner before granting the approval. Therefore, we have no hesitation to hold that the assessment order made u/s. 143(3) of the Act r.w. Sec. 153 A of the Act is bad in law and deserves to be annulled. The additional ground of appeal is allowed.

13. The ld. Departmental Representative has strongly relied upon the decision of the Tribunal Mumbai Bench in the case of Rafique Abdul Hamid Kokani Vs DCIT 113 Taxman 37, Hon'ble High Court of Karnataka in the case of Rishabchand Bhansali Vs DCIT 136 Taxman 579 and Hon'ble High Court of Madras in the case of Sakthivel Bankers Vs Asstt. Commissioner 124 Taxman 227. 13.1. We have carefully perused the decisions placed on record by the Ld. DR. We find that all the decisions relied upon by the Ld. DR are misplaced inasmuch as all these decisions relate to the issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the Ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue.

14. Since we have annulled the assessment order, we do not find it necessary to decide the issues raised on merits of the case." 9.9 In this case, the Addl. Commissioner has showed his inability to analyze the issues of draft order clearly stating that no much time was left as the draft order was placed before him on 31/12/2010 and approval was granted on the same day. In the case before us the Addl. CIT has though not expressly expressed his inability to analyze the issues of draft order but it is abundantly clear that he had not analyzed the issues in the draft order as in the present cases the approval has been given in 67 cases on the same date which is humanly impossible. If an ACIT cannot express his opinion on a single case in one day how another ACIT can express his opinion in 67 cases in a single day. 9.10 The Hon'ble Bombay High Court has dismissed the appeal of the Department filed against the above order of the Mumbai Tribunal in the case of Shreelekha Damani vide judgment dated 27/11/2018. The findings of Hon'ble Bombay High Court are reproduced below: "7. In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st 3 of 4 Uday S. Jagtap 668-16- ITXA- 15=.doc December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises." 9.11 Similar are the findings of I.T.A.T. Jodhpur Bench in the case of Indra Bansal & Ors. vs. ACIT in to 324 in which the Tribunal held as under: "6. We have heard the rival contentions and have perused the material on record. The main contention of learned Authorised Representative is that reasonable time was not available with the Joint Commissioner for the grant of necessary approval as envisaged under section 153D of the Act. We have perused the forwarding letter dt. 30-3- 2013 seeking approval of the draft assessment order. The date of receipt of this letter in the office of Joint Commissioner is indisputably on 31-3-2013 which is apparent from the date stamped on it by the office of the Joint Commissioner. Thus, this leaves no doubt that the letter requesting grant of approval and the granting of approval, both, are within one day of each other. This lends credence to the contention of the learned Authorized Representative that the draft assessment order was approved without much deliberation by the Joint Commissioner. Further, the time of the fax granting approval is 6.56 a.m. on 31-3-2013 which is prior to the office hours and, thus, it brings out a reasonable doubt that the approval was granted even before the letter requesting the approval was received in the office of the Joint Commissioner. Further, the response received by the assessee in response to his application under Right to Information Act, 2005 also establishes the correctness of the claim of the assessee that the assessment records were not before the Joint Commissioner when the approval was granted as the records were with the Range Office in Jodhpur whereas the approval was sent by fax on the morning of 31-3-2013 from Udaipur. Thus, it is our considered opinion that the Joint Commissioner had granted approval in a mechanical manner without examining the case records because the approval has been granted at 6.56 a.m. on 31-3-2013 from Udaipur wherein it has already been mentioned that the assessment records were being returned whereas the draft assessment order along with the assessment records were handed over to the office of the Joint Commissioner on 31-3-2013 and as such it was physically impossible that all the case records along with the draft assessment order were received by the Joint Commissioner at Udaipur. Tribunal, Mumbai Bench in the case of Smt. Shreelekha Damani v. Dy. CIT (2015) 125 DTR (Mumbai)(Trib) 263 : (2015) 173 TTJ (Mumbai) 332 has held that the legislative intent behind the insertion of section 153D of the Act was that the assessments in search and seizure cases should be made with the prior approval of superior authority which means that the superior authorities should apply their mind to the material on the basis of which the assessing officer is making the assessment. In this case, the Addl. CIT had expressed his inability to analyze the issues of the draft order on merits clearly stating that not much time was left and granted the approval under section 153D of the Act on the same day and Tribunal, Mumbai Bench held that the approval granted by Addl. CIT was mechanical and had been passed without considering the material on record and was, therefore, devoid of any application of mind. The impugned assessment order was annulled. Similarly, Tribunal, Allahabad Bench in Verma Roadways v. Asstt. CIT (2001) 70 TTJ (All) 728; (2000) 75ITD 183 (All) held that while granting approval, Commissioner is required to examine the material before approving the assessment order. In this case, Tribunal, Allahabad Bench was examining the issue of approval under section 158BG of the Act and it opined that the object for entrusting the job of approval to a superior and a very reasonable (sic-responsible) officer of the rank of Commissioner is that he with his ability, experience and maturity of understanding can scrutinize the documents, can appreciate its factual and legal aspects and can properly supervise the entire progress of assessment. Tribunal, Allahabad Bench held that the concerned authority while granting the approval is expected to examine the entire material before approving the assessment order and further that whenever any statutory obligation is cast on any authority, such authority is legally required to discharge the obligation not mechanically, nor formally but by application of mind. Similarly, the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT & Anr. (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27: (2008) 300 ITR 403 (SC), while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 2 cases was completed in one single day itself i.e., 31- 3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Joint Commissioner had adequate time with him so as to grant approval after duly examining the material prior to approving the assessment order. The circumstances indicate that this exercise was carried out by the Joint Commissioner in a mechanical manner without proper application of mind. Accordingly, respectfully following the ratio of the Co-ordinate Benches of Mumbai and Allahabad as afore-mentioned and also applying the ratio of the judgment of the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT (supra), we hold that the Joint Commissioner has failed to grant approval in terms of section 153D of the Act i.e., after application of mind but has rather carried out exercise in utmost haste and in a mechanical manner and, therefore, the approval so granted by him is not an approval which can be sustained. Accordingly, assessments in three COs and nineteen appeals of the assessee(s), on identical facts, are liable to be annulled as suffering from the incurable defect of the approval not being proper. Accordingly, we annul the assessment orders in CO Nos. 8 to 10/Jodh/2016 and to 331/Jodh/2016. Thus, all the three COs and the nineteen appeals of the assessee, as aforesaid, are allowed."

10. Similarly we find that Hon'ble Supreme Court in the case of 'Sahara India vs. CIT & Others' [2008] 216 CTR 303 (S.C.) : [2008] 7 DTR (SC) 27: [2008] 300 ITR 403 (SC) while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high- ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case.

11. In view of these facts and circumstances and in view of judicial precedents relied on by Learned A. R. Ground No.5 in appeals is allowed and the assessments orders are annulled. Rest of the grounds were not argued by Learned A. R. therefore, rest of the grounds are dismissed as not pressed.”

13. In view of these facts and circumstances and respectfully following the order of the Tribunal in the case of Shri Navin Jain and others (supra), the grievance of the assessee by way of Ground no.6 is allowed and the assessment order is annulled.”

(J.1.6) Moreover, in a Third Member case, order has been passed by Tribunal in the case of Dheeraj Chaudhary vs. ACIT [2025] 178 taxmann.com 360 (Delhi-Trib._ (TM), on the issue of validity of approval u/s 153D of the Act. Also, we are conscious of order in the case of P. C. Puri vs. CIT [1985] 151 ITR 584 (Delhi), in which Hon'ble Delhi High Court held: There is no difference, really speaking, between a full bench of three judges sitting together and this method of referring to the third judge in the case of a difference of opinion between the A two judges. Whether the first method is adopted or the second, ""opinion of the majority"" will be decisive. In this case there is a formal reference to a third judge to ascertain his opinion. His is the deciding voice. He turns the scales. The third judge is the full bench. Not alone. But along with two others who first heard the case. Whether the three judges sit at the same time or at different times-two at one time, and the third hearing the matter later on a difference of opinion-does not make much difference. As has happened in this case, the two judges have differed. So the case bag come to me, the third judge. The two judges have expressed their opinion. I, am now called upon to give my opinion. The opinion of the majority will prevail. All that happens is that the third is segregated from the two and does not sit with them. He comes in later on when there is a difference of opinion between them. In all cases it is the theory of numbers which is the foundation of the doctrine of stare decisis. Majority is a term signifying the greater number. Counting of heads underlies the theory'' of judicial precedents as in any majority decision. The constitutional requirement of a constitution court of five judges is based on this theory. Similarly the CPC of 1908 enacts that in case of difference of opinion the matter has to be referred to a third judge. Therefore, the reference was correctly made to the third judge. Relevant portion of the order in the case of Dheeraj Chaudhary is reproduced as under:

(K) The principles that emerge, in our understanding; from careful perusal of the aforesaid precedents, referred to in foregoing paragraphs (J.1) to (J.6.1) are as under:

(i) Approval u/s 153D of IT Act cannot be a mechanical exercise. The approval must be granted by the approving authority after due application of independent mind. When this requirement is not met, the approval suffers from infirmity and is invalid.

(ii) The contention of Revenue that approval u/s 153D of the IT Act being an administrative act, is not justiciable; is wrong.

(iii) It is a bare minimum requirement that the approving authority must indicate what thought process was involved in granting the approval. Even if elaborate reasons are not given; there has to be some indication that the approving authority has examined the draft orders with regard to applicable law and all the relevant materials. When this requirement is not met, such approval suffers from infirmity and is invalid.

(iv) The directions given by CBDT in Search Manual regarding granting of approval, although initially issued in the context of section 158BG of I.T. Act, are also applicable for approval u/s 153D of the IT Act; and are mandatory. When these directions are not met; the approval suffers from infirmity and is invalid.

(v) The approval of draft assessment order by approving authority being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise without due application of independent mind by the approving authority on the relevant materials and reasoning given in the assessment order; so as to appreciate factual and legal aspects to ensure that the entire material has been factored in, in the draft assessment order proposed by the Assessing Officer.

(vi) Section 153D of the IT Act requires that the Assessing Officer shall obtain prior approval of JCIT in respect of each assessment year. Section 153D of the IT Act requires that the Assessing Officer would be required to furnish the return of income in respect of each assessment year. The proviso to section 153D of the IT Act further provides for assessment of the total income in respect of each assessment year. Careful and conjoint reading of section 153A and section 153D of the IT Act leave no room to doubt that approval with respect to each assessment year is mandatory. As separate returns are to be filed for each assessment year, and as separate assessment orders are to be passed for each assessment year; it follows that approvals u/s 153D of the IT Act are to be given by the approving authority separately for each assessment year. If approvals for multiple assessment years are given u/s 153D of the IT Act through a common letter of approval; this violates statutory requirements; and such approvals suffer from infirmity and are invalid.

(vii) In Manual of Office Procedure, Volume-II (Technical) issued by CBDT is exercise of powers u/s 119 of the IT Act has directed in Chapter -3 that the Assessing Officer should submit draft assessment order in search cases to the approving authority well in time; and the approving authority should give due opportunity of being heard, at least one month before time barring date. These directions are binding on the Assessing Officer.

(viii) The Assessing Officer, while framing assessment, acts in quasi-judicial capacity and he ought to conform to the more elementary rules of judicial procedure; and in particular, to conduct the case himself, and not allow somebody else, even his superior officer to interfere in the conduct of the case. Higher authorities an Assessing Officer, Addl. CIT/Joint CIT i.e. JCIT or CIT or CCIT are not entitled to interfere in process of framing of assessment order by the Assessing Officer; except by mandate of law. The Addl.CIT/JCIT is entitled to issue directions u/s 144A of IT Act. Other than that, his role starts when he receives draft assessment orders for approval u/s 153D of the IT Act (wherever such approval is required under law). When first draft is returned back; his role ceases; and the role of Add. CIT / JCIT starts again when he receives the final draft of the proposed assessment order, which he eventually approves. The question if the approval u/s 153D of the IT Act suffered from infirmity and was invalid is to be decided having regard to receipt of final draft of the proposed assessment order which the Addl. CIT /JCIT eventually approved. The association of Addl. CIT/JCIT with the Assessing Officer, and involvement of the Addl. CIT/JCIT in the assessment proceedings before that has no relevance for deciding whether approval u/s 153D of the IT Act suffered from infirmity and was invalid. In fact, in view of the foregoing discussion, any such association and involvement may, depending on facts and circumstances of the case, be fatal to the assessment on strict application of rules of judicial procedure as aforesaid; depending on facts and circumstances of the case.

(ix) When approval u/s 153D of the IT Act suffers from infirmity and is invalid for one or more aforesaid reasons, the entire assessment order becomes vitiated; and is to be annulled.

(L) We accept the contention of the learned Departmental Representatives, as referred to in foregoing paragraph (H.1.1) of this order that whether in a particular case, JCIT had given approval u/s 153D of the IT Act after due application of mind, is a question of fact and the answer would depend on facts and circumstances of the particular case, independent of conclusion arrived at in any other case.

(L.1) Coming to the facts and circumstances of the present case; we accept the contention of the learned Counsel for the assessee that the affidavit of Shri M. L. Meena, the Assessing Officer and personal testimony of Shri Agrahari, Departmental Inspector are de void of any credibility; having regard to submissions made by learned Counsel for the assessee as referred to in foregoing paragraph (I) of this order. Further, in view of submissions of learned Counsel for the assessee as referred to in foregoing paragraph (I.1) of this order, we are of the opinion that neither the story presented by Revenue regarding Pen Drive inspires confidence nor, in any case it advances the case of Revenue, in the absence of any description of the contents of the Pen Drive in letter dated 18/07/2017 of the Assessing Officer and in the absence of any reference to Pen Drive in the notes and order sheet of the JCIT, the approving authority. Moreover, it is claimed by Revenue that all relevant records/materials were sent to the Addl. CIT/JCIT along with editable soft copies of the draft assessment order together with letter dated 18/07/2017, but there is no mention of “all relevant records/materials” in the letter dated 18/07/2017. Also, as mentioned earlier, there is no description of the contents of the Pen Drive in letter dated 18/07/2017. Besides, we are perplexed at hand written mention of the Pen Drive in the letter. Who writes Pen Drive as “Pen Drib”?. Who writes 1 Piece as “1 pees”? We are not convinced that a Pen Drive was sent with the letter dated 18/07/2017 by the Assessing Officer to the Addl. CIT/JCIT. Notwithstanding, the claim of Revenue that all relevant records/materials; which should consist of assessment records, seized materials, digital data in CPU, HDD and laptop, reports under Rules 9 and 9A of ITSC(P) Rules, assessees’ submissions etc; were available to the JCIT who gave approval u/s 153D of the IT Act in either physical form of digital form, is not borne out from records. Even if it was available, there is nothing on record to show that indeed the JCIT considered all relevant materials before giving approval u/s 153D of the IT Act. Further, having regard to submissions made by learned Counsel for the assessee, as referred to in foregoing paragraphs (F.1.1), (F.1.4, (F.1.4.1), (F.1.5) (I) (I.1) and (I.2) of this order; it is concluded that approval was granted by JCIT in a mechanical way without due application of mind, as an idle formality, and in the manner of rubber stamping; as it was humanly impossible for the JCIT to give approval in a total of 63 assessments; vide aforesaid common approval letter dated 31/07/2017; after due consideration of all relevant materials such as seized materials, appraisal report, digital data, submissions of the assessees, assessment records, reports under Rules 9 and 9A of ITSC(P) Rules, etc; within extremely limited time available to the JCIT. Further, the assessment order is dated 31/07/2017 but there is no mention of return of the assessment record from Varanasi (where JCIT was stationed) to Allahabad (where Assessing Officer was stationed) in any official communication between the two of them; which shows that the assessment records always remained with the Assessing Officer; and the JCIT did not even refer to the assessment records before granting approval u/s 153D of the IT Act. The doctrine of human probabilities in orders of Hon'ble Supreme Court in Durga Prasad More 82 ITR 540 (SC) and Sumati Dayal 214 ITR 801 (SC) operates against Revenue, in the facts and circumstances of the present case.

(L.2) It is not in dispute that aforesaid common approval letter dated 31/07/2017 was issued by JCIT to give approval u/s 153D of the IT Act for 63 different assessments pertaining to 11 different assessees of Jeevan Jyoti Group, for different assessment years.

(L.3) On perusal of aforesaid common approval letter dated 31/07/2017 issued by JCIT; it is found that there is complete absence of any indication of thought process involved in granting the approvals for the assessment u/s 153D of the IT Act. There is no indication that the JCIT examined the draft order with regard to assessment record, applicable law and all relevant materials. The approval u/s 153D of the IT Act has been given in a non-speaking, summary and formal way, in the manner of rubber stamping.

(L.4) Neither the approving authority gave opportunity of being heard to the assessee before giving approval u/s 153D of the IT Act; nor did the Assessing Officer submit draft assessment order to the approving authority well in time to enable the approving authority to provide opportunity to the assessee (at least) one month before the time barring date of 31/07/2017. Thus, the approving authority and the Assessing Officer, both, failed to comply with mandatory direction of CBDT, issued in exercise of power u/s 119 of the IT Act, in Chapter-3 of Manual of Office Procedure, Volume-II (Technical).

(L.5) The claim of Revenue that Addl. CIT/JCIT were associated with the Assessing Officer and were involved in assessment proceedings (otherwise than in proceedings u/s 144A of IT Act) even before role of Addl. CIT/JCIT as approving authority u/s 153D of the IT Act began upon receipt of the final draft of the proposed assessment order which was eventually approved u/s 153D of the IT Act, is in violation of Rules of judicial procedure prohibiting any interference by higher authorities with assessment proceedings before the Assessing Officer.

(M) When the facts of the case as discovered in foregoing paragraphs (L.1), (L.2), (L.3), (L.4) and (L.5) are considered; they are found to be in contravention of every principle in foregoing paragraph (K) of this order enumerated as (i) to (ix). Respectfully following the precedents referred to in foregoing paragraphs (J.1) to (J.6.1); which are at the core of these principles; it is concluded that approval u/s 153D of the IT Act was given by the JCIT in a mechanical manner without due application of mind. It is further concluded that the approval u/s 153D of the IT Act given by the JCIT suffered from infirmities mentioned at Sl.Nos. (i), (iii), (vi), (viii) and (iv) read with (vii) in foregoing paragraph (K) of this order. Accordingly, it is concluded that the approval given u/s 153D of the IT Act suffers from multiple infirmities; and is invalid; because of which the entire assessment order is vitiated. In accordance with Sl.No. (ix) in foregoing paragraph (K) of this order, therefore, the assessment order is to be annulled. The alternate submission made by learned Departmental Representatives, to restore the matter regarding approval u/s 153D of the IT Act to the file of the approving authority (i.e. Addl. CIT/JCIT) is rejected because it would amount to providing a second innings to Revenue against mandate of law; and also because it would amount to extending period of limitation available for completing assessment proceedings, which is not permissible in law. The limitation period available to Revenue is inclusive of time taken for granting approval u/s 153D of the IT Act; and there is no provision of law permitting extention of period of limitation for failure of the approving authority to give valid approval u/s 153D of the IT Act. In view of the foregoing; the Assessing Officer is annulled.

(M.1) Since the assessment order is annulled, the impugned appellate order of learned CIT(A) has no legs to stand. Therefore, the impugned appellate order of learned CIT(A) is set aside.

(M.2) As mentioned in foregoing paragraph (F) of this order, representatives of both sides have agreed that appeals of Minto Developers Pvt. Ltd. (I.T.A. No.337/Lkw/2018 for A.Y. 2009-10) may be taken as the lead case as regards the legal issue whether the assessments were passed by the Assessing Officer after obtaining valid approval of JCIT. They submitted that the facts and circumstances for all the other appeals on this issue were in para materia and the decision in the case of Minto Developers Pvt. Ltd. would apply mutatis mutandis to remaining cases also. Therefore, the assessment orders pertaining to all the appeals/Cross Objections are also hereby annulled; and the impugned appellate orders pertaining to all appeals/Cross Objections before us are set aside.”

B.3) Further, the aforesaid order in the case of Ramji Vaish (supra) on which learned Departmental Representatives placed reliance has also been respectfully considered by us. The relevant portion of this order is reproduced below for the ease of reference:

“12. Commencing their arguments, Shri Suyash Agarwal, Advocate and Sh. Praveen Godbole, C.A. (hereinafter referred to as the ld. ARs) submitted that in the present case, a search and seizure operation under section 132 of the Act was conducted on 03.02.2011, at the residential and business premises of the assessee. After the date of search, notices under section 153A were issued on 17.07.2012 and in compliance to those notices, returns were filed on 22.08.2012.After issuance of notices, to which compliance was made, the ld. AO framed assessment orders on 30.03.2013under section 153A/143(3) of the Act. In the assessment order for each year, on the last page of the order, the Assessing Officer narrated that the order had been passed after approval from the Joint Commissioner of Income, Central Range, Lucknow.It was submitted that while preparing the appeal against the decision of the ld. CIT(A), the assessee came to know that a legal issue was involved and therefore, a prayer had been made by the assesseefor admission of additional grounds as under: - “3.That in any view of the matter approval u/s 153D of the as taken by the assessing officer from Joint Commissioner of Income Tax, Lucknow in various assessee (Group cases) in one day which shows that prescribed authorities granted the approval without application of mind and without considering the search material facts, in all the cases (Group cases) hence the entire assessment order is illegal invalid hence order of the two lower authorities liable to be declared void as well as non-est.

4. That in any view of the matter meaning of approval as contemplated u/s 153D of the Act by the Joint Commissioner Lucknow was required to verify the issue raised by the assessing officer in draft assessment order and to apply his mind and to ascertain the entire facts from the assessing officer and to examine search material but in the present case inmechanical manner approval taken/granted on the day in more than 45 cases (Group) hence the order passed by the assessing officer and his action as confirmed by CIT(A) is highly unjustified. The legal issue in question is well covered by the decision of Hon'ble Jurisdictional High Court as well as other Hon'ble ITAT benches hence the decisions are binding.”

14. Responding to the paper books filed by the ld. DR before the hearing, including submissions opposing the admission of the additional ground raised by the assessee, the ld. ARs submitted that the additional ground was a purely legal ground, it went to the root of the matter and on identical facts and grounds, the matter stood concluded by decisions of various Courts including the Hon’ble Supreme Court, the Hon’ble jurisdictional High Court and the jurisdictional Bench of the ITAT, Lucknow. Our attention was invited to the latest decision of the ITAT Bench of Lucknow in to 669/LKW/2018 vide order dated 6.08.2024, wherein the ITAT had admitted the identical additional ground in the light of the decision of the Hon’ble Supreme Court in the case of NTPC Limited vs. CIT 229 ITR 383 (SC), on the grounds that they were of the opinion that the additional ground raised by the assessee was a purely legal ground which was germane to the issue involved in the appeal. Similarly, in the case of Subodh Agarwal in the ld. CIT DR had not voiced any objection to the admission of the additional ground since the ground was a purely legal ground. Reference was also invited to the decision of the ITAT in various cases where the additional grounds questioning the validity of the approval under section 153D had been admitted. On the issue of validity of proceedings under section 153D, it was once again reiterated that there was series of decisions in support of the contention that if many orders were approved on the same day, it reflected non application of mind. Therefore, it was prayed that the legal ground may be admitted as the issues involved were identical to various other cases, where the Courts had admitted challenges to the approval under section 153D, on account of the fact that it was purely a legal ground.

15. Further, in response to an affidavit of the JCIT, who had given the approval under section 153D on 26.03.2013, which formed a part of the DR’s paper book, the ld. ARs raised an objection, that such affidavit of a retired officer had no sanctity in the eyes of law, firstly because it had been filed after eleven years (it was dated 23.08.2024) and secondly because it was an afterthought and the Department had only filed this affidavit to give life to a dead approval, which could not be permitted in the eyes of law. It was submitted that by filing this affidavit, the ld. DR had contended that the Tribunal had committed error in annulling good assessment orders due to non-application of mind by JCIT under section 153D by ignoring the contention that the JCIT is not required to follow the principles of natural justice. It was submitted that this contention was totally misconceived.In the light of the orders passed by various Courts it was a settled proposition that the JCIT had to grant approval under section 153D after due application of mind as he was acting in his capacity as a quasi-judicial authority. It was also a settled proposition of law, that orders and judgments passed by a Tribunal or Court had binding effect unless set aside by the Hon’ble Supreme Court and for this proposition the ld. ARs placed reliance on the judgment of the Hon’ble Supreme Court in the case of Union of India and Others vs Kamlakshi Finance Corporation Ltd. (1991) 55 ELT 433 (SC), wherein the Hon’ble Apex Court had held that even if the order of a superior court was not acceptable, the lower authority was still bound to follow the orders of the superior judicial authority.It was submitted that the approval dated 26.03.2013 granted by the JCIT under section 153D was without application of mind and now the DRs, with a view to cure the defect, had filed the affidavit dated 23.08.2024, justifying the approval and stating that the same was approved after due application of mind, which is clearly an afterthought. The ld. ARs drew our attention to the decision of the Hon’ble Supreme Court in the case of Mohinder Singh Gill vs. Chief Election Commissioner (1978) 1 SCC 405, in which the Hon’ble Supreme Court had held that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of an affidavit or otherwise as an order bad in the beginning could not get validated by additional grounds that were later brought out. Therefore, it was submitted that the affidavit of the retired officer was liable to be ignored and justice ought to be provided to the assessee, in the light of settled law and the contention of the Department that a legal issue could not be raised before the Hon’ble Bench, had no force and therefore should be ignored. The ld. ARs also emphasized that the legal issue that had been raised as an additional ground was required to be adjudicated first, keeping other issues on merits pending, until the legal issue had been determined. As per Order XIV Rule 2 of the CPC, it had been laid down in Rule II(2) that where issues of law and of fact arise in the same suit and the court finds that the suit or any part thereof may be disposed of on an issue of law only, it may try that suit first. They also drew reference to the decision of the Hon’ble Supreme Court in the case of Major S.S. Khanna vs. Brigadier F.J. Dhillon (AIR 1964) SC 497, where the Hon’ble Supreme Court had held, that the jurisdiction to try an issue of law under Order XIV Rule 2 CPC, may be exercised only where the whole suit or a part thereof could be disposed of on the issue of law alone and relying upon such judgments, the ld. ARs prayed that a decision be first pronounced on the legal issue of the validity of the assessment, in view of their contention that the approval under section 153D, was given without due application of mind.

16. The Department has opposed the admission of these additional grounds raised for the first time before the ITAT in respect of approval under section 153D, under the provisions of Rule 11, Rule 18 and Rule 29 of the ITAT Rules, 1963. Sh. Amalendu Nath Mishra, CIT DR and Sh. A.K. Singh, Sr. DR (hereinafter referred to as the ld. DRs) argued the matter before the Bench and submitted that the said additional ground had been sought to be raised for the first time before the ITAT. The assessee had not explained why it did not raise this ground before the ld. CIT(A). The ld. DRs submitted that the aforesaid additional grounds were based on the AOs letter dated 25.03.2013, soliciting approval under section 153D and the JCIT’s letter dated 26.03.2013 conveying the approval under section 153D, both of which have been filed by the assessee alongwith its application for admission of additional ground. It was, therefore, self-evident that since the assessee was not a party to the process under section 153D, that these two documents were in the nature of the additional evidences adduced by the assessee and it was on the basis of these additional evidences, that the additional ground was sought to be raised. The ld. DRs pointed out that under Rules 11, 18 and 29, no additional evidences could be adduced and no additional ground could be raised, except with the leave of the Tribunal and for the reasons to be recorded by the Tribunal for allowing the additional evidences and for raising the additional ground. Moreover, asthe issue of approval under section 153D was not the subject matter of appeal before the ld. CIT(A), the ld. CIT(A) had no occasion to record his finding on the said issue. Therefore, the said issue does not emanate out of the order under section 250 of the ld. CIT(A) and was not a subject matter of appeal before the ITAT. In fact, the ld. DRs submitted that the approval under section 153D was not an appealable order and therefore, it did not fall within the jurisdiction of the Tribunal as defined under section 253(1) of the Income Tax Act. It was submitted that the jurisdiction of the ITAT and the powers of the ITAT were two different things. The issue of approval under section 153D, which did not emanate out of the orders of the ld. CIT(A), was beyond the jurisdiction of the ITAT in the present appeal. The ld. DRs argued that had the issue been within the jurisdiction of the ITAT, (in terms of the subject matter of appeal), then it would have had the widest powers to adjudicate upon the same, but it is not so in the present case. Therefore, since the Tribunal did not enjoy the jurisdiction to rule upon an approval under section 153D dehors of the matter being considered by the ld. CIT(A), where was the question of the Tribunal exercising the power to do so. Thus, it was submitted that the additional ground should not be entertained by the ITAT on account of this.

17. The ld. DRs also submitted, that the question as to whether in a given case, approval under section 153D has been accorded with due application of mind or not, is essentially a question of fact, which would depend upon the facts of each case and therefore, this was not a legal issue which could be raised as an additional / legal ground for the first time before the ITAT. The ld. DRs questioned the submissions made by the ARs that the issue of approval under section 153D went to the root of the matter, because the AOs jurisdiction or power to assess the income of a searched person is dependent upon the fulfillment of the requirements of section 153A and not on the approval under section 153D. It was, therefore submitted, that the impugned assessment proceedings having been validly initiated and completed under section 153A, after approval under section 153D, cannot be called into question on account of alleged non-application of mind in approval under section 153D, so as to render the impugned assessment order ab initio void as the assessee was trying to make out by means of the said additional / legal ground. It was submitted that the provisions requiring statutory approval under section 153D were analogous to the provisions of section 158BG (for block assessments applicable upto 31.05.2003) and section 274(2) for imposition of penalties, and in the context of the said two analogous provisions requiring approval of the Additional / Joint CIT, the Courts have repeatedly held, that such an approval is only an administrative act, which does not affect the AOs inherent jurisdiction to assess the income of the assessee or to levy penalty upon the assessee. Hence, the reasons being presented by the assessee, firstly for showing that this was a legal ground and secondly for showing that it went to the root of the matter and effected the validity of the assessment, were both misplaced and for the aforesaid reasons, the ld. DRs submitted that the aforesaid legal grounds should not be considered and admitted for adjudication by the Tribunal.

1. 1. That, during the period 19.07.2012 to 15.10.2014, 1 was posted as Joint/Addi Commissioner of Income Tax, Central Range, Lucknow.

2. That, apart from other supervisory roles, I was also approving authority for the Assessment orders prepared by Assessing Officer of Central Circle within jurisdiction of these ranges.

3. That, vide letter F.No. DCIT(CC)/Alld/Vaish Groups/2012- 13/1037 dated 125.03.2013, the A.O. sought approval for passing assessment orders in the case of Shri Ramji Vaish for A.Y. 2005-05 to 2011-12 which are under appeal for Hon'ble ITAT.

4. That, after proper application of mind, accorded approval for- passing assessment orders in the case of ShriRanji Vaishfor A.Y. 2005-06 to 2011-2, which are under appeal before Hon'ble ITAT, vide my office letter F.No. dated 26.03.2013. Jt. CIT/CR/LKO/Approval/2012-13/158 5. That, before approving the draft assessment orders submitted by Assessing Officers, a regular monitoring and supervision of assessment proceedings were made since examination of seized materials till scrutinizing of final reply.

6. That, since I, as Range Head constantly supervised the proceedings therefore at the time of submitting droit assessment order, I was well acquainted with facts and findings of the case.

7. That, for the purpose of proper monitoring and firsthand information of the progress of the cases, time and again I made my Camp Office at Allahabad during the material time. Moreover, the Assessing Officer used to give the draft orders in my e-mail and after due diligence, I used to return those draft order, after necessary correction and modification, through e-mail.

8. That, this is the reason that approval process took minimum time.

9. That, the regular monitoring was also necessary because in the most of cases assessee took long time for giving responses and submitted final reply at the fag-end of the year.

10. That, the approval has been accorded after due diligence and proper application of mind.

DECLARATION I, Buddhadeb Mukhopadhyay, S/o Late Amiyalal Mukherjee aged about 69 years R/o Flat No.- 301, Moore Heights, 93, M. B. Sarani, Kolkata- 700040, solemnly affirm that contents of point no. 1 to 10 are true and correct to the best of my knowledge and belief.”

23. Without prejudice to this argument, the ld. DRs submitted that even otherwise there was no reason to hold the assessments to be invalid on account of any irregularity in the approval process. It was submitted that cases had come up for decision where there was absolute lack of approval and theretoo the Courts had not held such assessments to be invalid. The lack of approval had been held to be a procedural irregularity that was not fatal to the order passed. Our attention was invited to the judgment of the Hon’ble Karnataka High Court in the case of Gayathri Textiles vs. CIT (2000) 111 taxman 123 (Kar) wherein the ld. CIT(A) had cancelled the penalty levied under section 271(1)(c), holding that the ld. AO had not obtained the previous approval of the IAC as required under section 274(2). On appeal by the Revenue, the Tribunal had reversed the order, holding that the failure to obtain the previous permission from the IAC for imposing penalty under section 271(1)(c) was only a procedural error and it was not fatal to the order of penalty under section 271(1)(c). The Hon’ble High Court held that in the said case, the proceedings were validly initiated and the proceedings under section 271(1)(c)(iii) only require prior approval of the IAC for direction for payment of penalty and not for the initiation of proceedings. Therefore, it was a procedural defect and as such the Tribunal was justified in holding that the failure to obtain the previous permission from the IAC for imposing the penalty under section 271(1)(c) was only a procedural error and it was not fatal to the order of penalty passed under section 271(1)(c) and also that the Tribunal was right to remand the matter back to the Department to pass a fresh penalty order. The ld. DRs also invited our attention to the judgment of the ITAT Jodhpur Bench in the case of Ratan Lal Dalmiya vs. ITO (2004) 1 SOT 281 (Johdhpur) in which a similar view had been taken with reference to penalty under section 271(1)(c), the judgment of the Hon’ble Madhya Pradesh High Court in the case of CIT vs. Vijay Dal Mills (1998) 230 ITR 301 (M.P.) where the Hon’ble Madhya Pradesh High Court followed its earlier order in the case of PrabhudayalAmichand vs. CIT (1989) 180 ITR 84 (M.P.) which in turn held that a procedural irregularity not involving the question of jurisdiction can be cured. It was held in that case that there could be no doubt that levy of penalty by the ITO without the previous approval of the IAC was illegal, but the case could go back to the ld. AO for curing the defect,by obtaining the prior approval of IAC. The ld. DRs also referred to the decision of the Hon’ble Kerela High Court in the case of G. Manoharan vs. ACIT (2006) 155 taxman 569 (Ker),the decision of the Hon’ble Kolkata High Court in the case of Sagar Dutta vs. CIT (2014) 44 taxman.com 311 (Calcutta) and the decision of the Hon’ble Supreme Court in the case of Guduthur Bros. vs Income-Tax Officer (1960) 40 ITR 298 (SC), in which the Hon’ble Courts had taken a similar view, that in case an illegality vitiated the proceeding after it was lawfully initiated, the proceedings were to be restored back to the stage at which the illegality occurred and not quashed altogether. The ld. DRs pointed out that in this instant case, the proceedings had been validly and lawfully initiated following a search against the assessee under section 153A. The notice that had been issued had been served upon the assessee. The jurisdiction to assess the assessee arose out of the search under section 132 and the subsequent service of notice under section 153A.It was not dependent upon the approval under section 153D, therefore,it was argued that when the proceedings had been validly and lawfully initiated, the resultant assessment orders could not be voidab initioand therefore could not be nullified. The obtaining of approval in a particular manner could be held to be a procedural irregularity and following the decision of the Hon’ble Supreme Court, as rendered in the case of Guduthur Bros. vs Income-Tax Officer (supra), the proceedings were to continue from the stage of such illegality. Therefore, if the Tribunal was of the opinion, that any irregularity had crept in to the approval process, then the right course of action would be to send it back to the JCIT for the removal of lacuna / irregularity. In support of this stance, the ld. DRs further relied upon the judgments of the Hon’ble Madhya Pradesh High Court in the case of PrabhudayalAmichand vs. CIT (1989) 44 taxman 213 (M.P.) and CIT vs. Damodar Das Muralilal (1997) 93 taxman 651 (M.P.), where this principle was that a procedural irregularity can be corrected at the point in which the regularity occurred when it was discovered,was re-affirmed. Acknowledging the fact that Tribunal’s and Courts had taken a different view on the matter on previous occasions, the ld. DRs submitted that the said Tribunal’s and Courts had no occasion to consider the facts and position in law as explained by them, before they had arrived at their conclusion. It was submitted that when a new set of arguments that were not presented before Courts earlier were submitted, then the Tribunal could and was duty bound to apply its mind to the issue afresh. For this proposition, the ld. DRs placed reliance on the decision of the ITAT Cuttack Bench in the case of Orissa State Civil Supplies Corporation Limited vs. DCIT (2003) 130 taxman 218 (Cuttack) (Mad) ,wherein the Tribunal had considered this aspect and held that in the name of adhering to the principles of consistency, it could not leave any scope for perpetuation of errors and therefore, in deserving cases and for cogent reasons to be placed on record, the Tribunal had the liberty of applying its mind afresh to the matter, irrespective of the decision taken in earlier years in the assessee’s own case and even on the same set of facts. The ld. DRs submitted that it had been held by the Hon’ble Supreme Court in the case of CIT vs. Assam Travels Shipping Service (1993) 67 taxman 269 (SC) and Hukum Chand Mills Limited vs. CIT (1967) 63 ITR 232 (SC), that in appropriate cases, the Tribunal had the power to remand the matter back. It was, therefore, prayed that if the ITAT was not convinced that the approval granted in the present case was in accordance with the Act, then it should in the interest of justice remand the matter back to the ld. AO for obtaining approval in the correct manner. Finally, the ld. DRs placed their reliance upon the decision of the Hon’ble Supreme Court in the case of CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) to further reiterate this point.

29. The next question which we must decide before proceeding is whether the said additional grounds that have been raised by the assessee are already covered by judicial precedents that are binding upon us and preclude us from looking into issues raised by the DRs on account of the principle of stare decisis. The assessee has cited various Court judgment of the Hon’ble jurisdictional High Court, the Hon’ble Orissa High Court and the Hon’ble Delhi High Court and the Lucknow Bench of the Tribunal to show that the matter has already been decided by the various courts, leaving us with little option but to follow those judgments. The DRs have argued otherwise and pointed out that each case was decided on a different set of facts and decision on the facts of a particular case cannot constitute precedents that would preclude us from looking into the matters afresh, if a different set of facts were presented for the first time. We may examine these rival arguments with reference to the cases that have been cited.

30. At the very outset, it has been urged by the ARs that the Hon’ble Supreme Court, having dismissed the SLP filed by the Revenue against the decision of the Hon’ble Orissa High Court in the case of ACIT vs. Serajuddin& Co. (2024) 163 taxman.com 118, the orders of the Hon’ble Orissa High Court in the matter ofACIT vs. Serajuddin& Co. (2023) 150 taxman.com 146 (Orissa) stood affirmed by the Hon’ble Supreme Court and therefore, was now the view of the Hon’ble Supreme Court. However, we observe from a perusal of the said order that the SLP was dismissed by the Hon’ble Supreme Court with the following observations: - “Having regard to the facts and circumstances of the case, we are not inclined to interfere in the matter. The Special Leave Petition is dismissed.” It is settled law that an in limine dismissal of an SLP has no binding force in terms of Article 141 of the Constitution of India. Consequently, it has nobinding precedent value, in contra distinction with a reasoned order of the Hon’ble Supreme Court or an order that has been passed in appeal. In the case of State of Orissa and Anrs vs. Dhirendra Sundar Das & Ors (2019) 6 SCC 270, the Hon’ble Supreme Court has clarified this issue with the following observations:- “9.27 It is a well settled principle of law emerging from a catena of decisions of this Court including Supreme Court Employees’ Association vs. Union of India and Anrand State of Punjab vs. Davinder Pal Singh Bhullar, that the dismissal of the SLP in limine simply implies that the case before this Court was not considered worthy of examination for a reason, which may be other than the merits of the case. Such in limine dismissal at the threshold, without giving any detailed reasons, does not constitute any declaration of law or a binding precedent under article 141 of the Constitution.” Thus, in view of the judgment of the Hon’ble Supreme Court itself on this subject, the contention of the ld. ARs that the Hon’ble Supreme Court has affirmed the order of Hon’ble Orissa High Court is not maintainable.

The Hon’ble Delhi High Court ultimately dismissed that appeal on account of the fact that a common and composite approval was given in the case of the assessee and the invalidity of that approval had attained finality with the in limine dismissal of the Departmental SLP, but even while it did so, it held, “We leave the question pertaining to the effect and impact of section 144A of the Act as well as the provision contained in the Search and Seizure Manual 2007, open to be addressed in appropriate proceeding”.

Thus, the Hon’ble Delhi High Court, in effect, acknowledged that these were issues that had not been considered by it in its earlier order, which could potentially have a bearing on the issue. For these reasons, we are of the view that the finding of the Hon’ble Allahabad High Court in the cases of Sh. Siddhartha Gupta, Smt. Sapna Gupta and Sh. Subodh Agarwal,with regard to a given set of facts do not preclude us from inquiring into the nature of approval on another set of facts. Thus, in our understanding, every case where it was agitated that the approval was given mechanically would have to be examined with reference to the facts of that particular case and the arguments presented by the parties in that particular case to determine whether the approval in such case was the culmination of the exercise of assessment or whether it was a perfunctory exercise to meet a statutory requirement and examination of this question to our mind, would not interfere with the principle of stare decisis as long as the analysis of whether the approval was mechanical,took due cognizance of the parameters laid down by the Hon’ble Court in determining the legality of the exercise.

Affidavit “I, Buddhadeb Mukhopadhyay, S/o Late Amiyalal Mukherjee aged about 69 years P./o Fiat No. 801, Moore Heights, 93, M. B. Sarani, Kolkata 700040 Solemnly affirm as under:

1. 1. That, during the period 19.07.2012 to 15.10.2014, 1 was posted as Joint/Addi Commissioner of Income Tax, Central Range, Lucknow.

2. That, apart from other supervisory roles, I was also approving authority for the Assessment orders prepared by Assessing Officer of Central Circle within jurisdiction of these ranges.

3. That, vide letter F.No. DCIT(CC)/Alld/Vaish Groups/2012- 13/1037 dated 125.03.2013, the A.O. sought approval for passing assessment orders in the case of ShriRamjiVaishfor A.Y. 2005-05 to 2011-12 which are under appeal for Hon'ble ITAT.

4. That, after proper application of mind, accorded approval for- passing assessment orders in the case of ShriRanji Vaishfor A.Y. 2005-06 to 2011-2, which are under appeal before Hon'ble ITAT, vide my office letter F.No. dated 26.03.2013. Jt. CIT/CR/LKO/Approval/2012-13/158 5. That, before approving the draft assessment orders submitted by Assessing Officers, a regular monitoring and supervision of assessment proceedings were made since examination of seized materials till scrutinizing of final reply.

6. That, since I, as Range Head constantly supervised the proceedings therefore at the time of submitting droit assessment order, I was well acquainted with facts and findings of the case.

7. That, for the purpose of proper monitoring and firsthand information of the progress of the cases, time and again I made my Camp Office at Allahabad during the material time. Moreover, the Assessing Officer used to give the draft orders in my e-mail and after due diligence, I used to return those draft order, after necessary correction and modification, through e-mail.

8. That, this is the reason that approval process took minimum time.

The Kolkata Bench of the Tribunal in the case of Shaw Wallace & Co. vs. Commissioner of Income Tax (1999) 68 ITD 148 (Kol), observed, “In our opinion the purpose / necessity to take approval u/s 158BG by AO to pass block assessment order appears to be that the CIT should monitor and supervise the assessment of the block period for the reason of this not being a routine assessment but a special assessment being a case of search and seizure and involving a block period of 10 years. It is from this angle that the Board’s instruction contained in its circular letter dated 2nd January 1996, directs the CIT to keep themselves involved in search assessments proceedings right from the beginning and for proper monitoring of search cases, internal correspondence folder should be maintained. While considering the giving of approval u/s 158BG the CIT may on perusal of record consider some part of the draft assessment order to need a modification or some addition not to be made, and to advise / instruct the AO accordingly. This process may rid the appellate authority of some its exercise. Therefore, even if their appears to be some irregularity in giving approval, the same hardly has any fatal consequence inasmuch as the resultant block assessment order remain very much assailable in appeal before the Tribunal and thus approval hardly entails any material prejudice to the assessee. Such approval, even if laconic in some aspects, will not invalidate / vitiate the order itself. The only understandable impact seems to be that it may necessitate somewhat more exercise at the appellate stage.”

It is generally accepted that the provisions of section 158BG are Para Materia to that of section 153D. Thus, the view that a defect in the approval u/s 158 BG would not render the assessment invalid must be considered which deciding the matter of the effect of irregular approval u/s 153D.The Cuttack Bench of the Tribunal, in the case of Gobardhan Matia 62-65/CTK/2013, following the judgment of the Hon’ble Orissa High Court in the case of Shiv Kumar Agarwal 186 ITR 734 (Ori), held, “Let us now for a moment assume that there has been a violation of section 153D of the Act. The consequence of the same would not be annulment of the assessment order. The provisions of section 153D is an administrative procedure in the course of assessment. The breach of such administrative procedure could at best lead to the assessment proceeding being redone from the point which the breach took place.”

(B.3.1) We have also given our respectful consideration to order of the Lucknow Bench of the Tribunal in the case of Satvik Polychem Private Limited vs. DCIT in and others, which has also been passed by Division Bench of the same Members (Shri Sudhanshu Srivastava, Judicial Member and Shri Nikhil Choudhary, Accountant Member) who have delivered aforesaid order in the case of Ramji Vaish (supra), relevant portion of the order is reproduced below:

“5. The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the assessee was challenging the validity of approval granted under section 153D of the Act in all the three appeals and prayed that this ground may be taken up first for hearing. Since the Department did not have any objection to the prayer, the Ld. A.R. proceeded to advance his arguments on the validity of approval under section 153D of the Act. 5.1 The Ld. A.R. invited our attention to the Letter of Approval under section 153D of the Act, dated 27.12.2019 of the Addl. Commissioner of Income Tax, Central Range, Kanpur (copy placed in the paper book) and submitted that the order dated 31.12.2019 passed by the DCIT, Central Circle-1, Kanpur under section 153A of the Act was based on the approval under section 153D of the Act granted by the ACIT, Central Range, Kanpur by a common order dated 27.12.2019 in cases pertaining to different assessees and different assessment years. He further submitted that the order passed by the DCIT within four days of approval granted by the ACIT, i.e. 27.12.2019, was without application of mind and without appreciating the facts and the same did not follow the mandate of section 153A of the Act. The Ld. A.R. in support of his arguments placed reliance on various case laws, which were placed in paper book.

5.2 Inviting our specific attention to order dated 22.11.2024 by the Co-ordinate Bench of ITAT Lucknow in the cases of M/s Standards Frozen Exports Pvt. Ltd., M/s Standard Agro Vet Pvt. Ltd., Shri Kamal Kant Verma and Shri Sachin Verma in IT(SS)A Nos. 41 to 45/LKW/2022, 46 to 49/LKW/2022, 50 to 53/LKW/2022 and 54 to 59/LKW/2022 respectively, the Ld. A.R. submitted that these appeals were decided in favour of the assessee by holding that the approval(s) granted under section 153D of the Act were done in a mechanical manner without application of mind. He submitted that likewise in the present set of appeals, the approval granted by learned Addl. CIT under section 153D of the Act, for passing the assessment orders was done in a mechanical manner without due application of mind. He drew our attention to approval granted by the Addl. CIT vide the communication dated 27.12.2019 and 28.12.2019 in the case of Satvik Polychem Pvt. Ltd. for assessment years 2017-18, 2015-16 and 2016-17 respectively. He further drew our attention to the contents of the aforesaid approval letters dated 27.12.2019 and 28.12.2019 and submitted that on their perusal, it emerges that the approval was sought by the Assessing Officer on 27.12.2019 and 28.12.2019 itself and the approval was given by the Addl. CIT. He contended that it was humanly impossible for the Addl. CIT to exercise due application of mind before granting approval in such a large number of cases having regard to the enormity of materials for due application of mind on the part of the Addl. CIT within a short span of the same working day. He also contended that the assessments made by the Assessing Officer were vitiated due to approval granted by the Addl. CIT in a mechanical manner without due application of mind. Moreover, he also contended that the absence of due application of mind by the Addl. CIT and the grant of approval in mechanical manner was fatal to the assessments made in pursuance of the approvals so granted by Addl. CIT. 5.3 The Ld. A.R. also submitted a compilation of copies of approval letters dated 27.12.2019 and 2812.2019 issued by the Addl. CIT, Kanpur and submitted that on these two dates approval was granted in as many as 110 cases (including assessee’s) which would indicate that there was complete non- application of mind while according approval under section 153D of the Act. 5.4 Reliance was also placed on the order dated 07.10.2021 of the Lucknow Bench of the Tribunal in the case of Shri Subodh Agarwal vs. DCIT, Kanpur for assessment year 2015-16 in ITA No.674/LKW/2018. The Ld. A.R. submitted that an identical issue had arisen before the Tribunal wherein, the Tribunal had quashed the assessment order based on the common approval dated 31.12.2017 granted by ACIT, Central Range, Kanpur under section 153D of the Act. He further submitted that against the said order dated 07.10.2021 (supra) of the Tribunal, the Department had filed an appeal before the Hon'ble Allahabad High Court, vide of 2022, which was dismissed by the Hon'ble Court vide order dated 12.12.2022.

6. Per contra, the ld. CIT (D.R.) submitted that the assessee’s argument that the approval under Section 153D of the Act was granted mechanically without application of mind was not supported by the factual matrix of the case. The Ld. CIT(DR) prayed that the submission of assessee on the ground of mechanical approval under section 153D of the Act by Addl. CIT/ Jt. CIT before the Tribunal may kindly be rejected and the order of the Assessing Officer may kindly be upheld.

8.1 As is apparent from the above two communications, 19 approvals were given in one communication dated 27.12.2019 (including two in the appeals before us) and 12 approvals were given in another communication dated 28.12.2019 (including one in the appeal before us). The requirement of prior approval of a superior authority i.e. the AddI. CIT, requires that the Addl. CIT should give due consideration to all relevant materials and appraise them properly in order to appreciate the factual and the legal aspects. It is well settled in law that statutory approval by superior authority must be granted only on the basis of proper consideration of all relevant materials, and further that the approval must reflect the due application of mind to the facts of the case and to the applicable law. 8.2 In the case of Pr. CIT vs. Subodh Agarwal [2023] 149 taxmann.com 373 (Allahabad), it was held by the Hon'ble Jurisdictional High Court that it was humanly impossible to go through the records of 38 cases in one day to apply independent mind to appraise the materials before the approving authority and the Hon'ble Allahabad High Court upheld the conclusion drawn by the Income Tax Appellate Tribunal that it was the mechanical exercise of power. The Hon'ble High Court upheld the order of the Income Tax Appellate Tribunal that the approval given in such a manner vitiated the entire assessment proceedings. Similar view was taken by Hon'ble jurisdictional High Court in the case of Pr. CIT vs. Siddarth Gupta [2023] 147 taxmann.com 305 (Allahabad). In addition to the aforesaid orders of Hon'ble jurisdictional High Court, the issue is also covered in favour of the assessee by the orders of Co-ordinate Bench of the Income Tax Appellate Tribunal, Lucknow in the cases of Sapna Gupta vs. DCIT (order dated 07.10.2021 in I.T.(SS)A.No.424/LKW/2019), Navin Jain vs DCIT (order dated 03.08.2021 in I.T.(SS)A.No.424/Lkw/2019), Rohit Gupta vs. DCIT (order dated 04.07.2022 in M/s Quality Structure Pvt. Ltd. vs. DIT (order dated 30.09.2024 in I.T. (SS)A.No.679 & 680). The SLP filed by Revenue on this issue was dismissed by Hon'ble Supreme Court in [2024] 163 taxmann.com 118 (SC). 8.3 Similar view was taken by ITAT in Kamal Kant Verma vs. DCIT in I.T.(SS)A. No.50 to 53/Lkw/2022, Sachin Verma vs. DCIT in I.T.(SS)A. No.54/Lkw/2022 and Sachin Verma vs DCIT in to 59/Lkw/2022. In fact, the ITAT allowed relief to the assessee in these group of cases on facts identical to the facts in these present group of appeals. The captioned appeals were part of the 110 approvals granted on 27.12.2019 and 28.12.2019 and so were the Standard Frozen Foods Exports Pvt. Ltd., M/s Standard Agro Vet Pvt. Ltd., Shri Kamal Kanth Verma and Shri Sachin Verma group of cases (supra) which have already been allowed relief by the ITAT by holding that the approvals granted under section 153D of the Act were granted without due application of mind by the Addl. CIT. The ITAT in these group of cases annulled the assessments by placing reliance on number of judicial precedents viz.: (i) Hon'ble Allahabad High Court in the case of Pr. CIT vs. Subodh Agarwal in of 2022, dated 12.12.2022; (ii) Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Co. (2023) 150 taxmann.com 146 (Orissa); (iii) Hon'ble Delhi High Court in the case of Pr. CIT vs. Shiv Kumar Nayyar in ITA No.285/2024. (iv) ITAT Bangalore Bench in the case of Khoday Eshwarsa & Sons vs. DCIT in & 1080/Bang/2024; (v) ITAT Delhi Bench in the case of Sanjay Duggal & Sons in ITA No.1813/Del/2019; and (vi) ITAT Lucknow Bench in the case of Quality Structure Pvt. Ltd. vs. DCIT in IT(SS)A No.679&680/LKW/2019.

8.4 The Ld. CIT (DR) has not been able to point out any facts in the present appeals which would distinguish the facts in the above mentioned group of appeals. 8.5 Therefore, respectfully following the aforesaid precedents and in view of foregoing discussion, it is held that the assessment orders passed in pursuance of approvals given by AddI. CIT in a mechanical manner without due application of mind, vitiated the entire assessment proceedings, which was fatal to the assessment orders. Accordingly, we set aside the impugned appellate orders of the learned CIT(A) in the present three appeals before us; and the corresponding assessment orders each dated 31.12.2019 (for assessment years 2015-16, 2016-17 and 2017-18) are annulled.

9. As we have already annulled the assessment orders in the foregoing paragraph No.8 of this order, the grounds taken by the assessee in the appeals on remaining disputes become merely academic in nature and need not be decided. Therefore, we decline to express any opinion on the same.

10. Since the assessment orders are annulled, the Departmental appeals become infructuous and are dismissed as such.”

(C) There are two aspects of approval given by JCIT u/s 153D of the Act. The first pertains to the consequences that follow if approval given u/s 153D of the Act is found to be invalid. This is a question of law on which we must take guidance from binding precedents and decisions of higher forums. In the aforesaid order dated 30/09/2025 passed by us in the case of Minto Developers Pvt. Ltd. (supra), we have taken guidance from binding precedents of Hon'ble Allahabad High Court in the cases Pr.CIT vs. Sapna Gupta (order dated 12/12/2022 in Income Tax Appeal No. 88 of 2022) reported at Pr.CIT vs. Sapna Gupta 147 taxmann.com 288 (Allahabad) and also in the case of Pr.CIT vs. Siddharth Gupta (order dated 12/12/2022 in Income Tax Appeal No. 90 of 2022) reported at Pr.CIT vs. Siddarth Gupta [2023] 147 taxmann.com 305 (Allahabad). We have also taken guidance from binding precedents in a Third Member case of Income Tax Appellate Tribunal passed in the case of Dheeraj Chaudhary vs. ACIT [2025] 178 taxmann.com 360 (Delhi-Trib.) (TM). We have further taken guidance from the order of Hon'ble Orissa High Court in the case of ACIT vs. M/s Serajuddin & Co. (in order dated 15/03/2023 in – 45 of 2022) reported at ACIT vs. Serajuddin & Co. [2023] taxmann.com (Orissa). The Special Writ Petitions filed by Revenue against the aforesaid order of Hon'ble Allahabad High Court in the case of Siddarth Gupta, and order of Hon'ble Orissa High Court in the case of M/s Serajuddin & Co. have been dismissed by Hon'ble Supreme Court. We have further taken guidance from the order of Hon'ble Delhi High Court in the case of Pr.CIT vs. Shiv Kumar Nayyar (order dated 15/05/2024 in and CM Appeal 28994/2024) reported at [2024] 163 taxmann.com 9 (Delhi). In this case, Hon'ble Delhi High Court duly considered the aforesaid orders of Hon'ble Allahabad High Court in the case of Pr.CIT vs. Sapna Gupta (supra) and Hon'ble Orissa High Court in the case of ACIT vs. M/s Serajuddin & Co. (supra), and expressing agreement with the Hon'ble Allahabad High Court and Hon'ble Orissa High Court; Hon'ble Delhi High Court upheld the order of the Income Tax Appellate Tribunal, quashing the assessment order. Further, in the case of Sapna Gupra (supra), Hon'ble Allahabad High Court has approved the order of Income Tax Appellate Tribunal in the case of Navin Jain & Others quashing the assessment order for lack of valid approval under section 153D of the Act. We have also taken guidance from the case of Pr.CIT vs. Anuj Bansal 165 taxmann.com 2 (Delhi)/466 ITR 251 (Delhi) in which Hon'ble Delhi High Court upheld the order of the Income Tax Appellate Tribunal quashing assessment order on the ground that there was absence of application of mind by the approving authority in granting approval under section 153D of the Act. SLP filed by Revenue against this order of Hon'ble Delhi High Court has also dismissed by Hon'ble Supreme Court. Further we have taken guidance from order of Hon'ble Delhi High Court in the case reported at Pr.CIT vs. Pioneer Tour Planner (P.) Ltd. 160 taxmann.com 652/ 465 ITR 356 (Delhi) and in Pr.CIT vs. MDLR Hotels (P.) Ltd. 166 taxmann.com 327 (Delhi); in which similar view was taken. We have, moreover, taken guidance from the order of Hon'ble Allahabad High Court in the case of Pr.CIT vs. Subodh Agarwal [2023] 149 taxmann.com 373 (Allahabad High Court). In all the aforesaid precedents, the quashing of assessment order by ITAT due to lack of valid approval under section 153D of the Act has been upheld by Hon'ble High Courts. We may further point out that the view taken by Income Tax Appellate Tribunal in the case of aforesaid order dated 31/10/2025 in the case of Ramji Vaish (supra) is in complete contrast with order passed in the case of Satvik Polychem Private Limited (supra), relevant portion of which has been reproduced in foregoing paragraph (B.3.1) of this order. In the case of Satvik Polychem Private Limited (supra), the Bench of Income Tax Appellate Tribunal has approved the quashing of assessment order for lack of valid approval under section 153D of the Act. However, the same Members of the Tribunal, in the case of Ramji Vaish (supra) have taken a contrasting decision, restoring the matters back to the file of the Assessing Officer for seeking fresh approvals from the range head. In our respectful opinion, the Bench of Tribunal, consisting of the same Members, and falling under the Jurisdiction of the same jurisdictional High Court (i.e. Hon'ble Allahabad High Court) was bound by their own earlier decision in the case of Satvik Polychem Private Limited (supra) wherein they have quashed the assessment orders for lack of valid approval under section 153D of the Act unless they were forced to take a different view on the basis of a stronger precedent. Since the aforesaid order dated 31/10/2025 in the case of Ramji Vaish (supra) is in violation of the binding precedents and precedents of higher forums, as discussed above, we respectfully hold that the aforesaid order dated 31/10/2025 in the case of Ramji Vaish (supra) is not a useful precedent for deciding the present appeals before us.

(C.1) We also find that the order of the Tribunal in the case of Ramji Vaish (supra), restoring the matter back to the file of the Assessing Officer for seeking fresh approval from the range head is also unimplementable and for this reason also it does not help us as a good precedent for deciding these appeals. The order in the case of Ramji Vaish is unimplementable because it will amount to non application of mind by the Assessing Officer if he seeks approval for draft assessment order prepared by his predecessor several years ago. The present Assessing Officer must exercise due application of mind on his own; and cannot simply resubmit the draft assessment order prepared by his predecessor. However, if the Assessing Officer exercises due application of mind on his own, and prepares a fresh draft of assessment order, the approval given by JCIT to the earlier draft assessment order becomes infructuous instantly; because the fresh approval under section 153D of the I.T. Act will no longer be for draft assessment order approved originally by JCIT vide aforesaid common approval letter dated 31/07/2017. In that event, it is self-evident that the approval given vide aforesaid common approval letter dated 31/07/2017 becomes automatically invalid.

(C..1) Moreover, in our aforesaid order dated 30/09/2025 in the case of Minto Developers Pvt. Ltd. (supra), we have already rejected the alternate submission made by Revenue to restore the matters regarding approvals under section 153D of the Act to the file of the approving authority, for two reasons. Firstly, because it would amount to providing a second inning to Revenue against mandate of law. Secondly, because it would amount to extending period of limitation available for completing assessment proceedings, which is not permissible in law. We have held already in that order that the limitation period available to Revenue is inclusive of time taken for granting approval under section 153D of the Act and there is no provision of law permitting extension of period of limitation for failure of the approving authority to give valid approval under section 153D of the Act. This view is consistent with the decision of Hon'ble Supreme Court in the case of Hope Textiles Ltd. vs. UOI 73 Taxman 188 (SC) in which it was held that even writ cannot be issued for passing order beyond limitation period. The Hon'ble Supreme Court held in this case that “A writ of mandamus can be issued to a statutory authority to compel it to perform its statutory obligation. It cannot be issued to compel him to pass an order in violation of a statutory provisions. Therefore, the writ cannot be issued to compel the ITO to pass order of assessment beyond period of limitation.” Further, in the case of Pr.CIT vs. Sunrise Finlease (P.) Ltd. [2018] 89 taxmann.com (Gujarat), Hon'ble Gujarat High Court held that lack of approval under section 153D of the Act would invalidate the assessment order, and was not a curable defect. The Hon'ble High Court noted that it was well settled that taxing statute had to be strictly construed; and requirement of obtaining approval of JCIT was to be regarded as mandatory in nature. It would be readily inferred that the lack of valid approval under section 153D of the Act was not a curable deficiency and the assessment orders passed in the absence of valid approval under section 153D of the Act would render the assessment order, void ab initio. Same view was taken by Nagpur Bench of the Income Tax Appellate Tribunal in the case of Umesh Sadashiv Thakre vs. ACIT [2025] 175 taxmann.com 951 (Nagpur-Trib.) and in Maheshwari Coal Benefication & Infrastructure (P.) Ltd. vs. DCIT [2025] 175 taxmann.com 615 (Nagpur0Trib) in which the settled position that absence of valid approval under section 153D of the Act was a substantive defect and thus not curable, was emphasized; and it was held that order passed without a valid approval was void ab initio. Further, we once again mention the principles that emerge from various precedents, as noted in paragraph (K) of our aforesaid order dated 30th September, 2025 in the case of Minto Developers Pvt. Ltd. (supra), relevant portion of which is already reproduced in foregoing paragraph (B.2.1) of this order:

“(K) The principles that emerge, in our understanding; from careful perusal of the aforesaid precedents, referred to in foregoing paragraphs (J.1) to (J.6.1) are as under:

(i) Approval u/s 153D of IT Act cannot be a mechanical exercise. The approval must be granted by the approving authority after due application of independent mind. When this requirement is not met, the approval suffers from infirmity and is invalid.

(ii) The contention of Revenue that approval u/s 153D of the IT Act being an administrative act, is not justiciable; is wrong.

(iii) It is a bare minimum requirement that the approving authority must indicate what thought process was involved in granting the approval. Even if elaborate reasons are not given; there has to be some indication that the approving authority has examined the draft orders with regard to applicable law and all the relevant materials. When this requirement is not met, such approval suffers from infirmity and is invalid.

(iv) The directions given by CBDT in Search Manual regarding granting of approval, although initially issued in the context of section 158BG of I.T. Act, are also applicable for approval u/s 153D of the IT Act; and are mandatory. When these directions are not met; the approval suffers from infirmity and is invalid.

(v) The approval of draft assessment order by approving authority being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise without due application of independent mind by the approving authority on the relevant materials and reasoning given in the assessment order; so as to appreciate factual and legal aspects to ensure that the entire material has been factored in, in the draft assessment order proposed by the Assessing Officer.

(vi) Section 153D of the IT Act requires that the Assessing Officer shall obtain prior approval of JCIT in respect of each assessment year. Section 153D of the IT Act requires that the Assessing Officer would be required to furnish the return of income in respect of each assessment year. The proviso to section 153D of the IT Act further provides for assessment of the total income in respect of each assessment year. Careful and conjoint reading of section 153A and section 153D of the IT Act leave no room to doubt that approval with respect to each assessment year is mandatory. As separate returns are to be filed for each assessment year, and as separate assessment orders are to be passed for each assessment year; it follows that approvals u/s 153D of the IT Act are to be given by the approving authority separately for each assessment year. If approvals for multiple assessment years are given u/s 153D of the IT Act through a common letter of approval; this violates statutory requirements; and such approvals suffer from infirmity and are invalid.

(vii) In Manual of Office Procedure, Volume-II (Technical) issued by CBDT is exercise of powers u/s 119 of the IT Act has directed in Chapter -3 that the Assessing Officer should submit draft assessment order in search cases to the approving authority well in time; and the approving authority should give due opportunity of being heard, at least one month before time barring date. These directions are binding on the Assessing Officer.

(viii) The Assessing Officer, while framing assessment, acts in quasi- judicial capacity and he ought to conform to the more elementary rules of judicial procedure; and in particular, to conduct the case himself, and not allow somebody else, even his superior officer to interfere in the conduct of the case. Higher authorities an Assessing Officer, Addl. CIT/Joint CIT i.e. JCIT or CIT or CCIT are not entitled to interfere in process of framing of assessment order by the Assessing Officer; except by mandate of law. The Addl.CIT/JCIT is entitled to issue directions u/s 144A of IT Act. Other than that, his role starts when he receives draft assessment orders for approval u/s 153D of the IT Act (wherever such approval is required under law). When first draft is returned back; his role ceases; and the role of Add. CIT / JCIT starts again when he receives the final draft of the proposed assessment order, which he eventually approves. The question if the approval u/s 153D of the IT Act suffered from infirmity and was invalid is to be decided having regard to receipt of final draft of the proposed assessment order which the Addl. CIT /JCIT eventually approved. The association of Addl. CIT/JCIT with the Assessing Officer, and involvement of the Addl. CIT/JCIT in the assessment proceedings before that has no relevance for deciding whether approval u/s 153D of the IT Act suffered from infirmity and was invalid. In fact, in view of the foregoing discussion, any such association and involvement may, depending on facts and circumstances of the case, be fatal to the assessment on strict application of rules of judicial procedure as aforesaid; depending on facts and circumstances of the case.

(ix) When approval u/s 153D of the IT Act suffers from infirmity and is invalid for one or more aforesaid reasons, the entire assessment order becomes vitiated; and is to be annulled.”

(C.1.2) Accordingly, we again affirm our view that assessment order passed under section 153A of the Act in the absence of valid approval under section 153D of the Act is not curable, and it makes the assessment order void ab initio; and such an assessment order deserves to be annulled.

(C.2) The second aspect of approval under section 153D of the Act is the question whether in a particular case the approval granted under section 153D of the Act suffered from infirmities rendering the approval invalid. We note that the approval given in the cases pertaining to these appeals before us, vide aforesaid common approval letter dated 31/07/2017 is the same approval letter through which the approval was granted by JCIT in the case of aforesaid order dated 30/09/2025 passed by us in the case of Minto Developers Pvt. Ltd. (supra). In the aforesaid case of Minto Developers Pvt. Ltd. (supra), we have already taken view that the approval by JCIT under section 153D of the Act was granted in a mechanical way, without due application of mind, as an idle formality and in a manner of rubber stamping. We have also highlighted in the aforesaid order dated 30/09/2025 in the case of Minto Developers Pvt. Ltd. that the approval under section 153D of the Act suffered from multiple infirmities because of which the approval granted under section 153D of the Act was invalid. The relevant discussion in paragraph (L) to (M) of our order dated 30/09/2025 in the case of Minto Developers Pvt. Ltd., already reproduced in foregoing paragraph (B.2.1) of this order, is reproduced below for the ease of reference:

“(L) We accept the contention of the learned Departmental Representatives, as referred to in foregoing paragraph (H.1.1) of this order that whether in a particular case, JCIT had given approval u/s 153D of the IT Act after due application of mind, is a question of fact and the answer would depend on facts and circumstances of the particular case, independent of conclusion arrived at in any other case.

(L.1) Coming to the facts and circumstances of the present case; we accept the contention of the learned Counsel for the assessee that the affidavit of Shri M. L. Meena, the Assessing Officer and personal testimony of Shri Agrahari, Departmental Inspector are de void of any credibility; having regard to submissions made by learned Counsel for the assessee as referred to in foregoing paragraph (I) of this order. Further, in view of submissions of learned Counsel for the assessee as referred to in foregoing paragraph (I.1) of this order, we are of the opinion that neither the story presented by Revenue regarding Pen Drive inspires confidence nor, in any case it advances the case of Revenue, in the absence of any description of the contents of the Pen Drive in letter dated 18/07/2017 of the Assessing Officer and in the absence of any reference to Pen Drive in the notes and order sheet of the JCIT, the approving authority. Moreover, it is claimed by Revenue that all relevant records/materials were sent to the Addl. CIT/JCIT along with editable soft copies of the draft assessment order together with letter dated 18/07/2017, but there is no mention of “all relevant records/materials” in the letter dated 18/07/2017. Also, as mentioned earlier, there is no description of the contents of the Pen Drive in letter dated 18/07/2017. Besides, we are perplexed at hand written mention of the Pen Drive in the letter. Who writes Pen Drive as “Pen Drib”?. Who writes 1 Piece as “1 pees”? We are not convinced that a Pen Drive was sent with the letter dated 18/07/2017 by the Assessing Officer to the Addl. CIT/JCIT. Notwithstanding, the claim of Revenue that all relevant records/materials; which should consist of assessment records, seized materials, digital data in CPU, HDD and laptop, reports under Rules 9 and 9A of ITSC(P) Rules, assessees’ submissions etc; were available to the JCIT who gave approval u/s 153D of the IT Act in either physical form of digital form, is not borne out from records. Even if it was available, there is nothing on record to show that indeed the JCIT considered all relevant materials before giving approval u/s 153D of the IT Act. Further, having regard to submissions made by learned Counsel for the assessee, as referred to in foregoing paragraphs (F.1.1), (F.1.4, (F.1.4.1), (F.1.5) (I) (I.1) and (I.2) of this order; it is concluded that approval was granted by JCIT in a mechanical way without due application of mind, as an idle formality, and in the manner of rubber stamping; as it was humanly impossible for the JCIT to give approval in a total of 63 assessments; vide aforesaid common approval letter dated 31/07/2017; after due consideration of all relevant materials such as seized materials, appraisal report, digital data, submissions of the assessees, assessment records, reports under Rules 9 and 9A of ITSC(P) Rules, etc; within extremely limited time available to the JCIT. Further, the assessment order is dated 31/07/2017 but there is no mention of return of the assessment record from Varanasi (where JCIT was stationed) to Allahabad (where Assessing Officer was stationed) in any official communication between the two of them; which shows that the assessment records always remained with the Assessing Officer; and the JCIT did not even refer to the assessment records before granting approval u/s 153D of the IT Act. The doctrine of human probabilities in orders of Hon'ble Supreme Court in Durga Prasad More 82 ITR 540 (SC) and Sumati Dayal 214 ITR 801 (SC) operates against Revenue, in the facts and circumstances of the present case.

(L.2) It is not in dispute that aforesaid common approval letter dated 31/07/2017 was issued by JCIT to give approval u/s 153D of the IT Act for 63 different assessments pertaining to 11 different assessees of Jeevan Jyoti Group, for different assessment years.

(L.3) On perusal of aforesaid common approval letter dated 31/07/2017 issued by JCIT; it is found that there is complete absence of any indication of thought process involved in granting the approvals for the assessment u/s 153D of the IT Act. There is no indication that the JCIT examined the draft order with regard to assessment record, applicable law and all relevant materials. The approval u/s 153D of the IT Act has been given in a non-speaking, summary and formal way, in the manner of rubber stamping.

(L.4) Neither the approving authority gave opportunity of being heard to the assessee before giving approval u/s 153D of the IT Act; nor did the Assessing Officer submit draft assessment order to the approving authority well in time to enable the approving authority to provide opportunity to the assessee (at least) one month before the time barring date of 31/07/2017. Thus, the approving authority and the Assessing Officer, both, failed to comply with mandatory direction of CBDT, issued in exercise of power u/s 119 of the IT Act, in Chapter-3 of Manual of Office Procedure, Volume-II (Technical).

(L.5) The claim of Revenue that Addl. CIT/JCIT were associated with the Assessing Officer and were involved in assessment proceedings (otherwise than in proceedings u/s 144A of IT Act) even before role of Addl. CIT/JCIT as approving authority u/s 153D of the IT Act began upon receipt of the final draft of the proposed assessment order which was eventually approved u/s 153D of the IT Act, is in violation of Rules of judicial procedure prohibiting any interference by higher authorities with assessment proceedings before the Assessing Officer.

(M) When the facts of the case as discovered in foregoing paragraphs (L.1), (L.2), (L.3), (L.4) and (L.5) are considered; they are found to be in contravention of every principle in foregoing paragraph (K) of this order enumerated as (i) to (ix). Respectfully following the precedents referred to in foregoing paragraphs (J.1) to (J.6.1); which are at the core of these principles; it is concluded that approval u/s 153D of the IT Act was given by the JCIT in a mechanical manner without due application of mind. It is further concluded that the approval u/s 153D of the IT Act given by the JCIT suffered from infirmities mentioned at Sl.Nos. (i), (iii), (vi), (viii) and (iv) read with (vii) in foregoing paragraph (K) of this order. Accordingly, it is concluded that the approval given u/s 153D of the IT Act suffers from multiple infirmities; and is invalid; because of which the entire assessment order is vitiated. In accordance with Sl.No. (ix) in foregoing paragraph (K) of this order, therefore, the assessment order is to be annulled. The alternate submission made by learned Departmental Representatives, to restore the matter regarding approval u/s 153D of the IT Act to the file of the approving authority (i.e. Addl. CIT/JCIT) is rejected because it would amount to providing a second innings to Revenue against mandate of law; and also because it would amount to extending period of limitation available for completing assessment proceedings, which is not permissible in law. The limitation period available to Revenue is inclusive of time taken for granting approval u/s 153D of the IT Act; and there is no provision of law permitting extention of period of limitation for failure of the approving authority to give valid approval u/s 153D of the IT Act. In view of the foregoing; the Assessing Officer is annulled.

(M.1) Since the assessment order is annulled, the impugned appellate order of learned CIT(A) has no legs to stand. Therefore, the impugned appellate order of learned CIT(A) is set aside.

(M.2) As mentioned in foregoing paragraph (F) of this order, representatives of both sides have agreed that appeals of Minto Developers Pvt. Ltd. (I.T.A. No.337/Lkw/2018 for A.Y. 2009-10) may be taken as the lead case as regards the legal issue whether the assessments were passed by the Assessing Officer after obtaining valid approval of JCIT. They submitted that the facts and circumstances for all the other appeals on this issue were in para materia and the decision in the case of Minto Developers Pvt. Ltd. would apply mutatis mutandis to remaining cases also. Therefore, the assessment orders pertaining to all the appeals/Cross Objections are also hereby annulled; and the impugned appellate orders pertaining to all appeals/Cross Objections before us are set aside.

(M.2.1) As the assessment orders pertaining to all appeals and Cross Objections before us have been annulled; and all the impugned appellate orders have been set aside; the grounds pertaining to other issues and matters before us have become merely academic in nature; hence not decided.

(C.2.1) As the facts of the present appeals before us are identical to the facts of aforesaid order dated 30/09/2025 in the case of Minto Developers Pvt. Ltd. (supra) to such an extent that approval under section 153D of the Act have been given by the same common approval letter dated 31/07/2017; and as our order in the case of Minto Developers Pvt. Ltd. has been passed after detailed discussion of submissions made by the two sides, careful perusal of materials on record and due consideration of precedents, we are inclined to conclude in the present appeals also that approval given under section 153D of the Act suffered from multiple infirmities because of which approval given under section 153D of the I.T. Act was rendered; and we are further inclined to annul the assessment orders pertaining to the present appeals, also in the like manner. However, we would also like to add further, having regard to materials and submissions brought for our consideration by learned Departmental Representatives at the time of hearing of these appeals. Firstly, we observe that the learned Departmental Representatives wrongly contended at the time of hearing that in the case of order passed by us in Minto Developers Pvt. Ltd. (supra) there was no mention anywhere that approvals were given by JCIT in a mechanical way without due application of mind. We note that in paragraph (L.1) our order in the case of Minto Developers Pvt. Ltd., already reproduced earlier in paragraph (B.2.1) of this order; we have categorically concluded that approval was granted by JCIT in a mechanical way without due application of mind as an idle formality and in a manner of rubber stamping. Further, it has been wrongly submitted by learned Departmental Representatives at the time of hearing, that order in the case of Minto Developers Pvt. Ltd. (supra) did not take into consideration the fact that JCIT had given certain directions regarding the first draft of the assessment order submitted alongwith the letter dated 18/07/2017; and that the final drafts, which were approved by JCIT vide aforesaid common approval letter dated 31/07/2017 were slightly different from earlier drafts in some cases. We find that in paragraph (H) of our order in the case of Minto Developers Pvt. Ltd., we have duly taken into consideration the submissions of the learned Departmental Representatives that there was a discussion between the JCIT and the Assessing Officer on 25/07/2017 that after that discussion the JCIT gave certain directions to the Assessing Officer and that the Assessing Officer forwarded the second draft assessment order along with the letter dated 28/07/2017. Moreover, we are disturbed by the contention of the learned Departmental Representatives that the Assessing Officer and the JCIT giving approval under section 153D of the Act were not required to peruse all the materials found/seized at the time of search under section 132 of the Act. The learned Departmental Representatives have contended that it was sufficient for the Assessing Officer and the JCIT to start their work with appraisal report (prepared by Investigation Wing of the Income Tax Department) as the basis. It amounts to admission that neither the Assessing Officer nor the JCIT applied their minds to materials found/seized in the course of search under section 132 of the Act and they were relying on appraisal of these materials by the Investigation Wing. This is tantamount to accepting that there was non application of mind by not only the JCIT giving approval under section 153D of the Act but also by the Assessing Officer; to material facts of the case; that they relied on borrowed appraisal of material facts as prepared by Investigation Wing. On this basis alone, the assessment orders deserve to be annulled.

(C.3) On facts also, these cases before us are clearly distinguishable from the facts of order of Lucknow Bench of the Tribunal in the case of Ramji Vaish (supra) because of which the order in the case of Ramji Vaish is not a useful precedent for deciding the appeals before us. In the case of Ramji Vaish (supra), the Bench of the Tribunal gave material consideration to the fact that there was ongoing discussion and consultation between the Assessing Officer and the approving authority under section 153D of the Act over prolonged period. However, in the present appeals before us, as is also obvious from relevant discussion in our aforesaid order dated 30/09/2025 in the case of Minto Developers Pvt. Ltd. (supra) that the JCIT who eventually gave approval under section 153D of the Act joined office barely a few days before giving approval through aforesaid common approval letter dated 31/07/2017. The JCIT, in fact joined office and took charge on 21/07/2017. This is clearly a relevant and distinguishing fact. Thus, the JCIT did not have enough time to familiarize himself with all the cases; and to have any kind of meaningful discussion. Moreover, another distinguishing fact is, the Assessing Officer and JCIT were posted at two different stations at (Allahabad and Varanasi) respectively, which must have come in the way of regular discussion and consultation.

(C.4) The learned Departmental Representatives have also strongly contended that there was prior discussion between the Assessing Officer and the JCIT because of which it cannot be said that JCIT gave approval under section 153D of the Act without due application of mind. In our order in the case of Minto Developers Pvt. Ltd., we have discussed how consultation, between the JCIT and Assessing Officer prior to approval under section 153D of the Act was not only irrelevant for deciding whether the approval was valid; but also was fatal to the assessment order itself due to interference of JCIT during pendency of assessment proceedings before the Assessing Officer. The relevant discussion is in paragraph (K) of our order in the case of Minto Developers Pvt. Ltd. In this regard, we would like to add further that the meaning of approval was explained by Hon'ble Supreme Court in the case of Lord Krishna Textiles Ltd. vs. Its Workmen [1961] 1 LLJ 211 (SC). The Hon'ble Supreme Court noted that approval, according to dictionary meaning, suggests that what has to be approved has already taken place; it is in the nature of ratification of what has already taken place. The word ‘approval’ in contradiction to the ‘prior permission’ shows that the action is taken first and ‘approval’ is to be obtained afterwards. It would logically imply that any role of JCIT in his association with the Assessing Officer, is de hors, his role and association as an approving authority under section 153D of the IT Act. His role prior to that of approval u/s 153D of the Act is that of general supervision of Assessing Officer; and it precludes interference in process of assessment. His legitimate role in the assessment is only as approving authority which begins only after the final draft of assessment order (eventually approved) is received at his end. Moreover, Hon'ble Punjab & Haryana High Court in a recent case reported at Findoc Finvest (P.) Ltd. vs. DCIT [2025] 172 taxmann.com 773 (Punjab & Haryana), held that where Assessing Officer was influenced by consultation and discussion with superior officer, assessment order could not be result of an independent application of mind but an order passed under influence and directions of superior officer. The assessment order was to be set aside. We also take guidance from case of DCIT vs. Surendra Kumar Jain (dead) through legal heir (neutral citation 2024: CGHC:25811-DB) in of 2005, vide order delivered on 18/07/2024 in which Hon'ble Chhatisgarh High Court, after detailed discussion of numerous orders of Hon'ble Supreme Court and Hon'ble High Courts, upheld the quashing of assessment order by ITAT, and held that (i) In democracy like ours, every authority may, however high, should function within four corners of law because the rule of law requires that all the machinery of state must function according to mandate of statute (ii) Statutory authority cannot permit its decision to be influenced by dictation of superior as same would amount to surrendering of discretion (iii) General power of superintendence must be distinguished from the interference in the adjudication process (iv) The true test of bias is not whether the judge is actually biased or not, but whether there is a real danger of bias from view point of fair minded and informed observer.

(C.5) Even on perusal of bare act; we find in provisions u/s 119 of IT Act; that even CBDT cannot issue orders, instructions or direction so as to require any Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner. The approving authority u/s 153D of the I.T. Act cannot be delegated with powers (by an instruction/circular/notification of CBDT) which CBDT does not have. It is well settled, that a delegating authority cannot delegate such powers to a subordinate authority, which the delegating authority does not have. So, the argument that the CBDT can issue direction to the Assessing Officer, to have discussion and consultation with JCIT; fails comprehensively.

(C.6) We also would like to comment on the contention of the learned Departmental Representatives that the JCIT who gave approval under section 153D of the Act was now available for filing of affidavit and for giving personal evidence. We express strong disapproval of this tendency on the part of the Revenue to try to incrementally improve their case; by bringing materials which were not available at the time of framing of the original assessment order. We hold that such a practice has to be discouraged. We further hold that any material which was not part of the assessment record, cannot be used at this stage to advance the case of Revenue for deciding validity of approval u/s 153D of the I.T. Act; whether it be affidavit, personal evidence or the claim that there was discussion and consultation between the Assessing Officer and the JCIT. In this regard, we take respectful guidance from order of Hon'ble Madras High Court in the case of CBDT vs. Regen Infrastructure & Services (P.) Ltd. [2016] 75 taxmann.com 135 (Madras), in which at para 8 of the order, relying on order of Hon'ble Supreme Court in the case of Mohinder Singh Gill vs. CEC AIR 1978 SC 851, Hon'ble High Court held that an order must necessarily be tested for its validity with reference to the reasons assigned and found on record. “The reasons cannot be supplemented subsequent to the passing of such order, by furnishing any other memorandum containing additional reasons or by way of explanations in the form of affidavit. ……………Otherwise, an order bad in the beginning may, by the time it comes to court on account of challenge, get validated by additional grounds later brought out.”, the Hon'ble High Court held.

(D) In view of the foregoing discussion, we hold, concurring with our earlier decision in the aforesaid order dated 30/09/2025; in the case of Minto Developers Pvt. Ltd. (supra); that in cases pertaining to present appeals before us; the approval given u/s 153D of the IT Act suffered from multiple infirmities; rendering the approval u/s 153D of the IT Act invalid in the eyes of law. For the same reasons, we hereby annul the assessment orders in the cases pertaining to present appeals before us. As the assessment orders have been annulled, other grounds taken in these appeals on merits of the additions made, become infructuous and merely academic; hence not decided. In appeals filed by the assessee; the grounds taken against initiation of penalty proceedings are not maintainable; which are dismissed being not maintainable.

(E.2) In view of the foregoing, we are of the view, consistent with the view taken by us in the cases of Jyoti Mediservices Pvt. Ltd. vs. DCIT (supra), and Minto Developers Pvt. Ltd. vs. ACIT (supra); that the approval has been given by Addl. CIT, under section 148B of the Act, in a mechanical manner and is not valid in the eye of law.

(E.2.1) Another reason, why the approval given by the Addl. CIT under section 148B of the Act is not valid, is because of his failure to dispose of the assessee’s application under section 144A of the Act. Through a petition under section 144 of the Act, the jurisdiction of the Addl. CIT was invoked, which remained to be discharged by the Addl. CIT. Neither the Addl. CIT gave any direction under section 144B of the Act, nor did he dispose of the assessee’s application under section 144A of the Act in any manner. Relevant discussion on this matter has also been made in foregoing paragraph (C.1) of this order, wherein contents of the assessee’s application under section 144 of the I. T. Act have been discussed. When the jurisdiction of Addl. CIT under section 144A of the Act is invoked by an assessee, the role of Addl. CIT temporarily becomes that of an assessing authority having concurrent jurisdiction with designated Assessing Officer having jurisdiction permanently. The failure of the Addl. CIT to give direction under section 144A of the Act and to dispose of the application under section 144A of the Act in any manner whatsoever, implied that because of this failure, the preparation of draft assessment order remained incomplete. Since the preparation of draft assessment order itself remained incomplete, the approval given under section 148B of the Act to such an incompletely prepared draft assessment order has to be held as invalid and suffering from infirmity.

(E.3) Because of the aforesaid reasons, we hold that the approval given by the Addl. CIT under section 148B of the Act was invalid in the eye of law. Further, since the provisions of giving approval under section 148B of the Act are akin to earlier provisions under section 153D of the Act, and both the provisions are in pari materia, therefore, following our decision in Jyoti Mediservices Pvt. Ltd. vs. DCIT (supra) , we hold that the assessment order, passed without a valid approval of the Addl. CIT, is in itself invalid and deserves to be annulled.

(F) In the assessee’s appeal for assessment year 2014-15, the assessee has also disputed the initiation of proceedings under section 147 of the Act. This issue was also raised by the assessee during appellate proceedings before the learned CIT(A). The learned CIT(A) however dismissed the assessee’s plea, taking recourse to Explanation -2 to Section 148 of the Act. The relevant portion of the order of the learned CIT(A) is reproduced as under:

(F.1) At the time of hearing, the learned A.R. for the assessee placed reliance on written submissions on this matter, as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. The learned Departmental Representative placed reliance on the impugned order of the learned CIT(A).

(F.2) We have heard both sides. We have perused materials on record. Relevant facts are not in dispute. It is not in dispute, that no incriminating material was found from the assessee’s premises during search under section 132 of the I. T. Act. Therefore, the Assessing Officer, in the absence of any such incriminating material; had no reason to believe that income had escaped assessment. The search under section 132 of the Act was conducted on 05/02/2022. Therefore, for the purpose of notice under section 148 of the Act read with section 147 of the Act, the provisions of law as amended by Finance Act, 2021 would prevail. The provisions of section 147 & 148 of the I. T. Act, as amended by Finance Act, 2021, and prevailing at the relevant time; are reproduced below:

“Income escaping assessment.

(F.2.1) A conjoint reading of the prevailing law as contained in section 147 & 148 of the I. T. Act, shows that the Assessing Officer is deemed to have information which suggests that income chargeable to tax has escaped assessment where a search is initiated under section 132 of the Act. However, to satisfy the requirement of section 147 of the Act, a mere suggestion is not adequate to assume jurisdiction under section 147 of the Act. The perusal of section 147 of the I. T. Act shows that the Assessing Officer can assume jurisdiction under section 147 of the Act if any income chargeable to tax has escaped assessment. Therefore, to assume jurisdiction under section 147 of the Act, the Assessing Officer must have, sound reasons to belief (and not just a suggestion) that income chargeable to tax has escaped assessment in the case of the assessee. The deeming provision under Explanation-2 to Section 148 of the Act is to be read strictly and not liberally; as it is well settled that deeming provisions of law are to be interpreted strictly. Explanation-2 to Section 148 of the Act provides that the Assessing Officer is deemed to have information which suggests that income chargeable to tax has escaped assessment. However, there is no deeming provision of law to the effect that the Assessing Officer is deemed to have sound belief that income has escaped assessment. The requirement u/s 147 of I. T. Act of forming a sound belief that income has escaped assessment, has placed a much higher burden on the Assessing Officer than merely having suggestion, that income has escaped assessment. Moreover, the search action under section 132 of the Act is merely a provision of law, authorizing investigation of the assessee’s affairs. Section 132 of the Act is not a charging provision. A provision of law, authorizing investigation in the case of the assessee, cannot bestow substantive or jurisdictional rights on Revenue to the detriment of the assessee, which were not available before the investigation started. It is well settled that provisions of law are to be interpreted in a manner which does not lead to absurd results. The interpretation give by the learned CIT(A) would imply that merely because search has been conducted under section 132 of the Act, which is a no more than a process of investigation; the Assessing Officer becomes vested with additional substantive and jurisdictional powers to assume jurisdiction u/s 147 of the I. T. Act even when no incriminating materials have been found at the time of search u/s 132 of the I. T. Act from the assessee’s premises based on which the Assessing Officer can reasonably arrive at sound belief that income has escaped assessment. This interpretation, being absurd is unacceptable. A reasonable interpretation of law, as provided in Section 147 and 148 of the I. T. Act, is that the Assessing Officer can assume jurisdiction u/s 147 of the I. T. Act if he can reasonably come to a sound belief that income has escaped assessment, with the help of incriminating materials found in the course of search under section 132 of the Act. However, if there are no incriminating materials found during search under section 132 of the Act, the deeming ‘suggestion’ under Explanation-2 to Section 148 of the Act, in itself does not lead to fulfillment of mandatory requirement u/s 147 of the I. T. Act that Assessing Officer must have sound reasons to believe that income has escaped assessment. From perusal of records, it is obvious that no incriminating material was found in the course of search under section 132 of the Act. In the absence of any incriminating material, the deeming provision under section 132 of the Act is not adequate for the Assessing Officer to assume jurisdiction under section 147 of the Act. For the aforesaid reason, we are of the view that the proceedings under section 147 read with section 148 were started, and jurisdiction under section 147 was assumed by the Assessing Officer without meeting the requirement of law. Accordingly, we conclude that the assessment order passed under section 147 of the Act is nonest and is unsustainable in the eye of law. Therefore, for this reason also, the assessment order deserved to be annulled.

(G) For the aforesaid reasons, as discussed in foregoing paragraphs (E), (E.1), (E.2), (E.2.1), (E.3), (F), (F.1), (F.2) and (F.2.1); the assessment order for assessment year 2014-15 is hereby annulled.

(G.1) Since the assessment order has been annulled, our observations regarding merits of various additions, as contained in earlier part of this order, become merely academic in nature.

(H) In assessment year 2015-16, in the assessee’s appeal vide once again the validity of initiation of proceedings under section 147 of the Act, and validity of approval granted under section 148B of the Act have been challenged. Moreover, the assessee has objected to net profit rate being assessed at 7% as per impugned appellate order of learned CIT(A), instead of the net profit rate disclosed by the assessee in the return of income. Further, the assessee has also appealed against the addition of Rs.1,54,35,000/- under section 56(2)(vii)(b) of the Act, out of which addition of Rs.47,38,700/- was sustained by learned CIT(A). We take up these issues one by one.

(H.1) As regards the aforesaid addition of Rs.1,54,35,000/- under section 56(2)(vii)(b) of the Act also, learned CIT(A) has sustained an addition of Rs.47,38,700/- in her impugned appellate order. At the time of hearing, learned A.R. for the assessee relied on written submissions made on this issue, as contained in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order and explained that addition is to be restricted to Rs.6,29,103/- instead of Rs.47,48,700/- as per impugned order of learned CIT(A). Learned Departmental Representative supported the impugned order of learned CIT(A) and assessment order passed by the Assessing Officer. In view of the aforesaid submissions made from the assessee’s side; we direct the Assessing Officer to restrict the addition u/s 56(2)(vii)(b) of I. T. Act; to Rs.6,29,103/- as explained by learned A.R. for the assessee.

(H.2) As regards the dispute on net profit ratio; this issue for assessment year 2015-16 is in pari materia with assessment year 2014-15. No material has been brought for our consideration by either side at the time of hearing to persuade us to take a view different from the view taken in assessment year 2014-15. Therefore, consistent with our view taken for assessment year 2014-15, we direct the Assessing Officer to accept net profit ratio disclosed by the assessee in return of income.

(H.2.1) As regards the validity of approval given by Addl. CIT u/s 148B of the I. T. Act, our view taken in assessment year 2014-15 in and our findings given for assessment year 2014015 will apply in this year also, because facts and circumstances in assessment year 2015-16 are in pari material with assessment year 2014-15; and no material has been brought for our consideration by either side, at the time of hearing to persuade us to take a view in assessment year 2015-16, different from our view taken for assessment year 2014-15. Accordingly, it is held that the approval granted u/s 148B of the Act is invalid in the eyes of law.

(H.3) Similarly, as far as validity of proceedings u/s 147 of I. T. Act is concerned, facts and circumstances for assessment year 2015-16 are in pari material with assessment year 2014-15 and no materia has been brought for our consideration by either side, at the time of hearing, to persuade us to take a view in assessment year 2015-16, different from view taken in assessment year 2014-15. Therefore, we hold that initiation of proceedings u/s 147 of the Act is invalid.

(I) Consistent with our order for assessment year 2014-15; and in view of foregoing paragraphs (H.2.1) and (H.3) of this order; the assessment order for assessment year 2015-16 is annulled.

(I.1) Since the assessment order for A.Y.2015-16 has been annulled, our observations regarding merits of various additions, as contained in earlier part of this order for assessment year 2015-16, become merely academic in nature.

(J) In assessment year 2015-16, the Revenue’s appeal vide has tax effect below Rs.60 lacs. Representatives of both sides, the learned Departmental Representative for Revenue and the learned A.R. for the assessee were in agreement that the tax effect being below the minimum prescribed limit of Rs.60,00,000/-, this appeal is not maintainable and should be dismissed. In view of foregoing and as representatives of both sides are in agreement on this, this appeal is dismissed in limine without admitting the appeal and without going into the merits of the case. By way of abundant caution, we clarify that Revenue will be at liberty to approach Income Tax Appellate Tribunal for restoration of appeal; if deemed fit, if it is found that the appeal is otherwise maintainable despite the tax effect being below Rs.60 lakhs.

(K) In assessment year 2016-17 also, the assessee, in appeal vide has raised dispute regarding validity of initiation of proceedings u/s 147 of the Act and validity of approval under section 148B of the Act. Further the assessee has also disputed the estimation of net profit rate @7% in the impugned order of learned CIT(A), which is higher than the net profit rate disclosed by the assessee in the return of income. In Revenue’s appeal for assessment year 2016-17 vide only one issue has been raised which is regarding the net profit rate. Revenue has appealed against scaling down of the net profit rate from 11% as per assessment order to 7% as per impugned appellate order of learned CIT(A). In assessment year 2017-18 also, the assessee, in appeal vide has raised dispute regarding validity of initiation of proceedings u/s 147 of the Act and validity of approval under section 148B of the Act. Further, the assessee has also disputed the estimation of net profit rate @7% in the impugned order of learned CIT(A), which is higher than the net profit rate disclosed by the assessee in the return of income. In Revenue’s appeal for assessment year 2017-18 vide I.T.A. No.460/Lkw/2025, only one issue has been raised which is regarding the net profit rate. Revenue has appealed against scaling down of the net profit rate from 11% as per assessment order to 7% as per impugned appellate order of learned CIT(A). In assessment year 2018-19, in the assessee’s appeal, vide I.T.A. No.351/Lkw/20205, once again the validity of initiation of proceedings under section 147 of the Act, and validity of approval granted under section 148B of the Act have been challenged. The assessee has also appealed against estimation of net profit rate @7% in the impugned appellate order. In assessment year 2019-20, the assessee, in appeal vide I.T.A. No.352/Lkw/2025, has once again raised dispute regarding validity of initiation u/s 148 of the Act and validity of approval under section 148B of the Act. Further the assessee has also disputed the estimation of net profit rate @7% in the impugned order of learned CIT(A), which is higher than the net profit rate disclosed by the assessee in the return of income. In Revenue’s appeal for assessment year 2019-20 vide , only one issue has been raised which is regarding the net profit rate. Revenue has appealed against scaling down of the net profit rate from 11% as per assessment order to 7% as per impugned appellate order of learned CIT(A).

(K.1) In respect of all the disputed issues in aforesaid appeals filed by the assessee and by Revenue, for Assessment Year 2016-17, Assessment Year 2017-18, Assessment Year 2018-19 and Assessment Year 2019-20; the facts and circumstances are in pari materia with facts and circumstances for Assessment Year 2014-15. No materials have been brought for our consideration to persuade us to take a view in assessment year 2016-16 to assessment year 2019-20, different from view taken by us in assessment year 2014-15. Accordingly, consistent with our view taken in assessment year 2014-15; we direct the Assessing Officer to accept the net profit rates disclosed by the assessee in respective returns for assessment year 2016- 17, assessment year 2017-18, assessment year 2018-19 and assessment year 2019-20.

(K.1.1) Again, consistent with view taken by us for assessment year 2014- 15; and in view of foregoing paragraph (K.1) of this order; we hold that initiation of proceedings u/s 147 of I. T. Act, in assessment year 2016-17, assessment year 2017-18, assessment year 2018-19 and assessment year 2019-20 is invalid. Further, consistent with view taken by us for assessment year 2014-15 and in view of foregoing paragraph (K.1) of this order, we hold that approvals given by Allahabad. CIT u/s 148 of I. T. Act, for assessment orders relevant to A.Y. 2016-17, A.Y.2017-18, A.Y.2018-19 and A.Y.2019-20; are invalid in the eyes of law.

(K.2) In view of foregoing paragraph (K.1.1) of this order; the assessment orders for assessment year 2016-17, assessment year 2017-18, assessment year 2018-19 and assessment year 2019-20 are also hereby annulled.

(K.2.1) In view of foregoing paragraph (K.2) of this order, whereby we have annulled the assessment orders for assessment year 2016-17 to assessment year 2019-20; our views expressed in foregoing paragraph (K.1) on merits of additions made, are of merely academic value.

(L) In assessment year 2020-21 in Revenue’s appeal vide four disputes have been raised. The first issue is regarding net profit rate. The Revenue contends in its appeal that the net profit rate should not have been scaled down by learned CIT(A) from 11% as per assessment order. On this issue, facts and circumstances are in pari material with assessment year 2014-15, and no material has been brought for our consideration to take a different view in assessment year 2020-21. Therefore, consistent with our view for assessment year 2014-15, we direct the Assessing Officer to accept the net profit rates disclosed by the assessee.

(L.1.) The second issue in Revenue’s appeal for A.Y.2020-21 is regarding addition of Rs.1,74,492/- on account of difference in valuation of property as determined by the Departmental Valuation Officer (D.V.O.) and as disclosed by the assessee in return of income. At the time of hearing before us the learned D.R. placed reliance on the order of the Assessing Officer whereas the learned A.R. for the assessee placed reliance on the impugned order of learned CIT(A). The Learned A.R. for the assessee also placed reliance on written submissions made on this issue, as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. We find that the order of learned CIT(A) on this issue is just and reasonable having regard to the applicable law and facts and circumstances of the case. Therefore, on this issue, the ground taken by Revenue is dismissed and order of the learned CIT(A) is upheld.

(L.2) The next issue raised in Revenue’s appeal is regarding addition of Rs.1,00,000/- on account of gift taken by the assessee from his father. The learned CIT(A) has deleted the addition in her impugned appellate order. At the time of hearing learned D.R. relied on the assessment order whereas learned A.R. for the assessee relied on the order of learned CIT(A). The Learned A.R. for the assessee also placed reliance on written submissions made on this issue, as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. We find that the order of learned CIT(A) on this issue is just and reasonable having regard to the applicable law and facts of the case. Therefore, on this issue, the ground taken by Revenue is dismissed and order of the learned CIT(A) is upheld.

(L.3) The last issue raised in the appeal of the Revenue is regarding addition of Rs.52,00,000/- on account of agricultural income. The learned CIT(A), in her impugned appellate order has deleted the addition of Rs.15,00,000/- out of the aforesaid amount of Rs.52,00,000/- and has sustained the addition of remaining amount of Rs.37,00,000/-. Revenue has appealed against the order of learned CIT(A) deleting the aforesaid amount of Rs.15,00,000; whereas in assessee’s Cross Objection vide C.O.No.28/Lkw/2024, the assessee has objected to addition of Rs.37,00,000/- being sustained by learned CIT(A). At the time of hearing, the learned Departmental Representative relied on the assessment order; while the learned A.R. for the assessee relied on written submissions on this issue, as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. On perusal of impugned appellate order of learned CIT(A), we find that the learned CIT(A) has accepted that the assessee has been showing agricultural income in earlier years also, and has taken into consideration the fact that the assessee has shown agricultural income in the following years also. The learned CIT(A) has not doubted that the assessee has agricultural income in this year also. However, she has sustained addition of Rs.37,00,000/- on ad hoc basis without explaining reasons on the basis of which this amount of Rs.37,00,000/- was determined by the learned CIT(A). Having regard to assessee’s submissions on this issue as contained in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order; and in the absence of any justification given by learned CIT(A) for quantification of the addition of Rs.37,00,000/- sustained by learned CIT(A), we direct the Assessing Officer, in the specific facts and circumstances of the present case, to delete this amount of Rs.37,00,000/- also, in addition to Rs.15,00,000/- already deleted by learned CIT(A). In effect the Assessing Officer is directed to delete the entire addition of Rs.52,00,000/-.

(L.4) In aforesaid Cross Objection of the assessee for assessment year 2020-21, ground has also been taken against net profit being determined at 7%. This issue is in pari materia with assessment year 2014-15 in which we have directed the Assessing Officer to accept net profit rate disclosed by the assessee in the return of income. No material has been brought for our consideration to persuade us to take a different view in assessment year 2020-21. Therefore, consistent with view taken by us for assessment year 2014-15 to assessment year 2019-20; we direct the Assessing Officer to accept net profit rate disclosed by assessee in return of income for assessment year 2020-21.

(L.5) In the Cross Objection for A.Y. 2020-21, the assessee has also taken ground against disallowance of assessee’s claim under section 80C of the Act. At the time of hearing, the learned A.R. for assessee placed reliance on written submissions on this issue as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. The learned Departmental Representative relied on the impugned order of learned CIT(A). On perusal of the impugned order of learned CIT(A), we are of the view that the order of learned CIT(A) on this issue is just and reasonable having regard to the applicable law and facts of the case. Therefore, this addition is upheld and ground taken by the assessee in Cross Objection regarding assessee’s claim u/s 80C is dismissed.

(L.6) The last dispute in the Cross Objection of the assessee for A.Y. 2020- 21 is regarding addition of Rs.20,07,400/- in respect of another property of the assessee. The addition has been made on the basis of difference between value determined by the D.V.O. and the value disclosed by the assessee. At the time of hearing before us, learned A.R. for the assessee placed reliance on written submissions on this issue as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. The learned Departmental Representative placed reliance on the assessment order and on impugned order of learned CIT(A). In view of submissions made from the assessee’s side, the Assessing Officer is directed to delete the aforesaid addition of Rs.20,07,000/-.

(M) In assessment year 2021-22,Revenue has filed appeal vide I.T.A. No.557/Lkw/2024. In this appeal, Revenue has taken ground against scaling down of the net profit rate from 11% determined by the Assessing Officer in the assessment order. On this issue, facts and circumstances in this year are in pari materia with facts and circumstances of assessment year 2014-15. No material has been brought for our consideration, by either side, to persuade us to take a view in this year, different from view taken by us for assessment year 2014-15. Therefore, consistent with view taken by us for assessment year 2014-15; we direct the Assessing Officer to accept the net profit rate disclosed by the assessee in return of income for A.Y. 2021-22.

(M.1) The second issue raised by Revenue in appeal for assessment year 2021-22 is regarding addition made by the Assessing Officer on account of difference in value of property as per value determined by D.V.O. and the value disclosed by the assessee in return of income. The total addition made by the Assessing Officer on this account was Rs.7,49,062/-. In her impugned appellate order, the learned CIT(A) has deleted the aforesaid addition of Rs.7,49,062/-. Revenue is in appeal against the order of learned CIT(A) on this issue. At the time of hearing, learned D.R. relied on assessment order whereas learned A.R. for the assessee relied on the impugned order of learned CIT(A). The learned A.R. for the assessee also relied on submissions made on this issue, as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. We find that the order of learned CIT(A) on this issue is just and reasonable having regard to the applicable law and facts of the case. The order of learned CIT(A) on this issue is sustained and ground taken by Revenue is dismissed.

(M.2) The third issue raised by Revenue in the appeal for assessment year 2021-22, is regarding claim of the assessee u/s 54F of the Act. The Assessing Officer disallowed this claim. The learned CIT(A), in her impugned appellate order has directed the Assessing Officer to allow the assessee’s claim under section 54F of the Act. At the time of hearing, learned D.R. for Revenue placed reliance on the assessment order. Learned A.R. for the assessee placed reliance on the impugned appellate order of learned CIT(A), and on submissions made on this issue, as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. We find that the order of learned CIT(A) on this issue is just and reasonable having regard to the applicable law and facts of the case. The order of learned CIT(A) on this issue is sustained, and ground taken by Revenue on this issue is dismissed.

(M.3) In Cross Objection of the assessee for assessment year 2021-22, vide C.O.No.27/Lkw/2024, ground has been taken by the assessee against the addition of Rs.9,41,800/-. This addition was made by the Assessing Officer on the basis of difference of valuation determined by the D.V.O. and the value disclosed by the assessee in respect of immovable property. The learned CIT(A) has sustained this addition. At the time of hearing, learned A.R. for the assessee relied on written submissions made on this issue, as contained in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. The learned D.R. for Revenue relied on the assessment order and the impugned appellate order of learned CIT(A). In view of the submissions made from the assessee’s side, we direct the Assessing Officer to delete the aforesaid addition of Rs.9,41,800/-.

(M.4) In the Cross Objection for assessment year 2021-22, the assessee has also taken the ground that the learned CIT(A) did not decide ground Nos. 1 to 4 of the appeal in assessee’s appeal before the learned CIT(A). After hearing learned D.R. and the learned A.R. for the assessee, we direct the learned CIT(A) to decide ground nos. 1 to 4 of the assessee’s appeal filed before him. Accordingly, the issues in grounds 1 to 4 of assessee’s appeal filed in the office of learned CIT(A), are restored back to the file of learned CIT(A) with the direction to pass order on these issues in accordance with law, after providing reasonable opportunity to the assessee.

(M.5) In the Cross Objection for assessment year 2021-22, the assessee has also taken ground against addition of Rs.9,22,200/- (being disallowance of expenses because of non adherence of TDS provisions), Rs.9,65,000/- [being disallowance made under 40A(3) of the Act] and Rs.8,06,600/- being disallowance made out of assessee’s claim of Rs.14,06,000/- under section 80G of the Act. At the time of hearing, learned A.R. for the assessee relied on written submissions as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. The learned D.R. for Revenue relied on the assessment order and on the impugned order of learned CIT(A). These issues require further verification of facts as the factual matrix contained in the assessment order and in the order of learned CIT(A) are not adequate to decide these issues at present. Therefore, these issues are also restored back to the file of the learned CIT(A) with the direction to pass de novo order in accordance with law after ascertaining the relevant facts and after giving reasonable opportunity to the assessee.

(N) In assessment year 2022-23, Revenue has filed appeal vide whereas the assessee has filed appeal vide against the impugned appellate order of learned CIT(A). In Revenue’s appeal, ground has been taken against scaling down of net profit rate from 11% determined by the Assessing Officer. On this issue, facts and circumstances in assessment year 2022-23 are in pari materia with facts and circumstances in assessment year 2014-15. No material has been brought for our consideration by either side to persuade us to take a view in assessment year 2022-23, different from view taken by us in assessment year 2014-15. Therefore, consistent with view taken by us for assessment year 2014-15; we direct the Assessing Officer to accept the net profit rate disclosed by the assessee in return of income for A.Y. 2022-23.

(N.1) The second issue raised in Revenue’s appeal for assessment year 2022-23 is regarding addition of Rs.7,81,000/- under section 69A of the Act on account of agricultural income shown by the assessee. The third issue raised by Revenue in its appeal for assessment year 2022-23 is regarding addition of Rs.35,31,800/- under section 69A of the Act. On the aforesaid issues regarding aforesaid additions of Rs.7,81,000/- and Rs.35,31,800/-, learned D.R. for Revenue relied on the assessment order. The learned A.R. for the assessee relied on impugned appellate order of the learned CIT(A) and on written submissions on these issues as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. We are of the view that the order of learned CIT(A) on these issues is just and fair having regard to applicable law and facts and circumstances of the case. Therefore, we decline to interfere with the impugned order of learned CIT(A) on these issues.

(N.2) In the assessee’s appeal for assessment year 2022-23, ground has been taken against the addition of Rs.4,75,445/-. This addition was made by the Assessing Officer on the basis of difference in valuation of property as determined by D.V.O. and value as disclosed by the assessee in the return of income. In the assessee’s appeal, the assessee has also taken ground against validity of approval given by the Addl. CIT, to the draft assessment order sent by the Assessing Officer. On these issues, learned A.R. for the assessee relied on written submissions as referred to in foregoing paragraphs (B.1), (B.2), (B.2.1) and (B.3) of this order. Learned D.R. for Revenue relied on impugned appellate order of learned CIT(A) and on the assessment order. As regards the dispute regarding aforesaid amount of Rs.4,75,445/-, we are of the view that factual matrix available in the records is not sufficient to decide the issue; and further verification of facts is required for deciding the issue. Therefore, this issue is restored back to the file of the Assessing Officer with the direction to pass denovo order on this issue, in accordance with law, after considering the submissions of assessee, and after providing reasonable opportunity to the assessee. As far as dispute regarding validity of approval given by the Addl CIT to draft assessment order is concerned; this issue is not relevant at present; because no disputed addition survives for assessment year 2022- 23, in view of our aforesaid directions in appeal of the assessee and appeal of Revenue for assessment year 2022-23. As the dispute is not relevant at present, it is not being decided.

(O) In the result, the outcome of the appeals and Cross Objections are as under:

Appeal for Filed by Result A.Y. (Party) -------------------- ------------- ------------- 2014-15 Assessee Allowed for statistical purposes. 2015-16 Assessee Allowed for statistical purposes. 2015-16 Revenue Dismissed for statistical purposes. 2016-16 Assessee Allowed for statistical purposes. 2015016 Revenue Dismissed for statistical purposes. 2017-18 Assessee Allowed for statistical purposes 2017-18 Revenue Dismissed for statistical purposes. 2018-19 Assessee Allowed for statistical purposes 2019-20 Assessee Allowed for statistical purposes 2019-20 Revenue Dismissed for statistical purposes.

2020-21 C.O. (assessee) Partly allowed 2020-21 Revenue Dismissed for statistical purposes. 2021-22 Revenue Partly allowed 2021-22 C.O.(assessee) Partly allowed 2022-23 Revenue Dismissed for statistical purposes. 2022-23 Assessee Dismissed for statistical purposes.

(Order pronounced in the open court on 11/12/2025)