SHRI DIPENDRA SINGH,TONK vs. ACIT CEN CIR 2, JAIPUR, JAIPUR

As the issues involved in all these appeals arise from a common set of facts and identical legal issues, these appeals are heard together and are disposed of by this consolidated order. 2.1 The assessee has raised the following grounds of appeal vide ITA No. 247/JPR/2024 for A.Y 2013-14as under:-

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 40,00,000, under Section 69 of the Income-Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 40,00,000, made by the ld. AO and confirmed by the ld. CIT(A).

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking provisions of Section 115BBE of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of Section 115BBE, as being not in accordance with the relevant law.

2 The assessee has raised the following grounds of appeal vide ITA No. 248/JPR/2024 for A.Y 2014-15 as under:- “1. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in, confirming the action of the ld. AO in assuming juri iction in the case of the assessee under Section 153C and passing order therein, not in accordance with the provision of law. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire proceedings, being not in accordance with provision of Section 153C.

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 11,40,000, under Section 69A of the Income-Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 11,40,000, made by the ld. AO and confirmed by the ld. CIT(A).

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 1,64,99,581, under Section 68 of the Income-Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 1,64,99,581, made by the ld. AO and confirmed by the ld. CIT(A).

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking provisions of Section 115BBE of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of Section 115BBE, as being not in accordance with the relevant law.

The assessee craves his right to add, amend or alter any of the grounds on or before the date of hearing.”

3 The assessee has raised the following grounds of appeal vide ITA No. 249/JPR/2024 for A.Y 2015-16 as under:-

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 13,13,000, under Section 68 of the Income-Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 13,13,000, made by the ld. AO and confirmed by the ld. CIT(A).

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 24,46,250, under Section 68 of the Income-Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 24,46,250, made by the ld. AO and confirmed by the ld. CIT(A).

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking provisions of Section 115BBE of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of Section 115BBE, as being not in accordance with the relevant law.

The assessee craves his right to add, amend or alter any of the grounds on or before the date of hearing.” 2.4 The assessee has raised the following grounds of appeal vide ITA No. 250/JPR/2024 for A.Y. 2017-18 as under:- “1. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in, confirming the action of the ld. AO in assuming juri iction in the case of the assessee under Section 153C and passing order therein, not in accordance with the provision of law. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire proceedings, being not in accordance with provision of Section 153C.

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 85,00,000, under Section 69A of the Income-Tax Act, 1961. The action

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking provisions of Section 115BBE of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of Section 115BBE, as being not in accordance with the relevant law.

The assessee craves his right to add, amend or alter any of the grounds on or before the date of hearing.” 2.5 The assessee has raised the following grounds of appeal vide ITA No. 251/JPR/2024 for A.Y 2018-19 as under:- “1. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in, confirming the action of the ld. AO in assuming juri iction in the case of the assessee under Section 153C and passing order therein, not in accordance with the provision of law. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire proceedings, being not in accordance with provision of Section 153C.

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making addition of Rs. 73,80,580, under Section 69A of the Income-Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 73,80,580, made by the ld. AO and confirmed by the ld. CIT(A).

In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking provisions of Section 115BBE of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of Section 115BBE, as being not in accordance with the relevant law.

The assessee craves his right to add, amend or alter any of the grounds on or before the date of hearing.”

During the course of hearing before us, the assessee also filed an Additional Ground of appeal under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963, challenging the validity of the approval granted under Section 153D of the Act. The Additional

It was submitted by the ld. AR of the assessee that the Additional Ground sought to be raised relates to a pure legal issue. According to the ld. AR, all relevant facts necessary for its adjudication are already available on record and no further investigation of fresh facts is required. Accordingly, the ld. AR of the assessee requested for admission of Additional Ground. In support of this proposition, the ld. AR placed reliance before us on the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT [1998] 229 ITR 383 (SC).

Apropos to the additional ground so raised ld.AR of the assessee submitted that the approval under Section 153D was granted in the present case was accorded in a mechanical manner and thereby the validity of that proceeding becomes illegal. Attention was drawn to the letter of approval placed on record, which contained only a blanket statement of grant of approval without any reference to draft assessment orders, seized material, or appraisal report. It was contended by the ld. AR of the assessee that the approving authority is statutorily required to examine the seized material, appraisal report, enquiries made by the Investigation Wing, and replies of the assessee, and then apply his independent mind before granting approval. It was further contended that in the present case, approval was granted for multiple years through a consolidated letter, whereas the law requires separate application of mind and approval for each assessment year. In this regard, ld. AR of the assessee also filed submission in support of this legal proposition, which being

It is submitted that assessing officer before passing the assessment order, framed under section 153C, is required to take approval from the Joint Commissioner under section 153D of the Act, if the Assessing Officer is below the rank of Joint Commissioner. For the purpose of approval, the Approving Authority is required to see all search material including incriminating material, seized documents, appraisal reports, enquiries made by the Investigation Wing and various enquiries made by the Assessing Officer during the assessment proceedings and the reply submitted by the assessee, and after due application of mind and ascertaining that the Assessing Officer has appreciated the search material and other evidences in proper perspective, has to give approval.

However, in the present case, the approval u/s 153D has been granted in a mechanical manner. Screenshot of the relevant approval is reproduced for your reference:

It is to be noted that there is not even a token mention of the draft orders having been perused by the approving authority. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval letter. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the ITA Nos. 247 to 251/JPR/2024 Shri Dipendra Singh 10 draft orders and finds that it meets the requirement of the law. Reliance is placed on the judgement of Hon’ble Supreme Court in the case of ACIT vs. Serajuddin and Co [2024] 163 taxmann.com 118 (SC) [CLC 2-3]wherein Hon’ble SC affirmed the order of High Court that the requirement of prior approval of superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of section 153D and that such approval is not meant to be given mechanically and while elaborate reasons need not be given, but there has to be some indication that approving authority has examined draft orders and finds that it meets requirement of law [Headnotes reproduced]

Reliance is also placed on the judgment of Hon’ble Supreme Court in the case of Sahara India vs. CIT & Others' [2008] 216 CTR 303 (S.C.) [2008] 7 DTR (SC) 27 wherein it was held that:

Similar decision has been passed by Hon’ble Supreme Courtin the case of Principal Commissioner of Income-tax vs. Anuj Bansal [2024] 165 taxmann.com 3 (SC) [CLC 14-15] wherein SLP was dismissed and affirmed the order of Hon’ble High Court of Delhi that “The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D”

It is further submitted that approval granted by the approving authority has to be for each assessment year separately. The words 'each assessment year' used in Section 153D have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled.

It is important to note that the provisions contained in sections 153A to section 153D provide for separate notice to be given to assessee for assessment for each year as specified in section 153A/153C of the Act; the assessee has to file separate ITR for each year as specified in section 153A/153C of the Act; separate assessment

Therefore, the careful and conjoint reading of Section 153A(1)/153C and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under section 153A/153C.

It is submitted that in the present case, the approving authority has granted approval for the assessee for all assessment years through a single approval letter which is against the intent of law and therefore, the approval granted is non-est and consequential assessment made on this basis of such approval is illegal and deserves to be quashed.

Reliance is placed on the following judgments to support the contention of the assessee that approval u/s 153D is to be provided for each assessment year separately.

Following the decisions of the aforementioned High Courts, various benches of the Hon’ble Tribunal have also taken a similar view in accepting the contention of the assessee:

In support of the submissions, reliance was placed on the following decisions, copy which have been placed before us by the ld. AR of the assessee in a case law paper book, the index of that reads as under ;

Copy of order of Hon’ble Supreme Court in the case of ACIT vs.Serajuddin and Co [2024] 163 taxmann.com 118 (SC) 2. Copy of order of Hon’ble Orissa High Court in the case of ACIT vs.Serajuddin and Co [2023] 150 taxmann.com 146 (Orissa) 3. Copy of order of Hon’ble Supreme Court in the case of PCIT vs.Anuj Bansal [2024] 165 taxmann.com 3 (SC) 4. Copy of order of Hon’ble Delhi High Court in the case of PCIT vs.Anuj Bansal [2024] 165 taxmann.com 2 (Delhi) 5. Copy of order of Hon’ble Delhi High Court in the case of PCIT vs.Shiv Kumar Nayyar [2024] 163 taxmann.com 9 (Delhi) 6. Copy of order of Hon’ble Delhi High Court in the case of PCIT vs.MDLR Hotels (P.) Ltd [2024] 166 taxmann.com 327 (Delhi) 7. Copy of order of Hon’ble Allahabad High Court in the case of PCIT vs.Sapna Gupta[2023] 147 taxmann.com 288 (Allahabad) 8. Copy of order of Hon’ble ITAT, Delhi Bench in the case of Shri Wave Industries Pvt. Ltd, vs. DCIT [ITA No. 5241/Del/2015] 9. Copy of order of Hon’ble ITAT, Delhi Bench in the case of Shri Harish Bajaj, vs. DCIT [ITA No. 2218 to 2223/Del/2023]

Per Contra, ld. DR supported the orders of the lower authorities and submitted that the approval was validly granted and the order has been passed in accordance with the law with proper approval of the competent authority. She refer the content of the provision which reads as under Prior approval necessary for assessment in cases of search or requisition. 153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B, except with the prior approval of the Joint Commissioner: Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the Principal Commissioner or Commissioner under sub-section (12) of section 144BA.