ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), NAGPUR vs. ATUL YAMSANWAR , NAGPUR

5 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 ./2022 153A r/w A.Y. 2020–21 – By Assessee CIT(A)–3, 16. 29/06/2022 section Nagpur Atul Manoharrao Yamsanwar 143(3)

./2022 143(3) A.Y. 2015–16 – By Revenue r/w CIT(A)–3, 17. 29/06/2022 section Nagpur Atul Manoharrao Yamsanwar 153A ITA no.260/Nag./2022 143(3) A.Y. 2017–18 – By Revenue r/w CIT(A)–3, 18. 29/06/2022 section Nagpur Atul Manoharrao Yamsanwar 153A ITA no.261/Nag./2022 143(3) A.Y. 2018–19 – By Revenue r/w CIT(A)–3, 19. 29/06/2022 section Nagpur Atul Manoharrao Yamsanwar 153A ITA no.262/Nag./2022 143(3) A.Y. 2019–20 – By Revenue r/w CIT(A)–3, 20. 29/06/2022 section Nagpur Atul Manoharrao Yamsanwar 153A ITA no.263/Nag./2022 153A r/w A.Y. 2020–21 – By Revenue CIT(A)–3, 21. 29/06/2022 section Nagpur Atul Manoharrao Yamsanwar 153A

6 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

4. Facts in Brief:– the assessee is an individual, engaged as a broker, labour contractor, cash handling agent, etc., for various persons. For the year under consideration, the original return of income under section 139(4) of the Income Tax Act, 1961 ("the Act") was filed on 12/04/2017, declaring total income at `2,69,020. On 25/06/2019, a search and seizure action under section 132 of the Act was conducted on Yamsanwar Group, of which the above assessees were a part of the search and seizure. Subsequent to search and seizure, statutory notices dated 16/09/2020, under section 153A of the Act issued for the assessment year 2016-17 in response to which the assessee filed his return of income on 05/12/2020 and subsequently assessment order dated 22/09/2021, was passed under section 143(3) r/w section 153A of the Act for the assessment year2016-17.

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“Ground 1: That on facts and circumstances of the case, Ld. AO has erred in passing the assessment order without getting proper approval under section 153D of the Act from learned Additional CIT. Ground 2: That on facts and circumstances of the case, the Approval granted by Ld. Addl. CIT, Range – 2 u/s 153D of the Act is without application of mind and without jurisdiction and therefore the consequential assessment order is bad in law, arbitrary, unjustified and deserves to quashed and set aside. Ground 3: That on the facts and circumstances of the case, neither the Ld. AO Assistant Commissioner of Income Tax (Central Circle), Range – 2, Nagpur nor the approving authority u/s 153D of the Act, Ld. Additional Commissioner of Income Tax (Central Circle), Range – 2, Nagpur had jurisdiction over the Assessee, therefore the Assessment Order passed without jurisdiction is bad in law, arbitrary, unjustified and deserves to quashed and set aside.”

8 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 that he is not pressing ground no.3 above challenging the jurisdiction. Consequently, ground no.3, stands dismissed as “not pressed”.

9. Insofar as grounds no.1 and 2, as mentioned above are considered, the same are challenging the validity of the approval granted by the Department under section 153D of the Act, contending it to be passed without application of mind, thereby making the assessment void ab intio.

11. Per contra, the learned Counsel for the assessee submitted that the issue of application of mind while granting approval by the Department under section 153D of the Act goes to the very root of the matter and being legal issue the same deserves to be admitted.

12. We have given a thoughtful consideration to the arguments made by the rival parties and perused the material available on record. We find force in the submission of the assessee, as the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v/s CIT, [1998] 229 ITR 383 (SC) has made it very clear that a ground based on question of law emerging from facts of a case must be admitted, even though the same being raised for the first time before the Tribunal. The issue of admission of additional

9 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 ground of appeal for the first time before Tribunal on the issue of 153D of the Act is also discussed by the Hon’ble Bombay High Court in PCIT v/s Smt. Shreelekha Damani, 307 CTR 218 (Bom). In that case, the Department challenged the order of the ITAT, Mumbai Bench, before Bombay High Court, where the issue relating to the provisions of section 153D of the Act was raised for the first time. The Hon’ble High Court held, “Question of validity of the approval goes to the root of the matter and could have been raised at any time.”.

13. Thus, respectfully following the ratio laid down by the judicial pronouncements cited supra on the present issue, we admit the additional grounds no.1 and 2, as mentioned above, through which the assessee is challenging the validity of approval so granted by the Department under section 153D of the Act, claiming the same to have been passed without “application of mind”.

14. To support his contention, the learned Counsel for the assessee submitted that on a bare perusal of the approval so granted by the Department under section 153D of the Act, it nowhere appears that the learned Addl. CIT (Approving Authority herein) has applied his mind before granting of approval. The learned Counsel for the assessee forcefully submitted that there are various additions made in the assessment orders passed in the matter of Yamsanwar Group by the same Assessing Officer, which prima facie are invalid additions, and the same have been duly deleted by the learned CIT(A). The learned Counsel for the assessee further

10 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 vehemently submitted that had the Approving Authority applied his mind to the draft assessment orders, such invalid additions would not have been allowed, and thus there was non-application of mind by the Approving Authority. The learned Counsel for the assessee concluding his arguments finally submitted that the approval so granted by the Department under section 153D of the Act cannot be in a mechanical manner and the fact of application of mind by the Approving Authority must be evident from the approval order itself. He submitted that Office of Manual Procedure issued by the Central Board of Direct Taxes (CBDT), requires an Approving Authority to not only pass an order under section 153D after due application of mind, rather the Approving Authority must also grant opportunity of hearing to the assessee at least one month before time barring date.

15. The learned Counsel for the assessee further strongly relied on the decision of the Co–ordinate Bench of the Tribunal, Nagpur Bench, in Maheshwari Coal Benefication & Infrastructure Pvt. Ltd., reported in [2025] 171 taxmann.com 842 (order dated 26/12/2024), in which case exactly same order under section 153D has been passed by the same authority, having same format, and exhibiting similar non-application of mind by the Approving Authority. In support of his arguments, the learned Counsel for the assessee relied on the following case laws:–

i) ACIT v/s M/s. Serajuddin & Co. Kolkata (2023) 333 CTR 0228 (Ori. HC) Order dated 15/03/2023. SLP filed by the Department against the judgment of the Hon’ble Orissa High Court was dismissed on 28/11/2023; ii) PCIT v/s Smt. Shreelekha Damani, [2018] (Bom. HC) 103 CCH 0432, order dated 27/11/2018;

11 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 iii) Arch Pharma Labs Ltd. v/s ACIT,[2021] 62 CCH 0009 (Mum Tribunal), order dated 07/04/2021.

16. Per contra, the learned Departmental Representative, Shri Salunke, vehemently argued that the contention of the learned Counsel for the assessee is ill founded. He contended that 153D approval is an internal document meant only for administrative purpose. According to the learned Departmental Representative, the Income Tax Officers of the same Range have their offices nearby, and they regularly keep each other updated about the developments in any case. Thus, the assessment order is culmination of this long drawn process, of which approval under section 153D of the Act is also a part. To support his contention, the learned Departmental Representative filed a written submission wherein he also relied on following case laws:-

i) Usha Satish Salvi v/s ACIT (ITA no.2439/Mum./2023, order dated 23/01/2025 (Mum. Trib.); ii) Pratibha Pipes & Structural Ltd. v/s DCIT, to 3876/Mum./2015, order dated 06/09/2019 (Mum. Trib.); and iii) Bibhudutta Panda v/s ACIT, to 81/CTK/2022, order dated 01/02/2023 (Cuttack Trib.).

17. Per–contra, the learned D.R. furnished Affidavits of the Assessing Officer and the Approving Authority wherein they have stated that they have applied their mind to the present cases. Lastly, the learned D.R. presented document detailing “confidential” meeting between various Income Tax officers, in which deviation note with respect to appraisal report has been discussed by the officers including the Assessing Officer and the Approving

12 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 Authority. The learned D.R. finally contended that the phrase “application of mind” is very subjective in nature and no criteria can be laid down by the Judiciary or this Tribunal as to what constitutes “Application of mind”.

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13 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

Scanned copy of approval so granted by the Department under section 153D in respect of Shri Umesh Sadashiv Thakre, for the A.Y. 2016–17

14 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

Scanned copy of approval so granted by the Department under section 153D in respect of M/s. YRCE Educare Pvt. Ltd., for the A.Y. 2018–19

15 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

Scanned copy of approval so granted by the Department under section 153D in respect of Shri Atul Manoharrao Yamsanwar, for the A.Y. 2014–15

16 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

19. We Further find that exactly similar approval under section 153D of the Act have been granted by the Department for all the remaining 20 cases which are under consideration before us, but the only changes are made in the name of the assessee and the year of assessment. Apparently, accordingly to the learned Counsel for the assessee, the learned Addl. CIT has granted the approval in a mere mechanical manner in a template format, without referring to any seized material, or any observation to the findings of the Assessing Officer in the draft assessment order. No credible evidence or explanation is mentioned in the order to suggest that the Approving Authority has applied his mind before granting the approval under section 153D of the Act. But. before we discuss as to whether or not the approval so granted by the Department under section 153D of the Act without application of mind, it is imperative to mention strong apprehension of the learned Departmental Representative to even examine the issue in detail. According to the learned Departmental Representative, the order/ approval under section 153D of the Act is an internal administrative document, meant only for communication between Jt. CIT and ACIT, and by no stretch of imagination, it was open for judicial review. It is now pertinent to refer to the provisions of section 153D of the Act which are reproduced herein below:–

“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….. except with the prior approval of the Joint Commissioner.”

20. The emphasis supplied in the above excerpt of section 153D above, is to highlight the intent of the legislature regarding the necessity of application of 17 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 mind to the draft order of each year of search. The same legislature has divided roles and responsibilities of Income Tax Authorities into two broad groups, one, the executory or administrative wing which broadly the assesses a taxpayer, and the other is the judicial wing, which checks, balances and judiciously reviews the action taken by the executory wing. For example, powers under sections 151, 263, etc., are related to the judicial wing. In fact, the statutory authority of the learned CIT(A) [section 2(16A)] and even this Tribunal [section 252] exists, because the same are formed or defined for the “judicial wing” of the Income Tax Act, 1961.

21. In the present case, before we delve into the merits of the arguments related to “application of mind” under section 153D of the Act, we first need to address the question whether or not, while passing an order of approval under section 153D of the Act, does the Officer discharged executory function or judicial function? To answer this question, let us consider Office of Manual Procedures that has been issued by the CBDT. The CBDT issued the Manual of Office Procedure in February 2003 in exercise of the powers conferred under section 119 of the Act. Para–9 of Chapter–3 of Volume-II (Technical) of the Manual reads as under:–

“9. Approval for assessment: An assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/ADDL.CIT (For the period from 30-6-1995 to 31-12-1996 the approving authority was the CIT.). The Assessing Officer should submit the draft assessment order for such approval well in time. The submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering letter filed in the relevant miscellaneous records folder. Due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. Finally once such approval is granted, it must be in writing and filed in the 18 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 relevant folder indicated above after making a due entry in the order-sheet. The assessment order can be passed only after the receipt of such approval. The fact that such approval has been obtained should also be mentioned in the body of the assessment order itself.”

22. The emphasis supplied on the above part of the Office of Manual Procedure issued by the CBDT speaks about giving opportunity to the assessee by the superior authority one month before passing of any order of approval. The requirement of prior approval under section 153D of the Act is comparable with a similar requirement under section 158BG of the Act. The only difference being that the latter provision occurs in Chapter-XIV-B relating to “special procedure for assessment of search cases” whereas section 153D, which was introduced in place of 158BG, is part of Chapter-XIV. Thus, the approval so granted by the Department under section 153D of the Act is neither executory nor administrative function, as the same gives rise to a “civil consequence”, of assessment being framed against the assessees. It is, therefore, a judicial function, which grants the authority for judicial review by this Tribunal.

23. During the course of hearing, the learned D.R. further argued that as there is no format of 153D approval defined, therefore, the order under section 153D of the Act so passed by the Department, as can be seen above, must be held to be valid. However, we do not accept this understanding of learned D.R. for the reason that each assessment year is a different than the other and the facts / additions made in separate assessment years demand separate application of mind, as is the requirement of section 153D of the Act. As there is no specific format in which an assessment order is supposed to be 19 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 passed, we do not understand as to how can there be any specific format of an order under section 153D? It totally depends on the facts and findings of each case. What is mandatorily required is independent application of mind by the learned Addl. CIT while granting approval under section 153D of the Act for each separate case after thoroughly and judiciously examining the draft order as well as other relevant documents based on which the assessment is completed.

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25. Broadly, we further find that in these Affidavits, the Approving Authority and ACIT have stated that there have been long discussions related to the 25 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 group cases, and only after due process, the approval under section 153D was given. Thus, the learned D.R. contended that approval under section 153D was granted by the Department after due application of mind. However, we are of the considered opinion that these Affidavits are not acceptable for the following reasons:-

i) Affidavit is a secondary source of evidence and not primary source. From plain reading of the approvals so granted by the Department under section 153D as enumerated above, it can be clearly inferred that there has been no application of mind while passing them, in fact they appear to be mere templates in which only name and assessment year is being changed. Now, if the Department wants to prove that there has been application of mind by the Approving Authority before granting approval under section 153D, then it cannot be done simply by filing secondary evidence, i.e., the Affidavits. The admissions made in these Affidavits must be supported by corroborative evidence that there has been application of mind on each separate year for each assessee. No such evidence is adduced which proves that there was application of mind by the Approving Authority on the draft orders prepared by the Assessing Officer and other such documents related to search. ii) These affidavits are self-serving and also filed without application of mind in a mere template format without even noticing that Atul Yamsanwar’s case for the A.Y. 2013-14 bearing ITA no.249/Nag./2022,

26 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 and Aakar Hotel’s case for A.Y. 2016-17 bearing ITA no.47/Nag./2023, are not covered under 153A, rather they both are related to re–opening under 147/148 of the Act; still, both of the officers have nonchalantly stated on oath by filing Affidavit that approval under section 153D in these cases has been passed after due deliberation, when, in fact, no approval under section 153D is there in these cases and it is not required in re–opening cases. This approach raises serious questions on the conduct of the officers. Further, these Affidavits have been filed in the cases of Unique Realities (ITA no.11 & 12/Nag./2023) and Deepak Gadge (ITA no.99 & 100/Nag./2023), in which cases the issue of 153D was not even raised. This confirms that the Affidavits are mere self- serving in nature, not supported by any corroborative evidence. iii) Vide Para-5 of the Affidavit of both the officers, it is mentioned, “On culmination of this continuous process, a proposal was received from DCIT Central Circle 2(1), Nagpur seeking approval under section 153D of the I.T. Act as envisaged by the said section. The requisite approval was given only after confirmation on the additions proposed in the earlier periodic discussions.” There may be numerous discussions between officers throughout the search & seizure proceedings and also during assessment. Those discussions are internal matter of the Department. However, provisions of section 153D of the Act demand that before any Assessing Officer passes an assessment under section 153A/153C of the Act pursuant to search action, the same needs to be approved by superior authority. Thus, the whole point of a supervisor

27 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

(Approving Authority) being saddled with the task of approving a draft order is that the orders must be reviewed “after” they are drafted, it is irrelevant how many times the case has been discussed before preparation of draft orders. The Affidavit does not even mention that “Draft Order” was prepared or discussed or perused. In the Affidavit, the Officers also say that the “proposal was received”, Proposal for what? what records were perused? How were the conclusions drawn? What suggestions were made by the Approving Authority? There is no mention of these important factors in the Affidavits. Under similar circumstances challenging the validity of approval so granted by the Department under section 153D of the Act, similar submission was made before ITAT, Mumbai Benches, in the matter of M/s Utility Supply Pvt. Ltd. v/s DCIT [ITA no.3585/Mum./2024, vide order dated 03/04/2025. The Co- ordinate Bench rejected such submissions holding as follows:-

“39. … And therefore, the contention of Ld. DR to the effects “that the procedure normally followed in such cases is that after centralization of the case, periodic discussions are held between the Range Head and the AO, where the appraisal report and the relevant seized material are duly discussed and submitting of the draft assessment order, is the culmination of the discussion process, not the initiation of the involvement of the Range Head, who is the approving authority”, has no essence, because the Assessing Officer is an independent quasi-judicial officer and therefore he is required to act or to pass the assessment order independently and without being influenced by any interference/indulgence of/by higher Authority. May be the higher authority was involved in process of investigation or enquiry, etc., but could not have interfered in deciding the issue(s) and/or passing the assessment order by the AO, except granting or rejecting the approval u/s 153D of the Act. The Approving Authority after submitting the draft order and relevant material, is required to assess the proposed assessment order independently in the context of material available on record and to give reasons for granting the approval. Admittedly in this case, approval dated 27.12.2019, does not reflect any relevant material/

28 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 findings/ reasoning, which can substantiate the validity of such approval. Thus, the contention raised by the Ld. DR, is untenable. Thus, on the aforesaid analyzations, we are of the considered view that in the instant case, the approval dated 27.12.2019 under consideration in not based on examining of any relevant documents and provisions of the Act in the context of the proposed addition and has been accorded in haste and time constrained pressure and, therefore lacks application of mind and hence in cumulative effects, the same suffers from perversity and impropriety and consequently un-sustainable. Thus, the approval, is declared as invalid in the eyes of law, which would entail the assessment order dated 27.12.2019 as invalid being void ab-initio.” iv) Affidavits like these should come through proper channel, i.e., the Principal Commissioner of Income Tax, and should not be handed over to this Tribunal directly. Affidavits like these can only be produced only when this Bench asks for it. This Bench never asked the officers concerned to produce Affidavits for proving “application of mind”. Rule 29 of ITAT Rules, 1963, makes it abundantly clear that Affidavit can only be filed if the Bench asks for it. The relevant portion of the same is highlighted below:-

“Production of additional evidence before the Tribunal 29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.” [Emphasis Supplied] v) At the outset, these Affidavits cannot be admitted in view of the provisions of Rule 29 r/w Rule-10 of ITAT Rules, 1963. But, even if we investigate the contents of the same, the whole idea of producing these

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Affidavits seems rather misleading, as besides words, there is no mention or production of any cogent evidence to prove “Application of mind”. We have our doubts if the higher authorities even aware that such an Affidavit is being filed before this Tribunal. vi) The Affidavit says that the case was discussed with “ACIT 2(1)” at length on “real time basis”. However, Yamsanwar Group was centralised to be assessed under “ACIT 1(1)” vide Order u/s 127(2)(a) of the Act dated 10/12/2019, and initial notices under section 153A/C as well as under sections 142(1), 143(2) of the Act were also issued by the ACIT- 1(1) on various dates in the year 2020, which were duly attended by the assessee. The cases were handled by the ACIT-1(1) for good one year and then transferred to ACIT-2(1) vide order dated 22/01/2021 passed under section 127 of the Act, after which the assessments were concluded. There is no mention of this important fact of transfer of cases from ACIT-1(1) to ACIT-2(1) in the Affidavits. The officers bluntly misrepresent that the case was discussed on real time basis with the ACIT-2(1) only, when, in fact, the assessee attended and submitted case before the ACIT-1(1), mostly. Also, why Affidavit of ACIT-1(1), was not considered to be produced before us, requires serious consideration. vii) To our utter surprise, the learned D.R. also produced a sealed envelope stating that he is relying on “Confidential” document to prove “Application of mind” by the officer. The Bench refrained from accepting and opening any such concealed document, which the other side did not 30 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 even get a chance to examine, let alone rebut. The learned D.R. later, on 17/03/2025, produced the same, which is being reproduced hereunder:-

31 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 32 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 33 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

34 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 viii) As can be seen the above, the covering letter mentioned subject as under:-

“Submission of copies of confidential letters having F. No. Addl CIT – CR/2/Yamsanwar Gr./ AMY/ 2021-22 dated 16/07/2021 written by then Addl. CIT, Central Range – 2, NGP to Addl DIT (Inv.) Nagpur and the confidential deviation meeting held on 03/08/2021 at 11 AM in the office of Addl. CIT – reg.” ix) In the covering letter itself, the learned D.R. stated in Para-2,3,4 that these “confidential” documents were produced before this Bench on 18/02/2025, but the Bench refrained from accepting the same as they were in sealed cover, however, as these documents were important, they are being submitted now. Thereafter, in Para 5, the learned D.R. stated – “If honourable Bench still believes that these documents should be provided to the assessee, the same may be done by Honourable Bench.” x) This Tribunal is in no position to accept any document which is not given to the other side, and these documents are not related to national security, which require submission in sealed covers. These are simple documents related to the search case of the assessee itself. Relying on documents which the other side has not been examined is completely unjustified and unacceptable by us and/or the Tribunal. xi) During the course of hearing, the learned D.R. handed over the “confidential” document on the date of hearing itself. The learned Counsel for the assessee rightly pointed out that these two pages

35 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 submitted by the learned D.R. are nothing, but deviation note. The first document is a letter addressed to Addl. DIT (Inv.) from Addl. CIT, Central Circle–2, Nagpur, dated 16/07/2021 in which it is being requested to arrange a meeting to discuss changes in deviation note. The second document is the minutes of the meeting dated 03/08/2021 formed in pursuance to the letter dated 16/07/2021, in which issues relating to deviation note and appraisal report were discussed. It must be noted here that there is no concept of deviation note in the Income Tax Act, and, therefore, any such note does not have any statutory relevance. The meeting was attended by four officers, i.e., Addl. DIT (Inv.), Addl. CIT, CR – 1, ACIT (CC) 2(1), ADIT (Inv.), Unit – II. We are unable to understand what are we supposed to make out of these two documents? Why are they being produced before this Tribunal in such a dramatic manner, especially when they are not even remotely related to the issue of provisions of section 153D application of mind by the Approving Authority. This is just a deviation note that is prepared based on Appraisal Report before the Draft Assessment Orders are prepared. Application of mind by the Approving Authority under section 153D is supposed to be after the preparation of Draft Assessment Orders. It appears that the learned D.R. is simply trying to confuse and mislead this Bench by producing documents which are absolutely irrelevant to the case in hand. xii) We further find that the opinion formed by the Approving Authority while passing order u/s 153D of the Act were not based on 36 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 any evidence, as there is no mention of the same, neither in the order under section 153D, nor in the Affidavits, even though the same have been vehemently argued by both the learned Counsel appearing for the parties before this Tribunal. What stopped the Department to simply produce documents and put this chapter to rest? Apparently, there was no such perusal of Draft Order, or relevant material that was perused by Approving Authority before passing the order under section 153D of the Act. According to the Hon’ble CJI Bhagwati in M/s Mehta Parikh & Co. v/s CIT, 1956 AIR 554, vide order dated 10/05/1956), the Hon’ble Supreme Court held as under:–

“Conclusions based on facts proved or admitted may be conclusions of fact but whether a particular inference can legitimately be drawn from such conclusions may be a question of law. Where, however, the fact-finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, the court is entitled to interfere.”

37 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 i) Assessee alleged the assessment under section 153A has been completed in absence of approval under section 153D of the Act. The Tribunal observed that the approval under section 153D was found in the group files, and at Para 7 of the assessment order, also mentioned of passing of assessment after due approval under section 153D of the Act. Therefore, the ground of the assessee regarding absence of approval under section 153D does not stand; ii) Issue related to non-availability of approval under section 153D in the assessment record, and not “non application of mind by Approving Authority under section 153D”, as is being challenged in the present case. In the entire order, the phrase “Application of Mind” is not appearing; iii) The Affidavit produced in this case by the Assessing Officer as well as Approving Authority was to confirm that the assessment had been completed after passing order under section 153D. It seems that the idea of producing Affidavits in the present case has found inspiration from the case of Prathibha Pipes and Structural Ltd. (supra). However, in Prathibha Pipes and Structural Ltd. (supra), the issue is entirely different, as it is not related to “Application of mind” under section 153D;

38 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 Pipes and Structural Ltd. (supra) was relied upon. The learned D.R. stated that the case of Usha Salvi (supra) and the present case are similar and, therefore, the same ratio must be applied to the present case as well. However, the case of Usha Salvi (supra) is also distinguishable in nature as compared to the facts of the present case for the following reasons:- i) The case is related to only 3 annexures in seized material which are mentioned in Para–3 of the submissions of the learned D.R. appearing in Para–7.2 of the impugned order. While in the present case, extensive materials were seized from various locations and different assessees, demanding application of mind for each assessee and for each assessment year; ii) Vide Para–8 of the order, approval so granted by the Department under section 153D is produced, wherein the Addl. CIT has stated “subject to corrections made therein”. This phrase clearly shows that the Addl. CIT has applied her mind to the cases and has also made corrections. No such application of mind is appearing in approval so granted by the Department under section 153D in the present case. Neither the same is proved by furnishing Affidavit nor have any other corroborative documents been filed by the Department; iii) Hon’ble Bench misinterpreted the case of Prathibha Pipes and Structural Ltd. (supra), as it was related to absence of approval under section 153D, and not in respect to “application of mind” while granting

39 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 approval under section 153D; when, in fact, in Usha Salvi’s case, the issue was related to “application of mind”; and iv) The issue of “application of mind” while granting approval under section 153D of the Act has been clearly established in the judgment of the Hon’ble Bombay High Court rendered in PCIT v. Smt. Shreelekha Damani (2018) 307 CTR 218 (Bom. HC), wherein the Hon’ble Bombay High Court upheld the Co–ordinate Bench decision of the Tribunal, Mumbai Bench, and the another judgment of the Hon’ble Orissa High Court rendered in ACIT v/s Serajuddin & Co., [2023] 150 taxmann.com 146 (Ori.), wherein the SLP filed by the Department was also dismissed by Hon’ble Supreme Court, which has not been even referred. Both judicial pronouncements relate to the issue of “Application of Mind”, whereas Prathibha Pipes and Structural Ltd. (supra), which has been strongly relied on by the Hon’ble Bench, is related to absence of the approval under section 153D.

i) In that case as well, from the approval itself, the requirement of “application of mind” seems to be fulfilled. The relevant portion of approval under section 153D of the Act is highlighted below:-

40 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

“The draft assessment orders in all the above noted assessees are approved accordingly as per statutory requirement u/s. 153D only in the light of the suggestions given above. Therefore, only after making verifications, necessary enquiries and investigations in the light of the above suggestions made, the final assessment orders should be passed expeditiously as per the draft orders approved. The tax and interest calculations to 'be incorporated in the final orders should be checked up once again to ensure the correctness of the same. The final orders along with Demand Notice should be served on the assessee concerned expeditiously and the proof of service be placed in the assessment folders. Copies of the final assessment orders may be sent to this office for record.” ii) Further, the above case law has distinguished Serajuddin and Co v/s ACIT, which was, at that time, the decision of the Co– ordinate Bench of the Tribunal. Before High Court of Orissa, Serajuddin’s case was upheld by dismissing the appeal of the Department, and the subsequent SLP filed before the Hon’ble Supreme Court was also dismissed. Thus, Serajuddin’s case, due to upholding by Orissa HC, makes the case of Bibhudutta Panda inapplicable to the present case; iii) Also, this case is against the Department, as the Tribunal had allowed the appeal for statistical purpose holding as follows:-

“12. We have considered the rival submissions. Coming to the first issue raised by the assessee in regard to the satisfaction u/s.153D of the Act, admittedly, the provision of Section 153D of the Act prescribes that the assessment order must have the approval of the Addl. CIT if the order is passed below the rank of JCIT. It is an admitted fact that an approval has been obtained for a draft assessment order passed on 27.03.2015. It is also an admitted fact that the Addl. CIT has directed the AO to do further verification and to proceed with the assessment without taking any further approval. This is where the error took place. The satisfaction of the Addl. CIT is not there as per the provisions of the Section 153D of the Act in respect of the variation in the income between that as was determined in the draft assessment order as on 27.03.2015 and as determined in the assessment order dated 31.03.2015. There is no power available with the 41 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

Addl. CIT to override the provisions of Section 153D of the Act and to direct the AO to do any further verification and to proceed with the assessment order without obtaining any further approval from the Addl. CIT. The Addl. CIT is a creature of statute and the statute binds him. The assessment order is a statutory document and it is bound by the rules of statute. This approval u/s.153D of the Act is an administrative act and if an administrative act has been prescribed in respect of the statutory document, such administrative act has to be done in respect of that statutory document. Failure of such act or the waiver of such act would lead to a statutory document being passed erroneously. Admittedly, such document does not become void ab initio. This being so, respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of Shiv Kumar Agrawal (supra) as also the coordinate bench of the Tribunal in the case of Gobardhan Matia(supra), as the irregularity in the assessment proceedings has taken place when the final assessment order has been passed without obtaining the approval of the Addl. CIT, we are of the view that the issue in this appeal would have to be restored to the point before passing of the impugned assessment order to obtain the approval of the Addl. CIT and then to proceed therefrom in accordance with law. Consequently, this ground of assessee’s appeal for all the assessment years under consideration is partly allowed for statistical purposes.”

42 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 “58. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record which consist of Paper Book furnished by the learned A.R. and gone through the case laws relied upon. We find that the Addl.CIT has granted approval under section 153D for making assessment under section 153C for the assessment year 2009-10 to 2013-14 separately for each assessment year. The respective approval so granted under section 153D of the Act for each assessment year has been reproduced above.

43 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

Explanation-1 to section 153A by the Finance Act, 2017 (wef. 01/04/2017), the Addl.CIT has not cared that the assessment made under section 153C dated 31/03/2022 for the assessment year 2009-10 to 2011-12 is time barred, as per first proviso to section 153C, date of search shall be the date of receiving the documents/ material by the Assessing Officer of the assessee, the date of receipt of the documents is 21/01/2021 shall be considered the date of search for the assessee company and thus, the assessment year 2009-10 to 2011-12 would be beyond the block of 10 assessment years as per Explanation-1 to section 153A, the assessment made under section 153C for the assessment year 2009-10 to 2011-12 is time barred and there is a violation of first proviso to section 153C. There is also violation of provisions of Explanation–1 to section 153A which is not cared by the Addl.CIT. (b) That for the assessment year 2009–10 to 2013–14 which comes under „relevant AY / AYs‟ as per Explanation-1 to sec153A(1) and Addl.CIT has not cared that documents / material i.e., ledger accounts found in searched premises (i.e., Suresh Agrawal, Kolkata) has been transferred to the Assessing Officer of the assessee-Company on 21/01/2021 by way of consolidated satisfaction note recorded by the Assessing Officer of the searched person, which is in possession of the Assessing Officer of the assessee-Company, does not constitute „asset‟ as per fourth proviso to section 153A(1) and Explanation-2 of the fourth proviso which is sine qua non for issuing notice under section 153C for the „relevant AY/ AYs‟, there is a violation of fourth proviso to section 153A(1), which is not cared by the Addl.CIT while granting such mechanical approval. (c) More so, thereafter, the Addl.CIT has also not cared that the Assessing Officer has not made any addition on account of „undisclosed assets‟ for the assessment year 2009–10 to 2013–14 which comes to the „relevant AY/ AYs‟ as per Explanation-1 to section 153A(1) and it is mandatory to make first addition on the count of „undisclosed assets‟, then only, he would be empowered to make any other addition on certain independent issue of unexplained cash credits under section 68 etc. This fact has not been cared by the Addl.CIT while granting such mechanical approval on 31/03/2022 fpr the assessment year 2009–10 to 2013–14. (d) Further, in the draft assessment order for the assessment year 2009-10 to 2013-14, the Assessing Officer has made addition on account of unexplained cash credits under section 68 whereas, there is no such credit entry is appearing / recorded/ found credited in the books of account of the assessee- Company in the assessment years, which is sine qua non for applying section 68 which is absent in these cases which is not cared by the Addl.CIT while granting such mechanical approval on 31/03/2022 for the assessment year 2009-10 to 2013-14 for example, in the draft assessment order for the A.Y. 2013-14, the Assessing Officer has made addition of ` 35 lakh on account of unexplained cash credits under section 68, whereas, it is an opening balance of ` 35 lakh as on 01/04/2012 which brought forward from earlier year(s) and thus, it is unsustainable in the eyes of law as there is no fresh credits appearing in the books of account, which is against the law laid down under section 68. It is also not cared by Addl.CIT while granting such mechanical approval on 31/03/2022 for the assessment year 2013–14. (e) Though, there is separate approval for each year is granted, but it is stereo-typed approval in same manner, in same fashion, in mechanical manner, merely on formality for all the 5 years i.e., A.Y. 2009-10 to 2013-14 separately, he has not even recorded any single word of his own satisfaction in the approval order passed under section 153D. It is an simpliciter approval

44 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 merely for formality, he has recorded in the approval granted under section 153D 31/03/2022 that he perused the „draft assessment order‟ but he has not pointed out the defects / discrepancies / inconsistencies in the „draft assessment order‟ as he has not verified the deemed date of search which only would be applicable for „Non-searched person‟ i.e., the assessee-Company, which should have been the date of receiving the document from the Assessing Officer of the searched person, as he has not even recorded that he perused the assessment records/ files for the impugned years involved therein. He has not even verified that opening balances of loan accounts are also added by the Assessing Officer under section 68 which is invalid as per mandate of section 68, as only fresh credits during the year concerned are liable to be assessed under section 68, which is ignored by the Addl.CIT while granting such mechanical approval. He has not even cared that in the absence of required satisfaction note‟ for each year separately, entire assessment under section 153C would be vitiated.

45 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 application of mind by the Addl.CIT judiciously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme, it is the bounden duty of the Assessing Officer to seek to place the draft assessment order together with copies of the satisfaction note/seized documents before the Addl.CIT well in time much before the due date of completion of search assessment. In the present case, approval under section 153D granted on the same day on 31/03/2022 on the basis of letter dated 31/03/2022 by the Assessing Officer for seeking approval, and thus, proper procedure has not been followed by the Assessing Officer as well as the Addl.CIT.

46 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 provides only the Assessing Officer to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the Addl.CIT to grant judicious approval under section 153D to the draft assessment orders placed by the Assessing Officer.

14. The issue which we have to decide is, can these approvals be treated as fulfilling the mandate of sec153D vis-a-vis legislative intent of the said sec in the statute. Sse153D reads as under: 16. The Legislative intent is clear from the above, in as much as, prior to the insertion of sec 153D, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/ reassess–ments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their minds on the material 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 authorities have to approve the assessment order.

19. Thus, the worthy Addl.CIT, Cen-Range-2, New Delhi gave approval To 246 assessment order by a single approval letter u/s153D by mentioning as under: “The above draft orders, as proposed, are hereby accorded approval with the direction to ensure that the orders are passed well before limitation period. Further, copies of final orders so passed be sent to this office for record.”

20. In our considered opinion, there is no whisper of any seized material sent by the AO with his proposal requesting the approval u/s153D. All the requests for approval are exhibited at pages 123 to 135 of the Convenience Compilation.

21. Even the approval granted by the Addl.CIT, Cent-Range-2, New Delhi does not refer to any seized material/assessment records or any other documents which could suggest that the Addl.CIT, Cent-Range-2, New Delhi has duly applied his mind before granting approvals.”

15. A plain reading of the aforesaid provision would indicate that sec151 stipulates that the PCCIT or CCIT or PCIT or CIT must be “satisfied”, on the reasons recorded by the AO, that it is a fit case for the issuance of such notice. Thus, the satisfaction of the prescribed authority is a sine qua non for a valid approval as per the said Sec.

16. A perusal of the proforma attached as Annex-II in the instant appeal would suggest that though the ACIT has appended his signatures by writing in his hand- “Yes, I am satisfied”, however, the PCIT has merely written

48 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 “Yes” without specifically noting his approval, while recording the satisfaction that it is a fit case for issuance of notice u/s148.

17. Thus, the incidental que which emanates at this juncture is whether simply penning down “Yes” would suffice requisite satisfaction as per sec151. Reference can be drawn from the decision of this Court in NC Cables Ltd, wherein, the usage of the expression “approved” was considered to be merely ritualistic and formal rather than meaningful. The relevant paragraph of the said decision reads as under:- “11. Sec151 clearly stipulates that the CIT(A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression “approved” says nothing. It is not as if the CIT(A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the court is satisfied that the findings by the ITAT cannot be disturbed.”

18. Further, this Court in Central India Electric Supply Co Ltd [2011] has taken a view that merely rubber stamping of “Yes” would suggest that the decision was taken in a mechanical manner. Paragraph 19 of the said decision is reproduced as under:- “19. In respect of the first plea, if the judgments in Chhugamal Rajpal (1971) (SC), Chanchal Kumar Chatterjee (1974) (Cal) and Govinda Choudhury and Sons (1977) (Orissa) are examined, the absence of reasons by the AO does not exist. This is so as along with the proforma, reasons set out by the AO were, in fact, given. However, in the instant case, the manner in which the proforma was stamped amounting to approval by the Board leaves much to be desired. It is a case where literally a mere stamp is affixed. It is signed by an Under Secretary underneath a stamped Yes against the column which queried as to whether the approval of the Board had been taken. Rubber stamping of underlying material is hardly a process which can get the imprimatur of this court as it suggests that the decision has been taken in a mechanical manner. Even if the reasoning set out by the ITO was to be agreed upon, the least which is expected is that an appropriate endorsement is made in this behalf setting out brief reasons. Reasons are the link between the material placed on record and the conclusion reached by an authority in respect of an issue, since they help in discerning the manner in which conclusion is reached by the concerned authority.”

19. In the case of Chhugamal Rajpal, the Hon‟ble SC refused to consider the affixing of signature alongwith the noting “Yes” as valid approval and had held as under:- “5. --- Further the report submitted by him u/s151(2) does not mention any reason for coming to the conclusion that it is a fit case for the issue of a notice u/s148. We are also of the opinion that the CIT has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice u/s148. To Que 8 in the report which reads “whether the CIT is satisfied that it is a fit case for the issue of notice u/s148”, he just noted the word “yes” and affixed his signatures thereunder. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice u/s148. The important safeguards provided in secs147 and 151 were lightly treated by the ITO as well as by the CIT. Both of them appear to have taken the the duty imposed on them under those provisions as of little importance. They have substituted the form for the substance.”

49 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

22. So far as the decision relied upon the Revenue in the case of Meenakshi Overseas P Ltd is concerned, the same was a case where the satisfaction was specifically appended in the proforma in terms of the phrase- “Yes, I am satisfied”. Moreover, paragraph 16 of the said decision distinguishes the approval granted using the expression “Yes” by citing Central India Electric Supply (2011) (Del HC), which has already been discussed above. The decision in the case of Experion Developers P Ltd would also not come to the rescue of the Revenue as the same does not deal with the expression used in the instant appeal at the time of granting of approval. 23. Therefore, it is seen that the PCIT has failed to satisfactorily record its concurrence. By no prudent stretch of imagination, the expression “Yes” could be considered to be a valid approval. In fact, the approval in the instant case is apparently akin to the rubber stamping of “Yes” in the case of Central India Electric Supply (2011) (Del HC). 5. In view of the aforesaid, we find no justification to interfere with the view expressed by the Tribunal. No substantial queof law arises. The appeals fail and shall stand dismissed. 6. While disposing of these set of appeals, we take note of the following observations that were made in ITA 8/2024: - “4. Accordingly, while we dismiss the instant appeal following the reasons assigned in the earlier case of Anuj Bansal, we leave the que pertaining to the effect and impact of sec144A as well as of the provisions contained in the Search and Seizure Manual, 2007, open to be addressed in appropriate proceedings.” 7. In the facts of the present case and those which have come to be recorded by the Tribunal, we find that there arises no occasion for us to examine the said issue. The same be accordingly kept open to be addressed in appropriate proceedings.” (iv) PCIT v. Anuj Bansal (2024) 165 taxmann.com 2 (Del HC) dt.13-7-23, concluded that- “7. The Tribunal has via the impugned order set aside the additions made qua the income of the asseessee inter alia, on the Gr. that there was no application of mind by the Addl.CIT in granting approval u/s153D. 8. To be noted, an assessment order was framed qua the asseessee u/s153A, rws.143(3). 9.1. The respondent had declared an income amounting to Rs.87,20,580. However, while making the additions, strangely, the AO noted that the returned income was Rs.11,00,460.

50 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

10. There were 2 additions made by the AO. The first addition was made qua cash deposited in the bank, amounting to Rs.15,04,35,000. The second addition was made with regard to cash introduced via an entry operator i.e., one, Mr Vipin Garg. The amount added qua this aspect was pegged at Rs.1,54,07,100.

11. Despite these additions, which would have taken the assessed income well beyond what was crystallised by the AO i.e., 1,65,07,560, the ACIT failed to notice the error.

12. This aspect was brought to the fore by the Tribunal in the impugned order. The Trib, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. 12.1. More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order. 13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: “17.1. However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the ld Addl.CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs. 87,20,580. Similarly, when the total assessed income as per the AO comes to Rs.16,69,42,560, the Addl.CIT could not have approved the assessed income at Rs.1,65,07,560 had he applied his mind. The addition of Rs. 15,04,35,000 made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes. 17.2. Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (Del Trib). In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the AO seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original ROI as well as total assessed income and the Addl.CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl.CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s153D has been granted in a mechanical manner and without application of mind and thus, it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s153D. In view of the above discussion, we hold that the order passed u/s153A rws.43(3) has to be quashed, thus ordered accordingly. The Gr. raised by the Assessee is accordingly allowed”. 14. In this appeal, we are required to examine whether any substantial que of law arises for our consideration. 15. Having regard to the findings returned by the Trib, which are findings of fact, in our view, no substantial que of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval u/s153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to sec292B. 16. We are not inclined to interdict the order of the Trib.” (v) PCIT v. Subash Dabas (2024) (Del HC) dt.17-5-24; & CNAPPL.20652/2023, concluded that- “11. Recently, in Shiv Kumar Nayyar (2024) (Del HC), we had an occasion to deal with an almost identical issue i.e., grant of approval u/s153D in a 51 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 mechanical manner and without application of mind. The relevant discussion of the said decision in Para no.10 to 15, is reproduced hereunder as:- “13. Reliance can also be placed upon Serajuddin and Co (Ori HC) to understand the exposition of law on the issue at hand. Para no.22 of the said decision reads as under:- “22. As rightly pointed out by ld counsel for the assessee there is not even a token mention of the draft orders having been perused by the Addl.CIT. 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 order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere “rubber stamping” of the letter seeking sanction by using similar words like „see‟ or „approved‟ will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of sec158BG, it would equally apply to sec153D. There are 3 or 4 requirements that are mandated therein, (i) the AO should submit the draft assessment order “well in time”. Here it was submitted just 2 days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order.”

14. During the course of arguments, ld counsel for the assessee apprised this Court that the SLP preferred by the Revenue against Serajuddin, came to be dismissed by the SC vide order dt. 28-11-23 in SLP(C) Diary no.44989/2023.

15. A similar view was taken by this Court in Anuj Bansal (Del HC), whereby, it was reiterated that the exercise of powers u/s153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval u/s153D cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.”

52 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

37. However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the ld Addl.CIT before granting the approval. Had there been application of mind, he would not have approved the addition of Rs.8 crores in respect of M/s.Tirupati Real Tech Pvt Ltd and Rs.7 1akhs in respect of M/s.Golden Buildmart P Ltd which are opening balances and the very same amounts were added in the preceding AY. Even the AO in his remand report has also admitted the mistake that the addition of an amount of Rs.8 crores, was the opening balance and the mistake is apparent from record and needs to be rectified.” 14. It is, therefore, discernible from the impugned order of the ITAT which reckons a categorical finding, and rightly so, that the approval u/s153D has been granted without due application of mind in the present case. Admittedly, the ITAT notes that the Addl.CIT has approved the draft assessment order without verifying the record which was made available before the said authority. It is further seen that the approval in the present case was accorded on the same day when it was sent to the concerned authority. It is also noteworthy that 35 draft assessment orders were approved by the Addl.CIT in one go on the said day. 15. Thus, in light of the decision rendered by us in Shiv Kumar Nayyar (2024) (Del HC), it is seen that the present appeals do not raise any substantial queof law. Consequently, the appeals stand dismissed and pending application(s), if any, are disposed of. (vi) PCIT v. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Del HC) dt.15-5- 24, concluded that- “13. Reliance can also be placed upon Serajuddin and Co (2023) (Ori HC) to understand the exposition of law on the issue at hand. Para no.22 of the said decision reads as under:- “22. As rightly pointed out by ld counsel for the assessee there is not even a token mention of the draft orders having been perused by the Addl.CIT. 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 order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere “rubber stamping” of the letter seeking sanction by using similar words like „see‟ or „approved‟ will not satisfy the requirement of the law. This is where the Technical Mannual of Office Procedure becomes important. Although, it was in the context of sec158BG, it would equally apply to sec153D. There are 3 or 4 requirements that are mandated therein, (i) the AO should submit the draft assessment order “well in time”. Here it was submitted just 2 days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order.” 14. During the course of arguments, ld counsel for the assessee apprised this Court that the SLP preferred by the Revenue against Serajuddin, came to be dismissed by the SC vide order dt. 28-11-23 in SLP(C) Diary no.44989/2023. 15. A similar view was taken by this Court in Anuj Bansal (Del HC), whereby, it was reiterated that the exercise of powers u/s153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval u/s153D cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.

53 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- “10. We have gone through the approval granted by the ld Addl.CIT on 30- 12-18 u/s153D which is enclosed at page 36 of the PB of the assessee. The said letter clearly states that a letter dt.30-12-18 was filed by the ld AO before the ld Addl.CIT seeking approval of draft assessment order u/s153D. The ld Addl.CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30-12-18 for 7 AYs in the case of the assessee and for 7 AYs in the case of Smt Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the PB which contains information obtained by Smt.Neetu Nayyar from Central Public Information Officer who is none other than the ld Addl.CIT, Central Range-S, New Delhi, under RTI Act, wherein, it reveals that the ld Addl.CIT had granted approval for 43 cases on 30-12-18 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the PB which contains the approval u/s153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld Addl.CIT to grant judicious approval u/s153D for 43 cases on a single day is the subject matter of dispute before us. Further, sec153D provides that approval has to be granted for each of the AY whereas, in the instant case, the ld Addl.CIT has granted a single approval for all AYs put together.”

17. Notably, the order of approval dt.30-12-20 which was produced before us by the ld counsel for the assessee clearly signifies that a single approval has been granted for AYs 11-12 to 17-18 in the case of the assessee. The said order also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, we cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the ITAT, succinctly encapsulated in the order extracted above.

18. Therefore, under the facts of the present case, considering the foregoing discussion and the enunciation of law settled through judicial pronouncements discussed hereinabove, we are unable to find any substantial que of law which would merit our consideration.” (vii) PCIT v. Dilip Construction P Ltd (2023) 7 NYPCTR 892 (Ori HC) held as under: “4. We find similarity in facts found in the case by the Trib. The approval does not even say the Jt.CIT had perused the files. As such, the contention sought to be raised in the appeal is covered by Serajuddin & Co (2023) (Ori HC). In the circumstances, the appeal and applications are dismissed.” (viii) ACIT v. Serajuddin & Co (2023) 150 taxmann.com 146 (Ori HC) dt.15-3-23, concluded that- “16. That such an approval of a superior officer cannot be a mechanical exercise has been emphasized in several decisions. Illustratively, in the context of sec142(2A) which empowers an AO to direct a special audit. The obtaining of the prior approval was held to be mandatory. Rajesh Kumar (2007) 2 SCC 181 (SC) observed as under: “58. An order of approval is also not to be mechanically granted. The same should be done having regard to the materials on record. The explanation given by the assessee, if any, would be a relevant factor. The approving

54 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 authority was required to go through it. He could have arrived at a different opinion. He in a situation of this nature could have corrected the AO if he was found to have adopted a wrong approach or posed a wrong que unto himself. He could have been asked to complete the process of the assessment within the specified time so as to save the Revenue from suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/ or the entries made therein. While exercising its power, the AO has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief CIT or the CIT, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given.”

18. The contention of the Revenue in those cases that the non-compliance of the said requirement does not entail civil consequences was negatived. Reiterating the view expressed in Rajesh Kumar, the SC in Sahara India (Firm) Luck held as under: “29. In Rajesh Kumar (2007) 2 SCC 181 it has been held that in view of sec 136, proceedings before an AO are deemed to be judicial proceedings. Sec136, stipulates that any proceeding before an IT Authority shall be deemed to be judicial proceedings within the meaning of sec 193 and 228 of IPC, 1860 and also for the purpose of sec196 of IPC and every IT Authority is a court for the purpose of sec195 of Code of Criminal Procedure, 1973. Though having regard to the language of the provision, we have some reservations on the said view expressed in Rajesh Kumar‟s case, but having held that when civil consequences ensue, no distinction between quasi judicial and administrative order survives, we deem it unnecessary to dilate on the scope of sec136. It is the civil consequence which obliterates the distinction between quasi judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away. Therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see: Maneka Gandhi (1978) 1 SCC 248 and SL Kapoor v. Jagmohan (1980) 4 SCC 379).

20. The non-compliance of the requirement was held to have vitiated the notice for reopening of the assessment. Likewise, in Syfonia Tradelinks P Ltd

55 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 (2021) (Del HC) the Del HC disapproved of the rubber stamping by the superior officer of the reasons furnished by the AO for issuance of the sanction.

25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of sec153D and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Addl.CIT resulting in vitiating the assessment orders themselves. (ix) SVP Southwest Industries Ltd v. DCIT (2024) (Mum-Trib) dt.30-4-24; Mum/ 2022, which concluded as under: “39. Thus, the approval granted by the ld Addl.CIT is identically worded as approval considered by Seerajuddin & Co (2023) 150 taxmann.com 146 (Ori HC) as per para No.22 of that decision, where there was not even a token mention of the draft orders having been pursued by the Addl.CIT. The letter simply grants approval. The bare minimum requirement of the approving authority having to indicate what thought process involved is also missing in the aforementioned approval order.

47. We are not on the issue that how the ld approving authority would approve all such orders on one day on 26-2-21 because it may be possible for a person to approve all such orders if he is in know of things since the stage of commencement of the assessment proceedings. However, we are unable to understand and appreciate the situation where the glaring mistakes in the assessment order as stated above and also fact of approval with approval No. and date of approval is mentioned in the draft assessment order itself which is sent for approval of the approving authority. This itself

56 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 forces us to state that all such approval granted u/s153D by the approving authority in all these appeals are without application of mind. Neither the interest of revenue, nor the principle of fair play and natural justice were taken care of while approving draft orders of the AO.

48. In view of above cumulative facts and respectfully following the decision of the Hon‟ble Orissa and Allahabad HC as well as the decision of the coordinate benches placed in PB No.4, we hold that the approval granted u/s153D in assessment orders in all such appeals are without application of mind and therefore, the assessment made by the ld AO are quashed.

49. Thus, Gr.No.1 in appeal of the assessee is allowed in all these 34 appeals filed by the assessee holding that approval granted u/s153D is without application of mind and hence, the assessment orders are annulled.” (x) Subhash Bhawnani v. DCIT (2023) 37 NYPTTJ 807 (Indore-Trib) dt.25-5-23, to 40/Ind/2020; AY12-13, 16-17 & 17-18, held that- “9. … Thus, ld AR contested, there is no recording of satisfaction by the ld Addl.CIT in the impugned approval order as to whether the assessment records/ assessment folders/ files/ seized materials or any incriminating documents or other connected documents and papers/ various statements recorded u/s132(4) and sec131(1A) of the assessee or any other person/ appraisal report of the Investigation Wing of the Department/ materials on hand with the Department at the time of initiation of search or material evidences gathered were placed for its verification and the same were duly verified and/or examined by him as mandated u/s153D. In the absence of compliance of the above mandate, the approval order dt.25-12-18 passed u/s153D becomes an empty formality without due process of law and, thus, not sustainable. The ld Addl.CIT, in fact, abdicated his statutory functions and delightfully relegated the statutory duty to his subordinate being the Dy.CIT, Central-1, Bhopal adopting a shortcut method. Merely, an undertaking given by the ld AO was considered to be adequate by the Addl.CIT to accord approval in all assessments involved without considering any merit in the proposed adjustments with reference to appraisal report, incriminating material collected in search etc.; this is nothing but an approval by way of mere mechanical exercise accepting the draft assessment-order without any independent application of mind by Addl.CIT. Ld AR submitted that the power to grant approval u/s153D is not to be exercised casually or any routine manner, rather the concerned authorities are expected to grant approval upon examination of the entire materials before approving the draft assessment-order and the authority is legally required to ensure due application of mind. Ld AR strongly contended that the Revenue does not have any evidence to show that the approval was granted with due diligence upon exercising adequate time and upon examining the materials needs to be considered in terms of the statutory provisions. Clearly, therefore, the approval is violative of the mandate of sec153D and therefore not sustainable at all. Ld AR argued that the case of assessee is fully covered by the decision of Hon‟ble Co-ordinate Bench in to 76/Ind/2020, Gurumukhdas Contractors (P) Ltd which is in fact a case of one of the group- entities part of the same search/ assessment proceeding and deal with by same AO and Addl.CIT in the same manner; therefore, the view taken therein by the Hon‟ble Co-ordinate Bench is applicable to assessee without any hesitation. Still to strengthen assessee‟s case, ld AR also relied upon the Trib, Cuttack Bench in ITA No.25 to 28/CTK/2012, Serajuddin & Co, dt.21-1- 22 where an identical issue was decided in favour of assessee and against revenue and the assessment orders passed by authorities on bad approval

57 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 u/s153D has been quashed. With these vehement submissions, ld AR prayed to quash the assessment-order passed by AO.” (xi) Mysore Finlease P Ltd (2024) (Del-Trib) dt.10-1-24, del/2019 11-12, held as under: “8. Per contra, the ld DR vehemently argued that the role of Jt.CIT, Cen- Range is totally different from the role of a Jt.CIT in the normal range. He argued that in a Cen-Range, the Jt.CIT is involved in the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing and is involved with the ld AO from time to time while issuing various questionnaires to the assessee. The Jt.CIT in Cen-Range also examine the seized documents in detail immediately after receipt of the appraisal report and provides able assistance to the ld AO about the interpretation of the said seized documents while issuing questionnaires to assessee, examining the replies filed by the assessee and drawing conclusions thereon. Hence, it is very easy for the Jt.CIT to grant approval of the draft assessment order on the same day since he is involved with the assessment proceedings right from the inception. Accordingly, he argued that the objection raised by the ld AR has no force. Further, the ld DR vehemently argued that bare reading of sec153D talks only about existence of approval from the Jt.CIT. There is no mention of application of mind on the part of the Jt.CIT or the approving authority in the said sec. The expression „application of mind‟ is only provided by the Judicial decisions and not provided in the statute. Hence, the ld DR argued that literal interpretation is to be given to the sec153D which does not provide for application of mind of the approving authority and hence, any other interpretation contrary to the same would only result in re-writing the law.

10. Let us now examine whether in the aforesaid background of the scheme, whether the approval in terms of sec153D has been granted by the Jt.CIT in a judicious way after due application of mind or not, in the instant case.

11. We have gone through the approval granted by the Jt.CIT on the date mentioned in the table hereinabove u/s153D. The said approval letter clearly states that a letter dt.29-12-17 was filed by the ld AO before the Jt.CIT seeking approval of draft assessment order u/s153D. The Jt.CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 29-12-17 for various AYs in the case of various assessees. In any event, whether is it humanly possible for an approving authority like the Jt.CIT to grant judicious approval u/s153D for 40 cases for various AYs on a single day is the subject matter of dispute before us. Further, sec153D provides that approval has to be granted for each of the AY whereas, in the instant case, the Jt.CIT has granted a single approval for all AYs put together. We find that the reliance placed by the ld AR on Serajuddin & Co (Ori HC) dt.15-3-23 is well founded. The que before the Hon‟ble Ori HC is as under:- “Whether on the facts and circumstances the ITAT was correct in holding that the approving authority has not applied his mind for giving approval u/s153D?”

15. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in holding that the approval u/s153D has been granted by the Jt.CIT in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Such an approval has neither been mandated by the provisions nor endorsed by the Hon‟ble Ori HC; Hon‟ble Alld HC and Hon‟ble Jurisdictional HC (Del HC) referred to supra. Hence, we find lot of force in the arguments advanced by the ld AR in support of the addl.grs raised for all AYs u/c before us for all the assessees. Accordingly, the Addl.grs raised by all the assessees for all the AYs u/c are hereby allowed.” (xii) Inder International v. ACIT (2021) 213 TTJ 251 (Chd-Trib) dt.7-6-21, Chd/ 2018; AY16-17, held that-

59 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 “15. ….In the present case before us, we noted that the Addl.CIT did not mention anything in the approval memo towards his process of deriving satisfaction so as to exhibit his due application of mind. We noted that the Addl.CIT merely approved the letter and the relevant para is noted in above paras. We noted that the relevant para of the above approval letter merely says that “Necessary statutory approval u/s153D is given to pass the above assessment order as such. Assessment record in this case is returned herewith...” which clearly proves that the Addl.CIT had routinely given approval to the AO to pass the order only on the basis of contents mentioned in the draft assessment order without any application of mind and seized materials were not looked at because that was not available before him at the time of granting of approval to the draft assessment order and other enquiry and examination was never carried out. From the said approval, it can be easily inferred that the said order was approved solely relying upon the implied undertaking obtained from the AO in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination/ investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his statutory functions and delightfully relegated his statutory duty to the subordinate AO, whose action the Addl.CIT was supposed to supervise. The Addl.CIT in short appears to have adopted a short-cut in the matter and an undertaking from AO was considered adequate by him to accord approval in all assessments involved. Manifestly, the Addl.CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Addl.CIT, Central has rendered the approval to be a mere formality and cannot be considered as actual approval in law. Hence, we quash the assessment framed u/s153A on this Addl. Gr. alone.

16. Needless to say that we need not adjudicate the Gr.s raised on merits by the assessee as we have already quashed the assessment on jurisdictional issue that the statutory approval granted u/s153D is without application of mind by the Addl.CIT.” (xiii) Arch Pharmalabs Ltd v. ACIT (2021) (Mum-Trib) dt.7-4-21, 7597/Mum/ 2012, held as under: “11.5. At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/ her process of deriving satisfaction so as to exhibit his/ her due application of mind. We may observe that Para 2 of the above approval letter merely says that “Approval is hereby accorded u/s153D to complete assessments u/s143(3) rws.153A in the following case on the basis of draft assessment orders...” which clearly proves that the Addl.CIT had routinely given approval to the AO to pass the order only on the basis of contents mentioned in the draft assessment order without any application of mind and seized materials were not looked at and/ or other enquiry and examination was never carried out. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the AO in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination/ investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/ her statutory functions and delightfully relegated his/ her statutory duty to the subordinate AO, whose action the Addl.CIT, was supposed to supervise. The addl.CIT in short

60 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Addl.CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Addl.CIT, Central has rendered the Approval to be a mere formality and can not be countenanced in law. 11.6. There are several decisions, which supports the view that approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s153D. Such perfunctory approval has no legal sanctity in the eyes of the law. Shreelekha Damani (Mum-Trib) approved by jurisdictional HC subsequently as reported in 307 CTR 218 affirms the plea of the assessee. 11.7. Very recently, Sanjay Duggal (Del-Trib) dt.19-1-21 has also echoed the same view after a detailed analysis of similar facts and also expressed a discordant note on such mechanical exercise of responsibility placed on designated authority u/s153D. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the plea raised by the assessee against maintainability of hollow approval u/s153D totally devoid of any application of mind. The approval so granted under the shelter of sec153D, does not, in our view, pass the test of legitimacy. The Assessment orders of various AYs as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments relatable to search in captioned appeals are non est and a nullity and hence, quashed.” (xiv) Sanjay Duggal v. ACIT (2021) (Del-Trib) dt.19-1-21, held as under: “11.5. Dharampal Satyapal Ltd (2019) (Gau HC) 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 coexist 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 u/s 153A or 153C, the Jt.CIT (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 AO during the course of assessment proceedings. Therefore, necessarily at the time of grant of approval of the assessment made by the AO, the Jt.CIT is required to verify the above issues, apply his mind that whether they have been properly appreciated by the AO while framing the assessment orders or not. The Jt.CIT is also required to verify whether the required procedure have been followed by the AO 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 AO to pass assessment order or reassessment order in search cases, then, it is the duty of the Jt.CIT to exercise such powers by applying his judicious mind. We are 61 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 of the view that the obligation of the approval of the Approving Authority is of 2 folds; on one hand, he has to apply his mind to secure in build for the Department against any omission or negligence by the AO in taxing right income in the hands of right person and in right AY and on the other hand, Jt.CIT 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 AO creating baseless tax liability on the assessee and thus, the Jt.CIT has to discharge his duty as per Law. Thus, granting approval u/s153D is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the Jt.CIT on the application of mind and this exercise should be discernable from the Orders of the approval u/s153D. 11.7. In the following Orders of various Benches of the Trib, it is held that while granting approval u/s153D, the Jt.CIT shall have to peruse all the incriminating material and other seized material on record and proper procedure if have been adopted by the AO and appraisal report as well. The Jt.CIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in Law. We may refer to such Orders as under: 13. In the present cases various approvals were granted by the Jt.CIT, Central Range-1, New Delhi, and forwarding letter of the AO are placed on record in all the cases. In all the cases as per the forwarding letter of the AO only assessment records were forwarded to the Jt.CIT, Range-1, New Delhi at the time of granting approval. Therefore, it is evident that the Jt.CIT being the Approving Authority was neither having seized material nor the appraisal report or other material at the time of granting approval. In the approval u/s153D there is a reference to the AO letter only. There is no reference to the seized material or record or notice u/s142 and reply of the assessee and if procedure for its inspection or perusal is there. There is no material considered by the Jt.CIT. Ld Counsel for the assessee has pointed out that assessee has suffered serious prejudice because of non-application of mind on the part of the Jt.CIT while granting approval u/s153D because the AO has made several double or triple additions on account of share capital, investments, FDRs purchased, loans, capital gains because these were created out of bank deposits made in the bank accounts of the assessees after the money transferred from the account of M/s. Alfa India. No telescopic benefit have been given as it was out of the source deposited in the bank accounts of the assessees. Netting of the money left have also not been considered and even the ld CIT(A) without considering the same has enhanced the assessments in some of the cases of the assessee. No steps have been taken by the AO for rectifying their mistakes when assessee filed petition for rectification u/s154. Thus, there was inconsistencies and double additions made by the AO in various AYs. It may also be noted that in the present case the facts stated in the impugned orders are that the sales of liquor are made by M/s. JIL to M/s. MAPSCO and Singla Group of cases and that part of the sale proceeds have been transferred to the account of M/s.Alfa India instead of paying the entire sale consideration to M/s.JIL. Thus, the nature of total receipt/ addition is the sale proceeds originally to be received by M/s.JIL. If the part of the sale proceeds which were to be received by M/s. JIL and when transferred to the account of M/s.Alfa India Ltd., the entire part sale receipts cannot be the income either in the hands of M/s. JIL or M/s. Alfa India or the assessees who may be the conduit as argued before us. The AO has failed to consider the concept of real income for the purpose of determining the correct tax liability and correct determination of income of the assessees. We rely upon Godhra Electricity Co Ltd (SC). This fact is also not verified and considered by the Jt.CIT while granting approval u/s153D. It may be noted here that entire sale proceeds when cannot be added in the hands of M/s JIL as income

62 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 which is also not done in the case of M/s. JIL, rightly so, how the same sale proceeds could be added as income in the hands of assessees u/s68 is not understandable. Thus, the Approving Authority without application of mind and in a most mechanical and technical manner granted approval u/s153D even without reference to any reason in the Order u/s153D. We, even, otherwise failed to understand that in search cases how an approval can be granted to an AY which is required to be based only on incriminating material without verification of those material and its reference in the appraisal report. The Jt.CIT even in approval did not mention if assessment record is seen by him.

16. In some of the cases the approval was granted on the date the request was made for approval by the AO. In all those cases merely draft assessment order and the assessment folders were available with the AO. For example in the case of Shri Sanjay Duggal family, in the case of Ms. Kritika Talwar on the same date the approval was granted and that too merely on the basis of the assessment records and draft assessment order and in most of the cases approval has been granted either on the same day or on the next day. Further, there is no reference that seized material as well as appraisal report have been verified by the Jt.CIT. It is not clarified whether assessment record is also seen by the Jt.CIT. It may also be noted that even in some of the Talwar group of cases approval is granted prior to 30-12-17 but in main cases of Shri Sanjay Duggal and Rajnish Talwar the approval is granted on 30-12-17. Therefore, without granting approval in the main cases how the Jt.CIT satisfied himself with the assessment orders in group cases which is also not explained. Therefore, the approval granted by the Jt.CIT in all the cases are merely technical approval just to complete the formality and without application of mind as neither there was an examination of the seized documents and the relevance of various observations made by the Investigation Wing in appraisal report. Thus, we hold the approval u/s153D have been granted without application of mind and is invalid, bad in Law and is liable to be quashed.” (i) SMW Ispat (P) Ltd v. ACIT (2024) 163 taxmann.com 119 (Pune-Trib) held as under:

63 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 “15. Heard both the parties and perused the material available on record. Coming to the main contention of non-application of mind by the approving authority. The ld AR placed reliance primarily on Serajuddin & Co (2023) (Ori HC). The relevant portion of the said judgment is reproduced here-in-below for ready reference: “22. As rightly pointed out by ld counsel for the assessee there is not even a token mention of the draft orders having been perused by the Addl.CIT. 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 order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere “rubber stamping” of the letter seeking sanction by using similar words like „see‟ or „approved‟ will not satisfy the requirement of the law.

64 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

17. We find the Department of Revenue filed SLP against the decision of Hon‟ble HC of Orissa in the case of M/s. Serajuddin & Co. before the Hon‟ble SC. The Hon‟ble SC was pleased to dismiss the SLP © Diary No. 44989/2023. The relevant decision is reproduced as under: “ACIT v. M/s.Serajuddin And Co. Date: 28-11-23 UPON hearing the counsel the Court made the following ORDER Delay condoned. Having regard to facts and circumstances of the case, we are not inclined to interfere in the matter. The SLP is dismissed. Pending application(s) shall stand disposed of.”

18. On careful reading of the above, we note that the Hon‟ble SC declined to interfere in the finding recorded by Serajuddin & Co (Ori HC) holding that the approval u/s153BD is mandatory requirement and such approval is not meant to be given mechanically, further, approval granted mechanically without application of mind vitiates the assessment orders. 22. The ld AR placed on record S Goyanka Lime & Chemicals Ltd (2015) (MP). On a careful examination of the same, we note that in pursuance of search, the assessments processed u/s143(1) were reopened by issuing a notice u/s148 on the basis of certain reasons recorded. The assessee objected to the same before the AO, which was rejected. The AO completed the assessment u/s143(3) rws.147. The CIT(A) quashed the said reassessment by holding the action of Jt.CIT in according sanction was without application of mind which was done in a mechanical manner. The ITAT upheld the order of CIT(A). The Hon‟ble MP HC dismissed the appeal of Revenue by observing no que of law involved warranting reconsideration. The relevant extract of the said decision as under for ready reference : “7. We have considered the rival contentions and we find that while according sanction, the Jt.CIT, IT has only recorded so “Yes, I am satisfied”. In Arjun Singh, the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- “The CIT acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format “Yes, I am satisfied” which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the CIT did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.” 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Jt.CIT, which accords sanction for issuing notice u/s148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to sec151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue.

65 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

10. In view of the concurrent findings recorded by the ld appellate authorities and the law laid down in Arjun Singh (MP HC), we see no que of law involved in the matter, warranting reconsideration.

e) Ground no.3, in the appeal being ITA No.112/Nag./2024, A.Y. 2013-14, is allowed.”

30. Thus, the power to grant approval under section 153D is not to be exercised casually or in a routine manner, rather the concerned authorities are expected to grant approval upon examination of the entire materials before approving the draft assessment order and the authority is legally required to ensure due application of mind. We also find that the Revenue does not have any evidence to show that the approval was granted with due diligence upon exercising adequate time and upon examining the materials needs to be considered in terms of the statutory provisions. Clearly, therefore, we hold that the approval so granted is violative of the mandate of section 153D and, therefore, not sustainable in the eyes of law. Consequently, the assessment made for the A.Y. 2014–15 to 2020–21, is held to be invalid and bad–in–law, hence the same is hereby quashed for want of valid assumption of jurisdiction in the absence of valid and proper statutory approval under section 153D by the Addl. CIT.

67 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 Indian Airlines & Others (AIR SCW 6213), the Hon’ble Supreme Court held that approval means confirming, ratifying, assenting, and sanctioning some act or thing done by another. In the case of Manpower Group Services India Pvt. Ltd. v/s CIT (430 ITR 399), the Hon’ble Delhi High Court has held that approval means to agree with the full knowledge of the contents of what is approved and pronounce it as good. In the case of Dharampal Satyapal Ltd. v/s Union of India (2018) 6 GSTROL 351, it has been observed by the Hon’ble Gauhati High Court that grant of approval means due application of mind on the subject matter approved, which satisfies all the legal and procedural requirements. In the context of the Land Acquisition Act, 1894, the Hon’le Supreme Court in Vijayadevi Naval Kishore Bhartia v/s Land Acquisition Officer, (2003) 5 SCC 83, has drawn the distinction between the Approving Authority and the appellate authority. It has observed that the Collector, after assessing the land, makes an award for its acquisition and works out compensation payable under section 11 of the said Act, and his award is sent to the Commissioner for his approval as per proviso to section 11(1) of the said Act. It has further been observed that the said Act has not conferred an appellate jurisdiction on the Commissioner under the proviso to section 11(1) of that Act, but the appropriate government exercises the appellate power. On the same logic, there is a distinction between the assessing authority and the Approving Authority. Thus, the assessing power, approving power and appellate powers are separate and distinct, and there should not be a mix-up of the said powers.

68 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

"The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence, including the transcript of the tape record, have been considered by the sanctioning authority. Consideration implies the application of the mind. The order of sanction must ex-facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority."

“It is trite that when a statute requires, a thing to be done in a certain manner, it shall be done in that manner alone and the Court would not accept it being done in some other manner.”

70 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

71 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 Authority has full knowledge about the contents of what is approved and confirmed authoritatively the order of the lower authority. It also preserves the institutional legitimacy and “adjudicative integrity”.

72 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 Supreme Court deals with the issue of sanction/approval, in which the Hon’ble Court emphasises that the power to sanction also includes the power of “not to sanction”, in case the Approving Authority or the sanctioning authority does not get to apply mind to the relevant documents necessary for granting the approval. Vide Para–18 & 19, Hon’ble Supreme Court held as under:– “18. The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence have been considered by the sanctioning authority. Consideration implies application of mind. The order of sanction must ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority.

73 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 the term “Approval” for the purpose of section 153D connotes conscious, diligent and objective appraisal of facts, material on record and its findings by assessing officer in the form of ‘Draft Assessment order’, by applying judicious mind and skill in accordance with law by superior authority, encompassing dominate purpose test. The proposition is no more res-integra that approval under section 153D of the Act is not procedural requirement but mandatory. It is trite that where the Assessing Officer is required to do a particular act in a particular manner, he cannot bypass the mandate of law and adopt a different approach. The supervisory power mandated under section 153D of the Act in case of search assessment could not be bypassed. The noncompliance of provisions of section 153D of the Act are a substantive defect and thus not curable. Such absence of approval has rendered the assessment order passed under section 153A of the Act as invalid and bad in law at the threshold.

"We find that only draft assessment orders were sent to JCIT without any assessment or search record. The approvals establishes that approving authority has granted the approvals, without reasons or depicting having applied an active mind to the issue involved and the material relied by the AO, but by merely mentioning "Following draft assessment orders are being approved", the impugned approval is granted. Now more particularly in the present set of facts where substantive additions were made in the hands of respondent and protective assessment were made in the hands of its Director respondent, had the competent authority been 74 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 even aware of the fact of the protective and substantive assessments being made, then it was more likely to have been granted in one letter. Rather if the sequence number of letters granting approval is considered the approval was first granted in case of protective addition and then of substantive addition in case of the company. This certainly shows that unmindful of nature of material relied and nature of additions the approvals have been mechanically granted by the JCIT. Whatever attempt is now being made by the department to fill in the lacuna by filing letters of then JCIT who granted the approval is doing more damage to the case of the department because when we take into consideration the letter of then JCIT, with the submission, we find that the said JCIT seems to be still under impression that grant of approval is mere formality and for that reasons the JCIT has stated in this letter that, "It is further noted that Approval letter U/s 153D is 'only a formal' culmination of application of mind, which takes place throughout the assessment period." [Emphasis supplied] On the contrary law as stands crystallized is that the approval letter should be speaking one and show that approval was granted by application of mind. There is inherent fallacy in the belief of JCIT as mentioned in this letter that "there is no requirement in law creating any evidence for discussions before granting the approval u/s 153D." On the contrary this bench is of firm view that not only as quasi-judicial authority but even in administrative capacity, if an approval is to be granted under a statute for initiating any quasi judicial proceedings then such approval should be self contained piece of evidence that due process of law was followed in grant of approval. Which certainly is not the case here. Thus, approvals granted in case of both the assessee to be vitiated and deserve to be quashed - Decided in favour of assessee.”

75 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21

76 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 the assessment order void ab initio. It is questionable why such an important fact was not mentioned in the Affidavits filed by learned officers of the Income Tax Department.

77 Umesh Sadashiv Thakre A.Y. 2016–17, 2017–18, 2018–19, 2019–20 & 2020–21 quashed and the appeals filed by the assessee for all the years under consideration are allowed. Once the assessments are quashed, the appeals of the Department rendered infructuous and hence the same are also dismissed.

Order pronounced in the open Court on 09/06/2025