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Facts
The assessee's appeals are against the orders of the Commissioner of Income-tax (Appeals). The core issue revolves around an additional ground raised by the assessee concerning the validity of the approval granted under section 153D of the Income Tax Act, which the assessee claims was mechanical and without application of mind. A search action was conducted on 26.10.2016, and subsequently, notices under section 153C and 143(2) were issued to the assessee.
Held
The Tribunal held that the approval granted under section 153D of the Act was mechanical and without application of mind, as a consolidated approval was given for multiple assessment years in a single order. This renders the approval invalid and consequently quashes the assessment order passed based on it. The Tribunal relied on decisions of the Hon'ble Karnataka High Court and Hon'ble Supreme Court.
Key Issues
Whether the consolidated approval granted under section 153D of the Income Tax Act, 1961, for multiple assessment years, without proper application of mind, is valid and whether the consequent assessment proceedings are vitiated.
Sections Cited
153D, 153C, 143(2), 142(1)
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Income Tax Appellate Tribunal, ‘PATNA’ BENCH, PATNA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
O R D E R Per Rajesh Kumar, AM:
Theseare appeals preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals), Patna-3(hereinafter referred to as the “Ld. CIT(A)”] dated 31.01.2022for the AYs 2011-12 to 2016-17. As the facts and circumstances are similar in all the appeals and also these relate to same assessee, therefore they are being decided by this common order. Hence, we will take the facts from A.Y. 2011-12 and decide the issue.
At the time of hearing, the ld. Counsel for the assessee raised additional ground which are extracted as under: -
“1. That on the facts and circumstances of the case, the order of the AO is void ab- initio as the same has been passed on the basis of mechanical and consolidated approval of 153D for all years of search. 2. That on the facts and in the circumstances of the case of the case proceedings- initiated u/s 153C of the Income Tax Act, 1961 is bad in law.”
The ld. DR on the other hand submitted that the issue was not raised before either of authorities below and therefore, may be restored to any of the authorities below for adjudication.
After hearing the rival contentions and perusing the materials available on record, we find that the issue is purely legal issue which goes to the root of the matter. Further, we note that no verification of facts is required to be done from any quarter and accordingly, respectfully following the decisions of Hon'ble Apex Court in the case of Jute Corporation of India Ltd. Vs CIT (supra) and National Thermal Power Co. Ltd v. CIT (supra), we admit the appeal of the assessee for adjudication.
The issue raised in additional ground is against the mechanical approval granted u/s 153D of the Act for all the years by Jt. Commissioner of Income Tax, Central circle-1, on the drat assessments thereby rendering the approval u/s 153D of the Act as invalid and so the consequential proceedings based thereupon.
The facts in brief are that a search action was conducted on 26.10.2016 in the residential and business premises of Satyam and Shivam group of trust and allied group at Patna. The assessee, Smt.
In the appellate proceedings, the appeal was dismissed by upholding the order of ld. Assessing Officer. Aggrieved with the order of the ld. CIT (A), the assessee is in appeal before us.
After hearing the rival contentions and perusing the materials available on record, including the approval granted u/s 153D of the Act dated 27.12.2018, on the draft assessment order, we find that consolidated approval has been given for A.Y. 2011-12 to 2017-18, in case of two assessee namely Shri Sushil Kumar, HUF and Smt. Anita Devi (the assessee before us). In our opinion the said approval is mechanical and without application of mind by the approving authority and therefore not a valid approval and therefore, all the consequential proceedings including the assessment framed in accordance with the said approval is invalid and nullity. For the sake of ready reference, the said approval is extracted below: -
The case of the assessee find support from the decision of Hon'ble Hon’ble Karnataka High Court in the case of Sunil Kumar Sharma, reported in [2024] 469 ITR 197 (Karnataka)/ [2024] 159 taxmann.com 179 (Karnataka) where it had been categorically held that, “the satisfaction note is required to be recorded under section 153C of the Act for each assessment year and hence, a consolidated
Further, satisfaction note is required to be recorded under section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant/Revenue.
The question as regards whether in an intra court appeal, a Division Bench could remit a writ petition in the matter of moulding the relief, it is relevant to refer to an Apex Court decision dated 31-7-2018 rendered in the case of Roma Sonkar v. Madhya Pradesh State Public Service Commission [Civil Appeal Nos. 7400-7401 of 2018, dated 31-7-2018]. The relevant paragraph 3 of the said order reads thus: "3. We have very serious reservations whether the Division Bench in an intra court appeal could have remitted a writ petition in the matter of moulding the relief. It is the exercise of jurisdiction of the High Court under Article 226 of the Constitution of India. The learned Single Judge as well as the Division Bench exercised the same jurisdiction. Only to avoid inconvenience to the litigants, another tier of screening by the Division Bench is provided in terms of the power of the High Court but that does not mean that the Single Judge is subordinate to the Division Bench. Being a writ proceeding, the Division Bench was called upon, in the intra court appeal, primarily and mostly to consider the correctness or otherwise of the view taken by the learned Single Judge. Hence, in our view, the Division Bench needs to consider the appeal(s) on merits by deciding on the correctness of the judgment of the learned Single Judge, instead of remitting the matter to the learned Single Judge."
In the totality of circumstances, and also on dwelling in detail with the materials, it reveals that the learned Single Judge has considered all the points and has gone through the reliances facilitated on both sides and has rendered the impugned order, which has been challenged by filing the present appeals. The grounds urged in the appeals preferred by the appellant/Revenue, do not have any substance and the impugned order rendered by the learned Single Judge do not JYOTI suffer from any infirmity and further, no warranting circumstances arise for interference. Consequently, these appeals deserve to be rejected as being devoid of merits.”
Ld. AR further placed reliance on the decision of Jurisdictional High Court in the case of Serajuddin& Co., reported in [2023] 150 taxmann.com 146 (Orissa)/[2023] 292 Taxman 566 (Orissa)/[2023] 454 ITR 312 (Orissa), wherein on similar finding the Hon’ble Jurisdictional High Court has held that, “approval having been granted mechanically without application of mind by Additional Commissioner resulting in vitiating assessment orders themselves”. It was the submission that the said decision of the Hon’ble Jurisdictional High Court has also been upheld by the Hon’ble Supreme Court, reported in [2024] 163 taxmann.com 118 (SC)/[2024] 299 Taxman 448 (SC).
In reply, ld. CIT-DR submitted that the ld. JCIT has examined all the assessment records and has given the approval. It was the submission that the order of the ld. AO and that of the ld. CIT(A) are liable to be upheld.
We have considered the rival submissions. A perusal of the approval of the draft assessment orders granted shows that multiple approvals have been granted by ld. JCIT Range-1, Patna dated 27.12.2018 in a single order. On this issue, respectfully following the decision of the Hon’ble Karnataka High Court in the case of Sunil Kumar Sharma, referred to supra, which is also approved by the Hon’ble Supreme
A further perusal of the approval granted by the ld. JCIT shows that the approval has been granted in a mechanical manner and without application of mind. Consequently, respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of Serajuddin& Co, referred to supra, which has also been upheld by the Hon’ble Supreme Court, we hold that the approval granted by the ld. JCIT Range-1, Patna dated 27.12.2018 in the case of the assessee is invalid and is accordingly quashed as unsustainable. Consequently, the assessment order passed in consequence to the approval granted u/s.153D of the Act, also stands quashed. Thus, the appeal of the assessee is allowed. to 22/PAT/2022 for A.Y. 2012-13 to 2016-17, is similar to one as decided by us in A.Y. 2011-12. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee in to 22/PAT/2022 as well. Hence, the appeals of the assessee are allowed.
In the result, all the appeals of the assessee are allowed.
Order pronounced in the open court on 29.07.2025.