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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeals are filed at the instance of assessee against the order of Commissioner of Income Tax (Appeal-1), Raipur (in short “Ld. CIT(A)”), u/s 250 of the Income Tax Act, 1961 (in short “The Act”) dated 01.03.2016, for the Assessment Year 2011-12 & 2012-13, which in turn arises from the order passed u/s 153A r.w.s. 143(3) of the Act, dated 07.03.2014 by Dy, Commissioner of Income Tax, Central Circle, Raipur (in short “The Ld. AO”).
& 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur 2. The final revised grounds of appeal raised / pressed by the assessee in present appeals are extracted as under: ITA 225/RPR/2016 for AY 2011
12. Revised Gr. No. 1:
1. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 6,25,000 on substantive basis, on the count of on money payment on purchase of house (i.e., D-31, Tikrapara) without bringing any material evidence on record for such 'on money' payment by the assessee; substantive addition of Rs. 6,25,000 is unjustified and is liable to be deleted.
Revised Gr. No. 2:
2. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 16,320 on the count of undisclosed commission income on hundies found, while the impugned hundies are unexecuted, even without bringing any material evidence on record for such earning of commission income on unexecuted hundies; more so, it is covered by the additional income decaled u/s 132(4)/ offered for taxation of Rs. 3,00,000 in the ROI filed; addition of Rs. 16,320 is unjustified and is liable to be deleted.
Revised Gr. No. 3:
3. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 11,56,300 u/s 69D on the count of hundies found, wherein name of lenders appeared and name of borrowers are absent; merely on presumption that the assessee was the actual borrower on these hundies found; in absence of any material evidence brought on record for such borrowings by the assessee; addition of Rs. 11,56,300 is unjustified and is liable to be deleted.
Revised Gr. No. 4:
4. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 29,525 u/s 69 on the count of hundies found, wherein name of borrowers appeared and name of lenders are absent; merely on presumption that the assessee was the actual lender on these hundies found; in absence of any material evidence brought on record for such lending by the assessee; more so, it is covered by the additional income decaled u/s 132(4)/ offered for taxation of Rs. 3,00,000 in the ROI filed; addition of Rs. 29,525 is unjustified and is liable to be deleted.
5. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 8,50,000 on the count of hundies found, wherein name of borrowers & lenders are absent; merely on presumption that the assessee was having undisclosed income; in absence of any material evidence brought on record for s earning of undisclosed income by the assessee; addition of Rs. 8,50,000 is unjustified and is liable to be deleted.
Submitted, for judicious consideration.
Revised Additional Gr. No. 1 “1. On the facts and circumstances of the case and in law, approval u/s 153D dt. 7- 3-14 by Addl. CIT, is invalid as it is granted for assessed income of Rs.31,38,200 (which includes Rs.20,52,145 on account of hundis for AY 11-12), while, it is evident by letter dt. 6-3-14 by Addl. CIT that he was of the view that undisclosed income of Rs. 1,13,75,000 on account of 58 hundis as per 'Appraisal Report' for AY 06-07 to AY 12-13 requires to be made in the hands of assessee or borrower or lender; approval granted u/s153D for Rs.20,52,145 on account of hundis, is baseless, on confused state of mind, without there being any material for such mechanical approval without application of mind merely a formality; consequential assessment made u/s144/143(3) rws.153A would be invalid & is liable to be quashed.”
ITA 226/RPR/2016 for AY 2012-13 Revised Gr. No. 1:
1. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 2,99,500 on the count of on money payment on purchase of shop (i.e., 338, Progressive Point) without bringing any material evidence on record for such 'on money' payment by the assessee; addition of Rs. 2,99,500 is unjustified and is liable to be deleted.
2. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 24,420 on the count of undisclosed commission income on hundis found, while the impugned hundis are unexecuted, even without bringing any material evidence on record for such earning of commission income on unexecuted hundis; more so, it is covered by the additional income decaled u/s 132(4)/ offered for taxation of Rs. 16,25,000 in the ROI filed; addition of Rs. 24,420 is unjustified and is liable to be deleted.
3. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 2,26,81,300 u/s 69D on the count of hundis found, wherein name of lenders appeared and name of borrowers are absent; merely on presumption that the assessee was the actual borrower on these hundis found; in absence of any material evidence brought on record for such borrowings by the assessee; addition of Rs. 2,26,81,300 is unjustified and is liable to be deleted.
4. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 2,46,310 u/s 69 on the count of hundis found, wherein name of borrowers appeared and name of lenders are absent; merely on presumption that the assessee was the actual lender on these hundis found; in absence of any material evidence brought on record for such lending by the assessee; more so, it is covered by the additional income decaled u/s 132(4)/ offered for taxation of Rs. 16,25,000 in the ROI filed; addition of Rs. 2,46,310 is unjustified and is liable to be deleted.
“5. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs. 63,44,725 on the count of hundis found, wherein name of borrowers & lenders are absent; merely on presumption that the assessee was having undisclosed income; in absence of any material evidence brought on record for such earning of undisclosed income by the assessee; addition of Rs. 63,44,725 is unjustified and is liable to be deleted.” Revised Additional Ground No. 1 “1. On the facts and circumstances of the case and in law, approval u/s 153D dt. 7- 3-14 by Addl. CIT, is invalid as it is granted for assessed income of Rs.3,14,06,830 (which includes Rs.2,92,96,755 on account of hundis for AY 12-13), while, it is evident by letter dt. 6-3-14 by Addl. CIT that he was of the view that undisclosed income of Rs. 1,13,75,000 on account of 58 hundis as per 'Appraisal Report' for AY 06-07 to AY 12-13 requires to be made in the hands of assessee or borrower or lender; approval granted u/s153D for Rs.2,92,96,755 on account of hundis, is baseless, on confused state of mind, without there being any material for such mechanical approval without application of mind merely a formality; consequential
3. Since the aforesaid appeals are filed by the same assessee, pertaining to two assessment years i.e., AY 2011-12 and 2012-13 having involved therein common issues on interconnected and identical facts, therefore, for the sake of brevity, these two appeals are taken up for adjudication together under this common order.
4. In order to deliberate on the issues raised in the present appeals, we are taking up AY 2011-12, as the lead case, wherein our observations and decisions shall apply mutatis mutandis to the other case i.e., for the AY 2012-13.
5. Facts of the lead case are culled out from the order of Ld. CIT(A), for the sake of completeness and reference: 2.1 Facts as per the assessment order as are under - The assessee is in the business of hundies and derives income from interest and commission. A search was conducted on the business and residential premises of the assessee. During the search operation various books of accounts, documents, loose papers etc. were seized and impounded. Subsequently, photocopies of the seized/impounded material were provided to the assessee.
During the course of assessment proceedings, the assessee's share of undisclosed income on account of payment of on-money for purchase of house- & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur cum-plot located at D-31, Tikrapara, Raipur works out to Rs. 250000/- for AY 2010-11 and Rs. 625000/- for AY 2011-12 respectively. Thus, the addition of Rs. 250000/- and Rs. 625000/- is made to the total income of the assessee. The assessee deals in hundi and derives commission therefrom. During the search & seizure action, a number of hundies related to the assessee were found.
During the assessment proceedings, the assessee was required to correlate the commission earned on these hundies with his regular books of accounts. However, the assessee was unable to do so. In absence of the assessee's explanation about as to where commission earned on such hundies has been accounted for in the books of account, the AO is left with no option but to estimate the commission earned on such hundies and make addition to the total income of the assessee considering this commission to be undisclosed.
Thus the year wise commission earned is as under:-
A. Y. Commission Rs. 2008-09 800/- 2009-10 500/- 2010-11 2560/- 2011-12 16320/- 2012-13 24420/- Thus, undisclosed commission on hundies is added to the total income of the assessee for the respective assessment year.
During the search & seizure action, a number of hundies were found from the premises of the assessee where there is only name of lender. These hundies were summarized. The year-wise summary of total amount lent hundies is as under: - Amount (Rs.) A.Y. 2008-09 75000/- 2009-10 50000/- 2010-11 350000/- 2011-12 156300/- 2012-13 22681300/- During the assessment proceeding, vide show cause notice dated 13/01/2014 the assessee was required to show cause as to why in the absence of names of borrowers why it shall not be presumed that he is the borrower in respect of these duly executed hundies. In this respect, the assessee submitted his reply on 17/01/2014. In the reply, the assessee stated that these lenders of hundies are actually potential borrowers. However, no documentary evidence in support of contentions of the assessee has been submitted. Thus, in view of the facts and circumstances of the case and particularly the fact that these hundies were found executed on the date of search the name of the borrower is neither available in the seized records nor has the assessee been able to supply the same during the course of assessment proceedings, it is established and held that the assessee is the borrower in respect of these hundies. The borrowings are covered u/s 69D of the Act. Therefore, an addition of Rs. 11,56,300/- is made.
During the search & action a number of hundies were found from the premises of the assessee where there is only name of borrower. These hundies were summarized. During the assessment proceeding, vide show cause notice dated 13/01/2014 the assessee was required to show cause as to why in the absence of names of lenders why it shall not be presumed that he is the lender in respect of these duly executed hundies. In this respect, the assessee submitted his reply on 17/01/2014. In the reply, the assessee. stated that these hundies are not actually executed. However, no documentary evidence in support of contentions of the assessee has been submitted. Thus in view of the facts and circumstances of the case and particularly the fact that these hundies were found executed on the date of search and the name of the lender is neither available in the seized records nor has the assessee been able to supply the same during the course of assessment proceedings, it is established and held that the assessee is the borrower in respect of these hundies. The transactions are covered u/s 69D of the Act. Further, the undisclosed commission earned on such investment in is also liable to be added in the hands of the assessee. Therefore, an addition of Rs. 29,525/- is made.
During the search & seizure action, a number of hundies were found from the premises of the assessee where there is neither name of the borrower nor name of the lender. These hundies were summarized. During the assessment & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur proceeding, vide show cause notice dated 13/01/2014 the assessee was required to show cause as to why in the absence of names of borrowers and lenders why the same shall not be added to the total income. In the reply dated 17/01/2014, the assessee stated that these hundies were not actually executed. However, no documentary evidence in support of contention of the assessee has been submitted. The assessee's explanation is not accepted as these hundies contain other details such as date, period amount etc. therefore, the amount represent undisclosed Income of the assessee. Therefore, an amount of Rs. 8,50,000/- is added to the total income.
Accordingly, the assessment of the assessee was completed u/s 153A r.w.s 143(3) of the Act on 07.03.2014, with the following additions for the AY 2011-12: Sr. Description Amount of Addition No. 01 On account of payment of on-money for purchase 6,25,000/- of house-cum-plot (para 11 of the Assessment Order) 02 Income from Commission on Hundies (Para 13 of 16,320/- the Assessment Order) 03 Addition u/s 69D for Hundies on which only name 11,56,300/- of the lender was found, the assessee was therefore, treated as borrower (para 14 of the Assessment Order) 04 Addition u/s 69D for Hundies on which only name 29,525/- of the borrower was found, the assessee was therefore, treated as lender (para 15 of the Assessment Order) 05 Addition as undisclosed income of the assessee 8,50,000/- for Hundies on which neither the name of the borrower nor name of the lender was found (para 16 of the Assessment Order)
& 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur 7. Aggrieved with the aforesaid additions by the Ld. AO, the assessee carried the matter before the Ld. CIT(A), wherein the appeal of assessee was dismissed by the Ld. CIT(A) with the following observations:
2.3 Facts being as above, in this case search and seizure action was conducted on 21/03/2012 during which various assets were found some of which were seized. This included cash, jewellary and hundies. Rs 35 lakhs was declared as unaccounted income. In para no. 13.1 the AO has listed hundies found from premises of the assessee on which commission income was earned by the assessee. Total income as per this list has been Separated assessment year wise from AYs 2008-09 to 2012-13. At para- 14 hundies have been listed on which name of lenders only were mentioned. Since the assessee did not furnish information and since these hundies were available from the assessee's premises the assessee was presumed the borrower. Total amount was bifurcated assessment year wise from 2008-09 to 2012-13. At para no. 15 were listed those hundies on which only the name of borrower was mentioned and name of lender was not mentioned. The appellant claimed that these hundies were not actually executed. He had no evidence to support his contention. Therefore, the amount has been added after bifurcating assessment year-wise. In para-16 those hundies have been listed on which neither the borrower nor the lender were mentioned. Total of these hundies was at Rs. 63,44,725/- and these belong to AYs 2011-12 and 2012-13. Since no explanations were furnished by the assessee these were added to the respective years. Appellant has contended that order of the AO is erroneous on facts and in law. He should have accepted contentions of the assessee in light of the supporting documents. He has disclosed his commission income much above what the AO has added. Therefore, the addition at para-13 have led to double & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur taxation. However, there is no evidence either before the AO or before the undersigned that the income declared by the appellant includes income from hundies listed at para-13. In ground no. 5 it was contented that the addition made in para-14 is erroneous because the hundies were unexecuted and no actual transaction have been made. On these hundies name of the lender have not been mentioned. Issue date and due date as well as amount are reflected. There is no reason to believe that transactions have not been affected. In ground no-6 it has been contented that the addition made at para- 15 are erroneous. The hundies were prepared as per borrower’s requirements. However, the transactions were not done. When the name of the borrowers, amount. date of issue and due date were duly reflected on these hundies the assessee' version is not believable that these transactions did not take place. Similarly in ground no. 7 the assessee has denied that addition as per para-16 should be made since these transactions were also not affected. Assessee has no evidence to support his contention. Wherever the name of the borrowers are mentioned or wherever the names of the lenders are mentioned none of these parties have been produced to confirm the contention of the assessee. Therefore, addition made by the AO is hereby sustained and the grounds of the appellant are rejected.
Regarding the cash of Rs. 8,25,00()/- found of which the assessee's share was Rs. 5,06,000/-. No explanation was submitted before the AO to show that the amount was recorded in assessee's books. The assessee has contended that the addition would lead to double taxation. Therefore, the addition should not have been made. However, no evidence has been furnished to show that the amount has already been added either in assessee's hand or in the hands of some other persons. Therefore, the addition is hereby sustained.
3.0 The appeals are dismissed.
The decision of Ld. CIT(A) was not found acceptable by the assessee, therefore, to challenge the same, the matter is being assailed before us by way of the present appeal.
At the outset of the hearing, Ld. AR requested to take up the additional Ground No.1, submitted on 09.06.2025, which reads as under:
9.1 Apropos, the aforesaid additional ground, Ld. AR submitted that the approval granted u/s 153D in the present case is an omnibus approval, merely a ritualistic formality, rubber stamping by the authority, without application of mind and without any thoughtful process being discernible. Copy of the approval dated 07.03.2014, which is the foundation on which the sanctity of the assessment framed depends, is extracted as below:
9.2 Referring to the aforesaid copy of approval u/s 153D dated 07.03.2014, Ld. AR submitted that the issue raised herein challenging the validity of approval u/s 153D is no more res integra as the same has been decided by various courts in favour of the assessee. Ld. AR to strengthen the aforesaid contention had submitted a written synopsis quoting findings and observations on the issue by various benches of tribunal and the Hon’ble High Courts, the same is extracted as under:
9.3 Based on aforesaid exhaustive submissions, Ld. AR contented that the approval granted u/s 153D in the present case dated 07.03.2014 does not hold good in the eyes of law, on account of various infirmities, such as wrong appreciation of facts, under borrowed satisfaction, fallacious assumptions, proforma approval, non-application of mind, no comments on the subject matter of addition, granting of approval has been considered as mere formality, due process of law not followed, involvement of the Addl CIT in process of assessment is only a part of official duty which does permit to obviate the mandate of law qua the duties to be performed as an approving authority u/s 153D, the authority is obligated to independently apply his mind dehors the conclusion drawn either by Inv, wing or by the AO. With such submission, Ld. AR submitted that the approval u/s 153D granted in the present case lakes & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur compliance of the mandatory provisions of law, as held by the various courts referred to supra, therefore, the same is liable to be treated as null and void, consequently the impugned assessment proceedings vitiates and thereafter, assessment framed u/s 153A r.w.s. 143(3) dated 07.03.2014 dehors the mandatory approval u/s 153D would be bad in law, void ab intio and liable to be stuck down, on this count itself.
9.4 Per contra Ld. CIT-DR representing the revenue submitted that the contention raised by Ld. AR is not tenable in terms of a submission received from the office of PCIT-1, Raipur enclosed therewith a letter by the then Addl. CIT, at present the Addl. Director General (Admin), NADT, Nagpur (the then Addl Commissioner of Income Tax (Central), Bhopal and competent authority, who had granted the subject approval u/s 153D dated 07.03.2014), clarifying that the approval granted was with due deliberations between the concerned AO and Addl. CIT. The submission by the department on this issue is reproduced hereunder for appreciation of the facts:
& 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur 9.5 Taking support from the aforesaid submission, Ld. CIT-DR submitted that In the present case, certain clarifications were sought by the Addl. CIT (Central), Bhopal in the course of assessment proceedings, also as per report submitted by Shri Muneesh Kumar, Addl. Director General (Admn), NADT, Nagpur (the then Addl. CIT, Central, Bhopal) through the office of PCIT-1, Raipur, elaborating the proceedings, deliberations and communications within the department between him and the Ld. AO, which is evident from the report dated 01.12.2023 (submitted on 23.07.2024 with the ITAT, Raipur). Considering such facts, the contentions, raised by the Ld. AR that the approval granted was mechanical in nature, under confused state or without application of mind does not inspire any confidence. In the wake of such facts and circumstances, the impugned approval granted u/s 153D cannot be termed as invalid or without application of mind. Ld. CIT-DR further placed his reliance on the observations of Hon’ble Jurisdictional High Court of CG in TAXC No. 88 of 2024 dated 16.04.2024 in the case of Hitesh Golchha vs ACIT, Central Circle-1, Raipur, wherein Hon’ble High Court has held as under:
The order of the Assessing officer of approval (Annexure - 4) would reflect that Joint Commissioner was satisfied on the basis of the documents on record that such approval was justified. In a given case, it cannot be presumed on the mere say of the assessee that no application of mind was there while granting the approval. It is the subjective satisfaction and the language of the (Annexure - 4) would show that on the basis of the document produced before the Joint Commissioner, he was convinced of the fact that such approval would be necessary as the statue mandate.
From perusal of the language of the letter (Annexure - 4), we cannot presume that there was no application of mind as the approval need not be a detailed assessment & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur order. The presumption under Section 114 of the Evidence Act would follow when such official Act has been done in accordance with official procedure and will lead to presumption that due diligence was followed. Even otherwise, the order of the ITAT would reflect that the case of appellant was remanded back to the Assessing Officer for fresh adjudication of the issue. Further the liberty was given to the assessee to raise all such issues before the Revenue Authorities and furnish necessary information/ evidences in support of his contention. When such right has already been reserved in favour of the assessee, to raise grounds, we do not find that any prejudice has been caused and in fact the ITAT has principally accepted the contention of the appellant and in furtherance to advance the rules of natural justice, opportunity is given to appellant assessee.
9.6 In backdrop of aforesaid submissions, it was the prayer by revenue that the addl. ground raised regarding validity of approval does not hold substance to be allowed, the same therefore, is liable to be rejected.
We have considered the rival submissions, perused the material available on record and case laws referred to by both the parties. The approval u/s 153D dated 07.03.2014 in the present case is identical to the similar approval (extracted below) in the case of Sharda Steel Traders Vs. ACIT/DCIT Central Circle 2, Raipur, in – 116/RPR/2025, vide order dated 21.05.2025, wherein the issue has been decided after a thoughtful consideration to the facts and circumstances of the case in favour of the assessee, with following observations:
11. While initiating the arguments, Shri Praveen Jain, C.A. representing the assesse (in short “Ld. AR”), submitted and requested to first deliberate upon the legal / technical ground raised by the assessee i.e., ground no. 6 of the appeal which is common for all the years that the assessment was completed without obtaining proper / valid approval u/s & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur 153D. To explain the issue, Ld. AR furnished a copy of approval u/s 153D along with synopsis regarding aforesaid technical ground. The submissions of assesse are extracted hereunder for the sake of completeness and to deliberate upon the issue:
21. After a careful consideration of aforesaid facts, circumstances and material on record along with the judicial pronouncements referred to supra, we find substance in the contention raised by the Ld. AR that in absence of relevant documents i.e., assessment records and seized material, the approval granted by the approval authority with a rider that the draft assessment orders are gone through within the limited time available, thus, it cannot be said that there was due application of mind by the approving authority, as the relevant documents are not available to him, nor the revenue could establish by way of any material, evidence or submission to dislodge the said fact. The approval granted u/s 153D, therefore, can be construed as mere formality and in mechanical manner.
In consideration of aforesaid facts and circumstances, respectfully following the ratio of law laid down under various judicial pronouncements by Tribunal, Hon’ble High Courts as well as Hon’ble Apex Court (referred to supra), we, therefore, are of the considered opinion that the approval u/s 153D dated 14.03.2016 (copy extracted supra) in the subject matters before us cannot constitute a valid approval, as per the mandate and settled position of law. Consequently, the assessment completed u/s 153A / 143(3) dated 15.03.2016 on the foundation of an invalid approval are bad in law, invalid and liable to be quashed. Resultantly, the common assessment order dated 15.03.2016 stands quashed, and the impugned orders of Ld. CIT(A) assailed before us are set aside.
In the matter of Sharda Steel Traders (supra), the reliance was placed on the decision of coordinate bench of ITAT, Delhi, in the case of “E” Bench, in dated 29.04.2024 in the case of MDLR Airline (P) Ltd. vs DCIT, Central Circle-14, New Delhi, wherein the & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur identical issue regarding the validity of approval u/s 153D was decided by the bench with the following observation:
5.5 A careful reading of the approval granted u/s 153D of the Act clearly indicates that the Approving Authority has neither examined the assessment records nor the seized materials. In fact, the letter of the Assessing Officer seeking approval also makes it clear that only draft assessment orders were sent for approval without any assessment record or seized material. It is further clear that on the very same day the letter of the Assessing Officer with draft assessment orders were received, approval u/s 153D of the Act was granted by the Approving Authority. The aforesaid facts clearly reveal that the Approving Authority, while granting approval u/s 153D of the Act has acted as a mere rubber stamp. The approval granted is completely mechanical without application of mind. Thus, in our view, the approval granted u/s 153D of the Act is not in accordance with the provisions contained u/s 153D of the Act, keeping in view the ratio laid down in various judicial precedents discussed herein above. Thus, in our view, the approval granted u/s 153D of the Act is invalid. Consequently, the assessment orders passed in pursuance to such approval are also invalid. Hence, deserves to be quashed. Accordingly, we do so. The impugned orders of learned First Appellate Authority are set aside. (emphasis supplied by us)
The aforesaid decision of Tribunal was subsequently, assailed by the revenue before the Hon’ble Delhi High Court, wherein the test of validity of approval accorded by the competent authority in terms of provisions of section 153D has been discussed and the finding of tribunal has been approved. The & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur relevant observations of Hon’ble Delhi High Court in the case of MDLR Hotels Pvt. Ltd. (2024) 166 taxmann.com 327 (Del HC) dt. 30.07.2024, reported in (2024) 166 taxmann.com 327 (Del HC) dated 30.07.2024 are as under:
It is the aforesaid facts which appear to have constrained the Tribunal to observe as follows: ……………. ……………. 20. In our considered opinion, there is no whisper of any seized material sent by the Assessing Officer with his proposal requesting the approval u / s 153D of the Act. All the requests for approval are exhibited at pages 123 to 135 of the Convenience Compilation.
Even the approval granted by the Additional Commissioner of Income tax, Central Range - 2, New Delhi does not refer to any seized material/assessment records or any other documents which could suggest that the Additional Commissioner of Income tax, Central Range - 2, New Delhi has duly applied his mind before granting approvals."
Hon’ble High Court further referred to various judgments, from which the relevant portions, therein, are culled out as under: (i) Pr. CIT v. PioneerTown Planners (P.) Ltd [2024] 160 taxmann.com 652/465 ITR 356 (Delhi) /[2024 SCC OnLine Del 1685: “ & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur 17. Thus, the incidental question which emanates at this juncture is whether simply penning down "Yes" would suffice requisite satisfaction as per Section 151 of the Act. Reference can be drawn from the decision of this Court in N. C. 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. Section 151 of the Act clearly stipulates that the Commissioner of Income-tax (Appeals), 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 Commissioner of Income-tax (Appeals) 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 Income-tax Appellate Tribunal cannot be disturbed."
(ii) Chhugamal Rajpal in the case of Ess Adv. (Mauritius) S. N. C. Et Compagnie v. ACIT [2021 SCC OnLine Del 3613] “ The salient aspect which emerges out of the foregoing discussion is that the satisfaction arrived at by the prescribed authority under Section 151 of the Act must be clearly discernible from the expression used at the time of affixing its signature while according to approval for reassessment under Section 148 of the Act. The said approval cannot be granted in a mechanical manner as it acts as a linkage between the facts considered and & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur conclusion reached. In the instant case, merely appending the phrase "Yes" does not appropriately align with the mandate of Section 151 of the Act as it fails to set out any degree of satisfaction, much less an unassailable satisfaction, for the said purpose.” In view of the aforesaid, we find no justification to interfere with the view expressed by the Tribunal. No substantial question of law arises. The appeals fail and shall stand dismissed.
Adverting to the judgment of Hon’ble Chhattisgarh High Court relied upon by the Ld. CIT-DR, in the case of Hitesh Golchha (supra). We are unable to subscribe with the claim of the revenue based on aforesaid judgment that an approval u/s 153D was granted following the provisions of the said section which is further enlightened by the Hon’ble Courts. We observe that, the facts of case considered in the said judgment and the appeal before us are distinguishable. From the judgment in the case of Hitesh Golchha (supra), as per para 4, Hon’ble High Court had observed that “the Joint Commissioner was satisfied on the basis of the documents on record that such approval was justified”. Such observation clarifies that in the case of Hitesh Golchha (supra), there was no dispute about the submission of documents and records for verification to the approving authority while granting the approval u/s 153D, whereas, the facts in the instant case have a distinguishing feature, wherein there is no evidence to show that such relevant documents are submitted or made available to the & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur approving authority at the time of approving the draft assessment orders for his perusal, verification and deliberation, therefore, we are unable to persuade or acknowledge the contention of the Ld. CIT-DR, that the judgment of Hitesh Golchha (supra) have any bearing or relevance, so as to findings therein merits to be adopted in the present matters. Consequently, the judgment relied upon would not be of any help to the revenue having factual differences as against the facts of the present cases before us. We, thus, cannot approve such claim of the revenue.
Having given a thoughtful consideration to the facts and circumstances of the present case, identical to the facts under which the decision in the case of Sharda Steel (supra) was granted relying upon the decision in the case of MDLR Hotels (supra) by the ITAT, Delhi, which have been approved by Hon’ble Delhi HC. We are of the considered view that the approval granted u/s 153D in the present matter fails on the scale of law, being granted in mechanical manner, without application of mind, in absence of relevant documents i.e., assessment records and seized material with the approving authority with a rider that the draft assessment orders are gone through within the limited time available, but nothing could be brought on record by the revenue that such documents are submitted by the Ld. AO to the Ld. Addl. CIT and the requisite & 226/BIL/2016 Shri Sandeep Meghani vs Dy. Commissioner of Income Tax, Raipur examination of such documents and application of mind with conviction before granting the approval was exercised.
Considering the aforesaid facts and circumstances, respectfully following the ratio of law laid down under various judicial pronouncements by Tribunal, Hon’ble High Courts as well as Hon’ble Apex Court (referred to supra), we are of the considered opinion that the approval u/s 153D dated 07.03.2014 (copy extracted supra) in the subject matters before us cannot constitute a valid approval, as per the mandate and settled position of law. Consequently, the assessment completed u/s 153A / 143(3) dated 07.03.2014 on the foundation of an invalid approval has been held to be bad in law, invalid and liable to be quashed. Resultantly, the impugned assessment order dated 07.03.2014, stands quashed, and the impugned orders of Ld. CIT(A) assailed before us are set aside.
Since, the subject assessment order dated 07.03.2014 has been quashed by us in adjudication of legal additional ground raised by the assessee challenging the validity of approval u/s 153D, the grounds on merits have become academic, therefore, not required to be adjudicated separately.
As we have allowed the appeal of assessee in AY 2011-12 by quashing the assessment order u/s 153A r.w.s. 143(3) dated 07.03.2014, the other appeal in for AY 2012-13, emanating from the common assessment order and approval u/s 153D dated 07.03.2014 (extracted supra), under identical facts, circumstances and grounds of appeals, being in parity with the appeal of assessee for AY 2011-12, is also allowed on the same terms.
& 226/BIL/2016 of the assessee stands allowed in terms of our aforesaid observations.
Order pronounced in the open court on 04/08/2025.