SHIV KUMAR NAYYAR,NEW DELHI vs. ACIT CENTRAL CIRCLE-20, NEW DELHI

सुनवाई क� ितिथ/ Date of hearing : 14/10/2024 घोषणा क� ितिथ/ Date of pronouncement : : 25/10/2024 आदेश/ORDER PER VIKAS AWASTHY, JM: These appeals by the assessee for assessment year 2016-17 and 2017-18 and appeal by the Department for assessment year 2017-18 are taken up together as identical issues are involved in these set of appeals. The appeals are arising from same search and seizure action carried out in the case of assessee on 18.11.2016. The assessee is in appeal against the order of Commissioner of Income Tax (Appeals)-31 (hereinafter referred to as 'the CIT(A)') for AY 2016-17 & 2017-18, respectively. The impugned orders for the respective impugned assessment years are of even date i.e. 18.07.2022.

AY 2016-17 3. Shri Anil Jain, appearing on behalf of the assessee submitted that although, the assessee in grounds of appeal has raised multiple grounds assailing jurisdictional issues and additions on merits, at this stage he would be pressing only ground no. 2 challenging validity of approval granted by the Addl. CIT u/s. 153D of the Income Tax Act, 1961(hereinafter referred to as 'the Act'). The ld. Counsel for the assessee narrating facts of the case submitted that the search and seizure action u/s. 132 and survey operation u/s. 133A of the Act was carried out by the Investigation Wing of the Department on 18.11.2016 on the assessee and Neetu Nayyar. The Assessing Officer (AO) completed the assessment on 30.12.2018 u/s. 153A r.w.s. 143(3) of the Act and on the same date the AO forwarded the draft assessment order for approval to Addl. CIT. The Addl. CIT on 30.12.2018 itself granted approval u/s. 153D of the Act in a mechanical manner without any application of mind. He referred to the letter granting approval by the Addl. CIT at page 4 of the paper book. He pointed that a perusal of the said letter would show that the Addl. CIT in a mechanical manner granted approval in the case of assessee for AYs 2011-12 to 2017-18 as well as in the case of Neetu Nayyar for AYs 2011-12 to 2017-18. He further submitted that the assessee had sought information under RTI Act, 2005 from the Department regarding, how many cases and assessment years the Add.CIT, Central Range-5, New Delhi has given approval u/s. 153D of the Act on 30.12.2018. As per the reply of the Department dated 24.08.2022 (at page 170-171 of the paper book), the Addl.CIT granted approval u/s. 153D of the Act in eight cases spread over 43 assessment years on 30.12.2018. It is humanly impossible to grant approval in 43 files in a single day after examining each and every file. He further stated that a perusal of the approval granted by the Addl.CIT would show that the Addl.CIT has not even mentioned that draft assessment order has been pursued by him. Thus, the bare minimum requirement for approving authority to go through the draft order has not been undertaken by the Addl.CIT. The Addl.CIT has thus, in a mechanical manner granted approval in the impugned assessment years which is against the law laid down by various High Courts. He submitted that in assessee's own case for AYs 2011-12 to 2015-16 in to 1285/Del/2020 and 1078/Del/2021, respectively, the Tribunal vide order dated 26.07.2023 quashed the assessment order as the approval u/s. 153D of the Act was granted by the Addl.CIT in a mechanical manner without application of mind. The approval granted by the Addl.CIT for AY 2011-12 to 2015-16 and in the impugned assessment year is the same; hence, the issue raised by the assessee in ground no. 2 of appeal for the impugned assessment year is squarely covered by the decision of the Tribunal in assessee's own case for preceding AYs. He further pointed that against the aforesaid order of Tribunal, the Revenue carried the issue in appeal before the Hon'ble Delhi High Court in ITA No. 285/2014. The Hon'ble High Court vide order dated 15.05.2024 upheld the said decision of the Tribunal and dismissed appeal of the Revenue. He further referred to decision of the Tribunal in the case of Neetu Nayyar in and 1989/Del/2022 for AY 2016-17 & 2017-18 decided on 22.11.2013, wherein the Tribunal after considering the same approval of Addl.CIT dated 30.12.2018 quashed the assessment orders following order of Tribunal in assessee' case in ITA No. 1282 to 1285/Del/2020 (supra). The ld. Counsel asserted that once approval granted by the Addl.CIT dated 30.12.2018 has been held to be unsustainable in the eyes of law being mechanical and without application of mind, the same approval cannot be held valid for other assessment years.

4. Per contra, Ms. Nimisha Singh, representing the department strongly supported the impugned order and prayed for dismissing ground no. 2 of appeal by the assessee. Referring to findings of the CIT(A) in para 8.1.2 of the impugned order, she submitted that the CIT(A) has categorically recorded the fact that the Addl.CIT was involved in framing of the assessment order in the case of Nayyar group at all stages. The questioner issued in Nayyar group of cases by the AO was revised by the Addl.CIT and specific questionnaire based on the seized material and the appraisal report was prepared. The said specific questionnaire was thereafter approved by the Addl.CIT vide letter dated 05.10.2018. Thus, there was full application of mind by the Addl. CIT in the instant case and he was well aware of the facts and proceedings at the assessment stage. The Addl.CIT had also discussed the response in group cases of assessee in meetings dated 07.12.2018, 20.12.2018 and 26.12.2018 with the AO. The Addl.CIT has also written a letter to the Additional Director of Income Tax (Investigation) on 26.12.2018 requesting for certain clarifications with respect to the seized material in group cases. Therefore, it would be wrong to say that the Addl.CIT had accorded approval in a mechanical manner on 30.12.2018. She stated that in the light of specific findings given by the CIT(A), decisions on which the AR of the assessee has placed reliance are distinguishable. The ld. DR further stated that the Tribunal while adjudicating appeals of the assessee for AYs 2011-12 to 2015-16 vide order dated 26.07.2023 has held the assessment order illegal merely on the basis of language and contents of the approval letter dated 30.12.2018. The finding of facts recorded by the CIT(A) based on office records of the Range Head were not considered by the co-ordinate Bench. The department thereafter filed appeal against the said order in (supra) before the Hon'ble High Court. The appeal of the department was dismissed by the Hon'ble High Court placing reliance on the decisions in the case of PCIT vs. Anuj Bansal in decided on 13.07.2023 by Hon’ble Delhi High Court, PCIT vs Sapna Gupta 2022 SCC Online (All.) 1294 and ACIT vs. M/s Serajuddin & Co. 2023 SCC Online (Ori) 992. However, the aforesaid decisions rendered by the Hon'ble High Courts are distinguishable on facts. She thus prayed for dismissing ground no. 2 of appeal and upholding validity of approval granted by the Addl.CIT u/s. 153D of the Act.

for all the assessment years under consideration before us. Accordingly, the additional ground raised by the assessee is hereby allowed.” Thus, the co-ordinate Bench after examining facts of the case and after considering various Hon’ble High Courts decisions held the approval granted by the Addl.CIT u/s. 153D of the Act unsustainable in the eye of law.

9. The Revenue challenged the aforesaid order before the Hon'ble High Court in (supra). The Hon'ble High Court upheld the findings of the Tribunal observing as under:-

17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 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.

by the assessee in appeal on merits become academic, hence, not deliberated.

13. In the result, appeal of the assessee is allowed.

& for AY 2017-18 14. Both sides are unanimous in stating that the factual matrix involved in these cross appeals are identical to assessment year 2016-17. The ld. AR of the assessee has confined his submissions in challenging validity of assessment order based on mechanical approval accorded by Addl.CIT u/s. 153D of the Act. Both sides further stated that the submissions made in AY 2016-17 would equally hold good for assessment year 2017-18, as well.