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Yogender Kumar Garg, Muzaffarnagar vs DCIT | s.68, 143(3) | ITAT Delhi 2024 | BharatTax

YOGENDER KUMAR GARG,MUZAFFARNAGAR vs. DCIT, CENTRAL CIRCLE, NOIDA

ITA 2910/DEL/2018Status: DisposedITAT Delhi26 June 2024AY 2014-15Bench: or at the time of hearing of appeal.12 pages

AI SummaryPartly Allowed

Facts

The assessee filed four appeals against the CIT(A) orders for A.Y. 2012-13 to 2015-16, challenging additions made under Section 68 for unexplained cash credit and questioning the validity of assessment proceedings. The primary contention was that the mandatory prior approval process under Section 153D of the Income Tax Act, 1961, was not properly followed by the Assessing Officer, rendering the assessment orders invalid.

Held

The Tribunal, relying on a co-ordinate bench decision in a similar group case, found that the approval granted by the JCIT under Section 153D was merely a 'technical approval' lacking proper application of mind. This procedural flaw rendered the assessment orders unenforceable in law, and thus, they were quashed. Other grounds of appeal were not adjudicated.

Key Issues

Whether the assessment orders passed in a search assessment case are invalid due to an improper and mechanical prior approval under Section 153D of the Income Tax Act, 1961, without due application of mind by the approving authority.

Sections Cited

68, 143(3), 153, 153A, 153B, 153C, 153D, 271(1)(c), 271AAB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI

For Appellant: Shri Amit Goel, CA &, Shri Pranav Yadav, Adv

For Respondent: Ms. Nimisha Singh, CIT-DR

Hearing: 22/05/2024Pronounced: 26/06/2024

Yogender Kumar Garg DCIT 9-A & 10-A, New Mandi Central Circle Muzaffar Nagar Vs. Noida Uttar Pradesh-251001 PAN-ABIPG 9791P (Appellant) (Respondent) Assessee by Shri Amit Goel, CA & Shri Pranav Yadav, Adv. Department by Ms. Nimisha Singh, CIT-DR Date of Hearing 22/05/2024 Date of Pronouncement 26/06/2024 ORDER PER S.RIFAUR RAHMAN,AM: 1. These four appeals have been filed by the Assessee against the orders of Learned Commissioner of Income Tax (Appeals)-IV, Kanpur [“Ld. CIT(A)”, for short], dated 28/03/2018 for Assessment Years 2012-13 to 2015-16 respectively.

2.

All these appeals are interconnected having common issues.

All these appeals are heard together and disposed off by this common order. We are taking as a lead case.

3. In all the above appeals, the assessee has raised similar grounds of appeal in all the Assessment Years under consideration. The relevant grounds raised by the assessee in Assessment Year 2012-13 are as under:-

“1. On the facts and circumstances of the case and in law, the initiation of assessment proceedings and issue/ services of notices are not in accordance with the provisions of law and accordingly the assessment order passed on the foundation of such notice(s) is liable to be quashed and the CITTA) erred in not holding so. 2 On the facts and circumstances of the case and in law, the addition of Rs 12,35,18,351/- made by the assessing officer on account of alleged unexplained cash credit u/s. 68 of the Income Tax Act 1901 beyond the scope/jurisdiction of provisions of section 153A of the Income Tax Act, 1961 and CIT(A) erred in not holding so.

3. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition Rs.12,35,18,554/- made by the assessing officer on account of alleged unexplained cash credit u/s 68 of the Income Tax Act, 1961.

superior authority is thus expected to confirm to the statutory requirements in letter and spirit. As noted in the preceding paragraphs, it is a classic case of collective abdication of statutory responsibility assigned under Act and yet putting civil consequences of onerous nature on a tax payer. It is axiomatic from the plain reading of approval memo that the JCIT is in complete dark on facts while being called upon to grant his clearance to the draft assessment orders. It is evident from the CBDT Circular No. 3 of 2008 dated 12.03.2008 that the legislature in its highest wisdom made it obligatory that the assessments of search cases should be made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the Assessing officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval the respective Assessment order. The solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional/ Joint CIT concerned, with his experience and maturity of understanding, should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act enjoins due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. At the cost of repetition, it may be reiterated that in the instant case, the approving authority has granted a mere 'technical approval' by his own express admission in departure to a substantive approval expected in law. The JCIT rather himself fairly recorded his objections to the fag end supply of draft assessment orders by the AO in bulk for several assessees involving multiple assessment years and effectively claimed that he had no opportunity to peruse the relevant underlying material for effective discharge of duty of supervisory nature owing to last minute supply of draft assessment orders. As discernible from the conjoint approval memo, the sanctioning authority (JCIT) has, in fact, under the force of circumstances, relegated his statutory duty to the subordinate AO, whose action the JCIT, was supposed to supervise as per the scheme of the Act. Manifestly, the JCIT, without any consideration of factual and legal position in proposed additions/disallowances and without contents of appraisal report before him or incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a simplicitor approval with caveats and disclaimers.