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Facts
For AY 2018-19, the AO made an addition of Rs. 3,62,00,000/- as unexplained cash credit under Section 68, following a search on the Brahmaputra Group which revealed transactions routed for the assessee through an employee's passbook. The assessment was reopened under Section 153C, as the source entity was identified as a shell company. The CIT(A) subsequently deleted this addition, concluding it was not based on incriminating material unearthed during the search.
Held
The Tribunal upheld the CIT(A)'s deletion of the Rs. 3,62,00,000/- addition, affirming that it was not based on incriminating material found during the search and seizure operation. While the initiation of proceedings under Section 153C was deemed valid due to incriminating material, the specific addition itself was based on pre-existing records rather than the seized material, which is not permissible for completed assessments without specific incriminating evidence. The Tribunal dismissed the Revenue's appeal, effectively confirming the deletion of the addition, and partly allowed the assessee's cross-objection, by allowing the challenge to the addition but dismissing the ground regarding mechanical approval under Section 153D.
Key Issues
1. Whether an addition of unexplained cash credit made under section 153C is sustainable if not based on incriminating material found during the search. 2. Whether the approval obtained for assessment under section 153D was mechanical and thus invalid.
Sections Cited
Section 250, Section 68, Section 153C, Section 132, Section 143(2), Section 142(1), Section 131, Section 132A, Section 153A, Section 147, Section 148, Section 153D
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Income Tax Appellate Tribunal, GAUHATI BENCH, GUWAHATI
Before: SHRI MANOMOHAN DAS, HON’BLE & SHRI RAKESH MISHRA, HON’BLE
ORDER
PER MANOMOHAN DAS, JM
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Central, North Eastern Region, Guwahati (hereinafter referred to as the (‘CIT-(A)) dated 23.06.2023 passed under section 250 of the Income-Tax Act, 1961 (hereinafter the ‘Act’) and pertains to the Assessment Year [AY] 2018-19. The ground of the Revenue is as under: (i) That on the facts of the case and in law, the Ld. CIT(A) has erred by deleting the addition to the tune of Rs. 3,62,00,000/- under the head of unexplained cash credit u/s 68 of the Income Tax Act, by not considering the fact that during the Page 1 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 assessment proceedings the assessee has failed to explain the source of transactions mentioned in the incriminating material seized from the assessee’s premises during the course of search.
There was a delay of 49 days in filing of the appeal by the Revenue. The Revenue prayed for condonation of the said delay vide an application dated 22.09.2023. Accordingly, the delays of 49 days in filing of the appeal by the Revenue is condoned as no objection raised by the assessee.
The facts of the case are that, the assessee filed its return of income for the AY 2018-19 on 26.10.2018 by declaring total loss of Rs. 36,10,403/-. Subsequently, scrutiny proceedings u/s 153C of the Act was selected by issuing notice u/s 153C of the Act dated 14.02.2022 by recording satisfactory note which is as under: “ Search and seizure operation was conducted u/s 132 of the Income Tax Act, 1961 on Brahmaputra Group on 29.01.2021. On close examination of the seized books bearing ID mark MB-01, it is observed that the same happens to be Savings Pass Book of one of the employee of the company, Shri Raktim Acharjee. It is further observed that the account of the employee was used by the company to route a transaction of Brahmaputra Finlease Pvt. Ltd., one of the NBFC Company of the group. The credits in the account was found to be from Great Eastern Superbuilt LLP and same is immediately transferred to Brahmaputra Finlease Pvt. Ltd. On being confronted with the findings during the course of search proceedings carried out on 29.01.2021, Shri Acharjee stated that he has no idea about that transaction and the same was carried out by him at the direction of the owners of the company. In view of the above, I am satisfied that the said seized materials contains information that pertains to the assessee”.
The assessee furnished return of income for AY 2018-19 on 29.04.2022 by declaring total loss of Rs. 36,10,403/- against the notice u/s 153C dated 14.02.2022. The notice u/s 143(2) & 142(1) of the Act were issued to the assessee and asked to submit various details regarding satisfactory note along with facts
Page 2 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 disclosed in the return for AY 2018-19. The assessee filed details which are placed on record. Unexplained Cash Credit: On perusal of the available documents on record, the ld. AO noted that the assessee has received an amount of Rs. 3,62,00,000/- from M/s Transparent Tie Up Pvt. Ltd. during AY 2018-19. The assessee was asked to produce the Principal Officer of M/s Transparent Tie Up Pvt. Ltd. to establish the genuineness of transaction vide a show cause notice. In response to the show cause notice, the assessee filed its written response but stated that unable to produce the Principal Officer of M/s Transparent Tie Up Pvt. Ltd. The assessee furnished confirmation of accounts, bank statement & Balance Sheet of M/s Transparent Tie Up Pvt. Ltd. The ld. Assessing Officer observed that, M/s MP Investment & Consultancy Services Pvt. Ltd. & M/s Transparent Tie Up Pvt. Ltd. are allegedly involved in some dubious transactions. M/s Transparent Tie Up Pvt. Ltd. is holding an account No. 03992320003709 in HDFC Bank and has been utilized for some dubious frequent debit / credit entries. The entity has also been identified as shell entity vide FIU alert No. 1-2017 dated 06.07.2017 by various law enforcement agencies. Statement of the account from the HDFC Bank was obtained for the period FY 2017-18 by the AO and analysed. From Financial analysis of M/s Transparent Tie Up Pvt. Ltd., it was found that, it lacks financial creditworthiness. In order to verify financial credentials of M/s Transparent Tie Up Pvt. Ltd. like nature of business, details of directors, details of bank accounts, Audited Balance Sheet etc., notice u/s 131 of the Act was sent to the entity. However, the assessee did not reply to the said summon. Therefore, the ld. AO satisfied that the company is a shell company existing only on papers so as to assist the entry operators to provide accommodation entry to beneficiary companies.
The ld. AO further observed that, the transaction pattern in the bank statement of M/s Transparent Tie Up Pvt. Ltd. Shows large credits are made in the account from various companies which are immediately transferred out to other entities. All the large transactions have been done in round figures which are multiple of lakhs which give impression that these are merely movement of funds
Page 3 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 from one account to another and not any genuine business transaction. The circular movement of funds raises suspicion that the account of M/s Transparent Tie Up Pvt. Ltd. was used to provide entry to some companies who are the actual beneficiaries of such transactions.
The ld. AO again observed that, M/s Transparent Tie Up Pvt. Ltd. is a shell company as per the Departmental Database which is controlled and managed by Subhash Kumar Agarwal, well known entry operator. Shri Ritish More is one of the directors of M/s Transparent Tie Up Pvt. Ltd. who given statement before the Income Tax Department on oath that, he was an employee of Subhash Kumar Agarwal and worked as dummy director of various companies including M/s Transparent Tie Up Pvt. Ltd. etc. etc. With the aforesaid discussions, the ld. AO treated the amount of Rs. 3,62,00,000/- as unexplained cash credit u/s 68 of the Act and added to the total income of the assessee. Aggrieved, the assessee filed 1st appeal before the ld. CIT(A). The ld. CIT(A) 7. vide order dated 23.06.2023 allowed the appeal of the assessee.
Aggrieved, the Revenue filed the present appeal before the Tribunal.
The ld. CIT(A) observed / concluded that, in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) in case any incriminating material is found / unearthed, even, in case of unabated / completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; (iii) in case no incriminating material unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments / unabated assessments. Meaning thereby, in respect
Page 4 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 of completed / unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed / unabated assessments can be reopened by the AO in exercise of powers under section 147 / 148 of the Act, subject to fulfillment of the conditions as envisaged / mentioned under section 147 / 148 of the Act and those powers are saved.
Thus, from a perusal of record, it is clear that the aggregate addition of Rs. 3,62,00,000/- for the impugned assessment year, made by the AO, pertaining to the purported unexplained credits received by the appellant for the captioned assessment year was not based on any incriminating seized document found during the course of search of the searched person and, further, on the date of search, no assessment for the captioned assessment year was pending. Therefore, in view of the above discussion and the judicial pronouncements cited above, it is held that the addition of Rs. 3,62,00,000/- made by the AO with respect to the captioned assessment year i.e. AY 2018-19 cannot be sustained and is, hereby, deleted.
The Ld. AR reiterated his submissions as was submitted before the ld. CIT(A). The assessment made by the ld. AO is not based on any incriminating material found / unearthed during the search. The Ld. AR relied on a number of decisions including the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla. On the other hand, the Ld. DR supports the order of the ld. AO. We have carefully considered the submissions made by both the parties. The ld. CIT(A) observed that, the addition made by the ld. AO was not based upon any incriminating material found during the search conducted by the Department. Accordingly, the ld. CIT(A) deleted the addition made by the ld. AO.
We observe that, the ld. AO initiated proceeding under section 153C of the Act satisfying that, “ Search and seizure operation was conducted u/s 132 of the Income Tax Act, 1961 on Brahmaputra Group on 29.01.2021. On close examination of the seized books bearing ID mark MB-01, it is observed that the Page 5 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 same happens to be Savings Pass Book of one of the employee of the company, Shri Raktim Acharjee. It is further observed that the account of the employee was used by the company to route a transaction of Brahmaputra Finlease Pvt. Ltd., one of the NBFC Company of the group. The credits in the account was found to be from Great Eastern Superbuilt LLP and same is immediately transferred to Brahmaputra Finlease Pvt. Ltd. On being confronted with the findings during the course of search proceedings carried out on 29.01.2021, Shri Acharjee stated that he has no idea about that transaction and the same was carried out by him at the direction of the owners of the company. In view of the above, I am satisfied that the said seized materials contains information that pertains to the assessee”.
We observe that, although the ld. AO initiated proceeding against the assessee under section 153C of the Act as aforesaid, he, the ld. AO did not make any addition on the basis of that satisfaction. The ld. AO did not adjudicate on the contents of the satisfaction made by him. Instead, the ld. AO made addition of RS. 3,62,00,000/- by adjudicating another issue which was not based on any incriminating material found during the course of search and seizure action of the Department.
The ld. AO made addition of the aforesaid amount stating that, on perusal of the available documents on record, the ld. AO noted that the assessee has received an amount of Rs. 3,62,00,000/- from M/s Transparent Tie Up Pvt. Ltd. during AY 2018-19. The assessee was asked to produce the Principal Officer of M/s Transparent Tie Up Pvt. Ltd. to establish the genuineness of transaction vide a show cause notice. In response to the show cause notice, the assessee filed its written response but stated that unable to produce the Principal Officer of M/s Transparent Tie Up Pvt. Ltd. The assessee furnished confirmation of accounts, bank statement & Balance Sheet of M/s Transparent Tie Up Pvt. Ltd. The ld. Assessing Officer observed that, M/s MP Investment & Consultancy Services Pvt. Ltd. & M/s Transparent Tie Up Pvt. Ltd. are allegedly involved in some dubious transactions. M/s Transparent Tie Up Pvt. Ltd. is holding an account No.
Page 6 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 03992320003709 in HDFC Bank and has been utilized for some dubious frequent debit / credit entries. The entity has also been identified as shell entity vide FIU alert No. 1-2017 dated 06.07.2017 by various law enforcement agencies. Statement of the account from the HDFC Bank was obtained for the period FY 2017-18 by the AO and analysed. From Financial analysis of M/s Transparent Tie Up Pvt. Ltd., it was found that, it lacks financial creditworthiness. In order to verify financial credentials of M/s Transparent Tie Up Pvt. Ltd. like nature of business, details of directors, details of bank accounts, Audited Balance Sheet etc., notice u/s 131 of the Act was sent to the entity. However, the assessee did not reply to the said summon. Therefore, the ld. AO satisfied that the company is a shell company existing only on papers so as to assist the entry operators to provide accommodation entry to beneficiary companies.
The ld. AO further observed that, the transaction pattern in the bank statement of M/s Transparent Tie Up Pvt. Ltd. large credits are made in the account from various companies which are immediately transferred out to other entities. All the large transactions have been done in round figures which are multiple of lakhs which give impression that these are merely movement of funds from one account to another and not any genuine business transaction. The circular movement of funds raises suspicion that the account of M/s Transparent Tie Up Pvt. Ltd. was used to provide entry to some companies who are the actual beneficiaries of such transactions.
The ld. AO again observed that, M/s Transparent Tie Up Pvt. Ltd. is a shell company as per the Departmental Database which is controlled and managed by Subhash Kumar Agarwal, well known entry operator. Shri Ritish More is one of the directors of M/s Transparent Tie Up Pvt. Ltd. who given statement before the Income Tax Department on oath that, he was an employee of Subhash Kumar Agarwal and worked as dummy director of various companies including M/s Transparent Tie Up Pvt. Ltd. etc. etc.
The adjudication done by the ld. AO is on the basis of available documents on record. It is not based on material found during the search and seizure
Page 7 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 operation conducted by the Department as the ld. AO stated that, “on perusal of the available documents on record”. The Bench put a question to the Ld. DR whether the addition made by the ld. AO was on the basis of material found during the assessment proceeding. The ld. DR replied that, the information was already available on record.
From the aforesaid facts, it is our considered opinion that, the deletion of addition of Rs. 3,62,00,000/- by the ld. CIT(A) attracts no interference. The ld. CIT(A) deleted the addition made by the ld. AO by observing that the addition is not based on any incriminating material found during the search and seizure operation carried out by the Department. The ld. CIT(A) discussed / relied on a number of decisions while deleting the addition of Rs. 3,62,00,000/-.
The assessee pressed into the services of a number of decisions including the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla reported in 380 ITR 573 and PCIT Vs. Abhisar Buildwell P. Ltd. [CA No. 6580 of 2021] dated 24.04.2023 of the Hon’ble Apex Court. The Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla reported in 380 ITR 573 held as under: “37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i). Once a search takes place under section 132 of the Act, notice under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii). Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AO as a fresh exercise.
Page 8 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 (iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the ‘total income’ of the aforementioned six years. In other words, there will be only one assessment order in respect of each of the six AYs “in which both the disclosed and the undisclosed income would be brought to tax”. (iv) Although section 153A does not say that addition should be strictly made on the basis of evidence found in the course of the search, or other post search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of seized material”. (v). In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in section 153A is relatable to abated proceedings ( i. e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings. (vi). In so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. (vii). Completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.
Page 9 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no addition could have been made to the income already assessed”. [Emphasis supplied] 20. The Hon’ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell P.Ltd. [CA No. 6580 of 2021] dated 24.04.2023 upholds the ratio of the Hon’ble Delhi High Court’s ruling in Kabul Chawla [2016] 380 ITR 573] and Hon’ble Gujarat High Court’s ruling in Saumya Construction [2016] 387 ITR 529] that for completed or unabated assessments, the Revenue has no jurisdiction under section 153A / 153C in the absence of any ‘incriminating material’ found during a search under section 132 or requisition under section 132A.
Thus, it is clear that, assessment or reassessment of income of an assessee is not possible in absence of any incriminating material found during search under section 132 or requisition made under section 132A of the Act in unabated assessment.
The ld. AO made addition of Rs. 3,62,00,000/- on unexplained cash credit under section 153C of the Act despite there was no incriminating material found during the course of search conducted on the Brahmaputra group against the assessee. The ld. AO also did not reopen the assessment on the issue of unexplained cash credit. The assessment was reopened by the ld. AO by satisfying that, search and seizure operation was conducted u/s 132 of the Income Tax Act, 1961 on Brahmaputra Group on 29.01.2021. There was a seized books bearing ID mark MB-01, the same happens to be Savings Pass Book of one of the employee of the company, Shri Raktim Acharjee. It was observed that the account of the employee was used by the company to route a transaction of Brahmaputra Finlease Pvt. Ltd., one of the NBFC Company of the group. The credits in the account was found to be from Great Eastern Superbuilt LLP and same is immediately transferred to Brahmaputra Finlease Pvt. Ltd. During the course of search proceedings, Shri Acharjee stated that he has no idea about that Page 10 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 transaction and the same was carried out by him at the direction of the owners of the company.
We observe that, the ld. AO did not make any adjudication on the basis of the seized material which was seized during the search. Instead, the ld. AO adjudicated the issue of unexplained cash credit on the basis of material already on record. Accordingly, we observe that, there was no error committed by the ld. CIT(A) by holding that, the addition of Rs. 3,62,00,000/- was not based on any incriminating material and therefore, has deleted the said addition of RS. 3,62,00,000/-.
As the addition made by the ld. AO in absence of any incriminating material found during the search and the assessment was reopened under section 153C of the Act, we finally observe that the ld. CIT(A) rightly deleted the addition made by the ld. AO. Accordingly, we uphold the order of the ld. CIT(A) dated 23.06.2023 to the extent of the deletion of Rs. 3,62,00,000/- and dismiss the appeal of the Revenue.
Now we take up CO No. 01 / GTY / 2024 filed by the assessee. The assessee has raised the following grounds in the cross objection:- (i) That the learned Commissioner of Income Tax (Appeals) has erred both in law and on the facts in upholding the assumption of jurisdiction u/s 153C of the Act and, framing of assessment u/s 153C of the Act both of which deserves to be quashed as such. (ii) That the additions made are without jurisdiction since it is not based on any material found as a result of search on the appellant, as have been also held by the judgment of Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla reported in 380 ITR 573 and Pr. CIT Vs. Meeta Gutgutia reported in 395 ITR 526. (iii) That since approval obtained u/s 153D of the Act was mechanical, illegal and invalid approval, order of assessment made u/s 153C is invalid and without jurisdiction. Prayer : - It is therefore, prayed that it be held that notice issued u/s 153C of the Act and also assessment framed u/s 153C of the Act are without jurisdiction.
Page 11 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 1. We observe that, the ld. AO has re-opened the assessment by satisfying that, “Search and seizure operation was conducted u/s 132 of the Income Tax Act, 1961 on Brahmaputra Group on 29.01.2021. On close examination of the seized books bearing ID mark MB-01, it is observed that the same happens to be Savings Pass Book of one of the employee of the company, Shri Raktim Acharjee. It is further observed that the account of the employee was used by the company to route a transaction of Brahmaputra Finlease Pvt. Ltd., one of the NBFC Company of the group. The credits in the account was found to be from Great Eastern Superbuilt LLP and same is immediately transferred to Brahmaputra Finlease Pvt. Ltd. On being confronted with the findings during the course of search proceedings carried out on 29.01.2021, Shri Acharjee stated that he has no idea about that transaction and the same was carried out by him at the direction of the owners of the company. We observe that, the basis for re-opening of the assessment of the assessee by the ld. AO under section 153C of the Act was correct one since incriminating material was found during the search in respect of the assessee. It was observed by the ld. AO that, “the account of the employee was used by the company to route a transaction of Brahmaputra Finlease Pvt. Ltd.”. Therefore, re-opening of the assessment cannot be held as incorrect. Accordingly, we decide this ground of appeal of the assessee against the assessee.
2. However, the addition made by the ld. AO was not based on any incriminating material which was found during the course of the search. The basis of the addition made by the ld. AO was already on the record. Therefore, it cannot be said that addition was correctly made by the ld. AO. There was no adjudication on the basis of the incriminating material found during the course of the search. The ld. AO directly proceeded to adjudicate the the issue of unexplained cash credit which was already on record of the Department. The basis on which the assessment was re-opened was not touched by the ld. AO. Further, there was no assessment pending against the assessee as was observed by the ld. CIT(A) in his order dated 23.06.2023. Accordingly, the addition made under section 153C of the Act by the ld. AO cannot be sustained and correctly
Page 12 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 deleted by the ld. CIT(A) as assessment cannot be reopened without any incriminating material found during search or requisition u/s 132 / 132A of the Act in unabetted assessment. CIT-Vs. Kabul Chawla (1980) ITR 573 (Delhi). Thus, we decide this ground of appeal of the assessee in his favour.
3. The assessee has contested the issue of approval granted to the AO under section 153D of the Act. The Department has submitted additional submission in writing vide dated 05.11.2024 as under: “In a search & seizure case, after the completion of search operation by the Investigation Wing, the seized materials along with an Appraisal Report [containing all details of the seized materials alongwith the family tree of the assessee, cases covered during search operation, statement(s) of the assessees, amount of disclosure etc. taken during the search proceedings ] is sent to AO for further necessary action as per the law. Copies of the said Appraisal Report are also sent by the Investigation wing to the Range Head and the PCIT of the AO for their perusal and necessary action as per the law. Before issuance of the questionnaire to the assessee, the AO prepare an ACTION NOTE [ a brief summarized form of the Appraisal Report, where the enumerates his future course of action ] on the basis of the Appraisal Report and seized documents and a copy of it sent to his Range Head and the PCIT for their kind perusal. Both the Range Head and the PCIT, after due perusing the ACTION NOTE discusses the case with the AO and if any shortcomings are there in the ACTION NOTE, they directs the AO to incorporate the same in the ACTION NOTE. Further, during the assessment proceedings, the AO discusses issues involved in the case with the Range Head time to time and also appraised the Range Head about the development of the case. The Range Head also advises the AO as and when required. After that when the AO and the Range Head are of the opinion that they are on the verge of finalization of the assessment, the AO prepares a “Draft Assessment Order” and put up before the Range Head alongwith the records for his kind perusal and necessary approval. The Range Head then having full knowledge about the issues relating to the assessment proceedings and after due application of mind and on the basis of the Appraisal Report, ACTION NOTE and seized materials, approves the ‘Draft Assessment Order’.
Page 13 of 14 CO 01/GTY/2024 DCIT, Central Circle – 1, Guwahati – Vs- Brahmaputra Finlease Pvt. Ltd. AY: 2018-19 It is also pertinent to mention here that the Range Head being in possession of the Appraisal Report, which he has gone through it several times. Hence, the approval given by the Range Head u/s 153D cannot be said to be done without application of mind and cannot be termed as ‘Mechanical’. We have considered the aforesaid written submissions of the Revenue and satisfied that the competent authority granted approval under section 153D of the Act after his application of mind on the case and related materials as was submitted by the ld. AO. On this written submission, the assessee has not forwarded any submission. Therefore, we dismiss the ground of the assessee that there was mechanical approval under section 153D of the Act.
In the result, appeal filed by the revenue is dismissed and the cross- objection filed by the Assessee is Partly Allowed Order passed in the open court on this 28th day of January, 2025. 27.