SHRI BHARAT SINGH,DHANBAD vs. DCIT, CENTRAL CIRCLE, DHANBAD

It was the submission that the said letter was for approval referring to 21 cases along with records and draft assessment orders. Ld. AR further drew our attention to page 6 of the paper book which is the approval granted by the Additional Commissioner of Income Tax, Central Range-2, Ranchi to the Assistant Commissioner of Income Tax, Central Circle, Dhanbad giving approval to the draft assessment orders in all the said 21 cases, which reads as follows :- -269/Ran/24 9. It was the submission that subsequent to the approval the assessment orders have been issued which are dated 24.11.2023. It was, thus, the submission that in 21 cases common letter for approval along with the draft assessment orders in respect of the three assesses have been sent on 24.11.2023 from Dhanbad to Ranchi. The same were perused by the Additional Commissioner of Income Tax, Central Range-2, Ranchi and returned to the AO at Dhanbad on 24.11.2023 and the final assessment orders were also issued on 24.11.2023 in all the 21 cases. It was the submission that the distance from Dhanbad to Ranchi by road takes a minimum of 4 hours. Even giving a cursory glance to the assessment records and the draft assessment orders and returning the assessment folders along with draft assessment orders and then having the same transported from Ranchi to Dhanbad taking another 4 hours by road and after all this preparation of the final orders and uploading the same to the portal, is an impossible task within a day’s time. Ld.AR drew our attention to the online portal which showed the proceedings. It was the submission that the said portal clearly showed the proceedings closure date to be left blank. The said proceedings in the portal in the case of assessee-Shri Kumbh Nath Singh reads as follows :-

It was the submissions that identical mails have been received for all the assessment years by all the three assesses. It was the submission that the said assessment orders were issued to the assessees only on 29.11.2023 for which ld. AR showed the sample email received by one of the assessee Shri Kumbh Nath Singh, which reads as follows :-

It was further the submission that in view of the decision of the Hon’ble Delhi High Court in the case of Shiv Kumar Nayyar, reported in [2024] 163 taxmann.com 9 (Delhi)/[2024] 467 ITR 186 (Delhi), has categorically held that giving multiple approvals u/s.153D of the Act in 43 cases therein without perusing the draft assessment orders at all and without an independent application of mind, the impugned assessment orders was rightly declared to be illegal by the Tribunal. Ld. AR further relied upon the decision of the Hon’ble Delhi High Court in the case of MDLR Hotels (P.) Ltd., reported in [2024] 166 taxmann.com 327 (Delhi). It was the submission, at the outset, a perusal of the approval sought and approval granted clearly showed that 21 case records had been sent for approval and the approvals have been obtained from a single approval letter. Therefore, clearly there is no application of mind by the Additional Commissioner of Income Tax, Central Range-2, Ranchi. It was the submission that the records and the draft orders having sent by road or any mode would take a minimum of 4 hours from Dhanbad to Ranchi and back from Ranchi to Dhanbad another 4 hours, in total 8 hours is required. There could not have been any time for the Additional Commissioner of Income Tax Central Range-2, Ranchi to have applied his mind or gone through the records of 21 cases. It was the submission that thus clearly there is non- application of mind and multiple approvals have been given in a single order. He also placed reliance on the decision of the Hon’ble Orissa High 146 (Orissa)/2023] 454 ITR 312(Orissa), which has also been upheld by the Hon’ble Supreme Court in the case of Serajuddin and Co., reported in [2024] 163 taxmann.com 118 (SC), thereby dismissing the SLP filed by the revenue. The relevant observations of the Hon’ble Orissa High Court in para 21 to 25 and more specifically in para 22 has held as follows:-

For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves.

At this point, the ld. AR was requested that the main issue having been already covered, the other issues of legal nature need not be gone into, however, ld.AR vehemently submitted that he needs to be heard on the other issues also and the order in respect of the same was required. Consequently, the ld. AR was heard on the issue of limitation of the assessment order also as well as the issue of DIN.

It was further submitted that in respect of DIN generated, admittedly, when the assessment order is passed in manual form and subsequently a DIN is generated, in such situations the CBDT has issued a circular in Circular No.19/2019 in F.No.225/95/2019-ITA.II, dated 14-8-2019, which reads as follows :- -269/Ran/24 CIRCULAR NO. 19/ 2019 [F.NO. 225/95/2019-ITA.II] SECTION 119 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - INSTRUCTIONS TO SUBORDINATE AUTHORITIES -GENERATION/ALLOTMENT/QUOTING OF DOCUMENTS IDENTIFICATION NUMBER IN NOTICE/ORDER/SUMMONS/LETTER/CORRESPONDENCE ISSUED BY THE INCOME-TAX DEPARTMENT CIRCULAR NO. 19/2019 [F.NO. 225/95/2019-ITA.II), DATED 14- 8-2019 With the launch of various e-governance initiatives, Income-tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax- administration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as "communication") were found to have been issued manually, without maintaining a proper audit trail of such communication.

In exceptional circumstances such as, - (i) when there are technical difficulties in generating/allotting/quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non- jurisdictional Assessing Officer, or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or v) When the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/Director General of income-tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General of Income-tax for issue of manual communication in the following format- ".. This communication issues manually without a DIN on account of reason/reasons given in para3(i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No ...dated (strike off those which are not applicable) and with the approval of the Chief Commissioner/Director General of Income Tax vide number.... dated ....

Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued. 5.

The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularised within 15 working days of its issuance, by - i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System.

An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance.

Further, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the Income- tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019. -269/Ran/24 20. It was the submission that in the said circular it has categorically mentioned in para 3 that the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner of Income Tax/Director General of income-tax. The proforma for such approval is also mentioned in the said paragraph. It was the submission that when the said DIN was generated no such approval has been obtained nor has such approval been intimated to the assessee nor has it mentioned in the intimation letter in respect of the DIN. It was, thus, the submission that the manual assessment order has been passed and the DIN has been generated without obtaining the necessary approval, the assessment orders in all the cases of assesses are liable to be quashed.

We have considered the submissions of the ld. AR and perused the documents produced as also the documents available on record. Admittedly, the assessment order is dated 24.11.2023. A perusal of the demand notice issued u/s.156 of the Act attached along with the assessment order, shows the handwritten note saying dispatch number 453 dated 24.11.2023. Obviously, this was to be the dispatch register details. It is also fact that the revenue has not produced the dispatch register before us. However, as this is a government document and the said dispatch register is not before us, we will assume such document to be true in the absence of any adverse proof being shown. We must mention here that we are unable to verify the dispatch register. This being so, we would be left with no other alternative but to accept the date of the assessment orders in all the impugned cases as 24.11.2023 having been passed on 24.11.2023. At this point the ld. AR submitted that though the assessment order dated 24.11.2023 has been said to be entered in the dispatch register on the same date, however, the DIN for the same was only generated on 28.11.2023 and the service of the assessment order along with DIN can only be said to be 28.11.2023 when it was uploaded in the portal or by email on 29.11.2023 along with the intimation of the DIN dated 28.11.2023. As mentioned earlier, the dispatch register has not been produced before us, therefore, we are unable to make any comment in respect of the said dispatch and service of the order, insofar as the ld. AR on behalf of the assessees has made the statement at the bar that no physical copy of the order has been served on the assessees nor received by the assessees through post. As the dispatch register is not before us, it is accepted that the order might have been dispatched by speed post or by hand delivery and these records are also not before us but because it has been mentioned that the order has been dispatched and the dispatch number is there, we are accepting the document to be generated on 24.11.2023 as it is a government document.

Coming to the issue of the approval granted u/s.153D of the Act, it is noticed that the letter of the AO seeking approval is of 24.11.2023 and the approval has also been granted on 24.11.2023. Both the letters from the AO at Dhanbad to the Additional Commissioner of Income Tax, Central Range-2, Ranchi and from the Additional Commissioner of Income Tax, Central Range-2, Ranchi to the AO at Dhanbad are in respect of three assessees for seven years each for 21 folders and this admittedly is hit by the decision of the Hon’ble Delhi High Court in the case of Shiv Kumar Nayyar, referred to supra, wherein in para 11 to 18, Hon’ble High Court has held as follows :- 11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for “each assessment year” referred to in clause (b) of sub-section (1) of Section 153A of the Act. It is beneficial to refer to the decision of the High Court of Judicature at Allahabad in the case of PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- “each assessment year” used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:- “13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. *** 19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A.” [Emphasis supplied] ITA Nos.265-269/Ran/24 12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for “each assessment year” for “each assessee” separately.

Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:- “22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "seen" or "approved" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the Assessing Officer should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii) the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order.” [Emphasis supplied] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023.

A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.

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.

Therefore, under the facts of the present case, considering the foregoing discussion and the enunciation of law settled through judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration.

Admittedly, as the said letters do not comply with the requirements of the provisions of Section 153D of the Act, respectfully following the decision of the Hon’ble Delhi High Court in the case of Shiv Kumar Nayaar, and also in the case of MDLR Hotel (P.) Ltd., referred to supra, the approvals are held to be invalid and consequently the consequential assessment orders passed in the case of three assessees stand quashed.

Coming to the issue of the approval granted by the Additional Commissioner of Income Tax, Range-2, Ranchi without applying his mind, it must be mentioned here that Ranchi is 4 hours from Dhanbad and returning the files to the AO, who is at Dhanbad, is another 4 hours required. Even stopping for a lunch on the way, an additional half-an hour to be consumed. Time for the Additional Commissioner of Income Tax, Central Range-2, Ranchi to read a file requires at least 10 mins per file which comes to 210 minutes for 21 cases leading to nearly 3½ hours. Obviously, this itself crosses total 12 and-a-half hours, which admittedly shows that the ld. Additional Commissioner of Income Tax, Central Range-2, Ranchi has not even gone through the files, much less has applied his mind before granting the approval. Consequently, the said approval is in violation of the principle laid down by the Hon’ble Supreme Court in the case of Serajuddin and Co., referred to supra, and on this ground also the approval given in all the appeals of the assessees under consideration is liable to be quashed and we do so accordingly. -269/Ran/24 25. Further a perusal of the approval does not show any application of mind by the Additional Commissioner of Income Tax, Central Range-2, Ranchi so as to the reasons and the basis on which the approval is being granted is also not mentioned and, thus, even on this ground also the approval is unsustainable and is liable to be quashed in view of the principle laid down by the Hon’ble Supreme Court in the case of Serajuddin and Co, and we do so. Consequently, on these grounds also the consequential assessment orders passed in the all the impugned cases of the assessees herein are liable to be quashed and we do so.

Coming to the last issue of DIN, it is noticed that admittedly the intimation letter does not comply with the para 3 of the Circular issued by the CBDT in Circular No.19 of 2019 dated 14-8-2019 which has been extracted above, insofar as the requisite approval has not been shown to have been taken from the concerned authority and such approval is even not mentioned in the intimation. However, as the issue of DIN and the requirement of the DIN being mandatory and the various conditions for the applicability of the DIN is subjudiced before the Hon’ble Supreme Court, we are not rendering our view on the said issues.

As we have already quashed the approval and the consequential assessment orders in the paragraph above on multiple grounds, the appeals of the assessee would stand allowed and the appeals of the revenue stand dismissed. -269/Ran/24 28. In the result, appeals of the assesses are allowed and appeals of the revenue are dismissed. Order dictated and pronounced in the open court on 09/10/2025.