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Income Tax Appellate Tribunal, DELHI BENCH ‘DB’, NEW DELHI
Before: SH. ANIL CHATURVEDI & SH. CHALLA NAGENDRA PRASAD
PER BENCH :
All the appeals filed by the assessee are directed against the order dated 31.07.2019 of the Commissioner of Income Tax (Appeals)-IV, Kanpur relating to Assessment Years 2008-09 to 2013-14.
At the outset, Learned AR submitted that the issues involved in all the appeals are identical except for the year and amounts
involved and therefore the submissions made by him for one year would be applicable to the other years also. Ld DR did not controvert the aforesaid submissions of Ld AR. In view of the aforesaid submissions of the Counsel, we for the sake of convenience proceed to dispose of all the appeals by a consolidated order but for the sake of reference refer to the facts for A.Y. 2008- 09.
The relevant facts as culled from the material on records are as under:
Assessee is an individual who is stated to be having income from business and other sources. He is also running hostel for students of DBIT College under proprietorship name “Saraswati Hostel”.
A search u/s 132 of the Act took place in the business and residential premises of the assessee on 26.04.2012 and DBIT Group of cases. Consequently, notice u/s 153A(1)(a) of the Act was issued on 05.03.2013 and served upon the assessee. In response to the aforesaid notice, assessee furnished return of income on 31.03.2014 declaring total income at Rs.4,37,640/-. Thereafter, the case was taken up for scrutiny and assessment was framed u/s 153A(1)(b) r.w.s 143(3) of the Act vide order dated 30.03.2015 and the total income was determined at Rs.36,50,140/-.
Aggrieved by the order of AO, assessee carried the matter before CIT(A) who by a consolidated order for A.Ys. 2008-09 to 2013-14 vide order dated 31.07.2019 in Appeal No. CIT(A)- IV/KNP/10123, 10121, 10119, 10117, 10115 & 10113/DCIT- CC/DDN/2015-16/325 to 330 dismissed the appeals of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal before us and has raised the following grounds: 1. That the notice issued u/s 153A of the Act and the assessment order passed u/s 153A r.w.s. 143(3) of the Income Tax Act (‘Act’) is illegal, bad in law and without jurisdiction.
That on the facts and circumstances of the case and in law the CIT(A) has grossly erred in upholding the assessment order and additions made therein passed by the Assessing officer u/s 153A r.w.s. 143(3) of the Act.
That on the facts and circumstances of the case and in law the CIT(A) has grossly erred in upholding the action of AO by assessing income of the Assessee u/s 153A r.w.s 143(3) as no incriminating material from the premises of the assessee was found during the course of search. Hence, the assessment order passed is illegal, void and liable to be quashed. 4. That no valid search is conducted on the assessee, hence the notice issued u/s 153 A of the Act is illegal, bad in law and without jurisdiction. Thus, the order passed u/s 153A r.w.s 143(3) of the Act is also illegal bad in law and without jurisdiction. 5. That the assessment order passed without valid approval U/s 153D of the Act is illegal, bad in law and without jurisdiction and the CIT(A) has erred in law and on facts in upholding the same. 6. That the alleged approval u/s 153D of the Act is illegal, bad in law and without any application of mind and the Assessment order passed without obtaining valid approval is liable to be quashed. 7. That the notice for enhancement by the CIT(A) and the additions made by way of enhancement by CIT(A) are illegal, bad in law and without jurisdiction.
That on the facts and circumstances of the case and in law the CIT(A) has grossly erred in enhancing the income of the assessee by Rs. 17,50,000/-. The CIT(A) has failed to appreciate that assessee had already made voluntary surrender and enhancement in this regard will lead to double addition and hence, is liable to be deleted. 9. The notice of enhancement issued by the CIT(A) is illegal, bad in law and without jurisdiction. 10. That the CIT(A) grossly erred in law and on facts in assuming jurisdiction vide issuance of consolidated/ combined notice of enhancement for all the concerned assessment years. The enhancement made consequent to issue of illegal notice is thus liable to be deleted. 11. That the CIT(A) has enhanced the income of the assessee without examining the books of accounts and assessment records of the assessee as confirmed by AO. Hence, the enhancement is illegal, bad in law and without jurisdiction. 12. That without prejudice, the CIT(A) has failed to appreciate that Assessee had surrendered the amount in respect of seized documents and there is no need to enhance the income of the assessee. 13. That in view of the facts and circumstances of the case and in law, the CIT(A) has erred in making / upholding certain additions on protective basis in the hands of assessee, whereas the said addition are illegal, bad in law and liable to be deleted. 14. That the CIT(A) has grossly erred in not providing sufficient and reasonable opportunity to the assessee before making additions on protective basis in the hands of assessee. 15. That the assessment order under section 143(3) r.w.s 153A of the Act is passed after taking the approval of the ACIT under section 153D of the Act and therefore, without setting aside the directions of the ACIT without seeking approval under section 153D of the Act, the order under section 143(3) r.w.s 153A of the Act, cannot be enhanced. 16. That without prejudice even when enhancing the income, the learned CIT(A) has neither stated even the source of income or head
of the income, which is stated to have been enhanced. Hence, the enhancement is illegal and bad in law. 17. That the order by the CIT(A) in enhancing the income is without jurisdiction and is wholly arbitrary as the order passed is without providing sufficient and adequate opportunity. 18. That the order passed by AO and also by CIT(A) are without giving reasonable and sufficient opportunity to the appellant and said order have been passed in violation of principles of natural justice. 19. That the CIT(A) has arbitrarily rejected the ground of ‘Non- opportunity’ as no reasonable opportunity was afforded by the AO while framing the Assessment and in the same way the CIT(A) has not afforded reasonable/sufficient opportunity before passing the impugned order. 20. That in view of the facts and circumstances of the case CIT(A) after admitting the additional evidences u/r 46A has ignored the said evidences and have not dealt with merits of such evidences and has also failed to appreciate the contents of such evidences. 21. That the CIT(A) has erred in law and on facts in upholding the income assessed by the AO at Rs.36,50,140/- for the relevant assessment year as against the returned income at Rs.4,37,640/-. The additions are illegal, bad in law and arbitrary without considering the explanations/evidences available on record and based upon mere surmises and conjectures. 22. That having regards to the facts and circumstances of the case, AO/CIT(A) has erred in recording incorrect facts and findings and without providing the alleged adverse material used against the opportunity, without providing opportunity of cross examination and without considering the submissions and evidences of the appellant. 23. That CIT(A) has erred in upholding the action of AO in confirming the addition of Rs.32,00,000/- on account of transferring of funds from society’s funds to bank account of negi builders and supplier i.e. alleged to be bogus entity. The addition is illegal, bad in law and arbitrary without considering the explanations/evidences available on record and based upon mere surmises and conjectures. 24. That CIT(A) has erred in upholding the disallowance of Rs.12,500/- on account of depreciation on building. The addition is illegal, bad in
law and arbitrary without considering the explanations/ evidences available on record and based upon mere surmises and conjectures. 25. That in view of the facts and circumstances of the case the AO and the CIT(A) has failed to appreciate that the additions cannot be made on the basis of alleged statements of Sunil Daundriyal and Sushil Kumar. The recorded statement do not have any evidentiary value. 26. Without prejudice, the additions made by the AO and CIT(A) are overlapping and also amounts to double addition and no set off/ telescoping is allowed. 27. That order u/s 127 of the Act was not passed in accordance with law consequently the impugned order passed under section 153A of the Act is illegal and liable to be quashed. The DCIT Central Circle, Dehradun was not competent to pass the Assessment Order as the order u/s 127 was not valid and legal order. 28. That the order of the Ld CIT(A) in confirming the assessment is based on misconceived and erroneous assumption and on non- existent facts and hence is unsustainable in law. 29. That the evidence filed and materials available on record have not been properly constructed and judiciously interpreted, hence the addition/ disallowance made are uncalled for. 30. That the observation and the additions by the AO and by the CIT(A) made are unjust, bad in law, highly excessive and based on surmise conjecture. 31. That on the facts and circumstances of the case and in law the AO/CIT(A) has grossly erred in charging interest u/s 234A, 234B and 234C of the Income Tax Act, 1961. 32. That the applicant craves leave to, add, amend, alter and/ or delete any of the above grounds of appeal at or before the time of hearing.”
Similar grounds have been raised by assessee in ITA Nos. 164, 166, 162, 161 & 165/DDN/2019 for A.Ys. 2009-10 to 2013- 14.
Before us, at the outset, Learned AR submitted that though the assessee has raised various grounds but he would argue Ground Nos. 5 & 6 wherein the assessee is challenging the validity of the assessment framed u/s 153A of the Act on account of no valid approval u/s 153D of the Act. He submitted that if these grounds are decided in assessee’s favour, then the other grounds raised would not require any adjudication.
Learned AR pointed to the copy of the approval of draft assessment orders submitted by AO to Additional Commissioner of Income Tax (Meerut) dated 30.03.2015 which is placed at page 53 of the paper book. From the aforesaid letter, he submitted that the AO who is stationed at Dehradun had sought the approval of draft assessment order from Additional Commissioner of Income Tax who is stationed at Meerut on 30.03.2015. He thereafter pointed to the approval order of Additional Commissioner of Income Tax which is dated 30.03.2015 and placed at Page 55 of the paper book. From the aforesaid approval, he submitted that Addl. CIT had granted the approval for passing assessment order u/s 153A(1)(b) r.w.s 143(3) of the Act in various cases listed in the table therein which included the draft assessment order in the case of assessee also. He thereafter pointed to the copy of the order sheet which is placed at page 54 of the paper book and pointed to the noting made by AO dated 30.03.2015 wherein it is noted that the draft order was submitted for approval u/s 153D of the Act and the approval was received vide Letter No.1158 on the same
date. He thereafter pointed to the copy of the assessment order passed u/s 153A r.w.s 143(3) which is placed at Page 15 of the paper book and from that order, he pointed to the date of order which is dated 30.03.2015. He thereafter submitted that the distance between Dehradun and Meerut is 250 Kilometers and the request for approval as well as granting of approval and passing of the assessment order was on the same day which shows that no independent satisfaction was recorded by the Addl. CIT and there no application of mind while granting approval. To support his contention about non application of mind, he pointed to the approval granted u/s 153D of the ACIT, Meerut dated 30.03.2015 which showed that the approval was given to pass final assessment order in 21 cases on 30th March 2015 to DCIT, Central Circle. He submitted that the approval granted by Addl. CIT was a mere formality to pass the assessment order in the cases as recorded in the approval letter and it was not physically possible for Addl. CIT to go through the each and every case for approval and granting the approval on same day. He therefore submitted that provision of Section 153D of the Act were not complied with and the approval was nothing but a mere formality which was given in mechanical manner. He submitted that it is a settled law that approval u/s 153D cannot be mechanical exercise and that the sanction has to be given only after independent application of mind and after considering the relevant issues. He therefore submitted that since the order passed by AO was not in accordance with law, the same should be quashed. He thereafter
submitted that identical issue arising out of the same search also arose in the case of Uttarakhand Uthan Samiti. The Delhi Benches of ITAT in the case of Uttarakhand Uthan Samiti vs. ITO in ITA No.48 to 52/DDN/2019 (ITAT-DELHI) vide order dated April 2020 has in similar situation and similar facts held that in the absence of proper approval given u/s 153D, the assessment orders passed by AO to be not in accordance with law and therefore the assessment orders passed by the AO was treated as null and void. In support of his aforesaid contention, he pointed to the copy of the order of the Tribunal placed at page 176 to 200 of the paper book and from that order he pointed that the Ground No.4 & 5 raised in that appeal were identical to the ground raised by assessee in present appeal. He thereafter pointed to the relevant submissions of the assessee and findings of the Co-ordinate Bench of Tribunal. He thereafter submitted that similar issue also arose in the case of Wali Gramodyog Villas Sansthan vs. DCIT Central Circle and the Hon’ble Delhi ITAT in ITA No.2902 & 2903/Del/2017 (ITAT-New Delhi) vide order dated 08.01.2022 held that in the absence of proper approval u/s 153D, the order passed by AO to be null and void. He pointed to the copy of the aforesaid order placed at page 539 to 557 of the paper book. He therefore submitted that since the issue raised in the present appeals are identical to that of Wali Gramodyog Villas Sansthan (supra) and Uttarakhand Uthan Samiti (supra) and arising out of the same search, therefore, following the order of the Tribunal in those cases, the order of AO be set aside.
Learned DR on the other hand supported the order of AO and CIT(A) and submitted that CIT(A) has dealt with issue in his order and the order of CIT(A) be upheld.
We have heard the rival submissions and perused the material available on record. Through the present grounds, assessee is challenging the validity of the assessment framed u/s 153A r.w.s 143(3) of the Act in the absence of proper approval u/s 153D of the Act. It is the submission of Learned AR that the AO who is stationed at Dehradun had sought approval of draft assessment order on 30.03.2015 from Addl. CIT who is stationed at Meerut. The approval was given by Addl. CIT on 30.03.2015 in assessee’s case and other cases, which are listed in the approval and thereafter the assessment order was also passed by the AO on 30.03.2015 meaning thereby that the approval granted by Addl. CIT u/s 153D was mechanical and without application of mind. We find that identical issue arose in the case of Uttarakhand Udyan Samiti arising out of the same search was before the Co- ordinate Bench of Tribunal. The Co-ordinate Bench of Tribunal in ITA Nos.48 to 52/DDN/2019 held that in the absence of proper approval u/s 153D of the Act, the assessment order passed by AO were not in accordance with law and accordingly the order passed by AO was annulled. The relevant findings of Tribunal in the case of Uttarakhand Udyan Samiti (supra) are reproduced herein under: 13. “We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited by the parties. The only issue
to be decided in the impugned appeals are regarding the validity of the assessment order in absence of proper approval necessary for assessment as per the provisions of section 153D. The provisions of section 153D read as under:- “153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner. Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12) of section 144BA.”
13.1 A perusal of the order sheet entries copy of which is placed at page 37 of the paper book, Volume-I shows that on 30th March, 2015, the AO has mentioned as under:-
“Draft order submitted for approval u/s 153D. Approval received vide letter No.1158. Order passed u/s 153A. Issue notice of demand.” 14. Similarly, the letter addressed by the DCIT, Central Circle, Dehradun to the Addl.CIT, Central Range, shows that such draft assessment orders were submitted for approval on 30th March, 2015. The relevant scanned copy of the same reads as under:-
“ F.No.: DCIT/CC/DDN/DFA/2014-15/ Office of the Dy. Commissioner of Income Tax, Central Circle, Dehradun Dated : 30.03.2015
To The Addl. Commissioner of Income Tax, Central Range, Meerut Sir,
Subject: Submission of Draft Assessment Orders in DBIT Group of cases, Dehradun - Approval thereof - regarding
Kindly refer to the subject cited above.
2 In this context, it is submitted that in compliance to your directions the Draft Assessment Orders in the following cases u/s 153A of the I T Act 1961 are being submitted for your kind perusal and necessary approval.
Sl.No. Name of the assessee PAN Asstt. Years
Sh. Sanjay Bansal ACZPB9725A 2007-08 To 2013-2014 2. Uttarakhand Uthan samiti AAAAU1376N 2007-08 To 2013-2014 3. Wali Gram Udhyog sansthan AAAAW1501B 2007-08 To 2013-2014 ; 4. Shri Krishna Educational Trust AAATS 3624 C 2007-08 To 2013-2014
It is requested that approval may kindly be accorded to the draft assessment orders.
Yours faithfully, Encl: Case records: Sd/- (Poonam Sharma) Dy. Commissioner of income Tax, Central Circle, Dehradun.” 15. We find, Addl.CIT, Central Range, Meerut, granted approval vide letter dated 30th March, 2015, the relevant scanned copy of which reads as under:-
“OFFICE OF THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE, MEERUT
F. No. Addl. CIT/CR/MRT/153D/2014-15/1158 Dated: 30.03.2015
To’ The Dy. Commissioner of Income Tax Central Circle, Dehradun
Sub.: Draft Assessment Orders u/s I53A/153C in DBIT Group of cases, Dehradun - Approval u/s 153D of Income Tax Act, 1961 - regarding – Please refer to your letters F.No. DCIT/CC/DDN/2014-15/2338 dated 27.3.2015 and F.No. DCIT/CC/DDN/2014-15/2339 dated 30.03.2015 on the above the above mentioned subject. 2. In the following case of DBIT Group' of ca.ses, prior approval u/s 153D of the Income Tax Act, 1961 is accorded for passing assessment orders u/s 153A/143(3) or 144 and 153C/143(3) of the I.T. Act, 1961 in respect of the assesses for the assessment years as mentioned below:-
U/s. 153 A
Sl.No. Name of the assessee PAN Asstt. Years
01 Smt. Seema Bansal AHBPB3579P 2007-08 To 2013-2014 02 Smt Bimal Bansal ADCPB1768R 2007-08 To 2013-2014 03 Drishti Builders AAIFA4643E 2012-13 to 2013-14 04 Sh. Sushil Kumar AQLPK2365D 2007-08 To 2013-2014 05 Sh Sunil Dandriyal ALTPD8489N 2007-08 To 2013-2014 06 Strategic Marketing AADFS8010M 2007-08 To 2013-2014 07 Sh. Ashok Mehta ABNPM2590F 2007-08 To 2013-2014 08 CKSR Animation pvt ltd AAECC0802F 2011-12 to 2013-14 09 Bharti Water Pvt Ltd AACCB5459M 2007-08 To 2013-2014 10 Chand sons education city pvt ltd AAECC0801G 2011-12 to 2013-14 11 Water wealth infra tech india pvt ltd./AABCW0319C 2011-12 to 2013-14 12 Sumer chand and sons AACFS6622C 2007-08 To 2013-2014, 13 Sh. Sanjay Bansal ACZPB9725A 2007-08 To 2013-2014 14 Uttarakhand Uthan samiti AAAAU1376N 2007-08 To 2013-2014 15 Wali Gram Udhyog sansthan AAAAW1501B 2007-08 To 2013-2014 16 Shri Krishna Educational Trust AAATS 3624 C 2007-08 To 2013-2014
u/s 153C Sl.No. Name of the assessee PAN Asstt. Years 01 Rama Gautam ADQPA8706L 2007-08 To 2013-2014 02 Mamta Dandriyal AYDPD5055F 2007-08 To 2013-2014 03 Gulzar Ahmed AFGPA7405Q 2007-08 To 2013-2014 04 Sohan lal kala AKMPK8071H 2007-08 To 2013-2014 05 Rishi Raj ANOPS3775M 2007-08 To 2013-2014
You are directed to pass necessary orders, as discussed/as amended in the drafts, in the above cases for all the relevant years. This office letter approving the draft orders shall invariably be quoted in the final order. A copy of final order passed in these cases shall be sent to this office for record. Further, proceedings are to be filed in the case of assessee when it was incorporated/was not in existence.
Record submitted in the cases of the above assesses are being returned. Sd/- (Anupam Kant Garg) Ends: as above. Addl.Commissioner of Income Tax Central Range, Meerut.”
From the above, it is seen that the AO passed the draft assessment order on 30.03.2015 and submitted the same for approval before the Addl.CIT who is stationed at a place 250 Kms away from Dehradun on 30.03.2015, the Addl. CIT gave the approval subject to certain modifications/amendments on 30.03.2015 and the AO passed the order on the same date i.e., 30th March, 2015. On a pointed query raised by the Bench as to whether any movement register is available to verify as to whether the files were sent to the Addl.CIT at Meerut,
the ld.CIT- DR submitted that there is no separate movement register for the purpose of sending for approval of the draft assessment orders by the AO to the JCIT/Addl.CIT, Central Range, Meerut. She submitted that it is customary practice that staff go with file and after discussion/approval get it back. The relevant portion of the reply given by the ld. CIT-DR at para 10 of her written synopsis reads as under:- “10. It has been submitted by the Assessing Officer that the there is no separate movement register for the purpose of seeking approval of draft order by the Assessing Officer from the JCIT/Addl. CIT, Central Range Meerut. It is customary practice that staff go with file and after discussion/approval get it back.”
A perusal of the above clearly shows that the approval was given in a mechanical manner by the Addl.CIT to the draft assessment orders passed by the AO. As mentioned earlier, the AO has submitted the draft assessment orders on 30th March, 2015 as per the order sheet entry which indicated that the AO was very much available in her office at Dehradun on 30th March, 2015. The Office of the Addl.CIT is situated at Meerut which is about 250 Kms from Dehradun. There is no other record to suggest that the files containing the draft orders were, in fact, moved from the office of the AO at Dehradun to the office of the Addl.CIT at Meerut who went through the same and has given approval with certain amendments. It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, there is nothing on record to suggest that the files have in fact moved from Dehradun to Meerut for obtaining approval. Therefore, in our opinion, the mandatory provisions as required u/s 153D has not been complied with.
17.1 We find identical issue had come up before the Delhi Bench of the Tribunal in the case of Rishabh Buildwell Pvt Ltd. (supra). The Tribunal, after considering the various decisions, quashed the assessment orders by observing as under:-
“11. We have heard the arguments of both the parties and gone through the record and documents filed before us. For ready reference the entire part of the letter of approval dated 30.12.2016 is reproduced as under: “Subject: Prior approval u/s 153 D in the cases of Cloud-9 & Sethi Groupregarding. Please refer to your office letter F. No. DCIT/ CC/ GZB/ S&S/153D 2016- 17/2904, 2908 & 2911 dated 28-12-2016 & 30-12-2016 on the above mentioned subject. 2. In the following cases of Cloud-9 & Sethi Group, prior approval u/s 153D of the IT Act, 1961 accorded for passing assessment orders in respect of the assesses for the assessment years as mentioned below:
S. Name of the assessee PAN A.Yrs. No. 1 M/s Risabh Buildcon Pvt. Ltd. AACCR7502F 2009-10 to 2015-16 2 M/s R.G.V. Fininvest Pvt. Ltd. AAACR4383G 2009-10 to 2015-16 3 M/s Aggarwal Capfin Fin. Services P.Ltd. AABCA0925E 2009-10 to 2015-16 4 M/s Arihant Info Solutions P. Ltd. AADCA5015H 2009-10 to 2015-16 5 M/s Sethi Estate P. Ltd. AABCS7643B 2009-10 to 2015-16 6 Sh. Chander Mohan Sethi AASPS1246A 2009-10 to 2015-16 7 Sh. Gulshan Sethi AASPS1248Q 2009-10 to 2015-16 8 M/s East View Developers P. Ltd. AABCE5324R 2009-10 to 2015-16 9 Sh. Desh Bhushan Jain AAFPJ6467R 2009 10 to 2015-16 10 M/s Max City Developers Pvt. Ltd. AAECM5401A 2009-10 to 2015-16 11 Sh. Sanjeev Jain ACFPJ3817P 2009-10 to 2015-16 12 M/s Sethi Buildwell Pvt. Ltd. AAICS9/42C 2009-10 to 2015-16 13 Sh. Satpal Nagar AAFPN6467M 2009-10 to 2015-16 14 M/s Risabh Buildwell Pvt. Ltd. AACCR9776R 2009-10 to 2015-16 15 Srnt. Magan Jain AIMPJ8085G 2009-10 to 2015-16 16 M/s Angel Buildcon Pvt. Ltd. AAFCAI968H 2009-10 to 2015-16
A technical approval is accorded to pass assessment orders in the above cases on the basis of the drafts assessment orders submitted for the assessment years in reference years. You are directed to ensure taking into account the seized documents/papers and comments in the appraisal report pertaining to AYs. The fact of initiation of penalty proceedings, wherever, applicable, must also be incorporated in last para of the order. The initiation of correct penalty provisions of I.T. Act u/s 271 (1)(c)/ 271AAB, as per facts of the ease, must be ensured.
This office reference no of approving the draft orders shall invariably be quoted in the assessment orders to be passed. A copy
of final assessment orders passed in these cases should be sent to this office for record immediately on passing the assessment orders.
It must also be ensured that if any document in this case, pertains to any third party assessed with a different AO, the necessary information for taking necessary action must be sent to concerned AO immediately.
The salient points of the approval letter is as under:
It is a technical approval
The AO was directed to ensure that the comments in the appraisal report are duly ensured.
The penalty proceedings should be mentioned wherever applicable for the initiation of correct penalty provisions must be ensured.
After taking into consideration, the above points, a copy of the final orders passed be sent to the JCIT.
The Income Tax Act envisages prior approval of the JCIT before passing the assessment order. The provisions read as under:
“no order of assessment or reassessment shall be passed by the assessing officer below the rant of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of Section 153A or assessment year referred to in clause (b) of sub-section (1) of Section 153B except with the prior approval of Joint Commissioner.”
When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. The Act envisages that the JCIT’s approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or rework the order once the approval has been accorded. The approval to be given is statutory in nature and legally binding. In the instant case, the approving authority has clearly mentioned that the approval given is a technical approval. Moreover, he has directed the DCIT to ensure the seized materials and the findings of the appraisal report to be incorporated in the final assessment order. This clearly goes to proves that the approval given by the JCIT is not a final
approval as required u/s 153D of the Act but a conditional approval subjected to modifications by the DCIT after receiving of the approval which makes it an invalid, qualified, uncertain approval. This is not the mandate of the Act. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. The approval has to be statutory nature after due application of mind, it should be neither technical nor proforma approval which is envisaged u/s 153D of the Act. Reliance is placed the judgment of Coordinate Bench in the case of M3M India Holdings (ITA 2691/2018). And the judgment of Hon’ble High Court of Bombay in the case of Pr CIT vs. Smt. Shreelekha Damani [ ITA no 668 of 2016 Dated: 27th November, 2018 ] is as under:
“1. This appeal is filed by the Revenue challenging the judgment of Income Tax Appellate Tribunal ("the Tribunal" for short) dated 19th August, 2015.
Following question was argued before us for our consideration:- "Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that there was no 'application of mind' on the part of the Authority granting approval?
Brief facts are that the Tribunal by the impugned judgment set aside the order of the Assessing Officer passed under Section 153A of the Income Tax Act, 1961 ("the Act" for short) for Assessment Year 1 of 4 Uday S. Jagtap 668-16-ITXA15=.doc 2007-08. This was on the ground that the mandatory statutory requirement of obtaining an approval of the concerned authority as flowing from Section 153D of the Act, before passing the order of assessment, was not complied with.
This was not a case where no approval was granted at all. However, the Tribunal was of the opinion that the approval granted by the Additional Commissioner of Income Tax was without application of mind and, therefore, not a valid approval in the eye of law. The Tribunal reproduced the observations made by the Additional CIT while granting approval and came to the conclusion that the same suffered from lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors
before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record.
The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time 2 of 4 Uday S. Jagtap 668-16- ITXA-15=.doc before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid.
Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks :-
"To, The DCIT(OSD)-1 Mumbai
Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg.
Ref : No. DCIT (OSD)-1/CR-7/Appr/2010-11 dt. 31.12.2010
As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analise the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961."
In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st 3 of 4 Uday S. Jagtap 668-16-ITXA- 15=.doc December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere
mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises. 8. Accordingly, the Tax Appeal is dismissed.”
Hence, keeping in view the facts and circumstances of the case and peculiarities of the instant case, owing to the judgment of the Hon’ble High Court, we hereby hold that the assessments completed by the DCIT do not stand in the eyes of law. Since the orders have been treated as null and void, any adjudication on other issues would be academic in nature only, hence refrained to do so.
In the result, the appeals of the assessees are allowed. (Order Pronounced in the Open Court on 04/07/2019).”
We find, the Jodhpur Bench of the Tribunal in the case of Indra Bansal & Ors (supra) has observed as under:- “6.4 Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 22 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down
that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Joint Commissioner had adequate time with him so as to grant approval after duly examining the material prior to approving the assessment order. The circumstances indicate that this exercise was carried out by the Joint Commissioner in a mechanical manner without proper application of mind. Accordingly, respectfully following the ratio of the Co-ordinate Benches of Mumbai and Allahabad as afore-mentioned and also applying the ratio of the judgement of the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT (supra), we hold that the Joint Commissioner has failed to grant approval in terms of section 153D of the Act i.e., after application of mind but has rather carried out exercise in utmost haste and in a mechanical manner and, therefore, the approval so granted by him is not an approval which can be sustained. Accordingly, assessments in three COs and nineteen appeals of the assessee(s), on identical facts, are liable to be annulled as suffering from the incurable defect of the approval not being proper. Accordingly, we annul the assessment orders in CO Nos, 8 to 10/Jodh/2016 and ITA Nos.325 to 331/Jodh/2016. Thus, all the three Cos and the nineteen appeals of the assessee, as aforesaid are allowed.” (emphasis supplied by us) 19. Since the facts of the instant case are identical to the facts of the case cited (supra), therefore, respectfully following the decisions cited above, we hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. Accordingly, the orders passed by the AO are annulled and the ground raised by the assessee on this preliminary issue as per grounds of appeal No.4 and 5 are allowed. Since the assessee succeeds on this preliminary ground of validity of assessment order in absence of proper approval u/s 153D, the other grounds raised by the assessee do not require any adjudication being academic in nature. The appeal filed by the assessee is accordingly allowed.”
Before us, no distinguishing feature in the facts of the present case and that in the case of Uttarakhand Uthan Samiti (supra) has been pointed out by Revenue nor has Revenue placed any material on record to demonstrate that the order of Tribunal in the case of Uttarakhand Uthan Samiti (supra) has been set aside/overruled or stayed by higher judicial forum. We, therefore following the decision of the Co-ordinate Bench of Tribunal in case of Uttarakhand Uthan Samiti (supra) and for similar reasons hold that in absence of proper approval u/s 153D the orders passed by AO to be null and void. We accordingly quash the order of the AO. Thus these Grounds of assessee are allowed.
Since we have set aside the assessment order to be null and void in the absence of proper approval u/s 153D, the other grounds raised by assessee require no adjudication.
In the result, appeal of the assessee is allowed.
As far as ITA Nos. 164, 166, 162, 161 & 165/DDN/2019 for A.Ys. 2009-10 to 2013-14 is concerned, before us, both the parties have submitted that the issue raised in the aforesaid appeals is identical to that of ITA No.163/DDN/2019. We have hereinabove while deciding the appeal and for the reasons stated have allowed the appeal of the assessee. We therefore for similar reasons allow the appeals of the assessee. Thus the grounds of the assessee are allowed.
In the combined result, all the appeals of the assessee are allowed.
Order pronounced in the open court on 27.05.2022
Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 27.05.2022 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI