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TMI Blog2018 (7) TMI 1888X X X X Extracts X X X X X X X X Extracts X X X X ..... he Parliament cannot be treated as an empty formality. The provision has certain purpose. The purpose behind the enactment of the above provision in the Statute by the Parliament are two folds. Firstly, the approval of the Senior Authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by Senior Authority will also ensure that proper enquiry or investigation are carried out by the Assessing Authority. Thus, the above provision provides for mental application of a Senior Officer of the Department, which in turn, provides safeguard to both i.e. Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed in the case of Akil Gulamali Somji vs ITO [2012 (4) TMI 318 - ITAT, PUNE] wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law, alsoconfirmed by HC [2013 (1) TMI 790 - BOMBAY HIGH COURT] In the instant case, we find that the Supervisory Authority has himself admitted that because of reasons stated by him, could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion of the assessment and therefore the assessment order is liable to be quashed. The ground of appeal is contested as follows:- . a. That as per the provisions of section 153D of the Act every assessment order in search cases are to be passed with the prior approval of the Ld. JCIT/Addl. CIT. In the instant case as mentioned in the bottom of the assessment order the approval had been obtained from the Ld. Addl. CIT on 27.03.2015. For this proposition it is submitted that, the AO issued notice u/s.142(1) on 30.3.2015 requisitioning certain documents, clarifications etc. If the assessment was completed prior to 27 03 2015, then how the notice u/s 142(1) was issued on 30.03.2015. As a matter of fact, no assessment was completed on 27.03.2015 or prior to that nor also orders were approved by the Ld. Addl. Commissioner of Income Tax. Therefore, the assessment order passed without obtaining the approval from the Addl. Commissioner of Income Tax is illegal and void abinitio and liable to be quashed. b. Further it is submitted that, as per the provisions of section 153D the Act, every assessment or reassessment order is to be passed not below the rank of Joint Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. A.R. was referred to the A.O. u/s.250(4) of the Act on 23.09.2016. In reply, the A.O. has given the following reply in letter dt.17.10.2016:- The contention of the assessee that the assessment orders were passed without the prior approval of the Addl. CIT is not correct. Assessment orders have been passed with the in principle approval of the Addl. C.I.T. after obtaining the same as required u/s.l53D of the I.T. Act, 1961. The imminent additions/disallowances which the Assessing Officer was going to make in its assessment orders to be passed u/s.l53A(b) of the Act were there in the proposed draft assessment orders. So the averments of the assessee that assessment orders were passed without obtaining the approval of the Addl. CIT is altogether misplaced and incorrect and not borne by the material available on record. Hence deserve to be dismissed. The A.O. has furnished copy of the approval letter of the Addl.CIT, Range- 1, Bhubaneswar dt.27.03.2015. The copy of the letter has been placed record. On perusal of the approval letter, it is clearly evident that the Addl. C7 asked the A.O. to verify opening balance with evidence failing which the opening balance may be added t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive intent is clear inasmuch as prior to the insertion of Sec.153D, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/reassessments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their minds on the materials on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authorities have to approve the assessment order. 11.4 The question before us is has this been done in the present case . The language of the approval letter says no . Let us now consider some analogous provision in the Act. Sec. 142(2A): 142(2A) If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be really so if one tries to understand it carefully. Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the section is not turned into an empty ritual. Needless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to the facts in issue is Sec. 158BG which read as under: The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or an Assistant Director or Deputy Director, as the case may be: Provided that no such order shall be passed without the previous approval of-- (a) the Commissioner or the Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or after the 1st day of January, 1997. 11.8. In this section also it is provided that the order cannot be passed without the previous approval. This section was thoroughly scrutinized by the Tribunal Madras Bench in the case of Kirtilal Kalidas Co. Vs DCIT 67 ITD 573, at para-41 of its order the observations of the Tribunal are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court in the case of United Electrical Co. Pvt. Ltd. Vs CIT 258 ITR 317 has held that the proviso to sub-section (1) of section151of the Act provides that after the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in-builts safeguards to prevent arbitrary exercise of power by an 7 ITA Nos.534 611/M/04 Assessing Officer to fiddle with the completed assessment . The Hon ble High Court further observed that what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the statement of the said parties, perhaps he would not have granted his approval, which was mandatory in terms of the proviso to sub-section (1) of section 151 of the Act as the action under section 147 was being initiated after the expiry of four years from the end of the relevant assessment year. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the Ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue 7. Further, he relied on the decision of Jodhpur Bench of the Tribunal in the case of Smt. Indra Bansal Ors vs ACIT, (2018) 192 TTJ (Jd) 968, wherein, it was held 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 Jt. CIT in hasty manner without even going through the records as the records were in Jodhpur while the Jt CIT 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. 31st March, 2013. Thus, it is apparent that the JCIT did not have adequate time to apply his mind to the material on the basis of which the AO 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 16,35,201.65 has been shown as cash in hand with ₹ 28,897.35 as cash at bank. Besides, investment of ₹ 4 Lacs in fixed deposits and ₹ 3 Lacs in MIS in Post Office has been shown. This appears quite unusual as the assessee was maintaining bank account with Punjab National Bank. No prudent person would keep such a big cash amount in his hand despite having a bank account. Further you should examine the opening cash in hand and ask the assessee to furnish evidence in support of it failing which this opening cash in hand may be added to the total income of the assessee. 9. Ld D.R. submitted that the Addl. CIT, Range-1, Bhubaneswar has gone through the seized materials and after that has given approval to the order of the Assessing Officer and while doing so, he has directed the Assessing Officer to examine the opening cash in hand before determining the total income of the assessee. The Assessing Officer after examining the same as per the direction of the Addl. CIT has passed the assessment order. Hence, it is wrong to say that the order of the Assessing Officer is not approved by the Additional CIT in view of the provisions of section 153D of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval to examine the cash in hand before passing the assessment order. He argued that the said details show that though there was shortage of time, the Addl. CIT has applied his mind before granting approval to the assessment order by burning the midnight order. 14. The common Ground No.4 in both the appeals reads as under: That the assessment order passed u/s.153A(a) are barred by limitation and liable to be quashed. 15. The CIT(A) has disposed of this issue by observing as under: That, the assessment order passed u/s 153A(a) is barred : limitation and liable to be quashed. The ground of appeal is contested as follows:- a. That, in the instant case as it is pointed out in the assessment order, it had been passed on 31.03.2015. For this proposition is it to bring to your kind notice that, the notice u/s 142(1) was issued and served on the appellant on 30.03.2015 to which the hearing was fixed on 31.03.2015. On 31.03.2015, the A/R of the appellant appeared and filed the required documents, explanations and necessary written submission. As per the provisions of the Act after getting of the documents, submissions etc the ld Assessing Officer applied his judicious m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'cannot be said to be passed unless it is in some way pronounced or published or the party affected has a means of knowing it. It is not enough if the order is made, signed and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking, or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. This should be done within the prescribed period, though the actual service of the order may be beyond that period. d. Further it is submitted that, the Hon'ble jurisdictional ITAT respectfully following the aforesaid decision in the case of ACIT, Circle-2(2) Vs. Orissa Stevedores Ltd. Vide ITA No.409-411/2011 CO no.30-32/CTK/2011, it was held the communication is condition precedent to an order of assessment becoming effective. e. Recently the Hon'ble Karnataka High Court in the case of Commissioner of Income Tax and Others Vs. B J N Hotels Ltd. (2016), 382 ITR 110 (Kar) it was held that, to make an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erving of assessment order (s) which resulted in demand by hand did not violate any rule. (ii). It is nowhere mentioned in the statute that the assessment order would have to be served on the assessee. Ail that is required is that the notice of demand specifying the sum payable should be served on the assessee in the prescribed form and would be accompanied by an assessment as held in the case of CIT Vs. Kailasho Devi Burman (1978) 115 ITR 732 (Cal.,) Sivalingam Chettiar (VS) Vs. CIT (1966) 62 ITR 678 (Mad.), Kalyankumar Ray Vs. CIT (1991) 191 ITR 634 (SC), Arrah Sasaram Light Railway Co. Ltd. Vs. CIT (1993) 204 ITR 807 (Cal), Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. Vs. CIT (1994) 208 ITR 882 (Cal), etc. The limitation period prescribed in section 153 is the period within which the AO has to complete one stage of the proceedings, that is, the assessment of the income and the determination of the tax payable. It is not necessary that the terms of the order of assessment should, also be communicated to the assessee within that period [Relied on RM.P.R. Viswanathan Chettiar Vs. CIT (1954) 25 ITR 79 (Mad.) approved in CIT Vs. Balkrishna Malhotra (1972) 81 ITR 759 (SC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before the said date. It does not mean that it should be served. On this ground itself as we find that the decision of the Coordinate Bench has erroneously laid down the law on this issue if the word 'made' is given the meaning served then the section itself would become unworkable and it would make all assessment orders made on the last day illegal. In the circumstances, respectfully following the principles and the ratio laid down by the Hon'ble Madras High Court in the case of CIT Vrs. Hi-Tech Aral Ltd. (20-10) 321 ITR 477, we differ from the decision taken by the Coordinate Bench in the case of Durga Condev Pvt. Ltd. (Supra) as also decision of Shanti Lai Godawat Ors. Vrs. ACIT (2009) 126 TTJ(Jodh) 135. Here, we may specifically mention that in the case of Durga Condev Pvt. Ltd. (Supra), though one of us is co signatory in that order still we differ from the said order as there is no bravery. perpetuating an error in law. The fact that the assessment order is dt.31.12.2010 an there is no evidence available to show that this order was not passed on 31.12.201t makes this order sustainable in law as under the provisions of the Genera/ Clauses Act . government docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 18. Ld D.R. on the other hand submitted that Section 153A requires the order to be made within the time limit and does not requires the same to be served on the assessee and they can be served later on. He agreed with the facts as stated in the order of the CIT(A) that although the assessment order was passed on 31.3.2015, it was served on the ld A.R. of the assessee by hand on 8.4.2015. He relied on the decision of Hon ble Calcutta High Court in the case of Binani Industries Ltd vs. CIT (2015) 59 taxmann. Com 389 and submitted that the Hon ble High Court has upheld the order in absence of any material to show that the Assessing Officer revisited the orders after 31.12.2016. 19. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, the assessee has raised two legal issues. Firstly, the order of assessment being issued after the statutorily permitted time is barred by limitation. Secondly, no requisite approval as envisaged under the provisions of Section 153D of the Act was obtained and, therefore, the impugned order of assessment is barred in law. 20. We find force in both the above legal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in section 153, the AO shall make an order of assessment or reassessment (a) In respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 11. A perusal of the above provisions show that the language used by the legislature in the above provision is in negative and the words used are order of assessment and not only assessment . The word order denotes a command which is to be followed by somebody else. Unless the command is communicated to the person by whom it has to be followed, it does not become an order . 12. In our considered view, simply determining the total income of an assessee and determining its tax liability on a piece of paper and signing the same may constitute an assessment but only on its communication to the assessee it becomes order of assessment . Thus, in our considered opinion, to become a legal valid order of assessment, its communica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts Ltd., 88 ITR 192 (SC). 16. Coming to the facts of the instant case, it is not in dispute that the last authorisation u/s.132 of the Act was executed on 28.5.2014. Twenty- one months from the end of the financial year 2014-2015 expires on 31.12.2016. Therefore, the orders of assessment in pursuance to the said search for the assessment years 2009-2010 to 2015-2016 were to be made on or before 31.12.2016. 17. It is not in dispute that the orders of assessment under consideration were dispatched only on 7.1.2017. Hence, in our considered opinion, the said orders of assessment were time barred and consequently, we set aside the same and allow this ground of appeal of the assessee for all the seven years under appeal. 22. In view of above, as in the instant case, the communication process of the assessment was not initiated admittedly within the prescribed period of limitation, hence it did not become an order of assessment within the period of limitation. We, therefore, have no hesitation in holding that the impugned order of assessment is barred by limitation. 23. In the instant case, the alleged approval letter dated 27.3.2015 of the Addl. CIT, Range-1, Bhubanes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Akil Gulamali Somji vs ITO, in IT Appeal Nos.455 to 458 (Pune) of 2010 order dated 30.3.2012, wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. The Hon ble Bombay High Court in the case of CIT-II Vs Shri Akil Gulamali Somji, in Income Tax Appeal (L) No.1416 of 2012 order dated 15.1.2013 concurred with the view of the Tribunal that not following of the provisions of section 153D of the Act will render the related order of assessment void. 25. In the instant case, we find that the Supervisory Authority has himself admitted that because of reasons stated by him, could not apply his mind and has accorded the approval mechanically to meet the requirements of law as the requirement was merely a formality. The said Supervisory Authority had a duty towards both the assessee as well as the Revenue which was failed to be performed in the instant case. 26. Further, we find that the approving authority has required the assessing authority to conduct further enquiry in respect of opening cash in hand. The Assessing Authority thereafter has never communicated his findings of the further enquiry to the ..... 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