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TMI Blog2021 (4) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) hereinafter] dated 03.01.2014 pertain to Assessment Year 2005-06. The assessee has also filed Cross Objection against the very same order of ld. CIT(A), therefore, we heard the same together and disposing of the same by this common order 2. When this appeal is taken up for hearing, Smt. Neerja Pradhan, ld. Departmental Representative and Shri Dhiraj Ghai, ld. Representative of the assessee brought to the notice of the Bench that this appeal relates to the Mittal Group of cases, which was decided earlier by this Bench. Both the Representative of the assessee and the Revenue clarified that the facts and material are same as in the other cases decided by this Tribunal, therefore, both side no objection to follow the earlier order of this Tribunal. 3. We have also carefully gone through the material available on record including the approval said to be granted by Joint Commissioner u/s. 153D of the Act. We find that the issue arises of consideration in this appeal was already decided by this Bench of this Tribunal in IT(SS) No.143/Jab/2014 by order dated 04.03.2021 and other group cases. For the purpose of convenience, we are reproducing the order of this Tribunal dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in AAA Paper marketing Ltd. vs. ACIT. 4. On the contrary, Smt. Neerja Pradhan, ld. representative for the revenue submitted that no doubt, the letter of the JCIT says that he was holding the charges of six ranges, therefore, it was not possible for him to go into the deep, however, finally he approved the draft assessment order as per technical requirement u/s 153D of the Act. Before this technical approval was given, according to ld. Departmental Representative there were discussions between the A.O. and the JCIT which is evident from the correspondence between the JCIT and the A.O. Referring to the copy of the letter addressed to the A.O. by the JCIT, the ld. DR submitted that there were discussions between the A.O. and the JCIT, therefore, it cannot be said that there was no application of mind. The A.O. also has responded to the letter of the JCIT dated 21.12.2011 by this letter dated 22.12.2011. The assessee was also invited for the discussion along with the A.O. in the chambers of the JCIT. The JCIT has also written a letter to the Commissioner on 20.12.2011 in order to take the Commissioner into confidence. The A.O also by his letter dated 26.12.2011 reminded the J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eye of law. In other words, unless the JCIT approves the proposal/draft assessment of the A.O. by applying his mind to the facts of the matter, the A.O. would not get jurisdiction to pass the assessment order. In other words, the AO will be vested with jurisdiction to pass assessment order only after the approval granted by JCIT u/s. 153D. Hence, the approval of JCIT is mandatorily requirement. 8. We have also carefully gone through the judgment of the Apex Court in Jai Prakash Singh (supra). This judgment of the Apex Court relate to service of notice on the legal heirs of deceased assessee. It is not a case of approval as required by statutory provision. Therefore, the Judgment of the Apex Court is not applicable to the facts of this case. 9. We have also gone through the judgment of the Bombay High Court in Mrs. Ratanbai N.K. Dubash (supra). In this case, the AO passed the order without obtaining direction from Inspecting assisting Commissioner. Hence, the assessment was annulled. This judgment of the Bombay High Court in fact supported the case of the assessee. Moreover, this Bench of the Tribunal in Tarachand Khatri (supra) has found that on identical circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (i) Share capital in various group companies of Mittal Group (ii) Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon (iii) Investment in Jewellery and capital gain on sale of these jewellery items linked to land purchased by the assessee in the name of on Shri Kale (iv) Issue related to sale of land having Dolomite mines through route of sale purchase of shares of the company. (v) Excavation and local cartage charges. In this meeting, all the points of addition and replies of the essence were discussed in length and you were directed to proceed as per line of action laid down in the discussion. For your convenience and clarity of action to be taken the main point are discussed here below:- i. Share capital in various group companies of Mittal Group: Without reproducing the contents of the note, it is to observe that you have not given any basis for including some part of share capital in the hands of family members of assessee. The specimen case was of Smt. Sarla Mittal for A.Y. 2004-05 in which the proposed addition of ₹ 1,3,00,000/- could not be explained by you. You were specifically asked by hon'ble CIT to explain how this working has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble apex court judgment and other High court judgment. In case you wish to differ on this matter, you may put up your view point before undersigned. (ii) Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon. In this matter also, detailed discussion was made and Hon'ble CIT, has clearly indicated that you should examine whether any investments in purchase of share of these companies/liquidation of investments of these companies has been made by the assessee in cash. Wherever any such investment is found. it should be properly examined and may be considered for additions as undisclosed investment of these companies (iii) Investment in Jewellery and capital gain on sale of these jewellery items linked to land purchased by the assessee in the name of on Shri Kale On this issue, during discussion, il was found that assessee has already surrendered the amount of cash investment in the said land. Later on. the assessee paid to Shri Kale by cheque and got witthdrawn the same amount in cash as per copy of bank account furnished. It is also found that this cash was available with the assessee and he may have utilized it for the purchase of jewellery etc. as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the assessee. e. Interest on loans taken against FDRs, which are duly recorded by the assessee. Further your may also verify correct value to be adopted for sale of property in in the case of Shri Pawan Kuamr Mittal (HUF). On the other issues, which may come across in other draft orders, instructions will be issued separately. Copy of note addressed to Hon'ble C.I.T. is enclosed. (Abhishek Shukla) Joint Commissioner of Income Tax Range-Katni Shri C.R. Mittal Sons (HUF). IT(SS) A No. 100 Jab 2014 10 Copy to: The Commissioner of Income Tax-1, Jabalpur with reference to discussion made. With your honor in this connection. Joint Commissioner of Income Tax, Range-Katni. Office of the Assistant Commissioner of income tax Circle Katni, Katni(MP) F.No ACIT TE/M /1530 approval/ Camp- Jabalpur, dated the 22 Dece: 2011 To, The Joint Commissioner of income tax, Range Katni Jabalpur, Sir, (By name Sub Approval of Draft assessment order u/s 153A/143(3) in the case of different Aassessees of Mittal Group Katni Regarding Ref. Your office letter no.JCIT/R-Katni/Mittal Group/11-12 dated 20.12.2011- addressed to CIT-I Jabalp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agrawal Coal Corporation wherein the case laws suggested by the assessee and also in the present letter you had quoted have been elaborately discussed and held that merely filing of PAN, copy of return, profit and loss account is not sufficient. In view of your advise, and Following the decision of ITAT Indore bench, such additions were made. 4. Another point raised is Fixed deposit Receipts in the cases of Ankit/Novas/Nippon. It may be clarified that the case of Nippon is neither assessed at Katni nor where it is being assessed has given by Mittal. As regards this I want to say that the issue of Nippon is beyond the jurisdiction. As regards the Ankit Novas, the draft order is yet to be finallred and the decision is still pending at my end due to the fact that on 20/12/2011 during the course of discussion, it was told to me that the matter is being referred to Dl(Inv) for clarification. Only on receipt of the clarification, the assessment order need to be finalized. It may further be stated that in the case of Ankit Tracom Pvt Ltd., the standing counsel had informed telephonically that passing of assessinent order is stayed. However, it was made clear that assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to you. It appears that all the above issues are raised by your honour as per the version of Mr. Lalit Mittal and Shri RN Mittal, CA. 7. Similar is the position regarding Excavation and cartage charges- the matter relates to unaccounted purchases and non debiting of expenses based on various seized documents, statements of various employees at the time of search and post search enquirles. The addition was made on account of unaccounted transactions. 8. From the perusal of the letter dated 21/12/2011, it is not clear, whether the assessment orders submitted to your office was approved or otherwise under sec. 153D or the instructions are under sec. 144A. 9 As per the appraisal report the proposed additions were more than 125 crores and if there is major deviation from such proposal, as per instructions of the Board, deviation report should be famished to the Investigation wing. From your above referred letter, It is not clear, whether any deviation report was furnished to the Investigation wing or not. This may also be made clear to me so that with the short time span, I could complete the search seizure assessments, 9. It may be made clear that recently my sis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltaneously refer to appraisal report so that a proper and balanced view or the issues may be taken in shortest possible time. The major issues crystallized are presented below for your kind consideration and necessary directions. 1. Share capital in various group companies of Mittal Group It is observed that some companies have subscribed to the share capital of group companies of Mittal Groups. This capital contribution by the Subject to verification by the investigation wing and it was opined by it that this was introduction of undeclared income by the Mittals in their group companies in the name of these companies. In appraisal report, year-Wise introduction of capital in the name of various companies of Mittal family has been worked out, which is the basis of proposed additions in different years in the cases of family members of Mittal group. The A0 is of the view that these transactions are sham transactions as some of the papers related to transfer of shares found in the possession of Mittal family blank and in all probability these shares were held by the family members of Mittal family in the period of 2000-2005 and were purported to have been transferred to these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en received. In my view, the presumption of these investors companies being bogus companies is not established. On the other hand, the assessee has proved beyond doubt the existence of these companies and the fact of subscription of shares by them through banking channels. However, you honors kind directions are solicited as this issue are common in most of the companies of Mittal Group as well as family members of Mittal Groups. 2. Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon It is observed that FDRs amounting ₹ 66 crores approximately were found in the premises of the assessee during search. Initially, during search these were listed but no impounding of them was made. Later, it is claimed by the assessee that the department has attached these FDRs. The source of investment in these FDR has been treated as unexplained in appraisal report, which is the basis of AOs addition on this point However, it is claimed by the assessee that these FDRs were made out of liquidation of companies investments with various companies, in which the assessee has subscribed shares sometime back. The version of assessee is that these companies were having investment most ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as proposed investment in these jewelries to be made from undeclared income of the assessee. The assessee has further raised objection to long-term capital gain calculation on the sale of these jewelleries taking purchase value as on 01.04.1981, while these jewelries were purchased after taking withdrawal from land transactions related to Shri Kale. No positive evidence regarding this has been brought on record either by the AO. 4. Issue related to sale of a company having Dolomite mines through route of sale / purchase of shares of the company. The one of the company of the assessee was owner of land having Dolomite mines, which was subject matter of sale to Jaypee Group. The assessee chose the route of sale through transfer of shares of the owner company. In this transaction, the amount of capital gain received was partly invested in REC bonds to avail benefits of Section 54EC and remaining amount was offered for taxation. The assessee has shown photo-copies of cheques and MOU reached between assessee and Jaypee Group, which were impounded also during search proceedings. The AO is of the view that this transaction is a shani transaction as it is unbelievable that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation Wing, Apart from this affidavit, the assessee is supported by copies of returns filed by these contractors supplying labours and doing excavation work. On the face of these documentary evidences regarding these contractors who have received payments from the assessee after TDS and who have also filed their returns in the Income Tax Department, the claim of the assessee appears to be proper and no disallowance of expenses on the basis of statement can be made. Regarding expenses of local carting, the assessee has produced evidence in the form of truck numbers, payment vouchers, registration book of trucks, details of payments etc. The list of payments was found at the premises of the assessee during search. 6. Purchase of lands. The additions have been proposed by the AO, on the presumption that the assessee has paid some extra money over and above the value declared in sale deed without bringing any evidence on record to support his addition. The assessee has explained that during search no any lose paper or any other evidence has been found to reach any such conclusion regarding excess payment over and above the amount in the books accounts, The contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INCOME TAX RANGE-1, CR BUILDING, NAPIER TOWN, JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-II, JABALPUR RANGE-SATNA, KATNI, CHHINDWARA AND SAGAR F.No.JCIT/Range/Katni/Mittail/2011-12 Dated: 26.12.2011 To The Asstt. Commissioner of Income Tax, Circle, Katni Sub: Statutory approval of Draft Assessment order u/s 153D in the cases of different assesses of Mittal Group, Katni- Reg. Please refer to your letter No.ACIT/KTE/MITTAL/153D/11-12 dated 26th December, 2011 forwarding therewith draft assessment orders in Mittal Group of cases for AY 2004-05 to 2010-11: Covering letter date Name of the assessee Assessment year 26.12.2011 1. Vijay Kumar Mittal (HUF) 2004-05 to 2010-11 2. M/s Mittal Roadways 2004-05 to 2010-11 3. M.P. Minerals Pvt. Ltd. 2004-05 to 2010-11 2. Due to shortage of time, as I am holding charge of six Ranges, it is not possible for me to go into the deep, therefore, the draft assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee stands allowed. (As per my separate, assent order) , (Sd/-) (Sanjay Arora) (N.R.S.Ganesan) Accountant Member Judicial Member In Re: Mittal Roadways (P.) Ltd. (IT(SS)A No. 143/Jab/2014 CO 64/Jab/2014) 1. I have perused the Order proposed by my ld. brother, JM, and am principally in agreement therewith in that the impugned assessments fail for want of the necessary approval u/s. 153D. My reasons for the same take a different trajectory and, accordingly, are being stated per a separate, assent order, which is to be read in conjunction with the said order. 2. The appeal raises the issue of maintainability of the impugned assessments in view of the approval u/s. 153D of the Act dated 26/12/2011 by the Joint Commissioner of Income Tax, Jabalpur ( Jt. CIT for short). Section 153D reads as under: 153D. Prior approval necessary for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is as the law contemplates an order of assessment or reassessment only upon his approval and, of course, within the time prescribed therefor. That his directions to the AO in the matter were not in clear terms and, besides, did raise concerns, not addressed, is the substance of AO s letter dated 22/12/2011 to the Jt. CIT. The assessment order as passed the said non-approval being manifest from the order granting approval , can therefore only be regarded as not bearing his approval. 3. It was vehemently argued before us on behalf of the Revenue that the approval cannot be regarded as invalid only for want of the approving authority having, as clearly stated therein, not gone into depth , i.e., as much as he would have otherwise, i.e., without the time constraint, preferred to, that being itself a subjective matter, which would vary from person to person. Rather, as the communications exchanged between the two authorities would reveal, there was consideration of and application of mind to the various aspects of the assessment/s. It may, toward this, be relevant to traverse the provision, considering it in light of the legislative intent leading to its enactm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessments in search and search-related cases. This perhaps also explains the absolute bar on the issue of an order of assessment/reassessment without prior approval by the Range head in such cases. Where, therefore, the approving authority states of being constrained for time to go into the depth of the matter, it only indicates his non-satisfaction with the draft order. That this non-satisfaction obtains despite his examination of the various aspects of the assessment/s makes it all the more relevant. The same results from his application of mind and not otherwise. At the same time, he using the same phrase in all the approvals , given at the same time, it could and as it appears, that while he had gone into some depth in some cases, though not satisfied therewith, he might not have in others and, overwhelmed by the volume of work involved in the short span of time available, recused himself so to speak, by issuing technical approvals. Either way, the object and intent of the law gets defeated. Nothing, therefore, turns in law on the fact of deliberations between the assessing and the reviewing authority which Ms. Pradhan, the ld. CIT-DR, was at pains to emphasize b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power of reassessment per se, but only to see as to whether the requirement of law, providing a condition precedent for the exercise of the said power, has been met or not. In the instant case/s as well, it would be a different matter where the Jt. CIT had issued some direction/s to the AO, subject to and on the basis of which he accords his approval. It will not, in that case, be open for an appellate court to review the same or sit in judgment thereon. No criterion for approval , except of course his satisfaction with the draft order, which is in fact implicit as otherwise the exercise (of approval) itself would be rendered meaningless, has been provided by the statute. The requisite of due application of mind is also toward this satisfaction inasmuch as there could be circumstances, as indeed have been found by the Appellate Courts, as in Tarachand Khatri v. Asst. CIT (in ITA No. 21/Jab/2019, dated 17/01/2020), of there being in fact no satisfaction inasmuch as the same could not arise under the given facts and circumstances, as, for example, apparent inconsistencies and anomalies in the approved assessment order. Needless to add, this again can be examined by the Courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes, 5th Edn. p. 596 and following pages. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done. The principle of the Privy Council case was also applied by the Federal Court in Biswanath Khemka vs. King Emperor [1945] F.C.R. 99 and there, as pointed out by this Court, the words of the provision were even more emphatic and of a prohibitory character. The essence of the rule is that where consultation has to be made during the performance of a public duty and an omission to do so occurs, the action can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at section 6 of the General Clauses Act, particularly cls. (b) and (c), saved the assessments as well as the notices. He relies upon a decision of the Privy Council in John Lemm vs. Mitchell [1912] A.C. 400, Eyre vs. Wynn-Mackenzie [1896] 1 Ch. 135 and Butcher vs. Henderson [1868] LR 3 QBD 335 in support of his proposition. The last two cases have no bearing upon this matter, but strong reliance is placed upon the Privy Council case. In that case, the earlier action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation, had already ended in favour of the defendant and no appeal therefrom was pending, and it was held that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the same act, unless the statute expressly and by definite words gave him that right. The Privy Council case is thus entirely different. No doubt, under section 6 of the General Clauses Act it is provided that where any Act repeals any enactment, then unless a different intention appears, the repeal shall not affect the previous op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest of the Revenue in search and search-related cases, giving it a mandatory status. It thus becomes as much integral to the procedure for assessment as is the issue of the notice for reassessment. And, further, in discharge of his quasi-judicial functions by the Jt. CIT who, as the Range head, has been for the purpose allowed the requisite powers (see ss. 2(7A), 120(4),124(5), 131, 132, 133). There is, thus, no inconsistency between section 153D, the scope of which has been found as toward improving that quality of the assessments by providing for internal review by the supervisory head (refer para 3), and the powers and duties of the Jt. CIT under the Act. The assessment order/s in the instant case, passed in breach of the qualifying, mandatory condition of its passing, i.e., an approval u/s. 153D, is an invalid order/s, to which no cognizance in law can be given. The plea of the approval thereunder being an administrative approval/action is thus to no moment. As explained in Panchamahal Steel Ltd. v. ITO [1997] 225 ITR 458 (SC), in the context of sec. 144B, the AO becomes practically functus officio after forwarding the draft assessment order along with the assessee s obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitment thereto of the officers concerned, and hope that the Revenue, so keen and anxious to improve the quality of the assessments and avoid unnecessary litigation, takes steps to prevent a recurrence, which has an opposite effect being detrimental to the cause of the Revenue as well as the morale of its officers. Where, one wonders, was the scope for hearing the assessee and his counsel by the Jt. CIT in the sec. 153D proceedings? One cannot also help mentioning here the hard work and the painstaking efforts put in by the AO, which is commendable indeed, particularly considering the difficult circumstances he was placed in at the time. Sd/- (Sanjay Arora) Date : 04/3/2021 Accountant Member 4. For the purpose of convenience, we are reproducing the so called approval said to be granted by Joint Commissioner of Income Tax in this case which is available at Page No. 184 of the P.B : OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX RANGE-1, CR BUILDING, NAPIER TOWN, JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-II, JABALPUR RANGE-SATNA, KATNI, C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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