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TMI Blog2021 (6) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be considered as actual approval in law. Hence, we quash the assessment framed u/s. 153A of the Act on this additional ground alone. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ng approval to the draft assessment order. The Ld. Counsel for the assessee stated that this is a search and seizure case and requisition u/s. 132A of the Act was made by the Investigation Wing, Ludhiana in lieu of search conducted by the Directorate of Revenue Intelligence, Ludhiana Unit on the assessee on 14.12.2015. The investigation of the Income Tax Department accordingly requisitioned u/s. 132A of the Act dated 26.05.2016. It was contended that a number of documents were seized during the course of search which was considered by the AO during the course of proceedings u/s. 153A of the Act. The Ld. Counsel for the assessee stated that the approval granted by the Addl. CIT on the same date i.e. 29.06.2017 when the AO requisitioned the approval u/s. 153D of the Act from the Addl. CIT and the manner in which statutory approval u/s. 153D of the Act is accorded is bad in law. The Ld. Counsel for the assessee also relied upon the case law of Hon'ble Supreme Court in the case of NTPC (supra) and also the decision of the Hon'ble Jurisdictional High Court in the case of VMT Spinning Co. Ltd. Vs. CIT & Another (2016) 389 ITR 326 (P&H). In view of the above, the Ld. Counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment record as discussed above, hence, we admit this additional ground and adjudicate the issue. 7. The Ld. Counsel for the assessee before us stated that this issue is squarely covered by the decision of the Hon'ble Bombay High Court in the case of PCIT Vs. Shreelekha Damani (2019) 307 CTR 218. He also stated that the Tribunal is consistently taking view and he cited the following case laws: S.No. Name of the Judgement Citation 1. Sanjay Duggal Vs. ACIT ITA No.1813/Del/2019 2. M3M India Holdings Vs. DCIT 71 ITR(Trib.) 451 3. Dilip Constructions Pvt. Ltd. Vs. ACIT IT(SS)A No.66 to 71/CTK/2018 4. Saurabh Agarwal Vs. DCIT ITA Nos. 263 to 267/Agr/2017 5. Rajesh Ladhani Vs. DCIT ITA No. 106 to 108/Agra/2019 6. Uttarakhand Uthan Samiti Vs. ITO ITA No. 48 to 52/DDN/2019 7. Rishabh Buildwell Pvt. Ltd. Vs. DCIT ITA No. 2212/Del/2018 8. AAA Paper Marketing Ltd. Vs. ACIT ITA No. 167/Lkw/2016 9. M/s Rajat Minerals Pvt. Ltd. Vs. DCIT IT(SS)A Nos.41 to 47/Ran/2019 10. Geetarani Panda Vs. ACIT IT(SS)A Nos. l/CTK/2017 11. ACIT Vs. CR Mittal & Sons (HUF) IT(SS)A No. 100/JAB/2014 8. The Ld. Counsel for the assessee also relied upon the recent decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Assessment folders in 11 cases alongwith Corresponding draft assessment Orders. Sd/- (Manke Shah Kapoor) Asstt. Commissioner of Income Tax Central Circle-II, Ludhiana 12. On page 2, the relevant statutory approval accorded u/s. 153D of the Act by the Addl. CIT is also enclosed and the same reads as under: Government of India Ministry of Finance Office of the Addl. Commissioner of Income Tax, Central Range, Ludhiana. SCO 1-6, 2nd Floor, Opp. B.V.M. School Kitchlu Nagar, Ludhiana. F. No. Addl. CIT(C), R/Ldh./16-17/560 Dated: 29.06.2017 To The Asst. Commissioner of Income Tax, Central Circle-II, Ludhiana. Sub: Approval u/s. 153D of the I.T. Act, 1961 in the case of M/s. Inder International (PAN AABFI7996J) and Sh. Abhay Jain (PAN AHEPJ7203M)-regarding- ********* Kindly refer to the subject cited above. Please refer to your office letter No. 446 dated 29.06.2017, received in this office on 29.06.2017 thereby submitted draft assessment order in the following cases: S.No. Name & address of the assessee PAN Assessment Years 1. M/s Inder International, 594, Nirankari Mohalla No.1, Overlock Road, Ludhiana AABF17996J 2011-12 to 2016- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars and thus only a symbolic exercise to meet the requirement of law (iii) Total lack of objectivity in drawing satisfaction on objective material while giving a combined approval for 7 assessments and also without evaluating the nuances of each assessment year involved (iv) the mundane action of Addl. CIT under S. 153D in a cosmetic manner gives infallible impression of approval on dotted line and thus defeats the purpose of supervision of search assessments (iv) initialed draft assessment orders not available in office records. 11.3. As observed, Section 153D bestows a supervisory jurisdiction on the designated authority in respect of search related assessment and thus enjoins a salutary duty of statutory nature. The designated superior authority is thus expected to confirm to the statutory requirement in letter and spirit. It is evident from the communication of AO and consequent approval thereon under S. 153D that no assessment record for any assessment year in question or any seized material had traveled to the authority concerned for his objective consideration of the same qua the draft assessment orders. No reference in this regard is made in the approval note either which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Assessment order. Solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional CIT, with his experience and maturity of understanding should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. 11.5. At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/her process of deriving satisfaction so as to exhibit his/h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors; order dated 19.01.2021 has also echoed the same view after a detailed analysis of similar facts and also expressed a discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the plea raised by the Assessee against maintainability of hollow approval under S. 153D totally devoid of any application of mind. The approval so granted under the shelter of section 153D, does not, in our view, pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments relatable to search in captioned appeals are non est and a nullity and hence quashed." 14. In view of the above decision and the fact that in the present case before us also the Addl. CIT has accorded the approval u/s. 153D of the Act only on 29.06.2017 when the AO placed the assessment order on that very date i.e. 29.06.2017. The relevant approval by the Addl. CIT reads as under: "Necessary statutory approval u/s. 153D is given to pass th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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