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TMI Blog2021 (9) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... t in celebrated case of CIT Vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] held that completed assessment can be interfered with by the AO while making assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in course of original assessment - no addition under section 68 was warranted in absence of incriminating evidence, in the abated assessment - Decided in favour of assessee. Validity of approval under section 153D - ground of appeal in granting bulk approval of the assessment under section 153A - JCIT approved the assessment order by presuming that the necessary opportunity has been given to the assessee and all the records, evidences and materials have been thoroughly verified. The JCIT granted bulk approval of 95 assessment orders which clearly defeats the intent and purpose behind insertion of section 153D brought in the statute by the Finance Act, 2007. JCIT while granting approval, presumed that Assessing Officer has given proper hearing to the assessee and thoroughly verified seized material and there are no adverse findings, satisfied himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, with the consent of the parties all appeals were clubbed heard together and is decided by common order. For appreciations of facts appeal for AY 2011-12 are treated as lead case. The Assessee raised the following grounds of appeal:- "1. That the ld. lower authorities have grossly erred in law and facts by invoking provisions of section 68 and making an addition of ₹ 4,25,00,000/- on account of receipt of share capital and premium thereon. 2. That the ld. lower authorities have erred in law and fact by making an addition of ₹ 21,250/- by deeming it to be the commission against above share capital received by the appellant. 3. That the ld. lower authorities have erred in invoking section 153A in absence of any incriminating evidence, thus making the impugned addition void-ab-initio. 4. That the ld. lower authorities have failed to appreciate or appraise the evidences and arguments submitted by the assessee to discharge its burden under section 68. 5. That the ld. lower authorities have erred in law and in fact by relying on irrelevant and factually incorrect evidences without providing the appellant an opportunity to cross-examination or rebut t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee vide its reply dated 31.08.2018 provided details of share capital, share premium, ledger extract and details of unsecured loans and capital accounts. The AO after considering the reply and the evidences, which were furnished by the assessee to substantiate the genuineness of the transactions, held that the investor companies are shell companies. The AO again issued final show case notice dated 07.12.2018 as to why the share premium should not be treated as unaccounted money of the assessee. The assessee again vide different replies dated 06.11.2018, 10.12.2018 and 14.12.2018 filed detailed reply as recorded in 3.7 of the assessment order. The AO has extracted the relevant part of the reply furnished by the assessee in para 3.7(i) at page no. 33 of the assessment order. 4. In the said reply, the assessee besides the other contentions specifically stated that additions can be made in the assessment under section 153A, if any incriminating evidences are found during the course of search. No such incrementing evidences regarding share application and share capital found during the search action and the AO has not highlighted such incriminating evidence during the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have also perused the copy of the Panchnama dated 27.01.2017 and other documentary evidences filed on record. 7. The ld. AR for the assessee submits that he has raised additional grounds of appeal. The additional grounds of appeal are purely legal in nature and no new facts are required to be brought on record for adjudication of these additional grounds of appeals. The additional grounds of appeals relates to validity of approval granted in a mechanical manner in respect 95 assessment orders, though the AO was required to pass separate order for each assessment year. To support his submissions the ld AR for the assessee relied on the decisions of Hon'ble Supreme Court in CIT Vs National Thermal Power Corporation (NTPC) 229 ITR 383-(SC). 8. On the other hand the ld. CIT-DR for the revenue opposed the raising the additional grounds of appeal that no such ground of appeal was raised before. The ld CIT-DR for the revenue further submits that the bench may decide the application in accordance with law. 9. We have considered the submissions of both the parties and find that the assessee has raised pure legal issues, the facts for adjudications of the additional grounds are emanating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record would demonstrate that the JCIT has granted approval under section 153D in a casual and mechanical manner and without any application of mind. As evident from the communication made by A.O. to the JCIT dated 14.12.2018. The AO in the said letter neither makes any iota of reference as to what are the seized materials nor furnishes any assurance with respect to approval and appraisal of all evidences and corresponding reply filed by the assessee. The JCIT rather than confirming such lacunae at the part of the assessing officer, goes on to act in oblivion by "presuming" that the necessary opportunity has been given to the assessee and all the records, evidences and materials have been thoroughly verified. Thus, in a bulk approval of 95 assessment orders on a presumption basis proves the ritualistic approval to comply with the provisions of law which clearly defeat the intent and purpose behind insertion of section 153D brought in the statute by the Finance Act, 2007. The JCIT has granted a blanket approval for 95 cases without giving any reasoning at all in a consolidated manner for all assessment years for different assessee for which voluminous assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions the ld AR for the assessee also relied on the following decisions; CIT Vs Kabul Chawla (Delhi High Court) (ITA Nos. 707, 709 and 713 of 2014), M/s All Cargo Logistics Ltd. Vs DCIT (ITA 5018 to 5022 & 5059/M/10) (Special Bench), R.R. Energy (ITA No. 225/RPR/2015 and Sanjay Duggal vs. ACIT, ITA 1813/Del/2019 dated 19.01.2021 16. On the other hand the ld. CIT-DR for the revenue supported the order of the lower authorities. The ld. CIT-DR for the revenue submits that in the search matters the draft assessment order is always prepared under the guidance of Joint Commissioner of Income- tax (JCIT). The assessee was provided full opportunity during the assessment. The assessment proceedings are also supervised by JCIT to protect the interest of revenue. The JCIT granted approval of the draft assessment after considering the material placed before him. There is no unwarranted thing in the order of assessing officer. There is no mandate in the statue to pass separate order for each and every assessment years as argued by AR of the assessee. The AO has made separate additions in each assessment year and ultimately assessed income for each year separately. The AO bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the AO in response to the show cause notice dated 29.11.2018. We further find that the assessee raised specific ground of appeal before ld CIT(A), vide ground No.4, that addition in the assessment is outside of search assessment as no incriminating material was seized in search. However, the ld CIT(A) has not discussed the ground of appeal raised by the assessee. 19. The Hon'ble Delhi High Court in PCIT Vs Best Infrastructure (India) Pvt. Ltd (supra) held that statement recorded under section 132(4) does not itself constitute incriminating material. Thus, the statement of Deepak Aggarwal cannot be treated as incriminating evidence for making basis for addition of share premium under section 68 of the Act. 20. Further, Delhi High Court in celebrated case of CIT Vs Kabul Chawla (supra) held that completed assessment can be interfered with by the AO while making assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in course of original assessment. The decision of Delhi High Court has been upheld by Hon'ble Apex Court in Singhad Technical Education Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the issues emanating from the records have been verified and the additions wherever required have been proposed. 4. You may act accordingly. The copy of the final order may be submitted for record purpose in this office Encl: case records Sd/- (R.M. Mujumdar) Joint Commissioner of Income tax, Range- Central, Raipur. 22. On careful perusal of the approval order of JCIT, we find that the JCIT while granting approval on 22.12.2018 recorded that " it is presumed that the AO has - given proper opportunity of hearing to the assessee, thoroughly verified the seized material and that there is no adverse finding, satisfy himself that all issues emanating from the record have been verified and additions wherever required have been proposed." 23. Before us, the ld AR for the assessee vehemently argued that JCIT has granted approval under section 153D in a casual and mechanical manner and without any application of mind and that from the communication made to the JCIT by AO vide letter dated 14.12.2018, the AO had not made any iota of reference as to what are the seized materials nor furnishes any assurance with respect to approval and appraisal of all evidences and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination / investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/ her statutory functions and delightfully relegated his/her statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, 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 ca not be countenanced in law. 26. Similar view was taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r authorities have failed to appreciate or appraise the evidences and arguments submitted by the assessee to discharge its burden under section 68. 5. That the ld. lower authorities have erred in law and in fact by relying on irrelevant and factually incorrect evidences without providing the appellant an opportunity to cross-examination or rebut the same in complete violation of principle of natural justice. 6. That the ld. lower authorities have passed the orders sans of any jurisdiction when the source of credit has already been assessed by the jurisdiction assessing officer. 7. That the orders passed by both the ld. assessing officer and Commissioner of Income Tax (Appeals) is highly mechanical in nature and without application of mind relying on statements/evidences not related to the impugned case. 8. That the assessee craves to add, alter or amend any ground before or at the time of hearing." 32. The assessee vide application dated 05.08.2021 raised identical additional grounds of appeal as recorded in para 2(supra). 33. As recorded above the facts of this appeal is almost identical except the facts that the AO made addition on account of unsecured loan and all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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