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TMI Blog2023 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... n the presumption the approval cannot be granted. Thus, we hold the approval under section 153D of the Act has been granted in the case of the assessee was without application of mind, the same is invalid, bad in law and liable to be quashed. No reason to upheld the order of the authorities below, consequently we hold that the order of Ld CIT(A) in affirmation of the order of Ld AO u/s.153A r.w.s.143(3) of the Act is unsustainable and derives to be quashed and we do so. Appeal of assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... void ab initio, invalid, illegal and bad in law hence, deserves to be quashed and declared a nullity since, the mandatory prior approval granted is no approval in the eyes of law as the same has not been obtained on the Final Assessment Order passed, is mechanical, mere empty formality lacks due application of mind and further, the Search Assessment Order was passed based on invalid, inchoate and consolidated approval, accordingly, the Search Assessment Order is bad in law & legally unsustainable hence, it is earnestly prayed that the Assessment Order passed u/s.153A r.w.s. 143(3) may please be quashed and cancelled in limine." 3. In view of the above, since the additional ground of appeal raised thus, goes to the root of the matter having a vital bearing on the tax liability of the appellant, it is prayed that the additional ground of appeal raised may kindly be admitted exercising plenary powers vested in your honours under Rule 11 of the Appellate Tribunal Rules, 1963 r.w. section 254 of the Income Tax Act, 1961. 3. During the course of hearing, in the present appeal, ld. AR argued only on the additional ground on the question of sustainability of assessment order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead income from other sources u/s.56(2)(viia) of the Act. 5. Being aggrieved with the assessment order, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) dismissed the appeal of the assessee sustaining the addition made by the AO. 6. Now, the assessee is in further appeal before the Tribunal against the order of ld. CIT(A). 7. Ld. AR before us submitted that the assessment framed by the AO u/s.153A r.w.s.143(3) of the Act is unsustainable. In this regard, ld. AR drew our attention to page 26 of the paper book filed by the assessee, which is a copy of the letter issued by the AO of the assessee to the JCIT (Central), Raipur seeking approval u/s.153D of the Act for framing the assessment in the case of the assessee along with other assessees. The same is reproduced hereunder :- 8. Further, the ld. AR drew our attention to page 25 of the paper book, wherein the JCIT vide letter dated 08.11.2016 approved the draft assessment as sought by the AO of the assessee u/s.153D of the Act, wherein the JCIT has given approval only on the basis of presumptions which is not permissible u/s.153D of the Act. The letter dated 08.11.20216 issued by the JCIT, Range-Central, Rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 (Date of Judgment: 12.12.2022) (Allahabad HC) (Pg.No.463 - 468 CLC) (ii) Pr.CIT v. Sapna Gupta in I.T.Appeal No.88 of 2022 (Date of Judgment: 12.12.2022) 2022 (12) TMI887 (Allahabad HC) (Pg.No.469 - 474 CLC) (iii) M/s.Goyal Energy & Steel Pvt. Ltd. v. ACIT, CC-2, Raipur in ITA No.240 to 243/RPR/2019 (Date of Order : 17.09.2021) (ITAT Raipur) (Pg.No. 1 - 22 CLC) (iv) Ritanjali Khatai & Ors. v. ACIT, CC-1, Bhubaneswar in IT(SS) A.No.51 to 53/CTK/2019 (Date of Order: 08.04.2022) (ITAT Cuttack) (Pg.No.23 - 41 CLC) (v) Arch Pharmalabs Ltd. v. ACIT (2021) 62 CCH 9 (ITAT Mumbai) (Pg.No.42 - 54 CLC) (vi) PCIT v. Smt.Shreelekha Damani 2018-TIOL-2516-HC-MUM-IT(Bom.HC) (Pg.No.74 - 76 CLC) (vii) Inder International v. ACIT (2021) 35 NYPTTJ 374 (ITAT Chandigarh) (Pg.No.77 - 88 CLC) (viii) Sh. Inder Pal Singh Arora v. DCIT2021 (6) TMI 933 (ITAT Dehradun) (Pg.No.89 - 95 CLC) (ix) Rajat Minerals (P.) Ltd. v. DCIT(2020) 181ITD 368 (ITATRanchi) (Pg.No.96 -110 CLC) (x) Shri Navin Jain & Ors. v. DCIT in IT(SS)A.Nos.639 to 641/Lkw/2019 (Date of Order: 03.08.2021) (ITAT Lucknow) (Pg.No. 111-142 CLC) (xi) Shri Saurabh Agarwal & Ors. v. DCIT in ITA No.263 to 267/Agr/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lahabad in the case of Sahara Credit Cooperative Society Ltd. Vs. DCIT/ACIT, reported in 447 ITR 597 (Allahabad) dated April 20, 2022, where in at para 41 to 44, it has been held as under:- "41. The learned counsel for the petitioner next submitted that the notice under section 148 of the Act was issued an 22-3-2021 by the DCIT/ACIT-3, Lucknow-New whereas the letter written by the member CIT-1/Lucknow to Additional CIT Range III (4), Lucknow communicating approval under section 151 for issuance of notice under section 148 of the Act was received by the A.O. on 24-3-2021. Thus on the date of issuance of notice i.e. on 22- 3-2021, the A.O. was not having any approval/sanction of ACIT-1 Lucknow. 42. In reply to the aforesaid submission, Sri. Manish Misra has stated that PCIT-1, Lucknow had granted approval under section 151 of the Act on 20-03-2020 and the approval was uploaded on the portal of the Department. Acting on the approval uploaded on the portal, the A.O. issued the notice under section 148 of the Act on 22-03-2020, without waiting for receipt of the paper copy of the approval. 43. We find that there is no need for the paper containing approval being received physica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(2)(vii) of the Act under the head income from other sources as the assessee could not explain the source and details of the investment made by the assessee in M/s Crest Steel and Power Ltd. and Topworth Pipes and Tubes Pvt. Ltd. in different financial years. Before passing the assessment order, the AO has sought approval from the JCIT, Range-Central, Raipur vide letter dated 03.11.2016 in the case of the assessee along with other assessees. The JCIT, Range-Central, Raipur has approved the draft assessment orders u/s.153A r.w.s.143(3) of the Act vide letter dated 08.11.2016. Consequently, the AO has passed assessment order on 08.11.2016. On perusal of the approval given by the JCIT, Range-Central, Raipur, we found that the JCIT has given approval only on the basis of presumption that the AO after giving proper opportunity to the assessee, thoroughly verified the seized material and proposed for making addition, which in our opinion, without looking into the complex facts of the search assessment has been approved in a mechanical manner. Even the CIT(A) has also overlooked this technical error in the assessment order. Further, it is not clarified as to whether the assessment record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income 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. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A. In the instant case, the draft assessment order in 38 cases, i.e. for 38 assessment years placed before the Approving Authority on 31.12.2017 was approved on same day i.e. 31.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 38 cases in one day to apply independent mind to appraise the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 corresponding reply by the assessee. And that ld. 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. 24.We find that the ld. 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 that all the issues emanating from the records have been verified and additions wherever required have been proposed. We further find that there is no independent application of mind on the part of ld.JCIT while granting the approval. 25.We find that coordinate bench of Mumbai Tribunal while considering the similar ground of appeal in granting bulk approval of the assessment under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval. 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 Coordinate bench of Delhi Tribunal in Sanjay Duggal & others (supra). 27. So far as the contention of ld CIT-DR that the assessment under section 153A is passed under the supervision of JCIT and that JCIT granted approval of the draft assessment after considering the material placed before him. We do not find any such satisfaction in the approval order that draft assessment after considering the material placed before him, rather the ld JCIT recorded that it is presumed that the AO granted proper opportunity to the assessee etc… 28. In view, of aforesaid discussion and respectfully following the decisions of coordinate benches in Sanjay Duggal & others (supra) and Archpharma Labs & Acrh Impex P Ltd (supra), we find convincing force in the submissions of the assessee that the approval granted by JCIT suffer from non-application of mind and depends on presumption of proper performance of duty by A.O. such per functionary approval under section 153D cannot termed as legitimate. The consequential assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely a covering letter supplying copy of the approval dated 23.11.2017, which cannot be treated as an explanation to the approval dated 23.11.2019 curbing the mistake in the procedure adopted by the JCIT while granting approval u/s.153D of the Act. On these subsequent letters/correspondences, we are of the considered view that for adjudicating legal ground of assessees challenging the validity of approval u/s.153D of the Act dated 23.11.2017, we have to evaluate said approval apparently by considering the totality of facts and circumstances and the manner in which such approval has been granted. This cannot be improvised by way of subsequent exercise or correspondence between the approving authority and the AO or other officers. 33. In view of foregoing discussion, we are inclined to hold that the ld JCIT has granted approval under section 153D of the Act in a mechanical manner without application of mind to the relevant assessment records and draft assessment orders submitted before him by the AO for grant of approval u/s.153D of the Act before passing the relevant assessment orders u/s.153A r.w.s 143(3) of the Act. 34. Considering the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts cautious wisdom to make it mandatory on the supervisory authority/approving authority to discharge the duty towards both the assessee as well as revenue to follow the proper procedure and to apply his mind on the material, relevant evidences and other documents including materials found during search & post search investigations and explanation & supporting documents of the assessee to the issue show caused to him by the AO, on the basis of which the AO wants to pass or frame assessment or reassessment orders and after such exercise by perusing and going through the relevant assessment folders/files alongwith proposed draft orders and also by applying his mind has granted approval u/s.153D of the Act. This is the minimum required exercise by the approving authority before granting approval u/s.153D of the Act. The approving authority has undertaken any such exercise should be discernible from the order of the approval and the subsequent internal correspondence between the lower authorities have no relevance and the defects or omissions or non-application of mind cannot be cured or rectified by any other exercise or working undertaken by the approving authority after grant of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority of the department which, in turn, provides safeguard to the both the parties i.e. revenue and the assessee. Therefore, the provisions of section 153D of the Act cannot be treated as a mere formality and mandate therein required to be followed by the approving authority in a judicious manner by due application of mind in a manner of cautious judicious or quasi judicial authority. This view has also been expressed by Pune Bench of the ITAT in the case of Akil Gulamali somji, in ITA Nos.455 to 458(Pune) of 2010 vide 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. We also take respectful cognizance of the fact that the Hon'ble Bombay High Court in the case of Akil Gulamali Somji (supra) has concurred with the said findings and view taken by the Pune Tribunal that not following the provisions of section 153D of the Act will render the related order of assessment void. 39. In view of foregoing discussion, we reach to a logical conclusion that it is the duty of the approving authority to act in accordance with the mandate and provisions of law while granting app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Accordingly, we are compelled to hold that the approval granted by the ld JCIT in the appeals under consideration has been granted in a mechanical manner without application of mind and that the assessments/reassessment orders passed by the AO on such approval are declared to be void and bad in law. We hold so. 41. In view of aforesaid discussion, we clearly find that approving authority has not applied his mind to the relevant assessment records and draft assessment orders prior to granting approval to the Assessing officer for passing assessment orders u/s.153A/143(3) of the Act. Therefore, the contention of ld A.R. of the assessee is justified and sustainable that the approval was granted in most mechanical manner without application of mind and respectfully following the proposition rendered by Hon'ble Bombay High Court in the case of Smt. Shreelakha Damani (supra), the order of ITAT Delhi Bench in the case of M3M India Holdings (supra) and decision of ITAT Cuttack Bench in the case of Geetarani Panda (supra), we hold that no valid approval has been sanctioned or accorded by the ld JCIT before allowing the AO to pass the relevant assessment orders. From the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the revenue only on the reason that where "Joint Commissioner recorded satisfaction on proposal of Assessing Officer by mentioning that it is a fit case for issuance of notice, approval under section 151 giving details of approving authority as Principal Commissioner in itself will not make approval invalid", this is altogether on different footing than the facts of the present case, where approval was granted by the Ld JCIT himself but on the basis of certain presumptions without verifying the seized material by himself, even the responsibility of satisfaction was placed on shoulders of the AO. We therefor of the view that guidance of the Hon'ble Jurisdictional High Court of Chhatisgarh in the case of Bharat Krishi Kendra Vs Union of India (supra) cannot be adopted for deciding the issue in the present appeal. Regarding the judgment in the case of Sahara Credit Cooperative Society Ltd. Vs. DCIT/ACIT (supra), Hon'ble Allahabad High Court has emphasised on the issue of communication of the approval, whether same is done physically or through uploading the same on portal of the department makes no difference, however in the present case no such issue has been agitated, thus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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