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TMI Blog2024 (1) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... IT seeking approval of draft assessment order u/s 153D of the Act. JCIT has accorded approval for the said draft assessment orders on the very same day i.e., on 29.12.2017 for various assessment years in the case of various assessees. In any event, whether is it humanly possible for an approving authority like the ld. JCIT to grant judicious approval u/s 153D of the Act for 40 cases for various assessment years on a single day is the subject matter of dispute before us. Further, section 153D of the Act provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. JCIT has granted a single approval for all assessment years put together. We find that the reliance placed by the Ld. AR on the decision of the Hon ble Orissa High Court in the case of M/s Serajuddin Co [ 2023 (3) TMI 785 - ORISSA HIGH COURT] is well founded. We find that similar issue has been addressed in the case of PCIT vs. Anju Bansal [ 2023 (7) TMI 1214 - DELHI HIGH COURT] wherein, under similar circumstances, the Hon ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in the form of share capital, share premium, unsecured loans , purchase and sale bills etc. Various incriminating documents were found and seized during the course of search and seizure operation in the group cases. Accordingly, the case of the assessee was also centralized to ACIT , Central Circle 13, New Delhi vide order passed u/s 127 of the Act . Notice u/s 153A of the Act was issued to various assessees and the returns filed by the respective parties for various Asst Years are tabulated hereunder:- S.No Name of assessee Relevant ITA number Assessment Year Date of Notice u/s 153A Date of ROI filed Returned income 1. Mysore Finlease Pvt Ltd 8821/del/2019 2011-12 01/09/2017 14/11/2017 (Rs 16,230) 2. Mysore Finlease Pvt Ltd 8822/del/2019 2012-13 01/09/2017 14/11/2017 (Rs 15,32,520) 3. Mysore Finlease Pvt Ltd 8823/de/2019 2013-14 01/09/2017 14/11/2017 (Rs 20,24,960) 4. Mysore Finlease Pvt Ltd 8824/del/2019 2014-15 01/09/2017 14/11/2017 (Rs 19,34,310) 5. Mysore Finlease Pvt Ltd 8825/del/2019 2015-16 01/09/2017 14/11/2017 (Rs 35,19,800) 6. Mysore Finlease Pvt Ltd 8826/del/2019 2016-17 19/09/2017 (143(2) notice for search year) 17/10/2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. Late Nem Chand Gupta (through legal heir mohitgupta 8873/del/2019 2013-14 02/09/2016 04/10/2016 Rs 496,800 29. Late Nem Chand Gupta (through legal heir mohitgupta 8874/del/2019 2015-16 02/09/2016 04/10/2016 Rs 489,340 30. QED venture Advisors Private Limited 8875/del/2019 2012-13 10/07/2017 04/09/2017 Loss of Rs 41,141 31. QED venture Advisors Private Limited 8876/del/2019 2013-14 10/07/2017 06/09/2017 Rs 4,810 32. QED venture advisors private limited 8877/del/2019 2015-16 10/07/2017 04/09/2017 Rs 1,12,590 33. Brij Kishore 8878/del/2019 2010-11 02/09/2016 20/10/2016 Different figures noted in para 2 Rs 3,70,292 And income computation Rs 2,49,937 34. Brij Kishore (revenue appeal) 8788/del/2019 2010-11 02/09/2016 20/10/2016 Different figures noted in para 2 Rs 3,70,292 And income computation Rs 2,49,937 35. Brij Kishore 8879/del/2019 2011-12 02/09/2016 20/10/2016 3,70,292 36. I-Tech insurance brokers Pvt Ltd 8880/del/2019 2010-11 02/09/2016 06/11/2017 Rs 4,39,546 37. I-Tech insurance brokers Pvt Ltd 8881/del/2019 2011-12 02/09/2016 06/11/2017 Loss of Rs 1,07,371 38. I-Tech insurance brokers Pvt Ltd 8882/del/2019 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Products Limited 8867/del/2019 2011-12 29.12.2017 Rs 18,00,43,374 25. Sperryn Gas Products Limited 8868/del/2019 2013-14 29.12.2017 Rs 3,83,41,800 26. Sperryn Gas products Limited 8869/del/2019 2015-16 29.12.2017 Rs 9,82,17,490 27. Late Nem Chand Gupta (through legal heir mohitgupta) 8872/del/2019 2012-13 29.12.2017 Rs 87,70,300 28. Late Nem Chand Gupta (through legal heir mohitgupta 8873/del/2019 2013-14 29.12.2017 Rs 34,09,492 29. Late Nem Chand Gupta (through legal heir mohitgupta 8874/del/2019 2015-16 29.12.2017 Rs 79,80,647 30. QED venture Advisors Private Limited 8875/del/2019 2012-13 29.12.2017 Rs 11,49,12,860 31. QED venture Advisors Private Limited 8876/del/2019 2013-14 29.12.2017 Rs 11,49,54,000 32. QED venture advisors private limited 8877/del/2019 2015-16 29.12.2017 Rs 36,12,360 33. Brij Kishore 8878/del/2019 8788/del/2019 2010-11 2010-11 29.12.2017 Rs 73,32,53,263 34. Brij Kishore (revenue sole appeal) 29.12.2017 35. Brij Kishore 8879/del/2019 2011-12 29.12.2017 Rs 5,21,00,100 36. I-Tech insurance brokers Pvt Ltd 8880/del/2019 2010-11 29.12.2017 Rs 15,73,53,200 37. I-Tech insurance brokers Pvt L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2017 21. Shridhar Portfolio Management Ltd 8864/del/2019 2014-15 28.12.2017 29.12.2017 22. Shridhar Portfolio Management Ltd 8865/del/2019 2015-16 28.12.2017 29.12.2017 23. Sperryn Gas Products Limited 8866/del/2019 2010-11 28.12.2017 29.12.2017 24. Sperryn Gas Products Limited 8867/del/2019 2011-12 28.12.2017 29.12.2017 25. Sperryn Gas Products Limited 8868/del/2019 2013-14 28.12.2017 29.12.2017 26. Sperryn Gas products Limited 8869/del/2019 2015-16 28.12.2017 29.12.2017 27. Late Nem Chand Gupta (through legal heir mohitgupta) 8872/del/2019 2012-13 29.12.2017 29.12.2017 28. Late Nem Chand Gupta (through legal heir mohitgupta 8873/del/2019 2013-14 29.12.2017 29.12.2017 29. Late Nem Chand Gupta (through legal heir mohitgupta 8874/del/2019 2015-16 29.12.2017 29.12.2017 30. QED venture Advisors Private Limited 8875/del/2019 2012-13 29.12.2017 29.12.2017 31. QED venture Advisors Private Limited 8876/del/2019 2013-14 29.12.2017 29.12.2017 32. QED venture advisors private limited 8877/del/2019 2015-16 29.12.2017 29.12.2017 33. Brij Kishore 8878/del/2019 8788/del/2019 2010-11 2010-11 29.12.2017 29.12.2017 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted u/s 153D by the ld. JCIT for all the seven assessment years, clearly states that the draft assessment orders per se were placed by the Ld. AO before the ld. JCIT only on 29.12.2017 and they were approved on the very same day. Accordingly, he pleaded that this type of approval cannot be treated as a valid approval contemplated u/s 153D of the Act. Further, the Ld. AR submitted that a single approval was granted by the ld. JCIT u/s 153D of the Act for all assessment years put together instead of granting approval for each of the assessment years separately as contemplated in the section. Accordingly, the Ld. AR argued that the entire search assessments framed in the hands of the various assessees listed in the cause title u/s 153A r.w.s. 143(3) of the Act dated 29.12.2017 for various Asst Years under consideration required to be quashed as void ab initio. In support of this argument, the Ld. AR placed heavy reliance on the decision of the Hon'ble Orissa High Court in ITA Nos.39 to 45 of 2022 dated 15.03.2023 in the case ACIT, Circle 1(2), Bhubaneshwar vs. M/s Serajuddin & Co. and the decision of the Hon'ble Allahabad High Court in the case of PCIT vs. Subodh Aggarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the Ld. AO to seek to place the draft assessment order together with copies of the seized documents before the ld. JCIT well in time much before the due date of completion of search assessment. The ld. JCIT is supposed to examine the seized documents, questionnaires raised by the Ld. AO on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Ld. AO and the conclusions drawn by the Ld. AO vis- à-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, are to be performed by the ld. JCIT in a judicious way after due application of mind. Even though as vehemently argued by the Ld. CIT-DR, the ld. JCIT is involved with the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the ld. JCIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld. AO in the draft assessment order. The copy of the appraisal report submitted by the Investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinabove u/s 153D of the Act. The said approval letter clearly states that a letter dated 29.12.2017 was filed by the Ld. AO before the ld. JCIT seeking approval of draft assessment order u/s 153D of the Act. The ld. JCIT has accorded approval for the said draft assessment orders on the very same day i.e., on 29.12.2017 for various assessment years in the case of various assessees. In any event, whether is it humanly possible for an approving authority like the ld. JCIT to grant judicious approval u/s 153D of the Act for 40 cases for various assessment years on a single day is the subject matter of dispute before us. Further, section 153D of the Act provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. JCIT has granted a single approval for all assessment years put together. We find that the reliance placed by the Ld. AR on the decision of the Hon'ble Orissa High Court in the case of ACIT, Circle 1(2), Bhubaneshwar vs. M/s Serajuddin & Co. in ITA Nos. 39 to 45 of 2022 dated 15.03.2023 is well founded. The question before the Hon'ble Orissa High Court is as under:- "Whether on the facts and circumstances the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. 24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under Section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 (165) E.L.T. 257 (S.C.) the Supreme Court observed as under: "Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2017. In this background, the Hon'ble Allahabad High Court held as under:- "The submission is that the substantial question of law which arises for consideration before this Court is about the justification of the act of the Tribunal in ignoring the findings recorded by the Assessing Officer and setting aside the assessment order on the sole ground of defect in the approval to the draft assessment order granted by the competent Approving Authority. Learned counsel for the Assessee, however, defended the order of the tribunal for the reasoning given therein. Considering the submissions of the learned counsel for the parties and having perused the order of the Tribunal, in view of the undisputed facts before us about the manner in which the approval to the draft assessment order was granted under Section 153D for the assessment proceedings, by a letter dated 31.12.2017 in 38 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal. To answer the same, we are required to go through the relevant provisions of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he "approval" as defined in Black's Law Dictionary as also the decisions of the Apex Court in the case of Sahara India vs. CIT and Others (2008) 300 ITR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned into an empty ritual. The Apex Court has held therein that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The above discussion made in the judgement of Tribunal dated 3.08.2021 in the case of Navin Jain Vs. Dy. C.I.T. (Supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under Section 153D of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 respondentassessee 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 to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier, there are infirmities in the figures of original return of income as well as total assessed and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed". [Emphasis is ours] 14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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