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TMI Blog2023 (7) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... fact is not in dispute before us. Of these 43 cases, as evident from paper book which contains the approval u/s. 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether is it humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s. 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together. 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 jurisdictional High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. We have no hesitation in holding that the approval u/s. 153D of the Act has been grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for all the assessment years and proceed for adjudication of the same. 5. The brief facts pertaining to the aforesaid additional ground are narrated hereinbelow:- a) A search and seizure action u/s. 132 of the Act was conducted on 18.11.2016 in Nayyar group of cases wherein the assessee was also covered. Accordingly, a notice u/s. 153A of the Act was issued to the assessee on 22.09.2017. In response to the said notice, a return of income was filed by the assessee on 13.09.2018 declaring total income of Rs. 3,96,800/-. The ld. AO noted that during the course of search, certain documents showing cash deposits in the bank were seized apart from certain papers relating to investments in mutual funds and life insurance policies. The statement of the assessee was recorded u/s. 132 (4) of the Act wherein he admitted to have undertaken foreign tours in various years. The income declared in the return by the assessee comprises income from salaries, income from house property and income from other sources. The ld. AO completed the assessment for the AY 2011-12 u/s. 153A r.w.s. 143(3) of the Act on 30.12.2018 determining the total income at Rs. 1,32,05,230/- after making various additions th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it meets the requirement of law. The ld. AR tried to buttress his stand by drawing our attention to pages 68 and 69 of the paper book which contained an order passed u/s. 7(1) of the Right to Information Act, 2005 dated 24.08.2022 in the case of Smt. Neetu Nayyar wherein the Central Public Information Officer, who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-5, New Delhi, had categorically stated that 43 cases were approved by the Addl. Commissioner on 30.12.2018 for AYs 2011-12 to 2017-18. Based on this, the ld. AR submitted that the ld. Addl. CIT had granted approval by devoting very few minutes for each case in a mechanical manner u/s. 153D without due application of mind. Moreover, the approval letter granted u/s. 153D by the ld. Addl. CIT for all the seven assessment years enclosed in page 36 of the paper book, clearly states that the draft assessment orders per se were placed by the ld. AO before the ld. Addl. CIT only on 30.12.2018 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme of the Act, it is the bounden duty of the ld. AO to seek to place the draft assessment order together with copies of the seized documents before the ld. Addl. CIT well in time much before the due date of completion of search assessment. The ld. Addl. CIT 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- -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. Addl. CIT in a judicious way after due application of mind. Even though as vehemently argued by the ld. CIT-DR, the Addl. CIT is involved with the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the ld. Addl. CIT, while granting the approval u/s. 153D has to independently apply his mind dehors the conclusions drawn e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-5, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s. 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether is it humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s. 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together. We find that the reliance placed by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en obtained, should be mentioned in the body of the assessment order. 23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 153D was granted by the ld. Addl. CIT on 31.12.2017. The final assessment order was passed by the ld. AO on 31.12.2017. The time limit for completion of search assessment was 31.12.2017. 38 cases were approved by the ld. Addl. CIT u/s. 153D of the Act on 31.12.2017. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch year is to be obtained under Section 153D of the Income Tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 we l. It is humanly impossible to go through the records of 38 cases in one day to apply independent mind 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 befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed income 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 ri ..... 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