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TMI Blog2024 (6) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 30-03- 2016 which clearly indicates that the approving authority granted approval in one day mechanically without examining the relevant material. According to the AO, the case of the assessee was covered by search action u/s. 132 of the Act conducted at Bhilwara concerning Mantri-Soni Group of Jalna/Bhilwara and their family members and business concerns at the business and residential premises of different members/associate which is evident from para 1 of the assessment order. The approving authority has to examine number of evidences, documents, statements of various persons etc. recorded which were necessarily to be taken into consideration while granting approval u/s. 153D of the Act by the JCIT. On an examination of the approval dated 21-03-2016 which is on record placed by the ld. DR on 09-10-2023, we find no such indication of examination of evidences, documents, statements of various persons etc. at least, no reference whatsoever made by the JCIT i.e. approving authority. JCIT granted approval u/s. 153D of the Act mechanically without application of mind which resulting in vitiating the present final assessment order dated 30- 03-2016 u/s. 143(3) r.w.s. 153A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 2,00,00,000/- which was taken from M/s. Sangam Infratech Limited, Bhilwara as unsecured loans on account of accommodation entry in the hands of the assessee on substantive basis and in the hands of M/s. Sangam Infratech on protective basis. Further, added unsecured loans of Rs. 85,00,000/- taken from M/s. Swift Venture Pvt. Limited on account of accommodation entry in the hands of the assessee vide paras 8.1, 8.19 and 8.20 of the assessment order and determined the total income of the assessee at Rs. 3,23,94,890/- as against the returned income of Rs. 38,94,890/- vide its order dated 30-03-2016 passed u/s. 143(3) r.w.s. 153A of the Act. As aggrieved by the said order of AO, the assessee preferred an appeal before the First Appellate authority. Considering the submissions of assessee, the CIT(A) confirmed both the additions made by the AO vide paras 62 and 63 of the impugned order. Having aggrieved by the order of CIT(A), the assessee is before us by raising respective grounds. 6. Ground No. 1 raised by the assessee challenging the action of CIT(A) in confirming the action of AO in initiating proceedings u/s. 153A of the Act and passing assessment order u/s. 153A r.w.s. 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper as per law or not. The approving authority has to apply its judicious mind to ensure the interest of the revenue against any omission or negligence by the AO in taxing right income in the hands of right person and in the right assessment year. Further, he is also responsible and duty bound to do justice with the taxpayer by granting protection against arbitrary or creating baseless tax liability on the taxpayer. He vehemently argued the approval granted by the Jt. CIT clearly lacks any application of mind and the approval granted in mechanical manner cannot be said to be valid approval taken in the eye of law. He prayed to quash the consequent assessment order declaring the same as invalid. 9. In support of his contentions, he drew our attention to the case laws paper book containing to 174 pages. He referred to order of Lucknow Benches of Tribunal in the case of Navin Jain and Ors. Vs. DCIT reported in 91 ITR (Trib.) 682 (Lucknow) at page 3 of the paper book. He submits that the Lucknow Benches of Tribunal annulled assessment orders by placing reliance on the decision of Hon ble Supreme Court in the case of Sahara India (Firm) Vs. CIT and Another reported in 300 ITR 403 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30-03- 2016 passed u/s. 143(3) r.w.s. 153A of the Act. 12. The ld. DR, Shri Ajay Kumar Kesari, CIT, submits that the assessment proceeding is a continuous process initiated just after the receipt of appraisal report and issue of notice u/s. 142(1) and 143(2) of the Act. The assessment is completed under the active guidance and monitoring / supervision of JCIT/Addl.CIT. The assessment of search proceeding u/s. 153A is distinct from normal scrutiny assessment completed u/s 143(3). It is not a matter of application of mind in few days. The assessment of a search case is based on seized materials which are described elaborately in appraisal report. A copy of appraisal report is sent to AO as well as JCIT/Addl. CIT for deep scrutiny of the case incorporating all sensitive issues having revenue implications, instructions for further enquiry on specific issue. The JCIT/Addl. CIT as well as AO start applying their mind on receipt of appraisal report. The JCIT/Addl. CIT frequently goes through the seized documents and makes discussion from time to time with AO on his observations being a supervisory authority since the seized documents are running in hundreds of pages. It is not possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of AR become infructuous. It shows that the AR is totally unaware about the assessment proceedings and its regular supervision by the JCIT/Addl.CIT. 14. Further, Shri Ajay Kumar Kesari, the ld. DR argued that the JCIT has applied his mind to the draft order to ascertain whether any specific issues remain unresolved and whether the assessment has been effectively completed covering all the issues apparent from the record to arrive at a conclusion. The JCIT has monitored the assessment during the period of the entire assessment proceedings and 4 days are more than enough to go through the draft order. The assessment has been properly completed taking into account all available aspects on record, which have on various occasions. He argued that the draft order is not returned for further modification, it can be assumed that the JCIT was completely satisfied with the draft order and its observations from the record, which it has monitored throughout the assessment period, are not contrary to the issues observed by him. The JCIT having fully satisfied has given its approval to the draft order, and it cannot be inferred that the draft order was approved without application of mind in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) r.w.s. 153A of the Act was passed on 30-03- 2016 which clearly indicates that the approving authority granted approval in one day mechanically without examining the relevant material. According to the AO, the case of the assessee was covered by search action u/s. 132 of the Act conducted at Bhilwara concerning Mantri-Soni Group of Jalna/Bhilwara and their family members and business concerns at the business and residential premises of different members/associate which is evident from para 1 of the assessment order. Admittedly, the AO sought approval u/s. 153D of the Act in 49 assessment orders vide letter dated 18-03-2016 which is on record placed on by the ld. DR on 09-10-2023. The approving authority has to examine number of evidences, documents, statements of various persons etc. recorded which were necessarily to be taken into consideration while granting approval u/s. 153D of the Act by the JCIT. On an examination of the approval dated 21-03-2016 which is on record placed by the ld. DR on 09-10-2023, we find no such indication of examination of evidences, documents, statements of various persons etc. at least, no reference whatsoever made by the JCIT i.e. approving authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y without application of mind vitiates the assessment orders. 19. In view of the above, let us examine the approval dated 21-03-2016 granted by the JCIT which is reproduced hereunder : GOVERNMENT OF INDIA INCOME TAX DEPARTMENT OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX CENTRAL RANGE, NASHIK 3rd Floor, Kendriya Rajaswa Bhawan, Gadkari Chowk, Old Agra Rd, Nashik-2 PHONE 2575611 to 13, 2314063 FAX : 2538994/2583884 No.Nsk/Jt.CIT(C)/153D/Approval/2015-16/1112 Dated: 21.03.2016 To, The Assistant Commissioner of Income Tax, Central Circle-2, Aurangabad. Sub: Approval of draft orders in the case of Mahalaxmi TMT, for the Assessment Years 2008-09 to 2014-15 regarding Please refer to the above. 2. Approval u/s. 153D of the I.T. Act, is granted subject to the compliance of following- a) The order sheet is to be completed properly. b) All submissions made by the assessee are to be placed in the respective folders for the respective assessment years. c) A detailed office note shall be written elaborating the issues raised in the appraisal report, the additions proposed in the appraisal report, the verifications carried out on the issue and the final finding if the AO has decided not to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l approval of draft assessments framed by the AO. We are unable to subscribe the arguments of ld. DR that the JCIT/Addl. CIT frequently goes through the seized documents and makes discussion from time to time with AO on his observations being a supervisory authority since the seized documents are running in hundreds of pages. It is not possible for JCIT/Addl. CIT to ask AO to handover the entire documents and details gathered by him for a long time to apply his mind. The requirement u/s. 153D of the Act for obtaining approval the JCIT is not procedural only, but a mandatory requirement as explained Circular No. 3 of 2008 dated 12-03- 2008 issued by the CBDT. Further, the above said approval clearly shows is a conditional approval subject to compliance in (a) to (j) which clearly establishes that the approval given by the JCIT was subjected to compliance of various conditions contemplated therein, in our opinion, is invalid where the approving authority is legally required to discharge the statutory obligation provided under law. Further, the provisions u/s. 153D of the Act requires prior approval before passing final assessment order and there is no provision to alter, change, modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce in the arguments of ld. AR that the period of time was available to Jt. CIT is only one day which is not enough to look into all the facts and details of search proceedings, the detailed and voluminous orders containing number of evidences, documents, statements of various persons etc. Thus, it clearly suggests there was no sufficient time for the JCIT to look into to all the evidences, documents, statements of various persons in one day i.e. 21-03-2016 as 19-03-2016 and 20-03-2016 being Saturday and Sunday, holidays. Therefore, the approval granted by the Jt. CIT clearly lacks any application of mind and the approval granted in mechanical manner cannot be said to be valid approval taken in the eye of law. Therefore, the JCIT as being approving authority without application of mind and without verifying details, granted approval u/s. 153D of the Act in a most mechanical manner, of which, in our opinion, the final assessment order dated 30-03- 2016 passed u/s. 143(3) r.w.s. 153A of the Act is vitiated for want of nonapplication of mind. 22. The ld. AR placed on record the decision of Hon ble High Court of Madhya Pradesh in the case of S. Goyanka Lime Chemicals Ltd. reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration. 11. The appeals are, therefore, dismissed. 23. We find the Department of Revenue filed SLP before the Hon ble Supreme Court against the decision of Hon ble High Court of Madhya Pradesh in the case of S. Goyanka Lime Chemicals Ltd. (supra). The Hon ble Supreme Court dismissed the SLP in favour of the assessee which reported in (2015) 64 taxmann.com 313 (SC) which is at page No. 162 of the case laws paper book. We find the facts and circumstances relating to challenging the approval granted by the JCIT on 21-03-2016 are similar to the facts in the case of S. Goyanka Lime Chemicals Ltd. (supra) before the Hon ble High Court of Madhya Pradesh. Therefore, the ratio laid down by the Hon ble High Court of Madhya Pradesh in the case of S. Goyanka Lime Chemicals Ltd. (supra) which was confirmed by the Hon ble Supreme Court is applicable to the facts on hand, therefore, the approval granted by the JCIT on 21-03-2016 is invalid, consequently, the final assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in ground No. 1 in quashing final assessment order dated 30-03-2016, ground Nos. 2 to 4 becomes academic, requiring no adjudication. 30. In the result, the appeal of the assessee is allowed. IT(SS)A No. 58/PUN/2022 for A.Y. 2011-12 by the assessee. 31. We find ground No. 1 raised in this appeal is similar to ground No. 1 raised in IT(SS)A No. 56/PUN/2022 for A.Y. 2009-10, wherein, we allowed ground No. 1 raised by the assessee and held approval dated 21-03-2016 is invalid for the reason of non-application of mind, consequently, quashed the final assessment order dated 30-03-2016 passed in pursuance of such invalid approval dated 21-03-2016. The view taken by us in ground No. 1 in IT(SS)A No. 56/PUN/2022 is equally applicable to ground No. 1 in IT(SS) No. 58/PUN/2022. Accordingly, ground No. 1 raised by the assessee is allowed. 32. In view of our decision in ground No. 1 in quashing final assessment order dated 30-03-2016, ground Nos. 2 to 7 becomes academic, requiring no adjudication. 33. In the result, the appeal of the assessee is allowed. IT(SS)A No. 59/PUN/2022 for A.Y. 2012-13 by the assessee. 34. We find ground No. 1 raised in this appeal is similar to ground No. 1 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication. 42. In the result, the appeal of the assessee is allowed. IT(SS)A No. 72/PUN/2022 for A.Y. 2011-12 by the Revenue. 43. In this appeal, the Revenue challenged the action of CIT(A) in restricting the undisclosed income to 4% of the total unaccounted sales. Since, we have taken a view in ground No. 1 of the assessee s appeal in IT(SS)A No. 56/PUN/2022 for A.Y. 2009-10 in quashing the final assessment order dated 30-03-2016 is bad under law treating the prior approval dated 21-03-2016 is invalid. In view of the same, the issue raised in ground Nos. 1 and 2 in this appeal does not survive, as it becomes infructuous. Thus, ground Nos. 1 and 2 raised by the Revenue are dismissed. 44. In the result, the appeal of Revenue is dismissed. IT(SS)A No. 73/PUN/2022 for A.Y. 2012-13 by the Revenue. 45. In this also appeal, the Revenue challenged the action of CIT(A) in deleting the addition made u/s. 68 of the Act. Since, we have taken a view in ground No. 1 of the assessee s appeal in IT(SS)A No. 56/PUN/2022 for A.Y. 2009-10 in quashing the final assessment order dated 30-03-2016 is bad under law treating the prior approval dated 21-03-2016 invalid. In view of the same, the issue raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find the Revenue filed three grounds of appeal amongst which the only issue challenging the action of CIT(A) in deleting the addition made by the AO on account of protective basis. 57. We note that the issue raised in this appeal also covered by the approval granted by the JCIT dated 21-03-2016 u/s. 153D of the Act, wherein, we held the same as invalid and quashed the final assessment order dated 30-03-2016. In view of the same, the issue raised in ground Nos. 1 to 3 in this appeal does not survive, as it becomes infructuous. Thus, ground Nos. 1 to 3 raised by the Revenue are dismissed. 58. In the result, the appeal of Revenue is dismissed. IT(SS)A No. 66/PUN/2022 for A.Y. 2009-10 by the Revenue. 59. We find the Revenue filed three grounds of appeal amongst which the only issue challenging the action of CIT(A) in deleting the addition made by the AO on account of protective basis. 60. We note that the issue raised in this appeal also covered by the approval granted by the JCIT dated 21-03-2016 u/s. 153D of the Act, wherein, we held the same as invalid and quashed the final assessment order dated 30-03-2016. In view of the same, the issue raised in ground Nos. 1 to 3 in this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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