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TMI Blog2024 (11) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration are allowed. Since, the entire search assessment in the hands of all the assesses have been declared as bad in law and illegal the other grounds raised by assessee need not be gone into. - Assistant Commissioner of Income Tax, Central Circle-13, New Delhi Versus Goldmine Buildcon Pvt. Ltd. And M/s Sunvision Agencies Pvt. Ltd. Versus Assistant Commissioner of Income Tax, Central Circle-13, New Delhi. And Deputy Commissioner of Income Tax, Central Circle-13, New Delhi. Versus M/s Sunvision Agencies Pvt. Ltd. M/s Skyline Metal Alloys Pvt. Ltd. Versus Assistant Commissioner of Income Tax, Central Circle-13, New Delhi. And Deputy Commissioner of Income Tax, Central Circle-13, New Delhi. Versus M/s Skyline Metal Alloys Pvt. Ltd. And Mukesh Kumar Versus Assistant Commissioner of Income Tax, Central Circle-13, New Delhi. Shri M. Balaganesh, Accountant Member And Shri Vimal Kumar, Judicial Member For the Assessee : Shri Lalit Mohan, CA And Shri Ankit Kumar, Adv. For the Respondent : Shri Rajesh Kumar, CIT-DR ORDER PER BENCH: 1. The captioned 16 appeals filed by assessee and 4 appeals by the Department are against order dated 28/02/2019 of Learned Commissioner of Income Tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2017 29.12.2017 29.12.2017 10 2016-17 29.12.2017 29.12.2017 29.12.2017 11 Skyline Metal Alloys (P) Ltd 2010-11 28.12.2017 Letter No. JCIT/CR- 4/ Approval 153 D/ 2017-18/1131 (page 1 of JPB) 29.12.2017 29.12.2017 29.12.2017 12 2011-12 28.12.2017 29.12.2017 29.12.2017 29.12.2017 13 2012-13 28.12.2017 29.12.2017 29.12.2017 29.12.2017 14 2013-14 28.12.2017 29.12.2017 29.12.2017 29.12.2017 15 2014-15 28.12.2017 29.12.2017 29.12.2017 29.12.2017 16 Mukesh Kumar 2010-11 28.12.2017 Letter No. JCIT/CR- 4/ Approval 153 D/ 2017-18/1133 (last page of order of assessment) Note 1 29.12.2017 29.12.2017 3. The appeal in ITA No.4289/Del/2019 is low tax effect. This appeal filed by the Revenue in case of low tax effect is not maintainable as per CBDT Circular No.09/2024 dated 17/09/2024. Therefore, this appeal of the Revenue is dismissed as withdrawn/not pressed. 4. Learned Authorized Representative for assesses submitted that the above said group name is referred as Deepak Agarwal Ors. Group. The approvals in 16 Assessment Years in captioned appeals were granted by the Learned Joint Commissioner of Income Tax, Central Range-4, New Delhi on 29/12/2017. In the case of Deepak Agarwal Ors. Group in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58/D/2022 dated 31.5.2024 Millenium Vinimay (P) Ltd. vs. ACIT (pages 178-195 of JPB) (vi) ITA No. 717/D/2021 dated 18.4.2023 DCIT vs. Amolak Singh Bhatia (vii) IT(SS)A No. 674/Lkw/2018 dated 2.9.2021 Subodh Agarwal vs. DCIT (viii) ITA No. 2503/D/2017 dated 23.7.2024 SEH Realtors (P) Ltd. vs ACIT (ix) xiii) ITA No. 429/D/2024 dated 30.9.2024 Sanjay Kumar vs. DCIT (x) 454 ITR 312 (Ori) ACIT vs. M/s Serajuddin and Co. Kolkata (pages 55-56 of JBP) affirmed by Apex Court in SLP No.44989/2023 (page 65 of JPB). (xi) ITA No.593/2023 (Del) dated 30.07.2024 PCIT vs. MDLR Hotels (P) Ltd. (pages 18-33 of JPB). (xii) 252 Taxman 407 (Guj) PCIT vs. Sunrise Finlease (P) Ltd. ITAT (Delhi). 6. Learned Authorized Representative for Department of Revenue supported the impugned orders of the Departmental Authorities. 7. From examination on record, in light of aforesaid, it is crystal clear that the core issue in the appeals is challenge to the authority to approval granted by Ld. JCIT vide order dated 29/12/2017. Learned JCIT had granted 39 approvals on 29/12/2017 itself for (Deepak Agarwal Others group). Hon ble ITAT Delhi Bench in case of Mysore Finlease Pvt. Ltd. Ors. in ITA 8821/Del/2019 Ors. decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in Income-tax Appeal No.86/2022 dated 12.12.2022. 8. Per contra, the Ld. DR vehemently argued that the role of ld. JCIT, Central Range is totally different from the role of a JCIT in the normal range. He argued that in a Central Range, the ld. JCIT is involved in the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing and is involved with the Ld. AO from time to time while issuing various questionnaires to the assessee. The ld. JCIT in Central Range also examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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 Investigation Wing to the Ld. AO and ld. JCIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from ld. JCIT u/s 153D of the Act. The ld. JCIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 ITAT was correct in holding that the approving authority has not applied his mind for giving approval u/s 153D? 12. In the case before the Hon'ble Orissa High Court, the approval of draft assessment orders was placed by the AO before the Addl.CIT on 27/29.12.2010 for seven assessment years. The approval was granted by the Addl. Commissioner for seven assessment years u/s 153D of the Act on 30.12.2010 by merely saying that the draft orders submitted by the officer in the above case for the seven assessment years are hereby approved. The Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian 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 the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income Tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under Section 132, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, 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), in the prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 assessee separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the approval as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the Act would vitiate the entire proceedings in the instant case. For the reasoning given in the case of Navin Jain (Supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income Tax Act. The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 agitate within the scope of the present appeal being in the nature of second appeal. No substantial question of law arises for consideration before us. The Appeal is dismissed being devoid of merit. 14. Further, we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCIT vs. Anju Bansal in ITA 368/2023 order dated 13.07.2023 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 section 153D of the Act would be fatal to the entire search assessment proceedings. The relevant operative part of the said order is reproduced below:- 12. This aspect was brought to the fore by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal. 15. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in holding that the approval u/s 153D of the Act has been granted by the ld. JCIT in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Such an approval has neither been mandated by the provisions of the Act nor endorsed by the decisions of the Hon'ble Orissa High Court; Hon'ble Allahabad High Court and Hon ble Jurisdictional High Court (Delhi High Court) referred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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