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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 ..... ar 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 (Appeals)-23, New Delhi [hereinafter referred to as 'Ld. CIT(A)'] arising out of Assessment Order dated 29/12/2017 u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as 'the Act') passed by the Assistant Commissioner of Income Tax, Central Circle- 13, New Delhi for Assessment Years 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 respectively. 2. The Assessees filed appeals challenging the approval granted by Learned CIT(A), Central Circle-4, New Delhi u/s 153D. The details are as under:- Sr. No. Asst. Year Assessee ITA No. (Assessee) ITA No. (Deptt.) Tax Effect is less than 60 Lakhs) Ground of appeal filed by assessee, challenging approval u/s 153D of the Act 1 2011-12 Inflocance Software Solutions (P) ..... 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 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 Therefore, this appeal of the Revenue is dismissed as withdrawn/not pressed. 4.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 respect of aforesaid entities as well as other group entities as tabulated form are as under: Sl. No. Name of Assessee AY Details of Approval letter for granting approval u/s 153D Date of Approval u/s 153D Date of Assessment Order 1 Infolence Software Solutions (P) Ltd. 2010-11 Letter No. JCIT/CR-4/ Approval 153 D/ 2017- 18/1130 29.12.2017 29.12.2017 2 2012-13 29.12.2017 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 (c) 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. decided on 10/01/2024 held under:- "7. We find that the ld. JCIT granted approval of the draft assessment orders u/s 153D of the Act for 40 cases for various Asst Years in respect of assessments to be completed u/s 153A of the Act. The Ld. AR before us had raised a preliminary objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 the seized documents in detail immediately after receipt of the appraisal report and provides able assistance to the Ld. AO about the interpretation of the said seized documents while issuing questionnaires to assessee, examining the replies filed by the assessee and drawing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment 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 examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the Ld. AO as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval 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'ble Orissa High Court took note of this fact and quashed the search assessment and decided the issue in favour of the assessee by holding as under:- "22. As rightly pointed out by learned counsel for the Assessee there is not even a token mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dges 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 nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions Issued by the Board. (3) A show cause notice and demand contrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and, in any case, cannot be a mechanical exercise of power. It was noted that the obligations of the approval of the Approving Authority serves two purposes: (i) On the one hand, he has to apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal, 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 to supra. Hence, we find lot of force in the arguments advanced by the Ld. AR in support of the additional grounds raised for all assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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