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TMI Blog2024 (12) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 declaring total income of Rs. 12,69,640/-. A search and seizure action u/s 132 of the Act was conducted in the premises of the assessee on 20.02.2019. In response to the notice u/s 153A of the Act, the assessee filed the return on 06.02.2021 declaring income of Rs. 12,69,640/- which was originally declared. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. The objection of the assessee against the notice issued u/s 153A of the Act was also disposed of by the Assessing Officer by passing a speaking order. 3. During the course of assessment proceedings the Assessing Officer noted that there was evidence / document found during the course of search indicating the suppression of professional receipts. The Assessing Officer referred to some of the sample pages of the diary seized which contained certain figures by omitting the last two digits. He noted that for the impugned assessment year the total receipts of the assessee were Rs. 64,92,750/- whereas the assessee has disclosed professional receipts of Rs. 31,42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of mind and accordingly, the asst order passed in consonance of the said approval be declared null and void. 2) The learned CIT(A) erred in confirming the addition of Rs 33,43,635/- on account of alleged unaccounted expenditure incurred on construction on hospital building without appreciating that no such addition was warranted on the facts of the case. 3) The learned CIT(A) erred in not appreciating that there was no concrete evidence that the assessee had actually incurred unaccounted expenditure on construction of hospital building and hence, the addition made may kindly be deleted 4] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal 7. The assessee has also raised the following additional grounds: The appellant in the above referred appeal requests for admission of the following Additional Grounds of Appeal which are raised without prejudice to the original ground of appeal :- 1] The assessee submits that the asst, order passed u/s 143(3) r.w.s. 153A is bad in law since the approval granted u/s 153D by the learned JCIT was without proper application of mind and accordingly, the asst. order passed in consonance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench to the approval granted by the JCIT, Central Range dated 26.09.2021 which reads as under: "GOVERNMENT OF INDIA OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX (CENTRAL RANGE)-NASHIK ROOM NO-211, 2nd FLOOR, SHAISHOBHAN COMPLEX GADKAR CHOWK OLD AGRAROAD, NASHIK-422002 email: [email protected] Phone:02532314867/2575611 to 13 FAX : 2538994/2583884 No.Nsk/Jt.CIT/CR/CC-1/153D/2021-22/454 Dated: 26.09.2021 To, The Dy. Commissioner of Income Tax, Central Circle-1, Nashik. Sub: Approval of draft orders u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 for A.Y. 2009-10 to Α.Υ. 2018-19 & u/s 143(3) r.w.s 153B of the IT Act 1961 for A.Y. 2019-20 in the case of Dr. Amol Pramod Mahajan, [AJFFM4677F]-reg Ref: No.NSK/DCIT/CC-1/Draft Approval/2021-22/1341, dated. 26.09.2021. Please refer to the above. 2. Approval u/s. 153D of the IT Act, is granted as per documents available on records and subject to the discussion made time to time in this case on 10.08.2021, 15.09.2021, 22.09.2021 and compliance of following a) The order sheet is to be completed properly. b) All submissions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amend, modify or re-work the order once the approval has been granted. Referring to the approval granted by the JCIT, he submitted that a perusal of the approval so granted shows that it is subject to compliance of various conditions which clearly proves that the approval granted is a conditional approval. He submitted that the approval u/s 153D of the Act is to be given on a standalone basis after perusing the records. However, in the present case, the said approval is a conditional one given on the very same day and secondly, it is a single approval for all the years. He submitted that the said approval by the JCIT nowhere deals with the merit of the case relating to the various additions made in the draft order and it does not contain as to why such approval is being granted. 14. Referring to the decision of the Pune Bench of the Tribunal in the case of Shri Santosh S. Mukta vs. ACIT, vide IT(SS)A Nos.18, 19 & 20/PUN/2021 for assessment years 2012-13, 2013-14 and 2014-15, order dated 24.09.2024 and the decision in the case of SMW Ispat Private Limited vs. ACIT, vide IT(SS)A Nos.56 to 61/PUN/2022, for assessment years 2009-10 to 2014-15, copies of which are placed in the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 153A put up before the competent authority are similar in nature and therefore a joint submission is being submitted with respect to the challenge thereto 2. Say of the Revenue: 2.1 The main grouse of the assessee is that the approval granted u/s 153D of the Act was a conditional approval subject to the compliances stated therein and accordingly, the assessment orders passed on the basis of such invalid approval should be held to be null and void. 2.2 At the outset, it needs to be understood that the approval that is granted u/s 153D is to the assessment order u/s 143 (3) rws 153A based on the documents available on record and the discussions that continuously take place in the course of the assessment proceedings between the AO and the competent authority granting approval. That is, it is a continuous process and not a one-day affair of merely granting approval on the last day or on the day when the draft assessment order was put up to the competent authority. There is no particular format for granting such approval u/s 153D and is normally and conventionally given in the form of a letter addressed to the AO concerned. While granting such approval, the competent authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the AO carries out in the course of assessment proceedings irrespective of any approval to be granted by the competent authority. That is to say, such acts on the part of the AO are intrinsic to the duties to be carried out by him/her and the reiteration in the letter granting approval u/s 153D is nothing but an administrative/supervisory advice to the AO and nothing more. It has got nothing to do with the approval that is required to be granted u/s 153D as per the provisions of the Act which would necessitate the competent authority to go through the material on record placed by the AO before the competent authority and examine its relevance with the draft assessment order, as also to note any omission or superfluous addition that may have crept into the assessment order. The approval of the competent authority u/s 153D is to safeguard to the assessee as well as to the revenue to ensure that superfluous additions are not made which are not in consonance with the material on record and at the same time there are no omissions on the part of the AO to bring to tax any income which had hitherto not been subjected to assessment in the draft order. Ultimately, it needs to be appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. We have also considered the various decisions cited before us by both sides. Before deciding the appeal on merit, we would first like to decide the additional grounds raised by the assessee. A perusal of the approval granted by the JCIT shows that he has given approval to the draft orders sent by the Assessing Officer on 26.09.2021 and the letter of the Assessing Officer to the JCIT reads as under: "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, NASHIK No.Nsk/DCIT/CC-1/Draft Approval/2021-22/1341 Dated: 26.09.2021 To, The Joint Commissioner of Income Tax, Central Range, Nashik. Sir, Sub: Approval of draft orders u/s 143(3) r.w.s 153A of the I.T. Act, 1961 for A.Y. 2009-10 to Α.Υ. 2018-19 & u/s 143(3) r.w.s 153B of the IT Act 1961 for A.Y. 2019-20 in the case of Dr. Amol Pramod Mahajan, [AJFPM4677F]-reg. Kindly refer to the above. 02. I am submitting herewith draft orders in the above mentioned case as per the provision of section 153D of the Act for approval. 03. The same has been submitted as per our discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "see" or "approved" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of Section 158BG of the Act, it would equally apply to Section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been 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. Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves. 16. On careful reading of the above judgment, we note that the Hon'ble High Court was pleased to observe that there should be some indication that the approving authority examined relevant material in detail while granting the approval u/s. 153D of the Act. The approval u/s. 153D is a mandatory requirement and such approval is not meant to be given mechanically. Such approval granted mechanically without application of mind by the Addl. CIT resulting in vitiating the assessment orders. We find in the present case that the AO sought approval u/s. 153D of the Act on 18-03-2016, the JCIT granted approval on 21-03-2016 and the final assessment order u/s. 143(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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LE MRS. JUSTICE B.V. NAGARATHNA HON'BLE MR. JUSTICE UJJAL BHUYAN For Petitioner(s) Mr. N Venkatraman, A.S.G. Mr. Raj Bahadur Yadav, AOR Mr. Udai Khanna, Adv. Mr. H R Rao, Adv. Mr. Akshat Singh, Adv. For Respondent(s) Mr. S. Ganesh, Sr. Adv. Mr. Ramesh Singh, Sr. Adv. Mr. Gaurav Khanna, AOR Mr. Venugopal Mohapatra, Adv. Ms. Natasha Sahrawat, Adv. Ms. Deepali Bhanot, Adv. Mr. Rudraksh Pandey, Adv. Mr. Gautam Barnwal, Adv. UPON hearing the counsel the Court made the following O R D E R Delay condoned. Having regard to facts and circumstances of the case, we are not inclined to interfere in the matter. The Special Leave Petition is dismissed. Pending application(s) shall stand disposed of. (NEETU SACHDEVA) (MALEKAR NAGARAJ) ASTT. REGUSTRAR-cum-PS COURT MASTER (NSH) 18. On careful reading of the above, we note that the Hon'ble Supreme Court declined to interfere in the finding recorded by the Hon'ble High Court of Orissa in the case of M/s. Serajuddin & Co. (supra) holding that the approval u/s. 153BD is mandatory requirement and such approval is not meant to be given mechanically, further, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 269SS / 269T are violated, separate proposal for initiation of penalty proceedings u/s. 271D / 271E should be submitted. j) Wherever necessary, A.O. should forward third party information to the A.O. of such party. 3. The orders alongwith the demand notice and penalty notices may be served on the assessee before the last date prescribed for completion of assessment and acknowledgement to the effect shall be kept on record. [Dr. Vivek Aggarwal] Joint Commissioner of Income Tax, Central Range, Nashik 20. On an examination of the above, we find that approving authority i.e. JCIT having received the alleged draft orders for approval from AO, Aurangabad on 18-03-2016 and accorded his approval on 21-03-2016. The ld. AR vehemently contended the 19th and 20th March, 2016 were Saturday and Sunday holidays, respectively, there is no time left to JCIT to apply his mind in giving approval. On a close examination of the said approval from (a) to (j), we find the same are procedural in nature, but nowhere we find application of his mind with regard to facts and circumstances of the case, number of evidences, documents, statements of various persons etc. The provision u/s. 153D of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial 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." Admittedly, in the present case, 49 assessments are involved from A.Ys. 2008-09 to 2014-15, therefore, in our opinion, it is humanly impossible to go through the records of 49 cases in one day i.e. on 21-03-2016. Further, it clearly shows the office of AO is located in Aurangabad and the office of JCIT is located in Nashik which is according to the ld. AR is about approximately distance 200 Kms. between Aurangabad to Nashik. Furhter, it shows the inward stamp receiving the said letter on 18-03-2016. The ld. DR also placed on record a copy of approval granted by the JCIT on 21-03-2016. On perusal of the said letter it is noted that the JCIT granted approval subject to the compliance of (a) to (j). On an examination of the same, we note that the JCIT directed the AO to follow the procedures and to conduct the proceedings as per law, it establishes that no discussion whatsoever made by the JCIT in the approval regarding the seized material as the case may be relating to 49 assessments in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- "The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material." 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Hon'ble High Court of Orissa in the case of M/s. Serajuddin & Co. (supra) which was confirmed by the Hon'ble Supreme Court vide order dated 28-11-2023 in SLP(C) No. 026338/2023, we hold that the approval dated 21-03-2016 granted by the JCIT u/s. 153D of the Act is without application of mind, therefore, invalid under law. Consequently, the final assessment order dated 30-03-2016 passed u/s. 143(3) r.w.s. 153A of the Act fails and quashed. 26. In view of our decision in ground No. 1 in quashing final assessment order dated 30-03-2016, ground Nos. 2 to 4 becomes academic, requiring no adjudication. 27. In the result, the appeal of the assessee is allowed." 22. We find following the above decision, Pune Bench of the Tribunal again in the case of Shri Santosh S. Mukta vs. ACIT (supra) has quashed the proceedings being not sustainable in law. 23. We find the Hon'ble High Court of Delhi in the case of PCIT vs. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Delhi) has held that where approval under section 153D for relevant assessment year was granted by Addl. Commissioner for 43 cases on a single day without perusing draft assessment order at all and without an independent app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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