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TMI Blog2024 (7) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 as relied upon. - SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER For the Assessee : Shri M. P. Rastogi, Adv Shri Deepak Malik, Adv Shri Shivam Malik, Adv For the Revenue : Shri Dharm Veer Singh, CIT DR ORDER PER M. BALAGANESH, A. M.: 1. The appeal in CO No. 9/Del/2022 and ITA No.2503/Del/2017 filed by the assessee and ITA No. 2693/Del/2017 for AY 2013-14, arises out of the order of the Commissioner of Income Tax (Appeals)-24, New Delhi [hereinafter referred to as ld. CIT(A) , in short] in Appeal No. 39/2015-16 dated 27.02.2017 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t totally 232 files containing the draft assessment orders which includes assessee herein also were sent by the ld. AO to ld. JCIT for seeking approval u/s 153D of the Act on 27.03.2015 and all the 232 files were sent back by the ld. JCIT to the ld. AO after granting approval u/s 153D of the Act on 27.03.2015. The ld. AR even placed on record the concerned approval granted u/s 153D of the Act by the ld. JCIT dated 27.03.2015 containing the list of 232 cases including the assessee herein. 4. The ld AR also submitted that the meaning of approval as contemplated u/s 153D of the Act is that the ld JCIT is required to verify the issues raised by the ld AO in the draft assessment order, apply his mind and ascertain whether the entire facts have been appreciated properly by the ld AO together with the supporting evidences. The said approval proceeding is a quasi judicial function to be performed by the ld JCIT based on sound reasoning on due examination of the seized documents, replies filed by the assessee and the draft assessment order of the ld AO. It is highly impossible for the Ld JCIT to grant approval to all the assessment orders on the very same day on receipt of draft assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. JCIT to grant approval of the draft assessment order on the same day since he is involved with the assessment proceedings right from the inception. Accordingly, he argued that the objection raised by the Ld. AR has no force. Further, the Ld. DR vehemently argued that bare reading of provisions of section 153D of the Act talks only about existence of approval from the ld. JCIT. There is no mention of application of mind on the part of the ld. JCIT or the approving authority in the said section. The expression application of mind is only provided by the judicial decisions and not provided in the statute. Hence the Ld. DR argued that literal interpretation is to be given to the provisions of section 153D of the Act which does not provide for application of mind of the approving authority and hence any other interpretation contrary to the same would only result in re-writing the law. The Ld DR also argued that the assessee files details at the last moment and that is why the approval is obtained from ld JCIT in the last moment. The Ld DR also argued that the ld. JCIT or ld. Additional CIT does not look into the figures and even if there are mistakes in the figures, the same would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon by the ld. DR does not have any statutory force. Hence the reliance placed thereon would not advance the case of the revenue. 8. We find as per the scheme of the Act, for framing search assessments, the Ld. AO can pass the search assessment order u/s 153A or u/s 153C of the Act only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the ld. JCIT, in terms of section 153D of the Act. This is a mandatory requirement of law. The said approval granting proceedings by the ld. JCIT is a quasi judicial proceeding requiring application of mind by the ld. JCIT judiciously. 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. JCIT well in time much before the due date of completion of search assessment. The ld. JCIT 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 questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies if not filed within the stipulated time. It is not the case of the revenue that the details were filed by the assessee in the instant case at the last moment. Even if it is so, as stated above, it is the prerogative of the ld. AO to accept the said letter containing details or reject the same as it was not filed within the stipulated time. On the contrary, if the ld. AO himself grants time to the assessee to furnish the details till the last moment, then no fault could be attributed to the assessee. In such circumstances, the only irresistible conclusion that could be drawn is that the ld. AO is not serious about the statutory deadlines provided in the Act. In our considered opinion, if the arguments of the Ld. CIT DR are to be appreciated that the ld. JCIT need not apply his mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose. The law provides only the Ld. AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the ld. JCIT to grant judicious approval u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.87,20,580/-, Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560/- had he applied his mind. The addition of Rs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes . 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal ( supra). In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only 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 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 ..... 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