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TMI Blog2023 (11) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee : Shri Anil Jain, CA For the Department : Shri Subhra Jyoti Chakraborty, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- The above captioned two separate appeals by the Revenue and 7 separate cross appeals by the assessee are preferred against separate orders of the ld. CIT(A) 27, New Delhi dated 26.02.2020 pertaining to Assessment Years 2011-12 to 2017-18 respectively. 2. The captioned appeals by the assessee and cross appeals by the Revenue were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. 4. The common challenge in all the appeals by the assessee relates to the approval obtained u/s 153D of the Income-tax Act, 1961 [the Act, for short] on the ground that it is not only mechanical but also without application of mind which makes the impugned assessment order non-est. 5. The other grounds in the appeals of the assessee are on merits of the case. But since the challenge to the approval goes to the root of the matter, we deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find lot of force in the arguments advanced by the ld. AR in support of the additional ground raised for all the assessment years under consideration before us. Accordingly, the additional ground raised by the assessee is hereby allowed. 15. Since, pursuant to the allowing of the additional ground, the entire search assessments framed in the hands of the assessee is to be declared illegal and bad in law, the other legal grounds and grounds on merits raised by the assessee and grounds on merits raised by the Revenue for AY 2015-16 need not be gone into as adjudication of the same would be merely academic in nature and, hence, they are left open. 16. In the result, all the appeals of the assessee are allowed and the appeal of the Revenue for AY 2015-16 is dismissed. 8. The co-ordinate bench in another batch of 111 appeals in group cases of MDLR Hotels Pvt Ltd had an occasion to consider a similar challenge to the approval u/s 153D of the Act and held as under: 13. We have given thoughtful consideration to the orders of the authorities below and have carefully perused all the relevant documentary evidences brought on record. We have also gone through each and every approval granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, 2007. 16. The Legislative intent is clear from the above, in as much as, prior to the insertion of Sec. 153D of the Act, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/ reassessments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their minds on the material on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authorities have to approve the assessment order. 17. The question before us is has this been done in the present case . The language of the approval letter says no . 18. In light of the afore-stated relevant provisions and legislative intent, approval dated 08.03.2013 is in respect of 62 assessment orders as exhibited at pages 136 and 137 of the Index to Convenience Compilation furnished by the ld. counsel for the assessee. Approval dated 15.03.2013 is in respect of 37 assessment orders as exhibited at pages 138 and 139. Approval dated 18.03.2013 is in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require. 25. In this section also the AO may direct the assessee to get the accounts audited by an Accountant with the previous approval of the Principal Chief Commissioner or Chief Commissioner. This provision has been elaborately considered by the Hon ble Supreme Court in the case of Sahara India Vs CIT 169 Taxman 328 wherein at para-6, the Hon ble Supreme Court observed as under: A bare perusal of the provisions of sub-section (2A) of the Act would show that the opinion of the Assessing Officer that it is necessary to get the accounts of assessee audited by an Accountant has to be formed only by having regard to: (i) the nature and complexity of the accounts of the assessee; and (ii) the interests of the revenue. The word and signifies conjunction and not disjunction. In other words, the twin conditions of nature and complexity of the accounts and the interests of the revenue are the prerequisites for exercise of power under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind to the facts of the case. 26. Thus, even the Hon ble Supreme Court has clearly laid down that the approval must reflect the application of mind to the facts of the case. 27. Similarly, the Hon ble High Court of Calcutta in the case of Peerless General Finance Investment Co. Ltd. Vs DCIT 236 ITR 671 has made the following observations which are pertinent to the facts of the case in hand before us: The factual matrix of the matter clearly shows that a proposal was made on March 10, 1998, and no prior approval therefore was granted by the Chief Commissioner of Income tax but merely one G. P. Agarwal was nominated. An argument has been advanced to the effect that by making such a nomination, approval will be deemed to have 9 ITA. No.4061/Mum/2012 been granted. The answer to the said contention must be rendered in the negative. The Chief Commissioner of Income tax before granting such approval must have before him the materials on the basis whereof an opinion had been formed. A prior approval can be granted only when the materials for appointment of the extraordinary procedure is required to be taken by the Assessing Officer. The Assessing Officer, therefore, was required to place a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese cases were made on 31-31997 and on the very same day, i.e., on 31-3-1997 the Commissioner grants approval and that too without giving or recording any reasons whatsoever. The approval order does not disclose the points which were considered by the Commissioner and the reasons for accepting them. In our view, this is totally an unsatisfactory method of granting approval in exercise of judicial power vested in the Commissioner. 11.9. This decision of the Tribunal was considered by Allahabad Bench of the Tribunal in the case of Verma Roadways Vs ACIT 75 ITD 183 wherein also the assessee- appellant has challenged the validity of approval to the assessment order accorded by the CIT Kanpur. The Tribunal at Para-47 has held as under: Coming to the aspect of the application of mind, while granting approval, we are of the view that requirement of approval pre-supposes a proper and thorough scrutiny and application of mind. In the case of Kirtilal Kalidas Co. (supra), the I.T.A.T Madras Bench A has observed that the function to be performed by the Commissioner in granting previous approval requires an enquiry and judicial approach on the entire facts, materials and evidence. It has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind by the Additional Commissioner before granting the approval . 30. The Hon'ble Allahabad High Court in the case of Siddharth Gupta ITA No. 90 of 2022 vide order dated 12.12.2-22 had the occasion to consider an identical issue. The most relevant findings /observations of the Hon'ble High Court read as under: The submission is that the substantial question of law which arises for consideration before this Court is about the justification of the act of the Tribunal in ignoring the findings recorded by the Assessing Officer and settingaside the assessment orders on the sole ground of defect in the approval to the draft assessment orders granted by the competent Approving Authority. Learned counsel for the Assessee, however, defended the order of the tribunal for the reasoning given therein. Considering the submissions of the learned counsels for 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 orders was granted under Section 153D for the assessment proceedings, by two letters dated 30.12.2017 and 31.12.2017, in 123 cases placed before the approving authority in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in 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 legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be obtained under Section 153D of the Income Tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the approval as defined in Black's Law Dictionary as also the decisions of the Apex Court in the case of Sahara India vs. CIT and Others (2008) 300 JTR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned 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 Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year or years), referred to in Clause (b) of sub-section (1) of Section 153A. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to each assessment year is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment orders under Section 153A. In the instant case, the draft assessment orders in 123 cases, i.e. for 123 assessment years placed before the Approving Authority on 30.12.2017 and 31.12.2017 were approved on 31.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 123 cases in one day to apply independent mind 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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