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TMI Blog2025 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... 021 -do- 3. 3304/Del/2024 -do- -do- -do- 4. 3305/Del/2024 -do- 21.04.2021 -do- 5. 3306/Del/2024 -do- -do- Assessment Order passed under section 143(3) of the Income Tax Act, 1961. 6. 3333/Del/2024 29.05.2024 23.04.2021 Assessment Order passed under section 143(3) r.w.s 153A(1)(b) of the Income Tax Act, 1961. 7. 3334/Del/2024 CIT(A)-3, Gurgaon order dated 24.05.2024 21.04.2021 -do - 8. 3332/Del/2024 CIT(A)-3, Gurgaon order dated 29.05.2024 21.04.2021 -do- 9. 3352/Del/2024 -do- 21.04.2021 -do- 10. 3314/Del/2024 CIT(A)-3, Gurgaon order dated 17.05.2024 19.04.2021 -do- 2. The issues being common and being related to the connected assessees for different assessment years, all captioned appeals have been heard together and are being disposed off by this common order. ITA No.3301/Del/2024 (A.Y. 2017-18) : 3. We shall first take ITA No.3301/Del/2024 in the case of Kavita Jain concerning AY 2017-18 for appreciation of facts and contentions raised on behalf of the assessee. 4. As per grounds of appeal, the assessee has assailed the additions made by the AO under s. 153 A of the Act on the merits of the additions and disallowances. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned & unconnected with the ongoing search assessment proceedings. 6.3. Adverting to the approval under challenge, the Ld. Counsel for the assessee pointed out that in the second line of approval, the Ld. Addl. CIT has merely stated that the draft assessment order was sent for approval by the AO, Karnal which stands approved and the assessment records are returned. No comment on any aspect of the assessment is found in any of captioned assessees. 7. On facts, the AO in the instant case invoked the provision of section 56(2)(vii)(c) of the Act in respect of shares allotted to the assessee @ INR 40/- per share against the rights entitlement being existing shareholder the Fair Market Value ("FMV") of the shares were determined by the AO at INR 44/- per share and thus INR 4/- per share were deemed as income from other sources. The assessee made out a case that the provision of section 56(2)(vii)(c) do not apply in view of section 49(4) of the Act and in view of the existing entitlement which partakes the character of 'consideration' for the purposes of section 56(2)(vii)(c) of the Act. Besides, the property must pre-exist in order to be 'revived from any person'. It was the bound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. We thus require to address ourselves into such mainstay issue at the outset. 11. We shall straightway advert to the communication exchanged between the AO, Karnal and the Ld. Addl. CIT, Chandigarh being the competent authority for the purposes of approval contemplated under s. 153D of the Act. 11.1. The communication letter by the AO (stationed at Karnal, Haryana) to the Ld. Addl. CIT (stationed at Chandigarh) is extracted below:- To Date: 21.04.2021 The Addl., Commissioner of Income Tax, Range Central, Chandigarh Sir, Sub: Approval u/s 153D of the Income Tax Act, 1961 in the case of Smt. Kavita Jain, H.No. 1247, Sector-11-12, HUDA, Panipat for the assessment years 2013-14 to 2019-20-Reg.- ************ Kindly refer to the subject cited above. 2. The draft assessment orders in respect of the following assessee of M/s Jai Bharat Group, Samaikha (Panipat) for the respective assessment year are enclosed herewith for your kind consideration and approval u/s 153D of the Income Tax Act, 1961. The relevant assessment record in respect of the same is also enclosed:- Sr.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the Revenue to contend that the approval itself is not justiciable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is no even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D is not a mere procedural irregularity and lapse committed by Revenue may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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