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TMI Blog2025 (2) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Hence, in the absence of any incriminating material in an unabated assessment, additions/ disallowances made by the AO in all captioned appeals requires to be quashed. Propriety of approval u/s 153D to the respective draft assessment orders placed before him by the AO - As discernible from the combined approval memo, the sanctioning authority (Addl. CIT) has, in fact, relegated his statutory duty to the subordinate AO, whose action the Addl. CIT, was supposed to supervise as per the scheme of the Act. Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions and without ensuring the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law. CIT(A) has brushed aside the legal objection summarily merely on an inept & indifferent premise that the assessment order makes mention of the approval from Addl. CIT u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- 2. At the time of hearing, it was stated that the issues involved for AYs 2013-14 to 2015-16 and 2019-20 are broadly common, interlinked and arising from the search action on the assessee and other group concerns covering the assessee. Hence, all these cases have been heard together and accordingly adjudicated by this common order. ITA Nos.3367 to 3369/Del/2024 [AYs 2013-14 to 2015-16] [Smt. Peu Veer] 3. It was stated on behalf of the captioned assessee at the outset that the assessment for AYs 2013-14 to AY 2015-16 in question for captioned assessee were not pending and stood concluded either under s. 143(1) or under s. 143(3) at the time of initiation of search on 19.11.2018 and thus remained unabated. Consequently, the legal framework for assessment of total income under s. 153A is narrow and is contingent upon the discovery of undisclosed income backed by incriminating material found in the course of search from the respective assessee. 4. As per grounds of appeal, the captioned assessee has challenged respective first appellate orders arising from the respective assessment orders broadly on following contours; (A) Legal objection on maintainability of additions car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions and placed documentary evidences along with case laws before CIT(A). 6.2 The CIT(A) however neither found any merit in the contention raised on various jurisdictional and legal points nor towards additions on merits having regard to the documentary evidences. The legal objection of the assessee questioning scope and legality of additions under s. 153A being outside the legal framework was discarded. Likewise, objections raised on a common approval granted under s. 153D alleging such approval to be an omnibus approval without application of mind to the draft assessment order was also found to be without any merit. The CIT(A) did not find any substance in the contentions raised on the merits of the additions either. The CIT(A) thus addressed all the substantive issues against the assessee and in favour of the Revenue. 7. Further aggrieved, the assessee preferred appeals before the Tribunal. 8. The Ld. Counsel submitted at the outset that the respective first appellate orders and the assessment orders have been passed based on complete misconception of scheme of search assessment under s. 153A. The Ld. Counsel also pointed out that the approval of the Addl. CIT to the dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective assessment orders. The material referred to and relied upon by both sides has been perused in accordance with Rule 18(6) of the Income Tax (Appellate Tribunal) Rules, 1963. Similarly, the case laws cited in the course of hearing has been given due weight having regard to the context of the case. 11. To begin with, we shall address ourselves with preliminary objections of legal nature touching the jurisdictional aspects as raised on behalf of the assessee. 11.1 The broad contours of the appeals of the assessee hinges around following pertinent legal issues emanating in these appeals of the assessee: (a) Whether the assessee was justified in making the additions dehors incriminating material found in the course of search from the premises of the assessee in such unabated and concluded assessments and whether while making assessment under s. 153A of the Act, the Revenue is entitled to interfere with already concluded (and not abated) assessments passed earlier either under s. 143(1) or under s. 143(3) of the Act and not pending at the time of search in the absence of any incriminating documents unearthed as a result of search? (b) Whether such purported approvals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (iv) On merits, the assessee contends that gifts have been received from blood relatives and backed by Gift Deeds. Such gifts giving rise to the additions under s. 69A is without any factual foundation. It is thus the case of the assessee that additions made by the AO was wrongly endorsed by the CIT(A) and such action cannot be countenanced in law both on the grounds of jurisdiction available to the AO as well as on merits. The assessee thus seeks reversal of the additions made by the AO. 12.2. On facts, it is the case of the assessee that the so-called incriminating material referred in the assessment order are in the shape of purported financial profiling of relatives who have given impugned gifts. The AO proceeded against assessee based on suspicion towards gifting capacity of the close relatives. Such inconclusive and rebuttable view forms the basis for drawing adverse interference towards alleged unexplained gifts in unabated assessments. The CIT(A) while confirming the additions on merits was clearly guided by so-called absence of necessary documentary evidences. No independent enquiry was carried out. While making the additions by the AO and upholding such additions by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of seized documents were verified before passing the draft assessment order. The Ld. Counsel contends that on a bare reading of phraseology of para 2 of the approval memo noted above, it would be manifest that combined and consolidated approval has been accorded on the same day solely based on the submissions and assurances from the AO that the pre-requisites have been met while preparing draft assessment orders. Delving deeper, the Ld. Counsel for the assessee yet again adverted to para 2 part 3 of the approval memo dated 10.05.2021 ( extracted above) to assert that the Addl. CIT clearly proceeded to accord approval under s. 153D on the presumption that relevant copy of seized documents were verified by the AO before passing respective draft assessment orders. Apparently, riding on such assurances from the AO, the combined approvals have been merrily accorded. The Addl. CIT thus barely acted on the assurance from the AO towards existence of basic requirement of passing a fair and balanced assessment order mandated in law. Such approvals, which do not even remotely indicate independent application of mind, if endorsed would defeat the very purpose of the statutory enactment of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority giving approval to search assessment under Sect ion 153D of the Act) for his perusal and prior approval. In view of the definitive judicial consensus available on the expectations from Competent Authority, such Competent Authority is expected to objectively evaluate such draft assessment order as far as possible, with due application of mind on various issues contained in such order so as to derive his/ her diligent satisfaction that the proposed action of AO is in conformity with subsisting law and is also in accord with underlying factual matrix. The requirement of law to grant approval is consistently held to be not a mere formality or a symbolic act but a mandatory requirement. The AO is obligated is pass the assessment order exactly, as per approval / directions of the designated authority. It is not open to the AO to modify the assessment order without the knowledge and concurrence of the designated authority. 16.2 Pertinently, it may be relevant to take note of host of judicial precedents governing the field wherein the Courts and various Benches of the Tribunal have uniformly struck a discordant note on mechanical and perfunctory approval in the context of provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval cast on superior authority acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act enjoins due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. Long line of judicial precedents which provides guidance in applying the law has been quoted in the preceding para. The courts have repeatedly deprecated the pernicious practice of granting approvals by the supervisory authorities in a nonchalant manner. 16.4 At the cost of repetition, it may be reiterated that in the instant case, the approving authority has granted a mere 'technical approval' by his own express admission in departure to a substantive approval expected in law. Curiously, the Addl.CIT has recorded that he has granted approval on the basis of presentation of the AO before Addl.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee in ITA No.3367 to 3369/Del/2024 [AYs 2013-14 to 2015-16] are allowed. ITA Nos.3370/Del/2024[ Smt. Peu Veer], 3380/Del/2024 [Virender Pal Singh] & 3381/Del/2024 [Bhupinder Kaur] (Assessment Year 2019-20) 20. One of the grounds in captioned appeals raises challenge to validity of approval under s. 153D similar to other appeals discussed in preceding paras. 21. The approval memo under s. 153D in captioned appeals are identically worded to that of other group cases. The approval memo under s. 153D being common and combined and similarly worded, the delineations noted above in respect of earlier years shall apply mutatis mutandis. As noted in para 14 to para 17 (supra), the Addl.CIT is found to have granted approval under s. 153D based on assurance from AO seeking approval that draft assessment orders have been framed after giving opportunity and due examinations and verifications have been carried out. Guided by such submissions of the AO, the Additional CIT has accorded approval without showing his own involvement and application of mind to facts emanating and law involved. The approval so accorded was thus held to be in the nature of a 'technical approval' in sy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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