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TMI Blog2025 (2) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... detected on a bare reading of such orders. Impliedly, the Addl. CIT has not even cared to read the assessment orders while entrusted with the task of approval of such orders. A common approval for all assessment years in complex matters of search without identifying or discussing any issue in relation to any assessment year further shows no semblance of any application of mind to any aspect of any assessment years.
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 under 153D of the Act and such powers are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law.
We are unhesitatingly disposed to hold that the integrity and propriety of impugned assessments under captioned appeals based on such combined approval memo u/s 153D in question cannot be countenanced in law. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... nt upon search, notices under s. 153A of the Act were issued to the assessee for respective AYs under appeal. Pursuant thereto, the assessee filed return of income under s. 153A of the Act for assessment years concerned. The assessments were framed under s. 143(3) r.w.s 153A of the Act for unabated and abated AYs 2014-15 to 2018-19 in question. While framing search assessments noted above, the AO inter alia made additions and disallowances for different assessment years under appeal. 6. Aggrieved, the assessee preferred appeal before the CIT(A) seeking to challenge the additions made on various counts. The assessee firstly alleged that the additions made by the AO are outside the ambit of legal framework inasmuch as no incriminating material was found during the course of search initiated against the assessee under s. 132 of the Act on 19.11.2018 and such assessments stood concluded and remained unabated at the time of initiation of search. It was further contended that third parties statements adverse to assessee in a different proceedings do not give rise to legally basis for making additions in respect of unabated assessments. The assessee also simultaneously challenged the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs from the vice of non application of mind in a gross manner. The Ld. Counsel thus contended that approval under s. 153D is not an empty legal formality but seeks to place enormous statutory responsibility on the authority to ensure fair play and just and proper order by the AO. The casual exercise of powers under s. 153D has actually frustrated the very purpose of such valuable safeguard & reduced the whole exercise to an empty formality. It was contended that no person with ordinary prudence and instructed in law could grant approval under s. 153D to the loopsided and legally untenable assessment orders under challenge. The Ld. Counsel referred to large number of judicial pronouncements to seek cancellation of respective assessment orders so passed on the strength of such sterile & hollow approvals. We shall deal with the various facets of the arguments at appropriate place in succeeding paragraphs while dealing with the respective issues. 9. Per contra, the Ld. CIT DR appearing for the Revenue strongly relied upon the first appellate order and submitted that the Ld.CIT(A) has dealt with all the objections threadbare and affirmed the action of the AO on legally sound basis. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. which cannot be equated with incriminating material found in the course of search of assessee per se. The law in this regard is well settled in respect of unabated assessments at the time of search. Hence, such additions are unsustainable under s. 153A. As stated, the assessment for such years stood concluded and AY 2014-15 to AY 2017-18 were not pending for assessment under normal provisions at the time of search. (ii) The additions to be made under s. 153A in unabated assessments are squarely dependent upon the discovery of incriminating documents found in the course of search from the premises of the assessee as held in landmark judgment in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxman.com 399 (SC) followed by many other judgements delivered later by the Hon'ble Supreme Court including PCIT vs. King Buildcon (P) Ltd. 154 taxamnn.com 189(SC). Consequently, the scope of assessment under s. 153A is restricted to the incriminating material found in the course of search in the case of the assessee in such unabated assessments. (iii) Material collected by the AO from third persons in post search or from other unconnected to search proceedings cannot be u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO) and (c) relevant copies 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 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 13.05.2021 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same dates but having different values of work for identical items are reproduced herewith: No summary sheet has been attached. Page 7 The Abstract summary sheet of the respective RAB is reproduced herewith: No summary sheet has been attached. Page 10 Point iv The extract of his statement is reproduced as under: No Part of the statement has been reproduced. Page 20 Para 6 Point a The said summary sheet is reproduced herewith: No Part of the statement has been reproduced Page 24 Point vii Copy of stated summary is reproduced herewith: No summary sheet has been attached. Page 25 Point vii The extract of statement of Sh.Hitesh Jaju is reproduced herewith: No Part of the statement has been reproduced. Page 29 Point 8 The excel sheet is reproduced herewith: No excel sheet has been attached. Page 29 Point 8 Copy of said receipt is reproduced herewith: No copy has been attached Page 30 The relevant extract of statement of Sh.Javed Saify is reproduced. No part of the Statement has been reproduced. Page 34 The statement of Sh.Kapil Razdan is reproduced herewith as under: No part of the Statement has been reproduced. Page 38 The extract of statement of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on the expectations from Competent Authority, such Competent Authority is necessarily required to objectively evaluate such draft assessment order 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 merely as a 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 At this juncture, 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 provisions of section 153D of the Act. Such routine approvals have resulted in invalidation of adjustments made in the assessment order. * ACIT vs Serajuddin & Co. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, not even formally but after due application of mind. Thus, the obligation of granting Approval 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 submission of the AO that proper opportunity has been provided to the Assessee; all the issues have been examined by him i.e. the AO and relevant copies of seized documents have been verified by him i.e. the AO before passing the ..... 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