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TMI Blog2025 (3) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... and bad-in-law.
Thus, the impugned approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. Appeals of the assessee are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 27.12.2019 is nullity and being without jurisdiction in as much as the said order has not been signed digitally as per the prescribed procedure, which is in violation of the binding instructions of CBDT and hence, the impugned assessment order may kindly be held as non-est and may kindly be quashed. Hence, the impugned order is completely devoid of jurisdiction not having being signed digitally as statutorily required. 8. The impugned assessment order passed u/s 143(3) r.w.s. 153A dated 27.12.2019 is nullity being without jurisdiction in as much as no prior approval as mandate by S. 153D was obtained or the approval obtained u/s 153D was not obtained from the specified authority, as prescribed in law or else the approval obtained u/s 153D was accorded mechanically without any application of mind. Hence, there is no approval as such, as contemplated by law hence, the impugned assessment order may kindly be quashed. 3. We have heard the ld. A/R as well as the ld. D/R on the admission of additional grounds. The additional grounds raised by the assessee are nothing but new legal plea arose out of reassessment proceedings initiated by ld. AO which was under challenge before this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /information, which was served upon the appellant. The case of the appellant was earlier selected by CASS for scrutiny assessment. The reasons of selection in CASS have also been verified by the AO during the assessment proceedings. The CASS scrutiny proceeding was abated vide order issued by the AO on 20.11.2019. Assessment order under section 143(3) read with section 153B(1)(b) of the I.T. Act, 1961 was passed by the AO assessing the total income at Rs. 71,10,17,370/- vide order dated 27.12.2019, making additions on various grounds of Rs. 74,26,393/-. Aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A). In first appeal, the ld. CIT (A) partly allowed the appeal of the assessee by reducing the addition upto Rs. 49,18,939/- (on account of Office Expenses, Student Welfare Expenses and Function Expenses) stating that the same are on a higher side and restricted the addition to Rs. 25,07,454/-. Now, the assessee has filed the present appeal before us. 5. We first take up Additional Ground No. 6 as mentioned herein above for adjudication. In regard to this Additional Ground, the relevant facts are that the impugned assessment order has been passed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have DIN bearing on its face. The assessment can be said to be 'made' only when the DIN is quoted on the order before it is signed. If without first generating the DIN and before it is quoted on the order, the order is signed, the order is non-est. 2. Supporting case laws - Order invalid where no DIN is mentioned: 2.1 Recently the Hon'ble Bombay High Court in the case of PCIT (EXEMPTION) vs. Tata Medical Centre Trust (2023) 334 CTR (Cal) 942 (DC 3-4), wherein the issue under consideration was whether the Tribunal was justified in quashing the order passed under s. 263 of the said Act on the ground of not mentioning any DIN. The Hon'ble court held as under: "6. The Revenue filed miscellaneous application seeking for rectification of the said order. Once again the Tribunal has undertaken a factual exercise and in fact, raised a specific query to the Revenue to point out how a DIN intimation letter along with the manual order as explained by the CIT(Exemption) in his reply fulfils the categorical requirement mandated by the CBDT circular, more particularly, in para 2 of the said circular, that the body of the communication, the order under s. 263 of the Act, must co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x-----xxx-----xxx-----xxx Therefore, the impugned notice dated 27th August 2022 issued under Section 148 of the Act is invalid and bad in law as the same has been issued without a DIN." 2.3 In the case of Ashok Commercial Enterprises v. ACIT [2023] 154 taxmann.com 144 (Bombay), a satisfaction note also has been held as a communication requiring DIN to be mentioned thereon. It was held that: "(d) The said Circular also applies to the satisfaction note dated 13th July 2021 issued by respondent no. 1. The satisfaction note will fall within the scope of paragraph 2 of the Circular as a communication of the specified type issued to any person. In the case of the satisfaction note no regularization dated 13th October 2021 has been issued". 2.4 Recently in the case of Practo Technologies Pvt. Ltd. Vs DCIT [in IT (TP)A No.154/Bang/2022, the Hon'ble Tribunal - Bangalore Bench, in the context of the directions issued u/s 144C (5), when noticed that no DIN was mentioned therein, held as under: "21. Respectfully following the above order of the Tribunal, since the DIN was not mentioned in DRP order dated 30.12.2021 which was mandatory as per CBDT Circular No.19 (supra) & in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities." 3.2 Strong reliance is also placed in the decision of His Late Highness Maharana Shri Bhagwat Singhji of Mewar vs. ITAT & Ors. (1996) 133 CTR (Raj) 97: (1997) 223 ITR 192 (Raj). 3.3 Also, the Hon'ble Rajasthan High Court in Sudesh Teneja vs. ITO (2022) 324 CTR (Raj) 577 : (2022) 210 DTR (Raj) 105 : (2022) 442 ITR 289 (Raj)held that (a) taxing statute must be interpreted strictly. Equity has no place in taxation. Nor while interpreting taxing statute intendment would have any place. (b) There is nothing unjust in the tax payer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly. (c) It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission:- "1. As per the mandatory provisions of S.153D of the Act, the AO, who is below the rank of the Jt. Commissioner of Income Tax, has to mandatorily obtain prior approval by sending him the Draft Assessment Order from the Jt. Commissioner of Income Tax before finally passing any assessment order u/s 153A r.w.s.143(3) in a search case. Accordingly, the Respondent AO in this case also sought approval of the Addl. Commissioner of Income Tax, Central Range, Udaipur u/s 153D of the Act. 2.1 In this regard, a bare perusal of the approval clearly shows that there is absolutely no application of mind much less independent application of mind as contemplated under law. Rather, the same appears to have been granted mechanically, in absence of a single word even to show that the competent authority has really considered the proposal, put forth before him, for getting his approval. The ld. Addl. CIT has simply stated that approval is granted, followed by a table which is nothing but simply showing basic details of the case. He is completely silent as to what made him grant such approval. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer cannot be a mechanical exercise has been emphasized in several decisions. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself.-Sahara India (Firm) vs. CIT (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27 : (2008) 14 SCC 151 and Rajesh Kumar vs. Dy. CIT (2006) 206 CTR (SC) 175 : (2007) 2 SCC 181 applied. There is not even a token mention of the draft orders having been perused by the Addl. CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. The mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like 'see' or 'approved' will not satisfy the requirement of the law. This is where the Technical Manual of Office P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration." Pertinently, the Dept. assailed the said judgment of Hon'ble High Court of Madhya Pradesh before the Hon'ble Supreme Court in CIT vs S. Goyanka Lime & Chemical Ltd. [2015] 64 taxmann.com 313 (SC) [SLP (C) NO.11916 OF 2015], wherein the Division Bench of Hon'ble Supreme Court dismissed the said SLP, uploading the judgment of Hon'ble High Court." 9. On the other hand, Ld. DR has referred to the approval dated 26.12.2019 accorded by Additional Commissioner of Income Tax, Central Range, Udaipur and contended that the same having been accorded in accordance with law, there is no merit in the contention raised by ld. AR for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r all the seven (7)assessment years were sent for approval by the AO to the ld. Addl. CIT on 24.12.2019 and the ld. Addl. CIT had granted approval for all the cases on 26.12.2019. The ld. AR pointed out that the ld. Addl. CIT while granting the approval had not given any independent finding or any reasoning showing even the thought process of the approving authority, which is a bare minimum requirement of the approving authority. He argued that while elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft assessment orders and finds that it meets the requirement of law. 10.2 Moreover, our attention was invited to copy of order passed u/s 7(1) of the Right to Information Act, 2005 dated 07.10.2024 placed at pages 137 to 139 of the Paper Book, as per which the concerned ACIT granted approval u/s 153D in 200 cases in a single day i.e on 26.12.2019. The ld. A/R submitted that it is humanly impossible to go through 200 assessment orders along with their all-search material including incriminating material, seized documents, appraisal report, enquiries made by the investigation wing and various enquiries made by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is against the intent of law and therefore, also the approval given by Addl.CIT is non est and consequential assessment made on this basis of such approval is illegal and deserves to be annulled. The ld. A/R of the assessee in support of his contention relied on the following judgments :- a) ACIT vs. Serajuddin& Co. (2023) 333 CTR (Ori) 228 b) ACIT vs. Serajuddin& Co. (SC) SLP (C) NO. 44989/2023 c) CIT vs S. Goyanka Lime & Chemicals Ltd. (2015) 56 taxmann.com 390 (MP) d) CIT vs S. Goyanka Lime & Chemical Ltd. (2015) 64 taxmann.com 313 (SC) (SLP (C) NO.11916 OF 2015) e) PCIT vs. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Delhi) f) CBDT Circular No. 3/2008 g) PCIT vs. Anuj Bansal (2024) 165 taxman.com 2 (Delhi) h) PCIT vs. Anuj Bansal (2024) 165 taxman.com 3 (SC) 10.5 Coming to the contention of non-application of mind by the approving authority, at the outset, we note that the Hon'ble Orissa High Court in its judgment in the case of ACIT vs. Serajuddin & Co. (2023) 333 CTR (Ori) 228, considered a similar question of 'Approval', wherein the draft assessment orders were placed by the AO before the ld. Addl.CIT on 27/29.12.2010 for seven assessment years. The approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Additional CIT resulting in vitiating the assessment orders themselves. 26. The question of law framed is therefore answered in the affirmative i.e., in favour of the Assessee and against the Department." We find that the Department of Revenue assailed the said judgment of Hon'ble High Court of Orissa, before the Hon'ble Supreme Court in ACIT vs. Serajuddin& Co. (SC) SLP (C) NO. 44989/2023, wherein the Division Bench of Hon'ble Supreme Court dismissed the said SLP by affirming the view taken by the Hon'ble High Court. The same is reproduced herein below : "Delay condoned. Having regard to facts and circumstances of the case, we are not inclined to interfere in the matter. The Special Leave Petition is dismissed. Pending application(s) shall stand disposed of." 10.6 Further, the Hon'ble Delhi High Court vide its judgment in case of PCIT vs. Anuj Bansal [(2024) 466 ITR 251] affirmed the decision of ITAT Delhi Bench, wherein the Coordinate Bench of ITAT Delhi held that the approval was granted without examining the assessment record or the search material and thus, was held as invalid and bad-in-law. The relevant extract of the said judgment is reproduced herein below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16.We are not inclined to interdict the order of the Tribunal." The Dept. assailed this judgment of Hon'ble Delhi High Court before the Hon'ble Supreme Court in PCIT vs. Anuj Bansal [2024] 466 ITR 254 (SC), wherein the Division Bench of Hon'ble Supreme Court after considering the facts of these cases dismissed the said SLP. 10.7 A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for "each assessment year" referred to in clause (b) of sub-section(1) of Section 153A of the Act. It is beneficial to refer to the judgment of the Hon'ble Allahabad High Court in the case of Pr. CIT v. Sapna Gupta [2023] 147 taxmann.com 288/[2022 SCC On Line All. 1294]which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- "each assessment year" used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. *** Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of "each assessment year" referred to in clause (b) of sub-section (1) of section 153A which provides for assessment in case of search under section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of "each assessment year" falling within six assessment years (and for the relevant assessment 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val has been granted at 6.56 a.m. on 31-3-2013 from Udaipur wherein it has already been mentioned that the assessment records were being returned whereas the draft assessment order along with the assessment records were handed over to the office of the Joint Commissioner on 31-3-2013 and as such it was physically impossible that all the case records along with the draft assessment order were received by the Joint Commissioner at Udaipur. ****** 6.4 Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 22 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving to indicate what the thought process involved was is missing in the aforementioned approval order. There is no indication of examination of evidences, documents, statements of various persons etc. by the Addl. CIT i.e. approving authority. Further, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records or the search material. Resultantly, the impugned approval order u/s 153D also shows that the said approval was granted without examining the assessment record or the search material. 10.10 On an examination of the above documents, we also find that Assessing Officer, Kota sought approval from the approving authority i.e. Addl. CIT vide letter Udaipur dated 24.12.2019. The office of AO is located in Kota and the office of Addl. CIT is located in Udaipur, distance of which by road is about 280 Kms (approx.) and hence the same would have practically received by the Addl. CIT in the evening of 24th Dec 2019 only. Thereafter, 25th Dec 2019 was Christmas and thus, an official holiday. The very next date, on 26th Dec 2019, the Addl. CIT granted approval in instant case, along with 193 other case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Public Information Officer under Right to Information Act, wherein, it reveals that the ld. Addl.CIT had granted approval for 200 cases on 26.12.2019 itself. This fact is not in dispute before us. It humanly is not possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 200 cases on a single day. 10.13 Recently, the Hon'ble Apex Court in Union of India v. Rajeev Bansal, (2024) 469 ITR 46 : 2024 SCC On Line SC 2693,elucidated the importance of prior approval. Although the said judgment is with reference to granting of Sanction u/s 151 prior to issuance of notice u/s 148, the ratio decidendi is binding to prior approval u/s 153D also, in as much as in both cases approval is to be taken from a superior authority to ensure that the subordinate authority has followed due process of law and has not taken arbitrary decisions. The relevant extract of the judgment is reproduced herein below : "76. Grant of sanction by the appropriate authority is a precondition for the Assessing Officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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