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TMI Blog2025 (4) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... rd together and accordingly adjudicated by this common order. 3. It was stated on behalf of the assessee at the outset that the assessment for AYs 2013-14 to AY 2014-15 in question 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 incriminating material in the course of search from the assessee. 4. As per grounds of appeal, the assessee has challenged first appellate orders and the respective assessment orders broadly on following contours; (A) Legal objection on maintainability of additions carried out in the assessment order passed under s. 153A of the Act unconnected to incriminating material discovered in the course of search; (B) Approval accorded by the competent authority i.e. Addl. CIT in the instant assessment orders do not meet the pre-requisites contemplated under s.153D of the Act and hence the assessment framed under s. 153A based on such non est approval is a nullity at the threshold.. (C) The impugned additions and disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 first appellate order 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 draft assessment order under s. 153D do not carry any rational probative value being accorded mechanically and flippantly. On merits of the additions, the Ld. Counsel yet again contended that there was no credible material to impeach the transactions reported. The inferences drawn against the assessee are contrary to material placed on record and thus without legal foundation. Third party evidences have been rejected arbitrarily without any attempt to traverse the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 11.1 The broad contours of the appeals of the assessee hinges around following pertaining legal issues emanating in these cases: (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 assessment and whether while making assessment under s. 153A of the Act, the Revenue is entitled to interfere with already concluded (and not abated) assessment 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 of the Addl. CIT is to be regarded as mechanical and perfunctory and without application of mind having regard to the functions entrusted under s. 153D of the Act. 12. The first and foremost legal objection concerns propriety of additions dehors incriminating material found in the course of search from the premises of the assessee in concluded assessment. 12.1. It is the case of the assessee that the assessment for captioned AYs 2013-14 to AY 2014-15 are liable to be challenged on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 statement of Shri Surjit Singh in the course of search on M/s. Steel Scoff India Pvt.Ltd. The statement of Shri Surjit Singh, an employee of M/s Abeer Scaffolds were recorded adverse to assessee under s. 131 of the Act. Such inconclusive and rebuttable statements forms the basis for drawing adverse interference towards alleged commission income. The CIT(A) while confirming the additions on merits was clearly guided by post-search inquiries, statement obtained from third parties in the course of survey etc. in independent proceedings and information collected by AO in s. 133(6) proceedings in the case of some of the parties. While making the additions by the AO and upholding such additions by the CIT(A), no reference whatsoever to the material gathered in the course of search from the premises of the assessee have been shown. 12.3 The assessee also refers to the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on behalf of the assessee that the combined approval granted for various AYs under s. 153D is plagued with substantive infirmities revealing gross nonapplication of mind and the assessment orders have been granted an omnibus approval on dotted line in a cursory manner. The broad counters of the discrepancies alleged on behalf of the assessee are: (a) The AO forwarded the draft assessment orders for various AYs under appeal to the Addl.CIT vide letter dated 19.04.2021 purportedly along with the assessment records to seek approval under s. 153D of the Act. The approval sought was accorded in complex search cases of multiple years of the assessee on 22.04.2021. The so-called approvals were given in a consolidated manner to the assessment orders spanning over AYs 2013-14 to 2019-20. Significantly, the Add. CIT recorded considering the facts as submitted that (a) proper opportunities of being heard was provided to the assessee by the AO; (b) All the issues appearing from the material on record were duly examined (naturally by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer is inter alia governed by the requirement of prior approval under Section 153D of the Act. Hence, the AO should complete the assessment proceedings and prepare a draft assessment order which needs to be placed before the approving authority i.e. Joint/Addl. Commissioner (designated 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 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 concurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional/ Joint CIT concerned, with his experience and maturity of understanding, should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. 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 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 appr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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