TMI Blog2019 (12) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... val as the proposal for approval was put up before the Additional CIT on 26.03.2015 and at the same time it was granted, without any application of mind on the pretext that limitation is going to get expired on 31.03.2015. Thus, in the case at hand despite availability of time the Additional CIT taking excuse of limitation has chosen to grant approval without application of his own mind but on the undertaking of the AO that while completing the assessment as per the draft assessment order, all the observations made in the appraisal report relating to examination/investigation as also the issues identified in the course of examination of seized material have carefully considered . In our view such a practice is required to be deprecated and we deprecate the same. - Decided in favour of assessee. - ITA No. 135 & 136/Agr/2018 - - - Dated:- 6-11-2019 - Shri Laliet Kumar, Judicial Member And Dr. Mitha Lal Meena, Accountant Member For the Appellant : Sh. Anurag Sinha, Advocate For the Respondent : Shri. Sunil Bapayee CIT, DR, Shri. Waseem Arshad, Sr. DR ORDER PER BENCH.: These tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st under section 234A 234B is either not chargeable or has excessively been charged. 4. BECAUSE, while confirming the addition Ld CIT(A) made various observations and conclusions which are contrary to facts available on records. While confirming the addition submission made and evidences filed have been rejected arbitrarily. 5. Because, the order appealed against is arbitrary, illegal, contrary to the facts, material on record, law and principles of natural justice. 6. BECAUSE, in any view of the matter the assessment order to the extent making variation in the Income returned by the appellant is bad both on facts and in law. 4. The Ld. AR has submitted that he has moved an Application under Rule 11 of the ITAT Rules for admission of Additional Ground vide letter dated 20.08.2018 with a request that the same may kindly be admitted. Additional ground raised by the assessee reads as under: Because the so-called approval as granted by the Learned Additional Commissioner of Income Tax, Central Range, Kanpur under section 153D for passing impugned assessment order dated 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53D of the Act for passing impugned assessment order dated 31.03.2015 passed under section 153A of the Act is no approval in the eye of law. Assessee has drawn out attention to the copy of Approval order passed under section 153D of the Act by the Additional Commissioner of Income Tax, Central Circle, Kanpur which was obtained by the assessee exercising his right under the Right to Information Act, 2005. (APB, Pg. 128-129) Most Urgent/Time Barring Dated: 26/03/2015 F.No. Addl. CIT (CR)/KNP/Draft Asstt/Mittal Agarwal/2014-15 To, The Dy. Commissioner of Income Tax, Central Circle, Agra Sub: Proposal of approval u/s 153D for the assessment proceeding completed completed u/s 153A/153C of the Act in Ladhani Group of cases-regarding Please refer to your letter bearing F. No. DCIT/CC/Agra/Approval/2014-15/dated 23.03.2015 alongwith case records pertaining to the said cases as detailed in the said letter seeking approval u/s 153D of the Income Tax Act, 1961 was submitted in this office on 24.03.2015 The approval is accorded in following 28 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Geeta Rani Panda Vs ACIT (2018) 194 TTJ (Ctk) 915 (Cuttack) (e) Shri Saurabh Agarwal Vs DCIT (2019) (9) TMI 866-Agra Bench (f) Shri. Ghanshyam Vs ITO (2018) 194 TTJ UO (Agra) 25 (g) State Bank of India Vs ACIT in W.P No. 53 of 2018 (Bom.) (h) Sabh Infrastructure Ltd Vs ACIT in W.P No. (C) 1357/2016 (Del) (i) Sahara India (Firm) Vs CIT (2008) 300 ITR 403 (SC) 5. On the other hand, the Department represented by Ld. CIT D.R Shri Sunil Bajpayee and Sr. D.R Shri. Waseem Arshad. They have argued that the order passed under section 153D of the Act by the Additional CIT was merely an Administrative order and no civil or penalty consequences would flow from such an order against the assessee. Further, it was submitted that there is no requirement under the law for granting the hearing to the assessee by the Additional CIT/Joint CIT prior to giving Approval under section 153D of the Act for assessment or reassessment under section 153A of the Act. 5.1 The Ld. D.R s have also relied upon the definition of Approval and sanction given in Black s law dictionary. It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate power. The DR s thus, submitted that the subject matter of the challenge in the present appeal is assessment order for which the jurisdictional fact is the existence of Approval, therefore, the Approval itself cannot be the subject matter of adjudication. It was submitted by the DR s that once the superior authority is agreeing to the finding of the lower authority then it is not required to record the reasons for so agreeing. It was further submitted that the recording of sanction or Approval is not required to be made in a particular manner. The same is discernible from the reasons recorded in the Assessment order. It was submitted by the DR s that what could be challenged before the Tribunal is want of sanction and for that the Ld. DR s relies upon the decision of the Mumbai Tribunal in the matter of Pratibha Pipes Structural Ltd DCIT 3874/Mum/2015 for the proposition that the Approval under section 153D of the Act has been held to be an Administrative procedure which requires to be complied with by the officers, who are discharging the Assessment functions. The Administration action of the Department is not very much relevant for the assessee to justify its case, on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total non-application of mind. In this view of the matter since the issue raised in this appeal specifically stood dealt with by the Agra Bench in Ghanshyam (supra) in its right perspective, therefore, the contention raised by the revenue deserves to be rejected. Revenue has placed reliance upon K.M Bansal (supra) wherein the Hon ble Jurisdictional High Court after being duly apprised of view held in the cases of S. Narayanappa (supra) Presidency Talkies Ltd. (supra) has held that before the Notice is issued under section 148 of the Act the proceedings are Administrative proceedings but once such a Notice is served upon the assessee such Administrative proceedings becomes quasi-judicial in nature and assessee has a right to challenge such proceedings since the stage of its initiation. Further, In the case of Sahara India (Firm) Vs CIT 300 ITR 403 (SC) Hon ble Apex Court has ruled that it is the civil consequence which obliterates the distinction between quasi-judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away. The contention raised by the DR s that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T and which in further appeal stood reversed by the Allahabad High Court. We have gone through the order passed in the case of Saurabh Agarwal (supra) and given careful thought to the Hon ble Allahabad High Court Judgment in CIT Vs Verma Roadways , (Supra) delivered on 11.01.2018. We found that though vide Ground No.8 the Department had raised a specific ground challenging the order passed by the ITAT on the issue of grant of Approval by the CIT, in that case. However, the Hon ble High Court through a detailed Judgment decided the Ground regarding validity of search and held proceedings under section 158BC of the Act to be validly initiated. In the referred case no argument was advanced by either party regarding validity of approval accorded by the Ld. CIT and no such issue was decided by a speaking order therefore, to our understanding such an order is sub-silento which is not binding. Therefore, no fault can be found in the order passed in the case of Saurabh Agarwal (supra). 11. Having held above, the issue which now requires to be adjudicated is whether the Approval so granted in this case can be treated as fulfilling the mandate of the provisions of Sec. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority have to approve the Assessment order. Object of entrusting the duty of Approval of assessment in search cases is that the Additional CIT, with his experience and maturity of understanding should scrutinize the seized documents and any other material forming the foundation of Assessment. It is an elementary law that whenever any statutory obligation is casted 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 153-D of the Act should necessary reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. 14. In the above background of law and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roach of the Additional CIT, Central has rendered the Approval to be an eyewash and idle formality and such a mechanically granted Approval is no approval in the eyes of law. 16. The Lucknow Bench of the ITAT in the case of Aap Paper Marketing Limited Vs ACIT , (2017) (4) TMI 1371-ITAT Lucknow, (APB, Pg. 122-129) coincidentally where the ITAT had the occasion to consider the validity of approval granted by the same Additional CIT, Central Circle, Kanpur while quashing the assessments in Para-14 held as under: In the present case Addl. CIT has granted impugned approval halfheartedly without application of mind and without considering and perusing the material on record. Thus, we are inclined to hold that there has been no application of mind by the Addl. CIT before granting the approval. Consequently, we hold that the assessment orders made u/s 143(3) of the Act r.w.s 153A of the Act in the case of M/s Siddhbhumi Alloys Ltd. for Assessment Year 2006-07 is bad in law and deserve to be annulled, thus, we ordered accordingly. Finally additional ground of appeal raised by the assessee by way of Rule 27 of the ITAT Rules in ITA No. 321/Lkw/2016 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. Commissioner before granting the approval. Therefore, we have no hesitation to hold that the assessment order made u/s. 143(3) of the Act r.w. sec. 153A of the Act is bad in law and deserves to be annulled. The additional ground of appeal is allowed. 19. The above order so passed by the ITAT was subjected to judicial scrutiny in appeal before the Hon ble Bombay High Court and the Hon ble High Court approved the order passed by the Mumbai Bench of the ITAT which is found reported as PCIT Vs Smt. Shreelekha Damani , (2019) 307 CTR (Bom.) 218(APB, Pg. 145-146) wherein in Para-7 the Hon ble High Court held as under: 7. In plain terms, the Addl. CIT recorded that the draft order for approval under s. 153D of the Act was submitted only on 31st Dec. 2010. Hence, there was not enough time left to analyze the issue of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Addl. CIT for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier so as to allow the undersigned sometime to go through and analyse the same vis-a-vis the appraisal report and seized records. It also goes without saying that you never cared even to discuss these cases with the undersigned for guidance and line of investigation to be taken. However, despite all this, I have gone through the material available on records and some of the observations, in respect of the following cases are given in subsequent paras. 24. In our considered view, the provisions contained in s. 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the statute by the Parliament is two-folds. Firstly, the approval of the senior authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by senior authority will also ensure that proper enquiry or investigations are carried out by the assessing authority. Thus, the above provision provides for mental application of a senior officer of the Department, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter of present litigation i.e non-application of mind by the superior authorities at the time of granting the Approval. The sum and substance of the decisions relied upon by the Ld. DR s was that the assessee was not entitled to any hearing or representation at the time of grant of approval. As mentioned hereinabove the scope and ambit in the present litigation is not that of grant of hearing or representation at the time of Approval but whether the Approval can be granted by the superior authority without application of mind even without examining the draft assessment order and that on the basis of undertaking of the AO to the effect that the AO has looked into seized material, investigation report, etc. can be held sustainable in the eyes of law. We had already answered that such an approval is bad in law and cannot be sustained. 23. The last submission made by the Ld. DR s was that the matter may be sent back to the AO to pass a fresh assessment order after seeking the approval from the competent authority. In this regard we are of the opinion that the Revenue is not entitled to second inning, for correction of its own mistake. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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