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TMI Blog2018 (7) TMI 1888X X X X Extracts X X X X X X X X Extracts X X X X ..... sed u/s.153A(a) of the Act is not sustainable in view of the fact that the order of assessments were approved u/s.153D by the ACIT before competition of the assessment and, therefore, the assessment order is liable to be quashed 5. The CIT(A) disposed of this issue by observing as under: " That, the assessment order passed u/s 153A(a) of the Act is not sustainable in view of the fact that the order of assessment were approved u/s 153D by the Ld. Addl. Commissioner of Income Tax before completion of the assessment and therefore the assessment order is liable to be quashed. The ground of appeal is contested as follows:- . a. That as per the provisions of section 153D of the Act every assessment order in search cases are to be passed with the prior approval of the Ld. JCIT/Addl. CIT. In the instant case as mentioned in the bottom of the assessment order the approval had been obtained from the Ld. Addl. CIT on 27.03.2015. For this proposition it is submitted that, the AO issued notice u/s.142(1) on 30.3.2015 requisitioning certain documents, clarifications etc. If the assessment was completed prior to 27 03 2015, then how the notice u/s 142(1) was issued on 30.03.2015. As a matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r authorities have to approve the assessment order". In the instant case, the ld Addl. CIT (As Claimed by the Ld. AO) has approved the order prior to the completion of the assessment from which it can be well concluded that, the Ld. Addl. CIT had not applied his mind to the materials on record and therefore, the assessment order is bad in law and liable to be quashed. On the above ground it is prayed before your honour to quash the assessment order. Decision:- The submission of the Ld. A.R. was referred to the A.O. u/s.250(4) of the Act on 23.09.2016. In reply, the A.O. has given the following reply in letter dt.17.10.2016:- "The contention of the assessee that the assessment orders were passed without the prior approval of the Addl. CIT is not correct. Assessment orders have been passed with the in principle approval of the Addl. C.I.T. after obtaining the same as required u/s.l53D of the I.T. Act, 1961. The imminent additions/disallowances which the Assessing Officer was going to make in its assessment orders to be passed u/s.l53A(b) of the Act were there in the proposed draft assessment orders. So the averments of the assessee that assessment orders were passed without obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the approval letter of the Addl. CIT, Range-1, Bhubaneswar dated 27.3.2015, the income assessed at Rs. 1,31,000/- and, therefore, the assessment orders passed by the Assessing Officer were without the prior approval of the Additional CIT and hence, bad in law and liable to be annulled. He relied on the decision of Mumbai Bench of the Tribunal in the case of Smt. Shreelekha Damani vs DCIT, 173 TTJ (Mumbai) 332, wherein, it was held as under: "11.3 The Legislative intent is clear inasmuch as prior to the insertion of Sec.153D, there was no provision for taking approval in cases of assessment and reassessment in cases where search has been conducted. Thus, the legislature wanted the assessments/reassessments of search and seizure cases should be made with the prior approval of superior authorities which also means that the superior authorities should apply their minds on the materials 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 authorities have to approve the assessment order. 11.4 The question before us is " has this been done in the present case". The language of the approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634 1 (All.), it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r perusal of the Chief Commissioner of Income-tax and for appointment of a special auditor. The Chief Commissioner of Income-tax, therefore, did not apply his mind at all as regards the prerequisite for grant of previous approval and mechanically appointed Sri G. P. Agarwal, as a special auditor. The said order depicts a total non-application of mind on the part of the Assessing Officer as also the Chief Commissioner of Income-tax." 11.7. Another section relevant to the facts in issue is Sec. 158BG which read as under: "The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or an Assistant Director or Deputy Director, as the case may be: Provided that no such order shall be passed without the previous approval of-- (a) the Commissioner or the Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied that it is a fit case for the issue of such notice. The sanction under this section was considered by the Tribunal, Mumbai Bench in the case of Shri Amarlal Bajaj in ITA No. 611/M/2004 wherein at para-8, the Tribunal has considered the decision of the Hon'ble High Court of Delhi Bench in the case of United Electrical Co. 258 ITR 317 which read as under: "Hon'ble Delhi High Court in the case of United Electrical Co. Pvt. Ltd. Vs CIT 258 ITR 317 has held that "the proviso to sub-section (1) of section151of the Act provides that after the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in-builts safeguards to prevent arbitrary exercise of power by an 7 ITA Nos.534 & 611/M/04 Assessing Officer to fiddle with the completed assessment". The Hon'ble High Court further observed that "what disturbs us more is that even the Additional C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Rafique Abdul Hamid Kokani Vs DCIT 113 Taxman 37, Hon'ble High Court of Karnataka in the case of Rishabchand Bhansali Vs DCIT 136 Taxman 579 and Hon'ble High Court of Madras in the case of Sakthivel Bankers Vs Asstt. Commissioner 124 Taxman 227. 13.1. We have carefully perused the decisions placed on record by the Ld. Dr. We find that all the decisions relied upon by the Ld. DR are misplaced inasmuch as all these decisions relate to the issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the Ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue>' 7. Further, he relied on the decision of Jodhpur Bench of the Tribunal in the case of Smt. Indra Bansal & Ors vs ACIT, (2018) 192 TTJ (Jd) 968, wherein, it was held as under: "6.4 Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Jt. CIT in hasty manner without even going through the records as the records were in Jodhpur while the Jt CIT was camping at Udaip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this also appears to be the case of capital building where the assessee has declared income of Rs. 87,200/- as misc. income, which is not verifiable and the entire receipts alongwith opening capital have been shown as cash in hand. A perusal of the balance sheet of the assessee shows an opening capital of Rs. 23,35,735/-, most of which is in cash. The capital as on 31st March, 2007 has been shown at Rs. 24,22,099/-, out which Rs. 16,35,201.65 has been shown as cash in hand with Rs. 28,897.35 as cash at bank. Besides, investment of Rs. 4 Lacs in fixed deposits and Rs. 3 Lacs in MIS in Post Office has been shown. This appears quite unusual as the assessee was maintaining bank account with Punjab National Bank. No prudent person would keep such a big cash amount in his hand despite having a bank account. Further you should examine the opening cash in hand and ask the assessee to furnish evidence in support of it failing which this opening cash in hand may be added to the total income of the assessee." 9. Ld D.R. submitted that the Addl. CIT, Range-1, Bhubaneswar has gone through the seized materials and after that has given approval to the order of the Assessing Officer and while d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in subsequent paras." 12. Ld A.R. submitted that the reading of the same will show that there was no application of mind due to shortage of time by the Additional CIT granting approval to the draft assessment order by the Assessing Officer. 13. In reply to the same, ld D.R. submitted that the reading of para 7 of the order will show that the Addl. CIT has applied his mind and granted necessary approval to examine the cash in hand before passing the assessment order. He argued that the said details show that though there was shortage of time, the Addl. CIT has applied his mind before granting approval to the assessment order by burning the midnight order. 14. The common Ground No.4 in both the appeals reads as under: "That the assessment order passed u/s.153A(a) are barred by limitation and liable to be quashed." 15. The CIT(A) has disposed of this issue by observing as under: "That, the assessment order passed u/s 153A(a) is barred : limitation and liable to be quashed. The ground of appeal is contested as follows:- a. That, in the instant case as it is pointed out in the assessment order, it had been passed on 31.03.2015. For this proposition is it to bring to your k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause, the law in this respect is that the order should not look only to have been made within limitation, it should be out of reach of the authority making the assessment order within the limitation. For this finding the reliance may be placed on B.J.Shelat Vs. State of Gujrat; AIR 1978 SC1109. In this case the Hon 'ble Supreme Court has held as follows:- "The order of any authority 'cannot be said to be passed unless it is in some way pronounced or published or the party affected has a means of knowing it. It is not enough if the order is made, signed and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking, or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. This should be done within the prescribed period, though the actual service of the order may be beyond that period." d. Further it is submitted that, the Hon'ble jurisdictional ITAT respectfully following the aforesaid decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings were completed by 31.03.20,15 and assessment orders have been served on 08.04.2015. No inordinate delay has happened. When the A.R. is ready to act in every respects [including applying for refund and receiving the refund vouchers] on behalf of the assessee through the PoA and as stated above the A.R. also did not object at the - instant to receive the assessment order serving of assessment order (s) which resulted in demand by hand did not violate any rule. " (ii). It is nowhere mentioned in the statute that the assessment order would have to be served on the assessee. Ail that is required is that the notice of demand specifying the sum payable should be served on the assessee in the prescribed form and would be accompanied by an assessment as held in the case of CIT Vs. Kailasho Devi Burman (1978) 115 ITR 732 (Cal.,) Sivalingam Chettiar (VS) Vs. CIT (1966) 62 ITR 678 (Mad.), Kalyankumar Ray Vs. CIT (1991) 191 ITR 634 (SC), Arrah Sasaram Light Railway Co. Ltd. Vs. CIT (1993) 204 ITR 807 (Cal), Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. Vs. CIT (1994) 208 ITR 882 (Cal), etc. The limitation period prescribed in section 153 is the period within which the AO has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee'. Similarly, in the provisions of section 149 of the Act, the words used are Issue to the assessee'. Thus, each word used in each section has a different purpose and different meaning. 'Made' cannot be treated on the same footing as served. The fact that the word used is 'made' in section 153 shows that the assessment order should be made on or before the said date. It does not mean that it should be served. On this ground itself as we find that the decision of the Coordinate Bench has erroneously laid down the law on this issue if the word 'made' is given the meaning served then the section itself would become unworkable and it would make all assessment orders made on the last day illegal. In the circumstances, respectfully following the principles and the ratio laid down by the Hon'ble Madras High Court in the case of CIT Vrs. Hi-Tech Aral Ltd. (20-10) 321 ITR 477, we differ from the decision taken by the Coordinate Bench in the case of Durga Condev Pvt. Ltd. (Supra) as also decision of Shanti Lai Godawat & Ors. Vrs. ACIT (2009) 126 TTJ(Jodh) 135. Here, we may specifically mention that in the case of Durga Condev Pvt. Ltd. (Supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the instant to receive the assessment order serving of assessment order (s) which resulted in demand by hand did not violate any rule." 17. On the above stated facts, his argument was that as the assessment order was passed on 31.3.2015 and the same was delivered by hand to the assessee on 8.4.2015, the same was barred by limitation and, therefore, liable to be annulled. 18. Ld D.R. on the other hand submitted that Section 153A requires the order to be made within the time limit and does not requires the same to be served on the assessee and they can be served later on. He agreed with the facts as stated in the order of the CIT(A) that although the assessment order was passed on 31.3.2015, it was served on the ld A.R. of the assessee by hand on 8.4.2015. He relied on the decision of Hon'ble Calcutta High Court in the case of Binani Industries Ltd vs. CIT (2015) 59 taxmann. Com 389 and submitted that the Hon'ble High Court has upheld the order in absence of any material to show that the Assessing Officer revisited the orders after 31.12.2016. 19. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. B J N Hotels Ld., (2017) 79 taxmann.com 336(Kar). 8. On the other hand, ld D.R. placed reliance on the orders of the CIT(A). 9. Ld D.R. could not explain when the orders were prepared on 30.12.2016 why it could not be dispatched on or before 31.12.2016. 10. We find that Section 153B(1)(a) reads as under: "153B (1) Notwithstanding anything contain in section 153, the AO shall make an order of assessment or reassessment - (a) 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, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed." 11. A perusal of the above provisions show that the language used by the legislature in the above provision is in negative and the words used are "order of assessment" and not only "assessment". The word order denotes a command which is to be followed by somebody else. Unless the command is communicated to the person by whom it has to be followed, it does not become an "order". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not deter us as it is a settled position of law that when two divergent views are expressed by two different Hon'ble High Courts, none of which are Hon'ble Jurisdictional High Court, then the view favourable to the assessee should be followed. For this, we derive support from the decision of Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd., 88 ITR 192 (SC). 16. Coming to the facts of the instant case, it is not in dispute that the last authorisation u/s.132 of the Act was executed on 28.5.2014. Twenty- one months from the end of the financial year 2014-2015 expires on 31.12.2016. Therefore, the orders of assessment in pursuance to the said search for the assessment years 2009-2010 to 2015-2016 were to be made on or before 31.12.2016. 17. It is not in dispute that the orders of assessment under consideration were dispatched only on 7.1.2017. Hence, in our considered opinion, the said orders of assessment were time barred and consequently, we set aside the same and allow this ground of appeal of the assessee for all the seven years under appeal." 22. In view of above, as in the instant case, the communication process of the assessment was not initiated admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on provides for mental application of a Senior Officer of the Department, which in turn, provides safeguard to both i.e. Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed by the Pune Benches of the Tribunal in the case of Akil Gulamali Somji vs ITO, in IT Appeal Nos.455 to 458 (Pune) of 2010 order dated 30.3.2012, wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. The Hon'ble Bombay High Court in the case of CIT-II Vs Shri Akil Gulamali Somji, in Income Tax Appeal (L) No.1416 of 2012 order dated 15.1.2013 concurred with the view of the Tribunal that not following of the provisions of section 153D of the Act will render the related order of assessment void. 25. In the instant case, we find that the Supervisory Authority has himself admitted that because of reasons stated by him, could not apply his mind and has accorded the approval mechanically to meet the requirements of law as the requirement was merely a formality. The said Supervisory Authority had a duty towards both the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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