TMI Blog2019 (11) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... obtaining approval is defeated. Moreover, where 4 clear days time was available with the administrative authority, it was a half-hearted approval and as such held as no approval in the eyes of law. Accordingly, we have no hesitation in declaring that the Approval granted by the Additional CIT, Central, Kanpur on 27.03.2015 is no approval in the eyes of law and therefore, the assessment made by the AO based on such an approval is also declared to be null and void. We therefore, quash the Assessment orders under section 153A of the Act - ITA No. 106,107 and 108/Agra/2019 - - - 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 And Shri. Waseem Arshad, Sr. DR ORDER Per Bench: This bunch of appeals are directed by the assessee, against the order dated 27.02.2019 passed by the Ld. CIT(A)-IV, Kanpur for the assessment year 2008- 09 and 2011-12. 2. Since common issues are involved in these appeals, therefore, these appeals we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f presumptions, conjectures and surmises in concluding that sum of ₹ 49,00,000 was invested by the appellant in property as alleged to be reflected in Page no. 32 and 37 of Matrix Note Book Annexure A -1 and in adding the same to the Income of the appellant . 6. BECAUSE, while sustaining the addition of ₹ 49,00,000 as unexplained investment, the Ld. CIT(A) grossly erred in not appreciating that no property stated to be referred in seized paper was ever acquired by the appellant and also that no cheque amount referred in the said seized paper was paid or received by the appellant . 7. BECAUSE, onus lays upon the AO to prove that appellant made the investment of ₹ 49,00,000/- which has not been recorded in books of account. In the entire proceedings commencing at the stage of Investigation Wing, assessment proceedings and upto the stage of appellate proceedings no evidence was brought on records to prove that any Investment was made by the appellant or even to corroborate and also covert the jottings/discussion/planning into admissible piece of evidence. 8. BECAUSE, the AO has made the addition pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Please refer to your letter bearing F. No. DCIT/CC/Agra/Approval/2014-15/dated 26.03.2015 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 at 3.50 P.M on 27.03.2015 The approval is accorded in following 34 cases, solely relying on the undertaking given by 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/kept in view as limitation for completion of these assessments are going to be expired on 31.03.2015: S. No. Name of the Assessee A.Y. Number of cases 1. Shri Rajesh Ladhani 2007-08 to 2013-14 7 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 403 (SC) 6. On the other hand, the Department represented by Ld. CIT D.R Shri Sunil Bajpayee and Sr. D.R Shri. Waseem Arshad who both have argued the matter from the side of Department submitted 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. 6.1 The Ld. D.R. s has also relied upon the definition of Approval and sanction given in Black s law dictionary. It was further submitted by the Ld. DR s that approval of Additional CIT is totally distinct from the Assessment order and is not required to be communicated. Hence, it is not open for challenge before the Court of Law. the Ld. DR s relied upon decision in the matter of Gopal S Pandit vs CIT , 96 taxmann.com 233. It was further submitted that once the reason for Administrative Approval are not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 merits. 6.3. The Ld. DR s further submitted that it is not within the sphere of the jurisdiction of the Tribunal to adjudicate the Administrative Approval granted by the Additional CIT, it was submitted that the Judgement by the Hon ble Bombay High Court relied upon by the assessee in the matter of Shreelekha Damani is distinguishable as no question of law was framed by the Hon ble High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised 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) (APB 284-289) Hon ble Apex Court has ruled that it is the civil consequence which obliterates the distinction between quasijudicial 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 proceedings prior to issuance of Notice under section 148 are administrative proceedings immune from challenge is a statement based on complete misreading and misunderstanding of law, because Reasons Recorded and Approval sought under section 151 of the Act are always open for challenge. Authority in this regard can be derived from Hon ble Bombay High Court Judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenging 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 subsilento which is not binding. Therefore, no fault can be found in the order passed in the case of Saurabh Agarwal (supra). 11. Having held as above, the issue which now requires to be adjudicated is whether the Approval so granted in this case can be treated as valid in view of the mandate of the provisions of Sec. 153-D of the Act vis- -vis the legislative intent of inserting the said section in the statute. Section 153-D read as under: No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of section 153A or the assessment year referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 153D 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 light of Order dated 27.03.2015 passed under section 153D of the Act, which gives legality to the impugned Assessment order, question which arises for our consideration is whether the said Approval granted by the Additional CIT, Central, Kanpur vide his order dated 27.03.2015 can be held to be granted after due application of mind and can be held to be valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted 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-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 vide Para-14 held as under: In the present case ACIT 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 ACIT 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 the Assessment Year 2006-07 is allowed. 17. From the approval order dated 27.03.2015 of the Addl. CIT, we find that the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, Mumbai Bench 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- 138-139) 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 want of time could not examine the issues arising out of the draft order. His action of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... praisal 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 in turn, provides safeguard to both i.e., Revenue as well as the assessee. Therefore, this important provision laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 without looking into seized material, investigation report, the draft assessment order 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. Assessee cannot be made to run again for many more years for contesting the litigation. Hon'ble Supreme Court also in the case of Parashuram Pottery Works Co. Ltd. v. ITO 106 ITR 1 observed that It has been said that the taxes are the price that we pay for civilizat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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