TMI Blog2020 (1) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... rroborate evidence have been brought on record or brought in the Orders of the authorities below, therefore, there was no justification for the authorities below to make the addition of ₹ 2.50 crores against the assessee. We set aside the Orders of the authorities below and delete the addition - Appeal of the assessee is allowed. Approval granted by JCIT under section 153D without application of mind - In identical issue have been considered in the light of Judgment of Pr. CIT vs., Smt. Shreelekha Damani [2018 (11) TMI 1563 - BOMBAY HIGH COURT] and it was held that requirement of Section 153D of the I.T. Act are not satisfied in the case. It was, therefore, held that entire assessment order is vitiated and is null and void. Therefore, it was set aside and quashed. In the present case, it is clear that A.O. did not refer to the seized material or the assessment record to the JCIT for his approval. It is not verified as to how the draft have been sent on the same day i.e., on 22.12.2017 to the JCIT from Jabalpur to Bhopal and as to how the approval have been received back on the same day i.e., on 22.12.2017 from Bhopal to Jabalpur. In the absence of any perusal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee during the course of post-search enquiry and assessee on that account has surrendered ₹ 2.50 crores as undisclosed income on account of incriminating loose papers. The relevant portion of the letter of the assessee Dated 05.01.2016 is scanned and reproduced in the assessment order in which the assessee stated that loose papers seized. At present the assessee does not have documents, therefore, he believed that he and his family members have undisclosed income of ₹ 2.50 crores recorded in these papers, which assessee would surrender for taxation. The assessee asked for copy of these documents so that further action could be taken into the matter. The A.O. on the basis of this letter noted that assessee later on failed to honour his commitment and did not offer the amount of ₹ 2.50 crores for taxation, which assessee has surrendered in his letter Dated 05.01.2016, therefore, addition of ₹ 2.50 crores was added in assessment year under appeal i.e., 2016-2017. The A.O. passed the assessment order under section 153A r.w.s. 143(3) Dated 27.12.2017. 2.1. The A.O. in the assessment order has mentioned that this order is passed with the prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft order have been sent. The A.O. in his letter did not mention if he has forwarded any assessment record before JCIT for his perusal before granting approval under section 153D. No statement of assessee have been recorded under section 132(4). The JCIT did not see any seized material or submission of the assessee brought on record. Therefore, JCIT granted the approval under section 153D without application of mind and in a mechanical manner. Learned Counsel for the Assessee relied upon the Judgment of Hon ble Supreme Court in the case of Sahara India (Firm) vs., CIT Another [2008] 300 ITR 403 [SC] and Judgment of Hon ble Madhya Pradesh High Court in the case of Arjun Singh Another vs., ADIT Others [2000] 246 ITR 363 [M.P.], Judgment of Hon ble Allahabad High Court in the case of CIT vs., Dilbagh Rai Arora [2019] 308 CTR 502 (All.). He has submitted that A.O. has not mentioned anything in the assessment order as to on what basis addition of ₹ 2.50 crores have been made in assessment order. The letter of the assessee was conditional and no evidence have been brought on record for making such addition. There is no recovery of the gold or other material s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned orders and submitted that there is always constant touch between the A.O. and JCIT. The JCIT has monitored the assessment. There is no disclosure of assessee during the course of search of ₹ 2.50 crores because no statement was recorded during the course of search. The assessee filed written letter Dated 05.01.2016 after discussion with the A.O. in post-search investigation. The Department has collected the evidence in search and A.O. was stopped from making enquiry by filing letter in January, 2016. The letter of the assessee Dated 05.01.2016 has not been withdrawn. The Ld. D.R, therefore, submitted that the matter may be remanded to the A.O. for making further enquiry into the matter. The Ld. D.R. also submitted that in this case lesser income and sales have been shown and loan is given to the group companies only. 5. We have considered the rival submissions and perused the material available on record. The A.O. in the assessment order has mentioned that search and seizure operation was conducted in the case of Jabalpur Hospital Metro Hospital Group (M.P.) on 17.11.2015. It is no where provided as to how the assessee has connected wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show and prove that an admission made by him was in fact not correct and true. 5.2. The Hon ble Supreme Court in the case of Pullangode Rubber Produce Co., vs., State of Kerala Another [1973] 91 ITR 18 (SC) held that assessee should be given an opportunity to show that admission is incorrect or does not show correct state of facts. 5.3. Since in the present case the letter Dated 05.01.2016 was qualified and subject to documents to be supplied by the A.O, it is clear that admission of the assessee in the said letter was not correct and true because it was not based on any evidence or material if found during search. Thus, the Board Circular Dated 10.03.2003 (supra) would apply to the case of the assessee that the Department should concentrate of collection of evidence of income and should not based on addition merely on the basis of confession obtained from assessee through the letter Dated 05.01.2016. Thus, there is no evidence on record or statement of assessee recorded during the course of search so as to prove that assessee has earned undisclosed income of ₹ 2.50 crores. Since no corroborate evidence have been brought on record or br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Shri Tara Chand Khatri AIJPK7280K 153A 2010-11 to 2016-17 2. Shri Ghanshyam Das Khatri AHMPK5704A 153A 2010-11 to 2016-17 4. It should be ensured that the final assessment orders are passed and served on the assessee well in time. A copy of the final assessment order should be submitted this office for record. Sd/-Alpesh Parmar Joint Commissioner of Income Tax Central Range, Bhopal. 6.2. The letter of the A.O. requesting for grant of approval under section 153D is filed at page-97 of the PB. In the said letter the A.O. has merely stated that he has verified the seized material and given an opportunity to the assessee before passing the draft assessment order. He has referred to draft assessment order only and sought approval from the JCIT and the Office of the A.O. is situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi F-Bench in the case of M/s. M3M India Holdings, Gurgaon vs., DCIT, Central Circle-II, Faridabad in ITA.No.2691/Del./ 2018, Dated 15.03.2019 reported in 71 ITR 451 (Delhi Tribunal), in which in paras 11 to 14 the Tribunal held as under : 11. On Ground No.1.3, Learned Counsel for the Assessee submitted that no proper sanction as required under section 153D have been received, therefore, assessment order is illegal and bad in Law. Learned Counsel for the Assessee referred to page 46 of the assessment order and submitted that Addl. CIT, Central Range, Chandigarh communicated the sanction under section 153D to the A.O. on 31st January 2014 and the assessing officer on the same day i.e., 31st January 2014 passed the assessment order. He has referred to page-48 of the paper book, which is copy of Fax message dated 5th February 2014 in connection with the communication of sanction/approval of Addl. CIT. PB-31 is the reply filed before A.O. by assessee on 29th January 2014. PB-469 is the reply to the RTI application filed by assessee dated 6th June 2018, in which no specific reply have been given by the Department as to by which mode the assessment record was forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that to the same effect there is another Judgment of the Allahabad High Court in the case of M.D. Overseas Ltd., vs., DGIT 333 ITR 407 (All.) He has, therefore, submitted that the approval in this case though not conveyed to the Assessing officer on time, but, is also given in a mechanical manner. Learned Counsel for the Assessee relied upon Judgment of the Honorable Bombay High Court in the case of Pr. CIT vs Smt. Shreelekha Damani in Income Tax Appeal No. 668 of 2016 dated 27th November 2018. He has submitted that the draft assessment order was sent from Faridabad to Chandigarh on 30th January 2014 and it is not clarified as to how it was sent, whether through messenger or courier or any other valid mode. Therefore, no time was left to consider the assessment record. Since last reply is filed on 29th January 2014, therefore, there was no application of mind by the assessing officer or the Addl. CIT to pass the assessment order within the time. Learned Counsel for the Assessee also relied upon order of ITAT, Jodhpur Bench in the case of Smt. Indira Bansal vs., ACIT (2018) 192 TTJ 968 (Jodh.). Learned Counsel for the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order under section 153B(1)(b) of the Income Tax Act, 1961. Further, Section 153D of the Income Tax Act provides that no order of assessment or reassessment shall be passed by the assessing officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of Section 153A or assessment year referred to in clause (b) of sub-section (1) of Section 153B except with the prior approval of Joint Commissioner. Therefore, for passing the impugned assessment order, the assessing officer who is in the rank of DCIT shall have to obtain prior approval of JCIT. The Learned Counsel for the Assessee referred to PB-31, which is last reply filed before assessing officer on 29th January 2014. The assessing officer written a letter to the Addl. CIT, Chandigarh on 30th January 2014 sending a draft assessment order for his consideration and approval in terms of Section 153D of the Income Tax Act, copy of which is filed at page 46 of the PB. The assessing officer is stationed at Faridabad. However, the Addl. CIT is stationed at Chandigarh. The Addl. CIT, Chandigarh granted approval under section 153D of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived on 5th February 2014, communicating the approval of Addl. CIT to the assessing officer. This Fax message is not legible. The Hon ble Bombay High Court in the case of Pr. CIT vs. Smt. Shreelekha Damani (supra), held as under IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 668 OF 2016 The Pr. Commissioner of Income Tax ..Appellant v/s. Smt. Shreelekha Damani. ..Respondent. Mr. A.R. Malhotra a/w Mr. N.A. Kazi for the appellant Mr. Jehangir Mistri, Senior Counsel a/w Mr. Atul Jasani for the respondent CORAM : AKIL KURESHI M.S. SANKLECHA, J.J. DATED : 27th NOVEMBER, 2018. P.C. 1. This appeal is filed by the Revenue challenging the judgment of Income Tax Appellate Tribunal ( the Tribunal for short) dated 19th August, 2015. 2. Following question was argued before us for our consideration Whether on the facts and circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analise the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961. 7. In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Faridabad to Addl. CIT in Chandigarh and vice-versa by Addl. CIT, Chandigarh to Assessing Officer at Faridabad on the very next day would lead to suspicion, in explanation of A.O. if any, valid draft order was transmitted to the Addl. CIT within the time or if the Addl. CIT has communicated the approval under section 153D to the Assessing Officer at Faridabad on 31st January 2014. These facts would clearly show that the action of the Addl. CIT, Chandigarh granting approval in this case was, thus, a mere mechanical exercise, accepting the draft order as it is, without any independent application of mind on his part. Nothing has been clarified during the course of hearing to the effect that if Addl. CIT has gone through the assessment record, before accepting the draft assessment order. Thus, there was no application of mind on the part of the Addl. CIT before granting approval. The Addl. CIT, Chandigarh has merely gone through the draft assessment order as per PB-47. Therefore, the contention of Learned Counsel for the Assessee is justified that the approval was granted in a most mechanical manner without application of mind and such approval was intimated to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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