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TMI Blog2021 (4) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... d material are same as in the other cases decided by this Tribunal, therefore, both side no objection to follow the earlier order of this Tribunal. 3. We have also carefully gone through the material available on record including the approval said to be granted by Joint Commissioner u/s. 153D of the Act. We find that the issue arises of consideration in this appeal was already decided by this Bench of this Tribunal in IT(SS) No.143/Jab/2014 by order dated 04.03.2021 and other group cases. For the purpose of convenience, we are reproducing the order of this Tribunal dated 04.03.2021, which reads as follows: 2. Shri Dhiraj Ghai, the ld. representative for assessee submitted that the first ground taken by him is with regard to approval by the JCIT as required under section 153D of the Income Tax Act, 1961 ( 'the Act' hereinafter). According to ld. representative for the assessee, no assessment order shall be passed unless it is approved by the JCIT. Referring to Paper Book, the ld. representative for the assessee submitted that the JCIT in categorically terms says that due to shortage of time as he was holding charges of six ranges, it was not possible for him to go into deep. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter addressed to the A.O. by the JCIT, the ld. DR submitted that there were discussions between the A.O. and the JCIT, therefore, it cannot be said that there was no application of mind. The A.O. also has responded to the letter of the JCIT dated 21.12.2011 by this letter dated 22.12.2011. The assessee was also invited for the discussion along with the A.O. in the chambers of the JCIT. The JCIT has also written a letter to the Commissioner on 20.12.2011 in order to take the Commissioner into confidence. The A.O also by his letter dated 26.12.2011 reminded the JCIT to give approval at the earliest opportunities, since, the assessment is getting time barred. 5. The ld. DR placed her reliance on the judgment of the Supreme Court in C.I.T. vs. Jai Prakash Singh (219 ITR 737) and submitted that charging sections fix the liability to tax and any violation of machinery provision will not render the assessment order void. Once the superior authority agreed to the finding of the lower authorities then it is not necessary to record reasons for so agreeing. Referring to the judgment of the Bombay High Court in C.I.T. vs. Ratanbai N.K. Dubash (230 ITR 495), the ld. DR submitted that the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provision. Therefore, the Judgment of the Apex Court is not applicable to the facts of this case. 9. We have also gone through the judgment of the Bombay High Court in Mrs. Ratanbai N.K. Dubash (supra). In this case, the AO passed the order without obtaining direction from Inspecting assisting Commissioner. Hence, the assessment was annulled. This judgment of the Bombay High Court in fact supported the case of the assessee. Moreover, this Bench of the Tribunal in Tarachand Khatri (supra) has found that on identical circumstances, there was no approval u/s. 153D of the Act. One of us Accountant Member is party to the order. 10. Now, let us examine whether the JCIT granted approval for passing the assessment order. Under the scheme of the Act, u/s. 153D, the Commissioner has no role to play. It is not known, why the JCIT intended to take the Commissioner into confidence by addressing a letter to him. The Commissioner has all the powers u/s. 263 of the Act, in case, he/she is satisfied that the assessment order is erroneous or prejudicial to the interest of revenue. We are reproducing the correspondence between the JCIT on the one hand and A.O. on other and also a lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to sale of land having Dolomite mines through route of sale purchase of shares of the company. (v) Excavation and local cartage charges. In this meeting, all the points of addition and replies of the essence were discussed in length and you were directed to proceed as per line of action laid down in the discussion. For your convenience and clarity of action to be taken the main point are discussed here below:- i. Share capital in various group companies of Mittal Group: Without reproducing the contents of the note, it is to observe that you have not given any basis for including some part of share capital in the hands of family members of assessee. The specimen case was of Smt. Sarla Mittal for A.Y. 2004-05 in which the proposed addition of Rs. 1,3,00,000/- could not be explained by you. You were specifically asked by hon'ble CIT to explain how this working has been done and what is the basis of arriving at this figure and the particular assessment year. You have stated that this figure is worked out in the appraisal report on the basis of some loose papers but you could not produce the particular seized paper on the basis of which these calculations have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at you should examine whether any investments in purchase of share of these companies/liquidation of investments of these companies has been made by the assessee in cash. Wherever any such investment is found. it should be properly examined and may be considered for additions as undisclosed investment of these companies (iii) Investment in Jewellery and capital gain on sale of these jewellery items linked to land purchased by the assessee in the name of on Shri Kale On this issue, during discussion, il was found that assessee has already surrendered the amount of cash investment in the said land. Later on. the assessee paid to Shri Kale by cheque and got witthdrawn the same amount in cash as per copy of bank account furnished. It is also found that this cash was available with the assessee and he may have utilized it for the purchase of jewellery etc. as per details submitted. If this contention is found probable, no addition is required. You may also examine and brig on record the basis of addition on account of capital gain working adopting date of acquisition as 01.04.1981. (Iv) Issue related to sale of land having Dolomite mines through route of sale/ purchase of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Copy of note addressed to Hon'ble C.I.T. is enclosed. (Abhishek Shukla) Joint Commissioner of Income Tax Range-Katni Shri C.R. Mittal & Sons (HUF). IT(SS) A No. 100 Jab 2014 10 Copy to: The Commissioner of Income Tax-1, Jabalpur with reference to discussion made. With your honor in this connection. Joint Commissioner of Income Tax, Range-Katni. Office of the Assistant Commissioner of income tax Circle Katni, Katni(MP) F.No ACIT TE/M /1530 approval/ Camp- Jabalpur, dated the 22 Dece: 2011 To, The Joint Commissioner of income tax, Range Katni Jabalpur, Sir, (By name Sub Approval of Draft assessment order u/s 153A/143(3) in the case of different Aassessees of Mittal Group Katni Regarding Ref. Your office letter no.JCIT/R-Katni/Mittal Group/11-12 dated 20.12.2011- addressed to CIT-I Jabalpur and copy endorsed to me & dated 21/12/2011 addressed to me and copy to CITI Jabalpur clarification regarding Please refer to the above. It may be clarified that till 20/12/2011 in 21 cases draft orders were submitted to your office. However, from the letter address to me, I am unable to understand it is whether approval under section 153D or directions to reframe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit Receipts in the cases of Ankit/Novas/Nippon. It may be clarified that the case of Nippon is neither assessed at Katni nor where it is being assessed has given by Mittal. As regards this I want to say that the issue of Nippon is beyond the jurisdiction. As regards the Ankit & Novas, the draft order is yet to be finallred and the decision is still pending at my end due to the fact that on 20/12/2011 during the course of discussion, it was told to me that the matter is being referred to Dl(Inv) for clarification. Only on receipt of the clarification, the assessment order need to be finalized. It may further be stated that in the case of Ankit Tracom Pvt Ltd., the standing counsel had informed telephonically that passing of assessinent order is stayed. However, it was made clear that assessment order may be prepared and not to be released. 5. Investment in Jewellery and capital gain on sale of these Jewellery Items linked to land purchased by the assessee in the name of Shri Kale- First of all, I may made it clear that the capital gain on sale of jewellery was made on account of purity of gold l.e. the gold jewellery purchased/possessed having purity of 79.96 and when it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h enquirles. The addition was made on account of unaccounted transactions. 8. From the perusal of the letter dated 21/12/2011, it is not clear, whether the assessment orders submitted to your office was approved or otherwise under sec. 153D or the instructions are under sec. 144A. 9 As per the appraisal report the proposed additions were more than 125 crores and if there is major deviation from such proposal, as per instructions of the Board, deviation report should be famished to the Investigation wing. From your above referred letter, It is not clear, whether any deviation report was furnished to the Investigation wing or not. This may also be made clear to me so that with the short time span, I could complete the search & seizure assessments, 9. It may be made clear that recently my sister in law (Bhabhl) expired on 21 Dec 2011 and due to these time barring cases, I could not even see her during her alling time or otherwise to attend the funeral which was held on 22/12/2011. At the same time, my mother was already a paralytic patient and recently suffered a second paralytic attack, 10. It may further be stated here that the valuation reports In the cases of Shri Vijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es may be taken in shortest possible time. The major issues crystallized are presented below for your kind consideration and necessary directions. 1. Share capital in various group companies of Mittal Group It is observed that some companies have subscribed to the share capital of group companies of Mittal Groups. This capital contribution by the Subject to verification by the investigation wing and it was opined by it that this was introduction of undeclared income by the Mittals in their group companies in the name of these companies. In appraisal report, year-Wise introduction of capital in the name of various companies of Mittal family has been worked out, which is the basis of proposed additions in different years in the cases of family members of Mittal group. The A0 is of the view that these transactions are sham transactions as some of the papers related to transfer of shares found in the possession of Mittal family blank and in all probability these shares were held by the family members of Mittal family in the period of 2000-2005 and were purported to have been transferred to these bogus companies and later on in the period of 2005-2010 they were again purchased by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established. On the other hand, the assessee has proved beyond doubt the existence of these companies and the fact of subscription of shares by them through banking channels. However, you honors kind directions are solicited as this issue are common in most of the companies of Mittal Group as well as family members of Mittal Groups. 2. Fixed Deposit Receipts in the cases of Ankit/Novas/Nippon It is observed that FDRs amounting Rs. 66 crores approximately were found in the premises of the assessee during search. Initially, during search these were listed but no impounding of them was made. Later, it is claimed by the assessee that the department has attached these FDRs. The source of investment in these FDR has been treated as unexplained in appraisal report, which is the basis of AOs addition on this point However, it is claimed by the assessee that these FDRs were made out of liquidation of companies' investments with various companies, in which the assessee has subscribed shares sometime back. The version of assessee is that these companies were having investment mostly in shares of some other companies and some minor other investments, which were not profitable investment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed objection to long-term capital gain calculation on the sale of these jewelleries taking purchase value as on 01.04.1981, while these jewelries were purchased after taking withdrawal from land transactions related to Shri Kale. No positive evidence regarding this has been brought on record either by the AO. 4. Issue related to sale of a company having Dolomite mines through route of sale / purchase of shares of the company. The one of the company of the assessee was owner of land having Dolomite mines, which was subject matter of sale to Jaypee Group. The assessee chose the route of sale through transfer of shares of the owner company. In this transaction, the amount of capital gain received was partly invested in REC bonds to avail benefits of Section 54EC and remaining amount was offered for taxation. The assessee has shown photo-copies of cheques and MOU reached between assessee and Jaypee Group, which were impounded also during search proceedings. The AO is of the view that this transaction is a shani transaction as it is unbelievable that the share of company would be sold at the value of 56 times of face value. Further, he found that although amount of consideration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d doing excavation work. On the face of these documentary evidences regarding these contractors who have received payments from the assessee after TDS and who have also filed their returns in the Income Tax Department, the claim of the assessee appears to be proper and no disallowance of expenses on the basis of statement can be made. Regarding expenses of local carting, the assessee has produced evidence in the form of truck numbers, payment vouchers, registration book of trucks, details of payments etc. The list of payments was found at the premises of the assessee during search. 6. Purchase of lands. The additions have been proposed by the AO, on the presumption that the assessee has paid some extra money over and above the value declared in sale deed without bringing any evidence on record to support his addition. The assessee has explained that during search no any lose paper or any other evidence has been found to reach any such conclusion regarding excess payment over and above the amount in the books accounts, The contention of the assessee appears to be correct. Yours faithfully (Abhishek Shukla) Joint Commissioner of Income Tax, Range-Katni OFFICE OF THE ASSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and every case assessment year wise. Yours Sincerely, Date: 22/12/2011 (Sanjay Kumar) ACIT-Katni OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX RANGE-1, CR BUILDING, NAPIER TOWN, JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-II, JABALPUR RANGE-SATNA, KATNI, CHHINDWARA AND SAGAR F.No.JCIT/Range/Katni/Mittail/2011-12 Dated: 26.12.2011 To The Asstt. Commissioner of Income Tax, Circle, Katni Sub: Statutory approval of Draft Assessment order u/s 153D in the cases of different assesses of Mittal Group, Katni- Reg. Please refer to your letter No.ACIT/KTE/MITTAL/153D/11-12 dated 26th December, 2011 forwarding therewith draft assessment orders in Mittal Group of cases for AY 2004-05 to 2010-11: Covering letter date Name of the assessee Assessment year 26.12.2011 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below were set-aside and the entire assessment order as confirmed by C.I.T.(A) are quashed. 14. In the result, appeal of the revenue is dismissed and C.O. of the assessee stands allowed." "(As per my separate, assent order) , (Sd/-) (Sanjay Arora) (N.R.S.Ganesan) Accountant Member &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in law, to which the answer must clearly be in the negative. As the exchange afore-referred, coupled with the letters dated 20 & 21/12/2011 by the Jt. CIT to the AO (forming part of the paper-book by the Revenue furnished on 03/02/2021), shows, the approving authority, on perusing the records and applying his mind to the various aspects of the assessment/s, finds himself unable to approve the draft assessment order as such. He, however, instead of requiring the AO to make change/s therein as deemed proper or, time permitting, even requiring him to, for the purpose, undertake inquiry on the lines he considers necessary, cites the reasons of overload of work and paucity of time, and grants - what he calls, 'technical' approvals. How, one wonders, could he do so, i.e., in law, being obliged thereby to, and even as required of him by the AO vide his letter dated 22/12/2011, either agree with the draft assessment order or advise necessary changes therein before according his approval. This is as the law contemplates an order of assessment or reassessment only upon his approval and, of course, within the time prescribed therefor. That his directions to the AO in the matter were not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of assessments as well as inspection of assessment charges. In recent times, the concept of limited scrutiny has also been introduced with a view to focus the resources of the Revenue on targeted issues, with an inbuilt flexibility for enhancing the scope of assessment in deserving cases - by following the procedure prescribed therefor - again, clearly, with the same intent and toward the same end. Considered in this backdrop, the legislative intent behind s. 153D could be no different, or at least materially so. In fact, the need for framing a balanced assessment, i.e., providing a check on the arbitrary use of power through high pitched assessments, as well as to strengthen the internal monitoring and review system of the Department, is imperative and cannot be overemphasized. It appears that inasmuch as no pre-decisional hearing to the assessees, as in ss. 144A/144B, has been provided in section 153D, its primary purpose is to improve the quality of the assessments in search and search-related cases. This perhaps also explains the absolute bar on the issue of an order of assessment/reassessment without prior approval by the Range head in such cases. Where, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason/s to believe escapement of income from tax by the AO prior to the issue of a reassessment notice. The purview of an Appellate Court, as is well-settled, is limited to ascertaining the existence or otherwise of a live link or a rational nexus between the material or information available with the assessing authority and his honest belief as to the escapement of income chargeable to tax from assessment. The veracity of this material/information, as long as it is from a reliable source, cannot be examined at the stage of assumption of jurisdiction for reassessment; the scope being the relevancy of the reason/s recorded for the purpose with a view to determining the validity thereof. Application of mind by the AO becomes a necessary ingredient toward this. Sufficiency of reason/s, which falls within the realm of the subjective satisfaction of the AO, cannot be gone into. Further, even this the Court does, not to review the manner of the exercise of the power of reassessment per se, but only to see as to whether the requirement of law, providing a condition precedent for the exercise of the said power, has been met or not. In the instant case/s as well, it would be a different m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act where-under no such consultation was necessary. This non-consultation was held as proof against the presumption of regularity of official acts, challenging the validity of the Commissioner's order. The Apex Court repelled the charge, holding the provision as directory, as follows: (pgs. 16-17) 'The provision about consultation must be treated as directory, on the principles accepted by this Court in State of U.P. vs. Manbodhan Lal Srivastava [1958] S.C.R. 533 and K.S. Srinivasan vs. Union of India [1958[ S.C.R. 1295. In the former case, this Court dealt with the provisions of Art. 320(3)(c) of the Constitution, under which consultation with the Union Public Service Commission was necessary. This Court relied upon the decision of the Privy Council in Montreal Street Railway Co. vs. Normandin (1917) A.C. 170 where it was observed as follows: ".....The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes, 5th Edn. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, i.e., on September 8, 1948, an Amending Act was promulgated, which stipulated such a requirement by way of proviso to the amended section, reading as under, and which was given a retrospective effect from March 30, 1948: (pg. 423) Provided that- (1) the ITO shall not issue a notice under this sub- section unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice.' (emphasis, supplied) The assessments, on challenge, were regarded as not valid, from the stage of the Tribunal - whereat the issue of their being not maintainable was raised for the first time, onwards. The Revenue relying on section 6 of the General Clauses Act, 1897, the Apex Court held as under: (pgs. 423-425) ' The question is whether the notices which were issued were rendered void by the operation of this proviso. The Commissioner contends that section 6 of the General Clauses Act, particularly cls. (b) and (c), saved the assessments as well as the notices. He relies upon a decision of the Privy Council in John Lemm vs. Mitchell [1912] A.C. 400, Eyre vs. Wynn-Mackenzie [1896] 1 Ch. 135 and Butcher vs. Hend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is equally applicable here. No question of law was raised before us, as it could not be in view of the decision of this Court in Y. Narayana Chetty vs. ITO [1959] 35 ITR 388 (SC), that the proviso was not mandatory in character. Indeed, there was time enough for fresh notices to have been issued, and we fail to see why the old notices were not recalled and fresh ones issued. For these reasons, we are in agreement with the High Court in the answers given, and dismiss this appeal with costs.' True, it is not the validity of the jurisdictional notice - as in Maharaja Pratap Singh Bahadur (supra), resulting in the proceedings taken without such a notice or in pursuance of an invalid such notice being void and illegal, and the assessments, in consequence, without jurisdiction, which is under question in the instant case. The 'approval' u/s. 153D, as afore-noted, is primarily towards safeguarding the interest of the Revenue in search and search-related cases, giving it a mandatory status. It thus becomes as much integral to the procedure for assessment as is the issue of the notice for reassessment. And, further, in discharge of his quasi-judicial functions by the Jt. CIT who, as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assistant Commissioner, i.e., below the rank of the Joint Commissioner. Similarly, the year of search being f.y. 2009-10, the assessment year under reference, i.e., AY. 2007-08, is that specified in s. 153D. The assessment order under reference is, thus, not valid in law inasmuch as no order of assessment or reassessment could be passed by the AO below the rank of Joint Commissioner for any of the years specified in section 153D, except with the approval of the Jt. CIT. 6. Before parting with this order, one cannot help note the irony of the situation, i.e., a measure adopted by law to protect the interest of the Revenue in critical cases should itself become the reason for the destruction thereof, an extremely unfortunate incident. This Court, however, cannot do anything beyond expressing its anguish at the sorry state of affairs with regard to the management of work as well as the commitment thereto of the officers concerned, and hope that the Revenue, so keen and anxious to improve the quality of the assessments and avoid unnecessary litigation, takes steps to prevent a recurrence, which has an opposite effect - being detrimental to the cause of the Revenue as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 15.12.2011 1. Aditya Welfare Trust 2004-05 to 2010-11 2. Vedansh Welfare Trust 2004-05 to 2010-11 3. Vineet Welfare Trust 2004-05 to 2010-11 4. Ankur Welfare Trust 2004-05 to 2010-11 5. C.R. Mittal & Sons (HUF) 2004-05 to 2010-11 6. Pawan Kumar Mittal (HUF) 2004-05 to 2010-11 7. Lalit Kumar Mittal (HUF) 2004-05 to 2010-11 8. Suresh Kumar Mittal (HUF) 2004-05 to 2010-11 9. Vijay Kumar Mittal (HUF) 2004-05 to 2010-11 2. Due to shortage of time, as I am holding charge of six Ranges, it is not possible for me to go into the deep, therefore, the draft assessment orders in the following cases submitted by you are hereby approved u/s 153D as per technical requirement. Case records as received are returned herewith. 3. Please ensure passing of order, issue of demand notice and challan as also service before the limitation date. Jt. Commissioner of Income Tax Range-Katni" 5. In view of the above facts and circumstances and the material available on record this Tribunal is of the considered opinion that there is no approval u/s 153D of the Act for passing of the assessment order. Therefore, this Tribunal is unable to uphold the orders of the authorities below. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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