TMI Blog2021 (6) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... by him to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed additions with reference to incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be considered as actual approval in law. Hence, we quash the assessment framed u/s. 153A of the Act on this additional ground alone. - Decided in favour of assessee. - ITA No. 1573/Chd/2018 - - - Dated:- 7-6-2021 - N.K. Saini And Mahavir Singh, Vice Presidents For the Appellant : Parikshit Aggarwal, CA For the Respondents : C. Chandrakanta, CIT, DR ORDER Mahavir Singh, Vice President This appeal by the assessee is arising out of the order of the Learned Commissioner of Income Tax (Appeals)-5 [in short the 'Ld. CIT(A)], Ludhiana dated 15.10.2018 relating to assessment year 2016-17, passed u/s. 250(6)) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'. The assessment was framed by the ACIT, Central Circle-II, Ludhiana for the assessment year 2016-17 u/s. 153A of the Act vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order. The Ld. Counsel for the assessee stated that this is a search and seizure case and requisition u/s. 132A of the Act was made by the Investigation Wing, Ludhiana in lieu of search conducted by the Directorate of Revenue Intelligence, Ludhiana Unit on the assessee on 14.12.2015. The investigation of the Income Tax Department accordingly requisitioned u/s. 132A of the Act dated 26.05.2016. It was contended that a number of documents were seized during the course of search which was considered by the AO during the course of proceedings u/s. 153A of the Act. The Ld. Counsel for the assessee stated that the approval granted by the Addl. CIT on the same date i.e. 29.06.2017 when the AO requisitioned the approval u/s. 153D of the Act from the Addl. CIT and the manner in which statutory approval u/s. 153D of the Act is accorded is bad in law. The Ld. Counsel for the assessee also relied upon the case law of Hon'ble Supreme Court in the case of NTPC (supra) and also the decision of the Hon'ble Jurisdictional High Court in the case of VMT Spinning Co. Ltd. Vs. CIT Another (2016) 389 ITR 326 (P H). In view of the above, the Ld. Counsel for the assessee stated that the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above, hence, we admit this additional ground and adjudicate the issue. 7. The Ld. Counsel for the assessee before us stated that this issue is squarely covered by the decision of the Hon'ble Bombay High Court in the case of PCIT Vs. Shreelekha Damani (2019) 307 CTR 218. He also stated that the Tribunal is consistently taking view and he cited the following case laws: S.No. Name of the Judgement Citation 1. Sanjay Duggal Vs. ACIT ITA No.1813/Del/2019 2. M3M India Holdings Vs. DCIT 71 ITR(Trib.) 451 3. Dilip Constructions Pvt. Ltd. Vs. ACIT IT(SS)A No.66 to 71/CTK/2018 4. Saurabh Agarwal Vs. DCIT ITA Nos. 263 to 267/Agr/2017 5. Rajesh Ladhani Vs. DCIT ITA No. 106 to 108/Agra/2019 6. Uttarakhand Uthan Samiti Vs. ITO ITA No. 48 to 52/DDN/2019 7. Rishabh Buildwell Pvt. Ltd. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garh (whereby directing the assessment order to complete the assessment proceedings by 30.06.2017), draft assessment orders of the following cases have been prepared: S.No. Name address of the assessee PAN Assessment Years 1. M/s Inder International, 594, Nirankari Mohalla No.1, Overlock Road, Ludhiana AABF17996J 2011-12 to 2016-17 (six Years U/s 153A) 2. S.Abhay Jain Prop. M/s Shree Lakshmi Steels, 467, Industrial Area-B, Millerganj, Ludjhiana AHEPJ7203M 2012-13 to 2016-17 (Five Years U/s 153C) Submitted for kind perusal and statutory approval U/s. 153D of the Income Tax Act, 1961. Yours faithfully Encls: Assessment folders in 11 cases alongwith Corresponding draft assessment Orders. Sd/- (Manke Shah Kapoor) Asstt. Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded that; Necessary statutory approval u/s. 153D is given to pass the above assessment order as such. Assessment record in this case is returned herewith. 12. We have gone through the decision of Hon'ble Bombay High Court cited by the Ld. Counsel for the assessee in the case of Shreelekha Damani (supra) wherein almost identical approval was considered by the Hon'ble Bombay High Court and the relevant findings are as under: 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks:- To, The DCIT (OSD)-1 Mumbai Subject: Approval u/s. 153D of draft order u/s. 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg. Ref: No. DCIT (OSD)-1/CR-7/Appr/2010-11 dt. 31.12.2010 As per this office 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 lef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft assessment order with due application of mind on various issues contained in such order so as to derive his/her conclusive satisfaction that the proposed action of AO is in conformity with subsisting law. The AO is obligated to pass the assessment order exactly, as per approval/directions of the designated authority. Inevitably, this evaluation is to be made on basis of material gathered at time of search as well as obtained in the course of the assessment proceeding. The requirement of law is to grant approval not merely as a formality or a symbolic act but a mandatory requirement. 11.2. In the backdrop of facts narrated in the preceding paras, it is the contention on behalf of the assessee that approval granted under S. 153D does not meet the requirement of law and hence assessment orders passed in consequence of such non-est approval is a nullity in law. The assessment orders thus passed is vitiated in law which illegality cannot be cured. In support of charge of non est approval, several contentions have been raised viz (i) the approval accorded under section 153D is without any occasion to refer to the assessment records and seized material, if any, incriminating the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared. The whole sequence of action apparently appears to be illusory to merely meet the requirement of law as an empty formality. It is also alleged on behalf of assessee that the draft assessment orders are not available on record which allegation has not been rebutted. The draft assessment orders showing some marking/initials etc. could have given a valuable input on the applicability of mind and could throw light on objectivity applied owing to total silence on any delineation on these aspects in the approval memo. The records before us are totally muted. 11.4. Based on solitary communication placed before us, it is ostensible that draft assessment orders were placed before the Addl. CIT on 29.12.2010 for the first time. It is axiomatic from the plain reading of approval memo that various assessment orders and the issues incorporated in the assessment orders, were never subjected to any discussion with the authority granting approval prior to 29.12.2010. It is evident from the CBDT Circular No. 3 of 2008 dated 12.03.2008 that the legislature in its highest wisdom made it obligatory that the assessments of search cases should be made with the prior approval of superior auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the observations made in the appraisal report relating to examination/investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/her statutory functions and delightfully relegated his/her statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/her to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be countenanced in law. 11.6. There are several decisions, which supports the view that approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s. 153D. Such perfunctory approval has no legal sanctity in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch clearly proves that the Addl. CIT had routinely given approval to the AO to pass the order only on the basis of contents mentioned in the draft assessment order without any application of mind and seized materials were not looked at because that was not available before him at the time of granting of approval to the draft assessment order and other enquiry and examination was never carried out. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination/investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his statutory functions and delightfully relegated his statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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