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TMI Blog2023 (12) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... tworthiness of the creditors could not be proved. b. The Ld. CIT(A) erred in deleting the addition of Rs. 4,02,00,000/- on account of unsecured loans received from various companies as on perusal of the bank statement it is found that the unsecured loan so received by the assessee by rotation of funds through the group of companies or through her family members for creating fictitious turnover by circular trading. c. CIT(A) failed to appreciate that the unsecured loan so received from the companies are the one in which the assessee herself or her family members were the Directors during the said period. d. The Ld. CIT(A) erred in deleting the addition of Rs. 4.02.00,000/- on account of unsecured loans as during search and post search investigation it was found that the Apple group of companies, in which assessee or her family members were Directors, were not doing any genuine business and were involved in providing accommodation entries 3. Since cross objections raised by the assessee are identical and similar therefore we are taking AY 2011-12 as lead case for the sake of convenience and brevity. The grounds of cross objection raised by the assessee in CO No. 41/Del/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thor) hence the issue is covered in favour of the assessee. The ld. AR, thus, submitted that the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is liable to be quashed as it is contrary to provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so. The ld. AR submitted that the cosmic approval accorded without application of mind may kindly be rendered as unenforceable in law and hence the same may kindly be quashed by following the Tribunal order (supra) passed under identical facts and circumstances. 6. The ld. CIT(DR) strongly supported the conclusion drawn by the ld. CIT(A) in para 7.1 of first appellate order and submitted that granting approval in a particular date in time baring cases, only indicates the final date on which the assessment proceedings have been finalized in guidance and supervision of Range head and therefore approval granted u/s. 153D of the Act comply with the requirement of law and thus the legal ground was rightly dismissed by the ld. CIT(A). However, she did not controvert that under identical facts and circumstances in the case of a group company of Apple Group i.e. M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter also observed that the fact of initiation of penalty proceedings, wherever applicable, must also be incorporated in the last para of the order. The initiation of correct penalty provisions of the Act under Section 271(1)(c)/ 271AAB as per facts of the case were also directed to be ensured at the end of the AO. c) After taking into consideration the above points, a copy of the final orders passed be sent to the JCIT. d) As many as 18 draft assessment orders including the assessment order of the assessee herein were combinedly placed before the JCIT in one go seeking statutory approval under Section 153D of the Act in relation to multiple assessment years of each assessee. e) No reference to the assessment records being sent along with the draft assessment order to the JCIT stationed long away is found in the communication addressed to JCIT by the Assessing Officer. f) The communication letter dated 30/12/2016 have been delivered to the Office of JCIT on 31/12/2016 i.e. the very last date of limitation for completion of the assessment. Subject to these broad observations, the approval was granted vide approval memo F. NO. JCIT/Central Range/Meerut/S&S/153D/2016-17/147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered at time of search as well as obtained in the course of assessment proceeding. The requirement of law is to grant approval not merely as a formality or a symbolic act but a mandatory requirement. 9.5 In the instant case, it is a matter of record by the own admission of JCIT that the approval granted is merely technical and without appraisal of evidences or enquiries. Thus fact thus need not be traversed any further. In the backdrop of the unequivocal observations made by the JCIT, approval granted under Section 153D apparently 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 order thus passed is vitiated in law which illegality cannot be cured. 10. In nutshell, the approval under S. 153D is repugnant for more than one reasons; (i) the approval accorded under Section 153D is admittedly without any occasion to refer to the assessment records and seized materials, if any, incriminating the assessee and hence such approval is in the realm of an abstract approval of draft assessment orders and consequently suffered from total non-application of mind. (ii) approval granted h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of search cases should be made with the prior approval of superior authority, so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the Assessing officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval the respective Assessment order. The solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional/ Joint CIT concerned, with his experience and maturity of understanding, should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast 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 enjoins due application of mind and if the same is subjected to judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations so made are not tenable in law. 14. In the light of foregoing discussions, We are unhesitatingly disposed to hold that the assessment order for AY 2014-15 in question, in pursuance of a hollow & cosmetic approval accorded under S. 153D and undeniably without application of mind, is rendered unenforceable in law and hence quashed. 8. In addition to order of the Tribunal in the case of a group company of Apple Group i.e. M.G Metalloy Pvt. Ltd. dated 08.05.2023 (supra), the ld. AR has also placed vehement reliance on the judgment of Hon'ble jurisdictional High Court of Delhi in the case PCIT vs Anuj Bansal dated 13.07.2023 in ITA No. 368/2023 to submit that when there was absence of application of mind by the ACIT in granting approval u/s. 153D of the Act then it is not an exercise dealing with in material matter which cannot be corrected by taking recourse to section 292B of the Act. The relevant part of said judgment reads as follows:- 12. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 9. Since the copy of the letter dated 30.12.2016 of DCIT Central Circle Noida to JCIT Central Range Meerut and approval order dated 31.12.2016 issued by JCIT Meerut includes names of present assessee Smt. Ruchi Garg at serial no. 6 and M/s M.G Metalloy Pvt. Ltd. at serial no. 10, therefore, we have no hesitation to hold that the legal contention of assessee envisaged in ground of cross objection one is squarely covered in favour of the assessee leading to inevitable invalidation of assessment orders as the formal and cosmic approval accorded u/s. 153D of the Act issued without application of mind to the relevant assessment orders and records has to be rendered un-enforceable in law and hence the same is quashed. It is pertinent to mention that the said conclusion also gets strong support from the judgement of Hon'ble jurisdictional High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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