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TMI Blog2025 (5) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... 2024 -do- 30.09.2021 -do- 3. ITA No. 3373/Del/2024 -do- 27.09.2021 -do- 4. ITA No.3374/Del/2024 -do- -do- -do- 5. ITA No. 3375/Del/2024 -do- -do- -do- 6. ITA No. 3376/Del/2024 -do- -do- -do- 7. ITA No. 3377/Del/2024 -do- -do- Assessment Order under section 143(3) of the Income Tax Act, 1961. 2. At the time of hearing, it was stated that the issues involved for AYs 2013-14 to 2019-20 are common, interlinked and arising from the search action on the assessee and other group concerns covering the assessee. Hence, All these cases have been heard together and accordingly adjudicated by this common order. ITA Nos.3371 to 3375/Del/2024 [Assessment years 2013-14 to 2017-18] [Mainee Steel Works Pvt.Ltd.] 3. It was stated on behalf of the assessee at the outset that the assessment for AY 2013-14 to AY 2017-18 were not pending and stood concluded either under s. 143(1) or under s. 143(3) at the time of initiation of search on 19.11.2018 and thus remained unabated. Consequently, the legal framework for assessment of total income under s. 153A is narrow and is contingent upon the discovery of incriminating material in the course of search from the assessee. 4. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firstly alleged that the additions made by the AO are outside the ambit of legal framework inasmuch as no incriminating material was found during the course of search initiated against the assessee under s. 132 of the Act on 19.11.2018 and such assessments stood concluded and remained unabated at the time of initiation of search. The assessee also simultaneously challenged the legitimacy of approval granted by the Competent Authority i.e. Addl.CIT, Central Range, Gurugram alleging that such approval has been granted mechanically in a ritualistic manner without application of mind. The Assessee also challenged the propriety of additions on merits. 6.1. In support of the legal and factual contentions, the assessee filed detailed submissions and placed documentary evidences along with case laws before CIT(A). 6.2 The CIT(A) however neither found any merit in the contention raised on various jurisdictional and legal points nor towards additions on merits having regard to the documentary evidences. The legal objection of the assessee questioning scope and legality of additions under s. 153A being outside the legal framework was discarded. Likewise, objections raised on approval grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w approvals. We shall deal with the various facets of the arguments at appropriate place in succeeding paragraphs while dealing with the respective issues. 9. Per contra, the Ld. CIT DR appearing for the Revenue strongly relied upon the first appellate order and submitted that the Ld.CIT(A) has dealt with all the objections threadbare and affirmed the action of the AO on legally sound basis. Hence, no interference therewith is called for. We shall deal with the averments made by the Ld.CIT DR while dealing with the respective issues in succeeding paragraphs. 10. We have dispassionately considered the rival submissions and perused the first appellate order passed combinedly for AY 2013-14 to AY 2019-20 as well as the respective assessment orders. The material referred to and relied upon by both sides has been perused in accordance with Rule 18(6) of the Income Tax (Appellate Tribunal) Rules, 1963. Similarly, the case laws cited in the course of hearing has been given due weight having regard to the context of the case. 11. To begin with, we shall address ourselves with preliminary objections of legal nature touching the jurisdictional aspects as raised on behalf of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents delivered later by the Hon'ble Supreme Court including PCIT vs. King Buildcon (P) Ltd. 154 taxamnn.com 189(SC). Consequently, the scope of assessment under s. 153A is restricted to the incriminating material found in the course of search in the case of the assessee in such unabated assessments. (iii) Material collected by the AO from third persons in post search or from other unconnected to search proceedings cannot be used for assessment under s. 153A in unabated cases. The additions made in the proceedings under s. 153A based on material found in the course of search/survey in the case of third person or statement of third person is unsustainable in law and the right course available to the AO in law was to proceed against the assessee either under s. 153C or under s. 148 as the case may be rather than under s. 153A of the Act. The additions made under s. 153A of the Act are bad in law on this score too. (iv) On merits, the assessee contends that all credit entries which are subject matter of additions under s.68 or purchases which are subject matter of s.69C are completely supported by the tangible material such as invoices, confirmations, bills, banking transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court observed that the statement of third person cannot be construed as incriminating material belonging to or pertaining to person other than the person searched. The assessee thus contends that where the statement of searched person himself was not construed as incriminating material per se in the absence of corroborative material, statement of third person in search or survey proceedings at the premises of the third person cannot be imported to hold existence of incriminating material for the purposes of unabated assessments. 13. On nuanced perusal of the assessment orders and the consolidated first appellate order, it is observed that there does not appear to be any reference to any incriminating material found in the course of search of the assessee per se. The alleged incriminating material referred are primarily in the nature of statement of third person prior or subsequent to search/survey proceedings. Guided by the principles laid down by the Abhisar Buildwell (P.) Ltd. (supra), Anand Kumar Jain (HUF) (supra) and Vikram Dhirani (supra), we find force in the legal plea placed on behalf of the assessee. Hence, in the absence of any incriminating material in an una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment orders. Apparently, riding on the assurances from the AO, the combined approvals have been merrily accorded. The Addl. CIT thus barely acted on the assurance from the AO towards existence of basic requirement of passing the fair and balanced assessment order mandated in law. Such approvals, which do not even remotely indicate independent application of mind, if endorsed would defeat the very purpose of the statutory enactment of s. 153D of the Act meant to act as valuable safeguard against any capricious or unjust or onerous liability on tax payers by the arbitrary exercise of powers of the AO. Evidently, the Addl. CIT himself has not exerted in any manner but rather ascribed to the acts and deeds of the AO as gospel truth. The approval is thus clearly is in the league of being mechanical and ritualistic approval rendering it expropriatory at the threshold. 14.3 The assessee thus contends that it is a gross case of an implied self confession of the Addl. CIT towards complete dependence on the process of assessment carried out by AO rendering it a 'technical approval' which in itself is fatal without anything more. 14.4 The assessee further contends that besides gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices provided by Mainee Steel Works Private Limited are as under: No replies have been attached. Oage 32 Para 7 Reproduction of the statement of Sh Surjit Singh No Part of the statement has been reproduced. 14.4.1 Thus, page 3 para 4.2 (AY 2013-14) of the assessment order inter-alia reads as "the relevant extract of the statement of Shri Ashok Kumar is reproduced as under". However, no part of the statement has been reproduced. The approval has been accorded on such incomplete assessment order. 14.4.2 Page 8 para 5.1 (AY 2013-14) inter alia reads as 'the relevant extract of the statement of Sh.Manoj Kumar Jain is reproduced as under'. However, no part of the statement has been reproduced. Despite such lapse, approval has been mechanically granted. 14.4.3 Page 13 para 6.3 (AY 2013-14) reads as "Further, during the post- search enquiries summons u/s 131 of the Act dated 20.02.2018 were issued to certain entities...............' Date mentioned as 20.02.2018 in the assessment order is prior to search date i.e. 19.11.2018. 14.4.4 Page 18 para 7.2 (AY 2013-14) read as ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .05.2021 is also not produced. Thus, such correspondence could thus be make belief to justify some involvement of Addl. CIT. The assessee however contends in the same breath that when the Addl. CIT himself admitted to have proceeded solely on the assurance from the AO in the approval memo which has given rise to the cause of action for passing the assessment orders, nothing else remains to be justified. Furthermore, a consolidated approval for several years involving complex issues of varied nature emanating from search itself smacks of ritualistic practice of omnibus approval. 18. The legal objection of transgression of requirements of approval under s. 153D is in question which has the effect on the very substratum of the various assessment orders which are subject matter of captioned appeals. 18.1 For passing assessment orders in search cases, the Assessing Officer is inter alia governed by the requirement of prior approval under Section 153D of the Act. Hence, the AO should complete the assessment proceedings and prepare a draft assessment order which needs to be placed before the approving authority i.e. Joint / Addl. Commissioner (designated authority giving approval to sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .294/Del/2022 for AY 2016-17) order dated 24.04.2024 * PCIT vs Tirupati Buildings & Officers Pvt.Ltd. (ITA No. 447/2024) order dated 20.08.2024 18.3 It is axiomatic from the plain reading of approval memo that the Addl. CIT is in complete dark on facts while being called upon to grant his clearance to the draft assessment orders. 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 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 el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the respective assessment orders which could easily be detected on a bare reading of such orders. Impliedly, the Addl. CIT has not even cared to read the assessment orders while entrusted with the task of approval of such orders. Furthermore, a common approval for all assessment years in complex matters of search without identifying or discussing any issue in relation to any assessment year further shows no semblance of any application of mind to any aspect of any assessment years. 18.6 The CIT(A) in para 8.2 2 to 8.2.6 of first appellate order has brushed aside the legal objection summarily merely on an inept & indifferent premise that the assessment order makes mention of the approval from Addl. CIT under 153D of the Act and such powers are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law. 19. In the light of foregoing discussions, we are unhesitatingly disposed to hold that the integrity and propriety of various assessments under captioned appeals based ..... X X X X Extracts X X X X X X X X Extracts X X X X
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