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TMI Blog2025 (5) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-12 be taken as the lead case and the decision rendered thereon could be applied mutatis mutandis for other Assessment Years, in view of identical facts, except with variance in figures. 3. The assessee has raised the following grounds of appeal:- "1. That on the facts and circumstances of the case and in law, the Assessment Order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Income Tax Act, 1961 ("the Act") and the appeal order dated 14.06.2024 passed by the Ld. Commissioner of Income Tax (Appeals)-28, New Delhi, ("CIT (A)") confirming the order of the Ld. Assessing Officer are bad in law. 2. That the Ld. Assessing Officer has erred in assessing the total income of the appellant at Rs. 37,52,09,710/- as against the returned income of Rs. 29,11,950/- thereby making addition of Rs. 37,22,97,760/- to the returned income of the appellant under section 68 of the Act based on the contents of the so-called pen-drive received by the Investigation Wing from the Enforcement Directorate. 3. That the Ld. CIT (A) has erred in law by falling to appreciate that the case of the appellant is squarely covered by the judgment of the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 4th proviso to section 153A of the Act and therefore, the assessment initiated and the order passed for the impugned assessment year is invalid. 7. That the Ld. CIT(A) has erred in sustaining the order of the Ld. Assessing Officer, which admittedly is based on the findings of the Enforcement Directorate on the so-called pen-drive, statements taken by the Enforcement Directorate under the PMLA and charge sheet filed by them without making any independent enquiries. 8. That the Ld. CIT(A) has erred in not appreciating the fact that the entire case of the Income Tax Department is based on the case of the Enforcement Directorate which has not attained finality and therefore Income Tax Department is pre-judging the issue which is before the Trial Court and relying on the testimony and pen-drive of one Mr. Rajiv Saxena to the Enforcement Directorate who has been removed from his approver-ship status by the Enforcement Directorate on the grounds of being a manipulator and forger. 9. That, the addition made by the Ld. Assessing Officer and sustained by the Ld. CIT (A) based on the so-called pen-drive, which is electronic evidence, without complying with the mandatory requirement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is mechanical, without any application of mind, without perusing the records of the case and has been passed in a haste therefore the assessment orders passed by the Ld. AO under section 153A are void-ab-initio, jurisdictionally flawed, and deserve to be quashed. iv. That in view of the facts and circumstances of the case and in law, the approval under section 153D of the Act is a consolidated approval, which is not in accordance with the provisions of section 153D and in violation of mandatory procedure laid down by CBDT in Circular No. 03 of 2008 dated 12.03.2018." 5. We find that the aforesaid additional grounds are purely legal in nature. The Ld. AR also stated that the order of approval u/s 153D of the Act has not been provided by the department inspite of repeated requests. Vide order sheet dated 10.12.2024, we admitted the additional grounds of appeal being jurisdictional in nature and emanating from facts on record. After perusing the application for additional grounds and the contention of the assessee, we considered it fit to direct the revenue to produce the order granting approval u/s 153D of the Act by the competent authority. This was subsequently compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act during search on the assessee and statement of Mr. M.N. Khanna recorded u/s 50 of Prevention of Money Laundering Act (PMLA), stating that they confirmed the transactions in the pen drive handed over by the Enforcement Directorate. The Ld. AO further stated that statement of the assessee before the Enforcement Directorate by giving comments on the content of the excel sheets contained in the pen drive and before the Income tax Department refusing to even recognize the pen drive, constitutes incriminating evidence. In other words, the Ld. AO stated that before the ED, the assessee was able to decode certain transactions in the pen drive but before the Income Tax Department, the assessee denied the contents of the pen drive. 10. In the opinion of the lower authorities and the Ld. Special Counsel for the Revenue (hereinafter referred to as Ld. DR) before us, the contents noted in Paragraphs 7 to 9 above constitute incriminating materials found during the course of search on the assessee by the Income Tax Department and hence the same could be used against the assessee for making addition in respect of an unabated assessment. Accordingly, it was argued by the Ld. DR before us ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the Ld. AO has himself conceded that the pen drive was already available with the Investigation Wing before the conduct of search. In this regard, the Ld. AR drew the attention of the Bench to the following pages of the assessment order and the remand report of the Ld. AO dated 5.12.2023 submitted before the Ld. CIT(A) :- "Page 2 of assessment order "2. Sh. Sushen Mohan Gupta has been accused of laundering the proceeds of crime in Defence deal. The role of Sh. Sushen Mohan Gupta in the tainted Defence deal came into prominence after the accused-turned approver, Rajiv Saxena was deported from Dubai on 31.01.2019 by the Directorate of Enforcement and he handed over crucial documents and evidences belonging to Sh. Sushen Mohan Gupta to the Enforcement Directorate. These crucial documents and evidences were further handed over to the Income Tax Department." (Emphasis Supplied) Page 3 of assessment order "4. Thereafter, Sh. Rajiv Saxena tendered the diaries and loose sheets in original to the investigating officer in Enforcement Directorate on 02.03.2019 and the pen drive on 04.03.2019. The pen drive was sent for forensic examination by the ED to the lab of Directorate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta is a US national but living and working in India. He has been accused of laundering the proceeds of crime in the said defence deal. He was arrested by the Enforcement Directorate on 25.03.2019. He was released on bail in the said case on 01.06.2019. His role in the Agusta Westland Defence deal came into prominence after Rajiv Saxena was deported from Dubai to India and he handed over crucial documents, information and evidences related to Sushen Mohan Gupta. ...... Thereafter, Rajiv Saxena tendered the diaries and loose sheets in original to the investigating officer in Enforcement Directorate on 02.03.2019 and the pen drive on 04.03.2019.... .... Based on the various notices issued to the assessee during the assessment proceedings and analysis of the replies filed by him, assessment u/s 153A of the Act was completed in the case of the assessee after making additions in the total income of the assessee based on the amounts of entries as reflected in the above referred excel sheet found in the pen drive received from the ED. The year-wise details of additions made in the case of the assessee based on the said pen drive is being furnished below..." (Emphasis Supplied) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on its contents. Assessee has stated that the said pen drive was not received from him during the search action u/s 132 and cannot be used against him in income tax proceedings as it is not an incriminating material found during the course of search However, the original pen drive belonging to the assessee was recovered from the possession of the Sh. Rajiv Saxena by the ED. .................................................................................................... Further, this information related to handing over of pen drive was available with the department before the date of search in the case of Sushen Mohan Gupta. The information contained in the said pen drive was confronted to the assessee and his family members and connected employees during the course of search itself. In view of the above discussion, it is clear that the requisite incriminating material was well in the possession of the AO and the AD had made the addition on the basis of the same". (Emphasis Supplied) 14. From the above observations of the Ld. AO, the Ld. AR submitted that it is amply clear that the income tax department has conceded that the pen drive on the basis of which addition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AR, even the charges have not been framed till date and trial is yet to begin and hence cannot constitute incriminating material found during search. The Ld. AR referred to the order of the Ld. CIT(A) in Para 8.4 thereon, wherein he has also held that the supplementary charge sheet is only a statutory document. Accordingly, the Ld. AR submitted that the same does not constitute incriminating evidence. 17. The Ld. AR further contended that Mr. Rajiv Saxena has since been removed from the status of being an approver in the parallel criminal proceedings, since he was found to be unreliable and untrustworthy. The Ld. AR referred to pages 286-352 of the paper book containing the application dated 18.10.2019 u/s 306 of the Cr. P.C Act by the ED who sought revocation of the tender of pardon granted to Mr Rajiv Saxena wherein it was stated that Mr Rajiv Saxena withheld full and true facts; deliberately provided wrong information and made false disclosures; trying to influence certain witnesses; tampered with material provided by him; misled the investigation by providing false information/documents; deliberately hid crucial evidence/documents and playing one agency against the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is so stated in the remand report at para 3 at page 168 of the Paper Book. iv. It was further contended that the three persons namely, Mr. M.N. Khanna, Mr. R.P. Kashyap and Mr. Nagesh Kumar Azad were not the employees of the assessee and they were employed with other companies and none of them stated anything relating to the assessee in terms of any material or income or expenditure being incriminating in nature and not recorded in the books of account of the assessee. v. It was stated that Mr. Nagesh Kumar Azad did not state anything on the contents of the excel sheets and for that purpose Q. No. 42, referred to on page 434 of the Paper Book can be perused wherein he stated that he has no knowledge of the contents of the excel sheet. vi. Mr. R.P Kashyap is the employee of M/s Indian Avitronics and merely stated that he received reimbursement from the company and, therefore, if incriminating evidence at all, it relates to the company. Besides, he never stated that the reimbursement received by him was not from the books of account of M/s Indian Avitronics. Extracts of the statement of Mr. R.P. Kashyap is enclosed at Pages 203 to 207 of the Paper Book. vii. That the reimbu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecidendi of the Hon'ble Supreme Court in Abhishar Buildwell (supra) is to be followed in its letter and spirit and evidence by way of incriminating documents reflecting undisclosed income is a prime requisite for making assessment u/s 153A of the Act. 22. During the course of hearing and also in the written submissions dated 3.02.2025 filed by the Ld. DR, he started with a legal submission on how the judgment of the Hon'ble Supreme Court in Abhishar (supra) is to be read and took us to the texts in the cases of Commissioner of Customs v. Toyota Kirloskar, (2007) 5 SCC 371, Laxmi Devi V. State of Bihar, (2015) 10 SCC 241 & Behrens v. Bertram Mills Circus Ltd., [1957] 2 QB 1, at page 25. According to the Ld. DR, the decision by the Hon'ble Supreme Court in the case of Abhishar (supra) would not help the assessee in as much as it has been established that the pen drive belongs to him and this is an extraordinary situation where the assessee kept the pen drive outside India with Mr. Rajiv Saxena and the ED brought the pen drive through proper channels and the same constitutes evidence against the assessee. He argued that it is not relevant that the pen drive was found duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nidh Overseas Pvt. Ltd. [2017] 394 ITR 753 (Del), CIT v. Hotel Meriya, (2011) 332 ITR 537, B. Kishore Kumar v. DCIT, Central Circle IV(1), Chennai, [2014] 52 taxmann.com 449, B. Kishore Kumar was upheld in (2015) 62 taxmann.com 215 to support that statement also constitutes as material because it is made in the course of the search. 27. As far as the statement u/s 132(4) of the Act by the assessee and three other persons, Mr. M.N. Khanna, Mr. R.P. Kashyap and Mr. Nagesh Kumar Azad are concerned, the Ld. CIT (Appeals) has at Para 8.4.1 at Pages 152 to 154 of his order held that the contradictory statement given by the assessee before the ED and Income-tax Department as regards the ownership and contents of the pen drive handed over by the ED, the evidence gathered from the pen drive being corroborative of the transaction and with the group concerns constitutes incriminating evidence and, therefore, the ground of the assessee is not tenable and hence liable to be dismissed. The Ld. DR relied on Para 8.4.1. of the order of Ld. CIT(A) as under:- "8.4.1 Coming to the statements given by the assessee before the Enforcement Directorate and the Income Tax Department, there clearly is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Kumar Azad was also recorded u/s 132(4) of the Act. In the statement Sh. R. P. Kashyap, director of DMG Finance and Investments Pvt. Ltd., Horizon Aerospace (India) Pvt. Ltd. and Defsys Solutions Pyt. Ltd. admitted to having seen the excel files by the name of Acc.xIs, Acc09.xIs, Acc011 copy.xis, Acc011.xls and Acc011-15.xls which where part of the pendrive. He further stated that the name "RPK Ent" and "RPK hospt" as appearing in these files having the date wise records of the expenses were reimbursed to him which were incurred by him earlier for the meal and other arrangements for official visitors were the actually received by him. Further, in the statements U/s 132(4) of the Act. Shri. Nagesh Kumar Azad a key employee of the SMG Group who was confronted the details pertaining to Actia India mentioned in the spreadsheet "Acc2016", hash accepted that the transactions correspond with the books of the company vis a viz with the entries pertaining to Actia in the excel sheet titled "Acc2016" Similarly, the statement of proprietor of BOTPL, Shri. Ramesh Hemrajani was also recorded u/s 50 of PMLA on 20.04.2019 wherein he had accepted the fact that the group has been booking tickets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corroboration has been discussed by the Ld. CIT(A) at Para 11, Pages 169 to 192 of his order. The Ld. CIT(A) has stated at first Para at Page 191 of his order that even if the email, etc. and other documents relied upon to corroborate the entries in the five excel sheets are recorded in the books of account or are not incriminating, it does not make a difference and that the entries in the pen drive will be used for making the assessment. According to the Ld. CIT(A), the Ld. AO had been able to corroborate that the excel sheets in the pen drive pertain to the assessee. The relevant observations are reproduced below:- "The corroboration exercise has been carried out by the Assessing Officer to establish that the content of the pendrive pertain to the assessee and since they are not recorded in the books of the assessee, the addition to income are warranted. Even if the emails etc. and other documents relied upon to corroborate the entries in the excel sheets are recorded in the books of account or are not incriminating, it does not make a difference, The Assessing Officer has been able to show that the names appearing in the excel sheets are not alien to the assessee and those ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the pen drive on the basis of which additions to income have been made. It is very clear from the order of the Ld. CIT(A), that the pen drive containing the five excel sheets on the basis of which addition has been made was already available with the Investigation Wing of the Income-tax Department before the conduct of the search on the assessee on 2.1.2020. This, according to the Ld. CIT(A) has been admitted both in the assessment order at page 2 and Remand Report at page 2. 31. With respect to the 32GB pen drive found from Havelock Island, Andaman & Nicobar Islands, the Ld. CIT(A) held that the same contained only fifth supplementary charge sheet filed by ED which runs into hundreds of pages and the supplementary charge sheet can be said to be statutory documents listing the charges against the assessee in the PMLA proceedings being carried out against the assessee. The Ld. CIT(A) has also stated that the 5 excel sheets were part of the said 5th supplementary chargesheet. It would be relevant to reproduce the findings of the Ld. CIT(A) in Para 8.4 of his order as under:- "8.4 I have considered the facts on record and contentions of the assessee and the Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy." 14. ...................... (iv) "in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein he has said that the supplementary charge sheet constitutes a statutory document. In our considered opinion, a chargesheet is only allegations leveled on a person by a regulatory authority and the same need to be tested in the trial court so as to make them evidence, much less incriminating evidence. Even this supplementary charge sheet was dated 22.5.2019 and the same was found with the assessee at the time of search conducted on 2.1.2020 at Havelock Island. Obviously the assessee had to possess a copy of chargesheet submitted in his case. What is to be seen for the purpose of income tax search assessment for a completed year is as to whether the same would be incriminating in nature. As rightly stated by the Ld. CIT(A), a charge sheet is a statutory document. Hence a statutory document which is there in public domain cannot fall under the ambit of 'incriminating material' found during the course of income tax search. 35. In view of the above, we have no hesitation to hold that both the documents i.e. (i) pen drive received by Income Tax Department from ED and (ii) 5th supplementary chargesheet found with the assessee, were already available with the Income-tax Department a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Abhay Gupta that the proprietorship concern of the assessee was engaged in unaccounted cash sales and purchases and therefore there was undisclosed income. Thus the necessary logical fall out of the aforesaid is that there was material found as a result of search on the assessee, showing unaccounted transactions. In our opinion, even the statement obtained whereby, the additional income of Rs. 3.5 crores was offered also constitutes material unearthed during search. The ld. counsel however has submitted that the said statement was not of the assessee, and was that of the son of the assessee. This argument too does not come to the rescue of the assessee, because the assessee also has signed the said statement as no. 2 above; and it has been stated very clearly in the statement of Shri Abhay Gupta to question No. 2 (supra) that he has made the statement on behalf of others u/s. 132(4) of the Act including the assessee. Moreover the aforesaid statement dated 18.04.2006 was followed by another statement on 03.05.2006, where too Shri Abhay Gupta represented himself as the authorized representative of the proprietorship concern of the assessee and sister concern Balajee Perfumes. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional grounds raised by the assessee have already been admitted by us as they go to the root of the matter. The approval papers u/s 153D of the Act were also placed on record by the Ld. DR. 41. The Ld. AR assailed the validity of the approval granted by the Ld. Addl. CIT u/s 153D of the Act stating inter alia that the approval was mechanical in nature; granted without any application of mind; without perusing the records of the case, and passed in haste. The Ld. AR argued that the meaning of 'approval' or 'grant of approval' under Income Tax Act has been the subject matter of interpretation before various Hon'ble High Courts and it has been held that the approving authority before granting approval must verify the issues raised by the Ld. AO and also apply its mind to ascertain as to whether required procedure has been followed by the Ld. AO. Referring to expression 'prior approval' used in section 153D of the Act, Ld. AR argued that this expression makes it amply clear that approval by the Ld. Addl. CIT is as important as framing of assessment by the Ld. AO. He submitted that approval cannot mean mere signature on a document without looking into what had been approved. Approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written by the Ld. AO to the Ld. Addl. CIT, seeking approval for the draft assessment orders for AYs 2010-11 to 2013-14 and AYs 2019-20 to 2020- 21 vide letter dated 27.09.2021, and AYs 2014-15 to 2018-19 vide letter dated 29.09.2021 which are enclosed in Pages 178 and 179 of Additional Ground Paper Book 1. He submitted that only the draft assessment orders, and nothing else, were sent to the Addl. CIT for her perusal although at the bottom of the letters it was mentioned that assessment folders were also enclosed. The Ld. AR further drew our attention to the order sheet entries maintained by the Ld. AO enclosed in Pages 185 to 251 of Additional Ground Paper Book 1, specifically the entries on 27.09.2021 and 29.09.2021, wherein the Ld. AO had only stated that "draft assessment order submitted for approval." The Ld. AR submitted that these entries support the fact that only the draft assessment orders were sent for the perusal of the Addl. CIT. Additionally, he pointed that the Ld. AO mentioned in paragraph 5 of his letter that draft orders were being submitted after examination of the seized material and after duly considering all related issues in the appraisal report (as applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other orders on these dates pertaining to different searches involving different assessee's. 44. The Ld. AR then drew our attention to two other approval letters dated 29.09.2021 and 30.09.2021 enclosed in Pages 182 to 184 of Additional Ground Paper Book 1, whereby the same Ld. Addl. CIT approved 11 orders pertaining to two different assessee's in each letter. Referring to these approvals, the Ld. AR submitted that they are worded exactly the same as the approval granted in the case of the assessee, with the same clerical and language errors, which indicates that these approvals were merely Proforma approvals maintained by the Ld. Addl. CIT, with the relevant details filled in as required, without actually reviewing the draft orders and case records mentioned in the approvals. The Ld. AR also presented two additional approval letters, dated 29.03.2023 and 30.03.2023, issued by the same office of Ld. Addl. CIT, whereby she approved nine orders passed u/s 153C of the Act for two different assessee's i.e. Manish Mohan Motwani and Mohan Lilaram Motwani. Referring to these approvals, the Ld. AR pointed that, even after two years, the language of the approvals remains exactly identical, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003 which is enclosed in Page 277 of the Additional Ground Paper Book 1. He submitted that the CBDT way back in the year 2003 had laid down the procedure for obtaining approval, which mandated that the Ld. AO submit the draft orders well in advance, preferably at least one month earlier, to provide the Ld. Addl. CIT with an adequate opportunity to examine the same judiciously before granting approval. He further submitted that it was also mandated to record in the order sheet the submission of the draft order to the Ld. Addl. CIT and its receipt. He stated that although the manual was issued by the CBDT in relation to Chapter XIV-B of the Act, it equally applies to Chapter XIV of the Act, as held by the Hon'ble Orissa High Court in Sirajuddin & Co. (supra). 47. Per Contra, the Ld. DR, while supporting the approval granted by the Ld. Addl. CIT u/s 153D of the Act contended that there exists a high presumption of law, which is also codified in section 114(e) of the then Indian Evidence Act, 1872 that all official acts are regularly performed and therefore, the Tribunal has to accept with the presumption that approvals are validly granted. He further stated that merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue of presumption u/s 114(e) of Indian Evidence Act is concerned, the Ld. AR, vide his submissions dated 21.02.2025, relied on the judgement of the Hon'ble Supreme Court in the case of Suresh Budharmal Kalani Alias Pappu Kalani v. State of Maharashtra reported in (1998) 7 SCC 337, wherein it was held that the presumption can be drawn only from facts and not from other presumptions by a process of probable and logical reasoning. Referring to the letter dated 31.08.2021 of the Ld. AO relied upon by the Ld. DR, the Ld. AR argued that same does not demonstrate the application of mind by the Ld. Addl. CIT. According to the Ld. AR, the letter at most shows that some general questionnaires, as well as some specific questionnaires based on the appraisal report, had been issued by the Ld. AO, without mentioning the particular assessee in the assessee's group. He further submitted that the letter does not mention whether the appraisal reports had been seen by the Ld. Addl. CIT. In fact, the supplementary appraisal report had not even been perused by the Ld. AO until 31.08.2021 as per the said letter, let alone by the Ld. Addl. CIT. He argued that none of the questionnaires attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153D nugatory. He further submitted that, regarding the issue of the summon to BOTPL on 29.09.2021 in the case of BOTPL and not the assessee, as contended by the Department, it is immaterial whether the summon was issued in the case of the assessee or BOTPL. The only material fact is that a summons was issued to BOTPL on 29.09.2021, which was mentioned in the orders relating to the assessee submitted for approval on that date. Therefore, this could not have been submitted before the evening or late night of 29.09.2021. In response to the Department's contention that draft orders were already submitted on 27.09.2021, and hence there is no question of issuing summon to BOTPL on 29.09.2021 in the case of the assessee, the Ld. AR submitted that the issue concerning BOTPL was not involved in the assessment orders submitted on 27.09.2021 for approval but was involved in the assessment orders submitted for approval on 29.09.2021. 52. We have considered the rival submissions and perused the materials available on record containing the written submissions made by both the sides and documents placed on record. We have also perused the judgments relied upon and placed by way of Paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re reading of provisions of section 153D of the Act talks only about existence of approval from the Ld. Addl. CIT. There is no mention of application of mind on the part of the Ld. Addl. CIT or the approving authority in the said section. The expression 'application of mind' is only provided by the judicial decisions and not provided in the statute. Hence the Ld. DR argued that literal interpretation is to be given to the provisions of section 153D of the Act which does not provide for application of mind of the approving authority and hence any other interpretation contrary to the same would only result in re-writing the law. The Ld. DR also argued that the assessee files details at the last moment and that is why the approval is obtained from Ld. Addl CIT in the last moment. The Ld. DR also argued that the Ld. Addl. CIT does not look into the figures and even if there are mistakes in the figures, the same would not vitiate the assessment proceedings. The Ld. DR also relied on the decision of Hon'ble Karnataka High Court in the case of Rishabchand Bhansali vs DCIT reported in 267 ITR 577 (Kar) and also on the guidelines issued by the Central Board of Direct Taxes (CBDT) dated 22.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly argued by the Ld. DR, the Ld. Addl CIT is involved with the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the Ld. Addl CIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld. AO in the draft assessment order. The copy of the appraisal report submitted by the Investigation Wing to the Ld. AO and Ld. Addl CIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from Ld. Addl CIT u/s 153D of the Act. The Ld. Addl CIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty ritual. Needless to emphasise that before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer. The approval must reflect the application of mind to the facts of the case." 56. It would be relevant to address the provisions of Section 14 of CMJ University Act, 2009 regarding the appointment of the Chancellor of the University and we find that the said provisions are pari material with section 153D of the Income Tax Act as under:- "Section 14 of CMJ University Act, 2009 - The Chancellor (1) The Sponsor shall appoint a person suitable to be appointed as the Chancellor of the University subject to the approval of the Visitor. Section 153D of the Income Tax Act, 1961 - Prior ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of any statutory flavour, a provision cannot be interpreted to create a legal fiction in such eventuality, and creating a fiction through judicial interpretation may amount to legislation, which is exclusively the domain of legislature. In this regard, we are benefited by the judgment of this Court in the case of Sant Lal Gupta & Ors. v. Modern Co- operative Group Housing Society Ltd. and Ors.27, wherein while interpreting Rule 36(3) of the Delhi Co-operative Societies Rules, 1973, it was held that:- 8. Rule 36(3) of the Rules, reads as under:- 36. Procedure for expulsion of members- (1)-(2) (3) When a resolution passed in accordance with sub-rule (1) or (2) is sent to the Registrar or otherwise brought to his notice, the Registrar may consider the resolution and after making such enquiry as to whether full and final opportunity has been given under sub-rule (1) or (2) give his approval and communicate the same to the society and the member concerned within a period of 6 months. The resolution shall be effective from the date of approval. 9. It is evident from the aforesaid provision that the legislature desired that every such resolution sent to the Registrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of any person as Chancellor by the Sponsor would attain validity only upon the approval of the Visitor. In the present case, it is an undisputed fact that the Visitor's approval was never granted for the appointment of the Chancellor of the University. 45. It is a settled legal proposition that if a statute provides for the approval of the higher Authority, the order cannot be given effect to unless it is approved and the same remains inconsequential and a dead letter in the eyes of law. (Emphasis supplied by us) 57. To the same effect are the decisions of the Hon'ble Allahabad High Court in the cases of PCIT vs Sapna Gupta reported in 147 taxmann.com 288 (Allahabad), PCIT vs Subodh Agarwal reported in 149 taxmann.com 373 (Allahabad) & PCIT and Anr vs Siddartha Gupta reported in 450 ITR 534 (All), which dealt with the requirement of prior approval u/s 153D of the Act for passing order under section 153A of the Act. The relevant observations made by Hon'ble Allahabad High Court in the case of Siddhartha Gupta (supra) are reproduced hereunder:- "The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against which the SLP of the Department has already been dismissed by the Hon'ble Supreme Court reported in 163 taxmann.com 118 (SC). The relevant observations made by the Hon'ble Orissa High Court in this regard are reproduced hereunder:- "22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft orders having been perused by the Additional CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like 'see' or 'approved' will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the search assessment proceedings. Moreover, it is also noticed that the draft assessment orders in the case of assessee for 11 years were submitted to the Ld. Addl. CIT only on 27.09.2021 & 29.09.2021 which were approved by the Ld. Addl. CIT on 30.09.2021 by a common approval. Further, it is also demonstrated by the Ld. AR by placing on record the assessment orders of 86 other cases enclosed in Pages 1 to 177 of the Additional Ground Paper Book 1 that apart from granting the approval in the case of assessee, the same Ld. Addl. CIT approved 86 other orders pertaining to different assessee's in these three days. Taking all these facts together, in the light of the requirements of the statute and the decided judicial precedents relied upon hereinabove, it could be safely concluded that it would not have been possible for the Ld. Addl. CIT to apply her mind judiciously before according approval in the case of the assessee. 61. The paucity of time available with the Ld. Addl. CIT to apply her mind before granting approval was also the subject matter of consideration before the Hon'ble Orissa High Court in the case of Serajuddin (supra). In this case, similar to the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was available in the manual order) and discrepancies in the order sheets of the assessment proceedings in the instant case, as pointed out by the Ld. AR, further demonstrates that assessment records were not perused by the Ld. Addl. CIT before granting approval. Similar issue has been addressed by the Hon'ble Jurisdictional High Court in PCIT v. Anuj Bansal reported in 165 taxmann.com 2 (Delhi), wherein the Hon'ble Court held that where an approval is granted without noticing discrepancy in assessment order or assessment record, such a mechanical approval would be invalid in the eyes of law. The relevant operative part of the said order is reproduced below:- "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. 12.1 More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order. 13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal." 63. We also noted that in the instant case, the Addl. CIT has granted approval to all draft assessment orders pertaining to eleven assessment years by a common approval. It may be noted that section 153D of the Act for the approval of the order of "each" assessment year. Therefore, the obligation on the approving authority is to verify the draft assessment order of each assessment year to ascertain whether it complies with the law as well as the procedure laid down. The assessee has explained that assessment in the case of the assessee have been framed on the basis of contents of one pen drive handed over to the Income Tax Department by ED before search and therefore, all material was within the knowledge of Income Tax Authorities prior to the search in the cases of the assessee's. During the assessment proceedings, the assessee disputed the authenticity of the contents of the pen drive, which was handed over to the ED by a third party. The assessee also contended that there was nothing in the hands of the Ld. AO, seized from the premises of the assessee, that could be considered incriminati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. *** 19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A." 12. It is obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessee's, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together." 17. Notably, the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the revenue in the instant case. 65. As far as the contention of the Ld DR, that other assessee's may not have raised similar objections to such approval in their cases, and that if the issue is decided in favour of the assessee, it would have a cascading impact on their assessments, is concerned, we wish to state that the issue of approvals granted in a mechanical manner without the application of mind u/s 153D of the Act is no longer res integra. Furthermore, merely because other assessee's may not have objected to the manner in which the approval was granted in their cases does not mean the same should be sustained in the case of the assessee. We also do not agree with the contention of the Ld. DR that since the judgments relied upon by the assessee were delivered in 2023 and 2024, the Tribunal should exercise caution in applying them to the approval granted in 2021. The CBDT manual, which prescribes the manner of obtaining approval in search cases, has been in existence since 2003, and it has been held to be binding upon the Department in the case of Serajuddin (supra). Moreover, the manner in which approval should be granted by the superior officer under the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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