Income Tax Appellate Tribunal - Delhi
Dcit, Cc- 1, Faridabad vs Empire Realtech Pvt. Ltd., New Delhi on 24 February, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. Manish Agarwal, Accountant Member
ITA No. 4288/Del/2017 : Asstt. Year: 2012-13
DCIT, Vs Empire Realtech Pvt. Ltd.,
Central Circle-1, SF 16-17, 1st Floor, Madame
Faridabad, Haryana Bhikaji Cama Place, New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AACCE4651J
CO No. 233/Del/2017 : Asstt. Year: 2012-13
Empire Realtech Pvt. Ltd., Vs DCIT,
SF 16-17, 1st Floor, Madame Central Circle-1,
Bhikaji Cama Place, New Delhi Faridabad, Haryana
(APPELLANT) (RESPONDENT)
PAN No. AACCE4651J
Assessee by : Sh. Aditya Gauri, Adv. &
Sh. Amar Vivek, Adv.
Revenue by : Sh. Surender Pal, CIT-DR
Date of Hearing: 24.02.2025 Date of Pronouncement: 24.02.2025
ORDER
Per Satbeer Singh Godara, Judicial Member:
This Revenue's appeal and assessee's cross objection for Assessment Year 2012-13, arise against the CIT (A)-3, Gurgaon's in case No. CIT(A), 151/CIT(A)(C)/GGN/2014-15 dated 05.04.2017, in proceedings u/s 153A(1)(b) r.w.s. 143(3) of the Income Tax Act, 1961 (in short "the Act").
2. Heard both the parties at length. Case file perused.
2 ITA No. 4288/Del/2017 CO No. 233/Del/2017Empire Realtech Pvt. Ltd.
3. Learned CIT-DR invites o ur attention to the Revenue's instant appeal ITA No. 4288/Del/2017 raising the following substantive grounds:
" (i) W h et h e r on t h e fa ct s a nd ci rcu m sta n c e s of th e ca s e, t h e Ld . C IT( A) w a s r ig ht i n d el et in g th e a d di ti on of R s .
2 2, 2 2 ,41 ,4 0 1/ - m a d e u / s 4 0 A( 2) ( b) o f t h e L T. A c t / C l o s e r ela tiv e s of t h e sp e ci fi ed p e r son s w h en t he A O h a d su f fi c i en t e v id en ce th a t ex c e s s iv e pa ym en t s h a v e b e en m a d e t o t he s p e c i fi ed p e r so n s / t hei r cl os e r el a t iv e s .
( ii) W h et h e r on t h e f a c ts a nd in t h e c i rcu mst a n c es o f th e c a s e t h e Ld . C I T(A ) ha s e r r ed in i gn o rin g th e fa ct t ha t t he lan d s o f th e sp e ci fi ed p e r so ns / t h ei r cl o s e r el a t iv e s w e r e adj oi ni ng / con t e mp o ra r y in p e ri od / e v e n th e s a l e d e ed s w it h th e sp e ci fi ed p e rs o n s a n d th ei r cl o s e r el a ti ve s w e r e ea rl i e r t o is s u e o f l et t e r of i nt ent ."
4. We next note that the assessee's cross objection CO No. 233/Del/2017 involves the following pleadings:
"1. That the learne d Commissio ner of Income Tax (Appeals)-Gurgaon has gro ssly er red both in law and on fac ts in fa iling to appreciate tha t since the addition made in the o rder o f assessment were not base d o n any incriminating materia l found as a result o f sear ch on the appe llant company and the refore they we re without juris dic tio n.
1.1 Tha t the learne d Commissio ner of Income Tax (Appeals) has failed to appreciate that in abse nce of any notice u/s 143(2) of the Act having been issued and served before the date of search it ought to have been held that no proceedings were pending on the date of search and conse quently addition made in the o rder of assessment was without jurisdic tio n.
2 That since approval o btaine d u/s 153D of the Act was a mechanic al a nd, inva lid appro val having been granted without due a pplication o f mind on the facts of the assessee company, or der of assessment made u/s 153A(1)(b) is invalid a nd no t in accorda nce wi th law."3 ITA No. 4288/Del/2017 CO No. 233/Del/2017
Empire Realtech Pvt. Ltd.
5. It is in this factual backdro p that the learne d CIT-DR could hardly dispute the clinching fact that the assessee's cross objec tion raises the foregoing legal issue of validity o f the impugned assessment framed by the Assessing Officer dated 18.02.2015 itself; for want of a valid section 153D approval in furtherance to the search in questio n carried out by the departmental authorities on 23.11.2012. We make it clear that the learned Assessing Officer's section 153D approval sought dated 12.02.2015 forms part o f the records befo re us which is found to be a common one for assessment years 2009-10, 2010-11 and 2012-13, which stood granted on 16.02.2015.
6. Faced with this situation, we invited Revenue's attention to various recent decisio ns that such an assessme nt based on a common section 153D approval is not sustainable in law in light of learned co-ordinate bench's order in Aditya Sharma Vs. ACIT, ITA Nos. 3616 to 3621/Del/2019 vide order dated 15.01 .2025 holding as under:
"3. We next note that the re arises the first and foremost issue of validity of all the impugned assessments framed u/s 143(3) r.w.s. 153A of the Act; date d 02.03.2017, in co nsequence to the se arch ac tion herein dated 15.02.2014, on the gr ound that the learned prescribed authority had not accor ded a valid appro val thereto u/s 153D of the Act. The Revenue co uld hardly dispute that the instant legal gro und sought to be raised 4 ITA No. 4288/Del/2017 CO No. 233/Del/2017 Empire Realtech Pvt. Ltd.
at the assessee's behest goes to the root of the matter and there fore , we quote National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC); as considere d in Allcargo Global L ogistics Ltd. vs. DCIT (2012) 137 ITD 287 (SB) (Mum), that such an additional ground could very well be allo wed to be ra ise d in section 254(1) proceedings, in order to determine the co rrect tax lia bility o f an assessee pro vided all the rele vant facts form part o f the re cords.
4. It is in this factual backdrop that we admit the assessee's instant legal ground and note with the able assis tance coming from bo th the parties that the learned Assessing Officer had so ught the prescr ibed authority's approv al on 27.02.2017 which stood granted on 02.03.2017. The clinching fact which from page 10 in the assessee's paper book is that the learned Assessing Office r herein had infact sought a common approval for all these assessment years from 2008-09 to 2013-14 whic h s tood granted, and there fore , we quote PCIT Vs. Shiv Kumar Nayyar (2024) 163 ta xmann.com 9 (De l.) , PCIT Vs. MDLR Ho tels (P) Ltd. (2024) 166 taxmann.com 327 (De l.) and AC IT vs. Serajuddin and Co. (2024) 163 taxmann.com 118 (SC), to conclude that such a combined section 153D a ppro val indeed vit iates the entire assessment itself. We draw strong therefrom to quash all the impugned assessments framed herein in assesse e's case in as sessment years 2008-09 to 2013-14 in very terms."
7. Learned CIT-DR has filed a copy of Revenue's written submissions as under:
"Sub: Written Submission in the abo ve case on the le gal ground of validity of Section 153D approval gr ante d by the J CIT/Addl. CIT - reg.
In the above case , it is humbly subm itted that in addition to the oral arguments submitted by the unde rsigned, the following legal issues/legal submissions, re levant to section 153D approval and two vital J udgments of the Hon. Supreme Court, on the legality and legal requirements of the Administrative Orders of gove rnme nt or e xecutive a utho rities, may k indly be cons ide red:-5 ITA No. 4288/Del/2017 CO No. 233/Del/2017
Empire Realtech Pvt. Ltd.
1. The word/phrase - "written approval" is not mentioned in the section 153D o f the Income tax Act, 1961. The o nly phr ase use d is "the prio r appro val" .
Therefore, the contents of the writte n orde r of the JCIT/Addl. CIT are legally not required to be examined or conside red, for meeting the legal o r factual re quirements of the appro val under section 153D.
2. The order by the Addl. CIT/JCIT under section 153D is an A dministrative Order, by the higher autho rity i.e. JCIT/Addl. CIT to the lower authority, i.e. AO. S uch an order is not a quasi-judicial o r judicial o rde r. The refo re, the le gal require ments and benchmarks regarding the principles of " the application o f mind" and "the speak ing order " are not as strict or high, as they are in the cas e of quas i-judic ial or judicial o rde r.
3. In respect o f the legal require ments and the benchma rks regarding the admini strative o rders, the Hon. Supreme C ourt has given many comprehensive judgements, which a re enclosed and the re levant portions/ parts are quote d as unde r:-
(i) Decis ion o f Hon'ble Supreme Court in the case of Municipal Council Neemuch vs M ahadeo Real Estate, date d 17 September, 2019, AIR 2019 SC 4517, 2019 (10) SCC 738.
"..... 14. In the prese nt case, the learned Judges of the Divis ion Bench have arrived at a finding that such a sanction was, in fact, granted. We will examine the correctness of the said finding of fact at a subsequent stage . Ho wever, befo re do ing that, we pro pose to examine the scope of the powers of the High Court of judic ia l re view of an administrative actio n. Though, there are a catena of judgments of this Co urt on the said iss ue, the law laid down by this Court in the case of T ata Cellular Vs . Union of India repo rte d in (1994) 6 SCC 651 lays do wn the basic pr inciples which still hol d the field. Paragraph 77 of the said judgment reads thus: "77. The duty of the co urt is to confine itself to the question of le gality. Its conce rn should be:-
1. Whethe r a decisio n-making authority exceede d its powers?
2. Committed a n error o f law,
3. committed a bre ac h of the rules o f natural jus tice , 6 ITA No. 4288/Del/2017 CO No. 233/Del/2017 Empire Realtech Pvt. Ltd.
4. reache d a decisio n which no reasonable tribunal would have re ache d or,
5. abuse d its powers.
Therefore, it is no t fo r the cour t to determine whethe r a par tic ular policy or par tic ular decision take n in the fulfillment of that policy is fair. It is only concer ned w ith the manner in which those decisio ns have been taken. The extent of the duty to ac t fairly will vary from case to case. Shortly put, the gro unds upon which an administra tive action is s ubject to control by judic ial revie w c an be classified as under:-
(i) Illegality: This means the decision-maker must understand corre ctly the law that re gulates his decis ion-making power and must give effect to it.
(ii) Irrationality, namely, unre asonable ness.
(iii) Proce dural impropriety .
The above are only the broad grounds but it does not rule out additio n o f furthe r grounds in course o f time. As a matter o f fa ct, in R. V. Sec reta ry of State for the Home Department, e x Brind, (1991) 1 AC 696, Lo rd Diplock refers specifically to o ne develo pment, namely, the possible recognitio n of the principle of proportio nality. In all these cases the test to be adopted is that the court should, 'consider whethe r something has gone wrong of a nature and degree which re quires its intervention".
15. It could thus be seen that the scope of judicial revie w of an administrative action is very limite d. Unless the Court comes to a conclusio n, that the dec isio n maker has not unde rstoo d the law co rrectly that regulates his decis ion-making power o r when it is found that the decis ion of the decision make r is vitiate d by irrationality and that too on the principle of "Wedne sbury Unreasonable ness" or unle ss it is found that there has been a procedural improprie ty in the decis ion-mak ing process , it wo uld not be permissible for the High Court to interfe re in the decision making process. It is also equally well settled, that it is not permissible for the Court to examine the va lidity o f the dec ision but this Court can examine only the correctness of the decision making process .
16. This Co urt recent ly in the case o f West Bengal Central School Service Commissio n Vs. Abdul Halim repor ted in 2019 SCC OnLine SC 902 had again an 7 ITA No. 4288/Del/2017 CO No. 233/Del/2017 Empire Realtech Pvt. Ltd.
occasion to consider the scope of interfere nce under Artic le 226 in an administrative actio n.
31. In exercise of its powe r of judicial revie w, the Court is to see whether the decision impugned is viti ate d by an apparent error of law. T he test to determine whether a decis ion is v itiate d by error appare nt on the face o f the record is whe ther the error is se lf-evident on the face of the reco rd or w hether the e rro r re quires e xamination or argument to establish it. If an e rror has to be established by a process of reasoning, on po ints where the re may reasonably be tw o opinions, it cannot be said to be an error on the face of the reco rd, as held by this Court in Satyanara ya n v. Mallikarj una repo rted in AIR 1960 SC
137. If the provision of a statutory rule is reasonably capable of two or more construc tio ns and one constr uction has been adopted, the decision would no t be open to interfe re nce by the writ Court. It is only an obvio us misinterpretation of a relevant statutory provisio n, o r ignorance or disregard the reof, or a decis ion founde d on reasons which are clearly wrong in law, which can be correcte d by the w rit Cour t by issuance of wri t o f Certio rari.
32. The sweep o f pow er under Article 226 may be wide enough to quash unreasonable orde rs. If a dec ision is so arbitrary and capricious that no reasonable person co uld have eve r arrived at it, the same is liable to be struck down by a w rit Co urt. If the decisio n cannot r ationally be suppo rte d by the materials on reco rd, the s ame may be regarded as pe rv erse. Municipal Counc il Neemuch vs Mahadeo Real Estate o n 17 September, 2019 Indian Kanoon - http://indiankanoon.org/do c/83894917/ 6.
33. However , the po wer o f the Co urt to e xamine the reasonableness of an order o f the authorities does not enable the Court to look into the sufficiency of the grounds in suppo rt of a decision to examine the merits of the dec isio n, sitting as if in appeal over the dec ision. The test is not what the Court considers re asonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has le d to manifes t injus tice . The writ Cour t does no t Interfere, because a decision is not perfe ct.
17. It co uld thus be see n that an interference by the High Court would be warranted o nly when the decision impugne d is vitia ted by an appare nt error o f law, i.e., 8 ITA No. 4288/Del/2017 CO No. 233/Del/2017 Empire Realtech Pvt. Ltd.
when the error is apparent on the face of the record and is se lf ev ident. T he High Court would be empowere d to exerc ise the pow ers when it finds that the decis ion impugne d is so ar bi trary and capricious that no reasonable person would have eve r arr ive d at. It has been re iterated that the test is not what the court conside rs reasona ble or unreasonable but a decision whic h the court thinks that no re asonable pe rson co uld have taken. Not o nly this but such a decision must have led to manife st inj us tice ....................................................................
25. In the present case, we find that the Commissio ner had ac ted rightly as a custodian of the public pro per ty by pointing o ut the anomalies in the proposal o f the Municipal Council to the State Go vernment and the State Government has also responded in the r ight pe rspec tive by autho rizing the Commissioner to take an appro priate decis ion. We are of the consi dere d view that, both, the Commissioner as well as the Sta te Government, have acted in the larger public interest, We are unable to appreciate as to how the High Court, in the present matter, could have come to a co nclusion that it was empowered to e xercise the power of judicial review to preve nt arbitrariness or favo ritism on the part o f the State authorities, as has been observe d by it in par agraph 13. W e are also unable to appreciate the finding o f the High Co urt in para 17 where in it has observed tha t the impugned decisio n of the authorities are found no t to be in the public interes t. We ask the question to us, a s to whether dire cting re-tende ring by inviting fresh tenders after giving wide public ity at the Natio nal leve l so as to obtain the best price fo r the public prope rty, would be in the public interest o r as to whe ther awa rding contract to a bidder in the tender process where it is fo und that the re was no adequate intere st or as to whethe r publicity and also a possibility of there being a ca rte l of bidde rs, wo uld be In the public inte rest. We are of the conside red v iew that the decis ion of the Commissioner which is set aside by the High Court is undoubte dly in larger public Interest, which would ensure that the Municipal Council earns a higher revenue by enla rging the sco pe of the competition. By no s tre tc h of imagination, the decision of the S tate Government o r the Commissioner could be termed as illegal, impro per , unreasonable o r irratio nal, w hich paramete rs only co uld have perm itted the High Cour t to interfe re. Interference by the High Court when none of such par ameters e xist, in 9 ITA No. 4288/Del/2017 CO No. 233/Del/2017 Empire Realtech Pvt. Ltd.
our v iew , was to tally improper . On the contrary, we find that it is the High Court, which ha s failed to take into conside ra tion relevant material.
26. In the result, the impugned Orders are not sustainable in law . The appeals are, accordingly, allo wed and the Impugned orders dated 31.08.2017 and 05.07.2018 are quashe d and set aside . The petition of respondent No . 1 stands dismissed... ........"
(ii) Decis ion of Hon'ble S upreme Court in the c ase of West Benga l Central Schoo l Service ... vs Abdul Halim date d 24 July, 2019, AIR 2019 SC 4504, AIR ONLINE 2019 SC 2188 AIR 2020 SC (CIV) 82.
"......... ...... .....31. The sweep of po wer under Ar ticle 226 may be wide enough to quash unre asonable orders. If a decis ion is so arbitra ry and capricious that no reasonable person could have ever arrived at it, the same is liable to be struck down by a w rit Court . If the dec ision cannot rationally be supported by the materia ls on reco rd, the same may be regarded as pe rve rse.
32. However , the po wer o f the Co urt to e xamine the reasonableness of an order o f the authorities does not enable the Court to look into the sufficiency of the grounds in suppo rt of a decision to examine the merits of the dec isio n, sitting as if in appeal over the dec ision. The test is not what the Court considers re asonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has le d to manifes t injustice. The w rit Court does not inter fe re, because a decision is not perfe ct.
33. In entertaining and a llow ing the wr it petition, the High Cour t has lost sight of the limits of its extr aordinary power of judicial revie w and has in fact sat in appeal over the decisio n of the respo ndent No. 2............ ...."
8. We have given our thoughtful consideration to the assessee's pleadings and Reve nue's vehement contentio ns as well as it's wr itten submission. We find no reason to upho ld the validity of the impugned assessment as it has c ome on record 10 ITA No. 4288/Del/2017 CO No. 233/Del/2017 Empire Realtech Pvt. Ltd.
that the same has been frame d in fur therance to a co mmon section 153D approval already held as not sustainable in law.
We order accordingly.
9. The assessee's cr oss objection herein CO No. 233/Del/2017 succeeds and the Revenue's appeal ITA No. 4288/Del/2017 fails in very terms. Ordered accordingly.
10. To sum up, this Revenue's appeal ITA No. 4288/Del/2017 is dismissed and the cross objection CO No. 233/Del/2017 is allowed. A copy of this common or der be placed in the respective case files.
Order Pronounced in the Open Court on 24/02/202 5.
Sd/- Sd/-
(Manish Agarwal) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 24/02/2025
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR