Income Tax Appellate Tribunal - Agra
D.S. India Jewelmart P Ltd, Mathura vs Acit Central Circle, Agra on 18 September, 2019
In the Income-Tax Appellate Tribunal,
Agra Bench, Agra
Before : Shri Laliet Kumar, Judicial Member And
Dr. Mitha Lal Meena, Accountant Member
ITA No. 263 to 267/Agr/2017
Assessment Year: 2008-09 to 2012-13
Shri Saurabh Agarwal C/o D.S. vs. DCIT, Central Circle,
(India) Jewelmart P. Ltd., in front of Agra.
Mehta Nursing Home, 2, Krishna
Nagar, Mathura.
PAN:ADEPA7167R
(Appellant) (Respondent)
ITA No. 260 to 262/Agr/2017
Assessment Year: 2007-08, 2008-09 & 2012-13
Late Sh. Mradul Garg Throuhg L/H vs. DCIT, Central Circle,
Paras Agarwal, C/o D.S. (India) Agra.
Jewelmart P. Ltd., in front of Mehta
Nursing Home, 2, Krishna Nagar,
Mathura. PAN:ACEPG5728M
(Appellant) (Respondent)
ITA No. 272 & 273/Agr/2017
Assessment Year: 2010-11 & 2012-13
ACIT, Central Circle, vs. Sh. Mradul Garg, 63,
Agra. Dwarkesh Colony, Mansi
Road, Mathura
PAN:ACEPG5728M
(Appellant) (Respondent)
ITA No. 268/Agr/2017
Assessment Year: 2012-13
M/s. D.S. (India) Jewelmart P. Ltd., vs. DCIT, Central Circle,
2, Krishna Nagar, opposite Mehta Agra.
Nursing Home, Mathura.
PAN:AAECD0868L
(Appellant)
(Respondent)
ITA No. 263/Agr/2017 2
ITA No. 276/Agr/2017
Assessment Year: 2012-13
DCIT, Central Circle, vs. M/s. D.S. (India) Jewelmart P. Ltd.,
Agra. 2, Krishna Nagar, opposite Mehta
Nursing Home, Mathura.
PAN:AAECD0868L
(Appellant) (Respondent)
ITA No. 269/Agr/2017
Assessment Year: 2012-13
Ashok Kumar Agarwal C/o D.S. vs. DCIT, Central Circle,
(India) Jewelmart P. Ltd., 2, Agra.
Krishna Nagar, opposite Mehta
Nursing Home, Mathura.
PAN:ABPPA1299R
(Appellant) (Respondent)
Assessee by Sh. Anil Verma, Advocate &
Sh. Anurag Sinha, Advocate
Revenue by Sh. Waseem Arshad, Sr. DR
Date of Hearing 06.09.2019
Date of Pronouncement 18.09.2019
ORDER
Per Bench, J.M.:
This bunch of appeals are directed by the assessee and the Revenue, feeling aggrieved by the orders of the ld. CIT(A) for the captioned assessment years. Since common questions of law and facts are involved in all these appeals, these appeals were heard together and are being disposed of by way of this consolidated order for the sake of convenience and brevity. We, therefore, take up ITA No. 263/Agr/2017 ITA No. 263/Agr/2017 3 for A.Y. 2007-08 as a leady case and our decision in this appeal would equally apply to other appeals, mentioned herein above. The grounds raised in this appeal read as under :
"1. That the Ld. CIT(A)-2, Agra has erred in Law and on facts in partly allowing assessee's appeal without properly appreciating facts, circumstances and legal position of the case.
2. That the Ld. CIT(A)-2, Agra has erred in law and on facts in not adjudicating the ground No. 17 of the ground taken in original grounds filed with the form 35 which relates to the addition of Rs.11,86,075/- in respect of unexplained investment in the construction of Hotel Haveli."
2. The ld. AR has submitted that he has moved an application for additional ground vide letter dated 08.07.2019 and the same may kindly be admitted. Additional ground raised by the assessee provides as under :
Because the so-called approval as granted by the Learned Additional Commissioner of Income Tax, Central Range, Kanpur under section 153D for passing impugned assessment order dated 29.03.2014 under section 153A of the 'Act' is no approval in the eye of law, having been granted without application of mind and such a mechanically granted approval has rendered the assessment order liable to be held illegal and void ab-initio"
2.1 The ld. AR had submitted that at this is stage legal ground can be raised before the Tribunal as it is arising out of the order passed by the Assessing Officer. For this purpose, out attention was drawn to the last line of the assessment order where the Assessing Officer has mentioned that the order was passed with approval of the Addl. CIT (Central Range), Kanpur. ] ITA No. 263/Agr/2017 4 2.2 Further, the ld. AR has drawn our attention to page 13 of the paper book where the approval granted by the Addl. CIT was mentioned as under :
Sub: Approval of Draft assessment orders U/s 153A / 153C of the Income Tax Act, 1961 - Regarding-
Please refer to your letter bearing F No DCIT(CC)/Agra/DSJ Group/2013- 14/1560 dated 21/03/2014 which was reported to be received in this office at 05:10 PM on 27/03/2014 alongwith draft assessment orders pertaining to the cases as detailed in the said letter seeking approval U/s 153D of the Income Tax Act, 1961.
In this regard it is noticed that prior to submission of these draft assessment orders, no discussion has been made at any stage of proceedings with the undersigned including at the stage of preparation / finalization of questionnaires U/s 142(1) of the Income Tax Act, 1961. Accordingly, keeping in view the limitation aspect in the matter and also the fact that only 02 working days are left in this financial year and also the fact that approval is sought by submitting the draft assessment order through speed post including the fact that relevant case records are also not enclosed, approval is accorded in the following 69 cases, solely relying on your undertaking to the effect that while completing the assessment as per draft assessment order, all the observations made in the appraisal report relating to examination / investigation as also the issues identified in the course of examination of seized material have carefully considered / kept in view. The approval, based on your undertaking as discussed herein before, is accorded as there is hardly any time left for any discussion much less meaningful discussion including the fact that there is hardly any time available for any further enquiries / investigation because of the fact that huge pendency of time barring cases is to be liquidated in the available time as indicated above:
S. No. Name of the assessee PAN AY
1. Mridul Garg - 2006-07 to 2011-12
2. Mridul Garg HUF - 2006-07 to 2012-13
3. Ashok Agarwal - 2006-07 to 2012-13
4. Ashok Agarwal HUF - 2006-07 to 2012-13
5. Saurabh Agarwal - 2006-07 to 2012-13
6. Saurabh Agarwal HUF - 2006-07 to 2012-13
7. Shalini Garg - 2006-07 to 2012-13
8. Neelam Garg - 2006-07 to 2012-13
9. Brij Kishori Agarwal - 2006-07 to 2012-13
10. Sterling Infrastructure &
Developers
A copy of the final order issued in the above cases alongwith office note immediately be sent to this office for record."ITA No. 263/Agr/2017 5
On the basis of the above, it was submitted that the additional CIT before granting approval has not applied his mind and has approved the draft assessment order etc. without himself examining the record of the assessment.
2.3 The ld. AR for the assessee had submitted that the approval envisaged under section 153D, is not merely an administrative approval but there is a statutory duty on the higher authorities to apply its mind before granting the approval. It was submitted that this duty is not required to be mechanically discharged by the officers as there is inbuilt purpose to safeguard the interest of the citizen's. 2.4 it was submitted that the plain reading of the additional CIT observation clearly shows the total nonapplication of mind by the additional CIT and he had even not bother to look into the draft and the documents and close thereto. It was submitted that the additional CIT was required to independently applied mind before according the approval, though there may not be set formula for inferring the application of mind but nonetheless in the present case the facts are so glaring that additional CIT himself has recorded that he has not applied the mind before according the request for approval was put up before him at the 11th hour. 2.5 the ld. AR relied upon the decision of the honourable Supreme Court in the matter of i. Sahara India (firm) vs CIT (2008) 300 ITR 403 ii. PCIT vs Sunrise Finlease Limited 89 Taxmann.com 1(Gujrat) ITA No. 263/Agr/2017 6 iii. SmtShreelekhaDamani vs DCIT 173 TTJ 332 iv. Pcit vs SmtShreelekhaDamani 307 CTR(Bom) 218 v. AAA PAPER MARKETING VS ACIT 2017(4) TMI 1371 vi. Smt Indra Bansal vs ACIT 192 TTJ (JD) 968 vii. Geeta Rani Panda vs ACIT 194 TTJ (CTK) 915 viii. AkilGulamali vs ITO 20 Taxman.com 380 ( para12) ix. Sun engineering (P) Ltd 198 ITR 297( para37)
3. On the other hand, the ld. DR had submitted that the legal grounds raised by the assessee is not born out on record and the ld.DR relied upon the decision of Hon'ble Bombay High Court in the matter of Ultratech Cement Ltd. (ITA No. 1060 of 2014). Further, it was submitted that the order passed u/s. 153D by JCIT was merely an administrative order and no civil or penalty consequences would flow against the assessee on account of the approval granted by the Addl. CIT. Further, it was submitted that there is no requirement of law for granting the hearing to the assessee by the Addl. CIT/JCIT prior to give approval u/s. 153D for assessment or reassessment u/s. 153A. He has also relied upon the definition of approval and sanction given in Black's law dictionary.
3.1 it was submitted by the ld. DR that approval of additional CIT is distinct from the assessment order and is not required to be communicated, hence it is not ITA No. 263/Agr/2017 7 challenge before the court of law. the ld. DR relied upon decision in the matter of Gopal S Pandit vs CIT 96 taxmann.com 233.It was further submitted that once the reason for administrative approval are not required to be communicated to the assessee then it is not permissible in law to permit the assessee to agitate the reasons for passing the administrative approval. It was submitted the approval granted by the additional CIT is not justiciable in law. It was submitted that the subject matter of the proceeding before the tribunal is the assessment order for which the existence of approval is necessary and therefore the approval cannot be formed basis of challenging the assessment order.
3.2 He further submitted that it administrative approval granted by the supervisory authority is not justifiable. He relied upon SpaceWood Furnishers Private Limited of the honourable Supreme Court.
3.3 it was submitted by the learned DR that Bombay High Court in the matter of CIT versus RatanbaiN.K.Dubash 230 ITR 495 had held as under:
"the power to determine the income vest in the authority exercising the quasi-
judicial function, and it is in violation of principle of quasi-judicial function that can render the assessment invalid. The act of administrative approval by additional CIT does not take away the quasi-judicial powers which still vests in AO and therefore administrative act cannot invalidate the assessment"ITA No. 263/Agr/2017 8
3.4 The DR had submitted that the subject matter of the challenge in the present appeal is assessment order for which the jurisdictional fact is the existence of approval, therefore the approval itself cannot be the subject matter of adjudication. He had further relied upon the decision of the honourable Supreme Court in the matter of RP Bhatt versus Union of India AIR 1986 SC 1040.It was submitted by the DR that once the superior authority is agreeing to the finding of the lower authority then it is not required to record the reasons for so agreeing. 3.5 it was further submitted that the recording of sanction or approval is not required to be made in a particular manner. The same is discernible from the reasons recorded in the assessment order. He relied upon the decision of the honourable Supreme Court in the matter of Mac Datta(SC). It was submitted by the DR that what could be challenged before the tribunal is want of sanction and for that the ld. DR relies upon the decision of the Mumbai tribunal in the matter ofPratibha Pipes & Structural Ltd DCIT 3874/Mum/2015 3.6 it was submitted by the learned DR that it is not within the spare of the direction of the tribunal to adjudicate the administrative approval granted by the additional CIT, it was submitted that the decision relied upon by the assessee in the matter of ShrreLekhaDamani is distinguishable as no question of law was framed by the high court. It was further submitted that grant of approval did not entail any civil consequences infection of property or personal right, civil liability the provision ITA No. 263/Agr/2017 9 of material and the property or impinging the personal right and therefore it cannot be subject matter of any judicial scrutiny by the tribunal. He had further relied upon the decision of the special bench in the matter of Aztec software. 3.7 Finally the ld. DR had summarized that in view of the decision of the jurisdictional High Court in the matter of Vikram Singh ITA number 264 of 2017 and in the matter of Pratibha Pipes & Structural Ltd DCIT 3874/Mum/2015, AkilGulamajiSomji 20 TaxmaNN.COM 380, the legal ground raised by the assessee are required to be dismissed as the grant of approval which is administrative in nature would not have any material effect on the assessment.
4. We have heard the rival contentions of the parties and perused the record. Karnataka High court in the matter of Gopas S. Pandit v. CIT, 95 taxman. Com 246 in paragraph 8 had held as under :
"8. Having heard the learned Counsel for the parties, we are satisfied that the internal guidelines issued by the Central Board of Direct Taxes, as urged by the learned Counsel for the Assessee, bereft of the statutory provisions in Section 153D of the Act cannot bind the approving Authority, namely, the Joint Commissioner to comply with the principles of natural justice by the said Authority. The Assessing Authority undoubtedly has of course given adequate and reasonable opportunity of hearing to the Assessee and all objections on merits were considered by him. Merely because, Section 153D of the Act requires a prior approval of the Draft Assessment Order by the higher Authority, namely, the Joint Commissioner in the present case, because the Assessment Order was passed by the Authority below the rank of the Joint Commissioner, the provisions of the Act do not mandate that a fresh round of opportunity of hearing should Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another be given to the Assessee by such ITA No. 263/Agr/2017 10 Authority, namely, Joint Commissioner also even for approving Draft Assessment Order."
4.1 Similarly, Gujrat High Court in the matter of Pr. CIT v. Sunrise Finlease P. Ltd. [2018] 89 taxmann.com 1 (Gujarat)Vin paragraph No. 9 -11 had held as under :
9. As regards proposed questions [B] and [C] viz., whether lack of approval under section 153D would invalidate the assessment order and was not a curable defect, it may be noted that section 153D of the Act mandates that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-
section (1) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B, except with the prior approval of the Joint Commissioner. In the present case, the assessment order has been passed by an Income Tax Officer, who admittedly is an officer below the rank of Joint Commissioner; therefore, the provisions of section 153D of the Act would be applicable. Section 153D starts with the words "No order of assessment or reassessment shall be passed....". In other words, the language employed in the provision is couched in the negative and therefore, there is a prohibition against passing of an assessment or reassessment order, except with the prior approval of the Joint Commissioner.
10. In Shin-Etsu Chemical Co. Ltd. v. AkshOptifibre Ltd. [2005] 7 SCC 234, the Supreme Court has observed that if the requirements of a statute which prescribes the manner in which something is to be done are expressed in negative language, that is to say, if the statute enacts that it shall be done in such a manner and in no other manner, it has been laid down that those requirements are in all cases, absolute, and that neglect to attend to them will invalidate the whole proceeding. In Vijay Narayan Thatte v. State of Maharashtra [2009] 9 SCC 92, the Supreme Court has held that it is well settled that when a statute is couched in negative language it is ordinarily regarded as peremptory and mandatory in nature. The Supreme Court, in some decisions has held that merely because a provision of law is couched in a negative language implying mandatory character, the same is not without exceptions. However, the present case deals with the interpretation of a taxing statute. It is well settled that a taxing statute has to strictly construed, therefore, from the language employed in section 153D of the Act, the requirement of obtaining the prior approval of the Joint Commissioner has to be regarded as mandatory in nature.
11. In the facts of the present case, as the assessment order has been passed by an Income Tax Officer, the requirement of obtaining the prior approval of the Joint Commissioner under section 153D of the Act was absolute. The Tribunal, however, has recorded a finding of fact that there is nothing on record to indicate that the prior approval of the Joint Commissioner was obtained. As a natural corollary therefore, in the absence of the requirement of prior approval of the ITA No. 263/Agr/2017 11 Joint Commissioner being satisfied, the whole proceeding would stand invalidated. The Tribunal was, therefore, wholly justified in holding that the impugned order of assessment would stand vitiated in view of non-compliance of the provisions of section 153D of the Act. On this count also, therefore, the appeal, does not merit acceptance.
4.2 Similarly in the matter of AkilGulamaliSomji20 taxmann.com 380 (Pune) tribunal had held as under
11. We have considered the above submissions and have gone through the decisions relied upon by the parties in view of orders of the authorities below and material available on record. The relevant facts are that during the course of search and seizure action on 29.7.2003 at the business and residential premises of Mr. Shriram Soni, certain documents belonging to the assessee were found and seized. Notice u/s. 153C was issued to the assessee and assessment u/s. 153C r.w.s. 144 have been framed for all the 4 A.Ys. under consideration. Before the Ld CIT(A), the assessment orders were questioned both on legal issue and on merits.
On legal issue, the validity of assessment orders in absence of approval obtained u/s. 153 D of the Act of Joint Commissioner of Income Tax has been questioned. On merits additions made by the A.O were impugned. Since the assessee could not succeed in its appeal, the present appeals have been preferred in questioning the first appellate orders.
12. On perusal of the provisions laid down u/s. 153C of the Act, it is apparent that after issuance of notice u/s. 153C, the A.O having jurisdiction over such other person (against which incriminating material has been found during the course of search conducted on a person) arose or re-assess income of such other person in accordance with the provisions of Sec. 153A. Sec. 153B talks about time limit for completion of assessment u/s. u/s. 153A, whereas S. 153D, talks about necessity of prior approval for framing assessment in case of search or requisition. We thus fully concur with the submission of the Ld. A.R. that provisions laid down u/s. 153D are very much applicable in case of assessment of income of any other person (i.e. the person other than the person searched). Now the issue for our adjudication is as to whether absence of obtaining prior approval u/s. 153D of Joint Commissioner of Income Tax, assessment made u/s. 153 C will make the assessment void or voidable/curable. For a ready reference, provisions laid down u/s. 153D of the Act are being reproduced hereunder :
"153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [subsection (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner]."
The above provisions u/s. 153 D have been laid down under the heading "prior approval necessary for assessment in cases of search or requisition". This ITA No. 263/Agr/2017 12 heading itself suggests that obtaining prior approval the assessment in cases of search or requisition is necessary. We further note that the provisions u/s. 153D start with a negative wording "no order of assessment or re-assessment" supported by the further wording "shall" makes the intention of the Legislature clear that compliance of Sec. 153D requirement is mandatory. No universal rule can be laid down as to whether mandatory enactment shall be considered directory or obligatory with an implied nullification for disobedience. As per the decision of Hon'ble Supreme Court in the cases of Banwari Lal Agarwalla v. State of Bihar AIR 1961 SC 849 ; Raza Buland Sugar Co.Ltd., v. Municipal Board AIR 1965 SC 895 if object of the enactment will be benefited by holding the same directory, it will be construed as mandatory, whereas if by holding it mandatory, serious general inconvenience will be created to nascent persons without very much further object of enactment, the same will be construed as directory. But all these does not mean that language used is to be ignored, only that the prima facie inference of the intention of the legislature arising from the words used may be displaced by considering the nature of the enactment, its designed consequences flowing from alternative constructions. The wordings and language used in Sec. 153D of the Act and the heading "prior approval necessary for assessment in cases of search or requisition" under which, Sec. 153D has been provided do not leave an iota of doubt about the very intention of the legislature to make the compliance u/s. 153D a mandatory. There is no dispute that if a provision is mandatory, an act done in breach thereof will be invalid, but, if it is directory, the act will be valid although non-compliance may give rise to some other penalty if provided by the Statute. The general rule that non-compliance of mandatory requirements results in nullification of the Act is subject at least to one exception. If contain requirements or conditions are provided by a statute in the interest of a particular person, the requirements, or conditions although mandatory may be waived him if no public interest are involved and in such case, the act done still be valid even if the requirement or condition has not been performed. Here, before us, is not a case where consent of assessee will waive the condition of obtaining prior approval u/s. 153D of the Joint Commissioner of Income Tax by the A.O for framing assessment u/s. 153C/ 153A of the Act. Condition of prior approval of JCIT u/s. 153D has been put in public interest and not in the interest of a particular person. Thus it cannot be waived by particular person. The use of word "shall" raises a presumption that a particular provision is imperative but this prima facie inference may be reverted by other consideration such as object and scope of the enactment and consequence flowing from such construction. The revenue has not been able to rebut the above inference by pointing out other consideration like object and scope of the enactment and the consequence flowing from such construction before us. Clause 9 of Manual of Office Procedure, Volume II (Technical) February 2003 issued by Directorate of Income Tax on behalf of Central Board of Direct Taxes, Department of Revenue, Government of India, reads as under :
"9. Approval for assessment : An assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/ADDL.CIT. (For the period from 30-6-1995 to 31-12-1996 the approving authority was the CIT.) The Assessing Officer should submit the draft assessment order for such approval well in time. The ITA No. 263/Agr/2017 13 submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering letter filed in the relevant miscellaneous records folder. Due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. Finally once such approval is granted, it must be in writing and filed in the relevant folder indicated above after making a due entry in the order-sheet. The assessment order can be passed only after the receipt of such approval. The fact that such approval has been obtained should also be mentioned in the body of the assessment order itself."
Chapter XIVB also deals with assessment of search cases. Sections 153A, 153B & 153 C have been introduced to Chapter XIV "procedure for assessment" w.e.f. 1.6.2003 by the Finance Act 2003 whereas Sec. 153 D has been inserted to the Chapter w.e.f. 1.6.2007 by the Finance Act 2007. These provisions thus also deal with the assessment in case of search or requisition and when the assessment orders in the present case were passed the provisions laid down u/s. 153D were very much in operation. In the present case, assessments in question have been framed on 27.12.2007.
13. In the case of Mrs. Rataabai N.K. Dubhash (Supra), the difference between cancellation and amendment of assessment in view of the provisions of Sections 143, 144B, 153 and 251 of the I.T. Act 1961 has been dealt with. The Hon'ble High Court has been pleased to hold as under
:
"In view of the above discussion, we are of the clear opinion that incases falling under section 144B of the Act, the quasi-judicial function of the Income-tax Officer as an assessing authority comes to an end themoment the assessee files objections to the draft order. The power to determine the income of the assessee thereafter gets vested in the Inspecting Assistant Commissioner to whom the Income-tax Officer is required to forward the draft order together with objections. The only thing that remained to be done by the Income-tax Officer is to pass a final order in accordance with the directions given by the Inspecting Assistant Commissioner. The function of the income-tax Officer to make the final assessment under section 144B(5) of the Act is more in the nature of a ministerial function because he can pass the order only in accordance with the directions of the Inspecting Assistant Commissioner. He cannot vary ordepart from the directions given by the Inspecting Assistant Commissioner. Moreover, the requirements of section 144B of the Act re mandatory. The Income-tax Officer has no option but to follow the same. He cannot make the final order on the basis of the draft order without forwarding the same to the Inspecting Assistant Commissioner along with the objections and without obtaining the directions of the Inspecting Assistant Commissioner. An assessment made by the Income-tax Officer in violation of the provisions of section 144B of the Act would be an assessment without jurisdiction. In the instant case, the admitted position is that on receipt of the draft order of assessment, the assessee did file objections and the Income-tax Officer completed the assessment himself on the basis of the draft order without ITA No. 263/Agr/2017 14 forwarding the draft order and the objections to the Inspecting Assistant Commissioner and obtaining directions from him. Such an order, on the face of it, is beyond the powers of the Income-tax Officer under section 143 read with section 144B of the Act and, hence, without jurisdiction. The Tribunal, in our opinion, was, therefore, justified in its conclusion that the assessment was liable to be annulled. It was right in holding that the assessment order passed by the Income-tax Officer the instant case without reference to the Inspecting Assistant Commissioner had rightly been annulled by the Commissioner of Income-tax (Appeals). In view of the above, we answer the question referred to us accordingly in favour of the assessee and against the Revenue.
This reference is disposed of accordingly with no order as to costs."
14. In the case of SPL's Siddharth Ltd. (Supra), before the Hon'ble Delhi High Court, the facts were that notice issued by the A.O u/s. 147 r.w.s 148 of the Act for re-opening the assessment for the A.Y. 2002-03 was set aside by the Tribunal on the ground that the requisite approval of Addl. Commissioner of Income Tax, which is mandatorily required, was not taken. Since 4 years had elapsed from the end of the relevant A.Y, the A.O u/s. 151(1) of the Act was required to take approval of the competent authority. The Hon'ble Delhi High Court after discussing the issue in detail and the case laws cited before it has been pleased to approve the decision of Tribunal. In view of these decisions and the position of law provided u/s. 153D of the Act, we hold that the assessment orders impugned framed in absence of obtaining prior approval of the Joint Commissioner for the A.Ys. under consideration are invalid as null and void and are quashed accordingly.
15. The decisions relied upon by the Ld. D.R are having different facts and issue, hence are not helpful to the revenue. In the case of Guduthur Bros. (Supra) the levy of penalty without affording a hearing to the assessee was questioned before the appellate authority, who set aside that order. The matter ultimately travelled to the Hon'ble Supreme Court and it was held that the ITO was well within his jurisdiction to continue the proceedings from the stage at which the illegality has occurred and to assess the appellants to a penalty, if any. Before the Hon'ble M.P. High Court in the case of SardarilalBhasin ( Supra), the issue was regarding applicability of prescribed limitation u/s. 275 in a penalty order passed after the case is remanded by an appellate authority. The Hon'ble Court was pleased to hold that the limitation prescribed u/s. 275 of the Act is not applicable to the penalty order passed after the case is remanded by an appellate Authority. In the case of Gayathri Textiles (Supra) non-obtaining of prior approval of I.A.C u/s. 271(1)(c) (iii) for direction for payment of penalty was held as procedurally defective. The provisions laid down u/s. 153D of the Act under consideration in the present case before us, are different as here the prior approval of Joint Commissioner is not required merely for direction for payment of the due amount of tax but overall approval of the assessment framed by the I.T.O. Thus, the cited decision is not applicable in the present case. In the case of Sara ITA No. 263/Agr/2017 15 Enterprises (Supra), the issue was as to whether the bar of limitation contained u/s. 275 of the Act would attenuate or curtail the powers of CIT, vested in him u/s. 263 of the said Act. The Hon'ble Madras High Court was pleased to hold that it is not hit by provisions of Sec. 275 of the Act. In PrabhudayalAmichand (Supra), the Hon'ble High Court of Madhya Pradesh with reference to Sec. 271(1)(c) of the Act was pleased to hold that a procedural irregularity not involving the question of jurisdiction can be cured. It is not helpful to the revenue in the present case because in the present case, the A.O was having no jurisdiction to frame assessment order without prior approval of JCIT as necessary requirement to comply with u/s. 153D of the Act. In the case of DamoderdasMurarilal (Supra), the Hon'ble High Court did not approve the view of the Tribunal in holding that in view of Clause (b) of Sec. 251(1) of the Act, the first appellate authority had no power of remand and therefore, the procedural illegality would not be corrected by recourse to remanding the case to the ITO. Here in the present case, as we have already discussed, and also cited the recent decision of Hon'ble jurisdictional Bombay High Court in the case of Mrs. Ratanbai N.K. Dubhash ( Supra) and of Hon'ble Delhi High Court in the case of SPL's Siddhartha Ltd. (Supra) that requirement u/s. 153 D for obtaining approval of JCIT is not procedural only but a mandatory requirement, hence the cited decision by the Ld. D.R is not applicable in the case of present assessee. Under above circumstances, the issue raised regarding the validity of assessment orders in question without obtaining prior approval u/s. 153D of the Act is decided in favour of the assessee. The assessment orders in question are thus quashed as null and void.
Personal hearing to the Assessee before according the approval under section 153D 4.3 From perusal of the above decisions, it is categorically clear The assessee is not entitled to have personal hearing from JCIT before granting approval u/s. 153D, as the assessee had already been heard during the assessment/reassessment proceedings by the Assessing Officer and Therefore, we are in agreement with the submissions of the ld. DR that the assessee is not required to be given any hearing for the purpose of granting any ITA No. 263/Agr/2017 16 approval. There is inbuilt purpose for seeking approval from an Officer below the rank of JCIT.
Whether approval granted by the officer under 153D is administrative order 4.4 Now, we will be examining whether the order passed by the JCIT/Addl. CIT in the case u/s. 153D was an administrative order or an order having civil, criminal or penal consequences. The similar provision was examined by the various high courts pertaining to section 158 BG, and after examining the scheme of Act had came to the conclusion that the prior approval provided under section 158 BG is administrative in nature. The Hon'ble Jurisdictional high Court in the matter of Dr. K.P. Singh*2014] 41 taxmann.com 406 (Allahabad) it was held as under ;
"9. It may be mentioned that no opportunity is required while giving the approval by the CIT as per the ratio laid down in the case of Rishabchand Bhansali (supra), where it was held that being an administrative action, assessee is not entitled to opportunity of being heard. Further, in the case of Lakshmi Jewellary (supra), it was held that :
"... the Commissioner of Income-tax before making an order approving the order of assessment made by the Assessing Officer in exercise of his powers under Section 158BG(a) need not give a hearing to the assessee".
Similarly, in the case of Shree Rama Medical and Surgical Agencies (supra), it was observed that :
"... The provisions of Section 158BG do not contemplate that the Commissioner should come face to face with the assessee while according approval for the proposed assessment under Chapter XIB-B of the Act. Apart from the language of the provision, the nature of the functions confided to the Commissioner is inconsistent with the application of the principles of natural justice."
4.5 Similar decision was rendered by the Hon'ble Karnataka High Court in the matter of RishabhchandBhansail, 136 Taxman 579, where the Karnataka High Court ITA No. 263/Agr/2017 17 had held that the approval granted by the Commissioner u/s. 158BG is an administrative approval and there is no necessity of giving hearing to the assessee. For the purpose of that, we reproduce paragraph No. 4 to 4.4 which is to the following effect :
4. Section 158BG provides that no order of assessment for the Block period shall be passed by the Assessing Officer without the previous approval of the Joint Commissioner in respect of a search initiated under section 132. The assessee contends that before granting previous approval under section 158BG for an order of assessment made under section 158BC, the Joint Commissioner should have given a hearing to the assessee. It is submitted that the power to grant previous approval under section 158BG is an amalgam of appellate and revisional power and therefore, the right to a hearing should be read into section 158BG. It is also contended that the Tribunal failed to consider this ground though specifically urged before it. 4.1 Chapter XIV-B contains a special procedure for assessment of search cases. Section 158BC prescribes the procedure for block assessment. Clause (c) of section 158BC enables the Assessing Officer, on determination of the undisclosed income of the block period, to pass an order of assessment and determine the tax payable by him on the basis of such assessment. Clause (b) requires the Assessing Officer to proceed in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144, while determining the undisclosed income of the block period. It is thus evident that the procedure clearly contemplates the Assessing Officer giving a hearing to the assessee before making an assessment order in regard to the block period.
4.2 Clause (k) of section 246A provides for an appeal against the order of assessment for the block period made by the Assessing Officer under clause (c) of section 158BC. Sub-section (2) of section 250 provides for a hearing of the appeal. Thus, the assessee is heard by the Assessing Officer before making the assessment order under section 158BC. If the assessee is aggrieved by the assessment order he had a remedy by way of an appeal under section 246A where also he is heard. There is no need therefore for the Joint Commissioner, to give a hearing before giving previous approval under section 158BG. Firstly, the statute does not provide for such a hearing;
secondly, principles of natural justice also do not require such a hearing having regard to the fact that the assessee gets a hearing before the assessment and also a hearing if he files an appeal against the order of assessment; and thirdly the order passed by the Joint Commissioner granting previous approval under the proviso to section 158BG is in exercise of administrative power on being satisfied that the order of assessment has been made in accordance with the provisions of Chapter XIV-B. The previous approval is purely an internal matter and it does not decide upon any rights of the assessee. The Joint Commissioner, while examining the matter under the proviso to section 158BG does not examine or adjudicate upon the rights or obligations of the assessee, but only considers whether the Assessing Officer has fulfilled the requirements of Chapter XIV-B. 4.3 In V.C. Shukla v. State AIR 1980 SC 962, the Supreme Court gave the following example :
"In cases where law requires sanction to be given by the appointing authority before a prosecution can be launched against a Government servant, it has never been suggested that the accused must be heard before sanction is accorded. . . ."
4.4 Where a statute requires the Executive to take an administrative action after being satisfied or after forming an opinion as to the existence of a state of circumstances, the action is based on the subjective satisfac-tion. It is well-settled that any administrative actions based either on policy or on subjective assessment, if does not prejudicially affect any vested right or interest, need not be preceded by a hearing, unless the statute specifically provides for the same. Therefore, in the absence of any provision for opportunity of hearing in section 158BG, there is no need for the Joint Commissioner to give a hearing to the assessee before granting "previous approval"
under section 158BG. The first question is, therefore, answered against the asseeeee.
4.6 The language used in section 153D and section158BG, are similar in nature and both prohibits passing of the assessment order or reassessment /block ITA No. 263/Agr/2017 18 assessment without the prior approval of the officers mentioned in the said sections.
The language used in these sections are in the mandatory form which prohibits passing of the order by the assessing officer without prior approval. Meaning thereby if an order is passed without any approval from the authorities mentioned in the respective sections then the order shall be bad in law and would be liable to be declared void being passed in contradiction to these provisions. Moreover these 2 provisions were provided by the legislature for the same purposes i.e to supervise the functioning of the lower authorities by the higher authorities. The comparative chart of these 2 provisions it is as under
[Prior approval necessary for section [Authority competent to make the block 153assessment in cases of search or assessment.
requisition. 158BG. The order of assessment for the block 153D. No order of assessment or reassessment period shall be passed by an Assessing Officer shall be passed by an Assessing Officer below the not below the rank of an Assistant rank of Joint Commissioner in respect of each Commissioner 7[or Deputy Commissioner] or an assessment year referred to in clause (b) Assistant Director 7[or Deputy Director], as the of 51[sub-section (1) of] section 153A or the case may be : assessment year referred to in clause (b) of sub- Provided that no such order shall be passed section (1) of section 153B, except with the prior without the previous approval of-- approval of the Joint Commissioner:] 52 (a) the 8[Principal Commissioner or] [Provided that nothing contained in this section 8 Commissioner or [Principal Director or] shall apply where the assessment or reassessment order, as the case may be, is required to be passed Director, as the case may be, in respect of by the Assessing Officer with the prior approval search initiated under section 132 or books of the 53[Principal Commissioner or] of account, other documents or any assets Commissioner under sub-section (12) of section requisitioned under section 132A, after the 144BA.] 30th day of June, 1995 but before the 1st day of January, 1997; (b) the 9[Joint] Commissioner or the 9[Joint] Director, as the case may be, in respect of search initiated under section 132 or books ITA No. 263/Agr/2017 19 of account, other documents or any assets requisitioned under section 132A, on or after the 1st day of January, 1997.]
4.7 in view of the above and also on account of the fact that the issue had already been examined by the jurisdictional High Court in respect of section 158 BG holding that the approval granted by the higher authorities were administrative in nature we do not find any reasons to take a contrary view and accordingly we are also of the opinion that the approval granted by the Joint Commissioner in the present case was in the nature of administrative approval.
Whether an administrative order which entail civil consequences/penal consequences/civil liabilities can be challenged before the tribunal if assessment order is premised on such administrative prior approval 4.8 In the above noted paragraph it is categorically mentioned that if the approval is lacking under section 153D granted by the superior authorities, then the assessment order is liable to be quashed being passed in violation of section 153D. However, if the approval is granted by the superior authority without looking into the material, without application of mind and merely relying upon the understanding of the assessing officer, then in that eventuality the said approval ceases to be approval in the eyes of law. In our view the approval as envisaged under section 153D of the Act is not empty formality and there is a rational and reason for mandating the approval before passing the assessment order under the Act. If it was merely a formality and the superior authority is not required to apply ITA No. 263/Agr/2017 20 its mind then there was no reason to incorporate even for approval of the superior authority and it would not have been worded in the mandatory manner. Because the language used in the provision is in the form of mandatory direction therefore it cannot be argued that even if the approval is granted without application of mind then also it is valid in the eyes of law. In our opinion, civil and penal consequences would flow from completion of assessment and therefore if the approval is denied then crystallize right will accrue in favour of the assessee and the assessee will have a right to assert that the assessment made is bad in law. Similarly if the approval is granted without application of mind which is discernible from the record then the said approval loses its character to be approval in the eyes of law. 4.9 We had already mentioned that the assessee is not entitled to any personal hearing before passing of the approval order by the authority under section 153D of the Act. But, while holding this in favour of the revenue, we cannot close our eyes and close the right of the assessee to challenge the approval granted by the superior authority in violation of the basic fundamental principle enshrined in the income tax Act as well as in general law whereby, it has been held that the authority while granting the approval should not grant the approval mechanically without even looking into the document and without applying its mind.
4.10 The right to challenge the approval, is also based on various principal including the non-application of mind by the superior authority or granting ITA No. 263/Agr/2017 21 approval by an authority which is not vested with the power to grant the approval or the approval granted was after the passing of the assessment order in all these cases and any other cases the direction of the tribunal and also the other courts are not barred and the tribunal and the other courts can very well examine the approval granted by the superior authority in the context of our aforesaid observation and also the other preparation of law laid down by the high courts and the tribunal . 4.11 The jurisdictional High Court in the case of Verma Roadways vs. ACIT, 75 ITD 183 to the following effect :
"Coming to the aspect of the application of mind, while granting approval, we are of the view that requirement of approval pre-supposes a proper and thorough scrutiny and application of mind. In the case of Kirtilal Kalidas & Co. (supra), the I.T.A.T Madras Bench 'A' has observed that the function to be performed by the Commissioner in granting previous approval requires an enquiry and judicial approach on the entire facts, materials and evidence. It has been further observed that in law where any act or function requires application of mind and judicial discretion or approach by any authority, it partakes and assumes the character and status of a judicial or at least quasi-judicial act, particularly because their Act, function, is likely to affect the rights of affected persons."
4.12 Similarly in the matter of Sahara India (Firm) vs. CIT, 169 taxman 329 and in paragraph 6 and 21-24 it was held as under :
"A bare perusal of the provisions of sub-section (2A) of the Act would show that the opinion of the Assessing Officer that it is necessary to get the accounts of assessee audited by an Accountant has to be formed only by having regard to: (i) the nature and complexity of the accounts of the assessee; and (ii) the interests of the revenue. The word "and" signifies conjunction and not disjunction. In ITA No. 263/Agr/2017 22 other words, the twin conditions of "nature and complexity of the accounts" and "the interests of the revenue" are the prerequisites for exercise of power under section 142(2A) of the Act. Undoubtedly, the object behind enacting the said provision is to assist the Assessing Officer in framing a correct and proper assessment based on the accounts maintained by the assessee and when he finds the accounts of the assessee to be complex, in order to protect the interests of the revenue, recourse to the said provision can be had. The word "complexity" used in section 142(2A) is not defined or explained in the Act. As observed in Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634 1 (All.), it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval 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.
21. In the light of the aforenoted legal position, we are in respectful agreement with the decision of this Court in Rajesh Kumar's case (supra) that an order under section 142(2A) does entail civil consequences. At this juncture, it would be relevant to take note of the insertion of proviso to section 142(2D) with effect from 1-6-2007. The proviso provides that the expenses of the auditor appointed in terms of the said provision shall, henceforth, be paid by the Central ITA No. 263/Agr/2017 23 Government. In view of the said amendment, it can be argued that the main plank of the judgment in Rajesh Kumar's case (supra) to the effect that direction under section 142(2A) entails civil consequences because the assessee has to pay sub-stantial fee to the special auditor is knocked off. True it is that the payment of auditor's fee is a major civil consequence, but it cannot be said to be the sole civil or evil consequence flowing from directions under section 142(2A). We are convinced that special audit has an altogether different connotation and implications from the audit under section 44AB. Unlike the compulsory audit under section 44AB, it is not limited to mere production of the books and vouchers before an auditor and verification thereof. It would involve submission of explanation and clarification which may be required by the special auditor on various issues with relevant data, document etc., which, in the normal course, an assessee is required to explain before the Assessing Officer. Therefore, special audit is more or less in the nature of an investigation and in some cases may even turn out to be stigmatic. We are, therefore, of the view that even after the obligation to pay auditor's fees and incidental expenses has been taken over by the Central Government, civil consequences would still ensue on the passing of an order for special audit.
22. We shall now deal with the submission of learned counsel appearing for the revenue that the order of special audit is only a step towards assessment and being in the nature of an inquiry before assessment, is purely an administrative act giving rise to no civil consequence and, therefore, at that stage a pre- decisional hearing is not required. In Rajesh Kumar's case (supra) it has been held that in view of section 136 of the Act, proceedings before an Assessing Officer are deemed to be judicial proceedings. Section 136 of the Act stipulates that any proceeding before an Income-tax Authority shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of Indian Penal Code, 1860 and also for the purpose of section 196 of I.P.C. and every Income-tax Authority is a court for the purpose of section 195 of Code of Criminal Procedure, 1973. Though having regard to the language of the provision, we have some reservations on the said view expressed in Rajesh Kumar's case (supra), but having held that when civil consequences ensue, no distinction between quasi- judicial and administrative order survives, we deem it unnecessary to dilate on the scope of section 136 of the Act. It is the civil consequence which obliterates the distinction between quasi-judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away. Therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see:Mrs. ITA No. 263/Agr/2017 24 Maneka Gandhi v. Union of India [1978] (1) SCC 248 and S.L. Kapoor v. Jagmohan AIR 1981 SC 136. As already noted above, the expression "civil consequences" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. Anything which affects a citizen in his civil life comes under its "wide umbrella. Accordingly, we reject the argument and hold that since an order under section 142(2A) does entail civil consequences, the rule audi alteram partem is required to be observed.
23. We are also unable to persuade ourselves to agree with the proposition canvassed by learned counsel for the revenue that since a post-decisional hearing in terms of sub-section (3) of section 142 is contemplated, the requirement of natural justice is fully met. Apart from the fact that ordinarily a post-decisional hearing is no substitute for pre-decisional hearing, even from the language of the said provision it is plain that the opportunity of being heard is only in respect of the material gathered on the basis of the audit report submitted under sub-section (2A) and not on the validity of the original order directing the special audit. It is well-settled that the principle audi alteram partem can be "excluded only when a statute contemplates a post decisional hearing amounting to a full review of the original order on merit, which, as explained above, is not the case here.
24. The upshot of the entire discussion is that the exercise of power under section 142(2A) of the Act leads to serious civil consequences and, therefore, even in the absence of express provision for affording an opportunity of pre-decisional hearing to an assessee and in the absence of any express provision in section 142(2A) barring the giving of reasonable opportunity to an assessee, the requirement of observance of principles of natural justice is to be read into the said provision. Accordingly, we reiterate the view expressed in Rajesh Kumar's case (supra)."
4.13. Further, the coordinate bench in the matter of ShreelekhaDamani 88 Taxmann.com 383 had held as under :
"11.9 This decision of the Tribunal was considered by Allahabad Bench of the Tribunal in the case of Verma Roadways v. Asstt. CIT[2000] 75 ITD 183 wherein also the assessee-appellant has challenged the validity of approval to the assessment order accorded by the CIT Kanpur. The Tribunal at Para-47 has held as under:ITA No. 263/Agr/2017 25
"Coming to the aspect of the application of mind, while granting approval, we are of the view that requirement of approval presupposes a proper and thorough scrutiny and application of mind. In the case of Kirtilal Kalidas & Co. (supra), the I.T.A.T Madras Bench 'A' has observed that the function to be performed by the Commissioner in granting previous approval requires an enquiry and judicial approach on the entire facts, materials and evidence. It has been further observed that in law where any act or function requires application of mind and judicial discretion or approach by any authority, it partakes and assumes the character and status of a judicial or at least quasi-judicial act, particularly because their Act, function, is likely to affect the rights of affected persons."
11.10 Similarly, u/s. 151 of the Act it is provided that no notice shall be issued u/s. 148 unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied that it is a fit case for the issue of such notice. The sanction under this section was considered by the Tribunal, Mumbai Bench in the case of Shri Amarlal Bajaj v. Asstt. CIT[2013] 37 taxmann.com 7/60 SOT 83 (URO) wherein at para-8, the Tribunal has considered the decision of the Hon'ble High Court of Delhi Bench in the case of United Electrical Co. (P.) Ltd. v. CIT[2002] 125 Taxman 775/258 ITR 317 (Delhi) which read as under:
'Hon'ble Delhi High Court in the case of United Electrical Co. Pvt. Ltd. v. CIT258 ITR 317 has held that "the proviso to sub-section (1) of section151of the Act provides that after the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in builts safeguards to prevent arbitrary exercise of power by an 7 ITA Nos.534 & 611/M/04 Assessing Officer to fiddle with the completed assessment". The Hon'ble High Court further observed that "what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the statement of the said parties, perhaps he would not have granted his approval, which was mandatory in terms of the proviso to sub-section (1) of section 151 of the Act as the action under section 147 was being initiated after the expiry of four years from the end of the relevant assessment year. The power vested in the Commissioner to grant or not to grant approval is coupled with a duty. The Commissioner is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case there has been no application of mind by the Additional Commissioner before granting the approval'.
12. Coming to the facts of the case in hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, the Addl. Commissioner has showed his inability to analyze the issues of draft order on merit clearly stating that no much time is left, inasmuch as the draft order was placed before him on 31.12.2010 and the approval was granted on the very same day.ITA No. 263/Agr/2017 26
Considering the factual matrix of the approval letter, we have no hesitation to hold that the approval granted by the Addl. Commissioner is devoid of any application of mind, is mechanical and without considering the materials on record. In our considered opinion, the power vested in the Joint Commissioner/Addl Commissioner to grant or not to grant approval is coupled with a duty. The Addl Commissioner/Joint Commissioner is required to apply his mind to the proposals put up to him for approval in the light of the material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. Commissioner before granting the approval. Therefore, we have no hesitation to hold that the assessment order made u/s. 143(3) of the Act r.w. sec. 153A of the Act is bad in law and deserves to be annulled. The additional ground of appeal is allowed.
13. The ld. Departmental Representative has strongly relied upon the decision of the Tribunal Mumbai Bench in the case of Rafique Abdul Hamid Kokani v. Dy. CIT[2000] 113 Taxman 37 (Mag.), Hon'ble High Court of Karnataka in the case of Rishabchand Bhansali v. Dy. CIT[2004] 136 Taxman 579/267 ITR 577 and Hon'ble High Court of Madras in the case of Sakthivel Bankers v. Asstt. CIT[2002] 124 Taxman 227/255 ITR 144.
13.1 We have carefully perused the decisions placed on record by the ld. DR. We find that all the decisions relied upon by the ld. DR are misplaced inasmuch as all these decisions relate to the issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue."
4.14. In view of the above we are of the considered opinion if the approval is granted by the superior authorities for extraneous reasons, without application of mind or without looking into the record, then the approval loses its character of an approval in the eyes of law. Accordingly we have no hesitation in declaring that the approval granted by the higher authorities on 27 March 2014 is no approval in the eyes of law and accordingly the assessment made by the assessing officer based on such an approval is also declared to be null and void. In fact, the issue of judicial review of the administrative decision were examined by Hon'ble Supreme Court in Tata Celular vs. Union of India (1994) 6SCC 651 (Paragraph 77) and also in the ITA No. 263/Agr/2017 27 matter of West Bengal Central School Service Commission vs. Abdul Halim, (2019) SCC online (SC) 902. We are bound by the law laid down by the Hon'ble Supreme Court in the aforesaid judgment.
4.15 we may mention that in the approval granted by additional Commissioner of income tax on 27 March 2014 it is clearly mentioned that he has not applied its mind and he has not even look into the draft assessment order and he solely relied upon the undertaking of the assessing officer who had completed the assessment proceedings. He has also not gone into the record of investigation and seized material and has granted the approval without any meaningful discussion and going through the record. In our view such a practice is required to be deprecated and we deprecate the same. It is the duty of the additional Commissioner of income tax to apply his mind while according the approval and should not grant approval in a callous and clandestine manner. There is a statutory duty on the additional Commissioner of income tax with a corresponding obligation on him to examine the record and thereafter accord the approval. The reason for granting the approval may not be subject matter of the proceedings but the manner and the material on the basis of which the approval was granted can always be examined by the tribunal and also by the other courts to come to the conclusion whether the approval was granted in a mechanical manner or after applying mind looking into the record. No evidences required to be appreciated as the approval is self-evident, i.e., that it was ITA No. 263/Agr/2017 28 granted by the additional Commissioner of income tax without application of mind and without looking into the record. In view of the above the assessment order passed by the assessing officer is void and accordingly all the appeals of the assessee are allowed.
4.16. We may record that the decisions relied upon by the ld. DR are factually distinguishable as none of the decisions have examined this aspect of application of mind by the superior authorities at the time of granting the approval. The sum and substance of the decisions relied upon by the learned departmental representative was that the assessee was not entitled to any hearing or representation at the time of grant of approval. As mentioned hereinabove the scope and ambit in the present litigation is not that of grant of hearing or representation at the time of approval but whether the approval can be granted by the superior authority without application of mind without looking into seized material, investigation report, the draft assessment order etc can be sustainable in the eyes of law. We had already answered that such an approval is bad in law and cannot be sustained. 4.17 The last submission made by the learned departmental representative was that the matter may be sent back to the assessing officer to pass a fresh assessment order after seeking the approval from the competent authority. In this regard we are of the opinion that the revenue is not entitled to 2nd inning, in the matter as the non grant of approval/grant of approval in a mechanical manner takes out the direction ITA No. 263/Agr/2017 29 of the assessing officer to pass the assessment order and the same cannot be rectified or improved by the revenue in the 2nd round of litigation. Undoubtedly the assessee is contesting the matter from the date of search before various forms including before the Hon'ble High court and the assessee cannot be made to run again for many more years for contesting the litigation. In view of these peculiarity of the facts we are of the opinion that 2nd inning for rectifying or removing the defects cannot be granted to the revenue.
4.18. As we had held that the assessment made by the Assessing Officer was bad in law and the same has been annulled, therefore, the appeals of the Revenue challenging the orders of the ld. CIT(A) are also liable to be dismissed.
5. In the result, the appeals of the assessee are allowed and those of Revenue are dismissed.
Order pronounced in the open court on 18th Sept., 2019.
Sd/- Sd/-
(Dr. Mitha Lal Meena) (Laliet Kumar)
Accountant Member Judicial member
Dated: 18/09/2013
*aks*
Copy of order forwarded to:
(1) The appellant (2) The respondent
(3) Commissioner (4) CIT(A)
(5) Departmental Representative (6) Guard File
By order
Assistant Registrar
Income Tax Appellate Tribunal
Agra Bench, Agra