Income Tax Appellate Tribunal - Kolkata
Sri Ravi Sharma Dhital,Goa vs A.C.I.T., Central Circle - 4(1), ... on 29 November, 2024
आयकर अपील य अ धकरण, कोलकाता पीठ "बी'', कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA ी राजेश कुमार, लेखा सट य एवं ी संजय शमा, या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member ] I.T.(SS)A. Nos. 104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital Vs. ACIT, Central Circle-4(1), Kolkata (PAN: BMGPD 5898 A) Appellant / (अपीलाथ ) Respondent / यथ Date of Hearing / सुनवाई 30.10.2024 क तथ Date of Pronouncement/ 29.11.2024 आदे श उ घोषणा क तथ For the Appellant/ Shri Siddharth Jhajharia, FCA नधा रती क ओर से For the Respondent/ Shri Prakash Nath Barnwal, CIT DR राज व क ओर से Shri Pradip Biswas, Addl. CITSR. D.R ORDER / आदे श Per Bench:
These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-27, Kolkata (hereinafter referred to as the Ld. CIT(A)) for the AY 2012-13 to 2019-20 respectively.
2. First we shall take IT(SS) A No. 104/Kol/2024 for AY 2012-13. The assessee has raised following grounds of appeal:
i) For that in view of the facts and in the circumstances, Ld. CIT(A) was wholly unjustified in not considering the validity of impugned order in the fact that 2 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital the impugned order was passed without approval of the prescribed authority u/s 153D and in absence of the impugned approval the impugned order is bad in law and in view of the facts and in the circumstances it may be held accordingly.
ii) Without prejudice to Ground no. 1 above, approval u/s 153D by prescribed authority has to be part of body of the impugned order in view of judicial precedents and absence of same has made such order bad in law and it may be held accordingly.
iii) For that your petitioner craves the right to put additional grounds and/or to alter/ amend/ modify the present grounds at the time of hearing.
3. At the time of hearing, the ld. Counsel for the assessee pressed the grounds no
(ii) which is against the order of Ld. CIT(A) upholding the assessment framed u/s 153/144 of the Act which did not mention the fact of approval granted u/s153D of the Act by the prescribed authority.
4. Facts in brief are that the assessee did not file any return of income u/s 139(1) of the Act for the impugned assessment year. A search and seizure operation u/s 132(1) of the Act was conducted on 24.07.2017 in the case of Shri Ravi Sharma Dhital. The assessee is a Nepali citizen who is settled in Goa for more than a decade and is associated with almost all major casinos of Goa and is known by name Ravi Nepali. Consequently, a notice u/s 153A of the Act and other notices were duly issued and served on the assessee. The AO called upon the assessee to furnish the various details with regard to cash and jewellery found from the premises of the assessee which the assessee could not explain. A search action was also conducted in the case of Sarju Sharma and associated entities on 10.08.2018 u/s 132 of the Act. Finally the AO made the addition of Rs. 2,10,620/- accepting the computation of income filed by the assessee during assessment proceedings thereby framing the assessment u/s 153A/143(3) of the Act as best judgment assessment vide order dated 26.12.2019. Pertinent to state that the assessment order did not mention anything about the approval 3 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital having been obtained from the competent authority u/s 153D of the Act or having been granted by the competent authority to frame the assessment.
5. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee though no specific finding was given on the legal issue by the assessee to the effect that the approval u/s 153D obtained from the competent authority was not mentioned in the assessment order. While dismissing the appeal , the ld CIT(A) observed and held as under:
"5.1. I have perused the assessment order as well as the submissions of the assessee. On examining the assessment record, it is observed that the AO had maintained all the procedures to initiate the reopening process u/s 153A r.w.s 144 of the Act and in passing the assessment order after providing adequate opportunity for hearing to the assessee. The assessee has not mentioned above any addition made by the AO. The AO has accepted the computation filed by the assessee without making any addition. In the absence of any addition, it is not required to disturb the AO's order. Hence, the appeal is dismissed."
6. After hearing the rival contentions and perusing the material on record, we observe that the search action has been conducted on the assessee and the assessment has been framed ex-parte u/s 153A/144 vide order dated 26.12.2019. It is also undisputed that the said order did not mention anything about the approval u/s 153D of the Act having been obtained from the competent authority for framing the assessment. Now the issue before us is whether the order passed u/s 153A/144 of the Act dated 26.12.2019 is a valid or not sans mentioning the approval u/s 153D of the Act which was required to be obtained from the competent authority for framing the assessment. We have perused the manual of Office Procedure issued by CBDT in February, 2003 in exercise of the powers u/s 109 of the Act and find that in Para 9 of Chapter 3 of Volumn- II (Technical) of the Manual provides that the assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/Addl. CIT for the period from 30.06.1995 to 31.12.1996, the approving authority was the PCIT. We have also perused carefully the decision of Orissa High Court in the case of ACIT vs. Serajuddin & Ors. [2023] 150 taxmann.com 146 (Orissa) referred and relied by the counsel for the assessee wherein it has been held that the approval obtained u/s 153D from the competent authority has to be mentioned in the assessment order failing which 4 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital the order would be invalid and nullity in the eyes of law. We note that in the said decision, the Hon'ble High Court has dealt with CBDT's Manual of Office Procedure issued in February, 2003 in exercise of the powers conferred u/s 109 of the Act. The relevant paragraphs from the decision of the Hon'ble High Court are reproduced hereunder for ready reference:
"10. At the outset, it requires to be noticed that many of the decisions referred to both on the side of the Revenue as well as the Assessee do not directly refer to Section 153D of the Act which was inserted with effect from 1st June, 2007. There is no doubt about the applicability of the said provision since the proceedings under Section 153A of the Act was initiated in the present case after that date.
11. Among the changes brought about by the Finance Act 2007 was the insertion of Section 153D of the Act. The CBDT circular dated 12th March 2008 refers to the various changes and inter alia also to the change brought about by the insertion of a new Section 153D of the Act. Paragraph 50 of the said circular is relevant and reads as under:
"50. Assessment of search cases--Orders of assessment and reassessment to be approved by the Joint Commissioner.
50.1 The existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A, does not provide for any approval for such assessment.
50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A.
50.3 Applicability- These amendments will take effect from the 1st day of June, 2007."
12. It must be noted at this stage that even prior to the introduction of Section 153D in the Act, there was a requirement under Section 158BG of the Act, which was substituted by a Finance Act 14 of 1997 with retrospective effect from 1st January 1997, of the AO having to obtain a previous approval of the JCIT/Additional CIT by submitting a draft assessment order following a search and seizure operation.
13. The CBDT issued the Manual of Office Procedure in February 2003 in exercise of the powers under Section 109 of the Act. Para 9 of Chapter 3 of Volume-II (Technical) of the Manual 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 5 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital 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 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."
14. The requirement of prior approval under Section 153D of the Act is comparable with a similar requirement under Section 158BG of the Act. The only difference being that the latter provision occurs in Chapter-XIV-B relating to "special procedure for assessment of search cases" whereas Section 153D is part of Chapter-XIV.
15. A plain reading of Section 153D itself makes it abundantly clear that the legislative intent was to be obtaining of "prior approval" by the AO when he is below the rank of a Joint Commissioner, before he passes an assessment order or reassessment order under Section 153A(1)(b) or 153B(2)(b) of the Act.
16. That such an approval of a superior officer cannot be a mechanical exercise has been emphasized in several decisions. Illustratively, in the context of Section 142 (2-A) which empowers an AO to direct a special audit. The obtaining of the prior approval was held to be mandatory. The Supreme Court in Rajesh Kumar v. Dy. CIT (2007) 2 SCC 181 observed as under:
"58. An order of approval is also not to be mechanically granted. The same should be done having regard to the materials on record. The explanation given by the assessee, if any, would be a relevant factor. The approving authority was required to go through it. He could have arrived at a different opinion. He in a situation of this nature could have corrected the assessing officer if he was found to have adopted a wrong approach or posed a wrong question unto himself. He could have been asked to complete the process of the assessment within the specified time so as to save the Revenue from suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/ or the entries made therein. While exercising its power, the assessing officer has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief Commissioner or the Commissioner, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given."
17. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself. In Sahara India (Firm) Lucknow v. Commissioner of Income Tax (supra), the Supreme Court explained as under:
"8. 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 6 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital 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."
18. The contention of the Revenue in those cases that the non- compliance of the said requirement does not entail civil consequences was negatived. Reiterating the view expressed in Rajesh Kumar (supra), the Supreme Court in Sahara India (Firm) Lucknow v. Commissioner of Income Tax (supra) held as under:
"29. In Rajesh Kumar (2007) 2 SCC 181 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: Maneka Gandhi v. Union of India (1978) 1 SCC 248 and S.L. Kapoor v. Jagmohan (1980) 4 SCC 379).
30. 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."
19. To the same effect, are the decisions of the Delhi High Court in Yum! Restaurants Asia Pte. Ltd. v. Deputy Director of Income Tax (supra) which dealt with the requirement under Section 151 (2) of the Act for initiating proceedings under Section 147 read with 148 of the Act. It was observed as under:
"11. The purpose of Section 151 of the Act is to introduce a supervisory check over the work of the AO, particularly, in the context of reopening of assessment. The law expects the AO to exercise the power under Section 147 of the Act to reopen an assessment only after due application of mind. If for some reason, there is an error that creeps into this exercise by the AO, then the law expects the superior officer to be able to correct that error. This explains why Section 151 (1) requires an officer of the rank of the Joint Commissioner to oversee the decision of the AO where the return originally filed was assessed under Section 143 (3) of the Act. Further, where the reopening of an assessment is sought to be made after the expiry of four years from the end of the relevant AY, a further check by the further superior officer is contemplated."
20. The non-compliance of the requirement was held to have vitiated the notice for reopening of the assessment. Likewise, in Syfonia Tradelinks Private Limited v. Income Tax Officer (supra) the Delhi High Court disapproved of the rubber stamping by the superior officer of the reasons furnished by the AO for issuance of the sanction.
7I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital
21. It is seen that in the present case, the AO wrote the following letter seeking approval of the Additional CIT:
GOVERNMENT OF INDIA OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), BHUBANESWAR No. ACIT/C-1(2)//Approval/2010-11/5293 Dated, Bhubaneswar, the 27/29th December, 2010 To The Addl. Commissioner of Income-tax, Range- 1, Bhubaneswar.
Sub: Approval of draft orders u/s 153D of the I.T. Act 1961 in the case of M/s. Serajuddin & Co. 19A, British India Street, Kolkata (in Serajuddin Group of Cases)- matter regarding.
Sir, Enclosed herewith kindly find the draft orders u/s 153A of the I.T.Act, 1961 along with assessment records in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata for kind perusal and necessary approval u/s.153D.
Sl. No. Name of the Section under which order passed Asst. year Assessee
1. M/s. Serajuddin & Co., 19A, u/s 153A/143(3)/144/145(3) British India Street, 2003-04 Kolkata.
2. -do- -do- 2004-05
3. -do- -do- 2005-06
4. -DO- -DO- 2006-07
5. -DO- -DO- 2007-08
6. -DO- -DO- 2008-09
7. -DO- U/s.143(3)/144/153B(B)/145( 2009-10
3) The above cases will be barred by limitation on 31.12.2010.
Encl: As above Yours faithfully, Sd/-
Asst. Commissioner of Income-tax, Circle-1(2), Bhubaneswar of the Tribunal itself Government of India OFFICE OF THE ADDL. COMMISSIONER OF INCOME TAX, 3 Floor, Range-1, Bhubaneswar No. Addl. CIT/R-1/BBSR/SD/2010-11/5350 Dated, Bhubaneswar, the 30th December, 2010 To The Assistant Commissioner of Income Tax, Circle-1(2), Bhubaneswar.
Sub: Approval u/s 153D-in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata-Matter regarding.
Ref: Draft Orders u/s 153A/143(3)/144 for the A.Y. 2003- 04 to 2008-09 u/s.143(3)/153B
(b)/144 of the A.Y.2009-10 in the case of above mentioned assessee.
Please refer to the above The draft orders u/s 153A/143(3)/144 for the A.Y. 2003-04 to 2008- 09 and u/s. 143(3)/153B(b)/144 for the A.Y. 2009-10 submitted by you in the above case for the following assessment years are hereby approved:
Assessment Year Income Determined (Rs)
2003-04 11,66,22,771
8
I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024
Assessment Years: 2012-13 to 2019-20
Shri Ravi Sharma Dhital
2004-05 36,46,80,016
2005-06 65,70,12,805
2006-07 60,02,65,791
2007-08 130,03,13,307
2008-09 274,68.87,069
2009-10 301,17,05,952
You are requested to serve these orders expeditiously on the assessee, submit a copy of final order to this office for record.
Sd/-
Addl. Commissioner of Income Tax, Range-1, Bhubaneswar
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 would equally apply to Section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind;
(ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order.
23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure.
24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under Section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 (165) E.L.T. 257 (S.C.) the Supreme Court observed as under:
"Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the 9 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute.
(2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board.
(3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars."
25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves.
26. The question of law framed is therefore answered in the affirmative i.e., in favour of the Assessee and against the Department.
27. The appeals are accordingly dismissed, but in the circumstances, with no order as to costs."
5.1. Similarly we have also perused the decision of Co-ordinate Bench in the case of Akhil Gulam Somji vs.. ITO in ITA Nos. 455 to 458/PN/2010 for AY 2001-02, 2002- 03, 2003-04 & 2004-05 dated 30.03.2012 referred by the ld Counsel for the assessee wherein the similar issue has been decided in favour of the assessee by observing and holding 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 10 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital 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 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 orer 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 Banwarilal Agarwalla Vs. State of Bihar, AIR 1961 SC 849 (853); Razas Bulland Sugar Co.Ltd., Vs. Municipal Board, AIR 1965 (SC) 895 (899) & Others 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 11 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital 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 31-121996 the approving authority was the CIT.) The Assessing Officer should submit the draft assessment order for such approval well in time. The 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 CIT Vs. Ratnabai N.K. Dubhash (Mrs.) (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 the moment the assessee files objections to the draft order. The power to determine the income of the assessee thereafter gets vested in the Inspect-ing 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 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 12 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital 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 CIT Vs. 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. Vs. ITO (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 CIT Vs. Sardarilal Hasim (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 Gayatri Textiles Vs. CIT (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 CIT Vs. Sara 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 Prabu Dayal Amichand Vs. CIT (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 CIT Vs.Damodhar Muralilal (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 CIT Vs. Ratnabai N.K. Dubhash (Mrs.) (Supra) and of Hon'ble Delhi High Court in the case of CIT Vs. SPL's Siddharth 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 13 I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024 Assessment Years: 2012-13 to 2019-20 Shri Ravi Sharma Dhital 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.
16. In view of the above finding, on the validity of assessment orders in question, the other issue questioning the validity of additions/disallowances made by the A.O in the assessment orders in question does not need adjudication as the same has become academic only.
17. Consequently, appeals are allowed."
5.2.1.We are also mindful of the fact that assessee is free to raise legal issue at any appellate stage and it is not sine qua non to restore the same to the lower authorities for the reason that the issue was not before them or was not adjudicated during the course of proceedings before them. Our view find support from the decision of Hon'ble Bombay High Court in the case of Kansai Nerolac Paints Ltd. Vs. DCIT 364 ITR 632 (Bom.).
5.2.2. In the instant case before us we note that the fact of approval having been obtained from the competent authority was not mentioned in the assessment order . Therefore considering the facts of the case of the assessee and ratio laid down by the Orissa High Court and Co-ordinate Bench, we are inclined to hold that the impugned assessment order is invalid and bad in law and is accordingly quashed.
6. The issue raised in all the other appeals are similar to one as decided by us in IT(SS)A No. 104/Kol/2024 for AY 2012-13. Therefore our decision in IT(SS)A No. 104/Kol/2024 for AY 2012-13 would, mutatis mutandis, apply to these appeals as well. Accordingly, all the appeals of the assessee are allowed.
7. In the result, all the appeals of the assessee are allowed.
Order is pronounced in the open court on 29th November, 2024
Sd/- Sd/-
(Sonjoy Sarma /संजय शमा) (Rajesh Kumar/राजेश कुमार)
Judicial Member/ या यक सद य Accountant Member/लेखा सद य
Dated: 29th November, 2024
SM, Sr. PS
14
I.T.(SS)A. Nos.104 to 110 & 1805/Kol/2024
Assessment Years: 2012-13 to 2019-20
Shri Ravi Sharma Dhital
Copy of the order forwarded to:
1. Appellant- Shri Ravi Sharma Dhital, C/o, M/s Salarpuria Jajodia & Co., 7, C.R. Avenue, 3rd Floor, Kolkata-700072
2. Respondent - ACIT, Central Circle-4(1), Kolkata
3. Ld. CIT(A)- 27, Kolkata
4. Ld. Pr. CIT- , Kolkata
5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata