Income Tax Appellate Tribunal - Chandigarh
M/S Inder International, Ludhiana vs Acit, Cc-Ii, Ludhiana on 7 June, 2021
आयकर अपील य अ धकरण, च डीगढ़ यायपीठ ए", च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH 'A', CHANDIGARH BEFORE: SHRI N.K. SAINI, VICE PRESIDENT AND SHRI MAHAVIR SINGH, VICE PRESIDENT आयकर अपील सं./ ITA No.1573/Chd/2018 नधा रण वष / Assessment Year : 2016-17 M/s Inder International, बनाम The A.C.I.T., 594, Nirankari Mohalla No.1, Central Circle-II, Overlock Road, Ludhiana Ludhiana.
थायी लेखा सं./PAN NO: A A B F 1 7 9 9 6 J अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Parikshit Aggarwal, CA राज व क ओर से/ Revenue by : Smt.C.Chandrakanta, CIT DR सन ु वाई क तार$ख/Date of Hearing : 19.05.2021
उदघोषणा क तार$ख/Date of Pronouncement: 07.06. 2021 (Hearing through webex) आदे श/Order Per Mahavir Singh, Vice President :
Th i s a p p e a l b y th e a sse s see is a ris in g ou t of t he or de r of the Le a rne d C om mi ssi on e r of I nc ome Ta x ( Ap p e a l s ) - 5 [ i n s h o r t th e ' L d .C I T (A ) ] , Lud h ia n a d a te d 1 5 .1 0 .2 0 1 8 re l a ti ng to a sse ssme nt ye a r 2 0 16 -1 7 , p a s se d u /s 2 50 ( 6 )) of t he I n come Ta x Act , 1 9 61 ( he re i na f te r re fe r re d to as 'A ct'. The a sse ssme nt was f r a me d by the AC I T, C e n tr a l C i r cl e -I I, Lud hi a n a f or th e a ss e ss me n t ye ar 2 0 16 -1 7 u /s 1 5 3 A o f the Act vi d e or de r d at e d 3 0 .0 6 . 20 1 7 .ITA No.1573/Chd/2018
A.Y .2016-17 Page 2 of 19
2. At th e ou tse t, the Ld. C ou nse l fo r the a sse ssee dr e w our a tte nti on to a ss e s see 's a p p li ca tio n d a te d 1 9 .03 .2 0 2 0 by vi rt ue o f w h ic h, a d di ti on a l g ro un d i s r a i se d . He d r e w ou r a tte n ti on to the re le v a nt a d d it ion al gr ou nd N o.8 w h i ch r e a d s a s u n de r:
" 8 . T h a t on l a w, f ac ts an d c irc u m sta n c es of th e c ase, the i mpu gn ed a sse ssmen t o rd er p a ssed u / s 1 5 3A d ese rve s to be qu a sh ed si n ce th e sta tu tor y an d man d a to r y a p prov al a s requ ir ed u / s 1 5 3 D h a s n o t bee n ob tai n ed an d the a p p roval sou gh t an d gran te d was to tal l y mec h an ic al an d r itu al i sti c on l y. "
3. Th e Ld. C ou ns e l f or th e a sse ss ee s ta te d th a t th is gr oun d is pu r e l y le ga l in na t ur e a n d no n e w fa c ts ar e re q ui re d for th e a d j ud i ca ti on o f t h is gr oun d a nd he nce , the sa me d e se r ve s to be a d mi tte d k ee p in g in min d t he l aw l a id dow n b y th e H on'b l e S up re me C our t i n th e c a se of N ati on a l Th e r ma l P ow e r C o. Lt d. ( N TP C ) Vs . C I T ( 1 9 98 ) 2 29 I TR 38 3 ( SC ) . The Ld. C ou ns e l for the a ss e s see took us t hr ou gh the P a pe r B o ok f il e d o n 18 . 0 5. 2 02 1 wh e re by h e h as e n cl ose d cop y of a pp r ov a l gr a n te d u/s 1 53 D of th e A ct vid e d a te d 29 . 06 . 2 01 7 . Th e Ld . C oun se l fo r th e a sse ssee took us thr ou gh th e le tte r w r it te n b y the AO to the Ad d l C I T v id e N o. ACIT/C-II/Ldh/2017-18/446, da t ed 29 . 0 6. 2 0 17 a n d p oi nte d out t ha t t he AO a p p li e d f or a p p rova l u/s 1 53 D of th e Ac t to the A dd l .C I T o n l y o n 29 . 0 6. 2 0 17 . H e fu r the r to ok u s t hr ou gh ITA No.1573/Chd/2018 A.Y .2016-17 Page 3 of 19 pa g e N o. 2 of a s se s se e 's P a pe r B ook w he re in r e le v a nt a pp r ov a l w a s gr a n te d u/s 15 3 D o f th e Ac t by t he A d dl . C I T, C e n tr a l C i r cle Ra n ge , Lud h ia n a vi d e F.No.Addl.CIT(C), R/Ldh./16-17/560, d a te d 2 9 .0 6 . 201 7 . H e f ur the r sta t e d t hat thi s a p p ro va l is a l so a cc or de d on the same da y i . e. 29 . 06 . 2 01 7 . He fu r the r s ta te d t he fa c t th a t the l a st h e a r i ng of th is c a se to ok p l a ce on 28 . 06. 2 0 17 a n d a sses see f i le d va r io us d e t a il s on 28 . 0 6. 2 01 7 . A cc or di n g to the Ld. C ou ns e l for th e a s se s see th e AO h a s gon e th r ou gh t he s e de ta i l s a n d a fte r th a t he ha s p r e p a re d d r a f t as se ssme nt or de r c ons is ti ng pa g e s 1 to 1 65 w hi ch h a s a nn e xu r e s A to E e n clos e d w i th thi s or de r r un nin g i n to p a ge s 1 to 4 1 . The Ld .C ou ns e l f or the a s se sse e sta t e d tha t i n c a se th e a ss e s sme n t or d e r i s pa s se d u/s 153A of th e Act , a ma n d a tor y a p pr ov a l as re q ui re d u/s 1 5 3 D o f th e Ac t has to b e ob ta i ne d b y t he AO fr om th e A d dl . C IT a n d gr a nt in g of a p pr ov a l is not a mere for ma l it y a s the A dd l .C I T ha s to a pp l y h i s mi nd w h il e gi vi ng a pp r ov a l to th e d ra ft a ss e ss me n t or de r . The Ld . C oun se l f or the a sse s see st ate d t ha t thi s i s a se a r c h a nd se izu r e c ase a nd r e q ui si ti on u /s 1 3 2A of t h e Ac t wa s ma de by t he I nve s tig a ti on Win g, Lud hi a n a in l i e u of se a r ch cond u cte d by the Di re c tor a te o f Re ve n ue I n te ll ig e nce , Lud hi a n a U ni t on the a sse ssee on 1 4. 1 2 .2 0 15 . The i nv e st iga tio n of the I n come Ta x D e p a r tme n t a cc or d in gl y r e q u i si tio ne d u/s 13 2 A of t he ITA No.1573/Chd/2018 A.Y .2016-17 Page 4 of 19 Act d a te d 2 6. 0 5. 2 0 16 . I t w a s con te n de d t ha t a n umb e r of doc ume nts w e re s e i ze d du r in g th e c our se of se a r ch wh i ch wa s con si d e re d b y the AO du r ing th e co ur se o f p r oce e d in gs u/s 15 3 A of t he Ac t. Th e Ld . C ou n se l for t he a sse ss ee sta te d tha t the a p pr ov al g r a nte d by the Ad d l .C I T on th e s ame d a te i. e . 29 . 0 6. 2 01 7 w h e n t he AO re qu is iti on e d the a pp r ova l u/s 15 3 D of the Ac t f r om th e Ad d l .C I T a nd t he ma nn e r i n w h i ch sta tu tor y a pp r ov a l u/s 1 5 3D o f t he Ac t i s a cc or de d i s b a d i n la w . The Ld .C ou ns e l fo r the a sse ssee a l so r e l ie d u p on t he ca se l a w of H on 'b le S up re me C ou r t i n th e ca s e o f N TPC (s up r a ) a nd a l s o th e de ci si on of th e H on 'b le Ju ri sd i cti on a l Hi gh C our t i n t he c a se of VM T S p i n ni ng C o. Ltd . V s. C I T & An othe r ( 20 1 6 ) 38 9 I TR 3 2 6 (P & H ) . I n vie w of t he a b ove , the Ld. C ou ns e l for t he a sse ssee s ta te d tha t the a d d iti on a l gr oun d b e a d mi tte d a nd a dj ud i ca te d a s th is i s a pur e l y le ga l gr oun d a nd no n e w f a cts a re r eq ui r e d to be g one in to to a dj ud i ca t e thi s gr ou nd be ca u se al l th e se fa c ts a s p r od uce d be fore the Be nch a r e ve r y mu ch p a r t of th e a sse ssme nt re cor d .
4. O n the oth e r h a nd, th e Ld . C I T D R Mr s.C .C h a nd r a k a nt a opp os e d the a dmi ss i bi l it y of th e ad d i ti ona l g ro un d. S he fi r st took us t hr ou gh t he te ch ni ca li ti e s t ha t the a s se s se e 's a pp l ic a ti on fo r a d di ti on a l gr oun d is da t e d 1 9 .0 3 .2 0 2 1 wh e re a s the a sse ssee ha s d e p osite d the ch a l la n f or ta k i ng ITA No.1573/Chd/2018 A.Y .2016-17 Page 5 of 19 cop i e s f r om th e AO on ly on 2 0. 0 3 .2 0 21 . Ac cor d i ng to h e r , thi s a p pl i ca ti on i s t ota l ly me c ha n i ca l a n d r itu a l is ti c a n d doc ume nts ob ta i ne d fr om t he Dep a r tme n t w e re no t a vai l a b le wi th th e a s se s see a t th e t ime of ra i si n g th i s a d d iti on a l gr oun d . H e n ce , sh e a r gue d tha t a t t hi s ve r y cou nt t he a sse sse e 's a d d i tio na l g r oun d sh ou ld be re je cte d.
5. W he n thi s fa c t wa s p oi nt e d ou t t o th e Ld. C ou ns e l f or the a sse ssee , he sta te d th a t the asse ssee obt a ine d t he le tte r wr i tte n by the AO to t he Ad d l .C I T f or a p p r ova l of a sse ssme nt or de r u /s 1 5 3D of t he A ct a n d a p p r ova l a cc or d e d b y the Ad d l. C I T u /s 15 3 D of th e A ct wer e a c tua l l y ha n de d ove r b y the AO on l y on 1 9 .0 3 . 20 2 1 , wh e re a s th e a sse ssee w a s a s ke d to d e p os it a su m of Rs .1 0 0 /- w h ic h w a s e ve ntu a l ly d e p osi te d onl y o n 20 . 03 . 2 02 1 . W he n a q ue sti on w a s po in te d out to t he Ld. C I T D R a b out the a ut he nti ci ty of the se d ocu me n ts, she sta te d tha t the se d ocu me nt s a re ta k e n fr om the De p ar tme nt bu t h e r onl y p oin t is th a t the a ss e s see f ir s t r a i se d thi s a dd i ti ona l gr ou nd a n d a fte r t ha t o bt a in e d th e co pi e s of a pp r ov a l a cc or de d u /s 1 5 3 D of t h e Ac t by the Ad d l.CI T.
6. W e ha ve g one th roug h the d oc ume n ts i .e . a p p l ic a ti on of the A O to the Ad dl . C I T da t e d 2 9 .0 6 . 20 1 7 a n d th e a p pr ov al a ccor d e d by t he Ad d l. CI T u /s 153D of th e A ct d a te d 29 . 06 . 2 01 7 . We h a ve a ls o gon e t hr ou gh the a d d iti on a l gr oun d r a i se d i n r e g a rd to th e va l i di ty of a ss e ssme n t or de r ITA No.1573/Chd/2018 A.Y .2016-17 Page 6 of 19 pa s se d u/s 153A of th e Ac t th a t the st a tut or y and ma nd a tor y a p p r o va l a s r e q ui r e d u/s 15 3 D of th e A ct w a s obt a in e d me ch a ni ca l l y a n d r it ua l is ti c on l y a n d th e re is no a pp l ic a ti on of min d b y t he Ad d l. CI T. A fte r goi n g thr oug h t he a dd i ti ona l g ro un d ra i s e d b y the asse ssee , we a re of th e v ie w tha t t hi s gr ou nd i s p ur e l y le ga l in n a tur e a n d no n e w fa c ts a re re q u ire d to be gone in to to a d j ud i ca te th is gr ou nd , a s the f a cts are a va i la b l e on the a sse s sme n t r e cor d as di sc us se d a bove , h e n ce , we a d mi t th i s a d d i ti onal g r oun d a nd a dj ud i ca t e the i ss ue .
7. Th e Ld . C oun se l fo r th e a sse ssee b e f ore us st a te d tha t thi s is sue i s s q ua r e l y c ove re d b y t he de ci si on of th e H on 'ble B omb a y H ig h C o ur t i n t he ca se of P CI T Vs . S h re e le k ha Da ma n i ( 20 1 9 ) 30 7 C TR 2 18 . He a l so sta te d th a t t he Tr i b un a l is c on s is te n tl y ta k i ng view a nd he ci te d the fol l ow in g ca se l aw s:
S.No. Name of the Judgement Citation 1. Sanjay Duggal Vs. ACIT ITA No.1813/Del/2019 2. M3M India Holdings Vs. DCIT 71 ITR(Trib.) 451
3. Dilip Constructions Pvt. Ltd. Vs. IT(SS)A No.66 to 71/CTK/2018 ACIT
4. Saurabh Agarwal Vs. DCIT ITA Nos. 263 to 267/Agr/2017
5. Rajesh Ladhani Vs. DCIT ITA No. 106 to 108/Agra/2019
6. Uttarakhand Uthan Samiti Vs. ITO ITA No. 48 to 52/DDN/2019
7. Rishabh Buildwell Pvt. Ltd. Vs. DCIT ITA No. 2212/Del/2018 ITA No.1573/Chd/2018 A.Y .2016-17 Page 7 of 19
8. AAA Paper Marketing Ltd. Vs. ACIT ITA No. 167/Lkw/2016
9. M/s Rajat Minerals Pvt. Ltd. Vs. IT(SS)A Nos.41 to 47/Ran/2019 DCIT
10. Geetarani Panda Vs. ACIT IT(SS)A Nos. l/CTK/2017
11. ACIT Vs. CR Mittal & Sons (HUF) IT(SS)A No. 100/JAB/2014
8. Th e Ld .C o un se l f or th e a sse s see a l so r e l ie d u pon t he re ce n t de ci si on of the I TA T, M u mb a i B e nc h in th e c ase of Ar ch Ph a r ma l a bs Ltd . Vs . AC I T, C C -3 2 in I TA N o.6 6 5 6 /M u m /2 01 7 & O the r s d a te d 0 7 .0 4 .2 0 21 , w h e re i n e xa ct ly on ide n ti ca l fa c ts the Tr i b un a l h a s he ld th a t t he a pp r ov in g a u tho ri ty ha s not m e n tio ne d any pr oc e ss of de r iv in g sa ti sf a cti on s o a s to e x hi b it d ue a p p li ca t ion o f min d by th e a p pr ov in g a ut hor i ty.
9. O n t he o the r ha n d , th e Ld . C I T D R too k u s t hr ou gh t he De pa r tme nt a l C ir cu l a r F. N o. 28 6 / 1 6 1/2 0 0 6 -I T ( I n v. II ) d a te d 22 . 12 . 2 00 6 w h e re i n e n ti re p r oc ess of se a r ch a nd se i z ure a sse ssme nt is me n ti on e d a nd a cco rd i ng to h er t hi s is str i ctl y f ol low e d a nd th e re i s no d e vi a ti on f r om th e s a me. Sh e a l so sta t e d th a t t he Ad d l .C I T is s up e r vi si n g a u tho ri ty of the AO in ca se of se a r c h a sse ss me n t and the re is no a ll e ga tio n b y t he a sse ssee t ha t t he re i s a n y d e via tion i n t he pr oc e ss . She re a d ou t th e r e le va n t c la u se s of th e ab ove ci rc ul a r i ss ue d by the B oa rd .
ITA No.1573/Chd/2018
A.Y .2016-17 Page 8 of 19 10 . W e ha ve g one th roug h a ll t he fa c ts of the c a se f ir st a n d a ls o g one th r oug h th e P a p er B ook fi l e d b y th e a sse sse e on 18 . 05 . 2 02 1 wh e re in re le va n t t wo d ocu me n ts i .e . le tte r b y t he AO to th e A dd l .C I T w hi ch is e n cl ose d i n a sse sse e 's Pa pe r B ook a t p a ge N o.1 a n d w hi ch r e a ds a s u nd e r :
Government of India Office of the Asst. Commissioner of Income Tax, Central Circle-II, Opp.B.V.M. School Kitchlu Nagar, Ludhiana.
No.ACIT/C-II/Ldh/2017-18/446 Dated:29.06.2017 To The Additional Commissioner of Income Tax, Central Range, Ludhiana.
Madam, Sub: Approval under section 153D of the Income Tax Act, 1961- in the case of M/s Inder International (PAN AABFI7996J) and Sh.Abhay Jain (PAN AHEPJ7203M) - matter regarding-
********* Kindly refer to the subject cited above.
Keeping in view the orders of Hon'ble Punjab & Haryana High Court Chandigarh (whereby directing the assessment order to complete the assessment proceedings by 30.06.2017), draft assessment orders of the following cases have been prepared:
S.No. Name & address of the PAN Assessment assessee Years
1. M/s Inder International, AABF17996J 2011-12 to 594, Nirankari Mohalla 2016-17 No.1, Overlock Road, (six Years U/s Ludhiana 153A)
2. S.Abhay Jain Prop. M/s AHEPJ7203M 2012-13 to Shree Lakshmi Steels, 467, 2016-17 Industrial Area-B, (Five Years U/s Millerganj, Ludjhiana 153C) ITA No.1573/Chd/2018 A.Y .2016-17 Page 9 of 19 Submitted for kind perusal and statutory approval U/s 153D of the Income Tax Act, 1961.
Yours faithfully Encls: Assessment folders in 11 cases alongwith Corresponding draft assessment Orders. Sd/-
(Manke Shah Kapoor) Asstt. Commissioner of Income Tax Central Circle-II, Ludhiana 12 . O n p a ge 2 , the r e le v a nt st a tutor y a p p r ova l a cc or de d u/s 1 53 D o f the A ct b y t he Ad d l .C I T i s a ls o e nc los e d a nd t he sa me r e a d s a s un d e r :
Government of India Ministry of Finance Office of the Addl. Commissioner of Income Tax, Central Range, Ludhiana.
_______________________________________________________________________ SCO 1-6, 2 nd Floor, Opp.B.V.M. School Kitchlu Nagar, Ludhiana.
F.No.Addl.CIT(C), R/Ldh./16-17/560 Dated:29.06.2017 To The Asst. Commissioner of Income Tax, Central Circle-II, Ludhiana.
Sub: Approval u/s 153D of the I.T. Act, 1961 in the case of M/s Inder International (PAN AABFI7996J) and Sh.Abhay Jain (PAN AHEPJ7203M) -regarding-
********* Kindly refer to the subject cited above.
Please refer to your office letter No.446 dated 29.06.2017, received in this office on 29.06.2017 thereby submitted draft assessment order in the following cases:ITA No.1573/Chd/2018
A.Y .2016-17 Page 10 of 19 S.No. Name & address of the PAN Assessment assessee Years
1. M/s Inder International, AABF17996J 2011-12 to 594, Nirankari Mohalla 2016-17 No.1, Overlock Road, (six Years U/s Ludhiana 153A)
2. Sh.Abhay Jain Prop. M/s AHEPJ7203M 2012-13 to Shree Lakshmi Steels, 467, 2016-17 Industrial Area-B, (Five Years U/s Millerganj, Ludjhiana 153C) Necessary statutory approval u/s 153D is given to pass the above assessment order, as sub. Assessment record in this case is returned herewith.
Encls: As above.
Sd/-
(Dr.Rajinder Kaur) Addl.Commissioner of Income Tax Central Range, Ludhiana 11 . F r om t he s e tw o d ocu me n ts it i s c le a r th a t the AO has pr e pa re d a d r a f t a s se s sme n t or de r on l y e it he r on 28 .0 6 .2 0 1 7 or on 2 9 . 06 . 20 17 . Thi s d r a ft a ss e s sme n t or de r wa s s e nt to the Ad d l .CI T on ly on 2 9. 0 6. 2 0 17 a lon gw i th d ra f t a sse ssme nt or de r of oth e r grou p ca se s a n d th e A dd l .C I T, C e n tr al Ra ng e , Lud hi a n a h a s a c cor d e d a p p r ova l u /s 1 5 3 D of th e A ct tha t ve r y d a y i.e . 2 9 .0 6 .2 0 1 7 a s i s cl ea r f ro m the a b ove a p pr ov al re p ro du ce d. Th e Ad d l. C I T si mp ly r e c or de d th a t;
" Nec es sar y sta tu to r y a p prov al u / s 1 5 3D i s g iven to p a ss th e abo v e a sse ss men t ord er a s su c h . As se ss men t rec ord in th i s c a se i s re turn e d h ere wi th ."
12 . W e ha ve gone thr oug h th e de ci sion of H on 'bl e B omba y Hi gh C our t ci te d b y the Ld . C ou n se l f or t he a s se ssee i n t he ITA No.1573/Chd/2018 A.Y .2016-17 Page 11 of 19 ca se of S h re e le kh a Da ma n i (s up r a ) wh e re in a l most i d e n tic a l a pp r ov a l w a s c on si de re d b y the H on' bl e B o mba y Hi gh C ou rt a nd t he re le v a nt f in d in gs a r e a s un d e r :
"6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks :-
"To, The DCIT(OSD)-1 Mumbai Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. Shreelekha Nandan Damani for A.Y. 2007-08 reg.
Ref : No. DCIT (OSD)-1/CR-7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analise the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted.
Approval to the above said draft order is granted u/s 153D of the I.T. Act, 1961."
7. In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st 3 of 4 Uday S. Jagtap 668-16-ITXA- 15=.doc December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of ITA No.1573/Chd/2018 A.Y .2016-17 Page 12 of 19 validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises."
13 . W e h a ve a ls o gon e th r oug h the re ce n t ca se la w of Mu mb a i Tr ib un a l in the c a se of Ar c h Ph a r ma l a bs Ltd . (s up r a ) w he re i n th e Tr i b un a l he ld a s un d e r :
" 1 1 .1 It m a y be per ti ne n t to o b se rve a t th i s sta ge th a t th e i mpu gn e d a sse ssmen t or d ers we r e p a sse d u / s. 1 4 3 (3 ) r ws 1 5 3 A of the Ac t f o r th e A Y 2 00 3 -0 4 to AY 2 00 8 - 09 a n d f or th e AY 2 0 0 9- 1 0 u/ s. 1 4 3 ( 3 ) of th e Ac t pur su an t to se arc h c arr ied o u t un d er s. 1 3 2 of th e Ac t. F or p a ss ing su ch a ss e ssmen t ord ers, th e Ass essin g Of f ic er is go vern ed b y s. 1 5 3D of the A c t wh ere b y th e As se ss ing Of f ic er sh ou l d co m pl e te th e a sse s sme n t proc eed ing s and pre p are a d r af t a sse s smen t ord er wh i ch n e ed to be pl aced bef ore th e a p pr ov in g au th ori ty i.e . Jo in t / Ad d l . Co mmi ss io ne r ( de sign ated au th or i ty g iv in g a p prov al to se ar ch a sse s smen ts u / s. 1 5 3 D of th e Ac t) . T h e ap pr ov in g au tho r ity i s n ec ess ar il y req uire d to o b je c ti vel y ev al u a te su c h dr af t a sse ssmen t ord e r wi th d u e a p pl i ca tio n of min d o n var iou s i ssu e s c on tain ed in su c h or der so as to d erive h i s/ h er c on cl u sive sa ti sf ac tio n th a t th e pro po sed ac ti on of AO is in c onf o rmi ty wi th su b si sti ng l a w. T h e A O is o bl ig a te d to pa s s th e a sse ssmen t or d er exac tl y, as per a p prov al / d irec ti on s of th e d esign a te d au th o ri ty . In e v i ta b l y, th i s ev alu a ti on i s to be made o n b a si s of ma te r ial ga th e red a t tim e of se arc h as we l l a s ob tai n ed in the co ur se of th e a s se ss men t pr oce ed in g. T h e req uire men t of l aw i s to gran t a p prov al n o t merel y a s a f ormal i ty or a sy mbo l ic ac t bu t a man d ator y req uire men t.
1 1 .2 In th e b ac kd ro p of f acts narr a ted in th e prec ed in g p ar a s, i t i s th e co n ten ti on on beh alf of the a ssse sse e th a t a p pro v al gran ted un d er S. 15 3 D d oes no t me e t t h e requ ire men t o f l a w an d h en c e a sse ssmen t ord e rs p a sse d in c on se qu en ce of su ch n on -e st ap pro v a l i s a nu l l ity in la w. T h e a sse ssmen t o rde rs th u s p a ssed i s v iti a ted in l a w ITA No.1573/Chd/2018 A.Y .2016-17 Page 13 of 19 wh i c h il l eg al ity can n o t be c u red . In su p por t of c harg e of n on est a ppr ov al , se ve ral c on ten ti on s h ave bee n ra i se d viz (i) th e a p prov al ac cor ded u n de r sec ti on 1 5 3 D i s wi tho u t an y oc c a sion to ref er to th e a sse ssme n t rec ord s an d s eized m ater i al , if an y, inc r i min a ti n g th e a sse sse e an d h en c e su ch a p prov al i s in th e real m of an a b str ac t a p prov al o f d raf t as se ss men t ord er s wh ic h wa s u n su b sta n ti a te d an d u n s u ppo r ted and c on sequ e n tl y suf f e red f ro m to ta l n on -a p pl ic a ti o n of min d ( i i) a p prov al gr an te d h u rr i ed l y in a spu r in vol v in g vo lu min ou s as se ss men ts sp an n in g o ver 7 a sse ssmen t ye a rs an d th u s o nl y a s ym bol ic ex erc ise to mee t th e re qu ire men t of l a w ( i i i) T ota l l ac k of objec ti v i ty in dr a wi n g sa ti sf ac tio n o n ob jec ti ve ma ter i al wh i le giv in g a c om b in ed a p prov al f or 7 a sse ssmen ts a n d al so wi th ou t ev al u a ti n g th e n u anc e s of eac h a sse ssmen t ye ar in vol ve d ( iv ) th e mu n d an e ac ti on o f A dd l . C IT u n d er S . 1 53 D in a c osme ti c man n er give s inf al li bl e i mpre s sion of a p prov al o n d o t te d l in e an d th u s d ef e ats th e pu r po se of su perv is io n of search a sse ssmen ts ( iv) in i ti a l ed d r af t as se s smen t or de r s n o t av a il abl e in o ff ic e rec ord s.
1 1 .3 As o b ser v ed , Se c tion 1 5 3 D be s to ws a su perv isor y ju r i sd ic ti on on th e d e sign a ted au th or i ty in re sp e c t of se arch r el ated a sse ssmen t an d th u s en jo in s a salu ta r y d u ty of sta tu tor y n a tu re. T h e d esi gna ted su per ior au th or i ty i s th u s ex pec ted to co nf irm to th e sta tu to ry re qu ire men t in l e tter an d sp i ri t. It is e vi d en t f rom th e c ommun ic a ti on o f AO an d con se qu en t a p p rov al the reon un d er S. 1 53 D th a t n o as se ss men t rec ord f or an y as se ss men t ye ar in q ue stion o r an y se ized ma ter i al h ad tr a vel ed to the au t ho rity co nc ern ed f or h is ob jec ti ve con s id er a tio n of th e sa me qu a th e d raf t a s se ss men t o rde r s. No re f eren c e in th i s reg ard i s mad e i n th e a p prov al n o te e i th er wh ich ma y d isc ard su c h al l eg a ti on a s u n tru e. No o th er ma ter i al o r o rd er sh ee t in a sse ssmen t proc eed in g s e tc. we re pl ac e d bef ore u s e i th er to e sta b l i sh o th er wi se . Exc e p t th e se t wo d oc u men ts n a mel y, a so l i tar y c o m mu n i c a ti on f ro m AO t o th e A dd l . C IT d a ted 2 9 /12 /2 0 10 an d an in t urn a p prov al b y Ad d l . C IT d a ted 3 1 /12 /2 0 1 0, the re i s n o th in g el se bef ore u s to g a u ge th e f ac ts d if f er en tl y. A b are ITA No.1573/Chd/2018 A.Y .2016-17 Page 14 of 19 gl an ce a t th e a p prov al so ac c o rde d m ak e s i t ev id en t th a t su c h a p prov al i s gen eric an d l i stle ss an d ac c ord ed in a bl an ke t man n er wi th ou t an y ref eren c e to an y i ssu e in re s pec t of an y of th e 7 a sse ssmen t ye ar s. A p p aren tl y, th e a p prov al h a s bee n gr an ted o n a d o t te d l in e wi th ou t an y av a il a b il i ty of rea son abl e tim e wh ic h f irms u p th e bel ief to wa rd s n on ap pl ic a tio n o f min d. Be sid e s, the ap pro v al h a s be en gr an ted i n a c on so lid a te d man n er f or al l a sse ssme n t y e ar s f or wh ich vo lu mn o u s a sse ssme n t o rd er s we re pre p ared . T he wh ol e sequ en c e of action a p p ar en tl y a p pe ar s to be il lu sor y to merel y mee t th e requ i reme n t of la w a s an e mp ty f o rmal i ty . It i s al so al le ged on be h alf of a sse ssee th a t th e draf t a sse ssme n t ord er s are no t av a il a bl e on rec o rd wh ic h al l eg a ti on h a s no t been rebu t ted . T h e draf t a sse s sme n t o rde rs sh o wi n g so me mar k in g / in ti a l s e tc. c ou l d h ave g iven a val u abl e in p u t o n th e a p pl ic a b il i ty of min d and c ou ld thro w l igh t on o b jec ti v i ty a p pl ie d o wi ng to to ta l s il en c e on a n y d el in e a ti on o n th e se a spe c ts in the a p prov al me mo. T h e rec ord s bef ore u s are to ta l l y mu ted .
1 1 .4 B ased on sol i ta r y c o mm un ic ati on pl aced bef ore u s, it i s osten si ble th a t d raf t a sse ssmen t ord ers we re pl ac ed bef o re th e A dd l . C IT o n 2 9 .1 2 . 20 1 0 f or th e f irst ti me. It i s ax io ma ti c f ro m the pl a in re ad in g of ap pro v al m emo th at v a rio u s a sse ssmen t ord e rs and th e is su e s in cor po r ated in the a sse s sme n t ord ers, we re n e ve r su b jec ted to an y d i sc u s sion wi th the au th or i ty gr an ti n g a p prov al pr ior to 2 9. 1 2 .2 0 1 0. It i s e vide n t f rom th e CBD T Circ u lar No . 3 of 2 0 08 da ted 1 2 . 03 . 2 00 8 th a t the l eg i sl a tu re in i ts h igh e st wi sd o m made i t obl ig a tor y th a t t he a sse ssmen ts of search c a se s sh ou l d be m ade wi th th e pr ior a p prov al of su per io r au th or i ty , so th a t th e su per ior au th ori ty a p pl y th e ir min d on th e m ater i al s an d o th e r a tten d in g c ir cu msta n ce s on the b as is of wh ic h the A sse ssin g of f ic er is ma k in g th e a sse s sme n t an d af ter d u e a p pl ic a ti on of min d an d on the b a si s of seized ma ter i al s, th e s upe r io r au tho r ity is requ ired to ac cord a p prov al th e re s pec ti ve A sse s sme n t ord er. S ol emn o b je c t of en tr u s ti n g th e du ty of Approv al of a sse ssmen t in se arc h c a se s is th at th e Ad d i tio n al C IT , wi th his e xper ien c e and ma tu r i ty of ITA No.1573/Chd/2018 A.Y .2016-17 Page 15 of 19 u n de rsta n d in g sh ou ld a t l e a st m in i mal l y sc ru ti n iz e the se ized d oc u men ts an d an y o th er ma te r i al f ormin g th e f oun d a ti on of A sse s sme n t. It i s el emen ta r y th a t wh e ne ver a n y sta tu tor y o bl ig a ti o n i s c a st u pon an y sta tu tor y au th or i ty , su ch au th or i ty i s req u i re d to d i sc h arge i ts o bl ig a ti o n no t me ch an ic al l y, n o t eve n f ormal l y bu t af ter d u e a p pl ic a ti on of min d . T h u s, th e obl ig ati on of gran ti n g A p prov a l ac ts a s an in b u il t pro tec ti on to the tax pa yer ag a i ns t ar b i tr ar y or u n ju st ex erc ise of d iscr e ti on by the AO. T he ap prov al gr an ted u n d er se c tio n 1 5 3 D of th e Ac t sh ou ld n ece ssar il y ref l ec t d u e a p pl ic a tio n of mind and if th e sa me i s su b jec ted to ju d ic i al sc ru ti n y, i t sh ou l d stan d f or i ts elf an d sh ou ld be s elf - def en d in g . T h ere are l ong l ine of ju dic i al pr ece de n ts wh ic h p ro vide s gu id an c e in a p pl y in g the l a w i n th i s reg ard .
1 1 .5 A t th e c o st of re pe ti ti o n, i t ma y be re i ter a te d th a t in the in sta n t c ase, ap pro v i ng au tho r i ty d id n o t men ti on an y th ing in th e a p prov al me mo to wa rd s h i s/ h e r proc e ss of d eriv in g s ati sf ac tion so a s to ex h i b i t hi s/h er d ue a ppl ic ati on of min d. W e m ay o b serv e th a t P ar a 2 of th e abo ve a p prov al l e tter me rel y s ay s th at "A p pr ov al i s h ere b y ac cord ed u / s. 1 5 3D of th e Inc o me - tax Ac t, 1 9 61 to c ompl e te a sse ssme n ts u / s. 1 4 3( 3 ) r. w. s. 15 3 A o f the I. T . Ac t in th e f ol l o wi n g c a se on the b a si s o f d raf t a sse s smen t ord er s.. . " wh i ch c l earl y prov e s th a t th e Ad dl . C IT h ad r ou tin el y g iv en ap pro v al to the A O to pa s s the ord er on l y on the b a si s o f c on ten ts men ti on ed in th e d r af t a sse ssmen t ord e r wi th o u t an y a p pl ic a ti on of min d an d se ized ma ter i al s we re n o t l oo ked a t an d /o r o th er e nqu ir y an d ex a min a ti on wa s n ev er c arr i ed ou t. F ro m th e sa id a p pro v al, i t c an be e a sil y i nf erre d th a t th e sa id ord er wa s a p prov ed , sol el y re ly in g u pon th e i mpl ied u n d er ta k in g o b ta i n ed f rom th e Asse ssin g Of f icer in th e f orm of dr af t a sse ssme n t ord er th a t AO h a s ta k en d ue c are wh il e f ra min g re s pe c ti ve d raf t a sse s sme n t o rde r s an d th a t a ll th e ob serv a ti on s m ad e in th e a p pr a is al re po r t rel a ti n g to ex a min a ti on / inv e stig ati on of se ized ma te r ial an d i ssue s u ne ar th ed du r in g se arc h h av e bee n sta ted l y con sid e re d b y th e A O s eek in g ap pro v al. T h us, th e san c t io n in g au tho r ity h a s, in ef f ec t, a bd ic a ted his/ h er sta tu tor y f u n c tion s and ITA No.1573/Chd/2018 A.Y .2016-17 Page 16 of 19 d el igh tf u l l y rel ega ted h is /he r sta t u tor y du ty to th e su bord in ate A O, wh o se ac ti on the Ad d iti on al C IT , wa s su p po sed to su perv i se . T h e ad dl . C IT in sho r t a p pe ar s to h av e ad o p ted a sho r t c u t in th e ma tter an d an u n d er ta k in g f rom A O was c on sid ere d ad equ a te b y h i m/ he r to ac c or d a p prov al in al l a sse ssmen ts in v o l ved . Man if estl y, th e Ad di tio n a l C IT , wi tho u t a n y co n s ide r ati o n of meri ts i n pro po sed ad ju st men ts wi th ref e ren ce to a p pr ai s al repo r t, in c r im in a tin g ma te r i al co ll ec ted in se arch e tc. h a s proc eed ed to gr an t a si mpl ic i to r ap pro v a l. T h is a p pro ach of the Ad d i tio n al C IT , Cen tr al h a s ren d ered th e A p pro v al to be a mere f ormal i ty an d c an n o t be c ou n te n an ced in l a w.
1 1 .6 T h ere are se veral d ec is ion s, wh ich su p por ts the v ie w th a t a p prov al g r an ted b y th e su per io r au th or i ty in mec h an ic al man n er d ef e ats the ver y pu r po se of o bta in in g ap pro v al u / s 15 3 D . S u ch perf un c to r y a p pr oval h a s n o l e g al s anc ti ty i n th e eye s of the l a w. T he d ec ision of th e co- ord in ate ben c h in S h reel ekh a D a man i vs. D C IT 17 3 T T J 3 3 2( M um.) and a p prov ed b y ju r i sd ic tio n al H igh Co ur t su bsequ en tl y a s re por ted in 30 7 CT R 21 8 af f ir ms th e pl e a o f th e As se ssee.
1 1 .7 Very rec en tl y, the c o- ord in a te be nc h in S an ja y D u ggal & or s ( IT A 18 1 3 /D el /2 0 1 9 & or s; ord er d a ted 19 . 0 1. 2 0 2 1 h as al so ec h oe d th e s ame v ie w af ter a de ta i le d an al y si s of si mil ar f ac ts and al so ex pre sse d a d i sc ord an t n o te o n suc h mec h an ic a l ex erc ise of re sp on si b il i ty pl aced o n d esign a ted au th or i ty u n de r sec ti on 1 5 3 D of th e Ac t. H en ce, vin d ic a te d b y t he f ac tu al po si tion a s n o ted in prec ed in g par a s, we f ind c on side ra ble f orc e in th e pl e a r a i sed by the Asse sse e ag a i ns t ma in ta i n ab il i ty o f h ol l o w a p pr ov a l u n der S . 15 3 D to ta l l y d evo id o f an y a p pl ic a ti o n of min d . T h e a p prov al so gr a n te d u n d er th e she l ter of sec ti o n 1 5 3D , d oes no t, in ou r v ie w, p a ss th e te st of l egi tim ac y. T he As se ss men t or d ers of variou s a sse ssmen t ye a rs a s a c on se q ue nc e of su ch in ex pl ic a bl e a p prov al l ac k s le g i ti ma c y. Co nsequ en tl y, th e im pug ne d a s se ss men ts rel a ta b l e to se arch in c ap t ion ed a p pe al s ar e n on est an d a n u ll i ty an d h en ce q ua sh e d. "ITA No.1573/Chd/2018
A.Y .2016-17 Page 17 of 19 14 . I n vie w of th e a bo ve de ci si on a n d t he f a ct th a t i n t he pr e se n t c a se be for e u s a ls o t he Ad d l .C I T h a s a c cor d e d t he a pp r ov a l u/s 15 3 D of the Ac t only o n 2 9 .0 6 .2 0 1 7 w h e n t he AO p l a ce d the a ss e s sme n t or der on th a t ve r y d a te i .e . 29 . 06 . 2 01 7 . Th e r e le v a nt a p p r ova l b y th e A dd l .C IT r e a d s a s un de r :
" Nec es sar y sta tu to r y a p prov al u / s 1 5 3D i s g iven to p a ss th e abo v e a sse ss men t ord er as su c h . As se ss men t rec ord in th i s c a se i s re turn e d h ere wi th ."
15 . F r om th e a bo ve , i t is cl e a r that th i s i s tota l l y n on a pp l ic a ti on of mi n d b y th e Ad d l. C I T, w h o i s t he su pe r vi si ng a uth or it y of t he AO , w h ile gr a nt in g s ta tu tor y a ppr ov a l u/s 15 3 D of t he A ct, th e i ssu e sta n ds cov e r e d i n f a vou r of the a sse sse e b y va r ious de ci si on s cite d a b ove . I n the p re se nt ca se be f ore u s, w e n ote d th a t t he Ad d l. CI T di d n ot me n ti on a nyt hi ng in th e a p pr ov a l me m o tow a r d s hi s p r oce s s of de r iv in g sa ti sf a ct ion so a s to e xhi b i t h i s d ue a pp li c a tio n of min d . W e no te d th a t the Ad d l . C I T me re ly a pp ro ve d t he le tte r a n d th e re le v a nt is no te d i n a bo ve p a r a s. W e n ote d tha t the r e le v a nt Pa r a o f th e a bov e a p p r ova l l e tte r me re ly sa ys th a t "N ece ssar y s ta tu tor y a p prov al u / s 1 5 3D i s g iv en to pa s s th e a bov e a sse ssmen t ord er a s su c h . A sse ssmen t rec ord in th is c ase i s retu rn ed h ere wi th . . . "w hi ch cl e a r l y pr ov e s t hat the Ad d l . CI T h a d r ou tin e l y gi ve n a p p r ova l t o th e AO t o p a ss ITA No.1573/Chd/2018 A.Y .2016-17 Page 18 of 19 the or de r onl y on th e b a si s of c on te n ts me nt ione d i n t he dr a f t a ss e s sme n t or d e r w i th out a n y a p p l ic a ti on o f mi nd a n d se i ze d ma te r i a l s w e re n ot l ook e d a t be ca u se t ha t w as no t a va i la b l e be fore h im a t the ti me of gr a n ti ng of ap p r ova l to the dr a f t a s ses sme n t or d e r and oth e r e n qui r y and e xa mi na ti on w a s n e ve r ca r r ie d out. F ro m t he s a i d a p p r ova l , it ca n b e e a si ly i nf e r re d tha t the sa i d o rd e r w a s ap pr ov e d , sol e l y re l yi n g up on th e i mp l ie d un de r ta k in g ob ta i n e d f ro m the A sse ss in g O ff i ce r i n the for m of d r a f t a sse ssme n t o rd e r tha t AO h a s ta k e n d ue c a re w h il e fr a mi ng r e s pe cti ve d r a ft a sse ssme nt or de rs a nd tha t a l l th e ob se r va ti on s m a d e in t he a pp r a i sa l r e p or t r e l a ti ng to e xamin a ti on / in ve sti ga ti on of se i ze d ma t e r ia l a nd is su e s un e ar th e d d ur i ng se a r ch h a ve be e n sta te d ly c on si de re d b y the AO s ee k i ng a pp rov a l. Thu s, the sa n cti on in g a u th or ity ha s , in e f fe c t, a b di ca t e d hi s sta tu tor y fu nc ti ons a n d d e l ig htf ul l y r e le ga te d hi s sta t utor y du ty to the s ubor d in a te A O, w hose a c ti on the Ad d iti on a l C I T, w a s s u p p o se d t o su p e r vi se . Th e a d d l . C I T i n s hor t a pp e a rs to h a ve a d op te d a sh or t c ut i n the ma tt e r an d a n un de r ta k in g fr om AO w a s con si d e re d a de q ua te by h i m to a ccor d a p p r ova l i n a l l a sse ss me n ts i n vol ve d . Ma n i f e st ly , the Ad d iti on a l C I T, w ith ou t any c o nsi d e r a ti on of me r i ts in pr op os e d a dd i ti ons wi th re fe re nce to i nc r imi na t in g ma te r i a l col le cte d in se a rch e tc . h a s p r oc ee de d t o gr a n t a s imp l ic it or ITA No.1573/Chd/2018 A.Y .2016-17 Page 19 of 19 a pp r ov a l. Th is a p p r oa ch o f the Ad di ti on a l C I T, C e ntr a l h as re nde re d th e A p pr ov a l to be a me r e f or ma l ity a n d c an n ot b e con si de re d a s a ctu a l a p p ro va l i n l a w . H e nce , we q u ash t he a sse ssme nt fr a me d u/s 1 53 A of th e A ct on th is a d d iti on a l gr oun d a l on e .
16 . N e e d le ss to sa y th a t w e ne e d n ot to a dj u di ca t e t he gr oun d s r a i se d on me r i ts b y t he ass e s see a s we hav e a lre a d y q ua sh e d th e a sse ssme nt on ju r is di ct ion a l i ssu e t ha t t he sta tu tor y a p p r ova l gr a nte d u /s 1 5 3D i s w ith ou t a pp l i ca ti on of min e b y t he Add l .C I T, 17 . I n the re s ul t, the a p p e a l of t he a sse s se e i s a l lo we d.
O r d e r p r on oun ce d on 0 7 .0 6 . 20 2 1 .
Sd/- Sd/-
(N.K. SAINI) (MAHAVIR SINGH)
VICE PRESIDENT VICE PRESIDENT
Dated: 07th June, 2021
*रती*
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar