Income Tax Appellate Tribunal - Delhi
Harvansh Chawla ,Delhi vs Dcit, Central Circle 5, Delhi on 28 February, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. Manish Agarwal, Accountant Member
ITA No. 152/Del/2022 : Asstt. Year: 2011-12
ITA No. 167/Del/2022 : Asstt. Year: 2012-13
ITA No. 168/Del/2022 : Asstt. Year: 2013-14
DCIT, Vs Harvansh Chawla,
Central Circle-5, C-17, Ground Floor, East
Delhi Nizamuddin, New Delhi-110013
(APPELLANT) (RESPONDENT)
PAN No. ADDPC7559G
CO No. 121/Del/2022 : Asstt. Year: 2011-12
CO No. 122/Del/2022 : Asstt. Year: 2012-13
CO No. 123/Del/2022 : Asstt. Year: 2013-14
Harvansh Chawla, Vs DCIT,
C-17, Ground Floor, East Central Circle-5,
Nizamuddin, New Delhi-110013 Delhi
(APPELLANT) (RESPONDENT)
PAN No. ADDPC7559G
Assessee by : Sh. Ruchesh Sinha, Adv.
Revenue by : Sh. Surender Pal, CIT-DR
Date of Hearing: 27.02.2025 Date of Pronouncement: 28.02.2025
ORDER
Per Satbeer Singh Godara, Judicial Member:
These Revenue's three appeals ITA Nos. 152, 167 & 168/Del/2022 and assessee's cross objections CO Nos. 121 , 122 & 123/Del/2022 for Assessme nt Years 2011-1 2, 2012-13 & 2013-14, arise against the CIT(A)-24, New Delhi's in case Nos.
CIT(A), Delhi-35/10076/2019-20, CIT(A), Delhi-35/10077/2019- 2 ITA Nos. 152, 167 & 168/Del/2022 CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla 20 & CIT(A), Delhi-35/10078/2019-20, in procee dings u/s 153A of the Income Tax Act, 1961 (in short " the Act"), appeal-wise;
respectively.
2. Heard both the parties at length. Case files perused.
3. It emer ges at the outset that the assessee's cross objec tions herein raise an identical legal issue of validity of the impugned section 153A assessments itself for w ant of a valid approval u/s 153D of the Act. Learned counsel has file d the corresponding common section 153D approval to this effect dated 31.12.2018 as well.
4. Learned CIT-DR on the other hand has vehe mently argued that this is an instance of the Joint Commis sioner having already issued the necessary directions u/s 144A of the Act to the Assessing Officer and therefore, the necessar y presumption is that the said prescr ibed authority had duly applied his mind with all the re levant facets under the Act. He has further taken pains to file the Revenue's written submissio ns reading as under:
"Sub: Written S ubmission in the above case on the legal ground of validi ty of Section 153D approval gr anted by the J CIT/Addl. CIT - reg.3 ITA Nos. 152, 167 & 168/Del/2022
CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla In the above ca se, it is humbly submitte d that in addition to the oral a rguments submitted by the undersigned, the fo llowing lega l issues/legal submiss ions, rele vant to section 153D approval and two vital Judgments of the Ho n. Supreme Cour t, on the lega lity and legal requirements o f the Administrative Orde rs o f go vernment or e xecutive authorities, m ay kindly be consider ed:-
1. The word/ phrase - "written approval" is no t mentioned in the section 153D of the Income tax Ac t, 1961. The only phrase use d is " the pr ior appro val".
Therefore, the contents o f the writte n order of the JCIT/Addl. CIT are legally not required to be examined or cons idere d, for meeting the legal or fac tual requirements o f the approva l under section 153D.
2. The order by the Addl . CIT/JCIT under section 153D is an Administrative Order, by the highe r authority i.e. JCIT/Addl. CIT to the lower authority, i.e. A O. Such an order is not a quasi-judicial or judic ial or der. Therefore, the legal requirements and be nchmar ks regarding the principles of "the application of mind" and "the spe aking order" are not as strict or hi gh, as they are in the case o f quasi-judicial or j udicial orde r.
3. In respect of the legal requirements and the benchma rks regar ding the adminis trative orders, the Hon. Supreme Court has give n many comprehens ive judgements, which are enclosed and the rele vant portions/ parts are quote d as unde r:-
(1) Decis ion of Ho n'ble Supreme Court in the c ase of Municipal Council Neemuch vs Mahadeo Real Estate, date d 17 Septem ber, 2019, AIR 2019 SC 4517, 2019 (10) SCC 738.
"......... ...... ..14. In the prese nt case, the learned Judges of the Divis ion Be nch have arrive d at a finding that such a sanc tion w as, in fact, granted. We will examine the correctness o f the said finding of fact at a subsequent stage . Howe ver , before do ing that, we propose to examine the scope of the powe rs of the High Co urt of judic ia l review of an administrative action. Though, there are a catena of judgments o f this Court o n the said is sue , the law la id down by this Court in the case of Tata Cellular Vs. Union o f India reporte d in (1994) 6 4 ITA Nos. 152, 167 & 168/Del/2022 CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla SCC 651 lays dow n the basic principles which still hold the field. Paragr aph 77 of the said judgment reads thus: "77. The duty of the court is to confine itself to the question of le gality. Its conce rn should be:-
1. Whethe r a decis ion-making autho rity excee ded its powers?
2. Committed a n error o f law,
3. committed a bre ac h of the rules o f natural jus tice ,
4. reache d a decisio n which no re asonable tribunal would have re ache d or,
5. abuse d its powers.
Therefore, it is no t for the court to determine whether a par tic ular policy or particular decision taken in the fulfillment o f that policy is fa ir. It is only concerned with the manne r in which those decisio ns have been take n. The extent of the duty to act fairly wil l vary from cas e to case. Sho rtly put, the grounds upon which an administra tive action is subject to control by judic ial revie w c an be classified as under:-
(i) Illegality : This means the decisio n-maker must understand co rrectly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality , namely, unre asonable ness.
(iii) Proce dural impropriety.
The abo ve are only the broad grounds but i t does not rule out addition o f further grounds in course of time. As a matter of fact, in R. v. Secreta ry o f State for the Home Department, ex B rind, ( 1991) 1 AC 696, Lo rd Diplock re fers spe cifically to one development, namely, the pos sible recognition of the principle of propo rtionality. In all these cases the test to be ado pted is that the co urt should, 'consider whether something has gone wro ng o f a nature and degree which requires its intervention".
15. It could thus be seen that the scope of judicial revie w of an a dministrative action is very limited. Unle ss the Court comes to a conclusion, that the decision maker has not understoo d the law co rrectly that regulates his decis ion-making power or whe n it is found that the decis ion of the decision maker is vitiate d by irratio nality and that too on the pr inciple of "Wednesbury Unreasonable ness" or unless it is found that there has been a procedural impropriety in the decis ion-making 5 ITA Nos. 152, 167 & 168/Del/2022 CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla process , it wo uld not be permissible for the High Co urt to interfere in the decision making process . It is also equally well se ttled, that it is not permissible for the Court to examine the validity of the decision but this Court can examine only the correctness of the dec ision- making process .
16. This Court recently in the case of West Bengal Central School Service Commissio n vs. Abdul Halim repor ted in 2019 SCC OnLlne SC 902 had again an occasion to co nsider the sco pe of interference under Artic le 226 in an administrative actio n.
"31. In e xercise of its po wer of j udicial re view, the Court is to see whether the decision impugned is vitiate d by an apparent error o f law. The test to determine whether a decis ion is vitiated by e rror appare nt on the face o f the record is w hether the error is self-evident o n the face of the recor d or w he ther the error requires examinatio n or argument to establish it. If a n error has to be establis hed by a process of re asoning, o n points where there may reasonably be two opinio ns, it c anno t be s aid to be an e rro r on the face of the re cord, as he ld by this Court in Satyanaraya n v. Mallik arjuna repo rted in AIR 1960 SC 137. If the provision of a statutor y rule is reasonably capa ble of two o r more constr uctions and o ne constr uction has been ado pte d, the decisio n would not be open to interfe rence by the writ Court. It is only an obvio us misinterpretation of a relevant statutory provisio n, or ignorance or disregard thereo f, or a decis ion fo unded on reaso ns which are cle arly wrong in law, which can be cor recte d by the writ Court by issuance of writ of Certio rari.
32. The' sweep of pow er under Article 226 may be wide enough to quash unreasonable orde rs. If a decisio n is so arbitrary and capricious tha t no reasonable person could have ever arrived at it, the same is liable to be struck down by a writ C ourt. I f the decision cannot r ationally be supported by the materials on re cord, the same may be regarde d as perverse . Municipal Counc il Neemuch vs Mahadeo Real Estate on 17 September, 2019 Indian Kanoon - http://indiankanoon.org/ do c/83894917/6
33. However , the power of the Court to examine the reasonableness o f an order o f the authorities does not enable the Cour t to look into the sufficienc y o f the grounds in support of a decisio n to examine the merits 6 ITA Nos. 152, 167 & 168/Del/2022 CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla of the dec is ion, sitting as if in appe al o ver the dec isio n. The test is not what the Court considers re asonable or unreasonable but a decision which the Court thinks that no reasonable pe rson could have ta ken, which has led to manifes t injustice . The wr it Court does not interfe re, because a decision is not perfe ct.
17. It could thus be seen that a n inte rference by the High Court would be w arr anted o nly whe n the dec ision impugne d Is vitiated by an appare nt er ror o f law, i.e., when the erro r Is apparent on the face of the record and is self e vident. T he High Co urt would be empo were d to exerc ise the pow ers whe n it finds that the decis ion impugne d is so arbitra ry and capr icio us that no reasonable perso n would have ever arr ive d at. I t has been reiterate d that the tes t is not what the co urt conside rs reaso nable o r unre asonable but a dec ision whic h the court thinks that no reasonable person could have take n. Not o nly this but such a decisio n must have led to manifest inj ustice ........................ ......................
25. In the present case, we find that the Commissioner had acte d rightly as a c usto dian o f the public proper ty by pointing out the anomalies in the proposal of the Municipal Co unc il to the State Go vernment and the State Government has also respo nde d in the right pers pective by authorizing the Commissioner to take an appropriate decis ion. We are of the considered view that, both, the Commissioner as well as the S tate Government, have acted in the larger public inte rest. We are unable to appreciate as to how the High Co urt, in the present matter, could have come to a co nclus ion that it was empowered to exercise the power of judic ial review to preve nt ar bi tr ar iness or favoritism on the part of the State authorities, as has bee n observe d by it in par agraph 13. We are a lso unable to apprec iate the finding of the High Court in para 17 w herein It has observed that the impugne d decisio n of the author iti es are found not to be in the public interes t. We ask the question to us, as to whe ther directing re-tendering by inviting fres h tenders afte r giving wide publicity at the Natio nal le vel so as to obtain the best price for the public pro perty , would be in the public interest or as to whether awarding contract to a bidder in the te nder process whe re it is found that there was no adequate public ity and also a possibility o f there being a cartel of bidders , would be in the public interest. We are of the conside red v iew that the decisio n of the Commissioner 7 ITA Nos. 152, 167 & 168/Del/2022 CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla whic h is set aside by the High Court is undoubte dly in larger public interest, w hich wo uld ensure that the Municipal Council earns a higher revenue by enlarging the scope o f the competition. By no stretch of imagination, the decision o f the Sta te Government or the Commissioner co uld be termed a s illegal, impro per, unreasonable or irrational, which parameters only could have permitted the High Court to interfe re. Interfe rence by the High Co ur t when none of such parameters exist, in o ur vie w, w as tota lly impro per. On the contrary, we find that it is the High Co urt, which has failed to take into cons ide ration relevant mate rial.
26. In the result, the impugned O rders are not sustainable in law. The appeals are, accordingly, allo w ed and the impugned orders dated 31.08.2017 and 05.07.2018 are quashe d and set aside . The petition of respondent No . 1 stands dismissed... .............."
(11) Decis ion of Ho n'ble Supreme Court in the c ase of West Bengal Ce ntral School Service ... vs A bdul Halim date d 24 July, 2019, AIR 2019 S C 4504, AIR ONLINE 2019 SC 2188 AIR 2020 SC ( CIV) 82.
"......... ...31. The sweep of power unde r Artic le 226 may be wide eno ugh to quash unreasonable orders . If a decis ion is so arbitrary and capr icio us that no reasonable person could have ever a rrived at it, the same is liable to be struc k do wn by a w rit Court. If the decision cannot rationally be supported by the mate rials on reco rd, the same may be regarded as pe rve rse.
32. However , the power of the Court to examine the reasonableness o f an order o f the authorities does not enable the Cour t to look into the sufficienc y o f the grounds in support of a decisio n to examine the merits of the decision, sitting as If in appe al over the dec ision. The test is not what the Court considers re asonable or unreasonable but a decision which the Court thinks that no reasonable pe rson could have ta ken, which has led to manifes t injustice . The wr it Court does not interfe re, because a decision is not perfe ct.
33. In enterta ining and allowing the w rit petition, the High Court has lost sight of the limits of its extraordinary pow er of judicial review and has in fact sat in appea l over the decision of the responde nt N o.
2...... ............... ."8 ITA Nos. 152, 167 & 168/Del/2022
CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla
5. Faced with this situation, we invited Revenue's attention to various recent decisio ns that such an assessme nt based on a common section 153D approval is not sustainable in law in light of learned co-ordinate bench's order in Aditya Sharma Vs. ACIT, ITA Nos. 3616 to 3621/Del/2019 vide order dated 15.01 .2025 holding as under:
"3. We next note tha t ther e arises the fir st and foremos t issue of validity o f all the impugned ass es sments framed u/s 143(3) r .w.s. 153A of the Act; dated 02.03.2017, in consequenc e to the searc h action here in dated 15.02.201 4, on the gr ound that the learned pr escribed authority ha d not ac corded a v alid a pproval ther eto u/s 153D of the Ac t. The Revenue c ould har dly dispute that the instant legal ground sought to be r aised at the ass ess ee' s behest goes to t he root of the matter and therefore, we quote National Therma l Power Co. Ltd. v s. CIT (199 8) 229 ITR 383 (SC); as considered in Allcargo Globa l L o gistics Ltd. vs . D CI T (2012) 137 ITD 2 87 (SB) (Mum), that suc h an additional ground could v ery well be al low ed t o be rais ed in s ec tion 254(1) pr oc eedings, in or der to determine the correct tax liability of an a ss es see provided all t he r eleva nt facts form par t of the rec or ds .
4. It is in this factua l back dr op that we admit the as sessee' s ins tant legal gr ound and note with the able as sista nce coming from both the parties that the learned Assess ing Offic er had sought the pr esc ribed author ity' s approval on 27.02.2017 which stood gra nted on 02.03.2017. The cl inching fac t which from pa ge 10 in the as sessee' s pa per book is that the lea rned Ass ess ing Offic er her ein had infa ct s ought a common appr ov al for a ll these as sessment yea rs fr om 2008-09 to 2013-14 whic h s tood gra nted, and therefore, w e quote PCIT Vs. Shiv Ku mar Na yya r (2024) 163 taxmann.com 9 (Del.) , PC IT Vs. MDLR Hotels (P) Ltd. (2 024) 166 taxmann.com 327 (Del.) a nd ACIT vs . Sera juddi n and Co. (2024) 163 taxma nn.com 118 (SC), to c onclude that suc h a combined s ec tion 153D approval indeed vi tiates the entire a sses sment itself. We dra w strong ther efr om to quas h all the impugned as sessments fr amed herein in assess ee' s ca se in as sessment y ear s 2008-09 to 2013-14 in ver y terms."9 ITA Nos. 152, 167 & 168/Del/2022
CO Nos. 121, 122 & 123/Del/2022 Harvansh Chawla
6. We have given our thoughtful consideration to the assessee's pleadings and Reve nue's vehement contentio ns as well as it's wr itten submission. We find no reason to upho ld the validity of the impugned assessment as it has c ome on record that the same has been frame d in fur therance to a co mmon section 153D approval already held as not sustainable in law.
Ordered accor dingly.
7. All other pleadings on merits herein stand rendered academic.
8. To sum up, these Revenue 's appeals ITA Nos. 152, 167 & 168/Del/2022 are dismissed and the cross obje ction CO Nos.
121, 122 & 123/Del/2012 are allowed in above terms. A co py of this common order be placed in the respective cas e files.
Order Pronounced in the Open Court on 28/02/202 5.
Sd/- Sd/-
(Manish Agarwal) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 28/02/2025
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR