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Judgment
PER MANISH AGARWAL, AM:
The captioned appeals are filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)-31, New Delhi (“Ld. CIT(A)”), dated 09.03.2022 passed u/s 250 of the Income Tax Act, 1961 (“the Act”) arising out of assessment order, dated 29.12.2017 passed u/s 143(3) of the Act for Assessment Year 2016-17. The other appeal is against the penalty order dt. 18.5.022 and DIN & document No. dt. 16.11.2022 passed by ld. CIT(A) u/s 271(1)(c) of the Act levying the penalty on the income enhanced by him.
The issues involved in both captioned appeals are interlinked, therefore, they have been heard together and accordingly, adjudicated by a common order.
First, we take assessee’s appeal in ITA No. 1359/Del/2022 for AY 2016-17.
ITA No. 1359/Del/2022 [AY 2016-17]
During the course of hearing assessee has taken following additional grounds of appeal:
The Additional Commissioner of Income-tax, Central Range -7, New Delhi erred in not granting an appropriate approval as required under section 153D of the Act.
The appellant contends that on the facts and in the circumstances of the case and in law, the approval granted by the Addl CIT under section 153D of the Act is mechanical and without application of mind and hence, the consequent assessment order needs to be quashed.
Before us the learned A/R for the assessee, in support of the additional grounds of appeal submits they are purely legal in nature and go to the very root of the matter. The same arise from the facts already on record and do not require investigation of any new or fresh facts. For this reliance is placed on the judgement of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT reported in [1998] 229 ITR 383 (SC) wherein the hon’ble Apex court has held that the Tribunal has wide powers to allow additional grounds to be raised if it is satisfied that the grounds raised are bona fide and that the same could not have been raised earlier for good reasons.
On the other hand, learned CIT DR submits that these grounds of appeal require verification on the part of the therefore they should not be admitted at this stage.
Heard the parties and perused the additional grounds of appeal taken. It is observed that in additional grounds of appeal assessee has challenged the validity of the approval granted u/s 153D of the Act. Since these grounds are borne out from the assessment order and requires no verification of the facts and are legal in nature, therefore, by respectfully following the judicial pronouncement relied upon by the assessee of the Hon’ble Supreme Court as stated above, the additional grounds of appeal raised by the assessee are admitted for adjudication
First we take additional grounds of appeal, wherein the learned AR of the assessee submitted that Ld. CIT(A) erred in law in upholding the impugned assessment order passed under section 143(3) of the Act when the AO has sought common approval u/s. 153D for the AYs 2010-11 to 2016-17 and which also was granted by the Ld. Addl. CIT, Central Range-7, New Delhi by a common letter dt. 29.12.20217 for all the assessment years from 2010-11 to 2016-17 purely in mechanical manner, without application of mind and when such approval is a non-est in the eyes of law and vitiates the entire assessment itself.
The Ld. CIT DR of the Revenue relied upon the orders of the authorities below and objected to the submissions of the ld. AR. He submitted that 153D approval is not applicable as per the amendment effective from 01.04.2021.
Heard the contentions of both the parties and perused the material available on record. We note that there arises the first and foremost issue of validity of all the impugned assessment framed u/s 143(3) of the Act, on the ground that the learned prescribed authority had not accorded a valid approval thereto u/s 153D of the Act. We may reproduce the approval u/s 153D of the Income Tax Act, which read as under:
F. No.: DCIT/CC-25/2017-18/1766
Dated 20.12.2017
To, The Addl. Commissioner of Income Tax, Central Range-7, New Delhi
Sir,
Sub: Approval u/s 153D of the I.T. Act, 1961 in case of Sh. Archit Jindal, (Pradeep Kumar Jindal Group), PAN – AGNPJ5775G- reg.
Kindly refer to the above mentioned subject. The draft assessment orders in the following cases are sent herewith for approval u/s 153D of the I.T. Act.
Sl No. Name of the Assessee A.Y. Assessed Income (Rs.) 1 Sh. Archit Jindal 2010-11 Rs.3,20,619/- 2 Sh. Archit Jindal 2011-12 Rs.4,71,790/- 3 Sh. Archit Jindal 2012-13 Rs.4,20,861/- 4 Sh. Archit Jindal 2013-14 Rs.2,84,640/- 4,58,126/- 5 Sh. Archit Jindal 2014-15 Rs.6,92,236/- 6 Sh. Archit Jindal 2015-16 Rs.5,62,950/- 7 Sh. Archit Jindal 2016-17 Rs.8,00,150/- The draft orders are being submitted after examination of the seized documents. The related issues mentioned in the appraisal report (as applicable) are duly considered.
Yours faithfully, (Ramesh Kumar) Deputy Commissioner of Income Tax, Central Circle-25, New Delhi
Office of the Additional Commissioner of Income Tax Central Range-7, Room No. 329 E-2, Jhandewalan Extension New Delhi
F. No. Addl. CIT/CR-7/2017-18/1408
Dated: 29.12.2017
To The Dy. Commissioner of Income Tax Central Circle-25, New Delhi
Sub: Approval u/s 153D of the I.T. Act, 1961 in case of Sh. Archit Jindal, (Pradeep Kumar Jindal Group), PAN - AGNPJ5775G - req.
Please refer to your letter F. No. DCIT/CC-25/2017-18/1644 dated 29.11.2017 on the above subject.
2.Approval is hereby accorded u/s 153D of the Income Tax Act, 1961 to the draft assessment orders as amended in the following cases, on the basis of the detailed discussion with you time to time, information available on record, facts mentioned in the Appraisal Report and relevant seized documents perused by you & brought to the notice of undersigned.
Sl No. Name of the Assessee A.Y. Assessed Income (Rs.) 1 Sh. Archit Jindal 2010-11 Rs.3,20,619/- 2 Sh. Archit Jindal 2011-12 Rs.4,71,790/- 3 Sh. Archit Jindal 2012-13 Rs.4,20,861/- 4 Sh. Archit Jindal 2013-14 Rs.2,84,616/- 5 Sh. Archit Jindal 2014-15 Rs.6,92,236/- 6 Sh. Archit Jindal 2015-16 Rs.5,62,950/- 7 Sh. Archit Jindal 2016-17 Rs. 54,45,641/- Copies of the final assessment orders should be forwarded to this office immediately after passing the orders. Proposal for retention of seized material should also be forwarded to this office within time as per IT Act, 1961. Before passing the final order, in case, there is requirement of protecting the interest of revenue, permission u/s 281B from Pr. CIT(C)-3, New Delhi should be taken. Office note indicating additions in relevant assessment years should be indicated in all Assessment Years. A.O to certify about perusal and verification of data seized in electronic format through working copies having certified hash values as that of original hard drives/CDs/ pen drives/mobile data & any other electronic data.
(Prakhat Viplava Gupta) Additional Commissioner of Income Tax Central Range -7, New Delhi
We find that in the case of ACIT, Circle1(2) vs. M/s Serajudeen and Co., the Hon’ble Supreme Court dismissed the appeal filed by the Department of Revenue against the order dated 15-03-2023 in ITA No. 43/2022 wherein the Hon’ble Orissa High Court in ITA No. 39 to 45/2022 held that:
“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 satisfied the requirement of law.”
We further find that in the case of Pr. Commissioner of Income Tax -15 v. Shiv Kumar Nayyar the Hon’ble Delhi High Court held that : “17. Notable, the order of approval dated 30-12-2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 in the case of the assessee. The said order also fail to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, we cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the ITAT, succinctly encapsulated in the order.
We observe that learned Assessing Officer had sought the prescribed authority’s approval on 20.12.2017 which stood granted on 29.12.2017. The sole issue is that the learned Assessing Officer herein had infact sought a common approval for the assessment years from 2010-11 to 2016-17 which stood granted, and therefore, we quote PCIT Vs. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Del.), PCIT Vs. MDLR Hotels (P) Ltd. (2024) 166 taxmann.com 327 (Del.) and ACIT vs. Serajuddin and Co. (2024) 163 taxmann.com 118 (SC), to conclude that such a combined section 153D approval indeed vitiates the entire assessment itself. We draw strong support therefrom, to quash the impugned assessment framed herein in assessee’s case for Assessment Year 2016-17 in very terms. Regarding the recent amendment introducing new section 292BC of the Act, wherein it is provided that no order should be held as invalid for any defective approval. However, such amendment is applicable for the approval granted on or after 01.04.2021 however, in the instant case as observed above, the ld. Adl. CIT has granted the approval u/s 153D of the Act on 29.11.2017 which incidentally be prior to 01.04.2021 thus the aforesaid amendment is not applicable to the present case. In view of the above, additional Ground of appeal raised by the assessee is allowed.
Since we have already allowed the additional ground of appeal and quashed the assessment on the issue of invalid approval u/s 153D of the Act, the other grounds of appeal taken on the merits of the additions become academic.
In the result, appeal of the assessee is allowed.
ITA No. 535/Del/2023 [AY 2016-17]
Since we have already allowed the appeal of the assessee in ITA No.1359/Del/2022 for AY 2016-17 by holding that the approval granted u/s 153D is mechanical and defective and consequent order passed was quashed. The present penalty proceedings u/s 271(1)(c) of the Act were initiated by ld. CIT(A) on the enhanced income however, when the order challenged before the ld. CIT(A) itself is quashed, therefore, the pending penalty proceedings initiated by ld. CIT(A) u/s 271(1)(c) has no legs to stand accordingly, same is hereby, deleted. All the Grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
In the final result, both appeals of the assessee in ITA No.1359/Del/2022 and ITA No.535/Del/2023 [Assessment Year 2016-17] are allowed.