AI Structured Summary
Not yet generated for this judgment
Judgment
PER ANUBHAV SHARMA, JM:
These appeals preferred by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-31, New Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 153C r.w.s 143(3) of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under: -
| ITA No. & AY | Ld. FAA who passed the appellate order | Appeal No. & Date of order of the Ld. FAA | AO who passed the assessment order & Date of order |
| 9064/D/25 2010-11 | PCIT(A)-31 New Delhi | DIN & Order No : ITBA/APL/M/250/2025 -26/1081816485(1) Dated: 16.10.2025 | DCIT, CC- 25 New Delhi Dated 29.12.2017 |
| 9065/D/25 2013-14 | PCIT(A)-31 New Delhi | DIN & Order No : ITBA/APL/M/250/2025 -26/1081816319(1) Dated: 16.10.2025 | DCIT, CC- 25 New Delhi Dated 29.12.2017 |
| 9066/D/25 2014-15 | PCIT(A)-31 New Delhi | DIN & Order No : ITBA/APL/M/250/2025 -26/1081816398(1) Dated: 16.10.2025 | DCIT, CC- 25 New Delhi Dated 29.12.2017 |
Heard and perused the record. At the time of hearing ld. Counsel for the assesse has stressed for disposal of legal ground No. 3 by which the impugned assessment order has been challenged on the basis that the approval granted u/s 153D of the Act is not in accordance with law.
As for convenience we reproduce the letter dated 21.12.2017 of Assessing Officer by which approval was sought and the letter dated 29.12.2017 of ld. competent authority by which approval u/s 153D was granted.
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/ 1417
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 M/s Focus Industrial Resources Ltd. (Pradeep Kr. Jindal Group), PAN - AAACF1838N - req.
Please refer to your letter F. No. DCIT/CC-25/2017-18/1776 dated 21.12.2017 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 M/s Focus Industrial Resources Ltd 2010-11 Rs.21,46,29,068/- 2 M/s Focus Industrial Resources Ltd 2011-12 Rs.1,77,53,280/- 3 M/s Focus Industrial Resources Ltd 2012-13 Rs. 8,74,24,617/- 4 M/s Focus Industrial Resources Ltd 2013-14 Rs. 21,38,50,340/- 5 M/s Focus Industrial Resources Ltd 2014-15 Rs. 9,92,00,924/- 6 M/s Focus Industrial Resources Ltd 2015-16 Rs.4,09,85,673/- 7 M/s Focus Industrial Resources Ltd 2016-17 Rs.7,09,950/- A 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.
(Prakhar Viplava Gupta)
Additional Commissioner of Income Tax
Central Range -7, New Delhi
Apart from defending the approval on the basis that same sufficiently indicates application of mind and that being administrative in nature has been rightly granted, the Ld. DR has vehemently opposed the grounds submitting that Section 292BC has been introduced by way of amendment recently and the same holds that the approval is supervisory and administrative function and any deficiency in the reasons would not vitiate the approval. It was submitted that the provision is applicable retrospectively. It was submitted on behalf of the department that the date referred 01.04.2021 in the amendment brought with the introduction of Section 292BC of the Act has to be read in consonance to the date of hearing of the appeal and when the Tribunal hears this appeal on that day the amendment u/s 292BC should be looked into.
This approval when taken into consideration shows that approval was granted for multiple years AYs: 2010-11 onwards till AY; 2016-17. The approval mentions that the approval has been granted to the draft assessment “as amended”. Ld. Competent authority then mentions that relevant seized documents perused by AO and brought to the notice of undersigned were made basis for grant of approval and at the same time as ld. Competent authority mentions in para 3 of the said approval order’ dated 29.12.2017, as follows:
“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.”
Now, if we go through the assessment order for instance of AY; 2010-11 the additions are on protective basis as well as substantive basis. There is no mention of any electronic devices or electronic evidences being relied by the ld. AO. The AO had not mentioned about heads of addition in the letter and only assessed income was reported and the same has become foundation of the approval. Thus the tenor of approval does not show application of mind as by referring to assessed income only and refer to electronic evidences, the approval is granted.
We also find that approving authority has mentioned in the impugned letter of approval that the approval has been granted to the draft assessment order 'as amended'. This phrase 'as amended' is quite ambiguous, and actually nothing could be explained or justified by ld. DR for using these words and thus rather than helping the case of Revenue and Ld. DR, it puts the case of the Revenue in docks as there is nothing in letter dated 21.12.2017 by the AO to mention that at any stage before 21.12.2017, there was any communication between the two authorities. The AO merely mentions that draft orders are being submitted after examination of seized documents. It does not even mention of forwarding records and that any previous direction on the drafts are given effect. Then, there is no mention in the approval granted on 29.12.2017, that any time between this letter dated 21.12.2017 and 29.12.2017, the two authorities have gone through the draft assessment order afresh, so as to justify the use of words 'as amended' in the approval letter, as in the approval letter there is only mention of letter dated 21.12.2017 of the Assessee.
The approval thus, when read in conjunction to the assessment order appears to be granted in a mechanical manner, stereotyped and in template form. The aforesaid, pointed out facts do not indicate insufficiency of reasons, but mere mechanical manner in which approval is granted. The law in this regard is settled that such mechanical exercise of powers u/s 153D of the Act, vitiates the assessment order. Reliance can be placed on decisions in Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992], PCIT v. Anuj Bansal [ITA 368/2023]. The Co-ordinate Bench of the Tribunal while examining the similar issue in the case of SEH Realtors Pvt. Ltd. Vs. ACIT in ITA No. 2503/Del/2017 and connected matters for Assessment Year 2013-14 vide order dated 23/07/2024, considered all the judicial pronouncements on the issue and has held as under: -
“8.We find as per the scheme of the Act, for framing search assessments, the Ld. AO can pass the search assessment order u/s 153A or u/s 153C of the Act only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the ld. JCIT, in terms of section 153D of the Act. This is a mandatory requirement of law. The said approval granting proceedings by the ld. JCIT is a quasi judicial proceeding requiring application of mind by the ld. JCIT judiciously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme of the Act, it is the bounden duty of the Ld. AO to seek to place the draft assessment order together with copies of the seized documents before the ld. JCIT well in time much before the due date of completion of search assessment. The ld. JCIT is supposed to examine the seized documents, questionnaires raised by the Ld. AO on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Ld. AO and the conclusions drawn by the Ld. AO vis- à-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, are to be performed by the ld. JCIT in a judicious way after due application of mind. Even though as vehemently argued by the Ld. CIT-DR, the ld. JCIT is involved with the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the ld. JCIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld. AO in the draft assessment order. The copy of the appraisal report submitted by the Investigation Wing to the Ld. AO and ld. JCIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from ld. JCIT u/s 153D of the Act. The ld. JCIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the Ld. AO as well as the ld. JCIT to even ignore the conclusions drawn in the appraisal report by the Investigation Wing and take a different stand in the assessment proceedings, the fact of ld. JCIT getting involved in the search assessment proceedings right from the receipt of copy of appraisal report, as argued by the Ld. CIT DR, has no substance. In other words, irrespective of the conclusions drawn in the appraisal report by the Investigation Wing, both the Ld. AO and the ld. JCIT are supposed to independently apply their mind in a judicious way before drawing any conclusions on the contents of the seized documents while framing the search assessments. As far as the argument of the Ld. CIT DR that the details were normally filed by the assessee at the last moment is concerned, the ld. AO has got every right to reject the said replies if not filed within the stipulated time. It is not the case of the revenue that the details were filed by the assessee in the instant case at the last moment. Even if it is so, as stated above, it is the prerogative of the ld. AO to accept the said letter containing details or reject the same as it was not filed within the stipulated time. On the contrary, if the ld. AO himself grants time to the assessee to furnish the details till the last moment, then no fault could be attributed to the assessee. In such circumstances, the only irresistible conclusion that could be drawn is that the ld. AO is not serious about the statutory deadlines provided in the Act. In our considered opinion, if the arguments of the Ld. CIT DR are to be appreciated that the ld. JCIT need not apply his mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose. The law provides only the Ld. AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on the ld. JCIT to grant judicious approval u/s 153D of the Act to the draft assessment orders placed by the Ld. AO.
The contention on behalf of department that Section 292BC of the Act introduced by way of amendment by Finance Act, 2026 w.e.f from 1.04.2021 would be applicable in the case of present assessee also have not substance as we find that legislature has made the amendment applicable retrospectively w.e.f 01.04.2021, only, in regard to approvals granted after 01.04.2021. Thus, by no stretch of imagination we can accept the contention that because the matter is being heard subsequent to the amendment, same becomes applicable to also in cases where approval was granted prior to 01.04.2021.
In the light of aforesaid the corresponding grounds are sustained and appeals are allowed. The impugned assessment orders are quashed.