Rakesh Kumar Jain (Through Legal Heir Aruna Jain) vs DCIT, Central Circle Ghaziabad, Uttar Pradesh

1.

On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) ['CIT(A)"] is bad, both in the eyes of law and on facts.

2.

(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the AO is illegal and liable to be quashed as the same has been passed violating mandatory provisions of section 153D of the Act. (i That the purported approval under section 153D of the Act is illegal, bad in law and without application of mind.

3.

(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 23,65,200/-made by the AO on account of cash found during the search under section 69A read with section 115BBE of the Act.

(i)

That the abovesaid addition has been confirmed ignoring the contention of the assessee that the alleged cash does not belong to the assessee and hence no addition can be made in the hands of the assessee.

(ii)

That the abovesaid addition has been confirmed by rejecting the detailed submission and explanation along with evidences brought on record by the assessee in this regard.

4.

(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 22,00,000/-made by the AO on account of cash found from bank locker No. 212/4 at Syndicate Bank under section 69A read with section 115BBE of the Act.

(ii)

That the abovesaid addition has been confirmed despite the fact that the said sum belongs to M/s Rakesh Kumar Jain HUF which has been duly declared under MGKY 2016 scheme and does not belong to the assessee.

(iii)

That the abovesaid addition has been confirmed by rejecting the detailed submission and explanation along with evidences brought on record by the assessee in this regard.

5.

(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 2,21,89,600/-made by the AO on account of cash found from bank locker No. 14/5 at Syndicate Bank in joint name of assessee and his wife under section 69A read with section 115BBE of the Act.

(i)

That the abovesaid addition has been confirmed despite the fact that the said sum belongs to his wife which has been duly declared by her under PMKY 2016 scheme and does not belong to the assesse.

(ii)

That the abovesaid addition has been confirmed by rejecting the detailed submission and explanation along with evidences brought on record by the assessee in this regard.

6.

(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 11,22,025/-made by the AO on account of "silver gaddi" found from bank locker No. 212/4 at Syndicate Bank under section 69 read with section 115BBE of the Act.

(i)

That the abovesaid addition has been confirmed without giving the benefit of CBDT Instruction No. 1996 dated 11.05.1994 to the assessee.

(i)

That the abovesaid addition has been confirmed by rejecting the detailed submission and explanation along with evidences brought on record by the assessee in this regard.

7.

(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 6,09,390,- rade by the AO comprising of stolen cash of Rs. 1,32,000/-and jewellery of Rs. 4,77,390/- under section 69A read with section 115BBE of the Act. (ii) That the abovesaid addition has been confirmed ignoring the contention of the assessee the alleged cash and jewellery belong to assessee's mother Smt. Pushpa Jain and not to the assessee.

(i)

That the abovesaid addition has been confirmed without giving the benefit of CBDT Instruction No.1996 dated 11.05.1994 to the assessee in respect of jewellery.

(iv)

That the abovesaid addition has ween confirmed by rejecting the detailed submission and explanation along with evidences brought on record by the assessee in this regard.

8.

(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 1,55,000/- made by the AO on account of cash deposited in bank account treating the same as unexplained under section 68 read with section 115BBE of the Act. (ii) That the abovesaid addition has been confirmed ignoring the contention of the assessee the alleged cash belongs to assessee's mother Smt. Pushpa Jain and not to the assessee. (iii) That the abovesaid addition has been confirmed by rejecting the detailed submission and explanation along with evidences brought on record by the assessee in this regard.

9.

On the facts and in the circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the impugned additions by invoking the provisions of section 68, section 69, or section 69A of the Income Tax Act, 1961, despite the fact that the conditions precedent for the applicability of these provisions was not satisfied in relation to the respective additions.

10.

On the facts and circumstances of the case, the learned CIT(A), has erred both on facts and in law in confirming the abovesaid addition despite the fact that the same has been made by the AO by indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumptions and assumptions.

11.

Without prejudice to the above, the learned CIT(A) has erred both on facts and in law in confirming the AO's action of charging tax under section 115BBE of the Act at an exorbitant rate.

12.

Without prejudice to the above, the learned CIT(A) has erred in law in confirming the retrospective application of the amendment brought by The Taxation Laws (Second Amendment) Act, 2016 under Section 115BBE, effective from 01.04.2016, despite the Act being notified only on 15.12.2016.

6.

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.

7.

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 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 it becomes applicable to also in cases where approval was granted prior to 01.04.2021.

8.

We also bring on record the fact that subsequent to the hearing a request was made on behalf of the department by ld. CIT, DR Shri Mahesh Kumar by letter dated 16.04.2026 that because a reference u/s 255 of the Act has been made to Hon’ble president on 16.04.2026 for constitution of special bench in the several cases, including the present, in regard to issue of approval u/s 153D of the Act, the case be released. We do not appreciate that after a matter has been kept heard and order reserved department can take a plea to release the matter as subsequently, reference has been made by the department for Constitution of Special Bench. We have found issue to be covered by decision of Hon’ble jurisdictional High Court, thus too, we find no reason to release the matter. Thus, we allow the corresponding ground raised and allow the appeals of the assessee. The impugned assessment arising out of the vitiated approval u/s 153D of the Act stand quashed….”