Smt. Sarika Mittal Vs ACIT (ITAT Jabalpur)
It is not in dispute that the AO in all the cases is of the rank of the Assistant Commissioner, i.e., below the rank of the Joint Commissioner. Similarly, the year of search being f.y. 2009-10, all the assessment years under reference, i.e., AYs. 2004-05 to 2010-11, are those specified in s. 153D. The assessment order/s under reference is, thus, not valid in law inasmuch as no order of assessment or reassessment could be passed by the AO below the rank of Joint Commissioner for any of the years specified in section 153D, except with the approval of the Jt. CIT.
FULL TEXT OF THE ORDER OF ITAT JABALPUR
All the appeals of the independent assessee are directed against the respective orders of ld. C.I.T.(A). Since common issues arising for consideration in all these appeals, we heard the same together and disposing of the same by this common order.
2. Shri Dhiraj Ghai, the ld. representative for assessee submitted that the first ground taken by him is with regard to approval by the JCIT as required under section 153D of the Income Tax Act, 1961 ( ‘the Act’ hereinafter). According to ld. representative for the assessee, no assessment order shall be passed unless it is approved by the JCIT. Referring to Paper Book, the ld. representative for the assessee submitted that the JCIT in categorically terms says that due to shortage of time as he was holding charges of six ranges, it was not possible for him to go into deep. Therefore, the JCIT without going to the material available on record including the draft assessment order approved only for technical requirement u/s 153D of the Act. Referring to section 153D of the Act , the ld. representative for the assessee vehemently argued that unless the JCIT applies his mind to the material available on record and the draft assessment order as proposed by AO, it cannot be construed as approval as required u/s 153D of the Act. Placing reliance on the order of the Delhi Benches of this Tribunal in Sanjay Dungal & Others vs. M/s. ACIT in ITA No. 1813/Del/2019 & Ors. (copies of which available in the P.B). Submitted that approval of JCIT is not a mere formality or ritual. It is mandatory requirement of the statutory provision.
3. The ld. representative for the assessee further submitted that since the JCIT has not applied his mind to the facts of the matter and granted only a technical approval, the A.O. has no jurisdiction to pass the assessment order. Therefore, the entire assessment order as confirmed by the C.I.T.(A) is invalid, non-est and void, hence, the assessment order as confirmed by C.I.T.(A) cannot stand in the eye of law. The ld. representative for assessee also placed a copy of the order of this bench of the Tribunal in the Paper Book in case of Tarachand Khatri vs. ACIT in ITA No. 21/Jab/2019 dated 17.01.2020. The Tribunal on identical set of facts found that unless the JCIT applied his mind to the material available on record while granting approval under section 153D of the Act. The technical approval, cannot be an approved at all. The ld. counsel for the assessee has also filed the copies of the decision of the Bombay Bench of this Tribunal in ACIT vs. Shreelekha Damani and Lucknow Benches of the Tribunal in AAA Paper marketing Ltd. vs. ACIT.
4. On the contrary, Smt. Neerja Pradhan, ld. representative for the revenue submitted that no doubt, the letter of the JCIT says that he was holding the charges of six ranges, therefore, it was not possible for him to go into the deep, however, finally he approved the draft assessment order as per technical requirement u/s 153D of the Act. Before this technical approval was given, according to ld. Departmental Representative there were discussions between the A.O. and the JCIT which is evident from the correspondence between the JCIT and the A.O. Referring to the copy of the letter addressed to the A.O. by the JCIT, the ld. DR submitted that there were discussions between the A.O. and the JCIT, therefore, it cannot be said that there was no application of mind. The A.O. also has responded to the letter of the JCIT dated 21.12.2011 by this letter dated 22.12.2011. The assessee was also invited for the discussion along with the A.O. in the chambers of the JCIT. The JCIT has also written a letter to the Commissioner on 20.12.2011 in order to take the Commissioner into confidence. The A.O also by his letter dated 26.12.2011 reminded the JCIT to give approval at the earliest opportunities, since, the assessment is getting time barred.
5. The ld. DR placed her reliance on the judgment of the Supreme Court in C.I.T. vs. Jai Prakash Singh (219 ITR 737) and submitted that charging sections fix the liability to tax and any violation of machinery provision will not render the assessment order void. Once the superior authority agreed to the finding of the lower authorities then it is not necessary to record reasons for so agreeing. Referring to the judgment of the Bombay High Court in C.I.T. vs. Ratanbai N.K. Dubash (230 ITR 495). The ld. DR submitted that the power to determine the income vest in the authority exercising the quasi-judicial function. It is in violation of principle of quasi-judicial function that can render the assessment invalid. The Act of Administrative Approval by Additional C.I.T. does not take away the quasi-judicial powers which still vests in A.O. Therefore, even if there is some defect in the technical approval granted by the JCIT, the same may not invalidate the order of assessment.
6. We have carefully gone through the orders of both the authorities below in the light of the arguments advanced on both the sides and the material available on record. The issue of approval u/s 153D goes to the very root of the matter. For the purpose of convenience, the provision of section 153D is reproduced herewith.
[SECTION 153D. Prior approval necessary for assessment in cases of search or requisition
No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of section 153A] or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner.]
7. This provision clearly says that no assessment order shall be passed unless it is approved by the JCIT. In other words, the A.O. is prohibited from passing any assessment order without approval of the JCIT. The parliament in its wisdom thought it fit in cases of searches, a senior officer of the Department at the rank of the Joint Commissioner has to grant his/her approval before passing the assessment order. This provision of section 153D is not an empty formality. It has its own sanctity in the eye of law. In other words, unless the JCIT approves the proposal/draft assessment of the A.O. by applying his mind to the facts of the matter, the A.O. would not get jurisdiction to pass the assessment order. In other words, the AO will be vested with jurisdiction to pass assessment order only after the approval granted by JCIT u/s. 153D. Hence, the approval of JCIT is mandatorily requirement.
8. We have also carefully gone through the judgment of the Apex Court in Jai Prakash Singh (supra). This judgment of the Apex Court relate to service of notice on the legal heirs of deceased assessee. It is not a copy of approval as required by statutory provision. Therefore, the Judgment of the Apex Court is not applicable to the facts of this case.
9. We have also gone through the judgment of the Bombay High Court in Mrs. Ratanbai N.K. Dubash (supra). In this case, the AO passed the order without obtaining direction from Inspecting assisting Commissioner. Hence, the assessment was annulled. This judgment of the Bombay High Court in fact supported the case of the assessee. Moreover, the Bench of the Tribunal in Tarachand Khatri (supra) has found that on identical circumstances, there was no approval u/s. 153D of the Act. One of the Accountant Member is party to the order.
10. Now, let us examine whether the JCIT granted approval for passing the assessment order. Under the scheme of the Act, u/s. 153D, the Commissioner has no role to play. It is not known, why the JCIT intended to take the Commissioner into confidence by addressing a letter to him. The Commissioner has all the powers u/s. 263 of the Act, in case, he/she is satisfied that the assessment order is erroneous and prejudicial to the interest of revenue. We are reproducing the correspondence between the JCIT on the one hand and A.O. on other and also a letter written by JCIT to the Commissioner.
OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX
RANGE-1, CR BUILDING, NAPIER TOWN, JABALPUR
HOLDING ADDITIONAL CHARGE OF RANGE-II, JABALPUR
RANGE-SATNA, KATNI, CHHINDWARA AND SAGAR
F. No. JCIT/Range/Katni/Mittail/2011-12
Dated: 26.12.2011
To
The Asstt. Commissioner of Income Tax,
Circle, Katni
Sub: Statutory approval of Draft Assessment order u/s 153D in the cases of different assesses of Mittal Group, Katni- Reg.
Please refer to your letter No.ACIT/KTE/MITTAL/153D/11-12 dated 23rd December, 2011 forwarding therewith draft assessment orders in Mittal Group of cases for AY 2004-05 to 2010-11:
