CHOUDHURY SWAPAN KUMAR MOHAPATRA,BALASORE V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, BHUBANESWAR, BHUBANESWAR

ITA 493/CTK/2024

AI Insights

This case involves a series of twelve appeals filed by different assessees against the orders passed by the CIT(A), National Faceless Appeal Centre, Delhi, for the assessment year 2016-2017. The primary contention in these appeals was the validity of the approval granted under Section 153D of the Income Tax Act by the JCIT, which was challenged on the grounds of lack of proper application of mind and mechanical approval. The Tribunal consolidated the appeals due to the common issue involved and decided the matter based on the precedent set by the Hon'ble Jurisdictional High Court in the case of Serajuddin and Co., which was further upheld by the Hon'ble Supreme Court.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472117 (ITAT-CUTTACK)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Other Referred Cases: Manish Maheswari vs. Income Tax Officer, Serajuddin and Co. vs. Income Tax Officer
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAROJ KUMAR DUBEY
• Assessee Lawyers: P.K.MISHRA; HIMANSHU JENA
• Keywords: Document seized; Documents seized; Assessment record
• Section: 119; 153A

Judgement Text

" आयकर आयकर आयकर आयकर अपीलीय अपीलीय अपीलीय अपीलीय अिधकरण अिधकरण अिधकरण अिधकरण, कटक कटक कटक कटक \u0001यायपीठ \u0001यायपीठ \u0001यायपीठ \u0001यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER आयकर अपील सं सं सं सं/ITA No.493/CTK/2024 (िनधा\u0005रण िनधा\u0005रण िनधा\u0005रण िनधा\u0005रण वष\u0005 वष\u0005 वष\u0005 वष\u0005 / Assessment Year : 2016-2017) Choudhury Swapan Kumar Mohapatra, Flat Dr. B.S.pani Lane, PO: Gopalgan, Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :ADBPM 5411 B AND आयकर अपील सं/ITA No.494/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Rajendra Kumar Gupta, At Nilia Bag, PO/PS: Vivekananda Marg, Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :ACXPG 1473 G AND आयकर अपील सं/ITA No.502/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Rohit Gupta, At: Proof Road, PO/PS/Dist: Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :AEVPG 6418 H AND आयकर अपील सं/ITA No.503/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Pramod Kumar Karan, At: Karan Commercial Corp. Near Tebtulia thakurani, Geneswarpur, PO/PS/DIST: Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :AEBPK 3017 L AND आयकर अपील सं/ITA No.504/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Rashmi Kanta Jatania, At: Near Town Hall, PO/PS/DIST: Balasore, Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :ABYPJ 3575 C AND आयकर अपील सं/ITA No.512/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Kalyan Kumar Chand C/o: Prasanta Kumar Chand, At: Chandmaripadia, PO: Sahadevkhunta,Dist: Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :ABFPC 4650 A ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 2 AND आयकर अपील सं/ITA No.513/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Abhay Kumar Kar, M/s Kaniska Syndicate, At/PO: O.t.Road, Dist: Balasore-756001 Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :AEBPK 3020 M AND आयकर अपील सं/ITA No.514/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Amitabh Giri, At: Plot No.1 PO/PS: Naya Bazar, District : Balasore-756001 Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :ACXPG 3163 H AND आयकर अपील सं/ITA No.529/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Abhaya Mohapatra, At : Flat Gopalgaon, PO/Ps : Gopalgaon District : Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. : ACEPM 7348 D AND आयकर अपील सं/ITA No.530/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Badal Chandra Senapati, At: Ranakutha, PO/PS: Tukurihazira, Dist : Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :AOKPS 4890 J AND आयकर अपील सं/ITA No.532/CTK/2024 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Dipak Kumar Rana, At: 1, Noorpur Road, Motiganj, At/PO: Motiganj, Dist : Balasore Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :ACAPR 1293 E AND आयकर अपील सं/ITA No.56/CTK/2025 (िनधा\tरण वष\t / Assessment Year : 2016-2017) Rajkamal Kar, At: M/s Ridhi Transline, PO: Bhaskarganj, B.C.Sen Rd, Dist : Balasore-756001 Vs ACIT, Central Circle-2, Bhubaneswar PAN No. :AIQPK 4778 B (अपीलाथ\u000f अपीलाथ\u000f अपीलाथ\u000f अपीलाथ\u000f /Appellant) .. (\u0010\u0011यथ\u000f \u0010\u0011यथ\u000f \u0010\u0011यथ\u000f \u0010\u0011यथ\u000f / Respondent) ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 3 िनधा\u0005\u0013रती िनधा\u0005\u0013रती िनधा\u0005\u0013रती िनधा\u0005\u0013रती क\u0016 क\u0016 क\u0016 क\u0016 ओर ओर ओर ओर से से से से /Assessee by : Shri P.K.Mishra, Himanshu Jena and Narahari Swain, Advocates राज\u0018व राज\u0018व राज\u0018व राज\u0018व क\u0016 क\u0016 क\u0016 क\u0016 ओर ओर ओर ओर से से से से /Revenue by : Shri Saroj Kumar Dubey, CIT-DR सुनवाई क\u0002 तारीख / Date of Hearing : 29/01/2025 घोषणा क\u0002 तारीख/Date of Pronouncement : 29/01/2025 आदेश आदेश आदेश आदेश / O R D E R Per Bench : These twelve appeals filed by twelve different assessees against the separate orders passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, all dated 01.11.2024 for the assessment year 2016-2017. 2. Since common issue is involved in all the appeals, therefore, all the appeals are tagged together and disposed off by this consolidated order. First we shall decide appeal in the case of Choudhury Swapan Kumar Mohapatra, filed in ITA No.493/CTK/2024 for A.Y.2016-20017 and outcome of the same shall be applicable to all the other appeals under consideration. 3. ITA No.493/CTK/2024 is filed by the assesee-Choudhury Swapan Kumar Mohapatra, against the order dated 01.11.2024, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2024-25/1070072128(1) for the assessment year 2016-2017. 4. It was submitted by the ld. AR that the assesee is challenging the assessment order on two technical grounds; first being the satisfaction recorded before initiation of proceedings u/s.153C of the Act and the second being in respect of approval granted u/s.153D of the Act by the ld. ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 4 JCIT. It was the submission that in respect of the satisfaction recorded, the AO has recorded his satisfaction in the assessee’s case which is shown in ordersheet available at page 1 of the paper book as follows :- ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 5 5. In respect of the said document, it was the submission that the alleged transactions were between the assesee was with M/s Modern Engineering and Management Foundation (MEMF), which is a trust. It was the submission that the evidences were found in the course of search at M/s SM Consultancy. It was the submission that the seized documents have been marked as SMCB-10, 11 & 73. It was the submission that there is no recording of satisfaction in the files of M/s SM Consultancy from whose possession these documents were seized for the purpose of transferring the alleged seized documents to the AO having jurisdiction over the assesee. It was the submission that even though the AO in respect of M/s SM Consultancy was the same as the AO in the case of the assesee still there is an absolute requirement of recording of satisfaction in the file of M/s SM Consultancy before transferring of the seized document to the AO having jurisdiction over the impugned assesee. He placed reliance on the decision of the Hon’ble Supreme Court in the case of Manish Maheswari, reported in (2007) 289 ITR 341 (SC). It was the submission that after this decision of Manish Maheswari (supra), the same has also been reiterated repeatedly. 6. When this issue was put to ld. CIT-DR, it was submitted by the ld. CIT-DR that he is not having access to the files of M/s SM Consultancy and, therefore, he is not in a position to answer in regard to produce the satisfaction immediately. Thus, the ld. CIT-DR submitted that he needs time to produce the satisfaction. ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 6 7. Ld. AR further proceeded to submit with regard to the second issue which is being raised against the approval granted u/s.153D of the Act by the ld. JCIT. The ld. AR drew our attention to page 3 of the paper book which is a copy of the approval granted by the ld. JCIT on 21.12.2018, which is as follows :- ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 7 8. He also drew our attention to a similar approval granted in the other cases, which is as follows :- ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 8 9. It was submitted that there were total 16 cases in the case of assessee’s group itself and these two approvals are only for the assessment year 2016-2017. The approval in all the cases were sought vide letter dated 20.12.2020 and approval was granted on 21.12.2018. The assessment order clearly showed that the assessments have been done for the assessment years 2011-2012 to 2016-2017, being six years and consequently the total number of approvals granted within 24 hours by the JCIT in assessee’s own group itself comes to 84 approvals. 10. It was also submitted by the ld. AR that the ordersheet entry which is placed in the paper book clearly showed that there was no mention of the files being sent for approval to JCIT. The said ordersheet placed in the paper book at page 2 read as under :- ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 9 11. It was the submission that a perusal of the approval granted also clearly shows non-application of mind. He relied upon the decision of the Hon’ble Jurisdictional High Court in the case of Serajuddin and Co. reported in [2023] 150 taxmann.com 146 (Orissa), wherein the Hon’ble jurisdictional High Court in para 21 to 25 has held as follows :- 21. It is seen that in the present case, the AO wrote the following letter seeking approval of the Additional CIT: GOVERNMENT OF INDIA OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), BHUBANESWAR No. ACIT/C-1(2)//Approval/2010-11/5293 Dated, Bhubaneswar, the 27/29th December, 2010 To The Addl. Commissioner of Income-tax, Range-1, Bhubaneswar. Sub: Approval of draft orders u/s 153D of the I.T. Act 1961 in the case of M/s. Serajuddin & Co. 19A, British India Street, Kolkata (in Serajuddin Group of Cases)- matter regarding. Sir, Enclosed herewith kindly find the draft orders u/s 153A of the I.T.Act, 1961 along with assessment records in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata for kind perusal and necessary approval u/s.153D. N o Name of the Assessee Section under which order passed Asst. Year 1 M/s Serajuddin & Co., 19A, u/s.153A/143(3)/144/145(3) British India Street, Kolkata 2003-04 2 -do- -do- 2004-05 3 -do- -do=- 2005-06 4 -DO- -DO- 2006-07 5 -DO- -DO- 2007-08 6 -DO- -DO- 2008-09 7 -DO- U/s.143(3)/144/153B(B)/145( 3) 2009-10 3) The above cases will be barred by limitation on 31.12.2010. Encl: As above Yours faithfully, Sd/- Asst. Commissioner of Income-tax, Circle-1(2), Bhubaneswar of the Tribunal itself Government of India OFFICE OF THE ADDL. COMMISSIONER OF INCOME TAX, 3 Floor, Range-1, Bhubaneswar No. Addl. CIT/R-1/BBSR/SD/2010-11/5350 Dated, ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 10 Bhubaneswar, the 30th December, 2010 To The Assistant Commissioner of Income Tax, Circle-1(2), Bhubaneswar. Sub: Approval u/s 153D-in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata-Matter regarding. Ref: Draft Orders u/s 153A/143(3)/144 for the A.Y. 2003- 04 to 2008-09 u/s.143(3)/153B (b)/144 of the A.Y.2009-10 in the case of above mentioned assessee. Please refer to the above The draft orders u/s 153A/143(3)/144 for the A.Y. 2003-04 to 2008-09 and u/s. 143(3)/153B(b)/144 for the A.Y. 2009-10 submitted by you in the above case for the following assessment years are hereby approved: Assessment Year Income Determined (Rs) 2003-04 11,66,22,771 2004-05 36,46,80,016 2005-06 65,70,12,805 2006-07 60,02,65,791 2007-08 130,03,13,307 2008-09 274,68.87,069 2009-10 301,17,05,952 You are requested to serve these orders expeditiously on the assessee, submit a copy of final order to this office for record. Sd/- Addl. Commissioner of Income Tax, Range-1, Bhubaneswar 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 satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of Section 158BG of the Act, it would equally apply to Section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO should submit the draft assessment order \"well in time\". Here it was submitted just two days prior to the deadline thereby putting the approving authority ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 11 under great pressure and not giving him sufficient time to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order. 23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. 24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under Section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 (165) E.L.T. 257 (S.C.) the Supreme Court observed as under: \"Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars.\" 25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 12 of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves. 12. It was the submission that the decision of the Hon’ble Jurisdictional High Court has been approved by the Hon’ble Supreme Court as reported in [2024] 163 taxmann.com 118 (SC) by dismissing the SLP filed by the revenue. It was the submission that the approval granted in assessee’s case was similar to the approval granted in the case of Serajuddin & Co. and on this ground also the approval being vitiated consequently the assessment order is required to be annulled. 13. In reply, ld. CIT-DR drew our attention to the approval accorded by the ld. JCIT. It was the submission that the approval letter refers to the several discussion that has been done between the AO and the JCIT. It was the submission that it also mentions that the JCIT has gone through the assessment orders and appraisal report and other relevant materials in the case. It was the submission that the JCIT has applied his mind before making the approval and the same is liable to be upheld. 14. We have considered the rival submissions. As mentioned earlier by the ld. AR that there are 84 cases in this group. It is surprising that JCIT has been able to go through the assessment orders, appraisal reports and other related materials for a minimum of 84 cases within one day. We use the word “minimum of 84 cases” because this group alone contains 84 cases and the JCIT could avail his other files also before him. The ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 13 assessment orders, in all the cases, are more than 9 pages, appraisal reports was also to be quite a few pages and the submissions of the assesee would be innumerable. These are physically impossible task which has been admitted to by the ld. JCIT. Consequently, the approval granted in these cases are without application of mind. This being so, respectfully following the principle laid down by the Hon’ble Jurisdictional High Court in the case of Serajuddin & Co., reported supra, which has also been approved by the Hon’ble Supreme Court by dismissal of the SLP, the approval u/s.153D of the Act granted in the impugned appeal in the case of Choudhury Swapan Kumar Mohapatra (ITA No.493/CTK/2024) for A.Y.2016-2017, by the JCIT, is held to be invalid and the consequential assessment order is hereby annulled. As the appeal of the assesee is allowed by allowing the legal grounds of appeal, other grounds taken on merits become academic and not adjudicated upon. Thus, the appeal of the assesee is allowed. 15. Since, we have already annulled the assessment framed by the AO in the case of Choudhury Swapan Kumar Mohapatra while dealing with the appeal in ITA No.493/CTK/2024 for A.Y.2016-2017, by holding the approval u/s.153D of the Act granted by the ld. JCIT as invalid, therefore, all the remaining eleven appeals filed by the eleven different assessees as mentioned in the cause title above, which also come under the invalid approval of the JCIT, are hereby allowed and the assessment framed in all the cases are hereby quashed. ITA No.493,494,502,503,504,512,513, 514,529,530&532/CTK/2024 & ITA No.56/CTK/2025 14 16. In the result, all the appeals of the assessees are allowed. Order dictated and pronounced in the open court on 29/01/2025. Sd/- (MANISH AGARWAL) Sd/- (GEORGE MATHAN) लेखा सद\u0003य/ ACCOUNTANT MEMBER \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / JUDICIAL MEMBER कटक कटक कटक कटक Cuttack; \u0003दनांक Dated 29/01/2025 Prakash Kumar Mishra, Sr.P.S. आदे आदे आदे आदेश श श श क\u0002 क\u0002 क\u0002 क\u0002 \u0003ितिलिप \u0003ितिलिप \u0003ितिलिप \u0003ितिलिप अ\tेिषत अ\tेिषत अ\tेिषत अ\tेिषत/Copy of the Order forwarded to : आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, (Assistant Registrar) आयकर आयकर आयकर आयकर अपीलीय अपीलीय अपीलीय अपीलीय अिधकरण अिधकरण अिधकरण अिधकरण, कटक कटक कटक कटक/ITAT, Cuttack 1. अपीलाथ\u0007 / The Appellant- 2. \b\tयथ\u0007 / The Respondent- 3. आयकर आयु\u000b(अपील) / The CIT(A), 4. आयकर आयु\r / CIT 5. िवभागीय \u0011ितिनिध, आयकर अपीलीय अिधकरण, कटक कटक कटक कटक / DR, ITAT, Cuttack 6. गाड\u0010 फाईल / Guard file. स\tयािपत \bित //True Copy// "