Mittal Roadways Pvt.Ltd., V. Assistant Commissioner of Income Tax,

CO 64/JAB/2014

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1092 (ITAT-JABALPUR)
• Duration Of Justice: 6 year(s) 7 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NEERJA PRADHAN
• Keywords: Gift; Search and seizure; Loose papers; Document seized; Charitable institution; Share purchase agreement; Source of fund; Retrospective amendment; Question of law; Competent authority; Block assessment; Sham transactions; Revised return; Documents seized; TDS; Liquidation
• Section: 143(3); 153A; 139(5); 192; 54EC; 13; 153; 22; 153C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI NRS GANESAN, JUDICIAL MEMBER & SANJAY ARORA, ACCOUNTANT MEMBER IT(SS)A NO. 143/JAB/2014 ASSESSMENT YEARS 2007-08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-KATNI, M.P. VS. MITTAL ROADWAYS PVT. LTD. 26, COMMERCIAL COMPLEX, HOUSING BOARD COLONY, KATNI, M.P. (PAN : AAACM1693A) (APPELLANT ) (RESPONDENT) C.O. NO. 64/JAB/2014 ASSESSMENT YEARS 2007-08 MITTAL ROADWAYS PVT. LTD. 26, COMMERCIAL COMPLEX, HOUSING BOARD COLONY, KATNI, M.P. (PAN : AAACM1693A) VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-KATNI, M.P. (APPELLANT ) (RESPONDENT) APPELLANT BY SMT. NEERJA PRADHAN, C.I.T.-DR RESPONDENT BY SHRI DHIRAJ GHAI, CA DATE OF HEARING 19/02/2021 DATE OF PRONOUNCEMENT 04 /03/2021 ORDER PER BENCH: THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF AS SESSEE ARE DIRECTED AGAINST THE ORDERS OF LD. CIT(A)-1, JABALP UR [THE CIT(A) HEREINAFTER] FOR ASSESSMENT YEAR 2007-08. MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 2 2. SHRI DHIRAJ GHAI, THE LD. REPRESENTATIVE FOR ASS ESSEE SUBMITTED THAT THE FIRST GROUND TAKEN BY HIM IS WITH REGARD TO APP ROVAL BY THE JCIT AS REQUIRED UNDER SECTION 153D OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER). ACCORDING TO LD. REPRESENTATIVE FOR T HE ASSESSEE, NO ASSESSMENT ORDER SHALL BE PASSED UNLESS IT IS APPRO VED 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 POSSI BLE FOR HIM TO GO INTO DEEP. THEREFORE, THE JCIT WITHOUT GOING TO THE MATE RIAL AVAILABLE ON RECORD INCLUDING THE DRAFT ASSESSMENT ORDER APPROVED ONLY FOR TECHNICAL REQUIREMENT U/S 153D OF THE ACT. REFERRING TO SECTI ON 153D OF THE ACT , THE LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY ARGU ED THAT UNLESS THE JCIT APPLIES HIS MIND TO THE MATERIAL AVAILABLE ON RECOR D AND THE DRAFT ASSESSMENT ORDER AS PROPOSED BY AO, IT CANNOT BE C ONSTRUED AS APPROVAL AS REQUIRED U/S 153D OF THE ACT. PLACING RELIANCE O N 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 FORMA LITY 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 T HE MATTER AND GRANTED MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 3 ONLY A TECHNICAL APPROVAL, THE A.O. HAS NO JURISDIC TION 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 L AW. THE LD. REPRESENTATIVE FOR ASSESSEE ALSO PLACED A COPY OF T HE 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 T O THE MATERIAL AVAILABLE ON RECORD WHILE GRANTING APPROVAL UNDER SECTION 153 D OF THE ACT. THE TECHNICAL APPROVAL, CANNOT BE AN APPROVED AT ALL. T HE 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 LUC KNOW BENCHES OF THE TRIBUNAL IN AAA PAPER MARKETING LTD. VS. ACIT. 4. ON THE CONTRARY, SMT. NEERJA PRADHAN, LD. REPRES ENTATIVE FOR THE REVENUE SUBMITTED THAT NO DOUBT, THE LETTER OF THE JCIT SAYS THAT HE WAS HOLDING THE CHARGES OF SIX RANGES, THEREFORE, IT WA S 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. B EFORE THIS TECHNICAL APPROVAL WAS GIVEN, ACCORDING TO LD. DEPARTMENTAL R EPRESENTATIVE THERE WERE DISCUSSIONS BETWEEN THE A.O. AND THE JCIT WHIC H IS EVIDENT FROM THE CORRESPONDENCE BETWEEN THE JCIT AND THE A.O. REFERR ING TO THE COPY OF MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 4 THE LETTER ADDRESSED TO THE A.O. BY THE JCIT, THE L D. DR SUBMITTED THAT THERE WERE DISCUSSIONS BETWEEN THE A.O. AND THE JCI T, 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 AL ONG WITH THE A.O. IN THE CHAMBERS OF THE JCIT. THE JCIT HAS ALSO WRITTEN A L ETTER TO THE COMMISSIONER ON 20.12.2011 IN ORDER TO TAKE THE COM MISSIONER INTO CONFIDENCE. THE A.O ALSO BY HIS LETTER DATED 26.12. 2011 REMINDED THE JCIT TO GIVE APPROVAL AT THE EARLIEST OPPORTUNITIES, SIN CE, THE ASSESSMENT IS GETTING TIME BARRED. 5. THE LD. DR PLACED HER RELIANCE ON THE JUDGMENT O F 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 AUTHOR ITIES THEN IT IS NOT NECESSARY TO RECORD REASONS FOR SO AGREEING. REFERR ING TO THE JUDGMENT OF THE BOMBAY HIGH COURT IN C.I.T. VS. RATANBAI N.K. D UBASH (230 ITR 495), THE LD. DR SUBMITTED THAT THE POWER TO DETERM INE THE INCOME VEST IN THE AUTHORITY EXERCISING THE QUASI-JUDICIAL FUNCTIO N. IT IS IN VIOLATION OF PRINCIPLE OF QUASI-JUDICIAL FUNCTION THAT CAN RENDE R THE ASSESSMENT INVALID. THE ACT OF ADMINISTRATIVE APPROVAL BY ADDITIONAL C. I.T. DOES NOT TAKE MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 5 AWAY THE QUASI-JUDICIAL POWERS WHICH STILL VESTS IN A.O. THEREFORE, EVEN IF THERE IS SOME DEFECT IN THE TECHNICAL APPROVAL GRAN TED BY THE JCIT, THE SAME MAY NOT INVALIDATE THE ORDER OF ASSESSMENT. 6. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF BOT H THE AUTHORITIES BELOW IN THE LIGHT OF THE ARGUMENTS ADVANCED ON BOT H 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 CONVENI ENCE, 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 PAS SED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RES PECT OF EACH ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF [SUB-S ECTION (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 O RDER 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 COMMISSI ONER HAS TO GRANT HIS/HER APPROVAL BEFORE PASSING THE ASSESSMENT ORDE R. THIS REQUIREMENT OF APPROVAL UNDER SECTION 153D IS NOT AN EMPTY FORMALI TY. 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 H IS MIND TO THE FACTS OF MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 6 THE MATTER, THE A.O. WOULD NOT GET JURISDICTION TO PASS THE ASSESSMENT ORDER. IN OTHER WORDS, THE AO WILL BE VESTED WITH J URISDICTION TO PASS ASSESSMENT ORDER ONLY AFTER THE APPROVAL GRANTED BY JCIT U/S. 153D. HENCE, THE APPROVAL OF JCIT IS MANDATORILY REQUIREM ENT. 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN JAI PRAKASH SINGH (SUPRA). THIS JUDGMENT O F THE APEX COURT RELATE TO SERVICE OF NOTICE ON THE LEGAL HEIRS OF DECEASED ASSESSEE. IT IS NOT A CASE OF APPROVAL AS REQUIRED BY STATUTORY PROVISION. THE REFORE, THE JUDGMENT OF THE APEX COURT IS NOT APPLICABLE TO THE FACTS OF TH IS CASE. 9. WE HAVE ALSO GONE THROUGH THE JUDGMENT OF THE BO MBAY HIGH COURT IN MRS. RATANBAI N.K. DUBASH (SUPRA). IN THIS CASE, THE AO PASSED THE ORDER WITHOUT OBTAINING DIRECTION FROM INSPECTING A SSISTING COMMISSIONER. HENCE, THE ASSESSMENT WAS ANNULLED. THIS JUDGMENT O F THE BOMBAY HIGH COURT IN FACT SUPPORTED THE CASE OF THE ASSESSEE. M OREOVER, THIS BENCH OF THE TRIBUNAL IN TARACHAND KHATRI (SUPRA) HAS FOUND THAT ON IDENTICAL CIRCUMSTANCES, THERE WAS NO APPROVAL U/S. 153D OF T HE ACT. ONE OF US ACCOUNTANT MEMBER IS PARTY TO THE ORDER. 10. NOW, LET US EXAMINE WHETHER THE JCIT GRANTED AP PROVAL 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 MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 7 TO TAKE THE COMMISSIONER INTO CONFIDENCE BY ADDRESS ING 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 OR PREJUDICIAL TO THE INTEREST OF REVENUE. WE ARE REPRODUCING THE CORRESPONDENCE B ETWEEN THE JCIT ON THE ONE HAND AND A.O. ON OTHER AND ALSO A LETTER WR ITTEN BY JCIT TO THE COMMISSIONER. OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-I, CR BUILDING, NAPIER TOWN. JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-11, JABALPUR, RANGE-SATNA, KATNS, CHTIINDWARA & SAGAR TEL: [phone]) F.NO. JCIT/R-KATNI/MITTAL GROUP/11-12/ DATED 21.12.2011 TO THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, KATNI (MP) SUB:- APPROVAL OF DRAFT ASSESSMENT ORDER U/S 153A/ 143(3) IN THE EASE OF DIFFERENT ASSESSEES OF MITTAL GROUP, KATNI. ..REG. PLEASE REFER TO DRAFT ORDERS SUBMITTED BY YOU IN 14 CASES TILL 19.12.201. AFTER STUDYING THESE DRAFT ORDERS, A NOTE WAS PREPA RED HIGHLIGHTING THE ISSUES IN THESE ORDERS INCORPORATING THE REASONING GIVEN BY YOU FOR MAKING ADDITIONS VIS A VIS SUBMISSIONS/EXPLANATIONS OFFERED BY THE ASSESSE. THIS NOTE WAS PREPARED IN VIEW OF THE FACT THAT WHEN OPPORTUNITY WAS ALLOWED TO THE ASSESSED TO CONFRONT THE EVIDENCES BROUGHT BY YOU ON RECORD FOR MAKING ADDITION. IT WA S OBSERVED THAT EXPLANATIONS AND SUBMISSIONS OF THE ASSESSEE HAVE N OT BEEN PROPERLY RELATED AND PROPER CLARITY HAS NOT BEEN BROUGHT FOR MAKING ADDITIONS. THIS NOTE WAS DISCUSSED WITH YOU IN MY CHAMBER AND LATER IN VIEW OF THE FACT THAT NEITHER SUFFICIENT MATERIAL IS BEING BROUGHT OR MAKING JUSTIFIABLE ADDITIONS NOR PROPER ENQUIRIES HAVE BEE N MADE ME THUS ARGUMENTS OF THE ASSESSEE AS BASELESS AND IN FRUCTU OUS, IT WAS THOUGHT NECESSARY TO BRING THIS STATE OF AFFAIRS IN THE KNO WLEDGE OF HON'BLE CIT. THE DISCUSSION ON LIVE MAJOR ISSUES INVOLVED IN THE CASE WAS MADE IN MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 8 THE CHAMBER OF HON'BLE CT WITH YOU ON 20.12.2011 AT 4.00 P.M. ONWARDS, WHICH ARE AS UNDER:- (I) SHARE CAPITAL IN VARIOUS GROUP COMPANIES OF MIT TAL GROUP (II) FIXED DEPOSIT RECEIPTS IN THE CASES OF ANKIT/N OVAS/NIPPON (III) INVESTMENT IN JEWELLERY AND CAPITAL GAIN ON S ALE OF THESE JEWELLERY ITEMS LINKED TO LAND PURCHASED BY THE ASSESSEE IN T HE NAME OF ON SHRI KALE (IV) ISSUE RELATED TO SALE OF LAND HAVING DOLO MITE MINES THROUGH ROUTE OF SALE PURCHASE OF SHARES OF THE COMPANY. (V) EXCAVATION AND LOCAL CARTAGE CHARGES. IN THIS MEETING, ALL THE POINTS OF ADDITION AND REP LIES OF THE ESSENCE WERE DISCUSSED IN LENGTH AND YOU WERE DIRECTED TO P ROCEED AS PER LINE OF ACTION LAID DOWN IN THE DISCUSSION. FOR YOUR CON VENIENCE AND CLARITY OF ACTION TO BE TAKEN THE MAIN POINT ARE DISCUSSED HERE BELOW:- I. SHARE CAPITAL IN VARIOUS GROUP COMPANIES OF MITTAL GROUP: WITHOUT REPRODUCING THE CONTENTS OF THE NOTE, IT IS TO OBSERVE THAT YOU HAVE NOT GIVEN ANY BASIS FOR INCLUDING SOME PAR T OF SHARE CAPITAL IN THE HANDS OF FAMILY MEMBERS OF ASSESSEE. THE SPE CIMEN CASE WAS OF SMT. SARLA MITTAL FOR A.Y. 2004-05 IN WHICH THE PRO POSED ADDITION OF RS.1,3,00,000/- COULD NOT BE EXPLAINED BY YOU. YOU WERE SPECIFICALLY ASKED BY HON'BLE CIT TO EXPLAIN HOW THIS WORKING HA S BEEN DONE AND WHAT IS THE BASIS OF ARRIVING AT THIS FIGURE AND TH E PARTICULAR ASSESSMENT YEAR. YOU HAVE STATED THAT THIS FIGURE IS WORKED OU T IN THE APPRAISAL REPORT ON THE BASIS OF SOME LOOSE PAPERS BUT YOU CO ULD NOT PRODUCE THE PARTICULAR SEIZED PAPER ON THE BASIS OF WHICH THESE CALCULATIONS HAVE BEEN MADE. CLEARLY THIS TYPE OF ADDITION, WHERE YOU YOURSELF ARE NOT CONFIDENT/SUPPORTED BY LOOSE PAPER OR PROPER IDENTI FIABLE DOCUMENT CANNOT BE APPROVED. FURTHER, IT IS OBSERVED THAT ASSESSEE HAS PRODUCED SO MANY EVIDENCES TO PROVE THE IDENTITY/EXISTENCE AND CREDITWORTHINES S OF THE COMPANIES BY PROVIDING THEIR PAN, ACKNOWLEDGEMENT OF I.T. RET URN. BALANCE SHEET, CONFIRMATION, COMPANIES MASTER DATA FROM SIT E OF MINISTRY OF CORPORATE AFFAIRS AND OTHER EVIDENCES IN SOME CASES OTHER EVIDENCES LIKE ASSESSMENT ORDERS, VERIFICATION LETTERS FROM T HE INCOME TAX DEPARTMENT AND ORDERS U/S. 143(3) IN CASES OF COMPA NIES OF ASSESSEE GROUP AND INVESTOR COMPANIES. THE ASSESSEE HAS ALSO CITED VARIOUS CASE LAWS IN HIS FAVOUR WHICH ARE AS UNDER:- (I) CIT VS. LOVELY EXPORTS (P) LTD.(SC)(2008) 216 C TR(SC) 195: (2008) 6 DTR(SC)308 (II) ACIT VS. VENKATESHWAR ISPAT (P) LTD. (HC OF CH HATTISGARH (2010, 41 DTR(CHHATTISGARH) 350: (2009) 319 ITR 393 (III)CIT VS. STELLER INVESTMENT LTD. (HC OF DELHI) (1991) 99 CTR (DI:L.) 10 :(1991) 192 ITR 287 (DEL): (1991) 59 TAX MAN 568 MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 9 (IV)CIT VS. STL EXTRUSION (P) LTD. (HC OF MP: INDOR E BENCH) (2011) 53 DTR(MP) 97: (2011) 333 ITR 269 (V) CIT VS. DAULAT RAM RAWATMULL (SC) 1972 CTR (SC) 411: (1973)87 ITR 349 (SC) (VI) DWARKADHISH INVESTMENT (P) LTD. (HC OF DELHI) [2010] 6 TAXMAN.COM 8.1 (DELHI) (VII) CIT VS. M/S. JAY DEE SECURITIES & FINANCE LTD . (ALLAHABAD HC) 166 TAXMANN 7 IT IS ALSO LEARNT THAT YOU HAVE ISSUED SECTION 133( 6) LETTERS TO THE INVESTOR COMPANIES. HOWEVER, IN SPITE OF SPECIFIC R EQUEST TO PRODUCE A CHART OF THESE COMPANIES WHERE THESE LETTERS HAVE B EEN ISSUED INDICATING THE STATUS OF RESPONSE IN EACH CASE, NO SUCH CHART HAS BEEN BROUGHT ON RECORD. ON THE OTHER HAND ASSESSEE HAS CLAIMED THAT IN MAJORITY OF INVESTOR COMPANIES, THE REPLIES HAVE BE EN RECEIVED IN YOUR OFFICE, WHICH HAVE NOT BEEN INCORPORATED IN THE BOD Y OF ASSESSMENT ORDER. THIS FACT HAS BEEN BROUGHT IN THE KNOWLEDGE OF HON'BLE CIT. WHO HAS STATED THAT IN SUCH CASES NO ADDITIONS CAN BE MADE. IN VIEW OF THESE FACTS, YOU MAY PROCEED AHEAD FOLLO WING HON'BLE APEX COURT JUDGMENT AND OTHER HIGH COURT JUDGMENT. IN CASE YOU WISH TO DIFFER ON THIS MATTER, YOU MAY PUT UP YOUR VIEW POINT BEFORE UNDERSIGNED. (II) FIXED DEPOSIT RECEIPTS IN THE CASES OF ANKIT/NOVAS/ NIPPON. IN THIS MATTER ALSO, DETAILED DISCUSSION WAS MADE A ND HON'BLE CIT, HAS CLEARLY INDICATED THAT YOU SHOULD EXAMINE WHETH ER ANY INVESTMENTS IN PURCHASE OF SHARE OF THESE COMPANIES/LIQUIDATION OF INVESTMENTS OF THESE COMPANIES HAS BEEN MADE BY THE ASSESSEE IN CA SH. WHEREVER ANY SUCH INVESTMENT IS FOUND. IT SHOULD BE PROPERLY EXA MINED AND MAY BE CONSIDERED FOR ADDITIONS AS UNDISCLOSED INVESTMENT OF THESE COMPANIES (III) INVESTMENT IN JEWELLERY AND CAPITAL GAIN ON S ALE OF THESE JEWELLERY ITEMS LINKED TO LAND PURCHASED BY THE ASS ESSEE IN THE NAME OF ON SHRI KALE ON THIS ISSUE, DURING DISCUSSION, IL WAS FOUND THAT ASSESSEE HAS ALREADY SURRENDERED THE AMOUNT OF CASH INVESTMENT I N THE SAID LAND. LATER ON. THE ASSESSEE PAID TO SHRI KALE BY CHEQUE AND GOT WITTHDRAWN THE SAME AMOUNT IN CASH AS PER COPY OF BANK ACCOUNT FURNISHED. IT IS ALSO FOUND THAT THIS CASH WAS AVAILABLE WITH THE AS SESSEE AND HE MAY HAVE UTILIZED IT FOR THE PURCHASE OF JEWELLERY ETC. AS PER DETAILS SUBMITTED. IF THIS CONTENTION IS FOUND PROBABLE, NO ADDITION IS REQUIRED. YOU MAY ALSO EXAMINE AND BRIG ON RECORD THE BASIS O F ADDITION ON ACCOUNT OF CAPITAL GAIN WORKING ADOPTING DATE OF AC QUISITION AS 01.04.1981. MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 10 (IV) ISSUE RELATED TO SALE OF LAND HAVING DOLOMITE MINES THROUGH ROUTE OF SALE/ PURCHASE OF SHARES OF THE COMPANY. DURING DISCUSSION, THIS ADDITION WAS LOUND TO BE TO TALLY BASELESS AS ASSESSEE HAS ALREADY PROVIDED COPIES OF ACCOUNTS PA YEE CHEQUES, BANK STATEMENTS ETC. TO PROVE THAT AMOUNT HAS BEEN RECEI VED FROM JAYPEE GROUP. YOU HAVE NOT MADE ANY ENQUIRIES FROM JAYPEE GROUP EXCEPT SENDING A LETTER. IN VIEW OF' EVIDENCE FURNISHED BY ASSESSEE, NO ADDITION APPEARS TO BE JUSTIFIED. IT IS ALSO OBSERV ED THAT ASSES SEE HAS ALREADY DECLARED CAPITAL GAIN ON THIS TRANSACTION I N HIS RETURN U/S 139(1). (V) EXCAVATION AND LOCAL CARTAGE CHARGES. DURING DISCUSSION. THIS ADDITION WAS ALSO FOUND TO BE TOTALLY BASELESS A ASSESSEE HAS ALREADY PROVIDED COPIES OF RETURNS O F CONTRACTORS AND OTHER EVIDENCE TO SHOW THAT THESE CONTRACTORS WERE WORKING ON THE SITE AND TDS WAS MADE ON THEIR PAYMENTS. REGARDING LABOUR PAYMENT THE EVIDENCE OF AGREEMENT DULY SIGNED BY ASST. LABOUR COMMISSIONER, LABOUR UNION LEADER, LOC AL MLA AND MANAGEMENT HAS BEEN SEEN AND FOUND TO BE PROPER EVI DENCE. IN THIS CONNECTION, YOU HAVE NOT BROUGHT ANY COGENT EVIDENCE FOR NOT ACCEPTING THESE EVIDENCES BROUGHT BY THE ASSESSEE E XCEPT RELYING ON STATEMENT OF SHRI BABULAL BURMAN AND OTHER STAFF ME MBERS. THESE STATEMENTS SHOULD HAVE BEEN STRENGTHENED BY FURTHER ENQUIRIES, WHICH HAS NOT BEEN DONE. YOU MAY ALSO GO THROUGH THE AFFI DAVIT OF SHRI BABULAL BURMAN IN THIS REGARD. SIMILARLY, NO EFFORTS HAVE BEEN MADE TO COUNTER THE EXPLANATION OF THE ASSESSEE REGARDING LOCAL CARTAGE WHICH INCLUDES RC BOOK OF TRUCKS UTILIZED. THEIR TRUCK NUMBERS, THE PAYMENT VOUCHERS . AS NO ENQUIRES HAVE BEEN MADE, THE EVIDENCE BROUGHT BY THE ASSESSE E HAS TO ACCEPTED. AFTER DISCUSSION IN THE CHAMBER OF HON'BLE CIT. SOM E FURTHER ISSUES HAVE BEEN BROUGHT T0 MY NOTICE BY 1HE ASSESSEE WHER E YOUR PROPOSED ADDITIONS DOSE NOT APPEAR TO BE PROPER VIZ. A. DIVIDEND INCOME. B. GIFTS RECEIVED BY FAMILY MEMBERS, WHICH ARE DULY RE CEIVED BY THE ASSESSEE. C. INDIRA VIKAS PATRA ENCASHED, WHICH ARE DULY RECORDE D BY THE ASSESSEE. D. CASH DEPOSITS IN SAVINGS BANKS ACCOUNTS, WHICH ARE DULY RECORDED BY THE ASSESSEE. E. INTEREST ON LOANS TAKEN AGAINST FDRS, WHICH ARE DUL Y RECORDED BY THE ASSESSEE. FURTHER YOUR MAY ALSO VERIFY CORRECT VALUE TO BE AD OPTED FOR SALE OF PROPERTY IN IN THE CASE OF SHRI PAWAN KUAMR MITTAL (HUF). MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 11 ON THE OTHER ISSUES, WHICH MAY COME ACROSS IN OTHER DRAFT ORDERS, INSTRUCTIONS WILL BE ISSUED SEPARATELY. COPY OF NOT E ADDRESSED TO HON'BLE C.I.T. IS ENCLOSED. (ABHISHEK SHUKLA) JOINT COMMISSIONER OF INCOME TAX RANGE-KATNI COPY TO: THE COMMISSIONER OF INCOME TAX-1, JABALPUR WITH REFERENCE TO DISCUSSION MADE. WITH YOUR HONOR IN THIS CONNECT ION. JOINT COMMISSIONER OF INCOME TAX, RANGE-KATNI. OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE KATNI, KATNI(MP) F.NO ACIT TE/M /1530 APPROVAL/ CAMP- JABALPUR, DATE D THE 22 DECE: 2011 TO, THE JOINT COMMISSIONER OF INCOME TAX, RANGE KATNI J ABALPUR, SIR, (BY NAME SUB APPROVAL OF DRAFT ASSESSMENT ORDER U/S 153A/143 (3) IN THE CASE OF DIFFERENT AASSESSEES OF MITTAL GROUP KATNI REGARDIN G REF. YOUR OFFICE LETTER NO.JCIT/R-KATNI/MITTAL GROU P/11-12 DATED 20.12.2011- ADDRESSED TO CIT-I JABALPUR AND COPY EN DORSED TO ME & DATED 21/12/2011 ADDRESSED TO ME AND COPY TO CITI JABALPU R CLARIFICATION REGARDING PLEASE REFER TO THE ABOVE. IT MAY BE CLARIFIED THAT TILL 20/12/2011 IN 21 CASE S DRAFT ORDERS WERE SUBMITTED TO YOUR OFFICE. HOWEVER, FROM THE LETTER ADDRESS TO ME, I AM UNABLE TO UNDERSTAND IT IS WHETHER APPROVAL UNDER S ECTION 153D OR DIRECTIONS TO REFRAME THE ASSESSMENTS. PLEASE CLARIFY ASSESSEE WISE AND ASSESSMENT YEAR WISE. 2. AS REGARD THE ADDITION IN THE CASE OF SMT. SARFA MITTAL, ONE OF THE MEMBER OF MITTAL FAMILY, IT WAS CLEARLY STATED BEFO RE YOUR HONOUR AND ALSO BEFORE SHRI LALIT MITTAL AND RN MITTAL, CA THAT THE AMOUNTS OF RS.13,00,000/- WAS THE SHARES CLAIMED TO HAVE BEEN SOLD BY THE RELEVANT MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 12 COMPANIES TO VARIOUS FICTITIOUS PERSONS OF DELHI AN D KOLKATTA, THE IDENTITY OF THESE PERSONS (COMPANIES) COULD NOT BE TRACED BY TH E INVESTIGATION WING DURING THE POST SEARCH ENQUIRY AND ALSO THE FACT TH AT THE LETTERS ISSUED BY ME DURING THE ASSESSMENT PROCEEDINGS WERE RECEIVED BAC K UNSERVED WITH THE POSTAL REMARK 'NO SUCH ADDRESSEE'. IT IS ALSO RELEV ANT TO MENTION THAT THOSE SHARES WERE TRANSFERRED BACK TO THE MITTAL FAMILY I N LATER YEARS. DURING THE COURSE OF SEARCH, SUCH SHARE CERTIFICATES, TRANSFER FORMS, POWER OF ATTORNEY ETC WERE SEIZED AND ALL THESE DOCUMENTS ARE FORMED PART OF THE ASSESSMENT ORDER. IN VIEW OF THE POSITION, THE SHARES SOLD IN A PARTICULAR FINANCIAL YEAR AND CLAIMED TO HAVE REPURCHASED BY THE FAMILY MEMBE RS WERE TREATED AS THE INVESTMENT OF THE FAMILY MEMBERS FROM UNDISCLOSED S OURCES. THIS IS THE POSITION IN RESPECT OF ALL HUFS & INDIVIDUALS. SIMI LAR ADDITIONS WERE MADE IN THE CASE OF COMPANIES ON PROTECTIVE BASIS AS THE AMOUNTS WERE FOUND CREDITED IN THEIR ACCOUNT. IN VIEW OF THE SPECIFIC CLARIFICATION, STILL YOU ARE IN VIEW OF NOT MAKING SUCH ADDITIONS, THE SAME BE CLAR IFIED. 3. ONE OF THE ISSUE RAISED BY YOU IS REGARDING SHAR E CAPITAL IN VARIOUS GROUP COMPANIES OF MITTAL GROUP - IT MAY BE MADE CLEAR TH AT TILL 19/12/2011, THE CASES WHICH YOU ARE REFERRING, NO DRAFT ORDERS IN C ASES OF COMPANIES WERE FURNISHED. IN THAT SITUATION, WITHOUT GOING TO THE MERIT OF THE ASSESSMENT ORDER HOW A PRUDENT PERSON CAN DECIDE WHAT ADDITION S ARE TO BE MADE OR OTHERWISE. IT MAY BE MENTIONED HERE THAT ON THIS IS SUE, DURING THE PERSONAL DISCUSSION, YOUR HONOUR HAD ADVISED ME TO REFER THE DECISION OF THE ITAT INDORE IN THE CASE OF AGRAWAL COAL CORPORATION WHER EIN THE CASE LAWS SUGGESTED BY THE ASSESSEE AND ALSO IN THE PRESENT L ETTER YOU HAD QUOTED HAVE BEEN ELABORATELY DISCUSSED AND HELD THAT MERELY FIL ING OF PAN, COPY OF RETURN, PROFIT AND LOSS ACCOUNT IS NOT SUFFICIENT. IN VIEW OF YOUR ADVISE, AND FOLLOWING THE DECISION OF ITAT INDORE BENCH, SUCH A DDITIONS WERE MADE. 4. ANOTHER POINT RAISED IS FIXED DEPOSIT RECEIPTS I N THE CASES OF ANKIT/NOVAS/NIPPON. IT MAY BE CLARIFIED THAT THE CA SE OF NIPPON IS NEITHER ASSESSED AT KATNI NOR WHERE IT IS BEING ASSESSED HA S GIVEN BY MITTAL. AS REGARDS THIS I WANT TO SAY THAT THE ISSUE OF NIPPON IS BEYOND THE JURISDICTION. AS REGARDS THE ANKIT & NOVAS, THE DRAFT ORDER IS YE T TO BE FINALLRED AND THE DECISION IS STILL PENDING AT MY END DUE TO THE FACT THAT ON 20/12/2011 DURING THE COURSE OF DISCUSSION, IT WAS TOLD TO ME THAT TH E MATTER IS BEING REFERRED TO DL(INV) FOR CLARIFICATION. ONLY ON RECEIPT OF THE C LARIFICATION, THE ASSESSMENT ORDER NEED TO BE FINALIZED. IT MAY FURTHER BE STATE D THAT IN THE CASE OF ANKIT TRACOM PVT LTD., THE STANDING COUNSEL HAD INFORMED TELEPHONICALLY THAT PASSING OF ASSESSINENT ORDER IS STAYED. HOWEVER, IT WAS MADE CLEAR THAT ASSESSMENT ORDER MAY BE PREPARED AND NOT TO BE RELE ASED. 5. INVESTMENT IN JEWELLERY AND CAPITAL GAIN ON SALE OF THESE JEWELLERY ITEMS LINKED TO LAND PURCHASED BY THE ASSESSEE IN THE NAM E OF SHRI KALE- FIRST OF ALL, I MAY MADE IT CLEAR THAT THE CAPITAL GAIN ON S ALE OF JEWELLERY WAS MADE ON ACCOUNT OF PURITY OF GOLD L.E. THE GOLD JEWELLER Y PURCHASED/POSSESSED HAVING PURITY OF 79.96 AND WHEN IT WAS SOLD, THE PU RITY WAS AROUND 90. SOME OF THE JEWELLERY WAS CLAIMED TO HAVE BEEN ACQU IRED BY GIFT FROM VARIOUS FAMILY MEMBERS. IN SPITE OF REPEATED OPPORT UNITIES GIVEN, THE MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 13 ASSESSEE HAD NOT GIVEN ANY DETAILS REGARDING THE NA ME OF THE PERSON OR THE DATE OF ACQUISITION BY THOSE PERSONS GIFTED THE JEW ELLERY. IN THAT SITUATION, IN MY VIEW EXCEPT TO APPLY THE PROVISIONS OF SECTION 4 9(1), I HAVE NO OTHER ALTERNATIVE. IN VIEW OF THIS, IT IS REQUESTED THAT SPECIFIC DIRECTIONS BE GIVEN TO EXCLUDE THE CAPITAL GAIN ON SALE OF JEWELLERY PARTI CULARLY IN VIEW OF PURITY AND DATE OF ACQUISITION. AS REGARDS THE PURCHASE OF LAND IN THE NAME OF MR K ALE, IN SPITE OF REPEATED OPPORTUNITY, THE ASSESSEE HAD NOT GIVEN AN Y DETAIL. IN SHORT, THE POINT IS CLEARIFIED AS- MR. KALE IS AN AADIVASI AND AS PER THE GOVT GULDELINES, THE LAND OF ADIVASIS CANNOT BE PURCHASE D ANY OTHER PERSON EXCEPT ADIVASI (EXCEPT SOME EXCEPTIONAL CASES. IN THIS CAS E, THE MITTAL FAMILY PURCHASED LANDS OF ADIVASIS IN THE NAME OF MR KALE AND LATER ON GOT TRANSFERRED AS PER THE EXCEPTIONAL CIRCUMSTANCES. I T IS A WELL SETTLED FACT THAT THE PURCHASE OF LAND IN BENAMI NAME CANNOT BE FROM KNOWN SOURCES OF INCOME. WHEN LATER ON TRANSFERRED INTO ASSESSEE'S N AME, THE AMOUNT IS BEING TRANSFERRED TO MR KALE'S ACCOUNT AND WITHDRAWN AND UTILIZED BY THE ASSESSEE FOR THEIR OWN PURPOSES. IN THE CASE OF ASSESSEE, NE ITHER THE AMOUNT WHICH WAS INVESTED EARLIER OUT OF UNACCOUNTED SOURCES WAS SUBJECTED TO TAX NOR ARE THE PERSONS INTRODUCING THE CAPITAL BY WAY OF GIFT PAYING TAX ON SUCH AMOUNT. THEREFORE, IT WAS HELD IN THE ASSESSMENT OR DER THAT THE UNACCOUNTED MONEY WHICH WAS USED FOR PURCHASE OF LAND WAS BROUG HT ON ACCOUNT, THEREFORE, THE INVESTMENT IN JEWELLERY WAS THOUGHT TO BE TAXED IN THIS YEAR. IF THE DECISION OF MINE IS WRONG, PLEASE CLARIFY. 6. ISSUE RELATED TO SALE OF LAND HAVING DOLOMITE MI NES THOUGH ROUTES OF SALE/PURCHASE OF SHARES OF THE COMPANY. IN MY KNOWL EDGE, NO SUCH ISSUE HAD CAME TO ANY OF THE DRAFT ASSESSMENT ORDERS SUBMITTE D TO YOU. IT APPEARS THAT ALL THE ABOVE ISSUES ARE RAISED BY YOUR HONOUR AS P ER THE VERSION OF MR. LALIT MITTAL AND SHRI RN MITTAL, CA. 7. SIMILAR IS THE POSITION REGARDING EXCAVATION AND CARTAGE CHARGES- THE MATTER RELATES TO UNACCOUNTED PURCHASES AND NON DEB ITING OF EXPENSES BASED ON VARIOUS SEIZED DOCUMENTS, STATEMENTS OF VARIOUS EMPLOYEES AT THE TIME OF SEARCH AND POST SEARCH ENQUIRLES. THE ADDITION WAS MADE ON ACCOUNT OF UNACCOUNTED TRANSACTIONS. 8. FROM THE PERUSAL OF THE LETTER DATED 21/12/2011, IT IS NOT CLEAR, WHETHER THE ASSESSMENT ORDERS SUBMITTED TO YOUR OFFICE WAS APPR OVED OR OTHERWISE UNDER SEC. 153D OR THE INSTRUCTIONS ARE UNDER SEC. 144A. 9 AS PER THE APPRAISAL REPORT THE PROPOSED ADDITION S WERE MORE THAN 125 CRORES AND IF THERE IS MAJOR DEVIATION FROM SUCH PR OPOSAL, AS PER INSTRUCTIONS OF THE BOARD, DEVIATION REPORT SHOULD BE FAMISHED T O THE INVESTIGATION WING. FROM YOUR ABOVE REFERRED LETTER, IT IS NOT CLEAR, W HETHER ANY DEVIATION REPORT WAS FURNISHED TO THE INVESTIGATION WING OR NOT. THI S MAY ALSO BE MADE CLEAR TO ME SO THAT WITH THE SHORT TIME SPAN, I COULD COM PLETE THE SEARCH & SEIZURE ASSESSMENTS, MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 14 9. IT MAY BE MADE CLEAR THAT RECENTLY MY SISTER IN LAW (BHABHL) EXPIRED ON 21 DEC 2011 AND DUE TO THESE TIME BARRING CASES, I COULD NOT EVEN SEE HER DURING HER ALLING TIME OR OTHERWISE TO ATTEND THE F UNERAL WHICH WAS HELD ON 22/12/2011. AT THE SAME TIME, MY MOTHER WAS ALREADY A PARALYTIC PATIENT AND RECENTLY SUFFERED A SECOND PARALYTIC ATTACK, 10. IT MAY FURTHER BE STATED HERE THAT THE VALUATIO N REPORTS IN THE CASES OF SHRI VIJAY KUMAR MITITAL, MP MINERALS AND MITTAL RO ADWAYS WERE RECEIVED RECENTLY, AND THE ASSESEE WAS GIVEN AN OPPORTUNITY TO FURNISH THEIR OBJECTIONS TO THE PROPOSED VALUATION. ONLY ON RECEI PT OF THE OBJECTIONS, THESE CASES COULD BE FINALIZED. AT THE END, IT MAY BE MEN TIONED THAT ALL THE ASSESSMENTS IN MITTAL GROUP ARE GETTING BARRED BY L IMITATION ON 31/12/2011, KEEPING IN VIEW THE PECULIAR SITUATION, MAY I REQUE ST YOU TO KINDLY ISSUE CLEAR INSTRUCTIONS WHETHER TO MAINTAIN THE ADDITION OR TO DELETE THE ADDITIONS PROPOSED. YOURS FAITHFULLY, (SANJAY KUMAR) ASSTT. C OMMISSIONER OF INCOME TAX CIRCLE, KATNI. COPY TO THE COMMISSIONER OF INCOME TAX-II, JABALPUR WITH REFERENCE TO THE JCIT, KATNI'S LETTER DATED 20TH & 21 DEC. 2011 REFE RRED ABOVE ASSTT. COMMI SSIONER OF INCOME TAX CIRCLE, KATNI. OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-I, CR BUILDING, NAPIER TOWN, JABALPUR HOLDING ADDITIONAL CHARGE OF RANGE-11, JABALPUR, RANGE-SATNA KATNI, CHINDWARA & SAGAR F.NO. JCIT/R-KATNI/ MITTAL GROUP/11-12/ DATED 20.12.2011 TO THE COMMISSIONER OF INCOME TAX-11, JABALPUR (MP) SIR, SUB: APPROVAL OF DRAFT ASSESSMENT ORDER W'S 153A/ 1 43(3) IN THE CASE OF DIFFERENT ASSESSCES OF MITTAL GROUP, KATNI...REG.. IN THIS CONNECTION, IT IS TO SUBMIT THAT ACIT, CIRC LE KATNI, SHRI SANJAY KUMAR HAS SUBMITTED DRAFT ASSESSMENT ORDERS IN THE CASES OF SOME ASSESSEES BELONGING TO THE MITTAL GROUP, IN WHICH S EARCH WAS CONDUCTED BY MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 15 THE DEPARTMENT AND BLOCK ASSESSMENTS ORDERS U/S 153 A / 153(3) ARE TO BE PASSED BY 31.12.2011. IT IS FURTHER SUBMIT THAT THE SE DRAFT ORDERS FOR COMPANIES AND SOME OTHER ASSESSEE OF THIS GROUP ARE YET TO BE SUBMITTED FOR PERUSAL OF THIS OFFICE. DUE TO PAUCITY OF TIME AVAILABLE AND LARGE NUMBER O F ASSESSMENTS PENDING IN THIS RANGE AND OTHER RANGES, IT WAS THOU GHT FIT TO DISCUSS THE ISSUES INVOLVED IN EACH DRAFT ASSESSMENT ORDER WITH THE ASSESSEE AND THE AO AND SIMULTANEOUSLY REFER TO APPRAISAL REPORT SO THA T A PROPER AND BALANCED VIEW OR THE ISSUES MAY BE TAKEN IN SHORTEST POSSIBL E TIME. THE MAJOR ISSUES CRYSTALLIZED ARE PRESENTED BELOW FOR YOUR KIND CONS IDERATION AND NECESSARY DIRECTIONS. 1. SHARE CAPITAL IN VARIOUS GROUP COMPANIES OF MITTAL GROUP IT IS OBSERVED THAT SOME COMPANIES HAVE SUBSCRIBED TO THE SHARE CAPITAL OF GROUP COMPANIES OF MITTAL GROUPS. THIS C APITAL CONTRIBUTION BY THE SUBJECT TO VERIFICATION BY THE INVESTIGATION WI NG AND IT WAS OPINED BY IT THAT THIS WAS INTRODUCTION OF UNDECLARED INCOME BY THE MITTALS IN THEIR GROUP COMPANIES IN THE NAME OF THESE COMPANIES. IN APPRAI SAL REPORT, YEAR-WISE INTRODUCTION OF CAPITAL IN THE NAME OF VARIOUS COMP ANIES OF MITTAL FAMILY HAS BEEN WORKED OUT, WHICH IS THE BASIS OF PROPOSED ADDITIONS IN DIFFERENT YEARS IN THE CASES OF FAMILY MEMBERS OF MITTAL GROU P. THE A0 IS OF THE VIEW THAT THESE TRANSACTIONS ARE SHAM TRANSACTIONS AS SO ME OF THE PAPERS RELATED TO TRANSFER OF SHARES FOUND IN THE POSSESSION OF MITTA L FAMILY BLANK AND IN ALL PROBABILITY THESE SHARES WERE HELD BY THE FAMILY ME MBERS OF MITTAL FAMILY IN THE PERIOD OF 2000-2005 AND WERE PURPORTED TO HA VE BEEN TRANSFERRED TO THESE BOGUS COMPANIES AND LATER ON IN THE PERIOD OF 2005-2010 THEY WERE AGAIN PURCHASED BY THE FAMILY MEMBERS OF MITTAL FAM ILY. IN FACT, THESE WERE NEVER TRANSFERRED / SUBSCRIBED BY THESE BOGUS COMPA NIES. THE AO IS RELYING ON THE FINDINGS/CONCLUSIONS DRAWN BY THE INVESTIGAT ION WING. WHICH IN TURN BASED ON STATEMENT OF SOME VIJAY GOYAL OF GEFECE GR OUP OF DELHI. STATED TO BE FAKE ENTRY PROVIDER. ALTHOUGH, THIS STATEMENT IS HEAVILY RELIED BY THE INVESTIGATION WING, THE SAME IS NOT INCORPORATED IN THE APPRAISAL REPORT. THE AO HAS REQUESTED INVESTIGATION WING FOR SUPPLY OF T HIS STATEMENT BUT IT WAS NOT MADE AVAILABLE. BARRING THIS, THE AO HAS GIVEN OPPORTUNITY TO THE ASSESSEE AND THE REPLIES OF THE ASSESSEE HAVE BEEN BROUGHT ON RECORD. IT IS EXPLAINED BY THE ASSESSEE THAT THESE CORPORAT E ASSESSEES, WHO SUBSCRIBED TO THE CAPITAL OF GROUP COMPANIES OF MIT TAL GROUP ARE WELL ESTABLISHED COMPANIES WHOSE PERMANENT ACCOUNT NUMBE R, CERTIFICATE OF INCORPORATION, COPIES OF ACKNOWLEDGEMENTS OF INCOME RETURNS AND BALANCE SHEET, THE EVIDENCE OF BANKING TRANSACTION BY WHICH AMOUNT HAS BEEN RECEIVED ETC HAVE BEEN SUBMITTED BY THE ASSESSEE. T HE ASSESSEE HAS SHOWN IN SOME SAMPLE CASES THAT THESE COMPANIES ARE BEING AS SESSED REGULARLY AND THEY WERE HAVING SUBSTANTIAL NETWORTH AS ON DATE OF INVESTMENT. IN SOME CASES, THE COMPANIES LIKE GEFCEE FINANCE LTD, STELL ER INVESTMENTS LID., MAHANIVESH INDIA LTD., AND ADONIS SECURITIES PVT. L TD., WERE HAVING NET- MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 16 WORTH OF RS. 15 CRORES TO RS.60 CRORES WHEREAS AMOU NT OF RS 7 TO 30 LACS WAS SUBSCRIBED THROUGH CHEQUE IN THE CASE OF ASSESS EE GROUP COMPANY. IT WAS FURTHER BROUGHT OUT THAT SECTION 143(3) ASSESSM ENTS HAVE BEEN COMPLETED IN THE SOME OF GROUP COMPANIES OF ASSESSE E, WHERE CAPITAL SUBSCRIPTION HAS BEEN VERIFIED BY THE THEN AO VIZ A CIT, KATNI. THE ASSESSEE HAS ALSO BROUGHT ON RECORD SOME LETTERS OF VERIFICATION ISSUED BY THE ASSESSING OFFICERS OF INVESTOR COMPANIES, WHICH WER E RECEIVED BY THE ASSESSEE IN PAST. FROM THE WEBSITE OF ROC, THE ASSE SSEE HAS DRAWN LATEST STATUS OF SOME OF THESE INVESTORS COMPANIES TO SHOW THAT THESE COMPANIES ARE LIVE COMPANIES AND IN SOME CASES THEY ARE LISTE D COMPANIES ALSO. THE ASSESSEE ALSO CLAIMS THAT SOME OF THE LETTERS ISSUE D BY THE AO FOR CONFIRMATION HAVE BEEN DULY RESPONDED BY THE SAID C OMPANIES. IN SOME OTHER CASES, THE REPORT FROM LOCAL INCOME TAX DEPAR TMENT AT KOLKATA AND NEW DELHI HAVE BEEN RECEIVED. IN MY VIEW, THE PRESUMPTION OF THESE INVESTORS COMP ANIES BEING BOGUS COMPANIES IS NOT ESTABLISHED. ON THE OTHER HAND, TH E ASSESSEE HAS PROVED BEYOND DOUBT THE EXISTENCE OF THESE COMPANIES AND T HE FACT OF SUBSCRIPTION OF SHARES BY THEM THROUGH BANKING CHANNELS. HOWEVER , YOU HONORS KIND DIRECTIONS ARE SOLICITED AS THIS ISSUE ARE COMMON I N MOST OF THE COMPANIES OF MITTAL GROUP AS WELL AS FAMILY MEMBERS OF MITTAL GR OUPS. 2. FIXED DEPOSIT RECEIPTS IN THE CASES OF ANKIT/NOVAS/ NIPPON IT IS OBSERVED THAT FDRS AMOUNTING RS. 66 CRORES AP PROXIMATELY WERE FOUND IN THE PREMISES OF THE ASSESSEE DURING SEARCH. INIT IALLY, DURING SEARCH THESE WERE LISTED BUT NO IMPOUNDING OF THEM WAS MADE. LAT ER, IT IS CLAIMED BY THE ASSESSEE THAT THE DEPARTMENT HAS ATTACHED THESE FDR S. THE SOURCE OF INVESTMENT IN THESE FDR HAS BEEN TREATED AS UNEXPLA INED IN APPRAISAL REPORT, WHICH IS THE BASIS OF AOS ADDITION ON THIS POINT HO WEVER, IT IS CLAIMED BY THE ASSESSEE THAT THESE FDRS WERE MADE OUT OF LIQUI DATION OF COMPANIES INVESTMENTS WITH VARIOUS COMPANIES, IN WHICH THE AS SESSEE HAS SUBSCRIBED SHARES SOMETIME BACK. THE VERSION OF ASSESSEE IS TH AT THESE COMPANIES WERE HAVING INVESTMENT MOSTLY IN SHARES OF SOME OTHER CO MPANIES AND SOME MINOR OTHER INVESTMENTS, WHICH WERE NOT PROFITABLE INVESTMENT AND THOSE COMPANIES WERE NOT HAVING SUFFICIENT PROFITS. HOWEV ER, AS SOON AS ASSESSEE STEPPED-IN, THESE COMPANY THE ASSESSEE LIQUIDATED T HOSE UN PROFITABLE INVESTMENT AND THE ENTIRE SALE PROCEEDS WERE INVEST ED IN FDRS./ UNSECURED LOANS GIVEN. IT IS OBSERVED FROM APPRAISAL REPORT THAT INTENSIVE ENQUIRIES WERE CONDUCTED BY THE INVESTIGATION WING TO FIND OUT THE ACTUAL SOURCE OF INVESTMENT, PRESUME TO BE MITTAL'S OWN UNDISCLOSED MONEY ROUTED THROUGH CHAIN OF COMPANIES INVESTING IN EACH OTHER. IT IS F URTHER SEEN THAT THESE EFFORTS HAVE BEEN SUCCESSFUL TO SOME EXTENT AND DEP ARTMENT HAS PIERCED THE CORPORATE VEIL TO FIND OUT THAT APPROXIMATELY RS.5 CRORES WAS INVESTED IN CASH IN THIRD OR FOURTH LAYERS OF COMPANIES. IN MY VIEW, ADDITION TO THIS EXTENT IS JUSTIFIABLE. MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 17 HOWEVER, IT IS EXPLAINED BY THE ASSESSEE THAT THERE IS NO DIRECT EVIDENCE IN THE HAND OF DEPARTMENT TO CLAIM THAT TH E AMOUNT OF CASH HAS COME FROM MITTAL'S AS THIS CASH AMOUNT HAS BEEN FOU ND IN THIRD OR FOURTH LAYER OF COMPANY TO WHICH ASSESSEE DOES NOT HAVE AN Y LINK. IT IS FURTHER SAID THAT THIS AMOUNT IS VERY SMALL IN COMPARISON TO TOT AL AMOUNT OF RS.66 CRORES AND FURTHER ASSESSEE HAS PROVIDED ALL NECESSARY DOC UMENTS TO PROOF THE SOURCE OF INVESTMENT MADE BY HIM. 3. INVESTMENT IN JEWELLERY AND CAPITAL GAIN ON SALE OF THESE 3. JEWELLERY ITEMS LINKED TO LAND PURCHASED BY THE ASSESSEE IN T HE NAME OF ONE SHRI KALE. IT IS ADMITTED FACT THAT ASSESSEE PURCHASED SOME PI ECE OF LAND IN THE NAME OF A TRIBAL PERSON, NAMELY, SHRI KALE SOMEWHER E BETWEEN 2003 TO 2005 NEARBY KATNI TOWN. OBVIOUSLY, THE PAYMENT WAS MADE IN CASH. LATER, THE ASSESSEE GOT THE LAND IN HIS NAME BY PAYING SAL E CONSIDERATION BY CHEQUE TO SHRI KALE AND GETTING BACK WITHDRAWAL OF THE SAM E AMOUNT FROM HIS BANK ACCOUNT IN CASH. ASSESSEE STATES THAT THE SOME OF T HE JEWELLERIES FOUND FROM THE MEMBERS OF FAMILY, OR SOLD BY THEM, ARE PURCHAS ED FROM THE AMOUNT OF THIS CASH WITHDRAWAL AVAILABLE WITH THE ASSESSEE. H OWEVER, ASSESSEE HAS NOT BEEN ABLE TO DIRECTLY LINK THIS AMOUNT WITH THE PUR CHASE OF JEWELLERY AS NO PURCHASE BILLS ARE AVAILABLE WITH THE ASSESSEE. IT IS CLAIMED BY THE ASSESSEE THAT THESE JEWELLERIES WERE ALREADY IN THE WT RETUR N OF THESE LADY MEMBERS. AS PER FINDING OF THE APPRAISAL REPORT, THE AO HAS PROPOSED INVESTMENT IN THESE JEWELRIES TO BE MADE FROM UNDEC LARED INCOME OF THE ASSESSEE. THE ASSESSEE HAS FURTHER RAISED OBJECTION TO LONG-T ERM CAPITAL GAIN CALCULATION ON THE SALE OF THESE JEWELLERIES TAKING PURCHASE VALUE AS ON 01.04.1981, WHILE THESE JEWELRIES WERE PURCHASED AF TER TAKING WITHDRAWAL FROM LAND TRANSACTIONS RELATED TO SHRI KALE. NO POS ITIVE EVIDENCE REGARDING THIS HAS BEEN BROUGHT ON RECORD EITHER BY THE AO. 4. ISSUE RELATED TO SALE OF A COMPANY HAVING DOLOMITE MINES THROUGH ROUTE OF SALE / PURCHASE OF SHARES OF THE COMPANY. THE ONE OF THE COMPANY OF THE ASSESSEE WAS OWNER OF LAND HAVING DOLOMITE MINES, WHICH WAS SUBJECT MATTER OF SALE TO JAYPEE GROUP. THE ASSESSEE CHOSE THE ROUTE OF SALE THROUGH TRANSFER O F SHARES OF THE OWNER COMPANY. IN THIS TRANSACTION, THE AMOUNT OF CAPITAL GAIN RECEIVED WAS PARTLY INVESTED IN REC BONDS TO AVAIL BENEFITS OF SECTION 54EC AND REMAINING AMOUNT WAS OFFERED FOR TAXATION. THE ASSESSEE HAS S HOWN PHOTO-COPIES OF CHEQUES AND MOU REACHED BETWEEN ASSESSEE AND JAYPEE GROUP, WHICH WERE IMPOUNDED ALSO DURING SEARCH PROCEEDINGS. THE AO IS OF THE VIEW THAT THIS TRANSACTION IS A SH ANI TRANSACTION AS IT IS UNBELIEVABLE THAT THE SHARE OF COMPANY WOULD BE SOLD AT THE VALUE OF 56 TIMES OF FACE VALUE. FURTHER, HE FOUND THAT ALTHOUG H AMOUNT OF CONSIDERATION MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 18 IS SHOWN TO BE RECEIVED BY CHEQUE BUT NO BANK CHARG ES HAVE BEEN DEBITED OUT OF THIS SALE CONSIDERATION ON GOING THROUGH THE RECORDS, IT IS TO OBSERVE THAT NO SUSTAINABLE ADDITION CAN BE MADE ON THIS POINT. 5. EXCAVATION AND LOCAL CARTAGE CHARGES THE ASSESSEE IS HAVING MINING WORK OF BAUXITE AROUN D KATNI. IT IS CLAIMED BY THE ASSESSEE THAT EXCAVATION WORK IS GOT DONE PA RTLY THROUGH CONTRACTORS, WHO ARE RESPONSIBLE FOR SUPPLY OF LABOURS AND ALSO SUPPLY OF MINING EQUIPMENT USED FOR EXCAVATION. SIMILARLY, IT IS ALS O STATED THAT THE EXCAVATED BAUXITE, LATERITE AND SOIL HAS TO BE CARRIED TO SOM E NEARBY PLAIN SURFACE FOR TEMPORARY STORAGE PURPOSES. LATER, BAUXITE IS FURTH ER TRANSPORTED TO RAILWAY SIDING. FOR THIS LOCAL CARTING ALSO, HELP OF CONTRA CTORS IS AVAILED BY THE ASSESSEE. IT IS CLAIMED BY THE ASSESSED THAT PAYMEN T FOR LABOUR WORK HAS TO BE MADE AS PER LABOUR RATE AGREEMENT AGREED AMONG A SSTT. LABOUR COMMISSIONER, LABOUR UNION, LOCAL MLA AND REPRESENT ATIVE OF MANAGEMENT. THE ASSESSEE HAS PRODUCED COPY OF SAID AGREEMENT, WHICH IS STATED TO BE IMPOUNDED DURING SCRATCH. HOWEVER, INVESTIGATION WING HAS GIVEN ITS FINDING T HAT ALL THESE PAYMENTS ARE BOGUS EXPENDITURES CLAIMED TO REDUCED TAX LIABILITIES. IT IS FURTHER CLAIMED THAT THIS AMOUNT HAS BEEN INVESTED IN THE FDRS ALREADY DISCUSSED IN PARA 2. THE CONTENTION OF THE WING IS BASED ON THE STATEMENT OF SHRI BABULAL BURMAN AND 2-3 CLERICAL STAFF RECORDED BY THE WING. SHRI BABULAL BURMAN IS STATED TO BE BLASTER AT THE MINES AND HE IS EMPLOYEE OF M P STATE MINING CORPORATION. THIS CORPORATION IS CO- OWNER OF THE COMPANY, WHICH IS MANAGING THE EXCAVATION WORK AT SITE. IT I S STATED BY THE ASSESSEE THAT EXCAVATION WORK IS INDEPENDENTLY MANAGED AND S UPERVISED BY THE ASSESSEE AT SITE. IT IS FURTHER EXPLAINED THAT THIS MINE WAS MANAGED DIRECTLY BY THIS CORPORATION AND FROM DECEMBER, 2006, IT HAS BEEN LET OUT TO THE ASSESSEE ON COMMISSION BASIS WITH UNDERSTANDING THA T EXISTING EMPLOYEES AND LABOURS OF CORPORATION WORKING AT THIS MINE WIL L BE RETAINED BY THE ASSESSEE. IT IS CLAIMED BY THE ASSESSEE BY PRODUCIN G AN AFFIDAVIT OF SHRI BURMAN THAT HE IS NOT WELL EDUCATED AND COULD NOT U NDERSTAND THE CONTENTS OF THE STATEMENT STATED TO BE SIGNED BY HIM DURING HIS EXAMINATION IN THE INVESTIGATION WING, APART FROM THIS AFFIDAVIT, THE ASSESSEE IS SUPPORTE D BY COPIES OF RETURNS FILED BY THESE CONTRACTORS SUPPLYING LABOUR S AND DOING EXCAVATION WORK. ON THE FACE OF THESE DOCUMENTARY EVIDENCES RE GARDING THESE CONTRACTORS WHO HAVE RECEIVED PAYMENTS FROM THE ASS ESSEE AFTER TDS AND WHO HAVE ALSO FILED THEIR RETURNS IN THE INCOME TAX DEPARTMENT, THE CLAIM OF THE ASSESSEE APPEARS TO BE PROPER AND NO DISALLOWAN CE OF EXPENSES ON THE BASIS OF STATEMENT CAN BE MADE. REGARDING EXPENSES OF LOCAL CARTING, THE ASSESSEE HAS PRODUCED EVIDENCE IN THE FORM OF TRUCK NUMBERS, PAYMENT VOUCHERS, REGISTRATION BOOK OF TRUCKS, DETAILS OF P AYMENTS ETC. THE LIST OF PAYMENTS WAS FOUND AT THE PREMISES OF THE ASSESSEE DURING SEARCH. MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 19 6. PURCHASE OF LANDS. THE ADDITIONS HAVE BEEN PROPOSED BY THE AO, ON THE PRESUMPTION THAT THE ASSESSEE HAS PAID SOME EXTRA MONEY OVER AN D ABOVE THE VALUE DECLARED IN SALE DEED WITHOUT BRINGING ANY EVIDENCE ON RECORD TO SUPPORT HIS ADDITION. THE ASSESSEE HAS EXPLAINED THAT DURING SEARCH NO AN Y LOSE PAPER OR ANY OTHER EVIDENCE HAS BEEN FOUND TO REACH ANY SUCH CONCLUSION REGARDING EXCESS PAYMENT OVER AND ABOVE THE AMOUNT IN THE BOO KS ACCOUNTS, THE CONTENTION OF THE ASSESSEE APPEARS TO BE CORREC T. YOURS FAITHFULLY (ABHISHEK SHUKLA) JOINT COMMISSIONER OF INCOME TAX, RANGE-KATNI OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX KATNI (MP) F.NO.ACIT/ASSESSMENT/APPROVAL/MITTAL/2011-12 DATE D: 22.12.2011 TO THE JOINT COMMISSIONER OF INCOME TAX, RANGE-KATNI, KATNI(MP) SUB: REPLY TO YOUR LETTER REGARDING APPROVAL OF DRA FT ASSESSMENT ORDER U/S 153A/143(3) IN CASE OF DIFFERENT ASSESSEE OF MITTAL GROUP, KATNI- REG. REF: YOUR LETTER F.NO.JCIT/R-KATNI/MITTAL GROUP/11- 12, DATED 21/12/2011 SIR, PLEASE REFER TO ABOVE, IN THIS CONNECTION MOST RESP ECTFULLY AND MOST HUMBLY AT MY END, I SEE THE FOLLOWING FOR THE KIND CONSIDERATION OF YOUR HONOR THAT: 1. DIRECTIONS AS GIVEN TO ME, ARE NOT CLEAR REGARDING TO WHICH PARTICULAR CASE AND TO WHICH PARTICULAR ASSESSMENT YEAR, SAME ARE ISSUED, FOR NOT MAKING ADDITION? 2. AS PER MANUAL OF OFFICE PROCEDURE, IT IS AN ESTABLI SHED ADMINISTRATIVE PROCEDURE THAT IN CASE WHERE THE ADD ITIONS AS PROPOSED BY INVESTIGATION WING, ARE CONSIDERED UNWA RRANTED BY THE AO, THEN INVESTIGATION WING HAS TO BE CONSULTED COM PULSORILY. IT IS PRESUMED THAT NECESSARY CONSULTATION HAS BEEN MADE. IF SO, PLEASE MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 20 PROVIDE ME THE COPY OF MINUTES RECORDED OF THIS CON SULTATION WITH THE INVESTIGATION WING. 3. YOU ARE AWARE THAT AS AN ASSESSING OFFICER IN THIS CASE, I HAVE EXAMINED EACH AND EVERY DOCUMENT ALONG WITH THE SUB MISSION AND GONE THROUGH ALL THE ASPECTS OF THE CASES AND THE F INDINGS ARE BASED ON CONCRETE EVIDENCE GATHERED BY ME DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AND AS GATHERED BY INVESTIGA TING WING DURING SEARCH AND SEIZURE PROCEEDINGS. 4. THE COPY OF DIRECTIONS ADDRESSED BY YOU TO ME IS WI THOUT ANY DAK NUMBER AND THE PHOTOCOPY OF SOME ORIGINAL LETTER, W HICH HAS NOT BEEN RECEIVED BY ME TILL NOW. IT IS REQUESTED YOUR HONOR TO PROVIDE ME ORIGINAL COPY OF THE SAME. 5. SINCE THE DIRECTIONS ARE NOT CLEAR I AM WITHHOLDING THE PASSING OF ASSESSMENT ORDERS TILL THE SPECIFIC DIRECTIONS ARE RECEIVED. I WOULD ALSO LIKE TO MENTION THAT THE TIME BARRING DATE IN SAID ASSESSMENT ORDERS IS 31/12/2011. HENCE YOU ARE REQUESTED TO IS SUE CLEAR DIRECTIONS IN EACH AND EVERY CASE ASSESSMENT YEAR W ISE. YOURS SINCERELY, DATE: 22/12/2011 (SANJAY KUMAR) ACIT-KATNI 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 26 TH DECEMBER, 2011 FORWARDING THEREWITH DRAFT ASSESSME NT ORDERS IN MITTAL GROUP OF CASES FOR AY 2004-05 TO 2010-11: COVERING LETTER DATE NAME OF THE ASSESSEE ASSESSMENT YEAR 26 .12.2011 1. VIJAY KUMAR MITTAL (HUF) 2004 - 05 TO 2010 - 11 MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 21 2. M/S MITTAL ROADWAYS 3. M.P. MINERALS PVT. LTD. 2004-05 TO 2010-11 2004-05 TO 2010-11 2. DUE TO SHORTAGE OF TIME, AS I AM HOLDING CHARGE OF SIX RANGES, IT IS NOT POSSIBLE FOR ME TO GO INTO THE DEEP, THEREFORE, THE DRAFT ASSESSMENT ORDERS IN THE FOLLOWING CASES SUBMITTED BY YOU ARE HEREBY APPROVE D U/S 153D AS PER TECHNICAL REQUIREMENT. CASE RECORDS AS RECEIVED ARE RETURNED HEREWITH. 3. PLEASE ENSURE PASSING OF ORDER, ISSUE OF DEMAND NOTICE AND CHALLAN AS ALSO SERVICE BEFORE THE LIMITATION DATE. JT. COMMISSIONER OF INCOME TAX RANGE-KATNI 11. FROM THE ABOVE CORRESPONDENCE BETWEEN THE A.O. ON ONE HAND AND THE JCIT ON THE OTHER HAND AND THE LETTER ADDRESSED BY THE JCIT TO THE COMMISSIONER CLEARLY SHOWS THAT IT WAS AT THE STAGE OF DISCUSSION AND THE JCIT COULD NOT ABLE TO MAKE HIS MIND. ULTIMATELY HE SIMPLY SAYS THAT DUE TO SHORTAGE OF TIME AS HE WAS HOLDING CHARGES FOR S IX RANGES, IT IS NOT POSSIBLE FOR HIM TO GO INTO THE MATERIAL DEEP, THER EFORE, HE APPROVED THE PROPOSAL TECHNICALLY AS REQUIRED U/S 153D OF THE AC T, IMMEDIATELY, AFTER THE AO BRINGS TO HIS NOTICE THAT THE ASSESSMENT IS GETTING TIME BARRED. 12. FROM THE ABOVE COMMUNICATIONS, IT IS OBVIOUS TH AT THE JCIT HAS NOT APPLIED HIS MIND EVEN THOUGH THERE WAS A DISCUSSION BETWEEN THE A.O. AND JCIT, THE JCIT COULD NOT MAKE HIS MIND. HENCE, THIS KIND OF CASUAL APPROVAL/TECHNICAL APPROVAL WITHOUT GOING TO THE MA TTER AND WITHOUT APPLYING HIS MIND TO THE MATERIAL AVAILABLE ON RECO RD IS NOT AN APPROVAL AT MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 22 ALL. THEREFORE, A.O. HAS NO JURISDICTION TO PASS TH E ASSESSMENT ORDER. IN OTHER WORDS, THE ASSESSMENT ORDER PASSED BY A.O. AS CONFIRMED BY C.I.T.(A) IS VOID, NULLITY, NON-EST, HENCE, CANNOT BE STAND IN THE EYE OF LAW. 13. AN IRREGULARITY IN THE ASSESSMENT ORDER MAY BE RECTIFIED BY REMITTING BACK THE MATTER TO THE ASSESSMENT. IN THE CASE ON H AND IT IS NOT AN IRREGULARITY IN THE ASSESSMENT ORDER, IT IS A JURIS DICTIONAL ERROR. THE A.O. HAS NO JURISDICTION TO PASS THE ASSESSMENT ORDER UN LESS THE JCIT GRANTED APPROVAL. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THIS IS NOT A RECTIFIABLE ERROR SINCE IT IS A JURISDICTIONAL ERRO R AND NOT AN IRREGULARITY IN THE ASSESSMENT PROCEEDING. MOREOVER, EVEN IF THE MA TTER IS REMITTED BACK, THE AO CANNOT DO ANYTHING BETTER, SINCE TIME LIMIT PROVIDED UNDER THE ACT HAS ALREADY EXPIRED. THEREFORE, THIS TRIBUNAL IS UN ABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS O F BOTH THE AUTHORITIES BELOW WERE SET-ASIDE AND THE ENTIRE ASSESSMENT ORDE R AS CONFIRMED BY C.I.T.(A) ARE QUASHED. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND C.O. OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.03. 2021. (AS PER MY SEPARATE, ASSENT ORDER) (SD/-) SD/- (SANJAY ARORA) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 23 DATED:04 /03/2021 IN RE: MITTAL ROADWAYS (P.) LTD . (IT(SS)A NO. 143/JAB/2014 & CO 64/JAB/2014) 1. I HAVE PERUSED THE ORDER PROPOSED BY MY LD. BROT HER, JM, AND AM PRINCIPALLY IN AGREEMENT THEREWITH IN THAT THE IMPU GNED ASSESSMENTS FAIL FOR WANT OF THE NECESSARY APPROVAL U/S. 153D. MY RE ASONS FOR THE SAME TAKE A DIFFERENT TRAJECTORY AND, ACCORDINGLY, ARE B EING STATED PER A SEPARATE, ASSENT ORDER, WHICH IS TO BE READ IN CONJUNCTION WI TH THE SAID ORDER. 2. THE APPEAL RAISES THE ISSUE OF MAINTAINABILITY O F THE IMPUGNED ASSESSMENTS IN VIEW OF THE APPROVAL U/S. 153D OF TH E ACT DATED 26/12/2011 BY THE JOINT COMMISSIONER OF INCOME TAX, JABALPUR ( JT. CIT FOR SHORT). SECTION 153D READS AS UNDER: 153D. PRIOR APPROVAL NECESSARY FOR ASSESSMENT IN CA SES OF SEARCH OR REQUISITION NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PAS SED 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, EXCE PT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER. (E MPHASIS, SUPPLIED) THE OPERATIVE PART OF THE APPROVAL LETTER AFORE-REF ERRED READS AS UNDER: DUE TO SHORTAGE OF TIME, AS HOLDING CHARGE OF SIX RANGES, IT IS NOT POSSIBLE FOR ME TO GO INTO THE DEEP, THEREFORE, THE DRAFT ASSESSMENT O RDERS IN THE FOLLOWING CASES SUBMITTED BY YOU ARE HEREBY APPROVED U/S. 153D AS P ER TECHNICAL REQUIREMENT. CASE RECORDS AS RECEIVED ARE RETURNED HEREWITH. (EMPHASIS, SUPPLIED) THE FACTS AND CIRCUMSTANCES LEADING TO THE SAID AP PROVAL HAVE BEEN DISCUSSED IN DETAIL, REPRODUCING THE COMMUNICATIONS EXCHANGED BETWEEN THE JT. CIT, THE APPROVING/COMPETENT AUTHORITY, AND THE ASSISTANT MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 24 COMMISSIONER, KATNI (ASST. CIT FOR SHORT), THE AS SESSING OFFICER (AO), IN THE ORDER BY MY LD. BROTHER. THE SAME CANNOT, BY ANY SCORE, BE REGARDED AS A VALID APPROVAL. IT IS NOT A CASE OF NON-APPLIC ATION OF MIND, A QUESTION OF FACT, AS THE LD. COUNSEL FOR THE ASSESSEE, SHRI GHAI, WOULD CONTEND BEFORE US, BUT OF IT BEING INDEED ONE, I.E., AN APPROVAL I N LAW, TO WHICH THE ANSWER MUST CLEARLY BE IN THE NEGATIVE. AS THE EXCHANGE AF ORE-REFERRED, COUPLED WITH THE LETTERS DATED 20 & 21/12/2011 BY THE JT. C IT TO THE AO (FORMING PART OF THE PAPER-BOOK BY THE REVENUE FURNISHED ON 03/02/2021), SHOWS, THE APPROVING AUTHORITY, ON PERUSING THE RECORDS AN D APPLYING HIS MIND TO THE VARIOUS ASPECTS OF THE ASSESSMENT/S, FINDS HIMS ELF UNABLE TO APPROVE THE DRAFT ASSESSMENT ORDER AS SUCH. HE, HOWEVER, INSTEA D OF REQUIRING THE AO TO MAKE CHANGE/S THEREIN AS DEEMED PROPER OR, TIME PERMITTING, EVEN REQUIRING HIM TO, FOR THE PURPOSE, UNDERTAKE INQUIR Y ON THE LINES HE CONSIDERS NECESSARY, CITES THE REASONS OF OVERLOAD OF WORK AND PAUCITY OF TIME, AND GRANTS WHAT HE CALLS, TECHNICAL APPRO VALS. HOW, ONE WONDERS, COULD HE DO SO, I.E., IN LAW, BEING OBLIGED THEREBY TO, AND EVEN AS REQUIRED OF HIM BY THE AO VIDE HIS LETTER DATED 22/12/2011, EITHER AGREE WITH THE DRAFT ASSESSMENT ORDER OR ADVISE NECESSARY CHANGES THEREIN BEFORE ACCORDING HIS APPROVAL. THIS IS AS THE LAW CONTEMPL ATES AN ORDER OF ASSESSMENT OR REASSESSMENT ONLY UPON HIS APPROVAL A ND, OF COURSE, WITHIN THE TIME PRESCRIBED THEREFOR. THAT HIS DIRECTIONS T O THE AO IN THE MATTER WERE NOT IN CLEAR TERMS AND, BESIDES, DID RAISE CON CERNS, NOT ADDRESSED, IS THE SUBSTANCE OF AOS LETTER DATED 22/12/2011 TO TH E JT. CIT. THE ASSESSMENT ORDER AS PASSED THE SAID NON-APPROVAL BEING MANIFEST FROM THE ORDER GRANTING APPROVAL, CAN THEREFORE ONLY B E REGARDED AS NOT BEARING HIS APPROVAL. 3. IT WAS VEHEMENTLY ARGUED BEFORE US ON BEHALF OF THE REVENUE THAT THE APPROVAL CANNOT BE REGARDED AS INVALID ONLY FOR WANT OF THE APPROVING MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 25 AUTHORITY HAVING, AS CLEARLY STATED THEREIN, NOT GO NE INTO DEPTH, I.E., AS MUCH AS HE WOULD HAVE OTHERWISE, I.E., WITHOUT THE TIME CONSTRAINT, PREFERRED TO, THAT BEING ITSELF A SUBJECTIVE MATTER , WHICH WOULD VARY FROM PERSON TO PERSON. RATHER, AS THE COMMUNICATIONS EXC HANGED BETWEEN THE TWO AUTHORITIES WOULD REVEAL, THERE WAS CONSIDERATI ON OF AND APPLICATION OF MIND TO THE VARIOUS ASPECTS OF THE ASSESSMENT/S. IT MAY, TOWARD THIS, BE RELEVANT TO TRAVERSE THE PR OVISION, CONSIDERING IT IN LIGHT OF THE LEGISLATIVE INTENT LEADING TO IT S ENACTMENT. THE PROVISION OF SECTION 153D WAS BROUGHT ON THE STATUTE-BOOK BY FIN ANCE ACT, 2007, W.E.F. 01.6.2007. THE SCOPE AND EFFECT OF ITS INSERTION HA S BEEN ELABORATED IN BOARD CIRCULAR 3/2008, DATED 12.3.2008. IT STATES O F THE LAW PROVIDING THUS FOR AN APPROVAL OF AN ASSESSMENT IN CASES WHERE SEA RCH HAS BEEN CONDUCTED OR REQUISITION MADE. NOT MUCH GUIDANCE ALSO FLOWS F ROM THE NOTES ON CLAUSES EXPLAINING THE STATUTORY CHANGE; THE SECTIO NS 153A TO 153C HAVING BEEN INSERTED ON THE STATUTE-BOOK BY FINANCE ACT, 2 003, W.E.F. 01/4/2003. A REVIEW OF THE PROVISIONS OF SECTION 144A AND, SIN CE OMITTED, SECTION 144B, REVEAL THEM, AND EVEN AS EXPLAINED BY THE HON BLE COURTS, TO BE DESIGNED TO PROVIDE A PRE-ASSESSMENT REVIEW AND A F ORUM TO AN ASSESSEE TO KNOW THE MERITS OF THE PROPOSED ASSESSMENT ORDER BE FORE THE ACTUAL ASSESSMENT IS MADE AND HE SADDLED WITH A PECUNIARY LIABILITY RESULTING FROM IT. THE OBJECT APPEARS TO BE TO AVOID MULTIPLI CITY OF PROCEEDINGS AND TO REDUCE THE AREA OF DISPUTE BETWEEN THE ASSESSEES AND THE DEPARTMENT AND ALSO TO PROVIDE FOR A CHECK AND BALANCE AGAINST ARB ITRARY ASSESSMENTS CAUSING UNNECESSARY HARASSMENT, WHICH COULD OTHERWI SE BE AVOIDED [ BHAGWAT PRASAD V. CIT [1998] 232 ITR 480 (ALL)]. THE BOARD CIRCULARS ISSUED QUA THE SAID SECTIONS HAVE ALSO EXPLAINED THE SAME TO BE AN ATTEMPT TO IMPROVE THE QUALITY OF THE SCRUTINY ASSESSMENTS AS WELL AS STRENGTHENING THE MACHINERY FOR REVIEW OF ASSESSMENTS AS WELL AS INSPECTION OF MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 26 ASSESSMENT CHARGES. IN RECENT TIMES, THE CONCEPT OF LIMITED SCRUTINY HAS ALSO BEEN INTRODUCED WITH A VIEW TO FOCUS THE RESOU RCES OF THE REVENUE ON TARGETED ISSUES, WITH AN INBUILT FLEXIBILITY FOR EN HANCING THE SCOPE OF ASSESSMENT IN DESERVING CASES BY FOLLOWING THE PR OCEDURE PRESCRIBED THEREFOR AGAIN, CLEARLY, WITH THE SAME INTENT AND TOWARD THE SAME END. CONSIDERED IN THIS BACKDROP, THE LEGISLATIVE INTENT BEHIND S. 153D COULD BE NO DIFFERENT, OR AT LEAST MATERIALLY SO. I N FACT, THE NEED FOR FRAMING A BALANCED ASSESSMENT, I.E., PROVIDING A CHECK ON T HE ARBITRARY USE OF POWER THROUGH HIGH PITCHED ASSESSMENTS, AS WELL AS TO STR ENGTHEN THE INTERNAL MONITORING AND REVIEW SYSTEM OF THE DEPARTMENT, IS IMPERATIVE AND CANNOT BE OVER-EMPHASIZED. IT APPEARS THAT INASMUCH AS NO PRE-DECISIONAL HEARING TO THE ASSESSEES, AS IN SS. 144A/144B, HAS BEEN PRO VIDED IN SECTION 153D, ITS PRIMARY PURPOSE IS TO IMPROVE THE QUALITY OF TH E ASSESSMENTS IN SEARCH AND SEARCH-RELATED CASES. THIS PERHAPS ALSO EXPLAIN S THE ABSOLUTE BAR ON THE ISSUE OF AN ORDER OF ASSESSMENT/REASSESSMENT WITHOU T PRIOR APPROVAL BY THE RANGE HEAD IN SUCH CASES. WHERE, THEREFORE, THE APP ROVING AUTHORITY STATES OF BEING CONSTRAINED FOR TIME TO GO INTO THE DEPTH OF THE MATTER, IT ONLY INDICATES HIS NON-SATISFACTION WITH THE DRAFT ORDER . THAT THIS NON- SATISFACTION OBTAINS DESPITE HIS EXAMINATION OF THE VARIOUS ASPECTS OF THE ASSESSMENT/S MAKES IT ALL THE MORE RELEVANT. THE SA ME RESULTS FROM HIS APPLICATION OF MIND AND NOT OTHERWISE. AT THE SAME TIME, HE USING THE SAME PHRASE IN ALL THE APPROVALS, GIVEN AT THE SAME TIME , IT COULD AND AS IT APPEARS, THAT WHILE HE HAD GONE INTO SOME DEPTH IN SOME CASES, THOUGH NOT SATISFIED THEREWITH, HE MIGHT NOT HAVE IN OTHERS AN D, OVERWHELMED BY THE VOLUME OF WORK INVOLVED IN THE SHORT SPAN OF TIME A VAILABLE, RECUSED HIMSELF SO TO SPEAK, BY ISSUING TECHNICAL APPRO VALS. EITHER WAY, THE OBJECT AND INTENT OF THE LAW GETS DEFEATED . NOTHING, THEREFORE, TURNS IN LAW ON THE FACT OF DELIBERATIONS BETWEEN THE ASSESSING AND THE REVIEWING MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 27 AUTHORITY WHICH MS. PRADHAN, THE LD. CIT-DR, WAS AT PAINS TO EMPHASIZE BEFORE US, AS THE ASSESSMENT ORDER/S THAT CAME TO B E FINALLY PASSED CANNOT BE REGARDED AS AN APPROVED ORDER/S, BEING APPROVED , AS APPARENT, TO MEET, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, T HE TECHNICAL REQUIREMENT OF APPROVAL! IT IS ALSO NOT OPEN FOR THIS TRIBUNA L TO TRAVEL BEYOND THE EXPRESS STATEMENT BY THE COMPETENT AUTHORITY IN THE APPROVAL LETTER, AND TO, UPON A REVIEW OF THE CORRESPONDENCE EXCHANGED ( INCLUDING THE MATERIAL REFERRED TO THEREIN) BETWEEN THE REVENUE AUTHORITIE S, FORM AN OPINION AS TO WHETHER THE APPROVING AUTHORITY OUGHT TO HAVE BEEN, OR BEEN NOT, SATISFIED. IT IS HIS, AND HIS SATISFACTION ALONE THAT IS RELEV ANT, AND DOING SO WOULD BE TO INTRUDE UPON AND USURP HIS SUPERVISORY POWER AND DUTY WITH REGARD TO ASSESSMENT, FRAMING OF WHICH IS THE PREROGATIVE OF THE REVENUE. IT IS EQUALLY IMPERMISSIBLE TO QUESTION THE BONA FIDES OF THE APPROVAL AS GIVEN OR THE TRUTHFULNESS OF WHAT IS STATED IN THE APPRO VAL LETTER OR INDEED IN THE AOS LETTER DATED 22/12/2011 (SUPRA) SEEKING CLARIF ICATIONS. 4. THE QUESTION OF DUE APPLICATION OF MIND, WHICH I S OFTEN RAISED BY AND ON BEHALF OF THE ASSESSEES IN SUCH-LIKE SITUATI ONS, AS INDEED WAS IN THE INSTANT CASE, IT MAY BE CLARIFIED HERE, ARISES FOR REVIEW ONLY FROM THE LIMITED STAND-POINT OF WHETHER THE CONDITION/S OF T HE SECTION OR THE PROVISION IS MET, AND NOT BEYOND. A PARALLEL IN THI S REGARD MAY BE DRAWN TO THE RECORDING OF THE REASON/S TO BELIEVE ESCAPEMENT OF INCOME FROM TAX BY THE AO PRIOR TO THE ISSUE OF A REASSESSMENT NOTICE. THE PURVIEW OF AN APPELLATE COURT, AS IS WELL-SETTLED, IS LIMITED TO ASCERTAINING THE EXISTENCE OR OTHERWISE OF A LIVE LINK OR A RATIONAL NEXUS BET WEEN THE MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING AUTHORITY AND HIS HONEST BELIEF AS TO THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX FROM ASSESSMENT. THE VERACITY OF THIS MATERIAL/INFORMATION, AS LONG AS I T IS FROM A RELIABLE SOURCE, MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 28 CANNOT BE EXAMINED AT THE STAGE OF ASSUMPTION OF JU RISDICTION FOR REASSESSMENT; THE SCOPE BEING THE RELEVANCY OF THE REASON/S RECORDED FOR THE PURPOSE WITH A VIEW TO DETERMINING THE VALIDITY THEREOF. APPLICATION OF MIND BY THE AO BECOMES A NECESSARY INGREDIENT TOWAR D THIS. SUFFICIENCY OF REASON/S, WHICH FALLS WITHIN THE REALM OF THE SU BJECTIVE SATISFACTION OF THE AO, CANNOT BE GONE INTO. FURTHER, EVEN THIS THE COURT DOES, NOT TO REVIEW THE MANNER OF THE EXERCISE OF THE POWER OF R EASSESSMENT PER SE , BUT ONLY TO SEE AS TO WHETHER THE REQUIREMENT OF LAW, P ROVIDING A CONDITION PRECEDENT FOR THE EXERCISE OF THE SAID POWER, HAS B EEN MET OR NOT. IN THE INSTANT CASE/S AS WELL, IT WOULD BE A DIFFERENT MAT TER WHERE THE JT. CIT HAD ISSUED SOME DIRECTION/S TO THE AO, SUBJECT TO AND O N THE BASIS OF WHICH HE ACCORDS HIS APPROVAL. IT WILL NOT, IN THAT CASE, BE OPEN FOR AN APPELLATE COURT TO REVIEW THE SAME OR SIT IN JUDGMENT THEREON. NO C RITERION FOR APPROVAL, EXCEPT OF COURSE HIS SATISFACTION WITH THE DRAFT OR DER, WHICH IS IN FACT IMPLICIT AS OTHERWISE THE EXERCISE (OF APPROVAL) ITSELF WOULD BE RENDERED MEANINGLESS, HAS BEEN PROVIDED BY THE STATUTE. THE REQUISITE OF DUE APPLICATION OF MIND IS ALSO TOWARD THIS SATISFACTI ON INASMUCH AS THERE COULD BE CIRCUMSTANCES, AS INDEED HAVE BEEN FOUND B Y THE APPELLATE COURTS, AS IN TARACHAND KHATRI V. ASST. CIT (IN ITA NO. 21/JAB/2019, DATED 17/01/2020), OF THERE BEING IN FACT NO SATISF ACTION INASMUCH AS THE SAME COULD NOT ARISE UNDER THE GIVEN FACTS AND CIRC UMSTANCES, AS, FOR EXAMPLE, APPARENT INCONSISTENCIES AND ANOMALIES IN THE APPROVED ASSESSMENT ORDER. NEEDLESS TO ADD, THIS AGAIN CAN B E EXAMINED BY THE COURTS ONLY FROM THE STAND-POINT OF A PRIMA FACIE SATISFACTION OF THE COMPETENT AUTHORITY. 5. THE QUESTION THAT ARISES NEXT FOR CONSIDERATION IS THE LEGAL CONSEQUENCE OF SUCH AN APPROVAL, I.E., WHICH CANNOT BE REGARDED AS ONE IN THE EYES OF LAW. WITHOUT DOUBT, THERE HAS BEEN THUS , IN FACT, NON- MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 29 COMPLIANCE OF SECTION 153D OF THE ACT. THE PROVISIO N, CAST IN NEGATIVE TERMS, COUPLED WITH THE USE OF WORD SHALL, CLARIF IES A MANDATORY INTENT, LAW ON WHICH IS WELL-SETTLED (SEE: MONTREAL STREET RAILWAY CO. V. NORMADIN [1917] A.C. 170, RELIED UPON AND APPLIED IN, TO CIT E SOME, HAZARI MAL KATHULIA V. ITO [1961] 41 ITR 12 (SC) AND BHAKTA VEDANTA SWAMI CHARITABLE TRUST VS. CIT (IN WP(C) 12347/2005, DATED 09/5/2006 (ORISSA)). 5.1 AN ISSUE THAT CAME UP IN THIS REGARD DURING HEA RING WAS OF THE APPROVAL BEING AN ADMINISTRATIVE APPROVAL, LACK OF WHICH MAY THEREFORE NOT BE FATAL TO THE ASSESSMENT. IT MAY BE NECESSARY TO CLARIFY THIS ASPECT AS WANT OF ADMINISTRATIVE ACTION, EVEN AS CLARIFIED IN STATE OF UP V. MANBODHAN LAL SRIVASTAVA [1958] SCR 533 AND K.S. SRINIVASAN V. UOI [1958] SCR 1295, 1321, NOTED WITH APPROVAL IN HAZARI MAL KATHULIA (SUPRA), MAY NOT AFFECT THE VALIDITY OF THE ACTS DONE. IN THE FACTS OF THE LATTER CASE, THE COMMISSIONER HAD FAILED TO CONSULT THE CENTRAL BOAR D OF REVENUE, WHICH HE WAS REQUIRED TO BEFORE FINALIZING THE ASSESSMENT UNDER THE PATIALA INCOME TAX ACT, AS HE HAD PROCEEDED UNDER THE INDIA N INCOME TAX ACT WHERE-UNDER NO SUCH CONSULTATION WAS NECESSARY. THI S NON-CONSULTATION WAS HELD AS PROOF AGAINST THE PRESUMPTION OF REGULA RITY OF OFFICIAL ACTS, CHALLENGING THE VALIDITY OF THE COMMISSIONERS ORDE R. THE APEX COURT REPELLED THE CHARGE, HOLDING THE PROVISION AS DIREC TORY, AS FOLLOWS: (PGS. 16-17) THE PROVISION ABOUT CONSULTATION MUST BE TREATED A S DIRECTORY, ON THE PRINCIPLES ACCEPTED BY THIS COURT IN STATE OF U.P. VS. MANBODHAN LAL SRIVASTAVA [1958] S.C.R. 533 AND K.S. SRINIVASAN VS. UNION OF INDIA [1958[ S.C.R. 1295. IN THE FORMER CASE, THIS COURT DEALT WITH THE PROVISIONS OF ART. 320(3) (C) OF THE CONSTITUTION, UNDER WHICH CONSULTATION WITH THE UNION PUBLIC SERVICE CO MMISSION WAS NECESSARY. THIS COURT RELIED UPON THE DECISION OF THE PRIVY COUNCIL IN MONTREAL STREET RAILWAY CO. VS. NORMANDIN (1917) A.C. 170 WHERE IT WAS OBSERVED AS FOLLOWS: MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 30 '.....THE QUESTION WHETHER PROVISIONS IN A STATUTE ARE DIRECTORY OR IMPERATIVE HAS VERY FREQUENTLY ARISEN IN THIS COUNTRY, BUT IT HAS BEEN SAID THAT NO GENERAL RULE CAN BE LAID DOWN, AND THAT IN EVERY CASE THE OBJECT OF THE STATUTE MUST BE LOOKED AT. THE CASES ON THE SUBJECT WILL BE FOUND COLLECTED IN MAX WELL ON STATUTES, 5TH EDN. P. 596 AND FOLLOWING PAGES. WHEN THE PROVISIONS OF A STATU TE RELATE TO THE PERFORMANCE OF A PUBLIC DUTY AND THE CASE IS SUCH THAT TO HOLD NULL AND VOID ACTS DONE IN NEGLECT OF THIS DUTY WOULD WORK SERIOUS GENERAL INCONVENIENCE, OR INJUSTICE TO PERSONS WHO HAVE NO CONTROL OVER THOSE ENTRUSTED WITH THE DUTY, AND AT THE SAME TIME WOULD NOT PROMOTE THE MAIN OBJECT OF THE LEGISLATURE, IT HAS BEEN THE PRACTICE TO HOLD SUCH PROVISIONS TO BE DIRECTORY ONLY, THE NEGLECT OF THE M, THOUGH PUNISHABLE, NOT AFFECTING THE VALIDITY OF THE ACTS DONE.' THE PRINCIPLE OF THE PRIVY COUNCIL CASE WAS ALSO AP PLIED BY THE FEDERAL COURT IN BISWANATH KHEMKA VS. KING EMPEROR [1945] F.C.R. 99 AND THERE, AS POINTED OUT BY THIS COURT, THE WORDS OF THE PROVISI ON WERE EVEN MORE EMPHATIC AND OF A PROHIBITORY CHARACTER. THE ESSENCE OF THE RULE IS THAT WHERE CONSULTATION HAS TO BE MADE DURING THE PERFORMANCE OF A PUBLIC DUTY AND AN OMISSION TO DO SO OCCURS, THE ACTION CANNOT BE REGARDED AS ALTOGETHER VOID, A ND THE DIRECTION FOR CONSULTATION MAY BE TREATED AS DIRECTORY AND ITS NEGLECT, AS OF NO CONSEQUENCE TO THE RESULT. IN VIEW OF WHAT HAS BEEN SAID IN THESE CASES, THE FAIL URE TO CONSULT THE CENTRAL BOARD OF REVENUE DOES NOT DESTROY THE EFFECTIVENESS OF TH E ORDER PASSED BY THE CIT, HOWEVER WRONG IT MIGHT BE FROM THE ADMINISTRATIVE P OINT OF VIEW . THE POWER WHICH THE CIT HAD, WAS ENTRUSTED TO HIM, AND THERE WAS ON LY A DUTY TO CONSULT THE CENTRAL BOARD OF REVENUE. THE FAILURE TO CONFORM TO THE DUT Y DID NOT ROB THE CIT OF THE POWER WHICH HE EXERCISED, AND THE EXERCISE OF THE P OWER CANNOT, THEREFORE, BE QUESTIONED BY THE ASSESSEE ON THE GROUND OF FAILURE TO CONSULT THE CENTRAL BOARD OF REVENUE, PROVISION REGARDING WHICH MUST BE REGARDED AS LAYIN G DOWN ADMINISTRATIVE CONTROL AND AS BEING DIRECTORY . 5.2 THE ISSUE, NEVERTHELESS, IS NOT RES INTEGRA ; THE DECISION IN CIT VS. MAHARAJA PRATAP SINGH BAHADUR OF GIDHAUR [1961] 41 ITR 421 (SC), AMONG OTHERS, BEING ON THE POINT. IN THE FACTS OF T HAT CASE, REASSESSMENT NOTICES U/S. 34 (CORRESPONDING TO SECTION 148(1) OF THE ACT) WERE ISSUED BY THE AO WITHOUT OBSERVING THE PROCEDURE PRESCRIBED T HEREFOR. THE NOTICES WERE ISSUED ON AUGUST 8, 1948 WITHOUT RECORDING THE REASONS FOR DOING SO AND PUTTING THEM BEFORE THE COMMISSIONER FOR HIS AP PROVAL. THERE WAS IN FACT NO SUCH REQUIREMENT IN LAW AS ON 08.8.1948, I. E., THE DATE OF ISSUE OF THE NOTICES. HOWEVER, SUBSEQUENTLY, I.E., ON SEPTEM BER 8, 1948, AN AMENDING ACT WAS PROMULGATED, WHICH STIPULATED SUCH A REQUIREMENT BY WAY OF PROVISO TO THE AMENDED SECTION, READING AS UNDER, AND WHIC H WAS GIVEN A RETROSPECTIVE EFFECT FROM MARCH 30, 1948: ( PG. 423) MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 31 PROVIDED THAT (1) THE ITO SHALL NOT ISSUE A NOTICE UNDER THIS SUB - SECTION UNLESS HE HAS RECORDED HIS REASONS FOR DOING SO AND THE COMMISSIONER IS SA TISFIED ON SUCH REASONS THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (EMPHASIS, SUPPLIED) THE ASSESSMENTS, ON CHALLENGE, WERE REGARDED AS NOT VALID, FROM THE STAGE OF THE TRIBUNAL WHEREAT THE ISSUE OF THEIR BEING NOT MAINTAINABLE WAS RAISED FOR THE FIRST TIME, ONWARDS. THE REVENUE REL YING ON SECTION 6 OF THE GENERAL CLAUSES ACT, 1897, THE APEX COURT HELD AS U NDER: (PGS. 423-425) THE QUESTION IS WHETHER THE NOTICES WHICH WERE ISSU ED WERE RENDERED VOID BY THE OPERATION OF THIS PROVISO. THE COMMISSIONER CON TENDS THAT SECTION 6 OF THE GENERAL CLAUSES ACT, PARTICULARLY CLS. (B) AND (C), SAVED THE ASSESSMENTS AS WELL AS THE NOTICES. HE RELIES UPON A DECISION OF THE PRIVY COUNCIL IN JOHN LEMM VS. MITCHELL [1912] A.C. 400, EYRE VS. WYNN-MACKENZIE [1896] 1 CH. 135 AND BUTCHER VS. HENDERSON [1868] LR 3 QBD 335 IN SUPPORT OF HIS PROPOSITION. THE LAST TWO CASES HAVE NO BEARING UPON THIS MATTER, BUT STRONG RELIANCE IS PLACED UPON THE PRIVY COUNCIL CASE. IN THAT CASE, THE EARLIER ACTION WHIC H HAD BEEN COMMENCED WHEN THE ORDINANCE HAD ABROGATED THE RIGHT OF ACTION FOR CRI MINAL CONVERSATION, HAD ALREADY ENDED IN FAVOUR OF THE DEFENDANT AND NO APPEAL THER EFROM WAS PENDING, AND IT WAS HELD THAT THE REVIVAL OF THE RIGHT OF ACTION FOR CR IMINAL CONVERSATION DID NOT INVEST THE PLAINTIFF WITH A RIGHT TO BEGIN AN ACTION AGAIN AND THUS EXPOSE THE DEFENDANT TO A DOUBLE JEOPARDY FOR THE SAME ACT, UNLESS THE STATUT E EXPRESSLY AND BY DEFINITE WORDS GAVE HIM THAT RIGHT. THE PRIVY COUNCIL CASE IS THUS ENTIRELY DIFFERENT. NO DOUBT, UNDER SECTION 6 OF THE GENERAL CLAUSES AC T IT IS PROVIDED THAT WHERE ANY ACT REPEALS ANY ENACTMENT, THEN UNLESS A DIFFERENT INTENTION APPEARS, THE REPEAL SHALL NOT AFFECT THE PREVIOUS OPERATION OF A NY ENACTMENT SO REPEALED OR ANYTHING DULY DONE THEREUNDER OR AFFECT ANY RIGHT, OBLIGATION OR LIABILITY ACQUIRED, ACCRUED OR INCURRED UNDER ANY ENACTMENT SO REPEALED . IT FURTHER PROVIDES THAT ANY LEGAL PROCEEDINGS MAY BE CONTINUED OR ENFORCED AS I F THE REPEALING ACT HAD NOT BEEN PASSED. NOW, IF THE AMENDING ACT HAD REPEALED THE O RIGINAL SECTION 34, AND MERELY ENACTED A NEW SECTION IN ITS PLACE, THE REPEAL MIGH T NOT HAVE AFFECTED THE OPERATION OF THE ORIGINAL SECTION BY VIRTUE OF SECTION 6. BUT THE AMENDING ACT GOES FURTHER THAN THIS. IT REPEALS THE ORIGINAL SECTION 34, NOT FROM THE DAY ON WHICH THE ACT RECEIVED THE ASSENT OF THE GOVERNOR-GENERAL BUT FRO M A STATED DAY, VIZ., MARCH 30, 1948, AND SUBSTITUTES IN ITS PLACE ANOTHER SECTION CONTAINING THE PROVISO ABOVEMENTIONED. THE AMENDING ACT PROVIDES THAT THE AMENDING SECTION SHALL BE DEEMED TO HAVE COME INTO FORCE ON MARCH 30, 1948, A ND THUS BY THIS RETROSPECTIVITY, INDICATES A DIFFERENT INTENTION WHICH EXCLUDES THE APPLICATION OF SECTION 6. IT IS TO BE NOTICED THAT THE NOTICES WERE ALL ISSUED ON AUGUST 8, 1948, WHEN ON THE STATUTE BOOK MUST BE DEEMED TO BE EXISTING AN ENACTMENT ENJOININ G A DUTY UPON THE INCOME TAX OFFICER TO OBTAIN PRIOR APPROVAL OF THE COMMISSIONE R, AND UNLESS THAT APPROVAL WAS OBTAINED, THE NOTICES COULD NOT BE ISSUED. THE NOTI CES WERE THUS INVALID. THE MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 32 PRINCIPLE WHICH WAS APPLIED BY THIS COURT IN VENKATACHALAM VS. BOMBAY DYEING & MFG. CO. LTD . [1958] 34 ITR 143 (SC) IS EQUALLY APPLICABLE HERE . NO QUESTION OF LAW WAS RAISED BEFORE US, AS IT COUL D NOT BE IN VIEW OF THE DECISION OF THIS COURT IN Y. NARAYANA CHETTY VS. ITO [1959] 35 ITR 388 (SC), THAT THE PROVISO WAS NOT MANDATORY IN CHARACTER. INDEED, THERE WAS TIME ENOUGH FOR FRESH NOTICES TO HAVE BEEN ISSUED, AND WE FAIL TO SEE WHY THE OLD NOTICES WERE NOT RECALLED AND FRESH ONES ISSUED. FOR THESE REASONS, WE ARE IN AGREEMENT WITH THE HIG H COURT IN THE ANSWERS GIVEN, AND DISMISS THIS APPEAL WITH COSTS. TRUE, IT IS NOT THE VALIDITY OF THE JURISDICTIONAL NOTICE AS IN MAHARAJA PRATAP SINGH BAHADUR (SUPRA), RESULTING IN THE PROCEEDINGS TAKEN WITHOUT SUCH A NOTICE OR IN PURSUANCE OF AN INVALID SUCH NO TICE BEING VOID AND ILLEGAL, AND THE ASSESSMENTS, IN CONSEQUENCE, WITHO UT JURISDICTION, WHICH IS UNDER QUESTION IN THE INSTANT CASE. THE APPROVAL U/S. 153D, AS AFORE- NOTED, IS PRIMARILY TOWARDS SAFEGUARDING THE INTERE ST OF THE REVENUE IN SEARCH AND SEARCH-RELATED CASES, GIVING IT A MANDAT ORY STATUS. IT THUS BECOMES AS MUCH INTEGRAL TO THE PROCEDURE FOR ASSES SMENT AS IS THE ISSUE OF THE NOTICE FOR REASSESSMENT . AND, FURTHER, IN DISCHARGE OF HIS QUASI- JUDICIAL FUNCTIONS BY THE JT. CIT WHO, AS THE RANGE HEAD, H AS BEEN FOR THE PURPOSE ALLOWED THE REQUISITE POWERS (SEE SS. 2(7A) , 120(4),124(5), 131, 132, 133). THERE IS, THUS, NO INCONSISTENCY BETWEEN SECTION 153D, THE SCOPE OF WHICH HAS BEEN FOUND AS TOWARD IMPROVING T HAT QUALITY OF THE ASSESSMENTS BY PROVIDING FOR INTERNAL REVIEW BY THE SUPERVISORY HEAD (REFER PARA 3), AND THE POWERS AND DUTIES OF THE JT. CIT U NDER THE ACT. THE ASSESSMENT ORDER/S IN THE INSTANT CASE, PASSED IN B REACH OF THE QUALIFYING, MANDATORY CONDITION OF ITS PASSING, I.E., AN APPROV AL U/S. 153D, IS AN INVALID ORDER/S, TO WHICH NO COGNIZANCE IN LAW CAN BE GIVEN. THE PLEA OF THE APPROVAL THEREUNDER BEING AN ADMINISTRATIVE APPROVAL/ACTION IS THUS TO NO MOMENT. AS EXPLAINED IN PANCHAMAHAL STEEL LTD. V. ITO [1997] 225 ITR 458 (SC), IN THE CONTEXT OF SEC. 144B, THE AO B ECOMES PRACTICALLY FUNCTUS OFFICIO AFTER FORWARDING THE DRAFT ASSESSMENT ORDER ALONG WITH THE MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 33 ASSESSEES OBJECTIONS TO THE APPROVING AUTHORITY, A ND IS TO THEREAFTER ONLY FOLLOW THE DIRECTIONS BY THE LATTER, WHICH HE CANNO T VARY OR DEPART FROM. HIS ACCEPTANCE OF THE REVISED RETURN BY THE ASSESSE E THEREAFTER, EVEN THOUGH FURNISHED WITHIN THE TIME PERIOD STIPULATED BY LAW THEREFOR, WAS ACCORDINGLY DISAPPROVED BY THE HONBLE COURT, EXPLA INING THAT THE PROVISION OF SEC. 139(5) FOR FURNISHING A REVISED R ETURN IS TO BE UNDERSTOOD AND CONSTRUED IN A REASONABLE MANNER. SURE, TIME PERMITTING, IT IS OPEN FOR THE AO TO, AS IN MAHARAJA PRATAP SINGH BAHADUR (SUPRA), SEEK FRESH APPROVAL (U/S. 153D), AND ISSUE AN ASSESSMENT ORDER MARKING THE CULMINATION OF THE P ROCESS OF FRAMING THE ASSESSMENT. THIS IS, AGAIN, FOR THE SAME REASON; AN ORDER PASSED WITHOUT A VALID APPROVAL BEING OF NO CONSEQUENCE IN LAW. REFE RENCE IN THIS REGARD MAY ALSO BE MADE TO CIT V. RATANBAI N.K. DUBHASH [1998] 230 ITR 495 (BOM). THERE IS HOWEVER NO GAINSAYING THAT THE TIME CONSTRAINT, AS STATED IN THE APPROVAL ITSELF, IS THE REASON FOR ITS GRA NT IN THE MANNER IT HAS, SO THAT THIS ASPECT BECOMES, EVEN AS IN MAHARAJA PRATAP SINGH BAHADUR (SUPRA), ACADEMIC. IN FACT, THIS FACT ITSELF, I.E., THE GRANT OF APPROVAL SO AS TO CIRCUMVENT THE TIME LIMITATION FOR ASSESSMENT, IS I TSELF REASON ENOUGH TO INVALIDATE THE APPROVAL. THE IMPUGNED ASSESSMENTS A RE, SUBJECT OF COURSE TO THE FULFILLMENT OF THE OTHER PRE-REQUISITE CONDI TIONS OF THE PROVISION, NON-EST IN LAW. 5.3 IT IS NOT IN DISPUTE THAT THE AO IS OF THE RANK OF THE ASSISTANT COMMISSIONER, I.E., BELOW THE RANK OF THE JOINT COM MISSIONER. SIMILARLY, THE YEAR OF SEARCH BEING F.Y. 2009-10, THE ASSESSME NT YEAR UNDER REFERENCE, I.E., AY. 2007-08, IS THAT SPECIFIED IN S. 153D. TH E ASSESSMENT ORDER UNDER REFERENCE IS, THUS, NOT VALID IN LAW INASMUCH AS NO ORDER OF ASSESSMENT OR REASSESSMENT COULD BE PASSED BY THE AO BELOW THE RA NK OF JOINT MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 34 COMMISSIONER FOR ANY OF THE YEARS SPECIFIED IN SECT ION 153D, EXCEPT WITH THE APPROVAL OF THE JT. CIT. 6. BEFORE PARTING WITH THIS ORDER, ONE CANNOT HELP NOTE THE IRONY OF THE SITUATION, I.E., A MEASURE ADOPTED BY LAW TO PROTEC T THE INTEREST OF THE REVENUE IN CRITICAL CASES SHOULD ITSELF BECOME THE REASON FOR THE DESTRUCTION THEREOF, AN EXTREMELY UNFORTUNATE INCID ENT. THIS COURT, HOWEVER, CANNOT DO ANYTHING BEYOND EXPRESSING ITS A NGUISH AT THE SORRY STATE OF AFFAIRS WITH REGARD TO THE MANAGEMENT OF W ORK AS WELL AS THE COMMITMENT THERETO OF THE OFFICERS CONCERNED, AND H OPE THAT THE REVENUE, SO KEEN AND ANXIOUS TO IMPROVE THE QUALITY OF THE A SSESSMENTS AND AVOID UNNECESSARY LITIGATION, TAKES STEPS TO PREVENT A RE CURRENCE, WHICH HAS AN OPPOSITE EFFECT BEING DETRIMENTAL TO THE CAUSE OF THE REVENUE AS WELL AS THE MORALE OF ITS OFFICERS. WHERE, ONE WONDERS, WA S THE SCOPE FOR HEARING THE ASSESSEE AND HIS COUNSEL BY THE JT. CIT IN THE SEC. 153D PROCEEDINGS? ONE CANNOT ALSO HELP MENTIONING HERE THE HARD WORK AND THE PAINSTAKING EFFORTS PUT IN BY THE AO, WHICH IS COMMENDABLE INDE ED, PARTICULARLY CONSIDERING THE DIFFICULT CIRCUMSTANCES HE WAS PLAC ED IN AT THE TIME. SD/- PLACE: JABALPUR (SANJAY ARORA) DATE: MARCH 04, 2021 AM, JABALPUR BENCH PATEL/P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-KATNI, M.P. 2. THE RESPONDENT: MITTAL ROADWAYS PVT. LTD. 26, COMMERCIAL COMPLEX, HOUSING BOARD COLONY, KATNI, M.P 3. THE CONCERNED C.I.T: C.I.T.(2), JABALPUR 4. THE CIT (A) -1, JABALPUR MITTAL ROADWAYS PVT. LTD. IT(SS) A NO. 143 JAB 2014 35 5. SR. DR, ITAT 6. GUARD FILE.