M/s. Impact Forging, Rajkot, Rajkot V. The Deputy Commissioner of Income Tax, Central Circle-1, Rajkot, Rajkot

ITA 308/RJT/2018

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The case involves M/s. Impact Forging, a partnership firm engaged in real estate, which faced penalties under section 271(1)(c) of the Income Tax Act for the assessment years 2011-12 to 2015-16. The penalties were based on additions made to the assessee's income following a search and seizure operation under section 132. The assessee contested the penalties, arguing that the assessment orders were invalid as they were not properly approved by the Joint Commissioner as required under section 153D of the Act. The ITAT examined the procedural compliance in granting such approvals and found them to be mechanical and without proper application of mind, leading to the decision to partly allow the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135846 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 23-08-2018
• Other Referred Cases: CIT Vs Varas International, NATIONAL THERMAL POWER CO. LTD vs CIT, DHL operators, Shilpa Associates VS ITO, Madad Lal Ansari Vs DCIT, Sahara India (Firm) v. CIT, ACIT Vs Seerajuddin & CO, Peerless General Finance & Investment Co. Ltd. v. Dy. CIT, Kirtilal Kalidas & Co. v. Dy. CIT, Verma Roadways v. Asstt. CIT, Atlanta Electricals Pvt. Ltd. Vs ACIT
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRISHRAMDEEPSINHA; FORTHEASSESSEEFOROURADJUDICATIONSOASTOWHETHERTHEPENALTYCANBE
• Assessee Lawyers: SHRIP.CYADAV

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनायपीप INTHEINCOMETAXAPPELLATETRIBUNAL, (ConductedthroughE-Court,Rajkot) BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And MsMADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं ./ITANos.307to311/Rjt/2018 निर्धररवरध / Asstt.Years:(2011-2012to2015-16) M/s.ImpactForging, 6,ManiNagar, NearPopullarRoller, MavdiPlot, Rajkot. PAN:AADFI1340Q Vs. D.C.I.T, CentralCircle-1, Rajkot. (Applicant)(Respondent) Assesseeby:ShriP.CYadav,A.R Revenueby:ShriShramdeepSinha,Sr.D.R सुिव्ईकीत्रीख /DateofHearing:18/10/2023 घोरर्कीत्रीख /DateofPronouncement:08/11/2023 आदेश/ORDER PERBENCH: ThecaptionedappealshavebeenfiledattheinstanceoftheAssessee againsttheseparateordersoftheLearnedCommissionerofIncomeTax (Appeals)-11,Ahmedabad,(inshort“Ld.CIT(A)”)arisinginthematterofpenalty orderpassedunders.271(1)(c)oftheIncomeTaxAct1961(here-in-after referredtoas"theAct")relevanttotheAssessmentYears2011-12to2015-16. 2.First,wetakeupITANo.307/Ahd/2018,anappealbytheassesseefor theAY2011-12asleadcase/year.Theassesseehasraisedfollowinggroundsof appeal: ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 2 1.ThelearnedCommissionerofIncome-tax(Appeals)-11,Ahmedabaderredin passinganexparteorderandnotaspeakingorder. 2.Onmerits,theLearnedCommissionerofIncome-tax(Appeals)-11,Ahmedabad erredinupholdinglevyofpenaltyofRs.60,738/-u/s.271(1)(c)oftheAct. Theappellantcravesleavetoadd,amend,alterandwithdrawanygroundofappeal anytimeuptothehearingofthisappeal. 3.1Theassesseevideletterdated26-10-2020hasalsoraisedtheadditional groundsofappealwhicharereproducedasunder: AdditionalGroundsofappeal a)OnthefactsandCircumstancesofthecaseandonthebasisofinformation obtainedunderRTIdated24.06.2020,theorderofAOlevyingpenaltyisvoidab initioasthesamehasbeeninitiatedinpursuancetoanorderofassessment, dated27.12.2016,whichitselfwasanullity,astheapprovalgrantedu/s153Dof theActismechanicalapproval. b)Onthefactsandunderthecircumstancesofthecasethepenaltyleviedunder section271(1)(c)oftheActisvoidasnospecificnoticeu/s274hasbeenissued bytheAO. c)Onthefactsandcircumstancesofthecasethepenaltyorderisbadinlawas theapprovalofJCITdated24.05.2017wasanapprovalwithoutapplicationof mind. 6.Itiswellsettledthatanassesseecanraisealegaladditionalgroundorevenfreshlegal pleaatanystageoftheproceedings.Insupporttheappellantseekstorelyonthe judgmentsofApexCourtinthecaseofCITVsVarasInternationalreportedin284ITR 80(SC)andNATIONALTHERMALPOWERCO.LTDvs.CITreportedin229ITR383(SC). SpecialBenchdecisioninthecaseofDHLoperatorsreportedin108TTJ152(SB). 7.Itisfurtherrelevanttomentionherethattheassesseehadnotraisethesegrounds categoricallyatthetimeoffilingofappealsincetheassesseewasofthefirmbeliefthat theApprovalofAdditionalCommissionerasstipulatedinsection153Dwasinconsonance withtheprovisionsoflaw.Howevertheassesseecametoknowthefactthattheapproval isamechanicalapproval,whenthedepartmenthasprovidedthereplyofRTIdated 24.06.2020.Andhencedelayinraisingtheabovegroundsisabonafidedelayandhence thesamemaykindlybecondoned. 8.Itisalsosettledpositionoflawthatlimitationofadditionalgroundwouldrelatebacksto originalgroundsasheldinthefollowingcases. a.ShilpaAssociatesVSITO-263ITR0317(Raj):- b.MadadLalAnsariVsDCIT-272ITR560(Raj)- 9.Theappellantshallbehighlygratefuliftheaforesaidgroundsarepermittedtobeurged whichhadnotbeenraisedduetoinadequateinformation,whichwassubsequently obtainedunderRTI. ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 3 4.ThelearnedARfortheassessee,attheoutset,submittedthatthe additionalgroundraisedbytheassesseevideletterdated26-10-2020goestothe rootofthematterandallthefactsrelatedtotheadditionalgroundareavailable ontherecord.Therefore,thesameneedstobeadmittedinviewofthejudgment oftheHon’bleSupremeCourtinthecaseofNTPCLtd.reportedin229ITR383 whereitwasheldasunder: Undersection254,theTribunalmayaftergivingboththepartiestotheappealan opportunityofbeingheard,passsuchordersthereonasitthinksfit.Thepowerofthe Tribunalindealingwithappealsis,thus,expressedinthewidestpossibleterms.The purposeoftheassessmentproceedingsbeforethetaxingauthoritiesistoassesscorrectly thetaxliabilityofanassesseeinaccordancewithlaw.If,forexample,asaresultofa judicialdecisiongivenwhiletheappealispendingbeforetheTribunal,itisfoundthata non-taxableitemistaxedorapermissibledeductionisdenied,thereisnoreasonwhythe assesseeshouldbepreventedfromraisingthatquestionbeforetheTribunalforthefirst time,solongastherelevantfactsareonrecordinrespectofthatitem.Thereisnoreason torestrictthepoweroftheTribunalundersection254onlytodecidethegroundswhich arisefromtheorderoftheCommissioner(Appeals).Boththeassesseeaswellasthe Departmenthavearighttofileanappeal/cross-objectionsbeforetheTribunal.Thereisno reasonwhytheTribunalshouldbepreventedfromconsideringquestionsoflawarisingin assessmentproceedingsalthoughnotraisedearlier. ******** TheviewthattheTribunalisconfinedonlytoissuesarisingoutoftheappealbeforethe Commissioner(Appeals)takestoonarrowaviewofthepowersoftheTribunal. Undoubtedly,theTribunalwillhavethediscretiontoallowornotallowanewgroundtobe raised.ButwheretheTribunalisonlyrequiredtoconsideraquestionoflawarisingfrom thefactswhichareonrecordintheassessmentproceedingsthereisnoreasonwhysuch aquestionshouldnotbeallowedtoberaisedwhenitisnecessarytoconsiderthat questioninordertocorrectlyassessthetaxliabilityofanassessee. 5.Ontheotherhand,thelearnedDRdidnotraiseanyobjectiontothe admissionoftheadditionalgroundofappealraisedbytheassessee. 6.Heardtherivalcontentionsofthepartiesandperusedthematerials availableonrecord.Theadditionalgroundraisedbytheassesseeislegalinnature andthereforethesamecanberaisedatanystageinpursuancetothejudgment oftheHon’bleSupremeCourtinthecaseofNTPCLtd(supra).Hence,weadmit theadditionalgroundofappealraisedbytheassesseeandproceedtoadjudicate thesame. ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 4 7.Theonlyinterconnectedissueraisedbytheassesseeisthatthelearned CIT(A)erredinconfirmingthepenaltyleviedbytheAOfor₹60,738/-underthe provisionsofsection271(1)(c)oftheAct. 8.Thefactsinbriefarethattheassesseeinthepresentcase,apartnership firm,isengagedinthebusinessofrealestate.Asearchundersection132ofthe ActwascarriedoutattheofficepremisesinthecaseofM/sRevaInfrastructure Incorporationdated16October2014.Asaresultofthesearch,various documentsofanincriminatingnaturewereseizedwhichbelongedtothesearch personaswellastheassessee.Accordingly,theproceedingsundersection153C oftheActwereinitiatedinthenameoftheassessee.TheAOduringthe proceedingundersection153CoftheActfoundthattherewasdifferenceinprofit andcapitalbalancereportedinbooksofaccountmaintainedforincometaxreturn purposeviz-a-vizbooksofaccountseizedduringthesearch.Onquestionbythe AO,theassesseehasacceptedthedifferentialamountof₹2,02,459/-asincome. TheAOaccordinglymadeanadditionof₹2,02,459/-tothetotalincomeofthe assesseeintheassessmentframedundersection153Creadwithsection143(3) oftheActvideorderdated27December2016.TheAOintheassessmentorder initiatedthepenaltyundersection271(1)(c)oftheActonthechargeof concealmentofincomewhichcametobeconfirmedbytheAOinthepenalty orderdated25May2017foranamountof₹60,738/-being100%oftheamount oftaxsoughttobeevaded. 9.Onappeal,thelearnedCIT(A)alsoconfirmedtheorderoftheAOvideex- parteorderdated27 th June2018. 10.BeingaggrievedbytheorderofthelearnedCIT(A),theassesseeisin appealbeforeus. ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 5 11.ThelearnedARbeforeushaschallengedthepenaltyleviedbythe authoritiesbelowundersection271(1)(c)oftheActonmeritaswellasonthe technicalgroundi.e.validityofthepenaltyorderwastestedontwocounts. 11.1ThecontentionofthelearnedARonthelegalpointwasthatthe assessmentundersection153(3)readwithsection143(3)oftheActhasbeen framedwithoutobtainingtheproperapprovalfromtheJointCommissionerunder theprovisionsofsection153DoftheAct.Therefore,theassessmentframed undersection153(3)readwithsection143(3)oftheActisbadinlaw.Thus,the learnedARpointedoutthatoncetheassessmentisbadinlawandliabletobe quashed,thenthepenaltyarisingoutofsuchassessmentorderisnotsustainable. Thus,thepenaltyorderframedundersection271(1)(c)oftheActisnot maintainableundertheprovisionsoflaw. 12.Onthecontrary,thelearnedDRvideletterdated5October2023 supportedbytheletteroftheDCITdated5 th ofSeptember2023hassubmittedas under: 3.FollowingarethesalientaspectsoftheCBDTinstructionrelevanttotheissueathand. Para1.3mandatesthatAOandrangeheadshouldjointlyscrutinizeappraisalreportand seizedmaterial.Para1.8requiresthatrangeheadshouldensurepropersatisfactionis recordedbeforeissueofnoticeu/s153Coru/s148.Para3.2mandatesthatfinalshow causenoticeshouldbepreparedinconsultationwiththeAddl.CIT.Para3.10adviceAOto consulthigherauthoritieswhilemakinglargeadditions.Thus,itcanbeseenthatthe instructionsspecificallymandatestheinvolvementoftherangeheadthroughoutthe assessmentproceedings. 3.2Inadditiontotheboard'sinstructions,itissubmittedthattheofficeoftherangehead, centralrange,RajkotiscollocatedinthesamepremiseastheofficeoftheAO.This arrangementfacilitatescontinuousanddaytodayinteractionbetweenAOandrangehead. 3.3Fromtheabove,itcanbeseenthattheAssessingofficerandtheRangeHead,from veryfirststage,arejointlyacquaintedwiththeappraisalreport/scizedmaterialaswellas theissuesinvolvedinaparticularcasebasedonwhichadditionsaregoingtobemadein assessmentorder,Asregardsmaintenanceofnotesheet/documentaryevidencefor discussionsbetweenrangeheadandAO,itissubmittedthatthesameisnotrequiredby theCBDTinstructionsasmentionedabove.Also,giventhecontinuousandregularnature ofdeliberationsanddiscussionbetweentherangeheadandoverlineAOitisnotfeasible tomaintainsuchrecordsandaccordinglysuchdocumentsarenotmaintainedasageneral practice. 3.4Inviewoftheabove,withoutgoingintotheparticularoftheinstantcaseitis submittedthatrangeheadisgenerallywell-awareaboutthefacts/issuesofthesearch ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 6 assessmentcases.Thus,theapprovalgrantedbyhimu/s153DoftheAct,inshorttime span,withrespecttosearchassessmentcan'tberegardedasmechanical'andwithoutdue applicationofmind. 4.Asfarasnotesheets/communications/documentsmaintainedduringassessment proceedingoftheaboveassessee,itistomentionthattheabovecasehasbeen decentralizedfromthisofficeandcurrentlyassessedwithITO,Ward-3(1)(1),Rajkot, therefore,thesamecanbecollectedfromITO,Ward-3(1)(1)Rajkot. 13.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.First,wetakeupthelegalcontentionofthelearned ARfortheassesseeforouradjudicationsoastowhetherthepenaltycanbe leviedwherethevalidityofassessmentorderitselfisindoubt.Inthisregard,the contentionofthelearnedARisthattheassessmentundersection153Creadwith section143(3)oftheActwasframedwithoutproperapprovalundersection153D oftheAct.Thus,theorderpassedundersection153Creadwithsection143(3)is badinlawandthereforenopenaltyproceedingcanbeinitiatedundersection 271(1)(c)oftheActbasedoninvalidassessmentorder. 13.1Theprocedureundersection153Dprovidesthatwheretheassessment orderu/s153A(1)(b)or153B(1)(b)ispassedbyAObelowtherankofJCIT,he hastoseekapprovalfromtheJCIT.Theissueariseswhetherassessment/ reassessmentmadeu/s153CrequiresapprovalfromJCIT.Itseemsthatsuch approvalisnecessarybecauseafterreceiptofseizedmaterialfromtheAOofthe personsearched,theAOof"otherperson""shallproceedagainstsuchother personandissuenoticeandassessorreassesstheincomeof"otherperson"in accordancewiththeprovisionsofsection153AoftheAct,iftheAOofthe"other person"issatisfiedthatbooksofaccount/documents/assetsseized/requisitioned haveabearingonthedeterminationoftotalincomeofsuch"otherperson".Thus, afterinitiationofproceedingsu/s153C,themachineryprovisionsofsection153A willapplyand,therefore,approvalwhereverrequiredhastobetaken.Inholding so,wealsodrawsupportandguidancefromtheorderofITATPUNEBENCH'B'in thecaseofAkilGulamaliSomjiv.Income-taxOfficer,Ward4(5),reportedin [2012]20taxmann.com380(Pune)whereinitwasheldasunder: ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 7 Onperusaloftheprovisionslaiddownundersection153C,itisapparentthatafter issuanceofnoticeundersection153C,theAssessingOfficerhavingjurisdictionoversuch otherperson(againstwhichincriminatingmaterialhasbeenfoundduringthecourseof searchconductedonaperson)assessorre-assessincomeofsuchotherpersonin accordancewiththeprovisionsofsection153A.Section153Btalksabouttimelimitfor completionofassessmentundersection153A,whereassection153Dtalksaboutnecessity ofpriorapprovalforframingassessmentincaseofsearchorrequisition.Thusthe provisionslaiddownundersection153Dareverymuchapplicableincaseofassessmentof incomeofanyotherperson(i.e.,thepersonotherthanthepersonsearched). 13.2Admittedly,theassessmentundersection153Creadwithsection143(3)of theActhasbeenframedbytheACITafterobtainingtheapprovalfromtheJoint Commissionerasprovidedundersection153DoftheAct.Thisfactcanbeverified fromthepara11oforderoftheAOwhichisreproducedasunder: 11.ThisorderispassedafterobtainingapprovaloftheJointCommissionerofIncometax, CentralRange,Rajkot,whichwasconveyed,videhisapprovalletterno.JCIT/CR.RJT/Asstt Apprl./2016-17/60dated27/12/2016. 13.3However,regardingtheapprovalgrantedundersection153DoftheActwe notecertainfactswhicharedetailedasunder: 14.3Todecidetheissueonhand,itisimportanttonotecertainfactswhicharelisted below: I.TheACIThasforwardedthedraftorderstotheJointCommissionerdated27 December2016throughtheemail. II.Thetimementionintheemailis13.29 III.Onlydraftorderswentsentfortheapprovalthroughtheemail.Inotherwordsthe entireassessmentrecordswerenotsenttotheJointCommissionerforhisapproval. IV.TheapprovalwassoughtbytheACITthroughsingleemailwithrespectof10 differentassessee. V.TheapprovalletterbytheJointCommissionerwasdated27December2016. 13.4TheabovefactscanbeverifiedfromRTIfiledbytheld.ARwhichisplaced onrecordandtheld.DRhasalsonotcontrovertedthesame. 13.5Theissuewhichwemustdecidewhethertheapprovalonhandgivenby theJointCommissionerisfulfillingthemandateoftheprovisionsofSec.153Dof theActvis-à-visthelegislativeintentofinsertingthesaidsectioninthestatute. Theprovisionsofsection153DoftheActreadasunder: 153D.NoorderofassessmentorreassessmentshallbepassedbyanAssessingOfficer belowtherankofJointCommissionerinrespectofeachassessmentyearreferredtoin ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 8 clause(b)ofsub-section(1)ofsection153Aortheassessmentyearreferredtoinclause (b)ofsub-section(1)ofsection153B,exceptwiththepriorapprovaloftheJoint Commissioner: Providedthatnothingcontainedinthissectionshallapplywheretheassessmentor reassessmentorder,asthecasemaybe,isrequiredtobepassedbytheAssessingOfficer withthepriorapprovalofthePrincipalCommissionerorCommissionerundersub-section (12)ofsection144BA. 13.6TheLegislativeintentcanalsobegatheredfromtheCBDTCircularNo.3of 2008,dated12.3.2008whichreadasunder: 50.Assessmentofsearchcases—Ordersofassessmentandreassessmenttobe approvedbytheJointCommissioner. 1.Theexistingprovisionsofmakingassessmentandreassessmentincaseswhere searchhasbeenconductedundersection132orrequisitionismadeundersection 132A,doesnotprovideforanyapprovalforsuchassessment. 2.Anewsection153Dhasbeeninsertedtoprovidethatnoorderofassessmentor reassessmentshallbepassedbyanAssessingOfficerbelowtherankofJoint CommissionerexceptwiththepreviousapprovaloftheJointCommissioner.Such provisionhasbeenmadeapplicabletoordersofassessmentorreassessmentpassed underclause(b)ofsection153Ainrespectofeachassessmentyearfallingwithin sixassessmentyearsimmediatelyprecedingtheassessmentyearrelevanttothe previousyearinwhichsearchisconductedundersection132orrequisitionismade undersection132A.Theprovisionhasalsobeenmadeapplicabletoordersof assessmentpassedunderclause(b)ofsection153Binrespectoftheassessment yearrelevanttothepreviousyearinwhichsearchisconductedundersection132or requisitionedismadeundersection132A. 3.Applicability-Theseamendmentswilltakeeffectfromthe1 st dayofJune, 2007. 13.7TheLegislativeintentisclearinasmuchaspriortotheinsertionofSec. 153D,therewasnoprovisionfortakingapprovalincasesofassessmentand reassessmentincaseswheresearchhasbeenconducted.Thus,thelegislature wantedtheassessments/reassessmentsofsearchandseizurecasesshouldbe madewiththepriorapprovalofsuperiorauthoritieswhichalsomeansthatthe superiorauthoritiesshouldapplytheirmindonthematerialsbasedonwhichthe officerismakingtheassessmentandafterdueapplicationofmindandbasedon seizedmaterials,thesuperiorauthoritieshavetoapprovetheassessmentorder. ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 9 13.8Thequestionbeforeusis"hasthisbeendoneinthepresentcase".The answerstandsinnegativebecausetherewasnoapplicationofmindofthejoint Commissionerasevidentfromthediscussionaforesaid.Inotherwords,the applicationofmindofthejointCommissionerwasnecessaryinordertoachieve thelegislatureintent. 13.9Hon'bleSupremeCourtinthecaseofSaharaIndia(Firm)v.CIT[2008]169 Taxman328/300ITR403intheprovisionsofsection142(2A)wheretheAOafter havingregardtothenatureandcomplexity/volumeoftheaccountsetc.wasof theopinionthatitisnecessarysotodo,hemay,withthepreviousapprovalofthe ChiefCommissionerorChiefCommissionerorCommissioner,directtheassessee togettheaccountsauditedbyanaccountant.TheHon'bleSupremeCourt observedasunder: “Needlesstoemphasisethatbeforegrantingapproval,theChiefCommissionerorthe Commissioner,asthecasemaybe,musthavebeforehimthematerialonthebasis whereofanopinioninthisbehalfhasbeenformedbytheAssessingOfficer.Theapproval mustreflecttheapplicationofmindtothefactsofthecase.” 13.10TheHon'bleSupremeCourtinthecaseofACITVsSeerajuddin&CO.in ITANos.39to45of2022orderdated15-03-2023hasalsoobservedasunder: 25.Foralloftheaforementionedreasons,theCourtfindsthattheITAThascorrectlysetout thelegalpositionwhileholdingthattherequirementofpriorapprovalofthesuperiorofficer beforeanorderofassessmentorreassessmentispassedpursuanttoasearchoperationisa mandatoryrequirementofSection153DoftheActandthatsuchapprovalisnotmeanttobe givenmechanically.TheCourtalsoconcurswiththefindingoftheITATthatinthepresent casessuchapprovalwasgrantedmechanicallywithoutapplicationofmindbytheAdditional CITresultinginvitiatingtheassessmentordersthemselves. 26.Thequestionoflawframedisthereforeansweredintheaffirmativei.e.,infavourofthe assesseeandagainsttheDepartment. 13.11Likewise,theHon'bleHighCourtofCalcuttainthecaseofPeerlessGeneral Finance&InvestmentCo.Ltd.v.Dy.CIT[1999]236ITR671hasmadethe followingobservationswhicharepertinenttothefactsofthecaseinhandbefore us. Anargumenthasbeenadvancedtotheeffectthatbymakingsuchanomination,approval willbedeemedtohavebeengranted.Theanswertothesaidcontentionmustberendered ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 10 inthenegative.TheChiefCommissionerofIncome-taxbeforegrantingsuchapproval musthavebeforehimthematerialsonthebasiswhereofanopinionhadbeenformed.A priorapprovalcanbegrantedonlywhenthematerialsforappointmentofthe extraordinaryprocedureisrequiredtobetakenbytheAssessingOfficer.TheAssessing Officer,therefore,wasrequiredtoplaceallmaterialsbeforetheCommissionerofIncome- taxortheChiefCommissionerofIncome-tax,asthecasemaybe,toshowthatheintends totakerecoursetothesaidprovisionhavingregardtothenatureandcomplexityofthe accountsoftheassesseeandtheinterestsoftheRevenue.Nosuchmaterialshadbeen placedbeforetheChiefCommissionerofIncome-tax. 13.12AnothersectionrelevanttothefactsinissueisSec.158BGwhichreadas under: 158BG.TheorderofassessmentfortheblockperiodshallbepassedbyanAssessing OfficernotbelowtherankofanAssistantCommissionerorDeputyCommissioneroran AssistantDirectororDeputyDirector,asthecasemaybe: Providedthatnosuchordershallbepassedwithoutthepreviousapprovalof— (a)thePrincipalCommissionerorCommissionerorPrincipalDirectororDirector,asthe casemaybe,inrespectofsearchinitiatedundersection132orbooksofaccount, otherdocumentsoranyassetsrequisitionedundersection132A,afterthe30thday ofJune,1995butbeforethe1stdayofJanuary,1997; (b)theJointCommissionerortheJointDirector,asthecasemaybe,inrespectof searchinitiatedundersection132orbooksofaccount,otherdocumentsorany assetsrequisitionedundersection132A,onorafterthe1stdayofJanuary,1997. 13.13Inthissectionalsoitisprovidedthattheordercannotbepassedwithout thepreviousapproval.ThissectionwasthoroughlyscrutinizedbytheTribunal MadrasBenchinthecaseofKirtilalKalidas&Co.v.Dy.CIT[1998]67ITD573,at para-41ofitsordertheobservationsoftheTribunalareasunder: 41.Inthesecases,theCommissionerhaspassedanordergrantingapprovalunder section158BGoftheActthroughasingleorderpassedon31-3-1997withoutgivingany reasonwhatsoever.Aswehaverecordedelsewhereabove,thedraftassessmentordersof theblockperiodinallthesecasesweremadeon31-3-1997andontheverysame day,i.e.,on31-3-1997theCommissionergrantsapprovalandthattoowithoutgivingor recordinganyreasonswhatsoever.Theapprovalorderdoesnotdisclosethepointswhich wereconsideredbytheCommissionerandthereasonsforacceptingthem.Inourview, thisistotallyanunsatisfactorymethodofgrantingapprovalinexerciseofjudicialpower vestedintheCommissioner. 13.14ThisdecisionoftheTribunalwasconsideredbyAllahabadBenchofthe TribunalinthecaseofVermaRoadwaysv.Asstt.CIT[2000]75ITD183wherein alsotheassessee-appellanthaschallengedthevalidityofapprovaltothe assessmentorderaccordedbytheCITKanpur.TheTribunalatPara-47hasheld asunder: ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 11 47.Comingtotheaspectoftheapplicationofmind,whilegrantingapproval,weareof theviewthatrequirementofapprovalpre-supposesaproperandthoroughscrutinyand applicationofmind.inthecaseofKirtilalKalidas&Co.(supra),theI.T.A.T.MadrasBench ‘A’hasobservedthatthefunctiontobeperformedbytheCommissioneringranting previousapprovalrequiresanenquiryandjudicialapproachontheentirefacts,materials andevidence.Ithasbeenfurtherobservedthatinlawwhereanyactorfunctionrequires applicationofmindandjudicialdiscretionorapproachbyanyauthority,itpartakesand assumesthecharacterandstatusofajudicialoratleastquasi-judicialact,particularly becausetheiract,function,islikelytoaffecttherightsofaffectedpersons. 13.15Comingtothefactsofthecaseonhandinthelightoftheanalytical discussionhereinaboveandasmentionedelsewhere,wefindthattheACIThas grantedapprovalundersection153DoftheActinamechanicalmannerand withouttheapplicationofmindandwithoutconsideringthematerialsonrecord. Furthermore,theapprovalwasgrantedontheverysameday.Thesaidpower cannotbeexercisedcasuallyandinaroutinemanner.Weareconstrainedto observethatinthepresentcase,therehasbeennoapplicationofmindbythe JCITCommissionerbeforegrantingtheapproval.Therefore,wehaveno hesitationholdingthattheassessmentordermadeu/s143(3)oftheActr.w.sec. 153CoftheActisbadinlawanddeservestobeannulled. 13.16Atthisjunctureitispertinenttomentionthatinthepresentcase,the assesseehasfiledtheincometaxreturnundertheprovisionsofsection153Cof theActdeclaringincomeofRs.NIL.However,theAOduringtheassessment proceedingproposedtomakeadditiononaccountofdifferenceinprofitand capitalemployedasperdisclosedbooksviz-a-vizallegedundisclosedbookseized duringthesearchatthepremisesofsearchedpersonwhichwasacceptedby assessee.Accordingly,theassessmentframedundersection153Creadwith section143(3)oftheActvideorderdated27-12-2016assessingtheincomeatRs. 2,02,459/-againsttheNILincomeofferedbytheassessee.Inotherwords,the assesseeacceptedtheassessmentframedundersection153Creadwithsection 143(3)oftheActdespitethefactthattheproceduresasspecifiedundersection 153DoftheActwerenotcompliedwithbytheAO.Nowtheissueariseswhether theassessmentordercanbechallengedinthepenaltyproceedingsand consequentlypenaltyordercanbeheldasinvalid.Thisquestionhasbeen ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 12 answeredbythisTribunalinthecaseofM/sAtlantaElectricalsPvt.Ltd.VsACITin ITANos.551&552/AHD/2012videorderdated26-09-2019byobservingas under: “9.2Wehoweveralsoadverttoanotherplearaisedonbehalfoftheassesseewhile assailingimpositionofpenalty.Apleahasbeeninteraliaraisedonbehalfoftheassessee towardsnon-fulfillmentofprerequisitesbeforeinvocationofprovisionsofSection153Cof theAct.Itisthecaseoftheassesseethatintheabsenceofjurisdictionunders.153Cof theAct,thequantumproceedingsunders.153CoftheActitselfisnonestand consequently,penaltyunders.271(1)(c)oftheActcouldnothavebeenimposed.On appraisal,wefindforceintheaforesaidpleatoo.TheerstwhileprovisionofSection153C oftheActpriortoitsamendmentbyFinanceAct,2015w.e.f.01.06.2015providedthatthe AOwasrequiredtobesatisfiedthatbothundisclosedassetsaswellasdocumentsseized etc.must‘belongto’apersonotherthanthepersoninwhosehandssearchwas conductedandproceedingsunders.153AoftheActwasinitiated.Theexpression‘belong to’wasexplainedbytheHon’bleDelhiHighCourtinthecaseofPepsicoIndiaHoldings PrivateLimitedvs.ACIT[2015]370ITR295(Delhi).ItwasobservedbytheHon’bleDelhi HighCourtthatSection153CoftheActcannotbeinvokedunlesstheAOofthesearched personissatisfiedforcogentreasonsthatseizeddocumentsdonot‘belongto’the searchedperson.Thedistinctionbetweenexpression‘belongsto’and‘relatesto’or‘refers to’mustbeborneinmindbyAO.ItwasobservedbytheHon’bleCourtthatAOshouldnot confusetheexpression‘belongsto’withexpression‘relatesto’or‘refersto’.TheHon'ble Courtwentontoexplainthepurportoftheexpressionbygivingillustrationofaregistered saledeedwhichessentiallyimpliedsomethingmorethanacasualconnection.Inthewake oftheaforesaidjudgment,merelybecauseadocument/loosepaperwasfoundinthe possessionofasearchedpersonshowingreferencetocertainentriesrelatabletoathird person,thesaiddocuments/loosepaperbyitselfwouldnottantamounttobebelongingto thethirdperson.SimilarviewhasbeenexpressedinthecaseofRenuConstructionsPvt. Ltd.(Delhi)399ITR262(Del.)andKamleshbhaiDharamshibhaiPatel263CTR362(Guj). Theco-ordinatebenchTribunalinShaileshSPatelvs.ITO(2018)97taxmann.com570 (AhmedabadTrib.)hasalsoreiteratedtheaforesaidpre-requisiteforformationof ‘satisfaction’forthepurposesofSection153CoftheAct.Noavermentisfoundfromthe caserecordsthatthedocumentsseizedtowardsexcessstockdidbelongtoandwasthe propertyofthecompanyandnotoftheDirectorfromwhosecustodyitwasfound. Therefore,insuchnon-descriptandinnocuoussituation,wherethequantumassessment itselfissusceptible,theconsequencesinformofpenaltyunders.271(1)(c)oftheAct wouldnot,inourview,bejustified.” 13.17InviewoftheaboveweholdthatthepenaltyleviedbytheAOinthe penaltyorderframedundersection271(1)(c)oftheActisnotsustainable.As such,theassesseesucceedsonthetechnicalissueraisedbyit.Accordingly,we refrainfromadjudicatingtheissueraisedbytheassesseeonmerit.Inotherwords, noseparateadjudicationontheissueraisedbytheassesseeonmeritisrequired inthegivenfactsandcircumstances.Accordingly,wedismissgroundraisedby assesseeonthemeritasinfructuous.Hence,theground,ofappealofthe assesseeispartlyallowed. ITAnos.315-317/Rjt/2017 Asstt.Year2012-13 13 14.Intheresult,theappealoftheassesseeispartlyallowed. ComingtoITANos.308to311/AHD/2018appealsbytheassesseefor A.Ys.2012-13to2015-16. 15.Attheoutsetwenotethattheissueraisedbytheassesseeinthecaptioned appealforA.Y.2012-13to2015-16areidenticaltothegroundsofappealraised bytheassesseeinITANo.307/AHD/2018fortheassessmentyear2011-12. Therefore,thefindingsgiveninITANo.307/AHD/2018shallalsobeapplicablefor theassessmentyears2012-13to2015-16.TheappealoftheassesseefortheA.Y. 2011-12hasbeendecidedbyusvideparagraphNo.13to13.17ofthisorder whereinwehavedecidedtheissuepartlyinfavouroftheassessee.Thelearned ARandtheDRalsoagreedthatwhateverwillbethefindingsfortheassessment year2011-12shallalsobeappliedfortheassessmentyears2012-13to2015-16. Hence,thegroundsofappealfiledbytheassesseeforA.Ys.2012-13to2015-16 areherebypartlyallowed. 16.IntheresulttheappealoftheassesseeforAYs.2012-13to2015-16are herebypartlyallowed. 17.Inthecombined,resultall5appealsoftheassesseeforA.Ys.2011-12to 2015-16areherebypartlyallowed. OrderpronouncedintheCourton08/11/2023atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated 08/11/2023 Manish