M/s Om Kirti Construction Pvt. Ltd., RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Cen. Circle-1, RAJKOT-GUJARAT

ITA 96/RJT/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0957 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M N MAURY
• Assessee Lawyers: DINESH RUP ARELIYA
• Keywords: Unexplained investment; Question of law; Assessment record; Set aside
• Section: 143(3); 153A; 13; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI MADHUMITA ROY, JUDICIAL MEMBER) ITA. NO: 96 & 97/RJT/2015 (ASSESSMENT YEAR: 2011-12) M/S OM KIRTI CONSTRUCTION PVT. LTD. 501-506, SHILP TOWER, RAJKOT PAN NO. AAACO 2484K & SHRI DINESHBHAI P. SORATHIA OM KIRTI CONSTRUCTION PVT. LTD. 501- 506, SHILP TOWER, RAJKOT PAN NO. AIOPS 1567J V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1, RAJKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C. YADAV, ADVOCATE & DINESH RUP ARELIYA CA RESPONDENT BY : SHRI M.N MAURY, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 27 -02-202 0 DATE OF PRONOUNCEMENT : 01 - 06 -2020 ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 2 PER BENCH, 1. THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF THE LD. CIT(A)-11, AHMEDABAD DATED 29.01.2015 PERTAINING TO A.Y. 2011-12 ITA 97/RJT/2015 DINESH BHAI 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, AHMEDABAD ERRED IN CONFIRMING ADDITION OF RS.35,67,200/- MADE BY THE A SSESSING OFFICER BY WAY OF UNEXPLAINED CASH FOUND DURING SEARCH. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, AHMEDABAD ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T REATING PROCEEDS FROM SALE OF LAND AS IN THE NATURE OF TRADE AND NOT IN THE NATURE OF LONG T ERM CAPITAL GAIN AS CLAIMED AND THEREBY COMPUTING THE PROFIT THEREON AT RS. 86,56,5 27/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, AHMEDABAD ERRED IN CONFIRMING DISALLOWANCE OF INTEREST PAYMENT OF RS. 14,40,475 TO 1C1CI BANK MADE BY THE A.O. BY TREATING IT AS PERSONAL EXPENDITURE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, AHMEDABAD ERRED IN CONFIRMING ADDITION OF RS. 2,28,990/- MADE BY THE A SSESSING OFFICER BY WAY OF UNEXPLAINED INVESTMENT IN JEWELLERY. 5.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, AHMEDABAD ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T REATING THE REMUNERATION INCOME OF 42,00,000/- FROM OM KIRTI CONSTRUCTIONS PVT. LTD. A S INCOME FROM OTHER SOURCES. 3. THE ASSESSEE VIDE LETTER DATED 20 TH FEBRUARY 2020 HAS ALSO FILED THE ADDITIONAL GROUNDS OF APPEAL AS REPRODUCED UNDER: A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE BASIS OF INFORMATION OBTAINED UNDER RTI DATED 13.12.2019, THE ORDER OF ASSESSMENT PASSED BY THE AO ON 04.03.2013, FOR THE IMPUGNED YEAR, IS VOID AB INITIO AS THE APP ROVAL GRANTED U/S 153D OF THE ACT IS MECHANICAL APPROVAL. B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSMENT ORDER PASSED UNDER SECTION 153A/143(3) OF THE I. T. ACT, 1961 IS BAD I N LAW AS THE APPROVAL OF ADDITIONAL CIT DATED 04.03.2013, RECEIVED BY THE AO AFTER THE PASS ING OF THE ASSESSMENT ORDER AND HENCE THE SAME CANNOT BE TERMED AS PRIOR APPROVAL A S MANDATED IN SECTION 153D OF THE ACT. ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 3 4. FIRST, WE TAKE UP THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 5. THE ASSESSEE IN THE ADDITIONAL GROUND OF APPEAL HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER FRAMED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT ON THE REASONING THAT SUCH ORDER WAS PASSED WIT HOUT OBTAINING THE PROPER APPROVAL FROM THE ADDITIONAL CIT AND THAT TOO IN ME CHANICAL MATTER. 6. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRE SENT CASE IS AN INDIVIDUAL AND PARTNER IN VARIOUS FIRM AND ALSO DIRECTOR IN THE M/ S OM KIRTI CONSTRUCTION P LTD. THERE WAS A SEARCH CONDUCTED UNDER SECTION 132 OF T HE ACT AT THE PREMISES OF THE ASSESSEE DATED 25TH FEBRUARY 2011 I.E. IN THE P Y 2010-11 CORRESPONDING TO AY 2011-12 WHICH IS BEFORE US FOR CONSIDERATION. AS THE YEAR UNDER CONSIDERATION BEFORE US IS THE SEARCH YEAR, THEREFORE THE ASSESSM ENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT. HOWEVER, THE PROVISION OF SECTIO N 153D OF THE ACT MANDATES THAT THE APPROVAL OF THE JOINT COMMISSIONER HAS TO BE OBTAINED BEFORE PASSING THE ASSESSMENT ORDER. THE RELEVANT PROVISIONS OF SE CTION 153D OF THE ACT READS AS UNDER: 153D. NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RESPECT OF EACH ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153A OR TH E ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153B, EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER 7. THE PROVISIONS SPECIFIED IN CLAUSE (B) OF SUBSECTIO N (1) OF SECTION 153B HAS A DIRECT BEARING ON THE ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND OF APPEAL. THE RELEVANT EXTRACT OF THE PROVISIONS OF C LAUSE (B) OF SUBSECTION (1) TO SECTION 153B READS AS UNDER: 153B. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 153, THE ASSESSING OFFICER SHALL MAKE AN ORDER OF ASSESSMENT OR REASSESSMENT, (A) *********** (B) IN RESPECT OF THE ASSESSMENT YEAR RELEVANT TO T HE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A, WITHIN A PERIOD OF TWENTY-ONE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 4 AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED: 8. ADMITTEDLY, THE YEAR BEFORE US I.E. AY 2011-12 IS T HE YEAR IN WHICH SEARCH WAS CONDUCTED UNDER SECTION 132 OF THE ACT. ACCORDINGLY , IN OUR CONSIDERED VIEW THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT W AS SUBJECT TO THE COMPLIANCE OF THE PROVISIONS SPECIFIED UNDER SECTIO N 153D OF THE ACT AS ELABORATED ABOVE. 9. IN THE LIGHT OF THE ABOVE PROVISION WE PROCEED TO A NALYZE THE CONTENTIONS OF THE LEARNED AR FOR THE ASSESSEE. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES A TO E, 1 TO 80 AND SUBMITTED AS UNDER: 1. THE PRESENT APPEALS ARE ARISING FROM THE ORDER OF CIT (A) AHMADABAD DATED 29.01.2015 IN ITA NUMBER 97 AND 27.01.2015 IN ITA N UMBER-96 AND RELATES TO AY 2011- 12. THE ASSESSEE IN ORDER TO ASSIST THE HON'BLE BEN CH HAS PREPARED THIS SYNOPSIS. 2. ASSESSEE BY VIRTUE OF HIS APPLICATION DATED 20. 02.2020 HAS RAISED TWO ADDITIONAL GROUNDS. 1) THAT THE APPROVAL U/S 153D IS NOT A PRI OR APPROVAL AS THE SAME HAS BEEN RECEIVED BY THE JURISDICTIONAL AO AFTER THE PASSING OF ASSESSMENT ORDER.2) THE APPROVAL RECEIVED IS A MECHANICAL APPROVAL. 3. CERTAIN DATES WHICH GOES TO THE ROOT OF THE MA TTER ARE AS UNDER- DATE EVENT REFERENCE 25.02.2011 SEARCH TAKEN PLACE IN ASSESSEE'S PREMISES ADMITTED FACT MENTIONED IN ORDER OF ASSESSMENT 01. 03.201 3(FRIDAY) PROPOSAL LETTER FOR APPROVAL OF 13 ASSESSEE'S COVERED BY THE SEARCH DATED WAS SENT TO THE BARODA ADDITIONAL CIT PAGE NO - B FILED IN DECISIONS PAPER BOOK 04.03.201 3(MONDAY) PROPOSAL FOR APPROVAL HAS BEEN RECEIVED BY THE OFFICE OF ADDITIONAL CIT- BARODA PAGE NO - E QUESTION NUMBER - 2 04.03.2013 APPROVAL FOR 13 ASSESSEES WAS GRANTED SEE PAGE NO - C ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 5 05.03.2013 APPROVAL FOR 13 ASSESSEES WAS RECEIVED BY THE JURISDICTIONAL AO PAGE NO - E QUESTION NUMBER - 3 4. PERUSAL OF THE ABOVE SEQUENCE OF EVENT WOULD S HOW THAT ON THE DATE WHEN THE ASSESSMENT WAS FRAMED I.E. 04.03.2013, THERE WAS NO APPROVAL OF THE ADDITIONAL CIT. HENCE THE ORDER PASSED BY THE AO IS NON-EST, VOID A B INITIO. IT IS SUBMITTED THAT PROVISIONS OF SECTION 153D ARE REPRODUCED HEREUNDER FOR READY REFERENCE. 153D. PRIOR APPROVAL NECESSARY FOR ASSESSMENT IN CA SES OF SEARCH OR REQUISITION.NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RESPECT OF EACH ASSES SMENT YEAR REFERRED TO IN CLAUSE (B) OF SECTION 153A OR THE ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUBSECTION (1) OF SECTION 153B, EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER. PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY WHERE THE ASSESSMENT OR REASSESSMENT ORDER, AS THE CASE MAYBE, IS REQUIRED TO BE PASSED BY THE ASSESSING OFFICER WITH THE PRIOR APPROVAL OF THE COMMISSIONER UNDER S UB-SECTION (12) OF SECTION 144BA.' 5. A PERUSAL OF THE ABOVE PROVISIONS WOULD SHOW TH AT THE LEGISLATURE HAS USED THE WORD SHALL IN SECTION 153-D, WHICH MEANS THAT THE PROVIS IONS OF SECTION 153D ARE MANDATORY. FURTHER THE MANUAL OF PROCEDURE AS MANDATED BY THE CBDT, APPLICABLE IN SEARCH ASSESSMENT WOULD SHOW THAT THE CBDT HAS CATEGORICAL LY MENTIONED IN THE PROVISIONS THAT ASSESSMENT ORDER WOULD BE PASSED ONLY AFTER THE REC EIPT OF THE APPROVAL. COPY OF MANUAL OF PROCEDURES IS ANNEXED IN DECISIONS PAPER BOOK PA GE NO-36. 6. IT IS NEXT SUBMITTED THAT NOW IT IS SETTLED LA W AS LAID DOWN BY VARIOUS HIGH COURTS THAT THE PROVISIONS OF SECTION 153D ARE MANDATORY. A REFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS. A: CIT VS AKIL GULAM ALI- 80CCH-53 (BOM) B. CIT VS SUNRISE FINLEASE REPORTED IN 252 TAXMAN 4 07(GUJ) C. CIT VS SHREE LEKHA DAMINI- 307 CTR 218(BOM) D. CIT VS SPL SIDHARTHA - DELHI HIGH COURT:- 7. IT IS NEXT SUBMITTED THAT IN THE CASE OF M3M A LSO THE AO HAS RECEIVED THE APPROVAL AFTER THE PASSING OF ASSESSMENT ORDER. WHICH APPROA CH IS ANNULLED BY THE ITAT. THE RELEVANT OBSERVATION OF THE DECISION ARE AS UNDER:- THE CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE IS JUSTIFIED THAT THE APPROVAL WAS GRANTED IN A MOST MECHANICAL MANNER WITHOUT APPLICA TION OF MIND AND SUCH APPROVAL WAS INTIMATED TO ASSESSING OFFICER ONLY ON 5TH FEBRUARY 2014, AFTER PASSING OF THE ASSESSMENT ORDER ON 31ST JANUARY 2014. THE ABOVE DECISIONS ARE CLEARLY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IN VIEW OF THE ABOVE DIS CUSSION, WE ARE OF THE VIEW THAT NO VALID APPROVAL/SANCTION HAVE BEEN GRANTED BY THE AD DL. CIT, CHANDIGARH BEFORE PASSING THE ASSESSMENT ORDER IN THE MATTER. THE REQUIREMENT S OF SECTION 153D OF I.T. ACT, 1961, ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 6 ARE NOT SATISFIED IN THIS CASE. WE ACCORDINGLY HOLD THAT ENTIRE ASSESSMENT ORDER IS VITIATED AND IS NULL AND VOID(PARA- 8. WITHOUT PREJUDICE TO THE ABOVE, IT IS NEXT SUB MITTED THAT THE APPROVAL GRANTED BY THE ADDITIONAL CIT IS A MECHANICAL APPROVAL. IT IS SUBM ITTED THAT PERUSAL OF THE LANGUAGE OF THE APPROVAL WOULD PROVE BEYOND DOUBT THAT THERE IS ABSOLUTELY NO APPLICATION OF MIND TO THE RECORDS OF ASSESSMENT BEFORE GRANTING THE APPRO VAL. 9. IT IS SUBMITTED THAT MENTIONING OF WORDS 'APPR OVED' WITHOUT REFERRING TO ANY MATERIAL IS NOT APPRECIATED BY THE VARIOUS COURT. IT HAS BEE N HELD BY THE COURTS THAT APPROVAL GRANTED UNDER SECTION 153D IS NOT A FORMAL EXERCISE . IT HAS TO BE DONE WITH GREAT CAUTION AND APPLICATION OF MIND. SUCH APPROVAL CANNOT BE GR ANTED IN ROUTINE MANNER. 10. IT IS SUBMITTED THAT RECENTLY THE FOLLOWING BEN CHES OF THE ITAT HAS HELD AS UNDER:- A) M3M INDIA HOLDING VS DCIT REPORTED IN 198 TTJ 0 921 (DEL) :- IN PARA 13.1 HON'BLE BENCH HAS OBSERVED AS UNDERLIE /ADD/. CIT, CHANDIGA RH DID NOT MENTION IN THE APPROVAL, IF HE HAS GONE THROUGH THE ASSESSMENT RECORD OR WHE THER ASSESSMENT RECORD HAVE BEEN PRODUCED BEFORE HIM BEFORE GRANTING APPROVAL IN THE MATTER. THE ASSESSES FIFED RTI APPLICATION TO THE REVENUE DEPARTMENT, COPY OF REPL Y IS FILED AT PAGE 469 OF THE PB, IN WHICH IT WAS EXPLAINED THAT LETTER OF THE ASSESSING OFFICER, FARIDABAD DATED 30TH JANUARY 2014 WAS FORWARDED TO THE /ADD/. CIT, CHANDIGARH ON 30TH JANUARY 2014. NO REPLY WAS GIVEN TO ASSESSEE AS TO WHEN THE LETTER OF THE ASSE SSING OFFICER WAS RECEIVED BY /ADD/. CIT, CHANDIGARH. IT WAS ALSO INTIMATED THAT NO SUCH RECORD IS AVAILABLE IN THE .OFFICE OF ASSESSING OFFICER REGARDING MODE BY WHICH ASSESSMEN T RECORD ALONG WITH THE LETTER OF THE ASSESSING OFFICER DATED 30TH JANUARY 2014 WERE FORWARDED TO THE /ADD/. CIT, CHANDIGARH. NO DETAILS/EXPLANATION WERE FURNISHED A S TO ON WHICH DATE THE ASSESSMENT RECORD WAS RECEIVED BY THE /ADD/. CIT, CHANDIGARH. THE ASSESSEE, ON INSPECTION OF THE RECORD, INTIMATED THE ASSESSING OFFICER THAT NO ORI GINAL APPROVAL UNDER SECTION 153D IS AVAILABLE ON RECORD. LEARNED COUNSEL FOR. THE ASSES SEE REFERRED TO PB 48, WHICH IS FAX MESSAGE RECEIVED ON 5TH FEBRUARY 2014, COMMUNICATIN G THE APPROVAL OF /ADD/. CIT TO THE ASSESSING OFFICER........... IN PARA-14 HON'BLE BENCH HAS FURTHER OBSERVED AS UN DER :- THE ADDL. CIT, CHANDIGARH DID NOT MENTION IN HIS AP PROVAL DATED 31ST JANUARY 2014 (SUPRA), IF HE HAS GONE THROUGH THE ASSESSMENT RECO RD OR THAT ASSESSMENT RECORD WAS PRODUCED BEFORE HIM. SINCE NO DETAILS ARE AVAILABLE ON RECORD ABOUT THE MODE, THROUGH WHICH, ASSESSMENT RECORD WAS TRANSMITTED BY THE ASS ESSING OFFICER AT FARIDABAD TO ADDL. CIT IN CHANDIGARH AND VICE-VERSA BY ADDL. CIT, CHAN DIGARH TO ASSESSING OFFICER AT FARIDABAD ON THE VERY NEXT DAY WOULD LEAD TO SUSPIC ION, IN EXPLANATION OF A.O. IF ANY, VALID DRAFT ORDER WAS TRANSMITTED TO THE ADDL. CIT WITHIN THE TIME OR IF THE ADDL. CIT HAS COMMUNICATED THE APPROVAL UNDER SECTION 153D TO THE ASSESSING OFFICER AT FARIDABAD ON 31ST JANUARY 2014. THESE FACTS WOULD CLEARLY SHOW T HAT THE ACTION OF THE ADDL. CIT, CHANDIGARH GRANTING APPROVAL IN THIS CASE WAS, THUS , A MERE MECHANICAL EXERCISE, ACCEPTING THE DRAFT ORDER AS IT IS, WITHOUT ANY IND EPENDENT APPLICATION OF MIND ON HIS PART ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 7 B) IT IS SUBMITTED THAT IN THE PRESENT CASE THE AS SESSEE VIDE HIS APPLICATION DATED 17.01.2010 HAS ALSO ASKED THE SIMILAR QUESTION AS T O WHETHER THE ASSESSMENT RECORDS OF ALL THE ASSESSEES(13) WERE SENT TO THE OFFICE OF AD DITIONAL CIT BARODA. HOWEVER NO CLEAR REPLY HAS BEEN GIVEN BY THE REVENUE. COPY OF RTI RE PLY DATED 14.02.2020 IS AT PAGE NO- E OF THE PAPER BOOK. QUESTION NUMBER -4 OF THIS REP LY IS RELEVANT IN THIS REGARD. C) IN THE RTI APPLICATION DATED 17.01.2020, THE AS SESSEE IN QUESTION NUMBER 5 HAS ALSO CATEGORICALLY QUESTIONED AS TO WHETHER THE RECORDS OF ALL 13 ASSESSEES WERE SENT TO THE ADDITIONAL CIT. IT IS INTERESTING TO NOTE THAT IN R EPLY TO THIS QUESTION IT HAS BEEN ANSWERED THAT DRAFT ORDER WAS SUBMITTED BY THE ACIT VIDE LET TER DATED 1.03.2013, WHICH MEANS NEITHER THE ASSESSMENT ORDERS OF 13 ASSESSEE NOR TH E RECORDS OF 13 ASSESSEE HAVE BEEN SENT TO THE ADDITIONAL CIT BARODA. THE RESPONDENT ( REVENUE) HAS USED THE EXPRESS DRAFT ORDER (SINGULAR) NOT PLURAL. USE OF THIS EXPRESSION CLEARLY SUGGESTS THAT ONLY LETTER FROM THE OFFICE OF ACIT RAJKOT WAS SENT AND NOT THE ENTI RE RECORDS OF ASSESSMENT. D) THE NEXT CASE ON THE ABOVE ISSUE THAT IS APPROVA L MUST NOT BE MECHANICAL IS THE JUDGMENT OF CUTTACK BENCH OF THE ITAT IN THE CASE O F DILIP CONSTRUCTION;- ITA NO- IN THIS APPROVAL, WE ARE UNABLE TO SEE ANY MENTION BY THE APPROVING AUTHORITY THAT HE HAS PERUSED THE RELEVANT ASSESSMENT RECORDS AND DRA FF ASSESSMENT ORDERS PROPOSED TO BE PASSED BY THE ASSESSING OFFICER. THE ASSESSING O FFICER ISSUED LETTER SEEKING APPROVAL ON 17.11.2017 AND APPROVAL HAS BEEN GRANTED ON 23.1 1.2017 THAT AFTER A PASSAGE OF FIVE DAYS TIME FROM THE APPROVAL ORDER AS REPRODUCED HER EINABOVE. FROM THE ABOVE, IT IS VERY MUCH CLEAR THAT THE APPROVING AUTHORITY I.E. THE ID JCIT HAS NOT EVEN BOTHERED TO MENTION THAT HE HAS PERUSED THE RELEVANT ASSESSMENT RECORDS AND DRAFT ASSESSMENT ORDERS FOR WHICH HE HAS GRANTED APPROVAL U/S.153D O F THE ACT AS PER THE MANDATORY REQUIREMENTS OF THE SAID PROVISIONS OF THE ACT. IN VIEW OF FOREGOING DISCUSSION, WE ARE INCLINED TO HOLD THAT THE ID JCIT HAS GRANTED APPROVAL UNDER SECTION 153D OF THE ACT IN A MECHANI CAL MANNER WITHOUT APPLICATION OF MIND TO THE RELEVANT ASSESSMENT RECORDS AND DRAFT A SSESSMENT ORDERS SUBMITTED BEFORE HIM BY THE AO FOR GRANT OF APPROVAL U/S.153D OF THE ACT BEFORE PASSING THE RELEVANT ASSESSMENT ORDERS U/S.153A R.W.S 143(3) OF THE ACT IN CONCULSIVE PORTION HON'BLE ITAT HAS OBSERVED AS UNDER:- FROM THE RELEVANT APPROVAL ORDERS DATED 23.11.2017, IT IS VIVID THAT ID JCIT HAS NOT MENTIONED IN THE APPROVAL ORDERS THAT HE HA S GONE THROUGH THE RELEVANT ASSESSMENT RECORDS/FILES/FOLDERS AND DRAFT ASSESSMENT ORDERS FOR GRANTING APPROVAL. THESE FACTS CLEARLY SHOW THAT TH E APPROVAL HAD BEEN GRANTED IN A MECHANICAL MANNER WITHOUT APPLICATION OF MIND AND, THUS, NO VALID APPROVAL HAS BEEN GRANTED BY THE ID JCIT BEFO RE AUTHORISING THE AO TO PASS ASSESSMENT ORDERS U/S.153A OF THE ACT. ACCORDI NGLY, ALL ASSESSMENT ORDERS ARE VITIATED AND THUS SAME ARE VOID BEING BA D IN LAW. THE REQUIREMENT OF MANDATE OF SECTION 153D OF THE ACT HAS NOT BEEN SATISFIED IN BOTH THE CASES AND ACCORDINGLY WE HOLD THAT THE ALL ASSESSMENT ORD ERS ARE VITIATED AND THUS SAME ARE VOID BEING BAD IN LAW. WE, ACCORDINGLY SET ASIDE THE IMPUGNED ORDERS OF LOWER AUTHORITIES AND QUASH THE ASSESSMEN T ORDERS BY ALLOWING ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 8 ADDITIONAL GROUND OF THE ASSESSEES IN ALL APPEALS F ILED BY BOTH THE ASSESSEES HAVING IDENTICAL AND SIMILAR FACTS AND CIRCUMSTANCE S 11. IN VIEW OF THE ABOVE IT IS PRAYED THAT THE APPE ALS OF THE ASSESSEE MAY BE ALLOWED ON THE LEGAL GROUNDS ALONE 10. ON THE OTHER HAND THE LEARNED DR VEHEMENTLY SUPPORT ED THE ORDER OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS OF THE DIS PUTE HAVE ALREADY BEEN DISCUSSED IN DETAIL IN THE PRECEDING PARAGRAPH. THE REFORE WE ARE NOT INCLINED TO REPEAT THE SAME FOR THE SAKE OF BREVITY AND CONVENI ENCE. ADMITTEDLY THE APPROVAL WAS GRANTED BY THE LEARNED JOINT COMMISSIO NER OF INCOME TAX DATED 4TH OF MARCH 2013 BUT THE SAME WAS RECEIVED BY THE AO HAVING JURISDICTION OVER THE ASSESSEE DATED 5 MARCH 2013. THIS FACT CAN BE V ERIFIED FROM THE ORDER OF THE INCOME TAX DEPARTMENT UNDER SECTION 7 (1) OF THE RT I ACT WHICH IS PLACED ON PAGE E OF THE PAPER BOOK. THE RELEVANT EXTRACT OF T HE QUESTION RAISED UNDER THE RTI BY THE ASSESSEE AND THE REPLY OF THE SAME BY TH E DEPARTMENT STAND AS UNDER: 3. ON WHICH DATE THE ACIT RAJKOT HAS RECEIVED THE A PPROVAL DATED 04.03.2013 OF ADDITIONAL BARODA. REPLY: THE RECORDS SUGGEST THAT THE SAID APPROVAL LETTER HAVE BEEN RECEIVED IN THE OFFICE OF THE ACIT, CC-1, RAJKOT ON 05.03.2013. 12. THUS, FROM THE ABOVE IT IS THE BEYOND DOUBT THAT TH E ASSESSMENT HAS BEEN FRAMED BY THE AO UNDER SECTION 143(3) OF THE ACT, W ITHOUT OBTAINING THE VALID APPROVAL FROM THE JOINT COMMISSIONER OF INCOME TAX. ACCORDINGLY, SUCH ASSESSMENT IS NOT VALID UNDER THE PROVISIONS OF LAW . IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONBLE J URISDICTIONAL HIGH COURT IN ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 9 CASE OF CIT VS. SUNRISE FINLEASE REPORTED IN 252 TA XMAN 407 WHERE IT WAS HELD AS UNDER: 11. IN THE FACTS OF THE PRESENT CASE, AS THE ASSESS MENT ORDER HAS BEEN PASSED BY AN INCOME TAX OFFICER, THE REQUIREMENT OF OBTAINING TH E PRIOR APPROVAL OF THE JOINT COMMISSIONER UNDER SECTION 153D OF THE ACT WAS ABSO LUTE. THE TRIBUNAL, HOWEVER, HAS RECORDED A FINDING OF FACT THAT THERE IS NOTHING ON RECORD TO INDICATE THAT THE PRIOR APPROVAL OF THE JOINT COMMISSIONER WAS OBTAINED. AS A NATURAL COROLLARY THEREFORE, IN THE ABSENCE OF THE REQUIREMENT OF PRIOR APPROVAL OF THE JOINT COMMISSIONER BEING SATISFIED, THE WHOLE PROCEEDING WOULD STAND INVALIDATED. THE T RIBUNAL WAS, THEREFORE, WHOLLY JUSTIFIED IN HOLDING THAT THE IMPUGNED ORDER OF ASS ESSMENT WOULD STAND VITIATED IN VIEW OF NON-COMPLIANCE OF THE PROVISIONS OF SECTION 153D OF THE ACT. ON THIS COUNT ALSO, THEREFORE, THE APPEAL, DOES NOT MERIT ACCEPTANCE. 12. FOR THE FOREGOING REASONS, IT IS NOT POSSIBLE T O STATE THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL GIVES RISE TO ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, SO AS TO WARRANT INTERFERENCE. THE APPEALS, TH EREFORE, FAIL AND ARE SUMMARILY DISMISSED. 13. AT THE TIME OF HEARING, THE LEARNED DR FOR THE REVE NUE HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE ARGUMENTS ADVANCED BY THE LEARNED AR FOR THE ASSESSEE. AS THE ASSESSEE SUCCEEDS ON THE PRELIMINA RY ISSUE RAISED BY HIM, WE DO NOT FIND ANY REASON TO ADJUDICATE THE OTHER ISSU E RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENT AS WELL AS ON MERITS. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. COMING TO THE ITA NO. 96/RAJKOT/2015 FOR A.Y. 2011- 12 16. AT THE OUTSET WE NOTE THAT IDENTICAL ISSUE HAS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE IN ITA NO. 97/RAJKOT/2015 VIDE PARAGRAPH N O. 11 TO 13 OF THIS ORDER. FOR THE DETAIL DISCUSSION PLEASE REFER THE RELEVANT PARAGRAPH AS DISCUSSED ABOVE. THEREFORE RESPECTFULLY FOLLOWING THE SAME AND TO MA INTAIN PARITY WITH THE FINDINGS, WE ALLOW THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN ITS FAVOUR. ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 10 17. BEFORE WE PART WITH THE ISSUE/APPEAL AS DISCUSSED A BOVE, IT IS PERTINENT TO NOTE THAT THE CLAUSE OF RULE 34 OF THE APPELLATE TRIBU NAL RULES 1963 REQUIRES THE BENCH TO MAKE ENDEAVOUR TO PRONOUNCE THE ORDER WITH IN 60 DAYS FROM THE CONCLUSION OF THE HEARING. HOWEVER THE PERIOD OF 60 DAYS CAN BE EXTENDED UNDER EXCEPTIONAL CIRCUMSTANCES BUT THE SAME SHOULD NOT O RDINARILY BE FURTHER EXTENDED BEYOND ANOTHER 30 DAYS. IN SIMPLE WORDS TH E TOTAL TIME AVAILABLE TO THE BENCH IS OF 90 DAYS UPON THE CONCLUSION OF THE HEARING. HOWEVER, DURING THE PREVAILING CIRCUMSTANCES WHERE THE ENTIRE WORLD IS FACING THE UNPRECEDENTED CHALLENGE OF COVID 2019 OUTBREAK, RESULTING THE LOCKDOWN IN THE COUNTRY, THE ORDERS THOUGH SUBSTANTIALLY PREPAR ED BUT COULD NOT BE PRONOUNCED FOR THE UNAVOIDABLE REASONS WITHIN THE M AXIMUM PERIOD OF 90 DAYS. IN SUCH CIRCUMSTANCES WE FIND THAT THE HONBLE MUMB AI TRIBUNAL IN THE CASE OF JSW LIMITED VS DEPUTY COMMISSIONER OF INCOME TAX IN ITA NO. 6103/MUM/2018 VIDE ORDER DATED 14-5-2020 EXTENDED THE TIME FOR PRONOUNCING THE ORDER WITHIN 90 DAYS OF TIME BY OBS ERVING AS UNDER: 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE SPREAD OF COVID 19 EPIDEMIC , AND THIS LOCKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUNT OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXAT ION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUD ICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED S ITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUP REME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LO CKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR W HERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN . HONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESI DES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FO R DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIO D FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 11 ACCORDINGLY , AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURT HER TILL 15TH JUNE 2020 . IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL O VER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19 TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRU S SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY S O NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-19 EPIDEMIC HAS B EEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE AN YTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE O F THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOU NCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTIRE COU NTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PER IOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHIL E INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMN IPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING E NACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTE RPRETATION SO ASSIGNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGE MENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVE RY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)] , HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VID E JUDGMENT DATED 15 TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MA RCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY . THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SU PREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VI EW, EVEN WITHOUT THE WORDS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITI ON, THE PERIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, T O 90-DAY TIME-LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE ANY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHE N THE HEARING IS CONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACT S OF THIS CASE. 11. TO SUM UP, THE APPEAL OF THE ASSESSEE IS ALLOWE D, AND APPEAL OF THE ASSESSING OFFICER IS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. CONSIDERING THE ABOVE, WE EXPRESS TO PRONOUNCE THE ORDER BEYOND THE PERIOD OF 90 DAYS. ACCORDINGLY, WE PROCEED TO PRONOUNCE THE O RDER AS ON DATE. ITA NOS. 96 & 97/RJT/2015 . A.Y. 2011-1 2 12 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 19. IN THE COMBINED RESULT, BOTH THE APPEAL OF THE DIFF ERENT ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 01- 06 - 202 0 SD/- SD/- (MADHUMITA ROY) (WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 01/06/2020 RAJESH TRUE COPY COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD