M/s. Prakash Ashphlting & Too Highway Ltd., Indore V. The ACIT, (CENTRAL)-1, Indore

ITSSA 178/Ind/2021

AI Insights

The case involves two appeals by Prakash Asphaltings & Toll Highways (India) Ltd. against the orders passed by the Deputy Commissioner of Income Tax, Central-1, Indore, under section 154 of the Income Tax Act for the assessment years 2009-10 and 2010-11. These orders were challenged on the grounds of lack of jurisdiction and procedural impropriety, specifically the absence of necessary sanction under section 153D of the Act, which is required for passing assessment orders in cases of search and seizure. The Tribunal examined whether the rectification orders under section 154 could be issued without the prior approval of the Joint Commissioner of Income Tax as mandated by section 153D, and whether the approvals previously granted were done so in a mechanical manner without proper application of mind.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130500 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2021
• Other Referred Cases: Suo-moto Cognizance of extending the Limitation reported in 441 ITR 722 (SC), Sehshasayee Paper Boards Ltd. vs. CIT (156 ITR 342), Barclays Bank PLC vs. CIT(IT) dated 03.01.2022, ACIT vs. Serajuddin & co. 150 taxmann.com 146, Pr. CIT vs. Sapna Gupta 147 taxmann.com 288, Dilip Jiwrajika vs. Dy. CIT (WPNo.3023 of 2019 dated 15.03.2022), CIT vs. Smt. Annapoornamma Chandrashekar 204 taxman 158, Navin Jain vs. Dy. C.I.T., Sehshasayee Paper Boards Ltd. vs. CIT, Barclays Bank PLC vs. CIT(IT), ACIT vs. Serajuddin & co., Pr. CIT vs. Sapna Gupta, Dilip Jiwrajika vs. Dy. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANUP GARG
• Keywords: Revision of order; Rectification of order; Search and seizure; Period of limitation; Competent authority; Block assessment; Time period of passing order
• Section: 263; 132; 154; 143(3); 153A; 12A; 158BC; 13; 158BD

Judgement Text

Page 1 of 16 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No.177 & 178/Ind/2021 (Assessment Year:2009-10 & 2010-11) Prakash Asphaltings & Toll Highways (India) Limited 76, Mail Road, Indore Vs. DCIT, Central-1 Indore (Appellant / Assessee) (Respondent/ Revenue) PAN: AABCP0398N Assessee by Shri Anup Garg, AR Revenue by Shri P.K. Mishra, CIT-DR Date of Hearing 25.07.2023 Date of Pronouncement 07 .08.2023 O R D E R Per Vijay Pal Rao, JM: These two appeals by the assessee are directed against two separate orders of Commissioner of Income Tax (Appeal) dated 07.07.2020 & 06.07.2020 arising from order passed by the AO u/s 154 of the Income Tax Act for Assessment Year 2009-10 & 2010-11 respectively. 2. There is a delay of 479 days in filing these appeals. The assessee has filed an application for condonation of delay. We have heard the Ld. AR as well as the Ld. DR on the point of delay in filing the present appeal. The Ld. AR of the assessee has submitted that the impugned orders were passed by the Ld. CIT(A) in the month of July 2020 but due to the Covid- 19 outbreak and lockdown throughout the nation the assessee could not IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 2 of 16 Page 2 of 16 file these appeals within the period of limitation. He has relied upon the judgment of Hon’ble Supreme Court in case of Suo-moto Cognizance of extending the Limitation reported in 441 ITR 722 (SC). Ld. DR has left the condonation to the wisdom of the Bench. Accordingly at the outset, we note that these appeals of the assessee are filed on 31 st December 2021 and the delay in filing these appeals are covered by the judgment of Hon’ble Supreme Court in case of Suo-moto Cognizance of extending the Limitation (supra) wherein the Hon’ble Supreme Court has finally issued the directions in Para 5 as under: “5. Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions: (i) The order dated 23-3-2020 is restored and in continuation of the subsequent orders dated 8-3-2021, 27-4-2021 and 23-9- 2021, it is directed that the period from 15-3-2020 till 28-2- 2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. (ii) Consequently, the balance period of limitation remaining as on 3-10-2021, if any, shall become available with effect from 1- 3-2022. iii. In cases where the limitation would have expired during the period between 15-3-2020 till 28-2- 2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 1-3-2022. In the event the actual balance period of limitation remaining, with effect from 1-3-2022 is greater than 90 days, that longer period shall apply. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 3 of 16 Page 3 of 16 IV. It is further clarified that the period from 15-3-2020 till 28- 2-2022 shall also stand excluded in computing the periods prescribed under sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.” Accordingly, in view of the judgment of Hon’ble Supreme Court in suo- moto cognizance for extension of the limitation, the appeals of the assessee are treated as filed within the period of limitation. 3. The assesse has raised common grounds in these appeals. The grounds raised for A.Y.2009-10 are as under: “The grounds stated here under are independent of, and without prejudice to one another. Ground No. 1: Order dated 30/07/2019 under section 154 of the Act Income tax Act, 1961 ("the Act") is without jurisdiction: On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeal) -3, Indore (hereinafter referred to as the learned CIT(A)) erred in upholding the jurisdiction of the Ld. AO to pass the order dated 30/07/2019 under section 154 of the Act. The Appellant prays that the order dated 30/07/2019 under section 154 of the Act be quashed as without jurisdiction and bad in law. Ground No. 2: Assessment order dated 30/07/2019 under Sec. 154 of the Act is bad in law. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeal)-3, Bhopal (hereinafter referred to as the learned CIT(A)) ought to have held that an order passed under section 153A of the Act can be rectified under section 154 of the Act was bad only as the same was passed without obtaining sanction from appropriate authority. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 4 of 16 Page 4 of 16 The Appellant prays that the order dated 30/07/2019 under section 154 of the Act be quashed as passed without obtaining sanction from appropriate authority.” 4. The assessment for assessment year 2009-10 to 2014-15 were completed u/s 153A r.w. section 143(3) of the Act on 30 th December 2016 in pursuant to the search and seizure action u/s 132 on 27 th August 2014. Thereafter the AO proposed to rectify the mistake in the assessment order with respect to the assessment years 2009-10 and 201-11 to make an addition of Rs.5.52 cr. and Rs.5.37 cr. respectively which was not included in the computation of assessed income while framing assessment u/s 153A r.w. section 143(3). The AO accordingly issued notice dated 22 nd July 2019. In response to the said notice the assesse filed reply dated 30 th July 2019 objecting to the proposed rectification and addition to the total income of the assesse. AO did not accept the objection of the assesse and passed the orders u/s 154 on 30 th July 2019 in respect of both assessment years. The assesse filed the appeals against the orders passed u/s 154 before the Ld. CIT(A) and raised the grounds against the addition made by the AO as well as legal objection against validity of the orders passed by the AO u/s 154 of the Act. Ld. CIT(A) deleted the addition made by the AO while deciding the issue on merits however, the validity of the order passed by the AO u/s 154 was upheld by the Ld. CIT(A) and objections raised by the assesse were rejected. The appeals filed by the department against the order of the Ld. CIT(A) were disposed by the Tribunal vide order dated 10.01.2023 and it was specifically held by the Tribunal that separate appeal is required to be filed against the order of Ld. CIT(A) arising from order passed u/s 154 of the Act. The revenue has not filed any appeal till date. 5. Before the Tribunal the Ld. AR of the assesse has submitted that the assesse has raised specific issue in ground no.2 regarding the validity of the orders passed u/s 154 of the Act. He has submitted that since the order which was proposed to be rectified by the AO were passed u/s 153A of the Act and there is a mandatory condition for taking sanction u/s 153D of the Act before passing the assessment order u/s 153A of the Act. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 5 of 16 Page 5 of 16 The AO while passing the assessment order u/s 153A obtained requisite sanction u/s 153D of the Act but no sanction was obtained by the AO while passing the impugned order u/s 154 of the Act. Thus, the Ld. AR has submitted that in absence of the mandatory sanction u/s 153D the order passed by the AO who is below the Rank of JCIT is not valid and liable to be quashed. It is a jurisdictional infirmity which cannot be cured. He has relied upon the judgment of Hon’ble Jurisdictional High Court in case of Sehshasayee Paper Boards Ltd. vs. CIT (156 ITR 342 and submitted that Hon’ble High Court has held that order giving effect to the CIT(A) and Tribunal cannot be undone by adopting a circuitous route under section 154 of the Act. Such orders can only be rectified by the said competent authority itself or by agitating the orders further. Thus, the Ld. AR has submitted that once the order u/s 153A was passed with prior sanction of the Additional Commissioner of Income Tax then the only records available to the AO to amend or rectify assessment order was either obtained sanction from the Additional Commissioner of Income Tax or send proposal of revision under section 263 of the Act. He has also relied upon the decision of Mumbai Benches of the Tribunal in case of Barclays Bank PLC vs. CIT(IT) dated 03.01.2022 in ITANo.827/Mum/2021, Mumbai and submitted that the Tribunal has quashed the revision order on the ground that the assessment order passed in pursuant to the directions of the DRP u/s 144C(5) of the Act cannot be revised by the Commissioner as it would amount to circumventing directions given under section 144C(5) of the Act. 6. Ld. AR has further submitted that if there was a mistake apparent from record then it demonstrates that sanction granted by the competent authority u/s 153D at the time of assessment order passed u/s 153A of the Act was in mechanical manner without application of mind. Had competent authority gone through the record and considered the draft order u/s 153A it would have certainly noticed such mistake and dealt with appropriately while granted sanction. He has thus contended the approval cannot be granted in a mechanical manner and in the absence of IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 6 of 16 Page 6 of 16 valid approval vitiates the entire order. Therefore, the consolidated order passed by the AO u/s 153A is bad in law and liable to be quashed. He has relied upon the judgment of Hon’ble Orissa High Court in case of ACIT vs. Serajuddin & co. 150 taxmann.com 146 as well as judgment of Hon’ble Allahabad High Court in the case of Pr. CIT vs. Sapna Gupta 147 taxmann.com 288 and submitted that Hon’ble High Court held that the approval granted in mechanical manner without due application of mind on the subject matter vitiates entire assessment order. He has also relied upon the decision of Hon’ble Bombay High court in case of Dilip Jiwrajika vs. Dy. CIT (WPNo.3023 of 2019 dated 15.03.2022 and submitted that the Hon’ble High Court has quashed the reopening of the assessment on the basis that it is the duty of the approving authority to peruse the reasons and deal with the error crept in. Failure to do so demonstrates granting of approval in a mechanical manner. Duty imposed upon sanctioning authority cannot be taken lightly. Therefore, the rectification order passed by the AO u/s 154 itself demonstrates that sanction granted by the competent authority was in mechanical manner and consequently the consolidated assessment order is bad in the eyes of law and resultantly the rectification order passed u/s 154 of the Act would not survive. 7. On the other hand Ld. DR has submitted that the requirement of sanction u/s 153D is only for the assessment orders or reassessment order passed u/s 153A and not for the rectification order passed u/s 154 of the Act. He has further contended that the issue of addition in question has already considered and adjudicated by the AO in the assessment order passed u/s 153A but due to mistake the same could not be added in the total income of the assesse and therefore, it is mistake apparent from the record which could be rectified in the proceedings u/s 154 of the Act. He has relied upon the order of the authorities below. 8. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessment order was passed u/s 153A dated 30.12.2016 as well as the impugned orders u/s 154 of the Act have been passed by the AO who is below the rank of IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 7 of 16 Page 7 of 16 JCIT/Additional CIT. The AO has enhanced the total income of the assessee for A.Y.2009-10 & 2010-11 by a sum of Rs.5,52,49,940/- and Rs.5,37,00,603/- respectively and therefore, by virtue of the order passed u/s 154 there is a material and substantial changes in the order passed u/s 153A of the Act for these two assessment orders. It is also not in dispute that the order passed u/s 154 of the Act for these two assessment years are prejudicial to the interest of the assessee as admitted by the AO in the show cause notice issued u/s 154/155 of the Act dated 27 th July 2019. Section 153D was inserted vide finance Act 2007 w.e.f 01.06.2007 making it mandatory in case of assessment or reassessment in pursuant to search to be approved by JCIT if the assessment is passed by the officer below the Rank of Joint Commissioner. For ready reference section 153D is quoted as under: “153D. Prior approval necessary for assessment in cases of search or requisition.—No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of 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.". [Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA].” 9. The object of inserting this section was to ensure an inbuilt protection against any arbitrary or unjust exercise of power by the AO. Therefore, the AO who is below the rank of Joint commissioner cannot passed an order u/s 153A without prior sanction or approval of the Joint Commissioner to the draft assessment order. There is no dispute that this IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 8 of 16 Page 8 of 16 requirement of approval of Joint Commissioner is mandatory pre-requisite jurisdictional conditions and in the absence of the same order would be nullity. Once the order u/s 153A cannot be passed without sanction u/s 153D then after taking the sanction and order is passed by the AO the same cannot be amended or alter by the AO itself as it would defeat very purpose of bringing this provision in the statute as an inbuilt protection against any arbitrary or unjust exercise of power by the AO. In other words if AO is allowed to change or amend the order which was passed with prior approval/sanction of the Joint Commissioner then it would amount to circumvent the provisions of section 153D of the Act. The AO cannot be do indirectly in the garb of rectification of mistake in the order which he cannot do directly while passing the assessment order u/s 153A of the Act. Therefore, the order passed by the AO u/s 154 of the Act resulting substantial enhancement of the income of the assessee is nothing but an amendment of the assessment order passed u/s 153A of the Act and therefore, all pre-requisite mandatory requirements u/s 153D as applicable for the assessment order passed u/s 153A would also be applicable for passing the order u/s 154 of the Act. It is appropriate to refer the judgment of Hon’ble Karnataka High Court in case of CIT vs. Smt. Annapoornamma Chandrashekar 204 taxman 158. The Hon’ble High Court has considered the validity of exercising revisional jurisdiction u/s 263 in respect of block assessment order u/s 158BC read with section 158BD with prior approval of Commissioner of Income Tax u/s 158BG. The Hon’ble High Court has held in para 14 to 19 as under: “14. Therefore, it is clear approval means to agree with full knowledge of the contents of what is approved and pronounce it as good. In other words confirm authoritatively. When the power of such approval is vested in a higher authority, when such higher authority approves an order of the lower authority, which means he has gone through the order of the lower authority, he has no reason to disagree he finds no fault with that order and therefore he confirms the order by his approval. It is to be seen that the statute has not used merely the word 'approval. The word used is 'previous approval. Therefore, unless the approval is previously taken, the assessment order would have no value at all. Therefore, when previous approval is a condition precedent and approval means to agree', ie.. to concur, to give mutual IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 9 of 16 Page 9 of 16 assent, to come into harmony, it is possible only after application of mind by the authority according approval. 15. Under section 263 of the Act, the Commissioner has been vested with the power to revise orders, which are prejudicial to the Revenue. The Commissioner may call for and examine the record of any proceedings under this Act and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may pass an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. 16. The word 'record has been defined in clause (b) to the Explanation to mean, shall include and shall be deemed always to have included all records relating to any proceedings under this Act available at the time of examination by the Commissioner. 17. Therefore, this power conferred on the Commissioner is in the nature of supervisory power. If he finds that the order passed by the Assessing Officer is erroneous and also prejudicial to the interest of the Revenue, after examining the record or any proceedings under the Act to rectify such error and to protect the interest of the Revenue he can exercise the said power, because, the Commissioner becomes aware of such erroneous orders prejudicial to the revenue after looking into the record. But, if he has looked into the record, applied his mind and agreed with the order of the Assessing Authority, this power of revision under Section 263 is not available to him after according approval to such order. Even though Section 158BH expressly provides that all other provisions of this Act shall apply to assessment made under this Chapter, the opening words make it clear that "save as otherwise provided under this chapter". Therefore, the other provisions are not attracted automatically. If before according approval, if the Commissioner has undertaken scrutiny of the records, gone through the order and then accorded approval, in the absence of specific provision in the Act providing for exercise of revisional jurisdiction, even against such orders, the power under Section 263 cannot be exercised. Therefore, from the aforesaid provision, the intention is very clear. In fact, after realizing this difficulty, Section 158BG was amended by conferring power of according previous approval on the Joint Commissioner or the Joint Director, as the case may be in respect of searches conducted after 1st day of January 1997, so that the revisional power can be exercised even in respect of block assessment orders passed by the authorities and approved by Joint Commissioner and Joint Director, in respect of searches conducted subsequent to 1st day of January 1997. Therefore, in respect of searches conducted prior to the 1st day of January 1997 in respect of which Commissioner has accorded previous approval, the provisions of Section 263 is not attracted. The flaw in the legislation has been promptly corrected by the Parliament. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 10 of 16 Page 10 of 16 But till such time, such a power was not conferred on the Commissioner. 18. Though no material is placed on record to show whether the Commissioner applied his mind prior to accord sanction, it being an official act provided under the statute, it is to be presumed that before according approval, he has looked into the records, applied his mind and he did not find any reason to disapprove the order passed by the Assessing Authority and thereafter he has accorded approval. If that is so he cannot revise the said order under Section 263 of the Act. 19. For the aforesaid reasons, we are satisfied, that the finding recorded by the Tribunal that the Commissioner had no jurisdiction to exercise his power under Section 263 of the Act in respect of searches initiated prior to 1st day of January 1997 is correct and does not suffer from any legal infirmity. The substantial question of law framed is answered accordingly in favour of the assessee and against the revenue. Accordingly, both the appeals are dismissed.” 10. Thus, it was held that an order which was passed with prior approval of the Commissioner of Income Tax is not amenable to revisional jurisdictional u/s 263 as the same authority has approved the assessment order and agreed with the order of the assessing authority. The Hon’ble High Court has further observed that this power of revision u/s 263 is not available to the Commissioner after according to approval to such assessment order. Therefore, applying same analogy the Assessing officer who has passed the order after taking prior approval of the higher/competent authority cannot tinker with the such assessment order without taking prior approval/sanction of the higher/competent authority. Accordingly we are of the considered opinion that the order passed by the AO u/s 154 of the Act for A.Y.2009-10 & 2010-11 thereby enhancing assessed income of the assessee without taking prior sanctions of the competent authority as required u/s 153D is not valid and liable to be quashed. 11. As regards the second contention of the Ld. AR of the assessee we find merit and substance in this contention that the rectification order passed by the AO u/s 154 of the Act itself goes to prove that the earlier sanction granted by the JCIT before the assessment order passed u/s 153A is not a valid sanction as it was given in mechanical manner without IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 11 of 16 Page 11 of 16 application of mind. The Hon’ble Allahabad High Court in case of Pr. CIT vs. Sapna Gupta (supra) has thoroughly analysed the provision of section 153A r.w.s. 153D in para 9 to 21 as under: “9.Considering the submissions of the learned counsel for the parties and having perused the order of the Tribunal, in view of the undisputed facts before us about the manner in which the approval to the draft assessment order was granted under Section 153D for the assessment proceedings, by a letter dated 30.12.2017 in 85 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal. 10.To answer the same, we are required to go through the relevant provisions of the Income Tax Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income Tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under Section 132, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years (and for the relevant assessment year or years) referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return required to be furnished under Section 139. 11. Section 153D of the Act relevant for our purposes is to be noted hereinunder: "Prior approval necessary for assessment in cases of search or requisition. 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 the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner." Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 12 of 16 Page 12 of 16 12. The Tribunal while quashing the assessment order had relied upon its earlier decision in Navin Jain and Others (Supra) wherein a detailed discussion has been made with regard to the requirement of prior approval of superior authority on the draft assessment order under Section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word 'approval' though has not been defined in the Income Tax Act but the general meaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered. 13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. 14. It was noted that the obligations of the approval of the Approving Authority serves two purposes: (i) On the one hand, he has to apply his mind to ensure the interest of the revenue against any ommission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 13 of 16 Page 13 of 16 (ii) On the other hand, superior authority is also responsible and duty- bound to do justice with the tax-payer by granting protection against arbitrary or creating baseless tax liability on the assessee. 15. The Tribunal has further noted that the provisions contained in Sections 153A to Section 153D provide for separate notice to be given to assessee for assessment for each year as specified in Section 153A of the Act; the assessee has to file separate ITR for each year as specified in Section 153A of the Act; separate assessment orders are to be passed for each year as specified in Section 153A of the Act. 16. It was observed that this is an important concept mentioned in Section 153A of the Act, which is peculiar to the scheme of the said Section. Keeping in view of this basic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that an important phrase is employed in the text of Section 153D, which is "each assessment year". The reading of the provisions in Section 153A and 153D conjointly makes it clear that separate approval of draft assessment order for each year is to be obtained under Section 153D of the Income Tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the "approval" as defined in Black's Law Dictionary as also the decisions of the Apex Court in the case of Sahara India vs. CIT and Others (2008) 300 JTR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned into an empty ritual. The Apex Court has held therein that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. 17. The above discussion made in the judgement of Tribunal dated 3.08.2021 in the case of Navin Jain Vs. Dy. C.I.T. (Supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under Section 153D of the Act would vitiate the entire proceedings in the instant case. 18. For the reasoning given in the case of Navin Jain (Supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income Tax Act. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 14 of 16 Page 14 of 16 19. The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval under Section 153D is pre-requisite to pass an order of assessment or re-assessment. Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of "each assessment year" referred to in Clause (b) of sub-section (1) of Section 153A which provides for assessment in case of search under Section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of "each assessment year" falling within six assessment years (and for the relevant assessment year or years), referred to in Clause (b) of sub-section (1) of Section 153A. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). 20. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A. 21. In the instant case, the draft assessment order in 85 cases, i.e. for 85 assessment years placed before the Approving Authority on 30.12.2017 was approved on same day i.e. 30.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 85 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 15 of 16 Page 15 of 16 12. The Hon’ble High Court has observed that the requirement of approval cannot be treated as formality but it is the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi-judicial authority. If an approval has been granted by the competent authority in a mechanical manner without application of mind then very purpose of obtaining the approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. The authority granting the sanction/approval shall apply independent mind to the material on record for “each assessment order” separately. The Hon’ble High Court has referred to the term used in section 153A & 153D and observed that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. The approval as contemplated u/s 153D of the Act requires the proving authority to verify the issue raised by the assessing officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. Therefore, the approval cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. The approval must be granted on the basis of the material available on record and reflect the application of mind to the facts of the case. 13. In the case in hand the Assessing Officer after passing the order u/s 153A noticed some mistake in the order and consequently passed the order u/s 154 then it is apparent that those mistakes were not noticed by the aproving authority due to the reason that the sanction was granted mechanically and without application of mind. Therefore, it is manifest from the record that the mistakes which were subsequently rectified by the AO u/s 154 of the Act can lead to only conclusion that sanction u/s 153D was granted mechanically and without application of mind. Though there is no valid approval u/s 153D of the Act however, the said assessment order is not subject matter before us and therefore, we IT(SS)A No.177 & 178/Ind/2021 Prakash Asphaltings & Toll Highways (India) Ltd. Page 16 of 16 Page 16 of 16 confined our finding only to the validity of the order passed u/s 154 of the Act. 14. Accordingly in view of the facts and circumstances of the case as well as above discussion the order passed by the AO u/s 154 of the assessment for A.Y.2009-10 & 2010-11 without pre-requisite sanction u/s 153D is not valid and liable to be quashed. We order accordingly. 15. In the result, appeals of assesse for A.Y.2009-10 & 2010-11 are allowed. Order pronounced in the open court on 07.08.2023. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 07 .08.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore