ACIT, CC-I, Lucknow V. Shri Gaurav Agarwal, Lucknow

ITSSA 252/LKW/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2973 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-08-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 30-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA RAJ
• Assessee Lawyers: Not Found
• Keywords: Reopening of assessment; Gift; Search and seizure; Document seized; Opportunity of being heard; Question of law; Tangible material; Validity of assessment; Accommodation entries; Assessment record; Bogus loan; Penny stocks; Documents seized; Bogus
• Section: 68; 148; 132; 271(1)(c); 69C; 143(3); 133A; 153A; 274; 143(2); 264; 64; 142(2A); 158BC; 113; 153; 153C

Judgement Text

I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.(SS)A. No. 252/Lkw/2020 Assessment Years:2015-16 A.C.I.T., Central Circle-1, Lucknow. Vs. Shri Gaurav Agarwal, 3/3, Gulmohar Enclave, Gokhale Marg, Lucknow. PAN:ADJPA4408J (Appellant) (Respondent) C.O.No.10/Lkw/2021 (in I.T.(SS)A. No. 252/Lkw/2020) Assessment Years:2015-16 Shri Gaurav Agarwal, 3/3, Gulmohar Enclave, Gokhale Marg, Lucknow. PAN:ADJPA4408J Vs. A.C.I.T., Central Circle-1, Lucknow. (Appellant) (Respondent) I.T.(SS)A. No. 255/Lkw/2020 Assessment Years:2015-16 A.C.I.T., Central Circle-1, Lucknow. Vs. Shri Arun Agarwal, 3/3, Gulmohar Enclave, Gokhale Marg, Lucknow. PAN:AACHA1811P (Appellant) (Respondent) I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 2 C.O.No.11/Lkw/2021 (in I.T.(SS)A. No. 255/Lkw/2020) Assessment Years:2015-16 Shri Arun Agarwal, 3/3, Gulmohar Enclave, Gokhale Marg, Lucknow. PAN:AACHA1811P Vs. A.C.I.T., Central Circle-1, Lucknow. (Appellant) (Respondent) O R D E R PER T. S. KAPOOR, A.M. These two appeals have been filed by the Revenue against the separate orders of learned CIT(A), both dated 17/06/2020 pertaining to assessment years 2015-16. Against the appeals filed by the Revenue, the assessee has also filed Cross Objections. The grounds of appeal taken by the Revenue are similar in both the appeals. Similarly the assessee has taken similar grounds in both the Cross Objections. For the sake of completeness, the grounds taken by the Revenue in I.T.A. No.252/Lkw/2020 and the grounds taken by the assessee in Cross Objections No.10/Lkw/2020, are reproduced below: I.T.A. No.252/Lk2/2020 “1. On facts and circumstances of the case and in law, the Ld. CIT(A) while annulling the assessment order on grounds that in Revenue by Smt. Pooja Raj, CIT, D.R. Assessee by Shri Rakesh Garg, Advocate Date of hearing 01/09/2022 Date of pronouncement 02/09/2022 I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 3 absence of any incriminating material being found during search, the conditions for issue of notice u/s 153A were not satisfied, erred and misread the relevant facts and circumstance as well as legal provisions under 153Aof the I T Act, 1901. 2. On facts and circumstances of the case and in law, the Ld. CIT(A), erred in relying upon the dismissal of revenue's SLP in case of Meeta Gutgutia to conclude that the binding jurisdictional Allahabad high court in Raj Kumar Arora stands overruled without appreciating that it was already held by a 3 Judge bench of SC itself in its decision in case of Khoday Distilleries Ltd in civil appeal no 2432 of 2019 affirming the earlier 3 Judge bench decision in case of Kunhayammed & Ors Vs State of kerala & Anr 245 ITR 360 (SC) that in limine dismissal of SLP at threshold itself neither constitutes declaration of law nor a binding precedent. Hence, the reliance by CIT(A) on dismissal of SLP in Meeta Gutgutia to override the binding/jurisdictional high court decision in Raj Kumar Arora was an apparent and patent mistake from records. 3. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in importing & applying the ratio of Delhi High court decision in case of Kabul Chawla, as well as other decisions, ignoring the judicial discipline and law of binding precedent as the jurisdictional high court in the case of Raj Kumar Arora 367 ITR 517 (Alld.) has already held that there was no requirement of assessment u/s 153A being based only on the basis of 'incriminating material' found during search. 4. Without prejudice to above grounds, on facts and circumstances of the case and in law, the Ld. CIT(A) erred in annulling the assessment order on grounds of absence of incriminating material without appreciating that the term incriminating used by Courts has not been defined under 153A and therefore, its meaning is required to be inferred harmoniously with other provisions of the Act dealing with search assessment or levy of penalty in cases of search assessments such as 153C, clause (ii) of 271AAB(c) etc. 5. On facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that in absence of specific use of term 'incriminating' u/s 153A, the meaning of the term I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 4 'incriminating' needs to be inferred as akin to the expression ‘bearing on the assessment of income' as appearing u/s 153C for assessment of other person based on material found during search. This expression has very wide connotation and envisages that such material should be in the nature of prima facie material only having live nexus to the belief of it having bearing on assessment of income and not in the nature of absolute incriminating evidence, which by itself could suggest/divulge the undisclosed income without any further act of investigation/examination. The detailed examination of such material for different assessment years finally representing undisclosed material or not, was the step envisaged only after the issue of notice u/s 153A for six assessment years. 6. On facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that after amendment u/s 153C w.e.f. 01.04.2005, it is the test of 'bearing on the assessment of income' only which needs to be applied in place of the test of 'presence of incriminating material' u/s 153A and the decision of apex court in Sinhgad Technical education society which was rendered for period prior to amendment w.e.f 1/4/2005 is therefore distinguishable in law. 7. On facts and circumstances of the case and in law, the Ld. CIT(A) while evaluating as to what can be 'incriminating', failed to take a note of clause (ii) of 271AAB(c) which defines undisclosed income as "any income based on entry in books of accounts wholly or partly false and would not have been found to be so, had the search not been conducted implying thereby that unsupported entries appearing in books of accounts can also fall within the sweep of being incriminating under the other provisions of the Act and hence the meaning of term Incriminating' was required to be inferred harmoniously w.r.t. such statutory provisions. 8. On facts and circumstances of the case and in law, the Ld. CIT(A) while evaluating as to what can be incriminating, again failed to take a note that even the penalty is attracted u/s 270A(10) when there is misreporting based on recorded entries in books of accounts, once again implying that entries recorded in books of accounts may still represent undisclosed income having bearing on the assessment of income or being I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 5 'incriminating', if they are partly recorded or camaflouged or shown to be from a source which is not the real source and hence the meaning of term 'incriminating' was required to be inferred harmoniously w.r.t. such statutory provisions. 9. On facts and circumstances of the case and in law, learned CIT(A) erred in not considering to the statement of Shri Santosh Kumar Chaudhary admitting to have provided with bogus LTCG from penny stocks and Security premium through Shell Cos not exiting at given addresses, and also ignoring the statement of some other persons recorded was on oath u/s 131(1A) such as Shri Virendra Keshri ex director of the Shell Cos who admitted that M/s Anirudh motor and general finance Pvt Ltd, M/s Fantastic Merchandise P Ltd etc was a paper Co wherein the individuals of fortuna group became directors and also confirmed the statement of Santosh Chaudhary and another person Shailendra (Gupta CA, auditor of Techmech Developer Pvt Ltd also admitted on oath u/s 131(1A) that Co did not have any business activity and that its accounts were partially certified on the basis of bills, vouchers and bank statements, which did satisfy the condition of 'incriminating' as well as having bearing on the assessment of income as provided u/s 153A w.i.t. bogus loans taken by assessee from Techmech developers Pvt Ltd. 10. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in I holding that the statement of Santosh Choudhary tecorded by DDIT Kolkata could not be termed as 'incriminating' on ground that statement recorded u/s 133A was not on oath without appreciating that in the assessment order it was clearly mentioned that the statements of other two persons i.e. Shri Virendra Keshri and Shri Shailendra Gupta CA were recorded on oath by the DDIT(lnv) u/s 131(1A) in the capacity of the authorised officer u/s 132(1) in connection with the search in the fortuna group wherein they had admitted that M/s Anirudh Motor Finance P Ltd and M/s Techmech Developer P Ltd were, merely paper Cos without actual economic activities, even though no survey could be done as these Cos were found non-existent at the given addresses. In CIT Chennai vs Ajit S Kumar 93 Taxman.com 294(SC), the court in the context of section 158BB has also upheld the use of information collected in a survey in case of connected person carried along with I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 6 search in other person for the purpose of making Asstt. u/s 158BB. 11. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in concluding that there was nothing incriminating' about the bogus LTCG claimed by assessee on sale of shares of PFL Infotech which was a penny stock as duly elaborated by AO in the assessment order and also confirmed by the fact that the BSE had stopped trading in this shares, on complaints of price manipulations which has not at all been controverted by Ld. CIT(A) in the appellate order. 12. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in concluding that there was nothing 'incriminating' about the bogus LTCG claimed by assessee on sale of shares of PFL Infotech which was a penny stock, when the very same CIT(A) in his appellate orders passed simultaneously in case of other lady members of the same group had duly confirmed the addition made by AO on account of bogus LTCG on penny stocks noticed during the search. The Ld. CIT(A) having failed to even discuss in appellate order as to how the LTCG claimed by assessee was not a penny stock, could not have applied different yardstick in case of present assessee. 13. On facts and circumstances of the case and in law, the Ld. CIT(A) also erred in not appreciating that the plea that there was no incriminating material for the relevant AY for issue of notice u/s 153A was raised for the first time before 3 CIT(A) only and therefore CIT(A) ought to have given opportunity to the Assessing Officer also by calling for the remand report in view of the ratio of decision in case of CIT Vs British India corporation Ltd 337 ITR 64 (Alld.). 14. On facts and circumstances of the case and in law, the Ld. CIT(A) also erred in not appreciating that the mere fact that the bogus credit entries of bogus Long Term Capital Gain of Rs.1,66,49,573/- are found to be recorded in books of accounts cannot by itself take such entries out of the sweep of being incriminating or having a bearing on the assessment of income. Accordingly, when it was already admitted by Ex director and CAs of shell Cos that they provided accommodation entry, the I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 7 burden u/s 68 could not be said to have been discharged by assessee and this fact itself, not only had a bearing on assessment of correct income even if recorded in books of accounts but also was incriminating in itself as the lender entities admittedly lacked economic substance also, more so when the CIT(A) having himself confirmed the addition on account of bogus LTCG credit entries in the cases of some other individual assessees of the same searched group. 15. On facts and circumstances of the case and in law, the Ld. CIT(A) in law while deleting the addition made by AO u/s 68 without considering the merits that in view of the amended provisions w.e.f. 1/4/2013, the burden u/s 68 could not have been said to be discharged by assessee just by filing confirmations/financial statement of shell Cos which did not have any economic substance nor found existing at given addresses in view of the ratio of decision in case of N R Portfolio Pvt Ltd 264 CTR 258 (Delhi), Nova promoters & Finlease Pvt Ltd 252 CTR 187 (Delhi), Seema Jain 406 ITR 411 (Delhi), Chetan Das Lachman Das 294 ITR 497 (Delhi). 16. On facts and circumstances of the case and in law, the Ld. CIT(A) in law while deleting the addition made by AO u/s 68, further erred in deleting the addition of Rs.4,99,487/- ,made by AO u/s 69C on account of commission paid by assessee from unexplained sources for obtaining the accommodation entries of bogus loans and LTCG. 17. On the facts and circumstances of the case and in law, the CIT(A) failed allude to the relevant facts & circumstances and misread the legal provisions to arrive at the conclusion. 18. That the above grounds are without prejudice to each other and appellant craves leave to add or amend any other more ground of appeal as state above as and when needs for doing so may arise.” C.O.No.10/Lkw/2021 “1. Because the Dy. CIT has erred in law and on facts in adding a sum of Rs.1,66,49,573/- as unexplained Cash credit u/s. 68 of the Income Tax Act, 1961 denying the exemption claimed in I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 8 respect of Long Term Capital Gain u/s. 10(38) of the IT Act, 1961. The addition is contrary to the facts bad in law and be deleted. 2. Because complete details of purchase and sale of shares, such as bill, contract notes were present and the transaction has been taken through Demat account, through proper baking channels, through SEBI registered brokers. Long Term Capital Gain on sale of shares cannot be denied and exemption u/s. 10(38) as claimed be allowed. 3. Because the entire proceeds on sale of shares is neither an advance nor deposit. The Dy. CIT has erred in law and on facts in adding the same in applying the provision of section 68 of the Act, which provisions are not applicable, the addition of Rs.1,66,49,578/- made to the total income, be deleted. 4. Because the Dy. CIT has erred in law and on facts in adding a sum of Rs.4,99,487/- u/s. 69C of the I.T. Act 1961, on the basis of purported payments to broker, is altogether wrong, bad in law and is based on wrong premises and be deleted. 5. Because in relation to the grounds taken herein fore, the appellant begs to refer and rely upon the averments that have been made in the Statement of Facts that is being filed along with the memo of appeal itself.” 2. Both the appeals were heard together therefore, for the sake of convenience a common and consolidated order is being passed. 2.1 During the course of hearing Learned counsel for the assessee submitted that he will not be pressing the grounds of Cross Objections therefore, these may be dismissed as not pressed. 3. Learned counsel for the assessee, at the outset, invited our attention to the petition dated 09/08/2021 filed by assessees under Rule 27 of I.T.A.T Rules whereby the assessees have taken a legal ground challenging the approval granted by Jt. CIT u/s 153D of the Act. Learned counsel for the I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 9 assessee submitted that as per Rule 27 of the I.T.A.T. Rules, either party can resort to Rule 27 challenging the action of learned CIT(A) on the issues decided against the party. Learned counsel for the assessee further submitted that though Rule 27 of I.T.A.T. Rules expressly says that either party can file petition under Rule 27 challenging the decision of CIT(A) against him but various courts and Tribunals have held that even if the issue has not been decided by learned CIT(A), the respondent can take recourse to petition under Rule 27 of the I.T.A.T. Rules. Reliance in this respect was placed on the order of Lucknow Bench of the Tribunal in the case of Income Tax Officer-6(1), Kanpur vs. Arti Securities & Services Ltd. in I.T.A. No.553/Lkw/2018 where vide order dated 06/11/2020 the Tribunal had considered similar application under Rule 27 of I.T.A.T. Rules and has allowed the same. Learned counsel for the assessee further placed reliance on an order of Lucknow Bench of the Tribunal in the case of AAA Paper Marketing Ltd. vs. ACIT in I.T.A. No.167/Lkw/2016 where again the Tribunal had decided the petition under Rule 27 in favour of the assessee under similar facts and circumstances. Learned counsel for the assessee further submitted that since the assessees have taken a legal ground in the petitions, which is coming out of the material already on record and no new material is required to adjudicate the same therefore, the same may be admitted and adjudicated first. 4. Learned CIT, D.R., on the other hand, vehemently argued that the assessees cannot take recourse to Rule 27 of the I.T.A.T. Rules as Rule 27 specifically states that only those issues can be raised which have been decided by learned CIT(A) against the respondent. It was submitted that the assessees had not taken this ground before the authorities below therefore, now the application filed under Rule 27 of the I.T.A.T. Rules, is not maintainable and be dismissed. I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 10 5. In rejoinder, Learned counsel for the assessees submitted that the arguments of Learned CIT (D.R.) have already been taken care of in the case laws relied on by him therefore, it was submitted that the same may be admitted and adjudicated. 6. We have heard the rival parties on the issue of admission of petitions under Rule 27 of the I.T.A.T. Rules. We find that Rule 27 of the I.T.A.T., Rules 1963 with its marginal note reads as under: “Respondent may support order on grounds decided against him. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.” 6.1 The effect of this rule is that a respondent has been entitled to support the order learned CIT(A) on the ground which has been decided against him. The underlying idea and the spirit of Rule 27 is to arm a respondent, in an appeal filed by the plaintiff, with an option to contest unfavourable decision of the CIT(A) on the aspect(s) of an issue, the final decision on which issue has been delivered in his favour. Take an instance of first appellate authority deciding the legal issue of reopening of an assessment against the assessee but deleting the addition on merits in favour of the assessee. When the Revenue files appeal against this order before the tribunal, it will naturally assail the finding of the CIT(A) qua the deletion of addition on merits. Notwithstanding the fact that the respondent assessee did not file any appeal against the order passed by the CIT(A), shall still be entitled under Rule 27 of the ITAT Rules, 1963, to support the conclusion of the order of the first appellate authority, being the deletion of addition, by challenging the finding of the CIT(A) which was delivered against him on the legal issue of reopening of assessment. I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 11 6.2 The mandate of Rule 27 is to be seen in contradistinction to the provisions of section 253(4) of the Act, which empower the respondent, on an appeal filed by the plaintiff, to file cross objection against any part of the order. At this stage, it may be fruitful to take note of the prescription of sec. 253(4), which provides that The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) or the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel has been preferred under sub-section (1) or sub- section (2) or sub-section (2A) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof; within thirty days of the receipt of the notice, file a memorandum of cross- objections, verified in the prescribed manner, against any part of the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel) or Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3) or sub-section (3A).' When we consider Rule 27 of the ITAT rules in juxtaposition to sec. 253(4) of the Act, the position which emerges is that whereas rule 27 is a remedy to the respondent to ‘support' the ultimate favourable conclusion of the CIT(A) by challenging such aspects of the issue which were decided against him, a cross objection u/s 253(4) of the Act is a remedy to the respondent to ‘challenge' the ultimate unfavourable conclusion of the CIT(A). 6.3 A cursory look at the language of rule 27 transpires that a respondent has been empowered to support the order appealed against on any of the grounds decided against him. In other words, the challenge can be made by I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 12 a respondent only in respect of a ground decided against him. In such circumstances, a question arises that if there is no decision at all of the CIT(A) on a particular aspect, which is otherwise germane to the overall issue decided in favour of the respondent, can the respondent espouse such aspect under rule 27 in an appeal filed by the plaintiff ? If we go by the literal interpretation of the Rule, then the answer is in negative that unless the ground is not decided against the respondent, he cannot take recourse to this provision. However, it is of paramount importance to keep in mind the fundamental object of enshrining rule 27, being giving an opportunity to the respondent to support the impugned order in an appeal filed by the plaintiff. A pragmatic approach on consideration of the object of such Rule, in our considered opinion, necessitates the adoption of liberal interpretation that when a particular issue is decided in favour of the respondent and the plaintiff has come up in appeal against such decision on the issue, then all the relevant aspects having bearing on the overall issue, even though not specifically decided against the plaintiff, should be open for challenge by the respondent under the rule. If the respondent is debarred from raising that aspect of the issue, which was not taken up before the first appellate authority or taken up but remained undecided, and the appeal of the plaintiff is allowed, the respondent would be rendered without remedy. It has been noticed above that a respondent is not entitled to file cross objection on such aspects of the issue u/s 253(4) of the Act, the scope of which provision is circumscribed to challenging the ultimate unfavourable conclusion drawn by the CIT(A). In common parlance, when an issue is decided in favour of one party whether on one aspect or the other, it is not expected of such a party to challenge the order by asserting that the decision should have been given in his favour on that issue on all the aspects and not on that particular aspect on which it was given. When an I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 13 appeal is filed against such favourable decision on the issue by the other party, and suppose the impugned order is not sustainable on that aspect of the issue on which it was decided, but on some other aspect which was not decided by the first appellate authority and the respondent is restrained from taking up such aspect on the reasoning that Rule 27 is not applicable on such aspect, the respondent would stand nowhere. In view of the foregoing discussion, it is clear that hyper technicalities of rule 27 cannot come in the way of the deciding such aspects of the issue taken up by the respondent before the tribunal which were germane to the main issue but were not contested or decided provided no fresh investigation of facts is required for rendering decision on such aspects. Now coming to the facts of the present cases, we find that the Assessing Officer has made the additions u/s 153A of the Act and learned CIT(A) has deleted the additions by holding that additions have not been made on the basis of incriminating material found during search. The Department has filed appeals against such findings of learned CIT(A) and if the findings of learned CIT(A) are reversed by ITAT then the assesses will stand nowhere. Since the assesses have taken a legal ground challenging the legality of assessment orders itself and which has a bearing on the assessments therefore, the petitions filed by the assessees deserves to be admitted and no new material is required to adjudicate these petitions. 6.4 The Lucknow Bench of the Tribunal in the case of Income Tax Officer- 6(1), Kanpur vs. M/s Arti Securities & Services Ltd. in I.T.A. No.553/Lkw/2018 where vide order dated 06/11/2020 the Tribunal has decided the issue of admission of petition under Rule 27 in favour of the assessee by holding as under: I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 14 “5. We have heard the rival parties and have gone through the material placed on record. We find that the assessee has invoked the provisions of Rule 27 of the I.T.A.T. Rules to challenge the order of CIT(A) on the following grounds: (i) That the Department has initiated the assessment for limited scrutiny which has been converted into fill scrutiny without taking the approval of concerned Pr. CIT, which was mandatory in view of CBDT Instruction No.20/2015 and 5/2016. (ii) The other ground taken in the application is that notice u/s 143(2) dated 03/09/2015 is issued by DCIT, Circle-6, Kanpur and later on assessment is framed by Income Tax Officer, Ward-6(1), Kanpur without valid issue of mandatory notice u/s 143(2) of the Act and therefore, the assessment is bad in law and void ab initio. We find that these issues have not been decided by the Assessing Officer or by learned CIT(A) in their respective orders. However, these issues go to the root of the assessment itself and are forming part of the material already available on record. Learned counsel for the assessee had invited our attention to the following case laws where under similar facts and circumstances, the various Benches of the Tribunal have decided the issue in favour of the assessee: (i) SIS Live, Delhi Benches:I-2, New Delhi. I.T.A. No.1313/Del/2015 dated 02/12/2015 (ii) Jubiliant Enpro Pvt. Ltd., I.T.A. No.560/Del/2010, dated 19/05/2014 (iii) Raj Kumar Jalan, IT(SS)A. No.28/Del/2012, dated 08/07/2015 (iv) M/s Tata Petrodyne Ltd., I.T.A. No.7679/Mum/2010, dated 16/09/2015 (v) M/s Cerner Healthcare Solutions Pvt. Ltd., I.T.A. No.675/Bang/2012, dated 08/01/2016 (vi) Great Wall Marketing (P) Ltd., I.T.A. No.660/Kol/2011, dated 03/02/2016 (vii) CIT vs. Edward Deventer (successors) Pvt. Ltd. 123 ITR 200 (Del) (viii) Deep Chand Kothari vs. CIT 171 ITR 381 (Raj) I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 15 (ix) R. B. Construction, I.T.A. No.1537/Ahd/2011, datedl 10/04/2015 (x) IME International Pvt. Ltd., I.T.A. No.1873/Deol/2012, dated 08/01/2016 (xi) Thandi Ram Jai Narain, I.T.A. No.1289/Del/2013, dated 27/06/2017 (xii) Jolly Fantasy World Ltd. 373 ITR 530 Besides the above noted cases, Learned counsel for the assessee has also invited our attention to an order passed by Lucknow Bench of the Tribunal vide order dated 28/04/2017 in the case of AAA Paper Marketing Ltd. We find that in this order the Tribunal has considered the arguments raised by Learned D. R. and after considering the arguments and after relying on the case law of Jubiliant Enpro Pvt. Ltd. (supra), has decided the issue in favour of the assessee by holding as under: “2. We have heard argument of both the sides and carefully considered the relevant material available on record of the Tribunal. Ld. counsel of the assessee- respondent submitted that the assessee want to invoke the provision of ITAT Rules 27 to challenge the order of the CIT(A) on following grounds: "The Ld. CIT(A) has erred in law and on facts in affirming the jurisdiction of the Assessing Officer under section 153A, ignoring that the Additional Commissioner has granted the approval in a mechanical manner, the CIT(A) has further erred in not appreciating that no proceedings were pending on the date of search and the entire assessment has been framed without any reference to incriminating material found as a result of search." 3. The Ld. counsel further submitted that under Rule 27 of the ITAT Rules, a legal plea, which was not raised by the assessee before the lower authorities, can be raised at any stage by the assessee before the Tribunal as per proposition laid down by various decision and orders including order of the ITAT 'ID' Bench Delhi dated I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 16 19.05.2014 in the case of DCIT Vs. Jubiliant Enpro Pvt. Ltd. in ITA No. 560/Del/2010 Assessment Year 1998-99. 4. In reply to the above, Ld. DR strongly opposed to admission of the above noted ground and submitted that the legal plea which was not raised before the Assessing Officer and CIT(A) cannot raised before the Tribunal at the appellate stage under any provision including Rule 27 of ITAT Rules. 5. On careful consideration of rival submission, we are of the view that in the similar situation ITAT Delhi 'D' Bench in the case of Jubiliant Enpro Pvt. Ltd. (Supra) held as follows : "13. Thus, it can be seen from the above discussion that we have reversed the order of the Ld. CIT(A) by restoring the penalty u/s 271(1)(c) of the Act in respect of three items, viz., Interest of Rs. 2,996/- earned but not declared as income; amount of Income-tax paid at Rs.71,432/- claimed as deduction by clubbing with Interest expenditure; and interest on late deposit of wealth-tax amounting to Rs.19,084/- claimed as deduction by clubbing with Interest expenditure. 14.1. The assessee has filed an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 requesting for the deletion of entire penalty on a legal issue, being the final determination of total income of the assessee u/s 115]A of the Act and the additions sustained pertaining only to the income computed under the normal provisions of the Act. The Id. AR relied on the judgment of the Hon'ble jurisdictional High Court in C1T Vs Nalwa Sons Investment Ltd. (2010) 327 ITR 543 (Del) to propel this submission. 14.2. Before proceeding with the matter on merit, it would be apposite to first decide about the maintainability or otherwise of such application. I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 17 Rule 27ofITA T Rules, 1963 with its marginal note reads as under- 'Respondent may support order on grounds decided against him. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.' 14.3. The effect of this rule is that a respondent has been entitled to support the order on the ground which has been decided against him. The underlying idea and the spirit of Rule 27 is to arm a respondent, in an appeal filed by the plaintiff, with an option to contest unfavorable decision of the CIT(A) on the aspect(s) of an issue, the final decision on which Issue has been delivered in his favor. Take an instance of first appellate authority deciding the legal issue of reopening of an assessment against the assessee but deleting the addition on merits in favor of the assessee. When the Revenue files appeal against this order before the tribunal, it will naturally assail the finding of the CIT(A) qua the deletion of addition on merits. Notwithstanding the fact that the respondent assessee did not file any appeal against the order passed by the CIT(A), he shall still be entitled under Rule 27 of the ITAT Rules, 1963, to support the conclusion of the order of the first appellate authority, being the deletion of addition, by challenging the finding of the. CIT(A) which was delivered against him on the legal issue of reopening of assessment. 14.4. The mandate of Rule 27 is to be seen in contradistinction to the provisions of section 253(4) of the Act, which empower the respondent, on an appeal filed by the plaintiff, to file cross objection against any part of the order. At this stage, it may be fruitful to take note of the prescription of sec. 253(4), which provides that: The Assessing Officer or the assessee, as the case I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 18 may be, on receipt of notice that an appeal against the order of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) or the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel has been preferred under sub- section (1) or sub-section (2) or sub-section (2A) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel) or Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time, specified in sub-section (3) or sub-section (3A).' When we consider Rule 27 of the ITA T rules in juxtaposition to sec. 253(4) of the Act, the position which emerges is that whereas rule 27 is a remedy to the respondent to support the ultimate favourable conclusion of the CIT(A) by challenging such aspects of the issue which were decided against him, a cross objection u/s 253(4) of the Act is a remedy to the respondent to challenge' the ultimate unfavorable conclusion of the CTT(A). 14.5. A cursory look at the language of rule 27 transpires that a respondent has been empowered to support the order appealed against on any of the grounds decided against him. In other words, the challenge can be made by a respondent only in respect of a ground decided against him' In such circumstances, a question arises that if there is no decision at all of the CIT(A) on a particular aspect, which is otherwise germane to the overall issue decided in favor of the respondent, can the respondent espouse such aspect under rule 27 in an appeal filed by the plaintiff. If we go by the I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 19 literal interpretation of the Rule, then the answer is in negative that unless the ground is not decided against' the respondent, he cannot take recourse to this provision. However, it is of paramount importance to keep in mind the fundamental object of enshrining rule 27, being giving an opportunity to the respondent to support the impugned order in an appeal filed by the plaintiff A pragmatic approach on consideration of the object of such Rule, in our considered opinion, necessitates the adoption of liberal interpretation that when a particular issue is decided in favor of the respondent and the plaintiff has come up in appeal against such decision on the issue, then all the relevant aspects having bearing on the overall issue, even though not specifically decided against the plaintiff, should be open for challenge by the respondent under the rule. If the respondent is debarred from raising that aspect of the issue, which was not taken up before the first appellate authority or taken up but remained undecided, and the appeal of the plaintiff is allowed, the respondent would be rendered without remedy. It has been noticed above that a respondent is not entitled to file cross objection on such aspects of the issue u/s 253(4) of the Act, the scope of which provision is circumscribed to challenging the ultimate unfavorable conclusion drawn by the CIT(A). In common parlance, when an issue is decided in favor of one party whether on one aspect or the other, it is not expected of such a party to challenge the order by asserting that the decision should have been given in his favor on that issue on all the aspects and not on that particular aspect on which it was given. When an appeal is filed against such favorable decision on the issue by the other party, and suppose the impugned order is not sustainable on that aspect of the issue on which it was decided, but on some other aspect which was not decided by the first appellate authority and the respondent is restrained from taking up such aspect on the I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 20 reasoning that Rule 27 is not applicable on such aspect, the respondent would stand nowhere. In view of the foregoing discussion, it is clear that hyper technicalities of rule 27 cannot come in the way of the deciding such aspects of the issue taken up by the respondent before the tribunal which were germane to the main issue but were not contested or decided provided no fresh investigation of facts is required for rendering decision on such aspects." 6. In view of above, legal ground raised by the assessee by invoking Rule 27 of the ITAT Rules in all three appeals is admitted for consideration on adjudication. Consequently, applications of the assessee in all three appeals of the Revenue are allowed. Keeping in view the facts and circumstances of the case and the legal precedents cited by Learned counsel for the assessee, we admit the application under Rule 27 of the I.T.A.T. Rules and Learned counsel for the assessee was asked to proceed with his arguments on merits of the grounds taken by him in the application. 6.5 In view of the above facts and circumstances and in view of the judicial precedent relied on by assessees, we hold that the petitions filed by the assessee under Rule 27 of the I.T.A.T. Rules, are maintainable and since the assessees have taken a legal issue in these petitions, which goes to the root of the addition therefore, the petitions were admitted and Learned counsel for the assessee was asked to proceed with his arguments on the legal ground taken in the petitions moved under Rule 27 of the I.T.A.T., Rules. 7. Learned counsel for the assessees read out the ground taken under Rule 27 application and submitted that this ground emerges from the fact that in these cases the assessment was required to be completed by the Assessing Officer not below the rank of Jt. CIT but has been completed by I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 21 an officer who is below the rank of Jt. CIT and therefore, the approval, as required by the provisions of section 153D, was required to be obtained from Jt. CIT. Learned counsel for the assessees submitted that though the Assessing Officer had taken the approval from Jt. CIT but such approval is not a valid approval in the eye of law as held by various Benches of various Tribunal and by Hon'ble Bombay High Court. Learned counsel for the assessees in this respect invited our attention to the approval letter dated 30/12/2018 wherein the Jt. CIT has given approval through one letter for seven years together in the case of three assesses including present two assessees. It was submitted that the issues involved in these seven years in the case of three assessees were multiple and in this respect filed a chart wherein various issues involved in these appeals yearwise were narrated. Learned counsel for the assessee submitted that the approval was sought on 29/12/2018 and on 30/12/2018 the approvals were granted and on 31/12/2018 the Assessing Officer passed the final assessment order. Learned counsel for the assessee submitted that the total documents involved in these cases including the search material and various queries and replies submitted by assesses amounted to more than 4000 which require proper application of mind. It was submitted that the Jt. CIT has given the approval in a mechanical manner as it is humanly not possible to go through in one day all the records including the search material where multiple issues are involved and therefore, such approval is not approval in the eye of law and in the absence of proper approval, the assessment orders passed by the Assessing Officer are void ab initio. Reliance in this respect was placed on the decision of Lucknow Bench of the Tribunal in the case of Navin Jain vs. Dy. CIT, CC-II, Kanpur in I.T.A. No.639 to 641/Lkw/2019, order dated 03/08/2021 where the Tribunal has held similar approvals as not valid and has quashed the assessment orders. Further I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 22 reliance was placed on a decision of Chandigarh Bench of the Tribunal in the case of Inder International vs. ACIT, CC-II, Ludhiana in I.T.A. No.1573/Chd/2018 where again similar issue has been decided in favour of the assessee. Learned counsel for the assessee further invited our attention to an order of Hon'ble Bombay High Court dated 27/11/2018 in the case of Pr. CIT vs. Smt. Shreelekha Damani in Income Tax Appeal No. 668 of 2016 where the Hon'ble High Court had dismissed the appeal of the Revenue and wherein the Revenue had challenged the findings of the Tribunal under similar facts and circumstances. In view of all these facts and circumstances and judicial precedents, it was submitted that the assessment order passed by the Assessing Officer be annulled and consequent order passed by learned CIT(A) be also annulled. 8. Learned CIT, D.R., on the other hand, submitted that the Assessing Officer had taken proper approval from the Jt. CIT and in this respect our attention was invited to the approval letter dated 30/12/2018. Learned CIT(D.R.) submitted that it cannot be said that the Jt. CIT has not applied his mind while allowing approval u/s 153D of the Act. It was further submitted that the assessment proceedings are continuous proceedings whereby the Assessing Officer in the course of assessment proceedings takes guidance from his superior authority from time to time. It was further submitted that granting of approval u/s 153D is not a quasi judicial act and rather it is an administrative act and therefore, it cannot be said that Jt. CIT had granted approval mechanically and without application of mind. Learned CIT, D. R. also filed written submissions which for the sake of completness are reproduced as under: “1. Whether there was application of mind on the part of the JCIT or not, while according approval to the assessment order is a pure question of fact and cannot be determined without examining the facts of the case. If there was a finding of fact that there was no application of mind in any other case and, on that ground, the assessment in that case was vitiated, that decision cannot be a valid precedence for deciding the similar question in this case. It is, I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 23 therefore, submitted that this being a pure question fact, cannot be allowed to be raised for the first time before the Hon. Tribunal. Approval to assessment is an administrative act, not a quasi-judicial one. There is no requirement that the JCIT should afford opportunity of being heard to the assessee before granting approval. The only requirement is that he should be satisfied that the assessment order is made in accordance with law. In this case, the approval was accorded. Such administrative acts are assumed to have been performed in the manner in which they are supposed to be performed, unless tangible material is brought on record to show that the reverse is true. It should be shown that the assessment suffers from such glaring deficiencies that no person duly instructed in law would approve of it. No such material has been brought on record in this case. It is also settled law that collection of tax is primarily an administrative exercise though undertaken in accordance with law. Hence, courts grant greater leeway to the Revenue authorities and law is interpreted so as to effectuate, not frustrate, tax collection. Tax is due simply because income has been earned. Annulling good assessments on such hyper-technical grounds would amount to depriving the Exchequer of the legitimate tax dues and would be against public policy. Hence, the contention that a valid assessment should be annulled on the ground that there was no application of mind on the part of the Joint Commissioner while according approval to the assessment order is misconceived and fit to be rejected. 2. A Central Range is a specialised Range for assessment of search and seizure cases. Here, the Assessing Officer has no original jurisdiction. Only a limited number of cases, requiring deep and coordinated investigation (and that includes search and seizure cases) are assigned to him. The main role of the JCIT in a Central Ranges is to monitor and supervise assessment work. This peculiar administrative structure is designed to ensure thorough involvement of the JCIT with an assessment throughout its life-cycle. He is involved with the case even before assessment in a particular case is taken up. A copy of the report of the DDIT (Inv) is invariably marked to him, he is part of decision for centralisation of the case and is required to review the progress of the assessments regularly. The assessment work is conducted under his direct and constant supervision and the draft assessment order is formally submitted to him when the order is ready to be made. The contention that the JCIT should go through the entire assessment record (including the seized I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 24 records, etc.) while according approval is based on the assumption that the JCIT is a stranger to the assessment work but that is factually incorrect. Such argument betrays complete lack of appreciation of the work in a Central Range and is misconceived. 2.1 This point can be explained in another way. The Assessing Officer is expected to make assessment after thoroughly familiarising himself with the facts of a case and evaluating the entire body of evidence on record. Naturally, he cannot make a single assessment in a day. But, if he keeps working throughout the year (as he does), the assessment work is work-in-progress and he is able to make a large number of assessments in a day. If someone chooses to ignore the work-in-progress aspect of the assessment work, he is bound to reach the flawed conclusion that it would be humanly impossible to make so many assessments within such a short period of time. And, if such a person is faced with a body of assessment orders made on a single day or few days, he is likely to jump to the conclusion that they must have been made without application of mind. Faced with this situation, the appropriate question for the Hon. Tribunal is to ask: If the JCIT has in fact expressed his opinion in 67 cases, how can it be said that the work was accomplished on a single day? The obvious answer would be that he had been involved in the progress of the case from the earlier stage and, hence, was familiar with the facts and circumstances thereof. The argument of the assessee amounts not only denouncing the administrative structure of the Central Charge and institutional integrity of Joint Commissionership but also depriving the Exchequer of the legitimate tax dues running in crores of rupees. 2.2 The acid test in such cases should be: Does the assessment order contain any decision which is so unreasonable that a person duly instructed in law could not have possibly approved of. If the answer to the question is in the affirmative, the approval may be vitiated. Still, it would be a procedural irregularity or error of judgement which should be corrected in appeal. If the assessment order which had been approved by the JCIT is modified in appeal, the approval is ipso facto modified. If an assessment is based on inadequate appreciation of the facts and circumstances of the case, it is remanded to the AO for fresh adjudication after removing the deficiencies noted by the appellate authority. The question of annulment arises only when a mandatory requirement of law has not been complied with. That question could possibly arise in this case if I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 25 the statutory approval were wanting. But that is not the case. In fact, even a finding to the effect that the assessment order suffers from such perversity which made it unfit for approval of any person duly instructed in law does not exist. It is, therefore, incomprehensible how such assessment can be said to be suffering from incurable substantive infirmity and be killed.” 9. The crux of written arguments of learned CIT, D.R. can be categorized into three categories: (i) The approval is valid or not depends upon case to case therefore, the case laws relied on by assessees has no precedence value. (ii) The assessment proceedings are continuous proceedings and the Jt. Commissioner always is associated with the assessment proceedings therefore, the approval granted by him cannot be said to be mechanical and without application of mind as the Jt. CIT cannot be said to be stranger to such proceedings. (iii) The act of granting approval is an administrative act and such administrative acts are assumed to have been performed in the manner in which they are supposed to be performed unless tangible material is brought on record to show that the Revenue is true. 10. We have heard the rival parties and have gone through the material placed on record. We find that there is no dispute about the fact that the assessment has been completed by the Assessing Officer below the rank of Jt. CIT as is apparent from the copy of approval letter filed by the assessee. The provisions of section 153D are therefore, squarely applicable in these cases. For the sake of completeness, the provisions of section 153D of the Act are reproduced below: “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 I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 26 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.” 10.1 The Legislative intent and introduction of this section can be gathered from the CBDT Circular No. 3 of 2008, dated 12.3.2008 which read as under: "50. Assessment of search cases Orders of assessment and reassessment to be approved by the Joint Commissioner. 50.1 The existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. 50.3 Applicability-These amendments will take effect from the 1st day of June 2007. I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 27 From the perusal of provisions of Section 153D of the Act read with the CBDT Circular No. 3 of 2008, dated 12.3.2008, the legislative intent can be gathered so far as that the legislature in its highest wisdom made it compulsory that the assessments in the case of search cases should be made with the prior approval of superior authority so that the superior authority apply their mind on the materials and other attending circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority has to approve the Assessment order. An object of entrusting the duty of Approval of assessment in search cases is that the Joint CIT, with his experience and maturity of understanding, should scrutinize the seized documents and any other material forming the foundation of Assessment. It is an elementary law that whenever any statutory obligation is cast upon any statutory authority such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as inbuilt protection to the taxpayer against the arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect the due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. It is most worthwhile to mention here is that in order to enable the approving authority to grant his previous approval, the Assessing Officer has to forward to the Approving authority the entire record containing all the facts, seized materials and other evidence collected by him during the course of his inquiry embarked for the purpose of making assessments along with his report on the findings arrived at by him on such inquiry or the proposed draft of the order of assessment to be passed by him in terms of Section 153A of the Act. It is, therefore, lawfully expected that the Approving authority after receipt of such report or draft order of assessment with the record, seized materials and other evidence from the Assessing Officer has to apply his mind by carefully studying I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 28 the entire record of the proceedings in relation to the framing of the order of assessment and then to make a final order by the Assessing Officer which may be either beneficial or prejudicial to any person/assessee. Thus, this act or function to be performed by the Approving authority in granting prior approval requires an inquiry and a judicial approach on the entire facts, materials, and evidence. In law where any act or function requires application of mind and judicial discretion or approach by any authority it partakes of and assumes the character and status of a judicial or at least quasi-judicial act particularly where such act or function is likely to affect any person or his rights prejudicially, and where, more so, such right is a civil right, namely, the amount of money, property, and assets which the assessee will be required to part with after the passing of the final order of assessment. Therefore, in our considered opinion, the provisions contained in Section 153D of the act as enacted by the Parliament cannot be treated as an empty formality. If it was merely a formality and the superior authority is not required to apply its mind then there was no reason to incorporate even for approval of the superior authority and it would not have been worded in a mandatory manner. Because the language used in the provision of Section 153D of the act is in the form of mandatory direction therefore it cannot be argued that even if the approval is granted without application of mind, then also it is valid in the eyes of law. The provision has a certain purpose. It is apparent that the purpose behind the enactment of the above provision in the statute by the Parliament is two-folds. Firstly, the approval of the senior authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by the senior authority will also ensure that proper enquiry or investigations are carried out by the assessing authority. Thus, the above provision provides for the mental application of a senior officer of the Department, which in turn, provides safeguard to both i.e., Revenue as well as the assessee. Therefore, this important provision laid down by the legislature I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 29 cannot be treated as a mere empty formality. If the approval is granted by the superior authorities in a mechanical manner without application of mind, then the very purpose of obtaining approval is defeated. The power to grant approval is not to be exercised casually and in a routine manner and further, the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. At this juncture, it is pertinent to mention that the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT & Anr. (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27 : (2008) 300 ITR 403 (SC), while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being inbuilt protection against the arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high-ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held 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. It is also in practice seen that when the matter is assailed in higher forums in appeal, what is examined by the courts is that as to whether the Joint Commissioner had adequate time with him so as to grant approval after duly examining the material prior to approving the assessment order and as to whether the due mind has been applied before according such sanction as against according sanction in utmost haste and in a mechanical manner. 10.2 Now in the present cases the issue before us is as to whether the Assessing Officer has taken the approval as required by the provisions of I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 30 section 153D of the Act or not. In this respect we find that the Assessing Officer moved the application for obtaining approval u/s 153D vide letter dated 29/12/2018 and on 30/12/2018 the Jt. CIT accorded such approval and the Assessing Officer passed the final assessment orders on 31/12/2018. We find that on 30/12/2018, the Jt. CIT gave approval in three cases out of which two are before us. In each case seven years are involved and in these seven years multiple issues are involved. The details of issues involved in these three cases are reproduced below: Name PAN Date of Approval of Order by Additional Assessment Year Addition Addition on account of Gaurav Agarwal ADJPA4408J 30-12-18 2011-12 581,000.00 Cash Deposit in Bank Gaurav Agarwal ADJPA4408J 30-12-18 2012-13 552,000.00 Cash Deposit in Bank Gaurav Agarwal ADJPA4408J 30-12-18 2013-14 44,350,000.00 Loan reed from companies Gaurav Agarwal ADJPA4408J 30-12-18 2014-15 23,651,970.00 Loan from Companies and Addition of Long Term Capital Gain plus Gaurav Agarwal ADJPA4408J 30-12-18 2015-16 17,149,060.00 Addition of Long Term Capital Gain plus commission Gaurav Agarwal ADJPA4408J 30-12-18 2016-17 5,750,000.00 Loan from companies Gaurav Agarwal ADJPA4408J 30-12-18 2017-18 1,531,000.00 Cash gift & 50 % of Cash Seized in Locker Name PAN Assessment Year Addition Addition on account of Arun Agarwal HUF AACHA1811P 30-12-18 2011-12 Nil Arun Agarwal HUF AACHA1811P 30-12-18 2012-13 5,000,000.00 Loan reed from company Arun Agarwal HUF AACHA1811P 30-12-18 2013-14 Nil Arun Agarwal HUF AACHA1811P 30-12-18 2014-15 67,337,798.00 Long Term Capital Gain + Commission I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 31 Arun Agarwal HUF AACHA1811P 30-12-18 2015-16 90,236,338.00 Long Term Capital Gain + Commission Arun Agarwal HUF AACHA1811P 30-12-18 2016-17 Nil Arun Agarwal HUF AACHA1811P 30-12-18 2017-18 Nil Name PAN Assessment Year Addition Addition on account of Arun Agarwal (IND) ABMPA2676 D 30-12-18 2011-12 Nil Arun Agarwal (IND) ABMPA2676 D 30-12-18 2012-13 6,500,000.00 Loan reed from company Arun Agarwal (IND) ABMPA2676 D 30-12-18 2013-14 4,000,000.00 Loan reed from company Arun Agarwal (IND) ABMPA2676 D 30-12-18 2014-15 22,100,000.00 Loan reed from company Arun Agarwal (IND) ABMPA2676 D 30-12-18 2015-16 2,000,000.00 Loan reed from company Arun Agarwal (IND) ABMPA2676 D 30-12-18 2016-17 Nil Arun Agarwal (IND) ABMPA2676 D 30-12-18 2017-18 996,000.00 Cash Seized during search These being search cases involving multiple issues and involving multiple correspondences between the assessee and the Assessing Officer, required detailed application of mind by Jt. CIT. The number of documents impounded as search material, amounted to 3989, which is the number documents as per Panchnama, a copy of which has been filed by learned counsel for the assessee during the course of hearing. Besides these documents, there must be more documents in the form of questionnaires by the Assessing Officer and various replies and statements of the searched persons. The examination of such documents cannot be gone through in one day therefore, the approvals given by Jt. CIT are mechanical only. The I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 32 argument of Learned CIT(D.R.) that the granting of approval is an administrative act and is not a judicial act is also not tenable as the provisions of section 153D are contained in the Act itself whereby it has been made mandatory that the Assessing Officer has to take approval from Jt. CIT. Had it been an administrative act, such provision was not needed to be included in the Income Tax Act itself. Therefore, this argument of Learned D.R. is also rejected. Regarding the argument of learned CIT(DR) that the case laws relied on by learned AR cannot have precedence value also has no force in view of the fact that in the present cases also the numbers of documents required to be examined by Jt. CIT exceeded 4000 which is humanly not possible for a person to go through in one day. 10.3 The Lucknow Bench of the Tribunal in the case of Shri Navin Jain vs. Dy. CIT, Central Circle-II, Kanpur in I.T.A. No.639 to 641/Lkw/2019 has already held that the approval granted in this way cannot be said to be approval as required by the provisions of section 153D of the Act. The findings of the Tribunal, as contained from para 9 to 10, are reproduced below: “9. We have heard the rival parties and have gone through the material placed on record. We find that in these cases, in view of a search carried out on the Sigma Group, the assessments of various assessees were reopened and various assessees were required to file income tax returns as required under the provisions of section 153A of the Act. The search was conducted on 23/08/2016 which continued upto 25/08/2016 and therefore, assessment year 2017- 18 became the search year and the years preceding the search year became the subject matter of reopening u/s 153A of the Act. The issue raised by Learned counsel for the assessee is that the approval granted by the Addl. CIT is bad in law as it is humanly impossible to go through documents exceeding 17,800 in a single day and then grant approval on the same day. Since the controversy involved here is with respect to approval u/s 153D of I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 33 the Act, it would be appropriate to first visit the provisions of section 153D of the Act, which for the sake of completeness are reproduced below: “SECTION 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 [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.]” 9.1 The above provisions of section 153D of the Act were inserted by Finance Act, 2007 with effect from 01/06/2007. In our humble understanding of the said provisions, we are of the opinion that the Legislature wanted the assessment/reassessment of the search cases should be made and order should be passed with the prior approval of superior authority. The word approval has not been defined in the Income Tax Act but the general meaning of word approval can be understood from Black Law of Dictionary which defines approval as: "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 34 or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 9.2 The Hon'ble Supreme Court of South Carolina in State vs. Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that approval implies knowledge and, the exercise or discretion after knowledge. 9.3 Further Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer [2003] 5 SCC 83 has held as under: "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate tine material on record in regard to the compensation payable. Otherwise, it would tantamount to blurring the distinction between Approving Authority and Appellate Authority''. 9.4 Further Hon'ble Gauhati High Court in the case of Dharampal Satyapal Ltd., vs., Union of India [2019] 366 ELT 253 (Gau.) Manu/GH/07070/2018 in para-28 has held as under : "When an Authority is required to give his approval, it is also to be understood that such Authority makes an application of mind as to I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 35 whether the matter that is required to be approved satisfies all the requirements of Law or procedure to which it may be subjected. In other words, grant of approval and application of mind as to whether such approval is to be granted must co-exist and, therefore, where an Authority grants an approval it is also to be construed that there was due application of mind that the subject matter approved and satisfies all the legal and procedural requirements." Therefore, from the definition of approval as per above authorities, its meaning with respect to approval u/s 153D means that the superior authority should apply his mind on the material on the basis of which the Assessing Officer is making or passing assessment order and after due application of mind to material in the hands of the Department and after going through the explanation by the assessee and documentary evidence and other relevant material, the superior authority has to grant approval u/s 153D for passing assessment/reassessment order in search cases. The approval u/s 153D of the Act cannot be treated mere formality only and the purpose of inserting this provision is two fold i.e. one before approving the senior authority will ensure that the assessee should be protected against the undue and irrelevant addition and disallowances and the approving authority will also ensure that proper enquiry or investigations are carried out by the Assessing Officer on the relevant materials including material in the hands of the Department. Secondly, the Assessing Officer also keeps in mind the interest of Revenue. Therefore, the said provision provides application of mind by the approving authority of the Department. Therefore, the provision of section 153D of the Act cannot be treated as mere formality and mandate therein is required to be followed by the approving authority in a judicious manner by due application of mind in a manner of a quasi judicial authority. We are cautious about the fact that reasons for granting approval may not be a subject matter of challenge or not required to be mentioned in the order of approval but the manner and material on the basis of which approval has been granted can be challenged by the assessee. The scope and issue agitated by the assessee by way of legal ground in the present cases is not that of granting of I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 36 approval but the main grievance of the assessee is that the approving authority has granted approval without application of mind and without looking into the seized material. We are inclined to hold 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 u/s 153D of the Act and mandate of enactment by the Legislature will be defeated. It is a trite law that for granting approval u/s 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 rationale of word "Each" as specifically referred to in Section 153D and Section 153A deserves to be given effective/proper meaning so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. The meaning of ‘approval’, as contemplated u/s 153D of the Act, is that the Jt. CIT is required to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind and to ascertain as to whether the entire facts have been properly appreciated by the Assessing Officer. The Jt. CIT is also required to verify whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. Thus, the approval cannot be a mere discretion or formality but quasi judicial function based on reasoning. In our view, when the Legislature has enacted the provision to be exercised by the higher authority to pass assessment order in the search cases then it is the duty of the Jt. CIT to exercise such power by applying his judicious mind. The obligation of the approval of the approving authority is of two fold i.e. on one hand, he has to apply his mind to ensure the interest of the Revenue against any omission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year and 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. The provisions contained from section 153A to section 153D contain features by which the assessee is to be given separate notice for assessment for each year as specified u/s 153A of the Act. Secondly, the assessee has to file separate ITR for each year as specified in section 153A of the Act. Thirdly, separate assessment orders are to be passed for each year as specified in section 153A of the Act. There is an important concept I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 37 mentioned in section 153A of the Act, abated and non abated which is peculiar to the scheme of section 153A of the Act. Keeping in view the above basic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that very important phrase as deployed in text of Section 153D, is "Each" assessment year. The word "Each" has been used extensively and this word needs to be given due weightage and adequate meaning and as such for each year separate approval is to be given under section 153D of the I.T. Act which is lacking in the present cases. There are many other provisions where statutory approval is required from higher authorities. Few of them are noted like in Section 151 and Section 274 etc., respectively dealing with the approvals on reopening cases and penalty cases. When Section 153D is juxtaposed with Section 151 and Section 274, most important differences which is peculiar to Section 153D is the word "Each". Word each is not used in Section 151 and Section 274 and the word "Each" is specially and consciously referred to in Section 153D so that assessee-wise and year-wise application of mind on the part of the approving authority is there which is in accordance with the overall scheme of Section 153A to Section 153D of the I.T. Act. Hon'ble Allahabad High Court in the case of Shri Mohd. Ayub vs. ITO [2012] 346 ITR 30 (Alld) dealt with non issue of separate notice under section 148 of the I.T. Act and held it to be invalid because each assessment year was to be taken as an independent unit of assessment and therefore, if the above settled position is tested with the provisions of Section 153D, it would emerge that when in a case where requirement of separate notice under section 148 of the I.T. Act was given absolute primacy therefore, in the context of Section 153D of the I.T. Act (where each word is expressly used and which is a year centric special scheme of assessment with concept of abated/non- abated assessments) there is absolute necessity of separate approval for each year and for each assessee. In the present cases Jt. CIT has given approval u/s 153D of the Act for all the years altogether involved in search and the approving authority in a mechanical manner and as an idle formality has granted approval. In one line the approving authority has given blank go ahead to pass order under section 153A without even taking minimum possible pains to take appropriate note of year-wise income as computed. The legislative intent behind Section 153D can be I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 38 discerned/gathered from the CBDT Circular No.3/2008 dated 12.03.2008 in which it is highlighted that approval of the approving authority is mandatory. For the sake of completeness, the contents of Circular No. 3/2008 are reproduced below: “50. Assessment of search cases Orders of assessment and reassessment to be approved by the Joint Commissioner. 50.1 The existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A does not provide for any approval for such assessment. 50.2 A new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. 50.3 Applicability-These amendments will take effect from the 1st day of June, 2007." I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 39 9.5 It is evident from the CBDT Circular that the legislature in its highest wisdom made it compulsory that the assessments of search cases should be made with the prior approval of superior authority, so that the superior authority could apply his mind on the materials and other circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority have to approve the assessment order. The object of entrusting the duty of approval of assessment in search cases is that the Jt. CIT, with his experience and understanding could scrutinize the seized documents and any other material forming the foundation of assessment. It is an elementary law that whenever any statutory obligation is casted upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. The approval granted under section 153D of the Act should necessary reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self defending. In the above background of law and in the light of order dated 30.12.2018 passed under section 153D of the Act, which gives legality to the impugned assessment orders, question which arises for our consideration is whether the approval granted by the Additional CIT, Central, Kanpur vide his order dated 30.12.2018 can be held to be granted after due application of mind and can be held to be valid in the eyes of law. Learned counsel for the assessee, during the proceedings before us had filed a chart showing number of documents seized during search belonging to the group totaling 15,800 pages. Besides the above documents, replies filed by assessees belonging to the group consisted of about 200 pages and in fact there were documents belonging to other group also, the approval of which has also been granted along with assessees on the same day through the same approval letter. Therefore, keeping in view huge number of documents involved, it is humanely impossible for a person to apply his mind on all cases individually and that too in a single day. For the sake of completeness, the said approval dated 30/12/2018 has been made part of this order and is reproduced below: I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 40 I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 41 I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 42 The contents of the approval speaks for itself loud and clear. The following inferences are inevitable from the bare reading of the said order. The draft assessment orders were placed before the Additional CIT, Central, Range- Kanpur on 30/12/2018 for the first time and on the same day approval was granted. As clearly mentioned in the approval under challenge, prior to this date the case was never discussed with the authority granting the approval. The Additional CIT without any consideration on merits in respect of the issues on which addition was made, granted the approval and such approval is an eyewash and idle formality and such a mechanically granted approval is no approval in the eyes of law. The entire gamete of law, as contemplated u/s 153D of the Act, has been considered by Delhi Bench of the Tribunal in a bunch of 52 appeals in I.T.A. No.1813/Del/2019 in the case of Sanjay Duggal and Others wherein the Hon'ble Bench vide order dated 19/01/2021 has quashed the assessment orders by holding that the approval granted u/s 153D of the Act was in a mechanical manner and thus cannot be held to be an approval as required u/s 153D of the Act. The relevant findings of the Tribunal are contained in para 11 onwards, which for the sake of completeness are reproduced below: I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 43 “11. We have considered the rival submissions and perused the written submissions filed by the parties and considered the material on record. It is an admitted fact that search and seizure action were carried-out in the cases of the assessees on 29.12.2015. Section 153A have been inserted into the Income Tax Act w.e.f. 01.06.2003. Prior to that there were provisions contained under section 158BC being the special procedure for assessment of search cases. Thus, the provisions of Section 153A to 153D are applicable in the case of assessees. According to Section 153A of the I.T. Act, there should be a search initiated under section 132 of the I.T. Act and panchanama drawn, the A.O. shall have to issue notice to the assessee requiring him to furnish the return of income within the specified time in respect of each assessment year falling within six assessment years. The A.O. shall assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Provided that the A.O. shall assess or re-assess the total income in respect of each assessment year falling within such six assessment years. It is further provided that assessment or re-assessment, if any, relevant to any assessment year falling within the period of six assessment years referred to in this Section pending on the date of initiation of the search under section 132 or making of requisition under section 132A as the case may be, shall abated. Thus, when provisions of Section 153A are applicable in a case of assessee, A.O. shall have to give separate notice of each assessment year and assessee shall have to be directed to file return of income for each year and separate orders shall have to be passed for each assessment year. In Section 153A of the I.T. Act, the A.O. shall have to see whether there are abated or non- abated assessments which was not provided in earlier provisions for block assessments. The Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla [2016] 380 ITR 573 (Del.) considered the issue of abated and non- abated assessments and with regard to completed assessments held that the same can be interfered with by I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 44 the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment. It is also held in the same Judgment that in so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall have to be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on record by the A.O. Therefore, these were the mandatory provisions contained in Section 153A which shall have to be satisfied by the A.O. before proceeding to frame assessment in the cases of persons searched under section 132 of the I.T. Act, 1961. Further safeguard have been provided for framing the assessments under section 153A that prior approval shall be necessary for assessments in the cases of the search or requisitioned, under section 153D of the IT. Act. Section 153D of the I.T. Act is reproduced as under : "153D - No Order of assessment or re-assessment 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 (ii) 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 Commissioner under sub-section (12) of section 144BA.". 11.1. It is an admitted fact that in all the above appeals assessments under section 153A have been framed by ACIT, Central Circle, New Delhi, therefore, prior approval of the JCIT in respect of each assessment year referred I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 45 to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by the A.O. in the present cases in respect of each assessment years under section 153A/153B of the I.T. Act, 1961, except with the prior approval of the Joint Commissioner. Learned Counsel for the Assessee has argued that the approval under section 153D have been granted by the JCIT without going through the seized material, appraisal report and other material on record. Thus, the approval is granted in a most mechanical manner and without application of mind. Therefore, same is invalid, bad in Law and void ab initio and as such all assessments under section 153A got vitiated and as such A.O. was not having jurisdiction to pass the assessment orders under section 153A of the I.T. Act, 1961. 11.2. The meaning of the word "Approval" as defined in Black Law Dictionary is – "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 11.3. The Hon'ble Supreme Court of South Carolina in State vs., Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that "Approval implies knowledge and, the exercise or discretion after knowledge." 11.4. The Hon'ble Supreme Court in the case of Vijayadevi Naval Kishore Bharatia vs., Land Acquisition Officer [2003] 5 SCC 83 wherein it has been held that : "Whenever there is an administrative approval given by higher authority, higher authority applies its mind to see whether the proposed Award is acceptable to the Government or not ? Such Authority may satisfy itself as to the material relied I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 46 upon by the Adjudicator, but, the Approving Authority cannot reverse the finding, as he is an Appellate Authority for the purpose of remanding the matter to the Adjudicating Authority as can be done by the Appellate Authority. Further, the Approving Authority also cannot exercise its power of prior approval to give directions to the Adjudicating Authority in what beneficial to accept/ appreciate tine material on record in regard to the compensation payable. Otherwise, it would tantamount to blurring the distinction between Approving Authority and Appellate Authority''. 11.5. The Hon'ble Gauhati High Court in the case of Dharampal Satyapal Ltd., vs., Union of India [2019] 366 ELT 253 (Gau.) Manu/GH/07070/2018 in para-28 has held as under : "When an Authority is required to give his approval, it is also to be understood that such Authority makes an application of mind as to whether the matter that is required to be approved satisfies all the requirements of Law or procedure to which it may be subjected. In other words, grant of approval and application of mind as to whether such approval is to be granted must co-exist and, therefore, where an Authority grants an approval it is also to be construed that there was due application of mind that the subject matter approved and satisfies all the legal and procedural requirements." 11.6. Therefore, in the cases of search, assessment orders whether framed under section 153A or 153C, the Joint Commissioner [Approving Authority] is required to see that whether the additions have been made in the hands of assessee are based properly on incriminating material found during the course of search, observations/comments in the appraisal report, the seized documents and further enquiries made by the A.O. during the course of assessment proceedings. Therefore, necessarily at the time of grant of approval of the I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 47 assessment made by the A.O, the Joint Commissioner is required to verify the above issues, apply his mind that whether they have been properly appreciated by the A.O. while framing the assessment orders or not. The JCIT is also required to verify whether the required procedure have been followed by the A.O. or not at the time of framing of the assessments. Thus, the approval cannot be a mere discretion or formality, but, is mandatory being Quasi Judicial function and it should be based on reasoning. In our view, when the legislature has enacted some provision to be exercised by the higher Revenue Authority enabling the A.O. to pass assessment order or reassessment order in search cases, then, it is the duty of the JCIT to exercise such powers by applying his judicious mind. We are of the view that the obligation of the approval of the Approving Authority is of two folds ; on one hand, he has to apply his mind to secure in build for the Department against any omission or negligence by the A.O. in taxing right income in the hands of right person and in right assessment year and on the other hand, JCIT is also responsible and duty bound to do justice with the tax payer [Assessee] by granting protection against arbitrary or unjust or unsustainable exercise and decision by the A.O. creating baseless tax liability on the assessee and thus, the JCIT has to discharge his duty as per Law. Thus, granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act.” 9.7 Further we find that I.T.A.T. Cuttack Bench in the case of Geetarani Panda vs. ACIT in I.T.A. No.01/CTK/2019 vide order dated 05/07/2018 has held as under: “24. In our considered view, the provisions contained in Section 153D as enacted by the Parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the Statute by the I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 48 Parliament are two folds. Firstly, the approval of the Senior Authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by Senior Authority will also ensure that proper enquiry or investigation are carried out by the Assessing Authority. Thus, the above provision provides for mental application of a Senior Officer of the Department, which in turn, provides safeguard to both i.e. Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. The same view was expressed by the Pune Benches of the Tribunal in the case of Akil Gulamali Somji vs ITO, in IT Appeal Nos.455 to 458 (Pune) of 2010 order dated 30.3.2012, wherein, it was held that when the approval was granted without proper application of mind, the order of assessment will be bad in law. The Hon'ble Bombay High Court in the case of CIT-II Vs Shri Akil Gulamali Somji, in Income Tax Appeal (L) No.1416 of 2012 order dated 15.1.2013 concurred with the view of the Tribunal that not following of the provisions of section 153D of the Act will render the related order of assessment void.” 9.8 Further we find that I.T.A.T. Mumbai Bench in the case of Shreelekha Dammani vs. DCIT in I.T.A. No.4061/Mum/2012 vide order dated 19/08/2015 has decided the issue in favour of the assessee by holding as under: “12. Coming to the facts of the case in hand in the light of the analytical discussion hereinabove and as mentioned elsewhere, the Addl. Commissioner has showed his inability to analyze the issues of draft order on merit clearly stating that no much time is left, inasmuch as the draft order was placed before him on 31.12.2010 and the approval was granted on the very same day. Considering the factual matrix of the approval letter, we have no hesitation to hold that the approval granted by the Addl. Commissioner is devoid of any application of mind, is mechanical and without considering the materials on record. In our considered opinion, the power vested in the Joint Commissioner/Addl I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 49 Commissioner to grant or not to grant approval is coupled with a duty. The Addl Commissioner/Joint Commissioner is required to apply his mind to the proposals put up to him for approval in the light of the material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. Commissioner before granting the approval. Therefore, we have no hesitation to hold that the assessment order made u/s. 143(3) of the Act r.w. Sec. 153 A of the Act is bad in law and deserves to be annulled. The additional ground of appeal is allowed. 13. The ld. Departmental Representative has strongly relied upon the decision of the Tribunal Mumbai Bench in the case of Rafique Abdul Hamid Kokani Vs DCIT 113 Taxman 37, Hon'ble High Court of Karnataka in the case of Rishabchand Bhansali Vs DCIT 136 Taxman 579 and Hon'ble High Court of Madras in the case of Sakthivel Bankers Vs Asstt. Commissioner 124 Taxman 227. 13.1. We have carefully perused the decisions placed on record by the Ld. DR. We find that all the decisions relied upon by the Ld. DR are misplaced inasmuch as all these decisions relate to the issue whether the Joint CIT/CIT has to give an opportunity of being heard to the assessee before granting the approval. This is not the issue before us as the Ld. Counsel has never argued that the assessee was not given any opportunity of being heard. These decisions therefore would not do any good to the Revenue. 14. Since we have annulled the assessment order, we do not find it necessary to decide the issues raised on merits of the case.” 9.9 In this case, the Addl. Commissioner has showed his inability to analyze the issues of draft order clearly stating that no much time was left as the draft order was placed before him on 31/12/2010 and approval was granted on the same day. In the case before us the Addl. CIT has though not expressly expressed his inability to analyze the issues of draft order but it is abundantly clear that he had not I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 50 analyzed the issues in the draft order as in the present cases the approval has been given in 67 cases on the same date which is humanly impossible. If an ACIT cannot express his opinion on a single case in one day how another ACIT can express his opinion in 67 cases in a single day. 9.10 The Hon'ble Bombay High Court has dismissed the appeal of the Department filed against the above order of the Mumbai Tribunal in the case of Shreelekha Damani vide judgment dated 27/11/2018. The findings of Hon'ble Bombay High Court are reproduced below: “7. In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31 st 3 of 4 Uday S. Jagtap 668-16- ITXA-15=.doc December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises.” 9.11 Similar are the findings of I.T.A.T. Jodhpur Bench in the case of Indra Bansal & Ors. vs. ACIT in I.T.A. Nos. 321 to 324 in which the Tribunal held as under: “6. We have heard the rival contentions and have perused the material on record. The main contention of I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 51 learned Authorised Representative is that reasonable time was not available with the Joint Commissioner for the grant of necessary approval as envisaged under section 153D of the Act. We have perused the forwarding letter dt. 30-3-2013 seeking approval of the draft assessment order. The date of receipt of this letter in the office of Joint Commissioner is indisputably on 31-3-2013 which is apparent from the date stamped on it by the office of the Joint Commissioner. Thus, this leaves no doubt that the letter requesting grant of approval and the granting of approval, both, are within one day of each other. This lends credence to the contention of the learned Authorized Representative that the draft assessment order was approved without much deliberation by the Joint Commissioner. Further, the time of the fax granting approval is 6.56 a.m. on 31-3-2013 which is prior to the office hours and, thus, it brings out a reasonable doubt that the approval was granted even before the letter requesting the approval was received in the office of the Joint Commissioner. Further, the response received by the assessee in response to his application under Right to Information Act, 2005 also establishes the correctness of the claim of the assessee that the assessment records were not before the Joint Commissioner when the approval was granted as the records were with the Range Office in Jodhpur whereas the approval was sent by fax on the morning of 31-3-2013 from Udaipur. Thus, it is our considered opinion that the Joint Commissioner had granted approval in a mechanical manner without examining the case records because the approval has been granted at 6.56 a.m. on 31-3-2013 from Udaipur wherein it has already been mentioned that the assessment records were being returned whereas the draft assessment order along with the assessment records were handed over to the office of the Joint Commissioner on 31-3-2013 and as such it was physically impossible that all the case records along with the draft assessment order were received by the Joint Commissioner at Udaipur. Tribunal, Mumbai Bench in the case of Smt. Shreelekha Damani v. Dy. CIT (2015) 125 DTR (Mumbai)(Trib) 263 : I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 52 (2015) 173 TTJ (Mumbai) 332 has held that the legislative intent behind the insertion of section 153D of the Act was that the assessments in search and seizure cases should be made with the prior approval of superior authority which means that the superior authorities should apply their mind to the material on the basis of which the assessing officer is making the assessment. In this case, the Addl. CIT had expressed his inability to analyze the issues of the draft order on merits clearly stating that not much time was left and granted the approval under section 153D of the Act on the same day and Tribunal, Mumbai Bench held that the approval granted by Addl. CIT was mechanical and had been passed without considering the material on record and was, therefore, devoid of any application of mind. The impugned assessment order was annulled. Similarly, Tribunal, Allahabad Bench in Verma Roadways v. Asstt. CIT (2001) 70 TTJ (All) 728; (2000) 75ITD 183 (All) held that while granting approval, Commissioner is required to examine the material before approving the assessment order. In this case, Tribunal, Allahabad Bench was examining the issue of approval under section 158BG of the Act and it opined that the object for entrusting the job of approval to a superior and a very reasonable (sic-responsible) officer of the rank of Commissioner is that he with his ability, experience and maturity of understanding can scrutinize the documents, can appreciate its factual and legal aspects and can properly supervise the entire progress of assessment. Tribunal, Allahabad Bench held that the concerned authority while granting the approval is expected to examine the entire material before approving the assessment order and further that whenever any statutory obligation is cast on any authority, such authority is legally required to discharge the obligation not mechanically, nor formally but by application of mind. Similarly, the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT & Anr. (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27: (2008) 300 ITR 403 (SC), while discussing the requirement of prior approval of I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 53 Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt 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 it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held 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. Coming to the facts of the case, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 2 cases was completed in one single day itself i.e., 31-3-2013. Thus, it is apparent that the Joint Commissioner did not have adequate time to apply his mind to the material on the basis of which the assessing officer had made the draft assessment orders. Tribunal, Mumbai Bench and Tribunal, Allahabad Bench in their orders, as discussed in the preceding paragraphs, have laid down that the power to grant approval is not to be exercised casually and in routine manner and further the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. In all the cases before us, the Department could not demonstrate, by cogent evidence, that the Joint Commissioner had adequate time with him so as to grant approval after duly examining the material prior to approving the assessment order. The circumstances indicate that this exercise was carried out by the Joint Commissioner in a mechanical manner without proper application of mind. Accordingly, respectfully following the ratio of the Co-ordinate I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 54 Benches of Mumbai and Allahabad as afore-mentioned and also applying the ratio of the judgment of the Hon'ble Apex Court in the case of Sahara India (Firm) v. CIT (supra), we hold that the Joint Commissioner has failed to grant approval in terms of section 153D of the Act i.e., after application of mind but has rather carried out exercise in utmost haste and in a mechanical manner and, therefore, the approval so granted by him is not an approval which can be sustained. Accordingly, assessments in three COs and nineteen appeals of the assessee(s), on identical facts, are liable to be annulled as suffering from the incurable defect of the approval not being proper. Accordingly, we annul the assessment orders in CO Nos. 8 to 10/Jodh/2016 and ITA Nos. 325 to 331/Jodh/2016. Thus, all the three COs and the nineteen appeals of the assessee, as aforesaid, are allowed.” 10. Similarly we find that Hon'ble Supreme Court in the case of ‘Sahara India vs. CIT & Others’ [2008] 216 CTR 303 (S.C.) : [2008] 7 DTR (SC) 27: [2008] 300 ITR 403 (SC) while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt 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 it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held 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. 10.4 The Chandigarh Bench of the Tribunal in the case of M/s Inder International vs. ACIT, Ludhiana in I.T.A. No.1573/Lkw/2018, vide order dated 07/06/2021 has also decided similar issue in favour of assessee and has quashed the assessment order. 10.5 Keeping in view the facts and circumstances of these cases and keeping in view the judicial precedents, relied on by the assessees, we find that the approvals granted by Jt. CIT in these cases is mere a formality and I.T.(SS)A. Nos.252 & 255/Lkw/2020 C.O. Nos.10 & 11/Lkw/2021 Assessment Years:2015-16 55 cannot be considered as actual approval in law and therefore, we quash the assessment order passed by the Assessing Officer u/s 153A of the Act. Since we have quashed the assessment orders, the orders passed by learned CIT(A), being consequential, are also quashed. 10.6 In view of the above, petitions filed by the assessees under Rule 27 of the ITAT Rules, are allowed. 11. In the result, the appeals filed by the Revenue and the Cross Objections filed by the assessee are dismissed. (Order pronounced in the open court on 02/09/2022) Sd/. Sd/. ( A. D. JAIN ) ( T. S. KAPOOR ) Vice President Accountant Member Dated:02/09/2022 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Assistant Registrar