Subhankar Ghosh, Kolkata V. ACIT, Central Circle, Cuttack

ITSSA 45/CTK/2023

AI Insights

The case involves five appeals filed by the assessee, Shri Subhankar Ghosh, against the orders passed by the CIT(A)-2, Bhubaneswar, for various assessment years. The primary contention was regarding the mechanical approval of the draft assessment orders under section 153D of the Income Tax Act by the JCIT(Central), which the assessee argued did not meet the legal requirements as per the precedent set by the Hon'ble Jurisdictional High Court in the case of Serajuddin & Co. The Tribunal agreed with the assessee's argument, noting the lack of substantive review in the approval process, and consequently quashed the assessment orders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 126998 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2023
• Other Referred Cases: Serajuddin & Co. v. [2023] 150 taxmann.com 146 (Orissa)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAROJ KUMAR MAHAPATRA
• Section: 119; 22

Judgement Text

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH VIRTUAL HEARING) BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER IT(SS)A Nos.43 t o 47/CT K/2023 (ननधाारण वषा / A.Y : 2009-10 to 2011-2012 & 2014-2015 & 20 15-2016) Shri Subhankar Ghosh, At: 156/2, Block-G, PO: New Alipore, 2 nd Floor, Dist : Kolkata, West Bengal Vs ACIT, Central Circle, Cuttack PAN No. :AEUPG 8380 B (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri P.K.Mishra, Advocate राजस्व की ओर से /Revenue by : Shri Saroj Kumar Mahapatra, Pr.CIT-DR स ु नवाई की तारीख / Date of Hearing : 21/07/2023 घोषणा की तारीख/Date of Pronouncement : 21/07/2023 आदेश / O R D E R Per Bench : These five appeals have been filed by the assessee against the separate orders of the ld. CIT(A)-2, Bhubaneswar, passed in I.T.Appeal No.Bhubaneswar-2/10708/2017-18, dated 14.03.2023, Bhubaneswar- 2/10709/2017-18, dated 20.03.2023, Bhubaneswar-2/10710/2017-18, dated 20.03.2023, Bhubaneswar-2/10711/2017-18, dated 27.03.2023 and Bhubaneswar-2/10712/2017-18, dated 27.03.2023, for the assessment years 2009-2010, 2010-2011, 2011-2012, 2014-2015 & 2015-2016, respectively. 2. These appeals have been posted for hearing on 19.07.2023 on which date the ld.AR had submitted that the approval u/s.153D of the Act given by the ld. JCIT(Central) was a mechanical approval granted and without considering as to whether the draft order met the requirement of IT(SS)A Nos.43-47/CTK/2023 2 law. In this regard, ld. AR placed before us the copy of approval, received from the AO, which read as follows :- 3. Ld.CIT-DR requested for two days time to examine the records. Today, when matter came up for hearing, it was fairly admitted by the ld.CIT-DR that the approval as shown by the ld.AR and as extracted above, was only approval available in the file and there was nothing more on this issue that was required to be said. Ld.AR further drew our attention to the decision of the Hon’ble Jurisdictional High Court in the case of Serajuddin & Co., reported in [2023] 150 taxmann.com 146 IT(SS)A Nos.43-47/CTK/2023 3 (Orissa), wherein the Hon’ble Jurisdictional High Court in paras 22 to 24 has held as under :- 22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft orders having been perused by the Additional CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like 'see' or 'approved' will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order. 23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. 24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 taxmann.com 1061 (SC)/2004 (165) E.L.T. 257 (SC) the Supreme Court observed as under: "Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there IT(SS)A Nos.43-47/CTK/2023 4 were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars." 4. It was the submission that the requirement of prior approval of superior officer before an order of assessment or re-assessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. It was the submission that as the present approval was similar to the approval granted in the case of Serajuddin & CO., in view of the decision of the Hon’ble Jurisdictional High Court, referred to supra, the assessment is liable to be quashed. 5. We have considered the rival submissions. The Hon’ble Jurisdictional High Court has categorically held that while elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. Where the approval is granted mechanically, it will vitiate the assessment order itself. The department has also not been IT(SS)A Nos.43-47/CTK/2023 5 able to place before us the letter of the AO written to the JCIT(Central) in the case of the assessee where the approval of the JCIT has been sought. In these circumstances, as the approval granted in respect of draft assessment order in the present case is found to be a mechanical approval and without application of mind, respectfully following the principles laid down by the Hon’ble Jurisdictional High Court in the case of Serajuddin & Co., referred to supra, the approval is held to be invalid and the consequential assessment order is also hereby quashed. 6. In the result, all the appeals of the assessee are allowed. Order dictated and pronounced in the open court on 21/07/2023. Sd/- (GIRISH AGRAWAL) Sd/- (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 21/07/2023 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ड पाईऱ / Guard file. सत्यावऩत प्रतत //True Copy//