MAINEE STEEL WORKS PVT. LTD.,NEW DELHI V. DCIT-2, GURGAON

ITA 3376/DEL/2024

AI Insights

The case involves multiple appeals by Mainee Steel Works Pvt. Ltd. against the assessment orders passed under sections 143(3) read with 153A of the Income Tax Act, 1961, for the assessment years 2013-14 to 2019-20. These assessments were conducted following a search operation under section 132 of the Act on the premises of the Mainee Group on November 19, 2018. The primary legal issues revolved around the maintainability of additions made in the assessments which were not supported by any incriminating material discovered during the search, and the validity of the approvals under section 153D, which were alleged to be granted in a mechanical manner without proper consideration of the facts and circumstances of each case. The Tribunal's decision highlighted the importance of incriminating material in justifying additions under section 153A for unabated assessments and criticized the procedural lapses in the approval process under section 153D.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37065 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2018-2019
• Other Referred Cases: Pr. CIT v. Abhisar Buildwell (P.) Ltd., PCIT vs. King Buildcon (P) Ltd., Pr.CIT vs Vikram Dhirani, CIT vs Anand Kumar Jain HUF, ACIT vs Serajuddin & Co. Kolkata, PCIT vs Anuj Bansal, PCIT vs Shiv Kumar Nayyar, PCIT vs MDLR Hotels(P)Ltd., PCIT vs. Sapna Gupta, PCIT vs. Siddarth Gupta, PCIT vs. Subodh Agarwal, Shreelekha Damani vs DCIT, Chhugamal Rajpal vs. S.P. Chaliha & ors., M3M India Holdings vs DCIT, Vrushali Sanjay Shinde vs DCIT, Sanjay Duggal vs ACIT, PCIT vs Subhash Dabas, Daze Construction Pvt.Ltd. vs ACIT, Veena Singh vs ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALJEET KAUR
• Assessee Lawyers: ASHWANI KUMAR; ADITYA KUMAR
• Keywords: Document seized; Documents seized; Bogus purchase; Accommodation entries; Assessment record; Competent authority; Tangible material; Bogus
• Section: 148; 143(3); 250; 143(1); 132; 153A; 68; 131; 133(6); 13; 153C; 20

Judgement Text

"ITA Nos.3371 to 3377/Del/2024 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER Sl. No ITA/CO No(s) Asst. Year(s) Appeal(s) by Appellant vs. Respondent Appellant Respondent 1. ITA No.3371/Del/2024 2013-14 Mainee Steel Works Pvt. Ltd. M-14, Ground Floor Greater Kailash-I New Delhi – 110 048 PAN : AAACM 8568 L DCIT Central Circle –II Gurgaon 2. ITA No.3372/Del/2024 2014-15 -do- -do- 3. ITA No.3373/Del/2024 2015-16 -do- -do- 4. ITA No.3374/Del/2024 2016-17 -do- -do- 5. ITA No.3375/Del/2024 2017-18 -do- -do- 6. ITA No.3376/Del/2024 2018-19 -do- -do- 7. ITA No.3377/Del/2024 2019-20 -do- -do- Assessee by Shri Ashwani Kumar, C.A., Shri Aditya Kumar, C.A. Ms. Depali Agarwal, C.A., Shri Ankur Agarwal, C.A. Ms. Muskan Goel, A.R. Revenue by Ms. Baljeet Kaur, CIT-D.R. Date of hearing: 21.11.2024 Date of Pronouncement: 24.01.2025 ORDER PER PRADIP KUMAR KEDIA, AM : The captioned appeals arise from the consolidated order of the Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)] passed under s. 250 of the Income Tax Act, 1961 [the Act] emanating from respective assessment orders passed by the Assessing Officer [AO] tabulated hereunder: Sr. Nos. ITA Nos. CIT(A) Order dated Assessment Order dated Remarks 1. ITA No.3371/Del/2024 CIT(A)-3, Gurgaon order dated 28.06.2024 27.09.2021 Assessment Order under section 153A of the Income Tax Act, 1961. ITA Nos.3371 to 3377/Del/2024 Page | 2 2 ITA No.3372/Del/2024 -do- 30.09.2021 -do- 3. ITA No.3373/Del/2024 -do- 27.09.2021 -do- 4. ITA No.3374/Del/2024 -do- -do- -do- 5. ITA No.3375/Del/2024 -do- -do- -do- 6. ITA No.3376/Del/2024 -do- -do- -do- 7. ITA No.3377/Del/2024 -do- -do- Assessment Order under section 143(3) of the Income Tax Act, 1961. 2. At the time of hearing, it was stated that the issues involved for AYs 2013-14 to 2019-20 are common, interlinked and arising from the search action on the assessee and other group concerns covering the assessee. Hence, All these cases have been heard together and accordingly adjudicated by this common order. ITA Nos.3371 to 3375/Del/2024 [Assessment years 2013-14 to 2017-18] [Mainee Steel Works Pvt.Ltd.] 3. It was stated on behalf of the assessee at the outset that the assessment for AY 2013-14 to AY 2017-18 were not pending and stood concluded either under s. 143(1) or under s. 143(3) at the time of initiation of search on 19.11.2018 and thus remained unabated. Consequently, the legal framework for assessment of total income under s. 153A is narrow and is contingent upon the discovery of incriminating material in the course of search from the assessee. 4. As per grounds of appeal, the assessee has challenged first appellate order and the respective assessment orders broadly on following contours; (A) Legal objection on maintainability of additions carried out in the assessment order passed under s. 153A of the Act unconnected to incriminating material discovered in the course of search; ITA Nos.3371 to 3377/Del/2024 Page | 3 (B) Approval accorded by the competent authority i.e. Addl. CIT in the instant assessment orders do not meet the pre-requisites contemplated under s.153D of the Act and hence the assessment framed under s. 153A based on such non est approval is a nullity at the threshold.. (C) The impugned additions and disallowances are a mere ipse dixit of the AO /CIT(A) and not objectively justifiable even on merits; such additions thus lacks legal and factual foundations 5. Briefly stated, the assessee company namely Mainee Steel Works Pvt. Ltd. is stated to be involved in the business of many activities including renting of construction scaffolding equipment etc. The assessee also derives rental income from factories/Godowns located in Noida, UP. The assessee was covered in a search and seizure operation under s. 132 of the Act that was conducted on 19.11.2018 at the various premises of Mainee Group of cases. Consequent upon search, notices under s. 153A of the Act were issued to the assessee for various AYs under appeal. Pursuant thereto, the assessee filed return of income under s. 153A of the Act for various assessment years. The assessments were inter alia framed under s. 143(3) r.w.s 153A of the Act for unabated AYs 2013-14 to 2017-18 in question. While framing search assessments noted above, the AO inter alia made additions under s. 68 of the Act alleging certain credits received from various parties to be in the nature of accommodation entries and holding that the nature and source of the credits have not been explained to the satisfaction of the AO. The additions under s. 68 for various assessment years were premised on the allegation that the assessee has failed to discharge onus towards genuineness and creditworthiness of the parties/lenders. The additions have also been made in certain years towards commission paid on alleged accommodation entries and additions towards bogus purchases etc. 6. Aggrieved, the assessee preferred appeal before the CIT(A) seeking to challenge the additions made on various counts. The assessee firstly alleged that the ITA Nos.3371 to 3377/Del/2024 Page | 4 additions made by the AO are outside the ambit of legal framework inasmuch as no incriminating material was found during the course of search initiated against the assessee under s. 132 of the Act on 19.11.2018 and such assessments stood concluded and remained unabated at the time of initiation of search. The assessee also simultaneously challenged the legitimacy of approval granted by the Competent Authority i.e. Addl.CIT, Central Range, Gurugram alleging that such approval has been granted mechanically in a ritualistic manner without application of mind. The Assessee also challenged the propriety of additions on merits. 6.1. In support of the legal and factual contentions, the assessee filed detailed submissions and placed documentary evidences along with case laws before CIT(A). 6.2 The CIT(A) however neither found any merit in the contention raised on various jurisdictional and legal points nor towards additions on merits having regard to the documentary evidences. The legal objection of the assessee questioning scope and legality of additions under s. 153A being outside the legal framework was discarded. Likewise, objections raised on approval granted under s. 153D alleging such approval to be an omnibus approval without application of mind to the draft assessment order was also found to be without any merit. The CIT(A) did not find any substance in the contentions raised on the merits of the additions either. The CIT(A) thus addressed all the substantive issues against the assessee and in favour of the Revenue. 7. Further aggrieved, the assessee preferred appeal before the Tribunal. 8. The Ld. Counsel for the assessee submitted at the outset that the first appellate order and the assessment orders have been passed based on complete misconception of scheme of search assessment under s. 153A. The Ld. Counsel also pointed out that the approval of the Addl. CIT to the draft assessment order under s. 153D do not carry any rational probative value being accorded mechanically and flippantly. On merits of the additions, the ld. Counsel yet again contended that there was no credible material ITA Nos.3371 to 3377/Del/2024 Page | 5 to impeach the transactions reported. The inferences drawn against the assessee are contrary to material placed on record and thus without legal foundation. Third party evidences have been rejected arbitrarily without any attempt to traverse the facts placed before the AO. The Ld. Counsel thus made wide ranging submissions to support the legal objections taken on maintainability of additions under s. 153A and touching the jurisdictional aspects in such group of concluded and unabated assessments. The Ld. Counsel also pointed out multiple defects in the action of the Addl CIT to demonstrate that the approval accorded under s. 153D suffers from the vice of non application of mind in a gross manner. The Ld. Counsel thus contended that approval under s. 153D is not an empty legal formality but seeks to place enormous statutory responsibility on the authority to ensure fair play and just and proper order by the AO. The casual exercise of powers under s. 153D has actually frustrated the very purpose of such valuable safeguard & reduced the whole exercise to an empty formality. It was contended that no person with ordinary prudence and instructed in law could grant approval under s. 153D to the loopsided and legally untenable assessment orders under challenge. The Ld. Counsel referred to large number of judicial pronouncements to seek cancellation of respective assessment orders so passed on the strength of such sterile & hollow approvals. We shall deal with the various facets of the arguments at appropriate place in succeeding paragraphs while dealing with the respective issues. 9. Per contra, the Ld. CIT DR appearing for the Revenue strongly relied upon the first appellate order and submitted that the Ld.CIT(A) has dealt with all the objections threadbare and affirmed the action of the AO on legally sound basis. Hence, no interference therewith is called for. We shall deal with the averments made by the Ld.CIT DR while dealing with the respective issues in succeeding paragraphs. ITA Nos.3371 to 3377/Del/2024 Page | 6 10. We have dispassionately considered the rival submissions and perused the first appellate order passed combinedly for AY 2013-14 to AY 2019-20 as well as the respective assessment orders. The material referred to and relied upon by both sides has been perused in accordance with Rule 18(6) of the Income Tax (Appellate Tribunal) Rules, 1963. Similarly, the case laws cited in the course of hearing has been given due weight having regard to the context of the case. 11. To begin with, we shall address ourselves with preliminary objections of legal nature touching the jurisdictional aspects as raised on behalf of the assessee. 11.1 The broad contours of the appeals of the assessee hinges around following pertaining legal issues emanating in these cases: (a) Whether the assessee was justified in making the additions dehors incriminating material found in the course of search from the premises of the assessee in such unabated and concluded assessment and whether while making assessment under s. 153A of the Act, the Revenue is entitled to interfere with already concluded (and not abated) assessment passed earlier either under s. 143(1) or under s. 143(3) of the Act and not pending at the time of search in the absence of any incriminating documents unearthed as a result of search? (b) Whether such purported approvals of the Ld. Addl. CIT is to be regarded as mechanical and perfunctory and without application of mind having regard to the functions entrusted under s. 153D of the Act. 12. The first and foremost legal objection concerns propriety of additions dehors incriminating material found in the course of search from the premises of the assessee in concluded assessment. 12.1. It is the case of the assessee that the assessment for captioned AYs 2013-14 to AY 2017-18 are liable to be challenged on three broad points:- ITA Nos.3371 to 3377/Del/2024 Page | 7 (i) The addition made by the AO in the assessment framed under s. 153A unconnected to any incriminating material found in the course of search per se as evident from the respective assessment orders and consequent first appellate order passed in a combined manner. The assessments under s. 153A have been framed primarily relying on certain adverse statement of third person, data recovered from third person etc. which cannot be equated with incriminating material found in the course of search of assessee per se. The law in this regard is well settled in respect of unabated assessments at the time of search. Hence, such additions are unsustainable under s. 153A. As stated, the assessment for such years stood concluded and AY 2013-14 to AY 2017-18 were not pending for assessment under normal provisions at the time of search. (ii) The additions to be made under s. 153A in unabated assessments are squarely dependent upon the discovery of incriminating documents found in the course of search from the premises of the assessee as held in landmark judgment in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxman.com 399 (SC) followed by many other judgements delivered later by the Hon’ble Supreme Court including PCIT vs. King Buildcon (P) Ltd. 154 taxamnn.com 189(SC). Consequently, the scope of assessment under s. 153A is restricted to the incriminating material found in the course of search in the case of the assessee in such unabated assessments. (iii) Material collected by the AO from third persons in post search or from other unconnected to search proceedings cannot be used for assessment under s. 153A in unabated cases. The additions made in the proceedings under s. 153A based on material found in the course of search/survey in the case of third person or statement of third person is unsustainable in law and the right course available to the AO in law was to proceed against the assessee either under s. 153C or under s. 148 as the case may be rather than under s. 153A of the Act. The additions made under s. 153A of the Act are bad in law on this score too. ITA Nos.3371 to 3377/Del/2024 Page | 8 (iv) On merits, the assessee contends that all credit entries which are subject matter of additions under s.68 or purchases which are subject matter of s.69C are completely supported by the tangible material such as invoices, confirmations, bills, banking transactions etc. in corroboration of respective entries. It is thus the case of the assessee that additions made by the Ld. AO was wrongly endorsed by the CIT(A) and such action cannot be countenanced in law both on the grounds of jurisdiction available to the AO as well as on merits. The assessee thus seeks reversal of the additions made by the AO. 12.2. On facts, it is the case of the assessee that the so-called incriminating material referred in the assessment order are in the shape of statement of Shri Ashok Kumar, Director of lender M/s. Shrill Investment Ltd, recorded under s. 131 of the Act adverse to the assessee. Likewise statement of Shri Manoj Kumar Jain, Director of SMB Securities Ltd. were recorded adverse to assessee under s. 131 of the Act in the course of survey on the lender. Such inconclusive and rebuttable statements forms the basis for drawing adverse interference towards money lent by such parties. The CIT(A) while confirming the additions on merits was clearly guided by post-search inquiries, statement obtained from the lenders in the course of survey etc. in independent proceedings and information collected by AO in s. 133(6) proceedings in the case of some of the lenders. The cogent material placed in support of the credit entries were thus disregarded. Furthermore, the financial statement of the lenders have been taken into account in post-search inquiries to draw adverse inference that creditworthiness of the lenders do not resonate with the money lent. While making the additions by the AO and upholding such additions by the CIT(A), no reference whatsoever to the material gathered in the course of search from the premises of the assessee have been shown. 12.3 The assessee also refers to the judgement of the Hon’ble Delhi High Court rendered in the case of Pr.CIT vs Vikram Dhirani in ITA No.666/2023 judgement ITA Nos.3371 to 3377/Del/2024 Page | 9 dated 20.08.2024 wherein it was held that statement under s. 132(4) obtained in the course of search ipso facto do not constitute incriminating material found in the course of search for the purposes of s. 153A of the Act. Likewise Hon’ble Delhi High Court in the case of CIT vs Anand Kumar Jain HUF [2021] 432 ITR 384 (Delhi) observed that additions on the basis of statement recorded in a separate search action in the case of third person do not constitute incriminating material for the purposes of s.153A of the Act. The Hon’ble High Court observed that the statement of third person cannot be construed as incriminating material belonging to or pertaining to person other than the person searched. The assessee thus contends that where the statement of searched person himself was not construed as incriminating material per se in the absence of corroborative material, statement of third person in search or survey proceedings at the premises of the third person cannot be imported to hold existence of incriminating material for the purposes of unabated assessments. 13. On nuanced perusal of the assessment orders and the consolidated first appellate order, it is observed that there does not appear to be any reference to any incriminating material found in the course of search of the assessee per se. The alleged incriminating material referred are primarily in the nature of statement of third person prior or subsequent to search/survey proceedings. Guided by the principles laid down by the Abhisar Buildwell (P.) Ltd. (supra), Anand Kumar Jain (HUF) (supra) and Vikram Dhirani (supra), we find force in the legal plea placed on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment, additions/ disallowances made by the AO in all captioned appeals requires to be quashed. 14 We now advert to the other legal challenge vociferously raised on behalf of the assessee towards propriety of approval under s. 153D to the respective draft assessment orders placed before him by the Ld.AO. ITA Nos.3371 to 3377/Del/2024 Page | 10 14.1 The approval memo under s. 153D has been assailed on behalf the assessee. It would thus be in fitness to extract the copy of approval for ready reference. ITA Nos.3371 to 3377/Del/2024 Page | 11 14.2 With reference to the approval memo extracted above, it is the contention on behalf of the assessee that the combined approval granted for various AYs under s. 153D is plagued with substantive infirmities revealing gross non-application of mind and the assessment orders have been granted an omnibus approval on dotted line in a cursory manner. The broad counters of the discrepancies alleged on behalf of the assessee are: (a) The AO forwarded the draft assessment orders for various AYs under appeal to the Addl.CIT on 24.05.2021 purportedly along with the assessment records to seek approval under s. 153D of the Act. The approval sought was accorded in complex search cases of multiple years of the assessee and other group cases on the next day i.e. on 25.05.2021. The so-called approvals were given in a consolidated manner to the assessment orders spanning over AYs 2013-14 to 2019-20. Significantly, the Add. CIT recorded considering the facts as submitted that (a) proper opportunities of being heard was provided to the assessee by the AO; (b) All the issues appearing from the material on record were duly examined (naturally by the AO) and (c) relevant copies of seized documents were verified before passing the draft assessment order. The Ld. Counsel contends that on a bare reading of phraseology of para 2 of the approval memo noted above, it would be manifest that combined and consolidated approval has been accorded solely based on the submissions and assurances from the AO that the pre-requisites have been met while preparing draft assessment orders. Delving deeper, the Ld. Counsel for the assessee yet again adverted to para 2 part 3 of the approval memo dated 25-05-2021 ( extracted above) to assert that the Addl. CIT clearly proceeded to accord approval under s. 153D on the presumption that relevant copy of seized documents were verified by the AO before passing respective draft assessment orders. Apparently, riding on the assurances from the AO, the combined approvals have been merrily accorded. The Addl. CIT thus barely acted on the assurance from the AO towards existence of basic requirement of passing the fair and ITA Nos.3371 to 3377/Del/2024 Page | 12 balanced assessment order mandated in law. Such approvals, which do not even remotely indicate independent application of mind, if endorsed would defeat the very purpose of the statutory enactment of s. 153D of the Act meant to act as valuable safeguard against any capricious or unjust or onerous liability on tax payers by the arbitrary exercise of powers of the AO. Evidently, the Addl. CIT himself has not exerted in any manner but rather ascribed to the acts and deeds of the AO as gospel truth. The approval is thus clearly is in the league of being mechanical and ritualistic approval rendering it expropriatory at the threshold. 14.3 The assessee thus contends that it is a gross case of an implied self confession of the Addl. CIT towards complete dependence on the process of assessment carried out by AO rendering it a ‘technical approval’ which in itself is fatal without anything more. 14.4 The assessee further contends that besides gross non application of mind discernible from such combined approval memo itself, assessment orders so approved are also marred by critical lapses and mistakes which remained unnoticed by the Addl. CIT. This shows that the Addl. CIT has not even cared to read the assessment orders but left every act to the wisdom of the AO. The assessee contends that the lapses / omissions committed as noticeable from the assessment orders have direct bearing on the process of reasoning adopted to come to conclusions on the ultimate additions/ disallowances. Some of the instances as may be observed are; AY Paragraph and Page No.of the Assessment Order Description and Comments Omission that the Ld. Additional Commissioner could have asked 2013-14 Page 3 para 4.2 Reproduction of the relevant extract of the statement of Sh.Ashok Kumar No Part of the statement has been reproduced. Page 8 Para 5.2 Reproduction of the relevant extract of No Part of the statement has been reproduced. ITA Nos.3371 to 3377/Del/2024 Page | 13 the statement of Sh.Manoj Kumar Page 13 Para 6.3 Further, during the post-search enquiries summons u/s 131 of the Act dated 20.02.2018 were issued to certain entities Date mentioned as 20.02.2018 which is prior to search date i.e. 19.11.2018 Page 18 para 7.2. Reproduction of the relevant extract of the statement of Sh.Manoj Kumar Jain No Part of the statement has been reproduced. Page 18 para 7.5 The reply to the above notice was provided by Mainee Steel Works Pvt.Ltd. which is as under:- No Part of the reply reproduced Page 23 Reproduction of the statement of Sh.Surjit Singh No Part of the statement has been reproduced. 2015-16 Page 4 Para 4.2. Reproduction of the relevant extract of the statement of Sh.Manoj Kumar Jain No Part of the statement has been reproduced. Page 9 Para 5.2 Reproduction of the relevant extract of the statement of Sh.Ashok Kumar No Part of the statement has been reproduced. Page 13 Para 6.2 Reproduction of the relevant extract of the statement of Sh.Manoj Kumar Jain No Part of the statement has been reproduced. Page 14 Para 6.5 The replies to the notices provided by Mainee Steel Works Private Limited are as under: No replies have been attached. Oage 32 Para 7 Reproduction of the statement of Sh Surjit Singh No Part of the statement has been reproduced. 14.4.1 Thus, page 3 para 4.2 (AY 2013-14) of the assessment order inter-alia reads as “the relevant extract of the statement of Shri Ashok Kumar is reproduced as under”. ITA Nos.3371 to 3377/Del/2024 Page | 14 However, no part of the statement has been reproduced. The approval has been accorded on such incomplete assessment order. 14.4.2 Page 8 para 5.1 (AY 2013-14) inter alia reads as ‘the relevant extract of the statement of Sh.Manoj Kumar Jain is reproduced as under’. However, no part of the statement has been reproduced. Despite such lapse, approval has been mechanically granted. 14.4.3 Page 13 para 6.3 (AY 2013-14) reads as “Further, during the post- search enquiries summons u/s 131 of the Act dated 20.02.2018 were issued to certain entities...............’ Date mentioned as 20.02.2018 in the assessment order is prior to search date i.e. 19.11.2018. 14.4.4 Page 18 para 7.2 (AY 2013-14) read as ‘the relevant extract of statement of Sh.Manoj Kumar Jain is reproduced herewith as under’. However no part of the statement has been reproduced. Such lapse remaining unnoticed yet again shows that the proposed assessment orders were not even read by the Ld.Addl.CIT. 14.4.5 Page 18 para 7.5 of the assessment order (AY 2013-14) reads as ‘the reply of the above notice was provided by Mainee Steel Works Pvt.Ltd. which is as under’ However, no part of the statement has been reproduced. 14. 4. 6 Page 23 of the of the order (AY 2013-14) reads as ‘the statement of Sh.Surjit Singh in this regard is reproduced herewith as under’. However, no part of statement has been reproduced. 15. The assessee also contends that the order sheet maintained in the assessment order is also relevant to appreciate the sequence of events. The order sheet does not record any movement of files or any correspondence with Addl. CIT in the course of ITA Nos.3371 to 3377/Del/2024 Page | 15 assessment. This shows that the incumbent Addl. CIT was totally kept unaware of the ongoing assessment proceedings. 16. The Ld.CIT DR appearing for revenue has however strongly defended the approval granted under s. 153D of the Act and submitted that as long as the statutory approval has been granted, a presumption would arise that all incidental acts have been performed properly and that due process of law has been followed and with proper application of mind. The Ld.CIT DR also pointed out that prior to approval dated 25.05.2021 accorded under s. 153D, there was another correspondence dated 18.05.2021 by the AO to the Addl. CIT wherein the AO has addressed the Addl. CIT towards mistake committed in the earlier draft order towards bogus purchases mismatch qua appraisal report. This goes to show involvement or application of mind on the part of the Addl. CIT in full earnest to the ongoing assessment. 17. In the re-joinder, the Ld. Counsel adverted the order sheet maintained towards the assessment proceedings yet again wherein date-wise events of the assessment proceedings are noted in seriatim. The Ld. Counsel contends that such order sheets are integral part of the assessment records and thus can not be ignored or brushed aside. The Ld. Counsel pointed out that the order sheet does not reflect any such inter se correspondence between the AO and the Addl. CIT. The so-called draft assessment orders prepared prior to 18.05.2021 is also not produced. Thus, such correspondence could thus be make belief to justify some involvement of Addl. CIT. The assessee however contends in the same breath that when the Addl. CIT himself admitted to have proceeded solely on the assurance from the AO in the approval memo which has given rise to the cause of action for passing the assessment orders, nothing else remains to be justified. Furthermore, a consolidated approval for several years involving complex issues of varied nature emanating from search itself smacks of ritualistic practice of omnibus approval. ITA Nos.3371 to 3377/Del/2024 Page | 16 18. The legal objection of transgression of requirements of approval under s. 153D is in question which has the effect on the very substratum of the various assessment orders which are subject matter of captioned appeals. 18.1 For passing assessment orders in search cases, the Assessing Officer is inter alia governed by the requirement of prior approval under Section 153D of the Act. Hence, the AO should complete the assessment proceedings and prepare a draft assessment order which needs to be placed before the approving authority i.e. Joint / Addl. Commissioner (designated authority giving approval to search assessment under Sect ion 153D of the Act) for his perusal and prior approval. In view of the definitive judicial consensus available on the expectations from Competent Authority, such competent authority is necessarily required to objectively evaluate such draft assessment order with due application of mind on various issues contained in such order so as to derive his/ her diligent satisfaction that the proposed action of AO is in conformity with subsisting law and is also in accord with underlying factual matrix. The requirement of law to grant approval is consistently held to be not a merely as a formality or a symbolic act but a mandatory requirement. The AO is obligated is pass the assessment order exactly, as per approval / directions of the designated authority. It is not open to the AO to modify the assessment order without the knowledge and concurrence of the designated authority. 18.2 At this juncture, it may be relevant to take note of host of judicial precedents governing the field wherein the Courts and various Benches of the Tribunal have uniformly struck a discordant note on mechanical and perfunctory approval in the context of provisions of section 153D of the Act. Such routine approvals have resulted in invalidation of adjustments made in the assessment order. • ACIT vs Serajuddin & Co. Kolkata [2023] 150 taxmann.com 146 (Orissa)-SLP against this order dismissed reported in (2024) 163 taxmann.com 118(SC). ITA Nos.3371 to 3377/Del/2024 Page | 17 • PCIT vs Anuj Bansal 466 ITR 251(Del.) • PCIT vs Shiv Kumar Nayyar (2024) 63 taxmann.com 9 (del.); 467 ITR 186 • PCIT vs MDLR Hotels(P)Ltd. (2024) 166 taxmann.com 327 (Del.) • PCT vs. Sapna Gupta(2023) 147 taxmann.com 288(All.) • PCIT vs. Siddarth Gupta (2023) 450 ITR 534 (All.) • PCIT vs. Subodh Agarwal (2023) 149 taxmann.com 373(All.) • Shreelekha Damani vs DCIT [ITA No.4061/Mum/2012] (Bom.High Court) • Chhugamal Rajpal vs. S.P. Chaliha & ors. (1971) 79 ITR 603 (SC)[in the context of s. 157 of the Act] • M3M India Holdings vs DCIT [2019] 71 ITR (Trib.) 451 (Del.) • Vrushali Sanjay Shinde vs DCIT [2023] 154 taxmann.com 324 (Mum.- Trib.) • Sanjay Duggal vs ACIT [ITA No.1813/Del/2019] order dated, 19.01.2021 • PCIT vs Subhash Dabas (ITA No.243/2023) order dated 17.05.2024 • Daze Construction Pvt.Ltd. vs ACIT (ITA Nos.594 to 598/Del/2023) order dated 30.09.2024 • Veena Singh vs ACIT (ITA No.294/Del/2022 for AY 2016-17) order dated 24.04.2024 • PCIT vs Tirupati Buildings & Officers Pvt.Ltd. (ITA No.447/2024) order dated 20.08.2024 ITA Nos.3371 to 3377/Del/2024 Page | 18 18.3 It is axiomatic from the plain reading of approval memo that the Addl. CIT is in complete dark on facts while being called upon to grant his clearance to the draft assessment orders. It is evident from the CBDT Circular No.3 of 2008 dated 12.03.2008 that the legislature in its highest wisdom made it obligatory that the assessments 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 Assessing officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority is required to accord approval the respective Assessment order. The solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional/ Joint CIT concerned, with his experience and maturity of understanding, should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary 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 an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act enjoins due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. Long line of judicial precedents which provides guidance in applying the law has been quoted in the preceding para. The courts have repeatedly deprecated the pernicious practice of granting approvals by the supervisory authorities in a nonchalant manner. 18.4 At the cost of repetition, it may be reiterated that in the instant case, the approving authority has granted a mere 'technical approval' by his own express admission in departure to a substantive approval expected in law. Curiously, the Addl.CIT has recorded that he has granted approval on the basis of submission of the ITA Nos.3371 to 3377/Del/2024 Page | 19 AO that proper opportunity has been provided to the Assessee; all the issues have been examined by him i.e. the AO and relevant copies of seized documents have been verified by him i.e. the AO before passing the draft order. The Addl. CIT thus effectively claimed that he has not pursued the relevant underlying material and proceeded on dotted line. Such an act cannot be regarded as effective discharge of duty of supervisory nature. As discernible from the combined approval memo, the sanctioning authority (Addl CIT) has, in fact, relegated his statutory duty to the subordinate AO, whose action the Adll. CIT, was supposed to supervise as per the scheme of the Act. Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions/disallowances and without the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law. 18.5 Besides, the Assessee has also demonstrated glaring lapses in the respective assessment orders which could easily be detected on a bare reading of such orders. Impliedly, the Addl. CIT has not even cared to read the assessment orders while entrusted with the task of approval of such orders. Furthermore, a common approval for all assessment years in complex matters of search without identifying or discussing any issue in relation to any assessment year further shows no semblance of any application of mind to any aspect of any assessment years. 18.6 The CIT(A) in para 8.2 2 to 8.2.6 of first appellate order has brushed aside the legal objection summarily merely on an inept & indifferent premise that the assessment order makes mention of the approval from Addl. CIT under 153D of the Act and such powers are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons ITA Nos.3371 to 3377/Del/2024 Page | 20 whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law. 19. In the light of foregoing discussions, we are unhesitatingly disposed to hold that the integrity and propriety of various assessments under captioned appeals based on such combined approval memo under s. 153D in question cannot be countenanced in law. 20. In view of legal objection answered in favour of the Assessee, the aspects of other objections on jurisdiction such as absence of DIN etc. or aspects of merits of additions/ disallowance does not call for separate adjudication. 21. The captioned appeals of the assessee in ITA No.3371 & 3375/Del/2024 [AY2013-14 to 2017-18] are allowed. ITA Nos.3376 to 3377/Del/2024 [Assessment years 2018-19 to 2019-20] [Mainee Steel Works Pvt.Ltd.] 22. One of the grounds in captioned appeals raises challenge to validity of approval under s. 153D. Similar other appeals discussed in preceding paras. 23. The approval memo under s. 153D being common and combined, the delineations noted above in respect of earlier years shall apply mutatis mutandis. As noted in para 14 to para 18 (supra), the Addl.CIT is found to have granted approval under s. 153D based on submissions from AO that draft assessment orders have been framed after giving opportunity and due examinations and verifications have been carried out. Guided by such submissions the approval has been accorded without sharing his own involvement and application of mind. The approval so accorded was thus held to be in the nature of a ‘technical approval’ in symbolic exercise of powers under s. 153D. Hence, the consequential assessment orders based on such repugnant approval under s. 153D is bad in law in tune with earlier years. In this view of the matter, the other legal and factual aspects does not call for separate adjudication. ITA Nos.3371 to 3377/Del/2024 Page | 21 24. The appeals of the assessee in ITA Nos.3376 & 3377/Del/2024 [AYs 2018-19 to 2019-20] are thus allowed. 25. In the combined result, all the captioned appeals are allowed. Order pronounced in the open court on 24.01.2025. Sd/- Sd/- (VIMAL KUMAR ) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 24 .01.2025 *Amit Kumar, Sr.PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "