PERNIA MOIN QUERSHI,NEW DELHI V. ACIT, CENTRAL CIRCLE-19, NEW DELHI

ITA 3627/DEL/2019

AI Insights

The case involves a series of appeals by the assessee, Pernia Moin Qureshi, against the orders of the CIT(A) sustaining various additions made by the Assessing Officer (AO) under section 68 of the Income Tax Act, related to unexplained cash credits and other alleged payments. The Tribunal also considered a cross-appeal by the Department for the assessment year 2013-14. The primary legal contention revolved around the validity of the approval process under section 153D for the assessments in question, which was challenged as being mechanical and lacking proper application of mind by the JCIT.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126186 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Other Referred Cases: CIT vs. Kabul Chawla, NTPC vs. CIT, Millenium Vinimay Pvt. Ltd. vs. ACIT, PCIT vs. Shiv Kumar Nayyar, PCIT vs. Sapna Gupta, MDLR Hotels Pvt. Ltd. vs. ACIT, MDLR Airline Pvt. Ltd. vs. DCIT, Amolak Singh Bhatia vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: NIRBHAY MEHTA; VANSHIKA MEHTA
• Keywords: Unexplained cash credit; Document seized; Documents seized; Search and seizure; Block assessment; Assessment record
• Section: 143(3); 132; 153A; 68; 43

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No. 1843/DEL/2019 (AY 2011-12) ITA No. 3626/DEL/2019 (AY 2012-13) ITA No. 3627/DEL/2019 (AY 2013-14) ITA No. 3628/DEL/2019 (AY 2014-15) PERNIA MOIN QURESHI, Vs. ACIT, CC-19, C-134, GROUND FLOOR, New Delhi DEFENCE COLONY, NEW DELHI – 24 (PAN:- AAHPQ4193P) (APPELLANT) (RESPONDENT) AND ITA No. 4166/DEL/2019 (AY 2013-14) DCIT, CC-7, Vs. PERNIA MOIN QURESHI, ROOM NO. 330, ARA CENTRE, C-134, GF, DEFENCE COLONY, JHANDEWALAN, NEW DELHI NEW DELHI – 24. (APPELLANT) (RESPONDENT) Assessee by: Shri Nirbhay Mehta, Adv. & Ms. Vanshika Mehta, Adv. Revenue by: Ms. Suman Malik, CIT(DR) Date of hearing: 16.04.2025 Date of pronouncement: 23.04.2025 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : These bunch of 05 appeals have been filed by the assessee for assessment years 2011-12, 2012-13, 2013-14 & 2014-15 and the Department has filed the 2 | P a g e cross appeal for assessment year 2013-14 in ITA No. 4166/Del/2019. Since common and identical issue has been involved in all these appeals, hence, these appeals are taken up together for adjudication and are being decided by this common order. 2. For the sake of convenience, the Appeal of the assessee in ITA No. 1843/Del/2019 (AY 2011-12) is taken up as lead case, hence, facts are narrated from the said appeal. ITA NO. 1843/DEL/2019 (AY 2011-12) 3. The Assessee has filed this appeal against the Order of the Ld. CIT(Appeal-27), Delhi dated 25.02.2019, relating to assessment year 2011-12 on the following grounds:- 1. That on the facts and circumstances of the case and in law, the order passed by CIT(A) is contrary to the facts and bad in a law. 2. That on the facts and circumstances of the case and in law, the CIT(A) was not justified in sustaining the addition of Rs. 6,61,310/- made by the AO by holding that the same are unexplained cash credits u/s. 68 of the Act appearing in JP Morgan Chase Bank account of the appellant. 2.1 That on the facts and circumstances of the case and in law, the CIT(A) was not justified in sustaining the addition of Rs. 22,50,000/- made by the AO by relying upon the statement of appellant recorded during the course of the search by ignoring the fact that actually no such alleged payments have been received to the appellant from M/s Pernia Qureshi Consultancy Pvt. Ltd. in which the appellant is the shareholder and Director. 3.1 That the CIT(A) was not justified to give vague conclusions for confirming the alleged addition by ignoring the fact that no incriminating document found during the course of search to support the contentions of the CIT(A). 3.2 That the CIT(A)’ has further erred in not considering and not adjudicating the submission made by the appellant during the course of appellate proceedings on the alleged ground of appeal. 4. That having deleted the additions in non-abated assessment by following the ratio laid down by Hon’ble High Court in the case of CIT vs. Kabul Chawla, CIT(A) is not justified in holding that the additions will revive if in future the aforesaid decision gets reversed. 3 | P a g e 4. However, at the time of hearing, ld. AR for the assessee has reiterated the contents of application dated 27.11.2024 filed by the assessee for admission of additional grounds of appeal which are in legal in nature, in the instant case and requested to admit the same in view of the Apex Court decision in the case of NTPC vs. CIT 229 ITR 383 (SC). Following are the additional grounds :- “Whether on the facts and circumstances of the case, the approval granted under section 153D of the Act through a common approval for separate assessment orders passed u/s. for AY 2014-15 is considered valid in law in view of decision on ITAT, Delhi in the case 153A for AY 2008-09 to 2013-14 and u/s. 153A r.w.s. 143(3) of the I.T. Act is considered valid in law in view of judgement of ITAT in the case of Millenium Vinimay Pvt. Ltd. vs. ACIT in ITA 458/Del/2022.” “Whether approval granted vide letter F.No. Joint/CIT/CR-5/153D/2016- 17/1102 is valid in terms of the provisions of section 153D of the I.T. Act.” 5. After careful consideration of the aforesaid application for admission of aforesaid additional grounds, we find considerable cogency in the contention of the assessee’s AR that the above said additional grounds are purely legal in nature and goes to root of the matter, hence, in view of the settled position of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. Commissioner of Income-tax [19981 229 ITR 383 (SC), the aforesaid additional grounds being legal in nature are hereby admitted for adjudication. 6. At the time of hearing, Ld. Counsel for the assessee only pressed the ground that approval u/s. 153D of the Act by the JCIT is mechanical and without application of mind. It was submitted that in the case of the assessee, the AO/ACIT, CC-19, New Delhi sent a common letter dated 29.12.2016 for approval u/s. 153D of the Act for the assessment years 2008-09 to 2014-15 to the JCIT on 29.12.2016; the JCIT also granted approval for all the assessment years from AY 2008-09 to 2014-15 by a common letter dated 29.12.2016 i.e. on the same day. It is further submitted that the approval granted by the JCIT 4 | P a g e u/s 153D of the IT Act on the same day for all the assessment years from AY 2008-09 to 2014-15 by way of single letter was without application of mind and mechanical in nature. The JCIT in its approval u/s 153D of the IT Act has failed to mention the assessment year wise income returned and assessed by the AO and furthermore, the JCIT also failed to consider any seized material which have been relied upon by the AO while framing the draft assessment orders in the case of the assessee. A perusal of the letter dated 29.12.2016 of approval would show that the JCIT has simply mentioned that : \"The above draft assessment order u/s 153D as proposed is hereby accorded approval\" 6.1 It is further submitted that it is clearly establish that JCIT has given approval in a mechanical manner without verifying the assessment records and seized documents. It is further submitted that the JCIT gave multiple approvals u/s 153D in a single day. 6.2 It was further submitted that going through the every case having multiple additions alongwith its seized material, and then approving so many cases in a single day is humanly impossible, which goes on to show that the approval given by the JCIT is mechanical in nature and without application of mind and not as per the law. In support of his contention, Ld. AR for the assessee has relied upon the following case laws:- - PCIT vs. Shiv Kumar Nayyar 163 Taxmann.com 9. - PCIT vs. Sapna Gupta 147 taxmanncom 299 (DHC) - MDLR Hotels Pvt. Ltd. vs. ACIT [ 2024] 166 taxmann.com 327 (DHC) - MDLR Airline Pvt. Ltd. vs. DCIT CC – ITA no. 1420/Del/2023 (Delhi ITAT dated 29.4.2024) - Amolak Singh Bhatia vs. DCIT ITA no. 717/Del/2021 9 (Delhi ITAT) dated 18.4.2023. 5 | P a g e In view of the above, it is prayed that in the absence of valid approval u/s 153D, the assessment orders passed by the Assessing Officer are liable to be quashed. 7. Per contra, Ld. CIT(DR) relied upon the orders of the authorities below. 8. We have carefully considered the rival submissions and perused the records. We find considerable cogency in the contention of the Ld. AR for the assessee that in this case the approval u/s. 153D is invalid as it is a consolidated approval for various years, however, the said approval was required to be given for “each year”. We further note that AO sent a common letter for approval u/s. 153D of the Act for the assessment years 2008-09 to 2014-15 to the JCIT on 29.12.2016 and the JCIT granted approval for all the assessment years from AY 2008-09 to 2014-15 by a common letter dated 29.12.2016 i.e. on the same day. It is observed that the approval granted by the JCIT u/s 153D of the IT Act on the same day for all the assessment years from AY 2008-09 to 2014-15 by way of single letter was without application of mind and mechanical in nature. It is undisputed that the JCIT in its approval u/s 153D of the IT Act has failed to mention the assessment year wise income returned and assessed by the AO and furthermore, the JCIT also failed to consider any seized material which have been relied upon by the AO while framing the draft assessment orders in the case of the assessee. A bare perusal of the letter dated 29.12.2016 of the JCIT of approval would show that the JCIT has simply mentioned that \"The above draft assessment order u/s 153D as proposed is hereby accorded approval\", which clearly establishes that the JCIT has given approval in a mechanical manner without verifying the assessment records and seized documents. Even otherwise, the Assessing Officer has passed the assessment order on the very same date i.e. on 29.12.2016 u/s. 153A read with section 143(3) of the Act, which is not practically feasible. We further note that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. The 6 | P a g e approval of JCIT should reflect application of mind, which is missing in this case. The requirement of approval cannot be treated as mere formality and the mandate of the Act is that the Approving Authority hast to act in a judicious manner by due Application of mind in a manner of a quasi judicial authority. It is settled law that if the approval has been granted by the approving authority in a mechanical manner, the very purpose of obtaining approval u/s. 153D of the Act and the mandate of the enactment by the legislature will be defeated. However, JCIT without any consideration of merits in proposed additions failed to consider any seized material which have been relied upon by the AO while framing the draft assessment orders in the case of the assessee has proceeded to grant a simplicitor approval. This approach of the JCIT has rendered approval be a mere formality and cannot be countenanced in law. In view of the peculiar facts and circumstances of the case, we are of the considered view that approval granted by JCIT is not valid in the eyes of law, hence, deserves to be quashed. It is apparently clear that Joint Commissioner of Income Tax has given approval which is purely mechanical and without application of mind. In such cases, the assessment looses its validity, hence, the same deserve to be quashed. The case laws refereed by the Ld. Counsel for the assessee are germane and supports the case of the assessee. To fortify our aforesaid decision, we draw support from the decision of the Hon’ble Delhi High Court in the case of PCIT vs. Shiv Kumar Nayyar 163 taxmann.com 9 wherein the Hon’ble Court has observed as under:- - Principal Commissioner of Income tax v. Shiv Kumar Nayyar 163 taxmann.com 9 (High Court of Delhi) [15 May 2024] * Search and seizure action under section 132 conducted on Nayyar group of cases on 18.11.2016. Accordingly notices u/s 153A were issued for block assessment years. Assessment orders were subsequently passed by the AO u/s 153A r.w.s 143(3). * Common approval under section 153D was granted by the JCIT. 7 | P a g e * Approval u/s 153D was challenged before the competent authorities. HELD * A plain reading of the provision of section 153D evinces an uncontrived position of law that the approval under section 153D has to be granted for each assessment year' referred to in clause (b) of sub- section (1) of section 153A. it is beneficial to refer to the decision of Allahabad High Court in the case of PCIT v. Sapna Gupta 147 taxmann.com 288 which captures with precision the scope of the concerned provision and more significantly, the import of the phrase - 'each assessment year' used in the language of 153D. * The court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for 'each assessment year' for 'each assessee' separately. * A similar view taken by High Court of Delhi in the case of PCIT v. Anuj Bansal [IT Appeal 368/2023], it was reiterated that the exercise of powers u/s 153D cannot be done mechanically. Thus, the salient aspect which emerges from the above-mentioned decisions is that grant of approval u/s 153D cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. * In the present case, the Tribunal has specifically noted that the approval was granted on the same day when the draft assessment orders were sent. * Notably, the order of approval dated 30.12.2020 which was produced by the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-2018 in the case of assessee. The said order 8 | P a g e also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, one cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the Tribunal.” 10. In the background of the aforesaid discussions and by respectfully following the aforesaid binding precedent, we hold that the approval dated 29.12.2016 granted u/s. 153D of the Act granted by the Joint Commissioner of Income Tax, Central Range-05, New Delhi in the instant case is mechanical and without due application of mind. Accordingly, we quash the assessment and allow the additional legal ground raised by the assessee. Since we have quashed the assessment, the other grounds, have become academic, hence, need not be adjudicated upon. 11. In the result, the appeal of the assessee for assessment year 2011-12 is allowed. 12. As regards other appeals of assessee are concerned related to assessment years 2012-13, 2013-14 & 2014-15 are concerned, our aforesaid decision given in assessment year 2011-12 will apply mutatis mutandis to these assessment years as well, being the legal additional ground, is identical in all the appeals of the assessee. Resultantly, the remaining 03 appeals of the assessee also stand allowed for assessment years 2012-13, 2013-14 & 2014-15. 9 | P a g e 13. As regards, Revenue’s appeal is concerned, since we have already allowed all the appeals of the assessee, as aforesaid, the Revenue’s appeal has become infructuous and dismissed as such. 14. To sum up: all the four appeals of the assessee for assessment years 2011-12, 2012-13, 2013-14 & 2014-15 stand allowed and Revenue’s appeal for AY 2013-14 stand dismissed. Order pronounced on 23.04.2025. Sd/- Sd/- (SUDHIR KUMAR) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBhatnagar Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "