SANSKAR NAGAR,JHANSI V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AGRA

ITA 349/AGR/2024

AI Insights

The case involves multiple appeals by M/s Sanskar Nagar against the quantum additions and penalties confirmed by the lower authorities for the Assessment Years 2014-15 to 2018-19. The primary contention was the legality of the assessments made under sections 153A and 153C of the Income Tax Act, following a search operation on the assessee's group. The Tribunal examined whether the materials used for the assessments were legally admissible and whether the procedural requirements for approvals were met. The Tribunal found that the materials used were seized from a third-party premises and the approvals were granted in a mechanical manner, leading to the quashing of the assessments and related penalties.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38836 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Other Referred Cases: Pr. CIT vs. Abhisar Buildwell (P.) Ltd., ACIT vs. Real Marketing Pvt. Ltd., Soumya Construction, CIT vs. Raj Kumar Arora, Pr. CIT vs. Sapna Gupta, Pr. CIT vs. Anand Kumar Jain HUF, Pr. CIT vs. Subhash Khattar, Navin Jain, Vijayadevi Navalkishore Bhartia v. Land Acquisition Officer, Dharampal Satyapal Ltd. v. Union of India, Sahara India(Firm) v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKESH KUMAR JAIN LD
• Assessee Lawyers: SURESH GUPTA LD
• Keywords: Business income; Question of law; Document seized; Documents seized; Search and seizure; Loose papers
• Section: 144; 143(3); 143(2); 132; 153A; 13; 153C; 142(2A); 271D; 145(3); 271E; 20

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM 1. आयकरअपीलसं./ ITA No.351/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2014-15) & 2. आयकरअपीलसं./ ITA No.352/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2015-16) & 3. आयकरअपीलसं./ ITA No.353/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2016-17) & 4. आयकरअपीलसं./ ITA No.354/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2017-18) & 5. आयकरअपीलसं./ ITA No.349/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2018-19; SMC Bench) & 6. आयकरअपीलसं./ ITA No.346/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2016-17; SMC Bench) & 7. आयकरअपीलसं./ ITA No.347/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2016-17; SMC bench) & 8. आयकरअपीलसं./ ITA No.348/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2017-18; SMC bench) & 9. आयकरअपीलसं./ ITA No.350/Agr/2024 2 (िनधाŊरणवषŊ / Assessment Year: 2018-19; SMC bench) M/s Sanskar Nagar 452/2A, CP Mission Compound Jhansi UP 284003 बनाम/ Vs. ACIT (Central Circle) Agra ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. ACMFS-5079-H (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Suresh Gupta (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Shri Sukesh Kumar Jain – Ld. CIT DR सुनवाईकीतारीख/Date of Hearing : 21-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1.1 The captioned appeals have been filed by the assessee for Assessment Years (AY) 2014-15 to 2018-19 against quantum additions as well as against confirmation of penalty u/s 271D / 271E. Facts as well as issues are stated to be substantially the same. These appeals were heard along with other appeals of the assessee group viz. M/s Sanskar Greens. It was admitted fact that the facts as well issues are substantially the same in all the appeals of the assessee group. In this background, we first take up quantum appeal for Assessment Year (AY) 2014-15 ITA No.351/Agr/2024 which arises out of an order of learned Commissioner of Income Tax (Appeals), Kanpur [CIT(A)] dated 10-07-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 153A of the Act on 10-04-2021. The assessee challenges assessment proceedings on legal grounds and quantum additions on merits. The Ld. AR has filed written submissions 3 also. The Ld. CIT-DR made vehement arguments and controverted the arguments of Ld. AR. 1.2 The Ld. AR advanced arguments and raised various pertinent legal grounds. It has been submitted that no search was conducted by the department at the assessee’s premises and therefore, the assumption of jurisdiction u/s 153A was bad-in-law. 1.3 Another issue raised by Ld. AR is that each of the assessments have been framed by taking cognizance of search material in the shape of note books seized vide Annexure BK-14, BK-16 and BK-17 containing plot wise details of plot sold which was seized from third- party premises. It has been stated that no other material has been relied upon to make the impugned additions. The assessee explained in the first appeal that the addition has been made on the basis of report of the special auditor who re-casted trading account based on above seized documents. However, these documents were not found and seized from assessee’s premises but found from the premises of third-party namely Sh. Rama Kant Verma which is clear from the remand report of Ld. AO. The same is also evident from the copies of Panchnamas of Shri Rama Kant Verma. In such a case, the assessment, at the most, could be framed u/s 153C but certainly not u/s 153A. The department is mandated to invoke the provisions of Sec.153C if such material as seized from the third-party is intended to be utilized in the assessment. For such assumption of jurisdiction u/s 153C, recording of satisfaction note would be mandatory requirement of law which has not been shown to have been fulfilled. 4 1.4 The Ld. AR also referred to the decision of Hon’ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P.) Ltd. (149 Taxmann.com 399) holding that no addition could be made for completed assessment in the absence of any incriminating material found during the course of search. The Ld. AR also referred to the decision of Ahmadabad Tribunal in the case of ACIT vs. Real Marketing Pvt. Ltd. (ITSS No.128-133/Ahd/2021) which relied upon the decision of Hon’ble Gujarat High Curt in the case of Soumya Construction (387 ITR 529) and quashed assessment u/s 153A on the ground that there was no seized material in the case of the assessee. The Ld. AR stated that the decision of Hon’ble Apex Court has overruled the decision of Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora (367 ITR 517) as cited by lower authorities. 1.5 The Ld. AR also drew attention to approval granted u/s 153D to submit that a combined approval has been granted in 13 cases for different assessees and therefore, the approval was given in a mechanical manner which run contrary to the decision of Hon’ble Allahabad High Court in the case of Pr. CIT vs. Sapna Gupta (2022 SCC Online All 1294) and therefore, the assessments are liable to be quashed. Finally, Ld. AR assailed the impugned additions on merits on various grounds. 1.6 The Ld. CIT-DR on the other hand vehemently controverted the arguments of Ld. AR and contended that the legal grounds have adequately been dealt with in the impugned orders of lower authorities. The Ld. CIT-DR also supported the quantum additions on merits. 5 Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 2.1 The assessee firm came into existence on 15-01-2014 and it was constituted by two partners namely Shri Deepak Purshwani and Shri Aman Madaan. The assessee carried out real estate projects. The return of income for this year was processed u/s 143(1). The assessee group was searched u/s 132 on 07-02-2018 and apparently, on the date of search, no assessment proceedings were pending in the case of the assessee and this was a case of unabated assessment year. The Ld. AO referred to various documents and loose papers as found during the course of search on assessee group. The partners of the firm were confronted with the seized material during the course of assessment proceedings and their combined statements were recorded u/s 131(1) wherein they admitted to have received on-money on sale of plots. 2.2 In this background, a notice u/s 153A was issued to the assessee on 13-05-2019 and the assessee filed return of income declaring nil income. The Ld. AO referred to incriminating material in the shape of notebooks marked as Annexure BK-14, BK-16 and BK-17 containing plot wise details as sold by the assessee group and alleged that clinching evidences of money received in cash over and above the amount received through banking channels in the projects being developed by the assessee and payment of out of books expenses 6 were found. It was alleged that the assessee was maintaining parallel books of account and violated the provisions of Sec. 40A(3). 2.3 Considering the complexities in linking various transactions of group entities, special audit was carried out u/s 142(2A) and the financial statements were re-casted by the special auditor. The books of accounts as maintained by the assessee were held to be unreliable and incomplete and therefore, rejected u/s 145(3) and Ld. AO proceeded to compute the total income on the basis of financial statements as re-casted by the special auditor. The special auditor reported Net Loss of Rs.0.85 Lacs. This loss was taken to be starting point for computing the income of the assessee. The assessee made payments / expenditure in cash in violation of Sec.40A(3) which was tabulated and added to the re-casted loss and total income was ultimately worked out at Rs.99.56 Lacs as tabulated on Page-12 of the assessment order. This was considered as the business income of the assessee. The Ld. AO also made separate addition of unsecured loans aggregating to Rs.46.25 as received from 4 persons which are detailed at para-14 of the assessment order. It was alleged by Ld. AO that the assessee could not prove that the loans were genuine and accordingly, the same were added u/s 69A. This order was passed after obtaining prior approval of Addl. Commissioner of Income Tax, Central Range, Kanpur as per the provisions of Sec.153D vide letter dated 06-04-2021. Aggrieved, the assessee assailed the assessment so framed before Ld. CIT(A). 7 Appellate Proceedings 3.1 The assessee made elaborate written submissions on legal grounds as well as on merits. The same are extracted at Paras 6.2 of the impugned order. The same was subjected to remand proceedings and a remand report was furnished by Ld. AO on 10-07-2023 wherein Ld. AO rejected the objections raised by the assessee. The remand report was confronted to the assessee and the assessee reiterated its stand assailing the quantum assessment on merits as well as on legal grounds. 3.2 The substantial adjudication of Ld. CIT(A) is contained in para 6.7 and 6.8 of the impugned order. The Ld. CIT(A) took note of the fact that search proceedings were conducted in the case of the assessee group as follows: - Name of the Entity Address Documents Seized Shri Aman Madaan, M/s Sanskar Nagar, M/s Sanskar Greens & M/s SG Commercial 452/2A, CP Mission Compound, Jhansi Three Loose Paper sets marked as LP- 1 to LP-3, one hard disk and one pen drive Shri Deepak Pursuhwani 496, Rajghat Colony, Capri Bazar, Jhansi One loose paper set marked as LP-1 Sh. Jagdish Prasad Sahu 792/5, Shakti Nagar, Civil Lines, Jhansi One loose paper set marked as LP-1 Shri Ramakant Verma 372/18-A, Civil Lines, Near Kunj Bihari Temple, Jhansi 25 loose paper sets marked as LP-1 to LP-25 and 25 registers marked as BK-1 to BK-25 The statement was recorded u/s 132(4) from Shri Ramakant Verma on 07-02-2018 wherein he stared that the documents as found from his premise pertain to the partners of the assessee-firm. He also stated that these transactions related to property transactions which are part 8 in cheque and part in cash. He explained that the partners requested him to give one room of his residential premise and the same was being used as office by the partners. The material so found from his premises indicated that there were details of each plot which belonged to M/s Sanskar Green, M/s Sanskar Nagar and M/s SG Commercial and there were details of Cheque and cash. 3.3 Post search proceedings, a combined statement was recorded from the partners on 18-05-2018 wherein they admitted that the loose papers and registers so found from the premises of Shri Ramakant Verma contained details of real estate business being conducted by the three firms. They also confirmed receipt of money in cash. 3.4 The special auditor, while conducting special audit, took into consideration, the seized material as well as the statement recorded during search and during post search proceedings and prepared the audit report. 3.5 The assessee pleaded that the aforesaid documents were found from third-party premises. The Ld. CIT(A) rejected the same on the ground that the partners took separate room in the premise of Shri Ramakant Verma from where incriminating material was found and seized and this fact was accepted by the the partners in their combined statement. 3.6 The assessee also stated that no search was conducted in the case of three firms. The same was rejected by Ld. CIT(A) on the ground that search was conducted on 07-02-2018 at 452/2A, CP 9 Mission Compound and the warrants / consequential warrants u/s 132 were issued in the case of Shri Aman Madaan and the three firms. 3.7 The assessee also contended that the additions were based on third-party evidence and the same was utilized without affording cross- examination to the assessee. However, Ld. CIT(A) rejected the same on the ground that Shri Ramakant Verma clearly stated that the loose paper folders and registers as found from his premises pertain to the three partners. The one room was used as office by the partners. The partners, in post search proceeding, admitted that the documents contained details of real estate business being conducted by the three firms. Thus, the document as found from one room belonged to these concerns. The said room was taken by the partners of the firm and all the documents of the firms were kept therein. 3.8 The assessee also stated that no incriminating material was found in the course of search in the case of the assessee. However, Ld. CIT(A) referred to various documents as found during the course of search (tabulated above) and rejected the said legal plea. 3.9 Lastly, Ld. CIT(A) considered the issue on merits and allowed partial relief against quantum additions. Aggrieved, the assessee is in further appeal before us. Our findings and adjudication 4. We find that impugned issue, on identical facts, has been adjudicated by us in the case of M/s Sanskar Greens, ITA Nos.355/Agr/2024 & ors. as under: - 10 4. From the facts, it emerges that the assessee firm is constituted by the three partners i.e., Sh. Deepak Pursuhwani, Shri Jagdish Prasad Sahu and Shri Aman Madaan. The assessee carried out real estate projects. The assessee group was searched u/s 132 on 07-02-2018 and apparently, on the date of search no assessment proceedings were pending in the case of the assessee and this was a case of unabated assessment year. Upon perusal of assessment order, it could be ascertained that Ld. AO has referred to various documents and loose papers as found during the course of search on assessee group. In post search proceedings, a combined statement was recorded from the three partners wherein they admitted to have received on-money on sale of plots. We find that Ld. AO has referred to incriminating material in the shape of notebooks marked as Annexure BK-14, BK-16 and BK-17 containing plot wise details as sold by the assessee-firm and made the impugned additions. However, as per our tabulation in preceding para 3.2, it could clearly be seen that these documents have been found from the premises of a third-party i.e., Shri Ramakant Verma. His statement was recorded u/s 132(4) during the course of search on 07-02-2018 wherein he stated that the documents as found from one room of his residential premises pertain to the three partners of the assessee-firm. He also stated that these transactions related to property transactions which are part in cheque and part in cash. He explained that the partners requested him to give one room of his residential premise and the same was being used as office by the partners. It could be ascertained that the said premise do not belong to the assessee-firm and the same is a third-party premises. The Ld. AO has referred to notebooks marked as Annexure BK-14, BK-16 and BK-17 which are found from this room and not found from assessee’s premises for which warrant of authorization was issued. No other material has been relied upon by Ld. AO to make the impugned addition in the hands of the assessee. The statement of the three partners are not recorded during the course of search proceeding but during post search proceedings and these statements are not recorded u/s 132(4) and therefore, no credence could be given to these statements. In other words, the incriminating material on which the additions have been made, has not been found from the assessee’s premises but the same has been found from a third-party premises. This being the case, this being unabated year, the assessment is liable to be quashed in terms of the decision of Hon’ble Apex Court in the case of Pr. CIT vs. Abhisar Buildwell (P.) Ltd. (149 Taxmann.com 399) holding that no addition could be made for completed assessment in the absence of any incriminating material found during the course of search on assessee. The co-ordinate bench of Ahmadabad Tribunal in the case of ACIT vs. Real Marketing Pvt. Ltd. (ITSS No.128- 133/Ahd/2021), relying upon the decision of Hon’ble Gujarat High Court in the case of Soumya Construction (387 ITR 529), confirmed quashing of assessment u/s 153A on the ground that there was no seized material in the case of the assessee. The decision of Hon’ble Apex Court has overruled the decision of Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora (367 ITR 517) as cited by lower authorities. Similar proposition has been laid down in various judicial decisions as cited by Ld. AR and placed on record. Since the same has laid down similar ratio, the same are not being discussed at length for want of brevity. Respectfully following all these decisions, we would hold that the impugned assessment is liable to be quashed. The assessee succeeds on this foremost legal ground. To use third-party material against the assessee, 11 proceedings u/s 153C could be initiated for which recording of satisfaction is a mandatory requirement which is not shown to have been fulfilled. 5. Another pertinent legal ground as raised by Ld. AR is that approval u/s 153D was given in a mechanical manner. To support the same, Ld. AR has stated that approval has been granted by Addl. CIT through common communication i.e., F. No. Addl CIT (CR) KNP/Approval u/s 153D/2020-21/17 dated 06-04-2021. The Ld. AR drew attention to the remand report as extracted in the impugned order on Page Nos.43 and 44, to state that common approval has been given through above communication in all 13 cases for different assessees. The Ld. AR thus submitted that the approval has been given in a mechanical manner which run contrary to the decision of Hon’ble Allahabad High Court in the case of Pr. CIT vs. Sapna Gupta (147 Taxmann.com 288) and therefore, the assessment is liable to be quashed. The relevant adjudication of Hon’ble Court was as under: - 9. Considering the submissions of the learned counsel for the parties and having perused the order of the Tribunal, in view of the undisputed facts before us about the manner in which the approval to the draft assessment order was granted under section 153D for the assessment proceedings, by a letter dated 30-12 2017 in 85 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal. 10. To answer the same, we are required to go through the relevant provisions of the Income-tax Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income-tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under section 132, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years (and for the relevant assessment year or years) referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return required to be furnished under section 139. 11. Section 153D of the Act relevant for our purposes is to be noted hereinunder: 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. 12. The Tribunal while quashing the assessment order had relied upon its earlier decision in Navin Jain (supra) wherein a detailed discussion has been made with 12 regard to the requirement of prior approval of superior authority on the draft assessment order under section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word 'approval' though has not been defined in the Income-tax Act but the general meaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Navalkishore Bhartia v. Land Acquisition Officer [2003] 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. v. Union of India 2019 (366) ELT 253 has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered. 13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for \"each assessment year\" in respect of \"each assessee\" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the \"approval\" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. 14. It was noted that the obligations of the approval of the Approving Authority serves two purposes: (i) On the one hand, he has to apply his mind to ensure the interest of the revenue against any ommission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year. (ii) On the other hand, superior authority is also responsible and duty-bound to do justice with the tax payer by granting protection against arbitrary or creating baseless tax liability on the assessee. 15. The Tribunal has further noted that the provisions contained in sections 153A to section 153D provide for separate notice to be given to assessee for assessment for each year as specified in section 153A of the Act; the assessee has to file separate ITR for each year as specified in section 153A of the Act; separate assessment orders are to be passed for each year as specified in section 153A of the Act. 13 16. It was observed that this is an important concept mentioned in Section 153A of the Act, which is peculiar to the scheme of the said Section. Keeping in view of this basic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that an important phrase is employed in the text of Section 153D, which is \"each assessment year\". The reading of the provisions in Section 153A and 153D conjointly makes it clear that separate approval of draft assessment order for each year is to be obtained under section 153D of the Income-tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the \"approval\" as defined in Black's Law Dictionary as also the decisions of the Apex Court in the case of Sahara India(Firm) v. CIT [2008] 169 Taxman 328/300 ITR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned into an empty ritual. The Apex Court has held therein that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. 17. The above discussion made in the judgement of Tribunal dated 3-8-2021 in the case of Navin Jain (supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under section 153D of the Act would vitiate the entire proceedings in the instant case. 18. For the reasoning given in the case of Navin Jain (supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income-tax Act. 19. The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval 14 under section 153D is pre-requisite to pass an order of assessment or re assessment. Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of \"each assessment year\" referred to in clause (b) of sub-section (1) of section 153A which provides for assessment in case of search under section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of \"each assessment year\" falling within six assessment years (and for the relevant assessment year or years), referred to in clause (b) of sub-section (1) of section 153A. The proviso to section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). 20. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to \"each assessment year\" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under section 153A. 21. In the instant case, the draft assessment order in 85 cases, i.e. for 85 assessment years placed before the Approving Authority on 30-12-2017 was approved on same day i.e. 30-12-2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 85 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. 22. As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeal being in the nature of second appeal. No substantial question of law arises for consideration before us. 23. The Appeal is dismissed being devoid of merit. The Hon’ble Court thus held that the approval of draft assessment order being an in- built protection against any arbitrary or unjust exercise of power by the Assessing Officer and therefore, the same could not be a mechanical exercise without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. The prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval under section 153D is pre-requisite to pass an order of assessment or re-assessment. Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of \"each assessment year\" referred to in clause 153A(1)(b) which provides for assessment in case of search u/s 132. Section 153A(1)(a) requires that the assessee would be required to furnish the return of income in respect of \"each 15 assessment year\" falling within six assessment years (and for the relevant assessment year or years), referred to in Sec.153A(1)(b). The proviso to section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). The conjoint reading of Sec.153A(1) and section 153D leave no room for doubt that approval with respect to \"each assessment year\" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order u/s 153A. Similar view has been taken in various other judicial decisions, the copies of which have been placed on record. 6. We find that similar facts exist before us. The approval has been given in similar mechanical manner. The approval is combined approval for different years and that too for different assessees. This being the case, drawing analogy from the above decision, we would hold that a combined approval would not meet the requirements of the law. Accordingly, the assessment for this year stand quashed on this ground also. Delving into other legal grounds as well as on merits of the case has been rendered academic in nature. The assessee succeeds on above legal grounds. The assessment so framed by Ld. AO stand quashed. The appeal stand allowed in terms of our above order. Facts being pari-materia the same, taking the same view, we would hold that the assessee succeeds on legal grounds. The assessment so framed by Ld. AO stand quashed. The appeal stand allowed in terms of our above order. 5. Similar are the facts in AYs 2015-16 & 2016-17, ITA Nos.352 & 353/Agr/2024 and therefore, taking the same view, we quash assessment for both these years. The assessee succeeds on legal grounds. Both the appeals stand allowed accordingly. 6. The facts as well as issues in AY 2017-18 ITA No.354/Agr/2024 are substantially identical except for the fact that the time limit to issue notice u/s 143(2) for this year had not expired. However, the assessment order would not survive on the issue of mechanical approval u/s 153D. Furthermore, the material seized from third-party premises has been used in an assessment framed u/s 153A. The Hon’ble Delhi High Court in the case of Pr. CIT vs. Anand Kumar 16 Jain HUF (ITA No.23/2021 dated 12-02-2021) has held that even if the statement u/s 132(4) recorded in the search of other person is considered to be incriminating material in the search, such incriminating material could be used in assessment u/s 153C only and the department is not entitled to rely on such incriminating material in an assessment u/s 153A. Again, in the case of Pr. CIT vs. Subhash Khattar (ITA No.60/2017 dated 25-07-2017), it was held by the same court that notice u/s 153A was misconceived since the so-called incriminating material was not found during search at assessee’s premises. The annulment of assessment on that ground in the first appeal was upheld by Hon’ble High Court in that case. Considering these decisions, the assessment stand quashed. 7. In appeal for AY 2018-19 ITA No.349/Agr/2024, the assessment has been framed u/s 144 on 08-04-2021. The Ld. AR has submitted that the documents as relied upon by Ld. AO were handed over on 14- 03-2019 on the basis of alleged incriminating material as found in the search of other entity and therefore, the assessment ought to have been framed u/s 153C. As per proviso to Sec.153C, the above date i.e., 14-03-2019 is to be treated as the date falling in the year of search and earlier six years are to be assessed u/s 153C and not under any other section. The assessment for AY 2018-19 falls in the block period of six years in view of proviso of Sec.153A and AY 2019- 20 being the year of search in view of proviso to Sec.153C of the Act. The Ld. AR has relied on the decision of Hon’ble Delhi High Court in the case of Pr. CIT vs. Ojjus Medicare Pvt. Ltd. (161 Taxmann.com 17 160) to support the same. We find force in the argument of Ld. AR since this year would clearly fall in the year of search and therefore, the assessment ought to have been framed u/s 153C and not under any other section. The cited case law duly supports the contention of Ld. AR. Further, the assessment order would not survive on the issue of mechanical approval u/s 153D. Considering these legal grounds, the assessment stand quashed. 8. The appeals listed at serial nos. 6 to 9 are penalty appeals assailing levy of penalty u/s 271D / 271E which emanates from respective assessment orders of Ld. AO for AYs 2016-17 to 2018-19. Since we have quashed assessments for these years, the penalties arising there-from would not survive. We order so. All these appeals stands allowed. 9. All the appeals stand allowed in terms of our above order. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखासद˟ /ACCOUNTANT MEMBER Dated: 28-03-2025 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF 18 ASSISTANT REGISTRAR ITAT AGRA "