SKYLARK HATCHERIES PRIVATE LIMITED,URLANA KALAN, ISRANA, PANIPAT V. DCIT, CENTRAL CIRCLE, KARNAL, DCIT, CENTRAL CIRCLE, KARNAL

ITA 2545/DEL/2023

AI Insights

The case involves M/s. Skylark Hatcheries Pvt. Ltd, which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the assessment order passed by the Assessing Officer (AO) under Section 153A read with Section 143(3) of the Income Tax Act. The primary contention was the mechanical approval granted by the JCIT under Section 153D, which the assessee argued was without proper application of mind and in violation of the procedural requirements of the Act. The Tribunal, referencing several judicial precedents, particularly from the jurisdictional High Court, found merit in the assessee's arguments and annulled the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470179 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Other Referred Cases: CIT Vs. Siddharth Gupta, PCIT Vs. Shiv Kumar Nayyar, Prateek Nagpal Vs. ACIT, CC-14 Delhi, Mysore Bhaskara Pankaja Vs. ACIT New Delhi, Sanjay Duggal & others Vs. ACIT, CC-4 Delhi, PCIT v. Sapna Gupta, Asst. CIT v. Serajuddin and Co
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: VED JAIN
• Keywords: Question of law; Assessment record
• Section: 143(3); 153A; 43; 6

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 2545/Del/2023 (Assessment Year: 2017-18) M/s. Skylark hatcheries Pvt. Ltd, Urlana Kalan, Israna, Panipat, Haryana- 132 103 Vs. DCIT, Central Circle, Karnal (Appellant) (Respondent) PAN:AAHCS9027M Assessee by : Shri Ved Jain, Adv Ms. Uma Upadhyay, CA Revenue by: Ms. Jaya Chaudhary, CIT DR Date of Hearing 12/02/2025 Date of pronouncement 27/02/2025 O R D E R PER MANISH AGARWAL, AM: 1. This is the appeal filed by the assessee against the order passed by the ld. Ld. Commissioner of Income Tax (Appeals), 3, Gurgaon dated 07.07.2023 in appeal No. 10592 & 10607/2019-20 for the Assessment Year2017-18. 2. The assessee has taken following grounds of appeal: “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT (A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in confirming the action of the AO despite the fact that the assessment order passed is bad in the eyes of law and liable to be quashed as the same was passed in violation of circular no. 10/2010 issued by CBDT which mandates that no order shall be passed without there being Valid Document Identification Number (DIN) quoted in the body of the order. ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 2 3. On the facts and circumstances of the case, the learned CIT (A) has erred, both on facts and in law, in rejecting the contention of the assessee that the assessment order passed under section 153A r.w.s. 143(3) is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and Invalid in the eyes of law 4. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in rejecting the contention of assessee that the order passed u/s 153A r.w.s. 113(3) of the Act in the absence of any incriminating material having been found during the course of search is invalid and unsustainable. 5. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in rejecting the contention of assessee that the proceedings Initiated under section 153A against the appellant and the assessment framed under section 1534 r.w.s 143(3) are in violation of mandatory provisions of Section 153D of the Act. 6. On the facts and circumstances of the case, the learned CIT (A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under section 153A against the appellant and the assessment framed under section 153A r.w.s 143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. 7. (i) On the facts and circumstances of the case, the learned CIT (A) has erred in confirming the addition of Rs. 8,58,85,995/- made by the AO holding that the assessee is made unaccounted sale during the year on the basis of documents found during the course of search. (ii) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations along with the evidences brought by the assessee to substantiate hit there is no unaccounted sale or receipts made by the assesses. (i) That abovesaid addition has been confirmed without bringing on record tiny adverse material on record. (iv) That the CIT(A) has erred both on facts and law in rejecting the contention of the assessee that books of accounts of the assessee are duly audited and has not been doubted/rejected by the AO. (v) That the CIT(A) has erred both on facts and in law in rejecting the alternative contention of the assessee that the entire turnover cannot be added to the income of the assesses, only the profit embedded in the alleged turnover can only be added. ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 3 8. (1) On the facts and circumstances of the case, the learned CIT (A) has erred in confirming the addition of Rs. 12,70,000/- made by the AO holding the same as undisclosed investment in land on account of documents found during the course of search. (ii) That the above addition has been confirmed rejecting the detailed submission and explanations along with the evidences brought by the assessee in this regard. 9. (1) On the facts and circumstances of the case, the learned CIT (A) has erred in confirming the addition of Rs. 1,00,00,000/- made by the AO on account of income declared by the assessee under income declaration scheme, 2016. (ii) That the above addition has been confirmed rejecting the detailed submissions and explanations filed by the assessee. 10. That the appellant craves leave to add, amend or alter any of the ground of appeal.” 3. From the perusal of the grounds of appeal taken, we find that assessee has challenged the orders of lower authorities on various legal grounds which are at S. No. 1 to 6 however, during the course hearing ld. AR press only ground of appeal no 5 wherein the assessee challenge the assessment order on the technical ground in respect of approval granted u/s.153D of the Act by the JCIT. The ld. AR drew our attention to copy of the approval granted by the ld. JCIT on 28.12.2019filed by the assessee along with written submissions filed. It was submitted that there were total Six cases containing total 21 different assessment years for which approval was sought by AO vide letter dt. 27.12.2019 reecived in the office of JCIT on 28.12.2019. The JCIT has granted approval in all the Six cases on the same day when the request was received in his office i.e. on 28.12.2019 for all the assessment years including the impugned Assessment years i.e. AY 2017-18 thus, approval was granted for total 21 assessment years. The approval in all the cases was sought by the DCIT, Central Circle, Karnal and approval was granted by the JCIT, Range ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 4 Central, Chandigarh. It was the submission that a perusal of the approval granted clearly shows that the same is given in mechanical manner where ld. Adl. CIT granted the approval for various assessment years and for six different assessee’s was granted on the same day. It was the submission that the approval granted in assessee’s case was similar to the approval granted in the case of CIT Vs. Siddharth Gupta dt. 12.12.2022 (ALL) in which case the SLP filed by revenue is dismissed by Hon’ble Supreme court vide order dt. 09-08-2024. He also placed reliance on the judgement of Hon’ble jurisdictional high court in the case of PCIT Vs. Shiv Kumar Nayyar 2024 (6) TMI 29 and submit that on this ground the approval being vitiated consequently the assessment order is required to be annulled. He also placed reliance to the decision of Hon’ble jurisdictional high court in following cases: - Prateek Nagpal Vs. ACIT, CC-14 Delhi 2025(1) TMI 651 dt. 10-1-25 - Mysore Bhaskara Pankaja Vs. ACIT New Delhi 2024 (7) TMI 1134 ITAT, Delhi - Sanjay Duggal & others Vs.ACIT, CC-4 Delhi 2021 (1) TMI 909 ITAT Delhi 4. In reply, ld. CIT-DR vehemently supported the order of the lower authorities and filed a detailed submission along with the affidavits of the AO and JCIT now Adl. CIT wherein they both have stated that the approval u/s 153D was granted after discussions held telephonically and during the personal visit of the AO to Chandigarh and also during the visits of the JCIT at Karnal. They both stated that prior to the official request for approval and granting the approval, detailed discussions were held between them therefore, it could not be held that the approval was mechanical. It was further submitted that the JCIT has gone through the assessment records available before him in the case. It was the ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 5 submission that the JCIT has applied his mind before making the approval and the same is liable to be upheld. 5. We have considered the rival submissions. The letter dt. 27.12.2019 of the AO, Karnal to the JCIT Chandigarh received in the office of JCIT on 28.12.2019 seeking approval in Six cases for total 21 different assessment year is as under: ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 6 6. The JCIT has accorded his approval separately for each assessment year on same day i.e. 28.12.2019, the approval given for the impugned assessment year is as under: 7. From the perusal of the approval, It could be seen that the AO in the instant case is located at Karnal and the JCIT who has granted approval is located at Central Range, Chandigarh thus for obtaining the approval entire records needs to be carried to Karnal to Chandigarh and ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 7 the JCIT has to examine all the material including the assessment folders, appraisal report and seized material before granting the approval which cannot be humanly possible in a single day. Though it was stated by the AO and the JCIT in their affidavits that discussions were held between them telephonically and also during their personal visits either at Chandigarh or at Karnal. However, facts remained that in the impugned assessment year itself, the assessment order carries as many as 70 pages and around 5 issues involved on which additions were made. It is expected from the approving authority that before according the approval at least he must have read the entire draft order and also refer the seized material based on which additions are proposed. The JCIT has given approval on the same day despite of the fact that the entire records were sent from the office of the AO at Karnal to the office of JCIT at Chandigarh which is evident from the letter seeking approval. As mentioned earlier by the ld. AR that there are 21 cases for which the approval was sought and granted on the same day i.e. on 28.12.2019by JCIT. It is surprising that JCIT has been able to go through the draft assessment orders, appraisal reports and other related materials for a minimum of 21 cases on the same day. We use the word “minimum of 21cases” because this letter seeking approval alone contains 21 cases and the JCIT had other files also before him of other officers also. The assessment orders, in the instant case is of 70 pages, appraisal report was also to be quite a few pages, the concerned seized material must also contain few pages and the submissions of the assessee would be innumerable. As observed above, the JCIT should have gone through them with reference to the draft assessment orders before granting approval. We are not aware about the nature and issues involved in the other cases and other assessment years and also how they were dealt with by JCIT. This is physically impossible task which has been admitted to by the ld. JCIT, Chandigarh. The Hon’ble ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 8 Jurisdictional High Court in the case of Shiv Kumar Nayyar, reported supra, has held as under : “9. We have heard the learned counsels appearing on behalf of the parties and perused the record. 10. Before embarking upon the analysis of the factual scenario of the instant appeal, we deem it apposite to examine the underlying intent of the relevant provision of the Act i.e., Section 153D, which is culled out as under:- \"153-D. Prior approval necessary for assessment in cases 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 153-A] or the assessment year referred to in clause (b) of sub-section (1) of Section 153-B, 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 144-BA.\" 11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for \"each assessment year\" referred to in clause (b) of sub-section (1) of Section 153A of the Act. It is beneficial to refer to the decision of the High Court of Judicature at Allahabad in the case of PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] 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 Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:- \"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 ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 9 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. *** 19. 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.\" [Emphasis supplied] 12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. 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. 13. Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC Online Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:- \"22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasonsneed not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere \"rubber stamping\" of the letter seeking sanction by using similar words like \"seen\" or \"approved\" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein,(i) the Assessing Officer should submit the draft ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 10 assessment order \"well in time\". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii) the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order.\" [Emphasis supplied] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023. 15. A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. 16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- \"10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 11 single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together.\" 17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 in the case of the assessee. The said order 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, we 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 ITAT, succinctly encapsulated in the order extracted above. 18. Therefore, under the facts of the present case, considering the foregoing discussion and the enunciation of law settled through judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration. 19. Consequently, the appeal stands dismissed. Pending application(s), if any, are also disposed of.” 8. The same view is expressed by the Hon’ble Delhi high court in other cases relied upon by the ld.AR. The Hon’ble Orissa High court in the case of Serajjudin & Co reported in [2023] SCC Online Ori 992 which has also been approved by the Hon’ble Supreme Court by dismissal of the SLP vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023 under identical circumstances has held the approval granted as invalid. Thus by respectfully following the ratio laid down by the Hon’ble jurisdictional high court in the case of Shiv Kumar Nayyar, reported supra, and also in the case of Serajjudin & Co, supra, the approval granted in this case is without application of mind and consequently the assessment order is annulled. The ground of appeal No. 5 of the assessee is allowed. 9. As the appeal of the assessee is allowed by allowing on the issue of legality of approval granted u/s 153D of the Act ,the other grounds of appeal on other legal issues and on merits by the assessee become academic and not adjudicated upon. ITA No. 2545/Del/2023 M/s. Skylark hatcheries Pvt. Ltd Page | 12 10. In the result, appeal of the assessee in is allowed. Order pronounced in the open court on 27/02/2025. -Sd/- -Sd/- (ANUBHAV SHARMA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27/02/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "