By Ajay R. Singh
Advocate
11. Pr CIT
vs. Smt. Shreelekha Damani [ ITA no 668 of 2016 Dated: 27th November, 2018 (Bombay High
Court)].
[Shreelekha
Damani vs. DCIT(OSD-1)CR-7; dated 19/08/2015; ITA. No 4061/Mum/2012, AY:
2007-08 Bench: F Mum. ITAT ]
Section
153A: Assessment – Search- Approval to the assessment order granted by the
Addl. CIT in a casual and mechanical manner and without application of mind
renders the assessment order void. [Section 153D].
A search and seizure action u/s. 132 of the Act was carried out on
16.10.2008 on Simplex Group of Companies and its Associates. The
Office/residential premises of the company and its Directors/connected persons
were also covered. Simplex Group is engaged in the business of Reality, paper,
Textile and Finance. On the basis of the incriminating documents/books of
account found during the course of search and seizure operation, assessment was
made u/s. 143(3) of the Act r.w.s 153A and as per the endorsement on page-11 of
the assessment order this order is passed with the prior approval of the ACIT,
Central Range-7, Mumbai.
The assessee before the Tribunal raised a additional ground against
the assessment order that the A.O has not complied with the provisions of
section 153D and hence the assessment made u/s. 153A of the Act is bad in law.
The Revenue furnished the copy of the approval given by Addl. CIT,
Central Range-7, Mumbai which is also filed by the assessee in the paper book .
The assessee vehemently submitted that the so called approval brought on record
cannot be considered as an approval within the frame work of the provisions of
Sec. 153D of the Act. The approval granted by the Addl CIT is devoid of
application of mind and by any stretch of imagination the order made u/s.
143(3) r.w.s 153A of the Act cannot be said to be made after receiving the
approval as per the provisions of section 153D of the Act.
The Tribunal held that the contents of this approval are “res
ipsa Loquiter” in as much as the language is speaking for itself. The Addl
CIT says that the draft order was placed before him on 31.12.2010. He further
says that there was no much time left to analyse the issue of draft order on
merit, therefore, the said order is approved as it is.
The legislature wanted the assessments/reassessments of search and
seizure cases should be made with the prior approval of superior authorities
which also means that the superior authorities should apply their minds on the
materials on the basis of which the officer is making the assessment and after
due application of mind and on the basis of seized materials, the superior
authorities have to approve the assessment order.
The approval granted by the Addl. Commissioner is devoid of any
application of mind, is mechanical and without considering the materials on
record. In our considered opinion, the power vested in the Joint
Commissioner/Addl Commissioner to grant or not to grant approval is coupled
with a duty. The Addl Commissioner/Joint Commissioner is required to apply his
mind to the proposals put up to him for approval in the light of the material
relied upon by the AO. The said power cannot be exercised casually and in a
routine manner. The Tribunal observed that in the present case, there has been
no application of mind by the Addl. Commissioner before granting the approval.
Therefore, the assessment order made u/s. 143(3) of the Act r.w.s. 153A of the
Act is bad in law and deserves to be annulled.
Being aggrieved with the order of the ITAT, the Revenue filed the
Appeal before High Court. The Court observed
that in plain terms, the Additional CIT recorded that the draft order
for approval u/s. 153D of the Act was submitted only on 31st
December, 2010. Hence, there was not enough time left to analyse the issues of
draft order on merit. Therefore, the order was approved as it was submitted.
Clearly, therefore, the Additional CIT for want of time could not examine the
issues arising out of the draft order. His action of granting the approval was
thus, a mere mechanical exercise accepting the draft order as it is without any
independent application of mind on his part. The Tribunal is, therefore,
perfectly justified in coming to the conclusion that the approval was invalid
in eye of law. We are conscious that the statute does not provide for any
format in which the approval must be granted or the approval granted must be
recorded. Nevertheless, when the Additional CIT while granting the approval
recorded that he did not have enough time to analyse the issues arising out of
the draft order, clearly this was a case in which the higher Authority had
granted the approval without consideration of relevant issues. Question of
validity of the approval goes to the root of the matter and could have been
raised at any time. In the result, no question of law arises. Accordingly, the
Reveune Appeal was dismissed.
