Akil Gulamali somji,, Pune v. ITO Wd.- 4(5),, Pune

ITA 455/PUN/2010 | 2001-2002
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 45524514 RSA 2010
Assessee PAN ADIPS8077Q
Bench Pune
Appeal Number ITA 455/PUN/2010
Duration Of Justice 2 year(s) 5 day(s)
Appellant Akil Gulamali somji,, Pune
Respondent ITO Wd.- 4(5),, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-03-2012
Assessment Year 2001-2002
Appeal Filed On 25-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER ITA NOS. 455 TO 458/PN/2010 (ASSTT. YEARS : 2001-02 2002-03 2003-04 & 2004-05 ) A KIL GULAMALI SOMJI ... APPELLANT SHOP NO. 16 GULISTAN COMPLEX OPPOSITE SPCA POONA COLLEGE ROAD PUNE 411 001 PAN ADIPS 8077 Q V. INCOME TAX OFFICER WARD 4[5] PUNE RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT : MS. ANN KAPTHUAMA DATE OF HEARING : 15/02/12 DATE OF PRONOUNCEMENT : 30-3-12 ORDER PER I.C. SUDHIR JM IN THESE APPEALS THE ASSESSEE HAS QUESTIONED FIRS T APPELLATE ORDER MAINLY ON TWO ISSUES. FIRSTLY THE VALIDITY OF ASSE SSMENT ORDER IN ABSENCE OF APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX AS PROVIDED U/S. 153D OF THE ACT AND SECONDLY THE VALIDITY OF ADDIT ION OF THE AMOUNT MADE BY A.O. U/S. 69C OF THE ACT ON ACCOUNT OF UNEXPLAIN ED EXPENDITURE OF INTEREST AND BROKERAGE PAID BY THE ASSESSEE AND OTH ER ADDITIONS. 2. THE LD. A.R. PREFERRED TO ADVANCE HIS ARGUMENT ON LEGAL ISSUE. SINCE IT GOES TO THE ROOT OF THE MATTER WE ALLOWED THE PARTIES TO ADVANCE THEIR ARGUMENT ON THE LEGAL ISSUE TO ADJUDICATE IT FIRST. 3. THE CONTENTION OF THE LD. A.R REMAINED THAT WHIL E FRAMING ASSESSMENT U/S. 153 C OF THE ACT AGAINST THE ASSES SEE THE ITO HAS FAILED TO OBTAIN NECESSARY APPROVAL OF THE JOINT CO MMISSIONER OF INCOME TAX TO THE IMPUGNED ASSESSMENT ORDERS AS PROVIDED U /S. 153 D OF THE ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 2 ACT HENCE ASSESSMENT ORDERS IN QUESTION ARE BAD IN LAW AND DESERVE TO BE ANNULLED. HE SUBMITTED THAT SEC. 153 C OF THE I .T. ACT 1961 PRESCRIBES THAT THE INCOME OF THE PERSON TO WHOM NO TICE HAS BEEN SERVED U/S. 153 C SHALL BE ASSESSED IN ACCORDANCE WITH THE PROVISIONS OF SEC. 153 A OF THE I.T. ACT 1961. THEREFORE THE ASSESSM ENT HAS TO BE FRAMED U/S. 153 A OF THE ACT AND NOT U/S. 153 C. THE FIR ST PROVISO AS WELL AS CLAUSE (II) OF SECOND PROVISO TO SEC. 153 B (1) SP ECIFY THE TIME LIMIT FOR COMPLETION OF ASSESSMENT U/S. 153A IN RESPECT OF PE RSON TO WHOM NOTICE IS ISSUED U/S. 153 C OF THE ACT. THEREFORE CONJO INT READING OF SEC. 153 A SEC. 153 B AND SEC. 153 D MAKES IT CLEAR THAT TH E APPROVAL AS PRESCRIBED U/S. 153 D IS ALSO REQUIRED TO BE OBTAI NED IN CASES WHERE NOTICE U/S. 153 C HAD BEEN SERVED THE ASSESSMENTS ARE TO BE FRAMED U/S. 153 A. THE LD. A.R. SUBMITTED THAT EVEN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2007 SP EAKS THAT APPROVAL U/S. 153 D IS ALSO TO BE OBTAINED IN CASE OF OTHER PERSO N AS REFERRED TO SEC. 153 C. IN SUPPORT HE DREW OUR ATTENTION TO PAGE N O. 338 (STATUTE) OF VOLUME 289 ITR. HE SUBMITTED THAT THE WORD APPROV AL HAS BEEN DEFINED IN BLACKS LAW DICTIONARY -VITH EDITION AS THE ACT OF CONFIRMING RATIFYING ASSENTING SANCTIONING OR C ONSENTING TO SOME ACT OR THING DONE BY ANOTHER. APPROVAL IMPLIES KNOWLEDGE AND EXERCISE OF DISCRETION AFTER KNOWLEDGE. THE SEC. 153 D USES WO RD SHALL WHICH INDICATE THAT THE PROVISIONS ARE MANDATORY ESPECIAL LY WHEN THE SECTION FURTHER PRESCRIBES AS THAT EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER NO ORDER SHALL BE PASSED. THEREFORE IN THE ABSENCE OF APPROVAL OF JOINT COMMISSIONER THE ORDER PASSED BY THE I.T.O. IS NOT A VALID AND LEGAL ORDER AND THEREFORE HAS NO LEGAL F ORCE. HE CONTENDED THAT IN THE EYE OF LAW AN ORDER PASSED WITHOUT SUCH APPR OVAL IS A NULLITY. ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 3 4. THE LD. A.R. SUBMITTED FURTHER THAT THE PROVISIO NS OF SEC. 153 C OF THE I.T. ACT 1961 ARE ANALOGOUS TO THE PROVISIONS OF SEC. 158 BD OF THE ACT. THE MANUAL OF OFFICE PROCEDURE VOLUME II PUBL ISHED IN FEBRUARY 2003 BY DIRECTORATE OF INCOME TAX (ORGANIZATION AN D MANAGEMENT SERVICES ) C.B.D.T. VIDE PAGE NO.2 HAS PRESCRIBED P ROCEDURE TO BE FOLLOWED IN CASE OF BLOCK ASSESSMENT. A COPY THERE OF HAS BEEN FURNISHED. THE LD. A.R. SUBMITTED THAT APPROVAL OF SENIOR AU THORITY PROVIDED TO AVOID ARBITRARY HIGH PITCHED ASSESSMENTS BEING FRA MED AND HENCE THE APPROVAL IS MANDATORY. THE OBJECT OF ENACTING SEC. 153 D IS ONE OF GENERAL POLICY AND HENCE IT IS MANDATORY. IN SUPPO RT HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF KIRSHAN LAL VS. J & K 1994-(SC2)-GJX-0264-SC. 5. THE LD. A.R. SUBMITTED THAT IT IS A WELL SETTLE D LAW THAT IF THE STATUTE PRESCRIBES THAT A PARTICULAR THING IS TO BE DONE IN A PARTICULAR MANNER IT IS TO BE DONE IN THAT MANNER ONLY. AN O RDER PASSED WITHOUT AN AUTHORITY IS NULLITY AND THE SAME IS TO BE ANNULLED . HE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. MRS. RATNABAI N.K. DUBHASH 230 ITR 495 (BOM.). HE SUBM ITTED THAT THE ASSESSMENT CANNOT BE RESTORED TO THE A.O TO FOLLOW THE PRESCRIBED PROCEDURE BECAUSE THE TIME LIMIT TO FRAME THE ASSE SSMENT HAS ALREADY EXPIRED AND EXTENDED TIME LIMIT CANNOT BE GIVEN O THERWISE THE LIMITATION PROVISION WILL BE FRUSTRATED. HE SUBMITTED THAT IN CASES WHERE THE PROVISIONS OF SEC. 153 D ARE NOT FOLLOWED AND IF TH E ASSESSMENTS ARE SET ASIDE TO REMOVE THE ILLEGALITY WIDE GATES WOULD B E OPENED FOR THE DEPARTMENT TO GET EXTENDED TIME LIMIT BY PASSING OR DERS WITHOUT FOLLOWING THE PROCEDURE PRESCRIBED U/S. 153 D AND INDIRECTLY WILL GET THE EXTENDED TIME LIMIT FOR COMPLETION OF ASSESSMENT. HE SUBMIT TED THAT IT IS A WELL SETTLED LAW THAT WHAT CANNOT BE DIRECTLY DONE CAN NOT BE DONE BY ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 4 FOLLOWING CIRCUITOUS WAY. HE REFERRED DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE F CIT VS. MRS. RATNABAI N.K. DUB HASH (SUPRA) IN THIS REGARD. 6. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE VALIDITY OF ASSESSMENT ORDER IN QUESTION. HE SUBMITTED THAT SE C 153 D TALKS OF ONLY APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX FO R ASSESSMENT ORDER PASSED U/S. 153A OF THE ACT. HE CONTENDED THAT EVE N IF FOR THE SAKE OF ARGUMENT IT IS ACCEPTED THAT A.O FAILED IN HIS MAND ATORY DUTY OF OBTAINING PRIOR APPROVAL WE HAVE TO GO BACK TO LEG ISLATIVE INTENT BEHIND THE RELEVANT SECTION. THE LD. D.R. SUBMITTED THAT THE PURPOSE OF APPROVAL IS TO AVOID HIGH PITCHED ASSESSMENT AND IN CONVENIENCE TO THE ASSESSEE. THIS PRE-SUPPOSES THE PARTICIPATION OF BOTH THE A.O AND ASSESSEE IN THE PROCESS OF ASSESSMENT. IN THE PRES ENT CASE ALL THE ASSESSMENTS FOR 4 YEARS HAS BEEN PASSED U/S. 153 C READ WITH SEC. 144 WHICH ITSELF IMPLIES THAT THERE WAS LACK OF CO-OPER ATION FROM THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VARI OUS COUNTS. SIMILARLY EVEN DURING THE APPELLATE PROCEEDINGS THERE HAS BEEN NO APPEARANCE OF THE ASSESSEE BEFORE THE LD CIT(A) A ND THERE WAS NO COMPLIANCE TO STATUTORY NOTICES. THE LD. D.R. PLAC ED RELIANCE ON THE FOLLOWING DECISIONS TO SUPPORT HER ARGUMENT THAT A. O IS WELL WITHIN THE JURISDICTION TO CONTINUE WITH THE PROCEEDINGS FROM THE STAGE AT WHICH THE ILLEGALITY HAS OCCURRED : 1) GUDUTHUR BROS. VS. ITO TC49R 480 (SC) 2) GAYATHRI TEXTILES VS. CIT (2000) 243 ITR 674 ( KAR) 3) CIT VS. SARA ENTERPRISES (1997) 224 ITR 169 (MAD) 4) CIT VS. SARDARILAL BHASHI (1989) 179 ITR 307 ( M.P) 5) PRABHUDAYAL AMICHAND VS CIT (1989) 180 ITR 84 (M.P) 6) CIT VS. DAMODARDAS MURARILAL (1996) 222 ITR 40 1 (M.P) ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 5 7. IN AN ALTERNATIVE SUBMISSION THE LD. D.R. REQUE STED TO SET ASIDE THE FILE TO THE A.O OR LD CIT(A) SO THAT DEFECT IN NOT OBTAINING THE APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX CA N BE CURED. SHE SUBMITTED FURTHER THAT TRIBUNAL IS ALSO NOT BOUND B Y CONSTRAINTS OF LIMITATION AND THEREFORE IT IS PRAYED THAT THE FIL E MAY BE SET ASIDE TO THE LOWER AUTHORITIES FOR NECESSARY ACTION. 8. ON QUERY RAISED BY THE BENCH THE LD. A.R. SUBMI TTED THAT THE PROVISIONS OF SEC. 153 D OF THE ACT ARE MANDATORY. HE SUBMITTED THAT IT IS A WELL SETTLED LAW THAT IN DETERMINING THE QUEST ION AS TO WHETHER THE PROVISION IS MANDATORY OR DIRECTORY THE SUBJECT MA TTER THE IMPORTANCE OF THE PROVISION THE RELATION OF THAT PROVISION TO TH E GENERAL OBJECT INTENDED TO BE SECURED BY THE ACT ARE REQUIRED TO BE LOOKED INTO. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) RE PRESIDENTIAL POLL REPORTED IN 1974- [SC2]-GJX -0912-SC 2) GOVINDLAL CHHAGANLAL PATEL VS. THE A.P.M.C. REPO RTED IN 1975-[SC2]-GJX-0313 SC. 3) KRISHAN LAL VS. STATE OF J & K REPORTED IN 1994- [SC2]-GJX- 264-SC (SC) 4) DHIRENDRA NATH GORAI AND OTHERS V/S SUDHIR CHAND RA GHOSH & OTHERS REPORTED IN 1964-[SC2]-GJX-0060-SC. 9. THE LD. A.R. SUBMITTED THAT THE SEC. 153D HAS B EEN ENACTED FOR THE BENEFIT OF GENERAL CLASS OF THE ASSESSEES IN WH OSE CASE THE ASSESSMENTS IN PURSUANCE OF THE SEARCH AND SEIZURE ACTION ARE TO BE COMPLETED. SINCE THE SECTION STARTS BY NEGATIVE WO RDS THE PROVISION BECOMES MANDATORY SUBMITTED THE LD. A.R. 10. HE SUBMITTED THAT IN ABSENCE OF APPROVAL OF THE JOINT COMMISSIONER OF INCOME-TAX OBTAINED ON THE ASSESSMENT ORDER IN Q UESTION THE ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 6 ASSESSMENT ORDER BE TREATED AS NULL AND VOID. HE P LACED RELIANCE ON THE FOLLOWING DECISIONS : 1) BALVANT N. VISHWAMITRA AND OTHERS VS. YADAV SADA SHIV MULE REPORTED IN 2004-[SC4]-GJX-0636 SC. 2) RAJENDRA KUMAR VERMA VS. D.G.I.T. REPORTED IN [ 2011] 9 TAXMANN.COM 85[ALL]. 3) M/S. ROLSON INTERNATIONAL VS. A.C.I.T REPORTED IN 2001[ID1]- GJX-1089 TBOM. 4) KHUBESHWAR PRASAD SINGH VS. STATE OF BIHAR REPO RTED IN 2007-[SC2]-GJX-0241 SC 5) C.I.R. VS. SPLS SIDDHARTHA LTD REPORTED IN ITAT ONLINE.ORG. 11. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS AND HA VE GONE THROUGH THE DECISIONS RELIED UPON BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND MATERIAL AVAILABLE ON RECORD. THE RELEVANT FACTS ARE THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION ON 29.7.2003 AT THE BUSINESS AND RESIDENTIAL PREMISES OF MR. SHRIRAM SO NI CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. N OTICE U/S. 153C WAS ISSUED TO THE ASSESSEE AND ASSESSMENT U/S. 153C R.W .S. 144 HAVE BEEN FRAMED FOR ALL THE 4 A.YS. UNDER CONSIDERATION. BEFORE THE LD CIT(A) THE ASSESSMENT ORDERS WERE QUESTIONED BOTH ON LEGAL ISSUE AND ON MERITS. ON LEGAL ISSUE THE VALIDITY OF ASSESSMENT ORDERS IN ABSENCE OF APPROVAL OBTAINED U/S. 153 D OF THE ACT OF JOINT CO MMISSIONER OF INCOME TAX HAS BEEN QUESTIONED. ON MERITS ADDITIONS MADE BY THE A.O WERE IMPUGNED. SINCE THE ASSESSEE COULD NOT SUCCEED IN ITS APPEAL THE PRESENT APPEALS HAVE BEEN PREFERRED IN QUESTIONING THE FIRST APPELLATE ORDERS. 12. ON PERUSAL OF THE PROVISIONS LAID DOWN U/S. 15 3C OF THE ACT IT IS APPARENT THAT AFTER ISSUANCE OF NOTICE U/S. 153C T HE A.O HAVING JURISDICTION OVER SUCH OTHER PERSON (AGAINST WHICH INCRIMINATING MATERIAL ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 7 HAS BEEN FOUND DURING THE COURSE OF SEARCH CONDUCTE D ON A PERSON) AROSE OR RE-ASSESS INCOME OF SUCH OTHER PERSON IN ACCORD ANCE WITH THE PROVISIONS OF SEC. 153A. SEC. 153B TALKS ABOUT TIM E LIMIT FOR COMPLETION OF ASSESSMENT U/S. U/S. 153A WHEREAS S. 153D TA LKS ABOUT NECESSITY OF PRIOR APPROVAL FOR FRAMING ASSESSMENT IN CASE OF SE ARCH OR REQUISITION. WE THUS FULLY CONCUR WITH THE SUBMISSION OF THE LD. A.R. THAT PROVISIONS LAID DOWN U/S. 153D ARE VERY MUCH APPLICABLE IN CAS E OF ASSESSMENT OF INCOME OF ANY OTHER PERSON (I.E. THE PERSON OTHER T HAN THE PERSON SEARCHED). NOW THE ISSUE FOR OUR ADJUDICATION IS A S TO WHETHER ABSENCE OF OBTAINING PRIOR APPROVAL U/S. 153D OF JOINT COMMISS IONER OF INCOME TAX ASSESSMENT MADE U/S. 153 C WILL MAKE THE ASSESSMEN T VOID OR VOIDABLE/CURABLE. FOR A READY REFERENCE PROVISION S LAID DOWN U/S. 153D OF THE ACT ARE BEING REPRODUCED HEREUNDER : 153D. NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COM MISSIONER IN RESPECT OF EACH ASSESSMENT YEAR REFERRED TO IN CLAU SE (B) OF [SUB- SECTION (1) OF] SECTION 153A OR THE ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153B EXCE PT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER]. THE ABOVE PROVISIONS U/S. 153 D HAVE BEEN LAID DOW N UNDER THE HEADING PRIOR APPROVAL NECESSARY FOR ASSESSMENT IN CASES OF SEARCH OR REQUISITION. THIS HEADING ITSELF SUGGESTS THAT O BTAINING PRIOR APPROVAL THE ASSESSMENT IN CASES OF SEARCH OR REQUISITION IS NECESSARY. WE FURTHER NOTE THAT THE PROVISIONS U/S. 153D START WITH A NE GATIVE WORDING NO ORER OF ASSESSMENT OR RE-ASSESSMENT SUPPORTED BY THE F URTHER WORDING SHALL MAKES THE INTENTION OF THE LEGISLATURE CLEA R THAT COMPLIANCE OF SEC. 153D REQUIREMENT IS MANDATORY. NO UNIVERSAL R ULE CAN BE LAID DOWN AS TO WHETHER MANDATORY ENACTMENT SHALL BE CONSIDER ED DIRECTORY OR ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 8 OBLIGATORY WITH AN IMPLIED NULLIFICATION FOR DISOB EDIENCE. AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASES OF B ANWARILAL AGARWALLA VS. STATE OF BIHAR AIR 1961 SC 849 (853); RAZAS BU LLAND SUGAR CO.LTD. VS. MUNICIPAL BOARD AIR 1965 (SC) 895 (899) & OTHE RS IF OBJECT OF THE ENACTMENT WILL BE BENEFITED BY HOLDING THE SAME DIR ECTORY IT WILL BE CONSTRUED AS MANDATORY WHEREAS IF BY HOLDING IT MA NDATORY SERIOUS GENERAL INCONVENIENCE WILL BE CREATED TO NASCENT P ERSONS WITHOUT VERY MUCH FURTHER OBJECT OF ENACTMENT THE SAME WILL BE CONSTRUED AS DIRECTORY. BUT ALL THESE DOES NOT MEAN THAT LANGUA GE USED IS TO BE IGNORED ONLY THAT THE PRIMA FACIE INFERENCE OF THE INTENTION OF THE LEGISLATURE ARISING FROM THE WORDS USED MAY BE DISP LACED BY CONSIDERING THE NATURE OF THE ENACTMENT ITS DESIGNED CONSEQUEN CES FLOWING FROM ALTERNATIVE CONSTRUCTIONS. THE WORDINGS AND LANGUAG E USED IN SEC. 153D OF THE ACT AND THE HEADING PRIOR APPROVAL NECESSAR Y FOR ASSESSMENT IN CASES OF SEARCH OR REQUISITION UNDER WHICH SEC. 1 53D HAS BEEN PROVIDED DO NOT LEAVE AN IOTA OF DOUBT ABOUT THE VERY INTENT ION OF THE LEGISLATURE TO MAKE THE COMPLIANCE U/S. 153D A MANDATORY. THERE I S NO DISPUTE THAT IF A PROVISION IS MANDATORY AN ACT DONE IN BREACH THE REOF WILL BE INVALID BUT IF IT IS DIRECTORY THE ACT WILL BE VALID ALT HOUGH NON-COMPLIANCE MAY GIVE RISE TO SOME OTHER PENALTY IF PROVIDED BY THE STATUTE. THE GENERAL RULE THAT NON-COMPLIANCE OF MANDATORY REQUIREMENTS RESULTS IN NULLIFICATION OF THE ACT IS SUBJECT AT LEAST TO ON E EXCEPTION. IF CONTAIN REQUIREMENTS OR CONDITIONS ARE PROVIDED BY A STATUT E IN THE INTEREST OF A PARTICULAR PERSON THE REQUIREMENTS OR CONDITIONS ALTHOUGH MANDATORY MAY BE WAIVED HIM IF NO PUBLIC INTEREST ARE INVOL VED AND IN SUCH CASE THE ACT DONE STILL BE VALID EVEN IF THE REQUIREMEN T OR CONDITION HAS NOT BEEN PERFORMED. HERE BEFORE US IS NOT A CASE WHE RE CONSENT OF ASSESSEE WILL WAIVE THE CONDITION OF OBTAINING PRI OR APPROVAL U/S. 153D OF THE JOINT COMMISSIONER OF INCOME TAX BY THE A.O FO R FRAMING ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 9 ASSESSMENT U/S. 153C/ 153A OF THE ACT. CONDITION O F PRIOR APPROVAL OF JCIT U/S. 153D HAS BEEN PUT IN PUBLIC INTEREST AND NOT IN THE INTEREST OF A PARTICULAR PERSON. THUS IT CANNOT BE WAIVED BY PAR TICULAR PERSON. THE USE OF WORD SHALL RAISES A PRESUMPTION THAT A PAR TICULAR PROVISION IS IMPERATIVE BUT THIS PRIMA FACIE INFERENCE MAY BE REVERTED BY OTHER CONSIDERATION SUCH AS OBJECT AND SCOPE OF THE ENACT MENT AND CONSEQUENCE FLOWING FROM SUCH CONSTRUCTION. THE REV ENUE HAS NOT BEEN ABLE TO REBUT THE ABOVE INFERENCE BY POINTING OUT OTHER CONSIDERATION LIKE OBJECT AND SCOPE OF THE ENACTMENT AND THE CONSEQUE NCE FLOWING FROM SUCH CONSTRUCTION BEFORE US. CLAUSE 9 OF MANUAL O F OFFICE PROCEDURE VOLUME II (TECHNICAL) FEBRUARY 2003 ISSUED BY DIREC TORATE OF INCOME TAX ON BEHALF OF CENTRAL BOARD OF DIRECT TAXES DEPARTM ENT OF REVENUE GOVERNMENT OF INDIA READS AS UNDER : 9. APPROVAL FOR ASSESSMENT : AN ASSESSMENT ORDER UNDER CHAPTER XIV-B CAN BE PASSED ONLY WITH THE PREVIOUS APPROVAL OF THE RANGE JCIT/ADDL.CIT. (FOR THE PERIOD FROM 30-6-1995 TO 31-12- 1996 THE APPROVING AUTHORITY WAS THE CIT.) THE AS SESSING OFFICER SHOULD SUBMIT THE DRAFT ASSESSMENT ORDER FOR SUCH APPROVAL WELL IN TIME. THE SUBMISSION OF THE DRAFT ORDER MUST BE DO CKETED IN THE ORDER-SHEET AND A COPY OF THE DRAFT ORDER AND COVE RING LETTER FILED IN THE RELEVANT MISCELLANEOUS RECORDS FOLDER. DUE OPPORTUNITY OF BEING HEARD SHOULD BE GIVEN TO THE ASSESSEE BY THE SUPERVISORY OFFICER GIVING APPROVAL TO THE PROPOSED BLOCK ASSE SSMENT AT LEAST ONE MONTH BEFORE THE TIME BARRING DATE. FINALLY O NCE SUCH APPROVAL IS GRANTED IT MUST BE IN WRITING AND FI LED IN THE RELEVANT FOLDER INDICATED ABOVE AFTER MAKING A DUE ENTRY IN THE ORDER-SHEET. THE ASSESSMENT ORDER CAN BE PASSED ONLY AFTER THE RECEIPT OF SUCH APPROVAL. THE FACT THAT SUCH APPROVAL HAS BEEN OBT AINED SHOULD ALSO BE MENTIONED IN THE BODY OF THE ASSESSMENT ORD ER ITSELF. CHAPTER XIVB ALSO DEALS WITH ASSESSMENT OF SEARCH CASES. SECTIONS 153A 153B & 153 C HAVE BEEN INTRODUCED TO CHAPTER XIV PROCEDURE FOR ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 10 ASSESSMENT W.E.F. 1.6.2003 BY THE FINANCE ACT 2003 WHEREAS SEC. 153 D HAS BEEN INSERTED TO THE CHAPTER W.E.F. 1.6.2007 BY TH E FINANCE ACT 2007. THESE PROVISIONS THUS ALSO DEAL WITH THE ASSESSMENT IN CA SE OF SEARCH OR REQUISITION AND WHEN THE ASSESSMENT ORDERS IN THE PRESENT CASE WERE PASSED THE PROVISIONS LAID DOWN U/S. 153D WERE VERY MUCH IN OP ERATION. IN THE PRESENT CASE ASSESSMENTS IN QUESTION HAVE BEEN FRAMED ON 2 7.12.2007. 13. IN THE CASE OF CIT VS. RATNABAI N.K. DUBHASH ( MRS.) (SUPRA) THE DIFFERENCE BETWEEN CANCELLATION AND AMENDMENT OF A SSESSMENT IN VIEW OF THE PROVISIONS OF SECTIONS 143 144B 153 AND 251 OF TH E I.T. ACT 1961 HAS BEEN DEALT WITH. THE HONBLE HIGH COURT HAS BEEN PLEASE D TO HOLD AS UNDER : IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CLE AR OPINION THAT INCASES FALLING UNDER SECTION 144B OF THE ACT THE QUASI-JUDICIAL FUNCTION OF THE INCOME-TAX OFFICER AS AN ASSESSING AUTHORITY COMES TO AN END THEMOMENT THE ASSESSEE FILES OBJECTIONS T O THE DRAFT ORDER. THE POWER TO DETERMINE THE INCOME OF THE AS SESSEE THEREAFTER GETS VESTED IN THE INSPECT-ING ASSISTANT COMMISSIONER TO WHOM THE INCOME-TAX OFFICER IS REQUIRED TO FORWARD THE DRAFT ORDER TOGETHER WITH OBJECTIONS. THE ONLY THING THAT REMA INED TO BE DONE BY THE INCOME-TAX OFFICER IS TO PASS A FINAL ORDER IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE INSPECTING ASSISTANT CO MMISSIONER. THE FUNCTION OF THE INCOME-TAX OFFICER TO MAKE THE FIN AL ASSESSMENT UNDER SECTION 144B(5) OF THE ACT IS MORE IN THE NAT URE OF A MINISTERIAL FUNCTION BECAUSE HE CAN PASS THE ORDER ONLY IN ACCORDANCE WITH THE DIRECTIONS OF THE INSPECTING AS SISTANT COMMISSIONER. HE CANNOT VARY ORDEPART FROM THE DI RECTIONS GIVEN BY THE INSPECTING ASSISTANT COMMISSIONER. MOREOVER THE REQUIREMENTS OF SECTION 144B OF THE ACT RE MANDATOR Y. THE INCOME-TAX OFFICER HAS NO OPTION BUT TO FOLLOW THE SAME. HE CANNOT MAKE THE FINAL ORDER ON THE BASIS OF THE DRA FT ORDER WITHOUT FORWARDING THE SAME TO THE INSPECTING ASSISTANT COM MISSIONER ALONG WITH THE OBJECTIONS AND WITHOUT OBTAINING TH E DIRECTIONS OF THE INSPECTING ASSISTANT COMMISSIONER. AN ASSESSME NT MADE BY THE INCOME-TAX OFFICER IN VIOLATION OF THE PROVISIO NS OF SECTION 144B OF THE ACT WOULD BE AN ASSESSMENT WITHOUT JURISDICT ION. IN THE INSTANT CASE THE ADMITTED POSITION IS THAT ON REC EIPT OF THE DRAFT ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 11 ORDER OF ASSESSMENT THE ASSESSEE DID FILE OBJECTIO NS AND THE INCOME-TAX OFFICER COMPLETED THE ASSESSMENT HIMSEL F ON THE BASIS OF THE DRAFT ORDER WITHOUT FORWARDING THE DRAFT ORD ER AND THE OBJECTIONS TO THE INSPECTING ASSISTANT COMMISSIONER AND OBTAINING DIRECTIONS FROM HIM. SUCH AN ORDER ON THE FACE OF IT IS BEYOND THE POWERS OF THE INCOME-TAX OFFICER UNDER SECTION 143 READ WITH SECTION 144B OF THE ACT AND HENCE WITHOUT JURISDI CTION. THE TRIBUNAL IN OUR OPINION WAS THEREFORE JUSTIFIED IN ITS CONCLUSION THAT THE ASSESSMENT WAS LIABLE TO BE ANNULLED. IT WAS RIGHT IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE INC OME-TAX OFFICER THE INSTANT CASE WITHOUT REFERENCE TO THE INSPECTIN G ASSISTANT COMMISSIONER HAD RIGHTLY BEEN ANNULLED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS). IN VIEW OF THE ABOVE WE ANS WER THE QUESTION REFERRED TO US ACCORDINGLY IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE. THIS REFERENCE IS DISPOSED OF ACCORDINGLY WITH NO ORDER AS TO COSTS.' 14. IN THE CASE OF CIT VS. SPLS SIDDHARTH LTD. (S UPRA) BEFORE THE HONBLE DELHI HIGH COURT THE FACTS WERE THAT NOTIC E ISSUED BY THE A.O U/S. 147 R.W.S 148 OF THE ACT FOR RE-OPENING THE AS SESSMENT FOR THE A.Y. 2002-03 WAS SET ASIDE BY THE TRIBUNAL ON THE GROUN D THAT THE REQUISITE APPROVAL OF ADDL. COMMISSIONER OF INCOME TAX WHICH IS MANDATORILY REQUIRED WAS NOT TAKEN. SINCE 4 YEARS HAD ELAPSE D FROM THE END OF THE RELEVANT A.Y THE A.O U/S. 151(1) OF THE ACT WAS RE QUIRED TO TAKE APPROVAL OF THE COMPETENT AUTHORITY. THE HONBLE DELHI HIGH COURT AFTER DISCUSSING THE ISSUE IN DETAIL AND THE CASE LAWS CITED BEFORE IT HAS BEEN PLEASED TO APPROVE THE DECISION OF TRIBUNAL. IN VIEW OF THE SE DECISIONS AND THE POSITION OF LAW PROVIDED U/S. 153D OF THE ACT WE H OLD THAT THE ASSESSMENT ORDERS IMPUGNED FRAMED IN ABSENCE OF OBT AINING PRIOR APPROVAL OF THE JOINT COMMISSIONER FOR THE A.YS. UN DER CONSIDERATION ARE INVALID AS NULL AND VOID AND ARE QUASHED ACCORDING LY. ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 12 15. THE DECISIONS RELIED UPON BY THE LD. D.R ARE HA VING DIFFERENT FACTS AND ISSUE HENCE ARE NOT HELPFUL TO THE REVENUE. I N THE CASE OF GUDUTHUR BROS. VS. ITO (SUPRA) THE LEVY OF PENALTY WITHOUT A FFORDING A HEARING TO THE ASSESSEE WAS QUESTIONED BEFORE THE APPELLATE AU THORITY WHO SET ASIDE THAT ORDER. THE MATTER ULTIMATELY TRAVELLED TO THE HONBLE SUPREME COURT AND IT WAS HELD THAT THE ITO WAS WELL WITHIN HIS JURISDICTION TO CONTINUE THE PROCEEDINGS FROM THE STAGE AT WHICH TH E ILLEGALITY HAS OCCURRED AND TO ASSESS THE APPELLANTS TO A PENALTY IF ANY. BEFORE THE HON BLE M.P. HIGH COURT IN THE CASE OF CIT VS. SARDARIL AL HASIM (SUPRA) THE ISSUE WAS REGARDING APPLICABILITY OF PRESCRIBED LIM ITATION U/S. 275 IN A PENALTY ORDER PASSED AFTER THE CASE IS REMANDED BY AN APPELLATE AUTHORITY. THE HONBLE COURT WAS PLEASED TO HOLD TH AT THE LIMITATION PRESCRIBED U/S. 275 OF THE ACT IS NOT APPLICABLE TO THE PENALTY ORDER PASSED AFTER THE CASE IS REMANDED BY AN APPELLATE A UTHORITY. IN THE CASE OF GAYATRI TEXTILES VS. CIT (SUPRA) NON-OBTAINING O F PRIOR APPROVAL OF I.A.C U/S. 271(1)( C ) (III) FOR DIRECTION FOR PAY MENT OF PENALTY WAS HELD AS PROCEDURALLY DEFECTIVE. THE PROVISIONS LAID DOW N U/S. 153D OF THE ACT UNDER CONSIDERATION IN THE PRESENT CASE BEFORE US ARE DIFFERENT AS HERE THE PRIOR APPROVAL OF JOINT COMMISSIONER IS NOT REQ UIRED MERELY FOR DIRECTION FOR PAYMENT OF THE DUE AMOUNT OF TAX BUT OVERALL APPROVAL OF THE ASSESSMENT FRAMED BY THE I.T.O. THUS THE CITED DE CISION IS NOT APPLICABLE IN THE PRESENT CASE. IN THE CASE OF CIT VS. SARA ENTERPRISES (SUPRA) THE ISSUE WAS AS TO WHETHER THE BAR OF LIM ITATION CONTAINED U/S. 275 OF THE ACT WOULD ATTENUATE OR CURTAIL THE POW ERS OF CIT VESTED IN HIM U/S. 263 OF THE SAID ACT. THE HONBLE MADRAS HIGH COURT WAS PLEASED TO HOLD THAT IT IS NOT HIT BY PROVISIONS OF SEC. 275 OF THE ACT. IN PRABU DAYAL AMICHAND VS. CIT (SUPRA) THE HONBLE H IGH COURT OF MADHYA PRADESH WITH REFERENCE TO SEC. 271(1)(C ) OF THE AC T WAS PLEASED TO HOLD THAT A PROCEDURAL IRREGULARITY NOT INVOLVING THE Q UESTION OF JURISDICTION ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 13 CAN BE CURED. IT IS NOT HELPFUL TO THE REVENUE IN THE PRESENT CASE BECAUSE IN THE PRESENT CASE THE A.O WAS HAVING NO JURISDICTION TO FRAME ASSESSMENT ORDER WITHOUT PRIOR APPROVAL OF JCIT AS NECESSARY REQUIREMENT TO COMPLY WITH U/S. 153D OF THE ACT. IN THE CASE OF CIT VS.DAMODHAR MURALILAL (SUPRA) THE HONBLE HIGH CO URT DID NOT APPROVE THE VIEW OF THE TRIBUNAL IN HOLDING THAT IN VIEW OF CLAUSE (B) OF SEC. 251(1) OF THE ACT THE FIRST APPELLATE AUTHORITY HA D NO POWER OF REMAND AND THEREFORE THE PROCEDURAL ILLEGALITY WOULD NOT BE CORRECTED BY RECOURSE TO REMANDING THE CASE TO THE ITO. HERE IN THE PRESENT CASE AS WE HAVE ALREADY DISCUSSED AND ALSO CITED THE RECEN T DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. RATNABAI N.K. DUBHASH (MRS.) (SUPRA) AND OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SPLS SIDDHARTH LTD. (SUPRA) THAT REQUIREME NT U/S. 153 D FOR OBTAINING APPROVAL OF JCIT IS NOT PROCEDURAL ONLY B UT A MANDATORY REQUIREMENT HENCE THE CITED DECISION BY THE LD. D. R IS NOT APPLICABLE IN THE CASE OF PRESENT ASSESSEE. UNDER ABOVE CIRCUMST ANCES THE ISSUE RAISED REGARDING THE VALIDITY OF ASSESSMENT ORDERS IN QUESTION WITHOUT OBTAINING PRIOR APPROVAL U/S. 153D OF THE ACT IS DE CIDED IN FAVOUR OF THE ASSESSEE. THE ASSESSMENT ORDERS IN QUESTION ARE T HUS QUASHED AS NULL AND VOID. 16. IN VIEW OF THE ABOVE FINDING ON THE VALIDITY O F ASSESSMENT ORDERS IN QUESTION THE OTHER ISSUE QUESTIONING THE VALIDITY OF ADDITIONS/DISALLOWANCES MADE BY THE A.O IN THE ASSE SSMENT ORDERS IN QUESTION DOES NOT NEED ADJUDICATION AS THE SAME HAS BECOME ACADEMIC ONLY. 17. CONSEQUENTLY APPEALS ARE ALLOWED. ITA . NOS.455 TO 458//PN/2010 AKIL GULAMALI SOMJI A.Y. 2001-02 TO 2004-05 PAGE OF 14 14 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON M ARCH 2012. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE DATED THE 30TH MARCH 2012 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.3 .2012. SD/- SD/- (R.K. PANDA) (I.C. SUDHIR) AM JM US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT II PUNE 4. THE CIT(A)- II PUNE 5. THE D.R. B BENCH PUNE 6. GUARD FILE /-TRUE COPY-/ BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE