Itxa/668/2016 Of Pr. Commissioner Of Income Tax, Central-2 v. Shreelekha Damani

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 668 OF 2016 The Pr. Commissioner of Income Tax.. Appellant v/s. Smt. Shreelekha Damani .. Respondent Mr. A.R. Malhotra a/w Mr. N.A. Kazi for the appellant Mr. Jehangir Mistri, Senior Counsel a/w Mr. Atul Jasani for therespondent P.C. CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. DATED : 27[th] NOVEMBER, 2018. 1.This appeal is filed by the Revenue challenging the judgment ofIncome Tax Appellate Tribunal ("the Tribunal" for short) dated19[th] August, 2015. 2.Following question was argued before us for our consideration :- "Whether on the facts and circumstances of the case and inlaw, the Tribunal was justified in holding that there was no'application of mind' on the part of the Authority grantingapproval? 3.Brief facts are that the Tribunal by the impugned judgment set aside the order of the Assessing Officer passed under Section 153A of the Income Tax Act, 1961 ("the Act" for short) for Assessment Year 2007-08. This was on the ground that the mandatory statutoryrequirement of obtaining an approval of the concerned authority asflowing from Section 153D of the Act, before passing the order ofassessment, was not complied with. 4.This was not a case where no approval was granted at all.However, the Tribunal was of the opinion that the approval granted bythe Additional Commissioner of Income Tax was without application ofmind and, therefore, not a valid approval in the eye of law. TheTribunal reproduced the observations made by the Additional CIT whilegranting approval and came to the conclusion that the same sufferedfrom lack of application of mind. The Tribunal referred to variousjudgments of the Supreme Court and the High Courts in support of itsconclusion that the approval whenever required under the law, must bepreceded by application of mind and consideration of relevant factorsbefore the same can be granted. The approval should not be an emptyritual and must be based on consideration of relevant material onrecord. 5.The learned Counsel for the Revenue submitted that the questionof legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding thatthe same is invalid. 6. Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting anapproval for passing the order of assessment, had made followingremarks :- "To,The DCIT(OSD)-1Mumbai Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s.153A in the case of Smt. Shreelekha Nandan Damani for A.Y.2007-08 reg. Ref : No. DCIT (OSD)-1/CR-7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the AssessingOfficers were asked to submit the draft orders for approval u/s153D on or before 24.12.2010. However, this draft order hasbeen submitted on 31.12.2010. Hence there is no much time leftto analise the issue of draft order on merit. Therefore, the draftorder is being approved as it is submitted. Approval to the above said draft order is granted u/s 153Dof the I.T. Act, 1961." 7.In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st "To,The DCIT(OSD)-1Mumbai Subject : Approval u/s 153D of draft order u/s 143(3) r.w.s.153A in the case of Smt. Shreelekha Nandan Damani for A.Y.2007-08 reg. Ref : No. DCIT (OSD)-1/CR-7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the AssessingOfficers were asked to submit the draft orders for approval u/s153D on or before 24.12.2010. However, this draft order hasbeen submitted on 31.12.2010. Hence there is no much time leftto analise the issue of draft order on merit. Therefore, the draftorder is being approved as it is submitted. Approval to the above said draft order is granted u/s 153Dof the I.T. Act, 1961." 7.In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st December, 2010. Hence, there was not enough time left to analyze theissues of draft order on merit. Therefore, the order was approved as itwas submitted. Clearly, therefore, the Additional CIT for want of timecould not examine the issues arising out of the draft order. His actionof granting the approval was thus, a mere mechanical exerciseaccepting the draft order as it is without any independent application ofmind on his part. The Tribunal is, therefore, perfectly justified incoming to the conclusion that the approval was invalid in eye of law.We are conscious that the statute does not provide for any format inwhich the approval must be granted or the approval granted must berecorded. Nevertheless, when the Additional CIT while granting theapproval recorded that he did not have enough time to analyze theissues arising out of the draft order, clearly this was a case in which thehigher Authority had granted the approval without consideration ofrelevant issues. Question of validity of the approval goes to the root ofthe matter and could have been raised at any time. In the result, noquestion of law arises. 8.Accordingly, the Tax Appeal is dismissed. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)