O/TAXAP/936/2017 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 936 of 2017 With TAX APPEAL NO. 937 of 2017 PRINCIPAL COMMISSIONER OF INCOME TAX - 4,....Appellant(s) Versus SUNRISE FINLEASE PVT. LTD.....Opponent(s) Appearance: MR MR BHATT, SR. ADVOCATE with MRS MAUNA M BHATT, ADVOCATE for Appellant CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR.JUSTICE A.S. SUPEHIA Date : 28/11/2017 ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By these appeals under section 260A of Income Tax Act, 1961 (hereinafter referred to as Act ), appellant- revenue has challenged common order dated 21.6.2017 made by Income Tax Appellate Tribunal, Ahmedabad Bench B (hereinafter referred to as Tribunal ) in ITA No.2483/Ahd/2014 and C.O. No.293/Ahd/2014, by proposing following identically worded questions in both appeals, stated to be substantial questions of law: [A] Whether Appellate Tribunal has erred in law and on facts in upholding order of CIT (A) deleting addition of Rs.90,00,000/- under section 68 Page 1 of 6 HC-NIC Page 1 of 6 Created On Sat Dec 16 10:05:41 IST 2017 O/TAXAP/936/2017 ORDER of Act? [B] Whether Appellate Tribunal has erred in law and on facts in holding assessment order passed under section 143(3) consequent to order under section 263, as invalid for want of approval under section 153D? [C] Whether on facts of case and in law, lack of approval under section 153D would invalidate assessment order and was not curable defect? [D] Whether Appellate Tribunal was correct in holding assessment to be invalid on account of no incriminating material found during search, even though there is no such requirement in section 153A, and provision of first proviso to section 153(A)(1) requires assessment / re-assessment for all six assessment years preceding relevant assessment year to be done and by virtue of second proviso to section 153A(1), all pending assessments on date of search stand abated necessitating fresh assessments for all six assessment years? 2. assessment year is 2007-08 and relevant accounting period is previous year 2006-07. In this case, assessee, company, engaged in share trading and financial activities, filed its return of income on 11.9.2007 stating income of Rs.84,030/-, which culminated into initiation of proceedings under section 153A of Act. assessee filed return on 18.6.2009 reiterating very income disclosed earlier. Assessing Officer framed assessment under section 153A of Act on 24.12.2009 accepting same. Commissioner of Income Tax, in exercise of powers under section 263 of Act, directed Assessing Officer to frame fresh assessment. In consequential proceedings, Assessing Officer finalized assessment on 11.12.2012 adding Rs.90,00,000/- towards share application/share Page 2 of 6 HC-NIC Page 2 of 6 Created On Sat Dec 16 10:05:41 IST 2017 O/TAXAP/936/2017 ORDER premium by placing reliance on statement made by assessee s director, one Shri Riddhesh G. Bhandari, recorded under section 131 of Act on 7.12.2009. 3. assessee carried matter in appeal before Commissioner (Appeals), who allowed appeal of assessee and directed Assessing Officer to delete addition made under section 68 of Act. Revenue went in appeal before Tribunal and assessee filed cross objection. By impugned order, Tribunal dismissed revenue s appeal and allowed cross-objection. 4. Mr. M.R. Bhatt, Senior Advocate, learned counsel for appellant in both appeals, assailed impugned order by reiterating grounds stated in assessment order. 5. Insofar as proposed question [A] and [D] are concerned, as can be seen from impugned order passed by Tribunal, Tribunal has found as matter of fact that no incriminating evidence against assessee was either found or seized during course of search so as to attract provisions of section 153A proceedings. Tribunal has placed reliance upon decision of jurisdictional High Court in case of Principal Commissioner of Income Tax v. Saumya Construction P. Ltd., [2016] 387 ITR 529 (Guj.), for proposition that section 153A of Act does not apply in absence of any incriminating evidence being found/seized during course of search. 6. This court in case of Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. (supra), has Page 3 of 6 HC-NIC Page 3 of 6 Created On Sat Dec 16 10:05:41 IST 2017 O/TAXAP/936/2017 ORDER held that in view of mandate of sub-section (1) of section 153A of Act, in every case where there is search or requisition, Assessing Officer is obliged to issue notice to such person to furnish returns of income for six years preceding assessment year relevant to previous year in which search is conducted or requisition is made. However, any addition or disallowance can be made only on basis of material collected during search or requisition. 7. In facts of present case, Tribunal has recorded finding of fact to effect that no incriminating material had been found during course of search proceedings and that statement of director which is stated to have been recorded during course of search under section 131 of Act, and which forms basis for impugned addition, was recorded much later on 7.12.2009. In light of above cited decision, it was not permissible for Assessing Officer to make any addition under section 153A of Act when no incriminating material had been found during course of search. 8. In above view of matter, view adopted by Tribunal being in consonance with view taken by this court in above referred decision, it cannot be said that impugned order passed by Tribunal suffers from any legal infirmity so as to give rise to question of law. 9. As regards proposed questions [B] and [C] viz., whether lack of approval under section 153D would invalidate assessment order and was not curable defect, it may be noted that section 153D of Act mandates that no order of assessment or reassessment shall be passed by Assessing Page 4 of 6 HC-NIC Page 4 of 6 Created On Sat Dec 16 10:05:41 IST 2017 O/TAXAP/936/2017 ORDER Officer below rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or assessment year referred to in clause (b) of sub-section (1) of section 153B, except with prior approval of Joint Commissioner. In present case, assessment order has been passed by Income Tax Officer, who admittedly is officer below rank of Joint Commissioner; therefore, provisions of section 153D of Act would be applicable. Section 153D starts with words No order of assessment or reassessment shall be passed.... . In other words, language employed in provision is couched in negative and therefore, there is prohibition against passing of assessment or reassessment order, except with prior approval of Joint Commissioner. 10. In Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234, Supreme Court has observed that if requirements of statute which prescribes manner in which something is to be done are expressed in negative lan- guage, that is to say, if statute enacts that it shall be done in such manner and in no other manner, it has been laid down that those requirements are in all cases, absolute, and that neglect to attend to them will invalidate whole pro- ceeding. In Vijay Narayan Thatte v. State of Maharashtra, (2009) 9 SCC 92, Supreme Court has held that it is well settled that when statute is couched in negative language it is ordinarily regarded as peremptory and mandatory in nature. Supreme Court, in some decisions has held that merely because provision of law is couched in negative language implying mandatory character, same is not without excep- tions. However, present case deals with interpretation Page 5 of 6 HC-NIC Page 5 of 6 Created On Sat Dec 16 10:05:41 IST 2017 O/TAXAP/936/2017 ORDER of taxing statute. It is well settled that taxing statute has to strictly construed, therefore, from language employed in section 153D of Act, requirement of obtaining prior approval of Joint Commissioner has to be regarded as man- datory in nature. 11. In facts of present case, as assessment order has been passed by Income Tax Officer, requirement of obtaining prior approval of Joint Commissioner under section 153D of Act was absolute. Tribunal, however, has recorded finding of fact that there is nothing on record to indicate that prior approval of Joint Commissioner was obtained. As natural corollary therefore, in absence of requirement of prior approval of Joint Commissioner being satisfied, whole proceeding would stand invalidated. Tribunal was, therefore, wholly justified in holding that impugned order of assessment would stand vitiated in view of non-compliance of provisions of section 153D of Act. On this count also, therefore, appeal, does not merit acceptance. 12. For foregoing reasons, it is not possible to state that impugned order passed by Tribunal gives rise to any question of law, much less, substantial question of law, so as to warrant interference. appeals, therefore, fail and are summarily dismissed. (HARSHA DEVANI, J.) (A. S. SUPEHIA, J.) parmar* Page 6 of 6 HC-NIC Page 6 of 6 Created On Sat Dec 16 10:05:41 IST 2017 Principal Commissioner of Income-tax-4 v. Sunrise Finlease Pvt. Ltd