Citation Codes

Equivalent Citations

citation codes

Case Number

ITA Nos. 455 to 458.PN/2010, (Asstt. Years: 2001-02, 2002-03, 2003-04 & 2004-05)

Advocates

Appellant by: Shri Sunil Ganoo
Respondent by: Ms. Ann Kapthuama

Judges

I.C Sudhir, J.M
D. Karunakara Rao, A.M

Acts

provisions of Sections 143, 144B, 153 and 251 of the I.T. Act 1961
provisions of Sec. 153 A of the I.T. Act 1961.
provisions of Sec. 153 C of the I.T. Act 1961
clause (b) of sub-section (1) of section 153B,
FINANCE ACT 2007
Finance Act 2003 whereas Sec. 153
Sec. 153 C of the I.T. Act 1961

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Smart Summary

Tribunal Opinion Summary — I.C. Sudhir, Judicial Member

Factual and Procedural Background

During a search and seizure action carried out on 29.7.2003 at the business and residential premises of Mr. Shriram Soni, certain documents belonging to the assessee were found and seized. A notice under section 153C of the Income-tax Act, 1961 was issued to the assessee and assessments under section 153C read with section 144 were framed for four assessment years. The assessee appealed to the first appellate authority (CIT(A)) challenging the assessment orders on two principal grounds: (1) the validity of the assessment orders in the absence of the prior approval of the Joint Commissioner of Income Tax as required by section 153D of the Act; and (2) the validity of additions (including additions under section 69C for unexplained expenditure on interest and brokerage) and other disallowances made by the Assessing Officer on merits. The tribunal permitted the parties to argue the legal question (the approval requirement under section 153D) first and ultimately adjudicated that legal issue before addressing (or making academic) the merits.

Legal Issues Presented

Whether assessments framed under section 153C (read with section 153A/section 144) in respect of the assessee are valid when the Assessing Officer did not obtain the prior approval of the Joint Commissioner of Income Tax as required by section 153D of the Income-tax Act, 1961.
If such prior approval was not obtained, whether the resulting assessments are void (null and void) or merely voidable/curable (i.e., whether the defect can be cured by remand or other means).
As a consequential matter, whether the additions/disallowances (including under section 69C) made by the Assessing Officer require adjudication if the assessment orders are held invalid.

Arguments of the Parties

Appellant's (Assessee's) Arguments — Ld. A.R.

When an assessment is framed after a notice under section 153C, the income of the person to whom notice is served is to be assessed in accordance with the provisions of section 153A; therefore the assessment effectively is a section 153A assessment and the prior approval requirement of section 153D must be complied with.
The statutory language of section 153D (which begins with a negative formulation and uses the word "shall" and expressly states that "except with the prior approval of the Joint Commissioner no order shall be passed") demonstrates that the approval is mandatory; an order passed without such approval is a nullity.
The concept of "approval" entails a substantive supervisory act (as per a cited definition in Black's Law Dictionary) and cannot be treated as a mere formality; it implies knowledge and exercise of discretion by the approving authority.
The Parliamentary memorandum accompanying the Finance Bill 2007 also indicates that approval under section 153D is required in cases falling under section 153C.
Procedural safeguards and the scheme (including office procedure prescribed for block assessments) indicate the approval is intended to prevent arbitrary or high‑pitched assessments and thus is mandatory and in public interest; it cannot be waived by the assessee.
Remanding the matter to the Assessing Officer to cure the defect is not appropriate where the limitation period has expired, because such a course would allow the department to indirectly obtain an extended time-limit contrary to the statute; what cannot be done directly cannot be achieved by a circuitous route.
Relied on multiple authorities (including Kirshan Lal v. J & K; Ratanbai N.K. Dubhash; Balvant N. Vishwamitra; Rajendra Kumar Verma; Rolson International; Khubeshwar Prasad Singh; and others) to support the contention that non-compliance with mandatory statutory pre-conditions renders the subsequent order void.

Respondent's (Revenue's) Arguments — Ld. D.R.

Section 153D refers to approval for assessment orders passed under section 153A; the Assessing Officer's actions in framing assessments under section 153C read with section 144 were within the Assessing Officer's jurisdiction given the factual posture (documents found during search related to the assessee) and the legislative design.
Even if approval was not obtained, the tribunal should consider legislative intent and purpose behind section 153D—which is to avoid high‑pitched assessments—and the practical reality that approval presupposes participation by both the Assessing Officer and the assessee. In the present case, there was lack of cooperation by the assessee (including non‑appearance during appellate proceedings and non‑compliance with statutory notices), which informed the Assessing Officer's course of action.
The Assessing Officer is within jurisdiction to continue proceedings from the stage at which an illegality (procedural defect) occurred and to proceed further; reliance was placed on authorities including Guduthur Bros. v. ITO, Gayathri Textiles v. CIT, Commissioner v. Sara Enterprises, Sardarilal Bhasin, Prabhudayal Amichand v. CIT, and Damodardas Murarilal to support this position.
Alternatively, the revenue asked that if a defect is found, the file be set aside to the Assessing Officer or to the CIT(A) so that the defect (non-obtaining of the prior approval) could be cured, with the submission that the Tribunal is not bound by the constraints of limitation and that remand is an appropriate remedy.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court in This Opinion
Kirshan Lal v. J & K (1994)	Cited by the assessee in support of the proposition that certain statutory requirements are mandatory (used in the context of mandatory/directory analysis).	The Court considered it among the authorities in examining whether section 153D is mandatory or directory and treated it as part of the body of authority supporting mandatory construction.
CIT v. Mrs. Ratanbai N.K. Dubhash [1998] 230 ITR 495	Discusses the distinction between cancellation and amendment of assessment and holds that where statute prescribes a mandatory procedure (under section 144B context), an assessment made without following that procedure is without jurisdiction and void.	The Court relied on this decision and its reasoning to support the conclusion that failure to obtain a required supervisory approval (analogous to the Inspecting Assistant Commissioner requirement) renders an assessment invalid; it was a key authority in quashing the assessments.
Guduthur Bros. v. Income Tax Officer, Special Circle, Bangalore [1960] 40 ITR 298 (SC)	Held that the ITO was within jurisdiction to continue proceedings from the stage at which an illegality occurred (context: penalty proceedings).	The Court observed that the facts and issues in Guduthur Bros. were different and held that this authority was not helpful to the revenue in the present case.
Gayathri Textiles v. CIT [2000] 243 ITR 674 (Kar)	Non-obtaining of prior approval of Inspecting Assistant Commissioner under section 271(1)(c)(iii) was held to be procedurally defective.	The Court noted the decision but found the provisions and context different from section 153D and therefore not applicable to support the revenue's case.
Commissioner of Income-Tax v. Sara Enterprises [1997] 224 ITR 169	Addresses whether the bar of limitation in section 275 would curtail powers of the Commissioner under section 263 (context of the case before Madras High Court).	The Court found it not helpful to the revenue on the present issue and did not rely upon it to sustain the assessments.
Commissioner of Income Tax v. Sardarilal Bhasin [1989] 179 ITR 307 (MP)	Related to applicability of prescribed limitation under section 275 in a penalty order passed after remand.	The Court treated this authority as addressing different issues and not supporting the revenue's position in the present matter.
Prabhudayal Amichand v. CIT [1989] 180 ITR 84	Holds that a procedural irregularity not involving a question of jurisdiction can be cured.	The Court observed that this principle is not helpful to the revenue since the present defect (lack of prior approval under section 153D) is held to go to jurisdiction and thus cannot be cured by remand.
Commissioner of Income-Tax v. Damodardas Murarilal [1996] 222 ITR 401	Deals with the power of first appellate authority and remand powers (Madhya Pradesh High Court context).	The Court held that this decision does not support the revenue because the statutory requirement under section 153D is not merely procedural but mandatory, so remand cannot cure the defect.
Balvant N. Vishwamitra v. Yadav Sadashiv Mule (2004)	Cited by the assessee in support of the proposition that an order passed without required statutory approval may be void (specific context cited by the parties).	The Court noted the citation among those relied upon by the assessee; it formed part of the body of authority the tribunal considered in concluding that section 153D is mandatory.
Rajendra Kumar Verma v. Director General (Investigation) IT [2011] 9 taxmann.com 85 (All)	Cited by the assessee (context: approvals/mandatory requirements).	The Court recorded the reliance and considered it within the corpus of authorities addressing mandatory statutory requirements.
Rolson International v. A.C.I.T. (2001 TBOM)	Cited by the assessee (context provided by the parties' citations).	The Court recorded the citation; it did not form the principal basis for upholding the assessments and was considered with other authorities.
Khubeshwar Prasad Singh v. State of Bihar (2007)	Cited by the assessee on questions of mandatory/directory character of statutory provisions.	The Court considered the authority among others when applying the mandatory/directory analysis to section 153D.
SPL's Siddharth Ltd. (Delhi High Court) (referred as SPL's Siddharth Ltd.)	Held that where requisite approval of Additional/competent authority is mandatorily required (in context of reopening under section 147/section 151), absence of such approval renders the action invalid; Tribunal's decision to set aside was approved by the High Court.	The Court relied on this decision; it found the decision directly analogous and applied the principle to hold that assessments framed without prior JCIT approval under section 153D were invalid and quashed the assessments.
Banwari Lal Agarwalla v. State of Bihar (AIR 1961 SC 849)	Authority cited for the legal test whether a statutory provision is mandatory or directory (examining object, importance, consequences).	The Court applied the test and reasoning from this authority when determining that the wording and scheme of section 153D indicate a mandatory requirement.
Raza Buland Sugar Co. Ltd. v. Municipal Board (AIR 1965 SC 895)	Another Supreme Court decision cited regarding the mandatory/directory analysis and consequences of construction.	The Court used this authority, together with Banwari Lal Agarwalla, to frame the approach to determine whether non-compliance with section 153D would render the assessment invalid.
Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (1964)	Cited by the assessee in the context of authority on mandatory/directory character of statutory provisions.	The Court referenced it among authorities considered for the mandatory/directory analysis.
Re Presidential Poll (1974)	Cited by the assessee as part of the jurisprudence on mandatory versus directory statutory provisions.	The Court considered it in the course of its analysis of whether section 153D is mandatory.
Govindlal Chhaganlal Patel v. A.P.M.C (1975)	Cited by the assessee in relation to the test for mandatory/directory construction of statutory provisions.	The Court included this decision in the body of cases it reviewed in reaching its conclusion that section 153D is mandatory.

Court's Reasoning and Analysis

The tribunal's analysis proceeded in a structured statutory and precedential manner:

Statutory scheme and interplay:
- The tribunal examined section 153C and noted that it provides that after issuance of notice under section 153C, the Assessing Officer having jurisdiction over the "other person" (i.e., the person in respect of whom incriminating material has been found) may assess or reassess income "in accordance with the provisions of section 153A." Section 153B deals with time limits for completion of assessments under section 153A.
- Section 153D, inserted by the Finance Act 2007 (w.e.f. 1.6.2007), is titled "prior approval necessary for assessment in cases of search or requisition" and prescribes that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in the specified cases except with the prior approval of the Joint Commissioner.
Textual construction and mandatory/directory analysis:
- The tribunal observed that the heading of section 153D and its text (negative framing plus the use of "shall" and the express proviso "except with the prior approval") manifest the Legislature's clear intention that compliance with section 153D is mandatory.
- Relying on Supreme Court authorities (Banwari Lal Agarwalla and Raza Buland Sugar Co. Ltd.) the tribunal reiterated the established approach: the prima facie force of mandatory language may be displaced only where consideration of object, scope and consequences justifies treating a provision as directory. The tribunal found no such countervailing considerations presented by the revenue to rebut the prima facie mandatory character of section 153D.
Public interest and waiver:
- The tribunal noted the general exception that mandatory requirements serving only the interest of a particular person might be waived by that person. However, it held that the prior approval requirement under section 153D is enacted in public interest (a supervisory safeguard) and therefore cannot be waived by the assessee.
Procedural context and timing:
- The tribunal noted that section 153D was in force at the time the impugned assessments were passed (the assessments were framed on 27.12.2007 and section 153D took effect from 1.6.2007), so compliance was required.
- It also referred to the Manual of Office Procedure which prescribes that block/search assessments require prior approval of supervisory officers and that approval should be obtained in writing and recorded; the Manual reinforced the legislative design for prior supervisory approval.
Precedential application:
- The tribunal relied on the decision in CIT v. Mrs. Ratanbai N.K. Dubhash (Bombay High Court) to support that where statute prescribes a mandatory procedure and the assessing authority acts beyond its prescribed powers, the action is without jurisdiction and void.
- The tribunal also relied on the authority of SPL's Siddharth Ltd. (Delhi High Court) where the Court approved the Tribunal's setting aside of a reopening because the requisite approval had not been taken—this case was treated as directly analogous and persuasive.
- The revenue's authorities (including Guduthur Bros., Gayathri Textiles, Sara Enterprises, Sardarilal Bhasin, Prabhudayal Amichand, Damodardas Murarilal) were examined and the tribunal explained why they were factually distinguishable or addressed different statutory contexts; thus they did not persuade the tribunal to treat section 153D as directory or to permit cure/remand in the present facts.
Conclusion of analysis:
- On the combined textual, contextual and precedential analysis, the tribunal concluded that section 153D imposes a mandatory precondition (prior approval of the Joint Commissioner) for passing assessment or reassessment orders in the search/requisition context and that failure to obtain such approval renders the assessment orders invalid (null and void).
- Because the tribunal quashed the assessments for want of prior approval, it found that the other substantive issues (additions/disallowances including those under section 69C) were rendered academic and did not require adjudication.

Holding and Implications

Holding (core ruling):

The tribunal held that the assessments framed under section 153C read with section 144 (effectively treated as assessments under section 153A for the person on whom notice under section 153C was served) were framed without the mandatory prior approval of the Joint Commissioner as required by section 153D, and consequently those assessment orders are quashed as null and void. The appeals were allowed.

Implications:

The direct and immediate effect is that the impugned assessment orders for the four assessment years were declared null and void and have been quashed by the tribunal.
Because the tribunal quashed the assessments on the ground of statutory non-compliance, the additional issues raised by the assessee regarding the correctness of particular additions and disallowances (including the addition under section 69C) were held to be academic and not adjudicated.
The tribunal treated section 153D as a mandatory statutory safeguard that cannot be waived by an assessee and held that remand or “curing” the defect is not appropriate where the statutory approval is a jurisdictional precondition; thus, in the tribunal's view no curative remand was ordered in the present case.
No express pronouncement was made in the opinion that a new binding precedent is being laid down beyond the adjudication of the facts before the tribunal; the decision rests on application of existing authorities and statutory construction to the facts before the tribunal.

End of summary based exclusively on the provided opinion.

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Akil Gulamali Somji Shop No. 16, Gulistan Complex, Opposite Spca, Poona College Road, Pune 411001 v. Income Tax Officer Ward 4[5], Pune

I.C. Sudhir, Judicial Member - In these appeals, the assessee has questioned first appellate order mainly on two issues. Firstly the validity of assessment 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 addition of the amount made by A.O. u/s. 69C of the Act on account of unexplained expenditure of interest and brokerage paid by the assessee and other 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 while framing assessment u/s. 153 C of the Act against the assessee, the ITO has failed to obtain necessary approval of the Joint Commissioner of Income Tax to the impugned assessment orders as provided u/s. 153 D of the 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 notice 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 assessment has to be framed u/s. 153 A of the Act and not u/s. 153 C. The first proviso as well as clause (ii) of Second proviso to Sec. 153 B (1) specify the time limit for completion of assessment u/s. 153A in respect of person to whom notice is issued u/s. 153 C of the Act. Therefore, conjoint reading of Sec. 153 A, Sec. 153 B and Sec. 153 D makes it clear that the approval as prescribed u/s. 153 D is also required to be obtained 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 speaks that approval u/s. 153 D is also to be obtained in case of other person as referred to Sec. 153 C. In support, he drew our attention to page No. 338 (Statute) of volume 289 ITR. He submitted that the word "approval" has been defined in Black's Law Dictionary -VIth Edition as the act of confirming, ratifying, assenting, sanctioning or consenting to some act or thing done by another. Approval implies knowledge and exercise of discretion after knowledge. The Sec. 153 D uses word "shall" which indicate that the provisions are mandatory especially 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 force. He contended that in the eye of law an order passed without such approval is a nullity.

4. The Ld. A.R. submitted further that the provisions 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 published in February 2003 by Directorate of Income Tax (Organization and Management Services) C.B.D.T. vide Page No.2 has prescribed procedure to be followed in case of Block Assessment. A copy thereof has been furnished. The Ld. A.R. submitted that approval of senior authority provided to avoid arbitrary, high pitched assessments being framed and hence the approval is mandatory. The object of enacting Sec. 153 D is one of general policy and hence it is mandatory. In support, he placed reliance on the decision of Hon'ble Supreme Court in the case of Kirshan Lal v. J & K, 1994-(SC2)-GJX-264-SC.

5. The Ld. A.R. submitted that it is a well settled 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 order passed without an authority is nullity and the same is to be annulled. He placed reliance on the decision of Hon'ble Bombay High Court in the case of CIT v. Mrs. Ratanbai N.K. Dubhash, [1998] 230 ITR 495 / 100 Taxman 458 . He submitted that the assessment cannot be restored to the A.O to follow the prescribed procedure because the time limit to frame the assessment has already expired and extended time limit cannot be given otherwise the limitation provision will be frustrated. He submitted that in cases where the provisions of Sec. 153 D are not followed and if the assessments are set aside to remove the illegality, wide gates would be opened for the department to get extended time limit by passing orders without following the procedure prescribed u/s. 153 D and indirectly will get the extended time limit for completion of assessment. He submitted that it is a well settled law that what cannot be directly done cannot be done by following circuitous way. He referred decision of Hon'ble Bombay High Court in the case of Mrs. Ratanbai N.K. Dubhash (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 Sec 153 D talks of only approval of the Joint Commissioner of Income Tax for assessment order passed u/s. 153A of the Act. He contended that even if for the sake of argument it is accepted that A.O failed in his mandatory duty of obtaining prior approval, we have to go back to legislative intent behind the relevant Section. The Ld. D.R. submitted that the purpose of approval is to avoid high pitched assessment and inconvenience to the assessee. This pre-supposes the participation of both the A.O and assessee in the process of assessment. In the present 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-operation from the assessee during the course of assessment proceedings on various counts. Similarly, even during the appellate proceedings, there has been no appearance of the assessee before the Ld CIT(A) and there was no compliance to statutory notices. The Ld. D.R. placed 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. v. Income Tax Officer, Special Circle, Bangalore , [1960] 40 ITR 298 (SC)

(2) Gayathri Textiles v. CIT, [2000] 243 ITR 674 / 111 Taxman 123 (Kar)

(3) Commissioner Of Income-Tax v. Sara Enterprises, [1997] 224 ITR 169/[1996] 89 Taxman 244 (Mad)

(4) Commissioner Of Income Tax v. Sardarilal Bhasin. [1989] 179 ITR 307 (MP)

(5) Prabhudayal Amichand v. CIT [1989] 180 ITR 84 / 44 Taxman 213 (MP)

(6) Commissioner Of Income-Tax v. Damodardas Murarilal. [1996] 222 ITR 401/[1997] 93 Taxman 651 (MP)

7. In an alternative submission, the Ld. D.R. requested 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 can be cured. She submitted further that Tribunal is also not bound by constraints of limitation and therefore, it is prayed that the file may be set aside to the lower authorities for necessary action.

8. On query raised by the Bench, the Ld. A.R. submitted 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 question, as to whether the provision is mandatory or directory, the subject matter, the importance of the provision, the relation of that provision to the 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 1974- [SC2]-GJX-0912-(SC)

(2) Govindlal Chhaganlal Patel v. A.P.M.C. 1975-[SC2]-GJX-0313 (SC).

(3) Krishan Lal (supra).

(4) Dhirendra Nath Gorai v. Sudhir Chandra Ghosh 1964-[SC2]-GJX-060 (SC).

9. The Ld. A.R. submitted that the Sec. 153D has been enacted for the benefit of general class of the assessees in whose case the assessments in pursuance of the search and seizure action are to be completed. Since the Section starts by negative words, 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 question, the assessment order be treated as null and void. He placed reliance on the following decisions :

(1) Balvant N. Vishwamitra v. Yadav Sadashiv Mule 2004-[SC4]-GJX-636 (SC).

(2) Rajendra Kumar Verma v. Director General (Investigation) IT [2011] 9 taxmann.com 85 (All).

(3) Rolson International v. A.C.I.T, 2001 [ID1]-GJX-1089 TBOM.

(4) Khubeshwar Prasad Singh v. State of Bihar, 2007-[SC2]-GJX-241 (SC)

(5) C.I.R. v. SPL's Siddhartha Ltd ITATONLINE.org.

11. We have considered the above submissions and have 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 Soni, certain documents belonging to the assessee were found and seized. Notice 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 Commissioner 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. 153C of the Act, it is apparent that after issuance of notice u/s. 153C, the A.O having jurisdiction over such other person (against which incriminating material has been found during the course of search conducted on a person) arose or re-assess income of such other person in accordance with the provisions of Sec. 153A. Sec. 153B talks about time limit for completion of assessment u/s. u/s. 153A, whereas S. 153D, talks about necessity of prior approval for framing assessment in case of search 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 case of assessment of income of any other person (i.e. the person other than the person searched). Now the issue for our adjudication is as to whether absence of obtaining prior approval u/s. 153D of Joint Commissioner of Income Tax, assessment made u/s. 153 C will make the assessment void or voidable/curable. For a ready reference, provisions 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 Commissioner in respect of each assessment year referred to in clause (b) of [subsection (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner]."

The above provisions u/s. 153 D have been laid down under the heading "prior approval necessary for assessment in cases of search or requisition". This heading itself suggests that obtaining prior approval the assessment in cases of search or requisition is necessary. We further note that the provisions u/s. 153D start with a negative wording "no order of assessment or re-assessment" supported by the further wording "shall" makes the intention of the Legislature clear that compliance of Sec. 153D requirement is mandatory. No universal rule can be laid down as to whether mandatory enactment shall be considered directory or obligatory with an implied nullification for disobedience. As per the decision of Hon'ble Supreme Court in the cases of Banwari Lal Agarwalla v. State of Bihar AIR 1961 SC 849 ; Raza Buland Sugar Co.Ltd., v. Municipal Board AIR 1965 SC 895 if object of the enactment will be benefited by holding the same directory, it will be construed as mandatory, whereas if by holding it mandatory, serious general inconvenience will be created to nascent persons without very much further object of enactment, the same will be construed as directory. But all these does not mean that language used is to be ignored, only that the prima facie inference of the intention of the legislature arising from the words used may be displaced by considering the nature of the enactment, its designed consequences flowing from alternative constructions. The wordings and language used in Sec. 153D of the Act and the heading "prior approval necessary for assessment in cases of search or requisition" under which, Sec. 153D has been provided do not leave an iota of doubt about the very intention of the legislature to make the compliance u/s. 153D a mandatory. There is no dispute that if a provision is mandatory, an act done in breach thereof will be invalid, but, if it is directory, the act will be valid although 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 one exception. If contain requirements or conditions are provided by a statute in the interest of a particular person, the requirements, or conditions although mandatory may be waived him if no public interest are involved and in such case, the act done still be valid even if the requirement or condition has not been performed. Here, before us, is not a case where consent of assessee will waive the condition of obtaining prior approval u/s. 153D of the Joint Commissioner of Income Tax by the A.O for framing assessment u/s. 153C/ 153A of the Act. Condition of 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 particular person. The use of word "shall" raises a presumption that a particular provision is imperative but this prima facie inference may be reverted by other consideration such as object and scope of the enactment and consequence flowing from such construction. The revenue has not been able to rebut the above inference by pointing out other consideration like object and scope of the enactment and the consequence flowing from such construction before us. Clause 9 of Manual of Office Procedure, Volume II (Technical) February 2003 issued by Directorate of Income Tax on behalf of Central Board of Direct Taxes, Department 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 Assessing Officer should submit the draft assessment order for such approval well in time. The submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering 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 assessment, at least one month before the time barring date. Finally once such approval is granted, it must be in writing and filed 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 obtained should also be mentioned in the body of the assessment order itself."

Chapter XIVB also deals with assessment of search cases. Sections 153A, 153B & 153 C have been introduced to Chapter XIV "procedure for 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 the Finance Act 2007. These provisions thus also deal with the assessment in case 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 operation. In the present case, assessments in question have been framed on 27.12.2007.

13. In the case of Mrs. Rataabai N.K. Dubhash (Supra), the difference between cancellation and amendment of assessment in view of the provisions of Sections 143, 144B, 153 and 251 of the I.T. Act 1961 has been dealt with. The Hon'ble High Court has been pleased to hold as under :

"In view of the above discussion, we are of the clear 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 to the draft order. The power to determine the income of the assessee thereafter gets vested in the Inspecting Assistant Commissioner to whom the Income-tax Officer is required to forward the draft order together with objections. The only thing that remained to be done by the Income-tax Officer is to pass a final order in accordance with the directions given by the Inspecting Assistant Commissioner. The function of the income-tax Officer to make the final assessment under section 144B(5) of the Act is more in the nature of a ministerial function because he can pass the order only in accordance with the directions of the Inspecting Assistant Commissioner. He cannot vary ordepart from the directions given by the Inspecting Assistant Commissioner. Moreover, the requirements of section 144B of the Act re mandatory. The Income-tax Officer has no option but to follow the same. He cannot make the final order on the basis of the draft order without forwarding the same to the Inspecting Assistant Commissioner along with the objections and without obtaining the directions of the Inspecting Assistant Commissioner. An assessment made by the Income-tax Officer in violation of the provisions of section 144B of the Act would be an assessment without jurisdiction. In the instant case, the admitted position is that on receipt of the draft order of assessment, the assessee did file objections and the Income-tax Officer completed the assessment himself on the basis of the draft order without forwarding the draft order 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 jurisdiction. 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 Income-tax Officer the instant case without reference to the Inspecting Assistant Commissioner had rightly been annulled by the Commissioner of Income-tax (Appeals). In view of the above, we answer the question referred to us accordingly in favour of the assessee and against the Revenue.

This reference is disposed of accordingly with no order as to costs."

14. In the case of SPL's Siddharth Ltd. (Supra), before the Hon'ble Delhi High Court, the facts were that notice issued by the A.O u/s. 147 r.w.s 148 of the Act for re-opening the assessment for the A.Y. 2002-03 was set aside by the Tribunal on the ground that the requisite approval of Addl. Commissioner of Income Tax, which is mandatorily required, was not taken. Since 4 years had elapsed from the end of the relevant A.Y, the A.O u/s. 151(1) of the Act was required to take approval of the competent authority. The Hon'ble 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 these decisions and the position of law provided u/s. 153D of the Act, we hold that the assessment orders impugned framed in absence of obtaining prior approval of the Joint Commissioner for the A.Ys. under consideration are invalid as null and void and are quashed accordingly.

15. The decisions relied upon by the Ld. D.R are having different facts and issue, hence are not helpful to the revenue. In the case of Guduthur Bros. (Supra) the levy of penalty without affording a hearing to the assessee was questioned before the appellate authority, who set aside that order. The matter ultimately travelled to the Hon'ble Supreme Court and it was held that the ITO was well within his jurisdiction to continue the proceedings from the stage at which the 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 Sardarilal Bhasin ( Supra), the issue was regarding applicability of prescribed limitation u/s. 275 in a penalty order passed after the case is remanded by an appellate authority. The Hon'ble Court was pleased to hold that 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 Authority. In the case of Gayathri Textiles (Supra) non-obtaining of prior approval of I.A.C u/s. 271(1)(c) (iii) for direction for payment of penalty was held as procedurally defective. The provisions laid down 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 required 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 decision is not applicable in the present case. In the case of Sara Enterprises (Supra), the issue was as to whether the bar of limitation contained u/s. 275 of the Act would attenuate or curtail the powers of CIT, vested in him u/s. 263 of the said Act. The Hon'ble Madras High Court was pleased to hold that it is not hit by provisions of Sec. 275 of the Act. In Prabhudayal Amichand (Supra), the Hon'ble High Court of Madhya Pradesh with reference to Sec. 271(1)(c) of the Act was pleased to hold that a procedural irregularity not involving the question of jurisdiction 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 Damoderdas Murarilal (Supra), the Hon'ble High Court 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 had 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 recent decision of Hon'ble jurisdictional Bombay High Court in the case of Mrs. Ratanbai N.K. Dubhash ( Supra) and of Hon'ble Delhi High Court in the case of SPL's Siddhartha Ltd. (Supra) that requirement u/s. 153 D for obtaining approval of JCIT is not procedural only but a mandatory requirement, hence the cited decision by the Ld. D.R is not applicable in the case of present assessee. Under above circumstances, the issue raised regarding the validity of assessment orders in question without obtaining prior approval u/s. 153D of the Act is decided in favour of the assessee. The assessment orders in question are thus quashed as null and void.

16. In view of the above finding, on the validity of assessment orders in question, the other issue questioning the validity of additions/disallowances made by the A.O in the assessment orders in question does not need adjudication as the same has become academic only.

17. Consequently, appeals are allowed.

Akil Gulamali Somji ... v. Income Tax Officer W...