Approval u/s 153D has to be granted for each assessment year. Single approval vitiated law

Approval u/s 153D has to be granted for each assessment year. A single approval granted for all AYs held as non application of independent mind.

In a recent case. The ITAT Delhi quashed a single approval u/s 153D accorded in respect of 14 Assessment Years pertaining to two Assessee’s.

ABCAUS Case Law Citation:
4807 (2025) (10) abcaus.in ITAT

Important Case Laws relied upon by Parties:
PCIT v. Sapna Gupta
ACIT vs Serajuddin & Co. Kolkata

A search and seizure operation u/s 132 of the Act carried out in the case of a Business Group wherein certain incriminating materials were found.  Satisfaction was recorded by the appellant assessing Officer (AO) that information contained in the hard disks inventoried relates to activity of providing bogus LTCG entry by the assessee.

Assessment orders were passed later u/s 153C/143(3) of the Act by making certain additions. 

Aggrieved by the assessment orders, the Assessee preferred four Appeals before the CIT(A) who dismissed the Appeals filed by the Assessee.

Before the Tribunal the assessee raised an additional grounds of appeal and submitted that the approval accorded u/s 153D of the Act was a mechanical and arbitrary approval without their being any application of mind and also without satisfying the statutory preconditions of the Act as such the assessment so framed was null and void. 

It was further submitted that approval issued u/s 153D of the Act does not mention any seized document having been perused and a single approval had been granted for 14 Assessment Years pertaining to two Assessee’s. Relying on the Judgment of the Jurisdictional High court prayed for quashing the assessment order.

The Tribunal observed that in the approval order of Additional Commissioner of Income Tax he had not uttered a word on the subject matter of additions.  The approval was in the nature of Performa approval; the approval granted smacked of mechanical or perfunctory approval in a symbolic exercise of powers vested under section 153D of the Act. Apart from the same, a single approval has been granted for 14 Assessment Years pertaining to two Assessee’s.

The Tribunal observed that the Jurisdictional High Court had observed that approval under Section 153D of the Act has to be granted for “each assessment year”. The High Court held that a single approval granted for all AYs and that too without making any mention of the fact that the draft assessment orders were perused at all, was lacking independent application of mind.

The Tribunal further observed that Hon’ble Orissa High Court had an occasion to examine substantial question of law on the propriety of approval granted under Section 153D of the Act. The High Court inter-alia observed that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. It is not correct on the part of the Revenue to contend that the approval itself is not justiciable. Mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like ‘approval’ will not, by itself, meet the requirement of law.

The Tribunal noted that the ratio of judgment delivered by the Delhi High Court and Orissa High Court has held in chorus that the approval granted under s. 153D of the Act, if granted mechanically, will vitiate the assessment order itself. The SLP filed against the aforesaid judgment of Orissa High Court had been dismissed by the Hon’ble Supreme Court.

Accordingly, the Tribunal quashed the single approval u/s 153D accorded in respect of 14 Assessment Years pertaining to two Assessee’s.

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