ITAT Allahabad follows it previous decision on validity of consolidated approval u/s 153D, says it’s later decision was in violation of binding precedents.
In a recent judgment, ITAT Allahabad on the issue of validity of consolidated approval u/s 153D of the Income Tax Act has followed its earlier decision wherein assessment orders were quashed for lack of valid approval. Whereas, the subsequent decision of the ITAT was held to be in violation of the binding precedents.
ABCAUS Case Law Citation:
4882 (2025) (11) abcaus.in ITAT
In the instant case, the assessee had challenged the order of assessment passed under Section 153A r.w.s. 143(3) of the Act by the Assessing Officer alleging it to be illegal & bad in law as the same was passed without valid statutory approval in terms of Section 153D of the Act as the same was granted by JCIT by a common approval letter which was a mechanical approval and amounted to non application of mind.
Before the Tribunal, the assessee contended that his appeals were squarely covered by earlier order of the Allahabad Bench of ITAT. However, the Department submitted that after the aforesaid order of Allahabad ITAT within one month, another order had been passed by the ITAT Allahabad taking a different view regarding provisions of section 153D of the Act therefore, the matter required to be decided again.
The assessee submitted that the approvals given in the case relied upon by it and in the present case were through the same i.e. common approval letter and therefore the issue in dispute regarding validity of approval given under section 153D of the Act, was not just similar but identical with the case on which view has already been taken by the Allahabad ITAT. it was open for Department to take the matter to higher forum i.e. Hon’ble High Court, but it would not be open for Allahabad Bench of the Tribunal to take a different view from the view already taken.
The assessee further submitted that third member decision of Delhi Bench of the Tribunal was also binding on all Benches of the Tribunal anywhere in India. Since it was a stronger precedent, the assessee submitted, it would also prevail over all decisions of Allahabad Bench of the Tribunal including the subsequent decision which had been passed without taking into consideration the case decided by ITAT Delhi.
In view of these arguments, the assessee submitted, the assessment orders relevant to the present appeals should also be annulled as was done in the case relied upon by it.
The Tribunal observed that Hon’ble Allahabad High Court had upheld that mechanical approval under section 153D of the Act would vitiate the entire proceedings. Hon’ble Delhi High Court upheld the order of ITAT quashing assessment order on the ground that there was absence of application of mind by the approving authority in granting approval u/s 153D of the Act. The SLP filed by Revenue against this order of Hon’ble Delhi High Court and Allahabad High Court had been dismissed.
The Tribunal further observed that in a third Member case, order has been passed by Delhi Tribunal on the issue of validity of approval u/s 153D of the Act. It was noted that Hon’ble Delhi High Court had held that there is no difference, really speaking, between a full bench of three judges sitting together and this method of referring to the third judge in the case of a difference of opinion between the A two judges. Whether the first method is adopted or the second, “opinion of the majority” will be decisive. In this case there is a formal reference to a third judge to ascertain his opinion. His is the deciding voice. He turns the scales. The third judge is the full bench. Not alone. In view of the above, the Tribunal opined that the reference was correctly made to the third judge.
The Tribunal observed that there are two aspects of approval given by JCIT u/s 153D of the Act. The first pertains to the consequences that follow if approval given u/s 153D of the Act is found to be invalid. This is a question of law on which there are binding precedents and decisions of higher forums. In the judgment of ITAT Allahabad relied upon by the assessee, the ITAT followed the precedents of Hon’ble Allahabad High Court.
The Tribunal further noted binding precedents in a Third Member case of Income Tax Appellate Tribunal Delhi and the order of Hon’ble Orissa High Court.
The Tribunal opined that the Bench of Tribunal, consisting of the same Members, and falling under the Jurisdiction of the same jurisdictional High Court (i.e. Hon’ble Allahabad High Court) was bound by their own earlier decision wherein they have quashed the assessment orders for lack of valid approval under section 153D of the Act unless they were forced to take a different view on the basis of a stronger precedent.
The Tribunal opined that the order of ITAT Allahabad relied upon by the Revenue was in violation of the binding precedents and precedents of higher forums, it was not a useful precedent for deciding the present appeals.
The Tribunal again affirmed its view that assessment order passed under section 153A of the Act in the absence of valid approval under section 153D of the Act is not curable, and it makes the assessment order void ab initio; and such an assessment order deserves to be annulled.
The Tribunal expressed that it was disturbing to hear the contention of the Departmental Representatives that the Assessing Officer and the JCIT giving approval under section 153D of the Act were not required to peruse all the materials found/seized at the time of search under section 132 of the Act. The Revenue contended that it was sufficient for the Assessing Officer and the JCIT to start their work with appraisal report (prepared by Investigation Wing of the Income Tax Department) as the basis. It amounted to admission that neither the Assessing Officer nor the JCIT applied their minds to materials found/seized in the course of search under section 132 of the Act and they were relying on appraisal of these materials by the Investigation Wing.
The Tribunal also clarified that consultation, between the JCIT and Assessing Officer prior to approval under section 153D of the Act was not only irrelevant for deciding whether the approval was valid; but also was fatal to the assessment order itself due to interference of JCIT during pendency of assessment proceedings before the Assessing Officer.
The Tribunal further observed that in provisions u/s 119 of IT Act; that even CBDT cannot issue orders, instructions or direction so as to require any Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner. The approving authority u/s 153D of the Act cannot be delegated with powers (by an instruction/circular/notification of CBDT) which CBDT does not have. It is well settled, that a delegating authority cannot delegate such powers to a subordinate authority, which the delegating authority does not have. So, the argument that the CBDT can issue direction to the Assessing Officer, to have discussion and consultation with JCIT; fails comprehensively.
Accordingly, the ITAT concurred with our earlier decision relied upon by the assessee and held that in present cases, the approval given u/s 153D of the Act suffered from multiple infirmities; rendering the approval u/s 153D of the Act invalid in the eyes of law. As a result the assessment orders were also annulled.
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