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Facts
A search and seizure operation was conducted at the assessee's premises, leading to the issuance of notices under Section 153A and Section 142(1) of the Act. The assessment was completed at a significantly higher income than initially declared. The assessee appealed to the CIT(A) who partly allowed the appeal.
Held
The Tribunal held that the approval granted under Section 153D of the Act was mechanical and lacked independent application of mind, making the assessment order void. Consequently, the assessee's appeal was allowed, and the Revenue's appeals were dismissed.
Key Issues
Whether the approval granted under Section 153D of the Income Tax Act was a mechanical exercise without due application of mind, rendering the assessment order void. Whether the assessment orders were vitiated due to procedural irregularities in obtaining approval.
Sections Cited
132, 153A, 142(1), 153D, 143(3)
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Income Tax Appellate Tribunal, DELHI “C” BENCH: NEW DELHI
Before: SHRI SUDHIR KUMAR & SHRI MANISH AGARWAL
Order dated Assessment Assessment Order under Nos. Order dated section 1 28.04.2023 28.07.2021 143(3) of the Income Tax Act, 1961. 2-3 ITA No.1941/Del/2023 -do- -do- 143(3)/153A of the & C.O.-81/Del/2023 Income Tax Act, 1961. Page | 4 to -do- -do- -do- 2078/Del/2023 6 ITA No.2079/Del/2023 01.05.2023 -do- -do- 7-8 ITA No.2266/Del/2023 -do- -do- -do- & Co.No.97/Del/2023 9-10 ITA No.2267/Del/2023 & -do- -do- -do- Co.No.98/Del/2023 11 ITA No.2080/Del/2023 -do- -do- -do- 12-13 ITA No.2567/Del/2023 -do- -do- -do- & C.O.120/Del/2023 14 ITA No.2081/Del/2023 -do- -do- -do- 15-16 ITA No.2268/Del/2023 -do- -do- -do- & C.O.-99/Del/2023 17 ITA No.2086/Del/2023 -do- -do- -do- 18-19 ITA No.2568/Del/2023 -do- -do- -do- & C.O.-119/Del/2023 -do- -do- -do-
The issues being common, interlinked and related to the same assessee for various AYrs therefore, all these appeals by the assessee and Revenue and cross-objection filed by the assessee have been heard together and accordingly adjudicated by a common order.
First we take appeal of the assessee in 3. [Assessment Year 2011-12]. [Assessment Year 2011-12] 4. Brief facts of the case are that the assessee has derived income from house property, business or profession and other sources. A search and seizure operation u/s 132 of the Act was conducted on 28.06.2018 at the residential and business premises of assessee comprising of Shri Harish Bajaj & Others Group of cases. A notice dated 03.02.2021 u/s 153A of the Act was issued and served upon the assessee. Thereafter, notice u/s 142(1) of the Act alongwith questionnaire was issued to the assessee on 08.02.2021. The assessee e-filed his return of income on 15.02.2021, declaring total income of INR 6,72,340/-. Assessee had filed online submissions and supporting documents and after examining the details/information filed by the assessee, assessment was completed at a total income of INR 1,98,30,042/-. Against such order, the assessee preferred appeal before Ld. CIT(A) who after considering the submissions, partly allowed the appeal of the assessee.
5. Aggrieved by the order of Ld. CIT(A), assessee preferred appeal before the Tribunal wherein the following grounds of appeal are taken: 1. “That having regard to the facts and circumstances of the case, the assumption of jurisdiction u/s 153A and passing the impugned assessment order is bad in law and against the facts and circumstances of the case.
2. That in any case and in any view of the matter, the assumption of jurisdiction u/s 153A and passing the impugned assessment order is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 19,41,614/- on account of estimation of net profit @ 2% of the turnover and further erred in rejecting the books of account of the assessee, more so when no incriminating material was found during the course of search and impugned addition has been made by recording incorrect facts and finding and without providing the entire adverse material available on record and without observing the principles of natural justice.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in rejecting the books of account of the assessee and that too without any basis/material and evidence available on record.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have deleted the various following additions/disallowance inter alia on the ground that no incriminating material was found during the course of search warranting such additions/disallowances.
* Rs.85,60,040/- by treating it as alleged unexplained investment u/s 69. * Rs.27,55,000/- by treating it as alleged unexplained credit u/s 68. * Rs.59,01,048/-by treating it as alleged unexplained credit u/s 68.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned assessment order dated 28-07-2021 as the same is barred by limitation.
7. That in any case and without prejudice to the above grounds, additions/disallowances made in the impugned assessment order are beyond jurisdiction and illegal also for the reason that these could not have been made since no incriminating material has been found as a result of search warranting impugned additions/disallowances.
8. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned assessment order without there being requisite approval in terms of section 153D and in any case approval, if any, is mechanical without application of mind and is no approval in the eyes of law.
9. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961.
10. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Before us the ld.AR of the assessee stated that ground of appeal No. 8 be taken first wherein the validity of assessment order with regard to the approval granted u/s 153D is challenged.
Before us, Ld.AR for the assessee submits that in the present case, approval was granted by Ld. Addl. CIT, Central Range- Gurugram vide letter dt. 14.07.2021 which is a mechanical approval and common for Five different assessee’s for Twenty different assessment years. Ld. AR submits that Ld. Addl. CIT granted approval for AY 2011-12 to 2019-20 in terms of letter No. Addl. CIT/CR/MRT/Approval/153D/2021-22/305 dt. 14.07.2021 which is mechanical approval as no separate approval for each Assessment Year and was given rather approval was given by a single order for various assessment years and for Five different persons. The approval so granted is as under:
8. Ld. AR further submits that from the perusal of the approval, it could be seen that Addl. CIT while granting the approval has not stated that he has gone through the seized material and assessment records including the replies filed by the assessee with reference to the additions/ disallowance proposed in the drafts assessment order. As per ld. AR, the Addl. CIT has not verified the material, nor any reference was made in the approval and thus it is a mechanical approval given. He further states that the Addl. CIT was at Meerut and the assessing officer was stationed at Ghaziabad and it is not possible that Addl. CIT had occasion to go through the assessment records and seized material pertaining to the issues on which additions were proposed in draft assessment order.
9. Ld. AR finally submits that common approval is given for various Assessment Years and for five different assessee which is contrary to the provisions of section 153D of the Act and therefore, he prayed that no proper application of mind before granting the approval and thus assessment order so passed deserved to be held as null and void. He placed reliance on the following judgements:- [i] M/s Tavleen Resorts & Spa Pvt. Ltd. Vs. DCIT in [ii] Smt. Peu Veer Vs. DCIT in & 3380 t0 3381/Del/2024 [ii] Mainee Steel Works Pvt. Ltd. Vs. DCIT in ITA No. 3371 to 3377/Del/2024; [iii] Divjot Singh Mainee Vs. DCIT in ITA No. 3378- 3379/Del/2024 [iv] Sohan Lal Single (AOP) Vs. DCIT in ITA No. 711- 712/Del/2023 and 713-714/Del/2024 Page | 9
10. On the other hand, Ld. Sr. DR for the Revenue supported the orders of lower authorities. The Ld. Sr. DR filed a written submission regarding section 153D approval. For ready-reference, relevant contents of the written submissions filed by the Revenue are reproduced as under:- 1. “It is not a gainsaying that the Addl. CIT hold the concurrent jurisdiction and that the assessment is a continuous process involving administrative as well statutory roles being donned by the Addl. CIT. And it is incumbent on the approving authority to examine and monitor the assessments which can't be denied if the same is not reduced in writing at every point of time till the finalization of the assessment. The approval of the approving authority underlines that he has examined the assessment records, relevant copies of seized documents and the relevant issues arising from the material on record judiciously in independent manner by way of due application of mind. It would not be out of place to mention here that the appellant has not come out with any case that there is case of non-application of mind. The appellant has to positively prove that there is a case of non-application of mind in light of the submission that the approval u/s 153D is an administrative approval. Here, it would not be out of place to highlight that the relevant seized documents in a case are always part of the assessment records as per practice, and requirement of the work. They are not kept separately as relevant seized material is frequently referred to by the assessing officer during the course of assessment proceedings and also made part of assessment order most of the time. In fact, as per the law, seized material is considered as part of records before Assessing Officer and all such seized records, return of income, notices etc. used during an assessment proceeding when considered collectively is known as 'Assessment record'. Therefore, from the letter seeking approval, it is evident that the entire assessment records which included seized material was placed before the approving authority for the purpose of taking decision with regard to approval under section 153D of the Act. 2. In view of the same, it cannot be inferred in any manner from the letter seeking approval by the AO and the letter granting approval by the Addl. CIT that approval under section 153D of the Act was granted in mechanical manner without independent application of mind by the Addl. CIT. 3. Further, in search cases, an Addl. CIT is well aware about progress of the assessment proceedings, relevant issues of different assessee, nature and content of the seized material in light of the fact that the as per the CBDT guideline F. No. 286/161/2006-IT (Inv. II) dt. 22.12.2006, copy of appraisal report is shared by Investigation Wing with both that the assessing officer and Joint CIT. In fact, CBDT guideline dt. 22.12.2006 (Copy enclosed) on the subject of the search and Seizure Assessments Page | 10 clearly outlines such close coordination. Thus, as per the prevailing Practice and Guidelines, the approving authority has good idea of issues involved in particular case before hand i.e. much before the cases are sent to him for approval Under Section 153D of the Act. This guideline of CBDT is relevant piece of information, which throws light on the way search assessments are taken up by the filed officers. Therefore, in light of such peculiar fact of instant case, it cannot be inferred that the Addl. CIT was not in a position to independently apply his mind in judicial manner to the case of assessee on the same day.
In this regard, it is further submitted that on perusal of case laws on the issue of requirements for proper approval under section 153D, it is found that Hon'ble jurisdictional high court has emphatically held that such an issue is essentially a question of fact and has to be decided based of factual matrix of a particular case. Further, it has been held that approval cannot be reduced to a mechanical exercise and approving authority is required to apply his/her independent mind while granting such an approval. Thus, all the cases have been decided on this point by Hon'ble Tribunal and Hon'ble High court in light of peculiar facts of those cases only. Some of such peculiar facts of such cases are outlined here in under to emphasize upon distinguishing nature of facts of instant cases from those cases.: Case Name and Citation Peculiar Facts of cases Distinguishing facts of in mentioned in first col. the instant case HIGH COURT OF DELHI in -No Assessment records Appellant has not been able the case of PCIT vs. Anuj were sent along with draft to prove that its case and Bansal ΙΤΑ 368/2023 assessment order. facts are in alliance with Dated July 13,2023 -There were infirmities in the cited case. the figures of Original Further, there is nothing on Return of income and the record to suggest that in Assessed income. the instant case of the -Addl.CIT did not apply his assessee, there were some mind as he did not notice factual infirmities in the such errors/infirmities. order granting approval. None of the peculiar factual aspects are present in the instant case. Therefore, the case of Anuj Bansal had distinguishable facts than those of instant case. HIGH COURT OF DELHI in The approval order failed to Further, in the instant case, the case of Principal make any mention of the approval is given for the Commissioner Income-tax v. fact that the draft case of assessee only. Shiv Kumar Nayyar [2024] assessment orders were 163 taxmann.com 9 (Delhi) perused at all, of much less perusal of the same with an Therefore, facts of the independent application of instant case are mind. distinguishable.
Also, in this case of Shiv Kumar Nayyar, there was no fact brought on the record by the Revenue to prove that identical issues (involving similar facts) were involved in different cases submitted for approval by the AO. It was in absence of such factual information that granting of approval for 43 cases in a single day was viewed by the Hon'ble High Court. ITAT NEW DELHI in the The approving authority In the instant case, case of Seh Realtors Pvt. had granted approval in approval is given for the Ltd. v. ACIT Central Circle-8 232 cases in a single day. case of assessee only and Therefore, issue of judicious that too in six cases. 2017 23.07.2024 approval for such large Therefore, facts of the number of cases from the instant case are angle of human limitations distinguishable. was an issue before Hon'ble Bench.
Reliance is placed in the case of Home Finders Housing Ltd. v Income-tax Officer Ward 2(3), Chennai [2018] 93 taxmann.com 371 (Madras) wherein it was held that in case an order is passed without following a prescribed procedure, the entire proceedings would not be vitiated.
There is no statutory requirement to deal with the objections given by the assessee after receiving reasons for initiating proceedings under section 147 of the I.T. Act. However, there is a judgement of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd.'s cas (supra) mandating such disposal of objections before passing the assessment order.
The Supreme Court in GKN Driveshafts (India) Ltd.'s (supra) made it clear that on receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by a speaking order. The judgment is very clear that before proceeding with the assessment proceedings, the Assessing Officer has to pass a speaking order. Therefore, the Assessing Officer is bound to pass an order and thereafter only further proceedings could be taken for passing the assessment order. It would not suffice by giving reasons to the objections in the assessment order, in view of the judgment in GKN Driveshafts (India) Ltd. 's case (supra).
15. The applicant has raised two contentions in this appeal.
(a) The assessment order passed in violation of the law laid down by the Supreme Court is void and it cannot be ratified by remitting the matter to the Assessing Officer: (b) The assessment order was passed just one day prior to the period of limitation and therefore, it would not be possible to pass a fresh order after giving disposal to the objections.
16. It is not in dispute that there is no statutory requirement to pass an order taking into account the statement of objections filed by the assessee after receiving the reasons for invoking Section 147 of the I.T. Act. The Hon'ble Supreme Court in GKN Driveshafts (India) Ltd.'s case (supra), has given a procedural safeguard to the assessee to avoid unnecessary harassment by directing the Assessing Officer to pass a speaking order taking into account the objections for reopening the assessment under Section 147 of the 1.T. Act.
17. The forming of opinion to proceed further by disposal of the objections need not be a detailed consideration of all the facts and law applicable. It must show application of mind to the objections raised by the notice. In case the objections are such that it would require a detailed examination of facts and application of legal provisions, taking into account the assessment order sought to be reopened, the string of violations, suppression of material particulars and transactions which would require considerable time and would be in the nature of a detailed adjudicatory process, the Assessing Officer can dispose of the objections, by giving his tentative reasons for overruling the objections.
18. The disposal of objections is in the value of a procedural requirement to appraise the assessee of the actual grounds which made the Assessing Officer to arrive at a prima facie satisfaction that there was escape of assessment warranting reopening the assessment proceedings. The disposal of such objection must be before the date of hearing and passing a fresh order of assessment. In case, on a consideration of the objection submitted by the assessee, the Assessing Officer is of the view that there is no ground made out to proceed, he can pass an order to wind up the proceedings. It is only when a decision was taken to overrule the objections, and to proceed further with the reassessment process, the Assessing Officer is obliged to give disposal to the statement of objections submitted by the assessee.
20. The learned counsel for the appellant by placing reliance on an order passed by the learned Single Judge in Mrs. Jayanthi Natrajan (cited supra) submitted that the order being one made without complying with mandatory procedure, is nonest in law and it cannot be given life by complying with the procedure later. In short, it is the contention that non-compliance of a prescribed procedure would nullify the order and the irregularity cannot be cured later.
We therefore make the position clear that non-compliance of the procedure indicated in the GKN Driveshafts (India) Ltd.'s case (supra) would not make the order void or non-ext. Such a violation in the matter of procedure is only an irregularity which could be cured by remitting the matter to the authority. Later, the Hon'ble Supreme Court also dismissed the SLP raised in the matter. 6. Further, reliance is also placed on the judgment of Hon'ble Kerala High Court in OP(C) No. 340 of 2019 against the order in IA 3123/2018 in OS 125/2018 of II Additional Sub Court, Ernakulam dated 23.06.2022, wherein it is held that the: "5. Courts should endeavor to dispose of a case on merits rather than on default." The Apex Court in the case of Improvement Trust, Ludhiyana vs Ujagar Singh & Ors on 09.06.2010 in Civil Appeal NO. 2395 of 2008 also held that: "......After all, justice can be done only when the matter is fought on merits and in accordance with law rather to dispose it of on such technicalities and that too at the threshold. Both sides had tried to argue the matter on merits but we refrain ourselves from touching the merits of the matter as that can best be done by the Executing Court which had denied an opportunity to the appellant to lead evidence and to prove the issues so formulated. In our opinion, ends of justice would be met by setting aside the impugned orders and matter is emitted to the Executing Court to consider and dispose of appellant's objections filed under Order 21 Rule 90 of CPC on merits and in accordance with law, at an early date. It is pertinent to point out that unless malafides are writ large on the conduct of the party, generally as a normal 1 rule, delay should be condoned. In the legal arena, an attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technalities." 7. It is further submitted that there cannot be any presumption drawn against the approving authority with regard to application of mind merely on the ground that number of cases approved in a day were high. There cannot be any threshold limit set for the same. How many cases will be considered unreasonably high and how many cases will be considered reasonable? It is submitted that every approval needs to be examined in light of its peculiar facts such as number of issue involved, nature of issue involved, modus-operandi involved, number of cases involved and inter- relationship among facts of such cases. If identical issues are involved involving same modus-operandi and cases are of same search group only, it would not be unreasonable to consider that an approving authority will be able to apply its independent mind judiciously to relatively larger number of cases in a single day. Ultimately, it boils down to factual matrix of the cases sent for approval. In the instant case, in light of the factual Page | 14 matrix that additions were made in different cases of the group on the same ground based on same factual position with regard to same accommodation entry provider and involving same modus-operandi, it would be justified to consider that the approving authority would have been in a position to apply his mind to all such cases sent for approval by the AO on the same day, particularly when number of such cases is not too high and facts/issues involved are in the knowledge of approving authority beforehand i.e. before receiving proposal for approval.
Therefore, in view of the above discussion, it is respectfully submitted that the fact of the instant cases are significantly distinguishable from the fact all those cases where Hon'ble Courts and Hon'ble Tribunal have held approval under section 153D as a mechanical approval without due application of mind by the approving authority. Moreover, content of the approval letter clearly establishes that while granting approval, the approving authority had considered facts of the case, assessment records and seized documents and had applied his mind independently. In view of the above it is respect to submitted to kindly take on record the above objections and reject the contention of the assessee on this ground and uphold the order of assessing officer.”
Heard the contentions of both the parties and perused the material available on record. In the instant case, from the approval as reproduced above, for Twenty assessment years in the case of Five different assessee, the Additional CIT while granting the approval, needs to examine all the material including the assessment records, full appraisal report and seized material pertaining to each Assessment Year with reference to the addition proposed by the AO for which approval is sought and for each individual assessee. Further approval is to be granted for each assessment year separately.
The Hon’ble Jurisdictional High Court in the case of Shiv Kumar Nayyar in [TS-343-HC-2024-Delhi] has held that the approval u/s 153D of the Act has to be granted for each Assessment year independently. The relevant observations of the judgement of Hon’ble High Court are as under:- "11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for "each assessment year" referred to in clause (b) of sub-section (1) of Section 153A of the Act. It is beneficial to refer to the decision of the High Court of Judicature at Allahabad in the case of PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- "each assessment year" used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:- "13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. *** 19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A." [Emphasis supplied] 12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for "each assessment year" for "each assessee" separately.
Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:- "22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "seen" or "approved" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the Assessing Officer should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii) the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order." [Emphasis supplied] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023.
A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.
In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- "10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together."
17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017- 18 in the case of the assessee. The said order also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, we cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the ITAT, succinctly encapsulated in the order extracted above." 13. Similarly, the Hon'ble Orissa High Court in the case of ACIT vs Serajuddin & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act. The Hon’ble Orissa High Court Page | 18 made wide ranging observations towards the manner and legality of approval under s. 153D of the Act. The Hon'ble 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. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justifiable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is not even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the 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 Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgement in the case of ACIT vs Page | 19 Serajuddin & Co. was dismissed as reported in (2024) 163 taxmann.com 118 (SC).
[ 14. So far as the judgements relied upon by Ld.AR, we find that the approval granted u/s 153 is not a procedural requirement but is fatal for the entire assessment proceedings. As in terms of this approval, Ld. Addl. CIT has given thought to the material placed before him by the AO and the material available with him in the shape of appraisal report etc. with respect to the draft assessment order. We further find that this issue has been considered in detail by the Hon’ble Jurisdictional High Court in the case of Pr. CIT Vs. MDLR Hotels (P) Ltd. (2024) 166 taxmann.com 327 (Delhi) and further in the case of PCIT vs Anuj Bansal in dated 13.07.2023 wherein SLP filed was dismissed by Hon’ble Supreme Court in PCIT vs Anuj Bansal 466 ITR 254 (SC).
15. Such mechanical approval cannot be sustainable in law in the light of judicial dicta available. The approval memo is totally silent on the issues involved and has granted omnibus approval without any thoughtful process being discernible. A single approval u/s 153D has been accorded in respect of Twenty Assessment Years in case of Five different assessee and there is no other material to show involvement of the superior authority in the course of assessment proceedings. In the case of other family members namely Shri Harish Bajaj and Devendra Kumar Bajaj, in whose cases approval was granted by the ld. Addl. CIT through same approval letter, were decided by the Co-ordinate “B” Bench of Delhi Page | 20 Tribunal wherein under identical circumstances and by making similar observations in [Assessment Year 2013-14] & Others vide order dt.25.02.2025. The Co-ordinate bench has quashed the orders by holding the approval as mechanical. Thus, applying the ratio of judgements delivered as noted above, the assessment order based on ritualistic approval stands vitiated and thus, quashed by allowing Ground of appeal No. 8 of the Assessee.
16. Since we have already allowed the Ground of appeal No. 8 taken by the assessee thus, other grounds of appeal are not adjudicated.
In the result, appeal of the assessee is allowed. to 2079, 2080, 2081, 2086, 2082/Del/2023 [Assessee’s appeals], 2266, 2267, 2567, 2268, 2568/Del/2023 [Revenue’s appeals] & C.O.Nos.-81, 97, 98, 120, 99, 119/Del/2023 [C.Os by Assessee] [Assessment Years 2011-12 to 2019-20]
Since in all the other appeals of the assessee in to 2079, 2080, 2081, 2086, 2082/Del/2023 for Assessment years 2011-12 to 2019-20 respectively, the assessee has taken one of the ground of appeal, challenging the validity of assessment order passed u/s 143(3) r.w.s. 153A of the Act in light of provisions of section 153D of the Act which issue has been decided in favour of the assessee in for AY 2011-12, hereinabove. Since the facts are identical and the approval was granted by Adl. CIT for all these assessment years also by a common order vide letter No. Addl. CIT/CR/MRT/Approval/153D/2021-22/305 dt.14.07.2021 for A.Yrs. 2011-12 to 2019-20 thus, following the said observations, all the captioned appeals of the assessee are allowed.
19. Since, we have already allowed the appeal of the assessee by quashing the assessment orders for AYs 2011-12 to 2019-20 respectively, allowing the ground taken by the assessee on the validity of assessment order passed u/s 143(3) r.w.s. 153A of the Act in light of provisions of section 153D of the Act, therefore, the appeals of the revenue for various assessment years comprising 2266, 2267, 2567, 2268, 2568/Del/2023 and C.O.Nos. 81, 97, 98, 120, 99, 119/Del/2023 [Assessment Years 2011-12 to 2019-20] respectively filed by the assessee are become infructuous and thus, dismissed.
In the combined result, all appeals of the assessee in 2077 to 2079, 2080, 2081, 2086, 2082/Del/2023 [Assessment Years 2011-12 to 2019-20] are allowed and appeals of the Revenue in 2266, 2267, 2567, 2268, 2568/Del/2023 are dismissed. C.O.Nos. 81, 97, 98, 120, 99, 119/Del/2023 filed by the assessee are also dismissed being infructuous.
Order pronounced in the open Court on 22.08.2025.