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Facts
The assessee's appeal was against the order of the CIT(A), which arose from an order passed by the ACIT under Section 153A read with Section 144 of the Income Tax Act, 1961. The assessee raised additional grounds concerning the validity of approval granted under Section 153D of the Act.
Held
The Tribunal held that the approval granted under Section 153D of the Act was done in a mechanical manner without due application of mind, rendering the approval proceedings invalid. Consequently, the entire assessment proceedings initiated under Section 153A read with Section 144 were quashed.
Key Issues
The key issue was whether the approval granted by the Additional Commissioner of Income Tax under Section 153D was valid, considering it was a common approval for multiple assessment years and lacked evidence of due application of mind.
Sections Cited
153A, 144, 153D, 143(2)
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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SMT. ANNAPURNA GUPTA
O R D E R
PER Ms. MADHUMITA ROY, JM:
The instant appeal filed at the behest of the assessee is directed against the order dated 17.01.2023 passed by the CIT(A)- 27, New Delhi, arising out of the order dated 26.12.2018 passed by the ACIT, Central Circle – 17, New Delhi under section 153A read with section 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2016-17. grounds of appeal vide application dated 30.11.2024, as under:
“3. “Whether on the facts and circumstances of the case, the approval granted u/s 153D of the Act through a common approval for separate assessment order passed u/s 153A for AY 2011-12 to 2016-17 and u/s 153A read with section 144 of the ACT for AY 2017-18 is considered valid in law in view of judgment of Hon’ble ITAT Delhi Bench in the case of MilleniumVinimay Pvt. Ltd. Vs. ACIT in ITA No. 458/D/2012.” for AY Learned Assessing Officer did not have valid jurisdiction in issuing notice u/s.143 (2) of the Act and therefore, the notice is bad in law and entire assessment order on the basis of such notice, since vitiated, is liable to be quashed. 3.1 “Whether approval granted vide letter F. No. Addl. CIT/CR- 5/153D/2018-19/1011 dated 26.12.2018 is valid in terms of the provisions of section 153D of the IT Act.”
At the time of hearing of the instant appeal, Ld. Counsel appearing for the assessee submitted before us that this particular additional legal grounds though not placed before the authorities below, the same can be entertained/admitted by us, in view of the judgment passed by the Hon’ble Apex Court in the matter of National Power Thermal Limited, reported in 229 ITR 383 (SC) followed by the jurisdictional High Court in CIT vs, Jai Parabolics Print Pvt. Ltd. 276 ITR 42(Delhi). However, the Ld. DR has raised his objection to this effect that this particular ground of maintainability of the assessment proceeding has not been raised before the authorities below and thus the same neither can be raised here, nor can be entertained by us, if so raised. In rebuttal, the Learned Counsel for the assessee submitted before us that no additional evidence is required for disputed question of fact raised in this particular ground. It was further contended by the Learned Counsel for the assessee that the question arose from the facts are already on record. The determination of this particular ground will also aid in determining the assessee’s current tax liability meaning thereby the issue involved herein raised in the additional ground goes to the root of the matter and hence prayed for admission of the same.
4 Having heard the Learned Counsel appearing for the parties, and having regard to the facts and circumstances of the case, particularly taken into consideration the ratio laid down by the Hon’ble Supreme Court in the case of National Power Thermal Limited, reported in 229 ITR 383 (SC) (supra), we are of the considered opinion that the additional ground as narrated in the foregoing paragraph in regard to the jurisdiction of the Learned AO in issuing notice under Section 143(2) of the Act goes to the root of the matter and thus this additional ground demands adjudication at the very threshold by us. In that view of the matter, the additional ground is, therefore, admitted.
5 Ld. AR of the assessee challenged the jurisdiction of order of assessment on the basis that approval obtained u/s 153D of the Act is invalid and not in u/s 153D of the Act that it is well within the jurisdiction.
6 We have heard the rival submission made by the respective parties and we have also perused the materials available including the copy of approval obtained u/s 153D of the Act and judicial pronouncements relied upon by both the parties.
Approval obtained u/s 153D of the Act is reproduced hereunder:
7 It is evident from perusal of aforesaid approval, that learned AO vide his It is evident from perusal of aforesaid approval, that learned AO vide his It is evident from perusal of aforesaid approval, that learned AO vide his letter dated 26.12.2018 has sought approval u/s 153D of the Act, with his letter, he letter dated 26.12.2018 has sought approval u/s 153D of the Act, with his letter, he letter dated 26.12.2018 has sought approval u/s 153D of the Act, with his letter, he merely submitted draft assessment order. Learned Additional Commissione draft assessment order. Learned Additional Commissioner of draft assessment order. Learned Additional Commissione Income Tax, Central Range 5, New Delhi, Income Tax, Central Range 5, New Delhi, the approving authority, on the same approving authority, on the same approval for assessment years 2011-12 to 2017-18. It is clear that approving authority has nowhere records that he has perused the relevant seized material and draft order of assessment before granted approval u/s 153D of the Act. Learned AR in support of his argument has relied upon the following judgments: i) Pr. CIT vs. Sapna Gupta (Allahabad High Court) 147 taxmann.com 288 ii) Pr. CIT vs. Shiv Kumar Nayyar (Delhi High Court) 163 taxmann.com 9 iii) PCIT(Central)-2 v. Anuj Bansal (Delhi High Court) 165 taxmann.com 2 iv) Amolak Singh Bhatia vs. DCIT (Delhi ITAT) in v) MDLR Airlines (P) Ltd. vs. DCIT (Delhi ITAT) in 8 We have considered the judgment passed by the Hon’ble Delhi High Court in the case of Pr. CIT vs. Shiv Kumar Nayyar (supra) as relied upon by the assessee. While dealing with this particular issue and finalizing the same in favour of the assessee the Hon’ble Court has been pleased to observe as follows:
“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.
Rajesh Karsanbhai Ptel 18. Therefore, under the facts of the present case, considering the foregoing discussion and the enunciation of law settled through judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration.
19. Consequently, the appeal stands dismissed. Pending application(s), if any, are also disposed of. [Emphasis is ours] 9 In another decision in the case of Shiv Kumar Nayyar v. ACIT, only in , 87/Del/2022, Coordinate Bench has held as under:
“7. The assessee has challenged the validity of approval granted by Addl.CIT dated 30.12.2018. Before proceeding further it is relevant to refer to the said approval. The same is extracted herein below for ready reference:-
From a bare perusal of the aforesaid approval it is not emanating that the Addl.CIT either in the past or even when proposed assessment order was forwarded by the Assessing Officer to Addl.CIT has examined the same. The said approval is a combined approval for AY 2011-12 to 2017-18 in the case of assessee and NeetuNayyar. The co-ordinate Bench in assessee's own case while adjudicating appeal of the assessee in to 1285/Del/2020 and for AYs 2011-12 to 2015-16, respectively vide order Rajesh Karsanbhai Ptel dated 26.07.2023 after considering the same very approval and placing reliance on the decisions rendered in the case of M/s Serajuddin& Co. (supra), PCIT vs. Subodh Aggarwal by Hon'ble Allahabad High Court and PCIT vs Anuj Bansal of Hon'ble Jurisdictional High Court (supra) concluded as under:-
“14. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in holding that the approval u/s 153D of the Act has been granted by the Addl.CIT in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Such an approval has neither been mandated by the provisions of the Act nor endorsed by the decision of the Hon’ble Orissa High Court and Hon’ble Allahabad High Court referred to supra. Hence, we find lot of force in the arguments advanced by the ld. AR in support of the additional ground raised for all the assessment years under consideration before us. Accordingly, the additional ground raised by the assessee is hereby allowed.”
Thus, the co-ordinate Bench after examining facts of the case and after considering various Hon’ble High Courts decisions held the approval granted by the Addl.CIT u/s. 153D of the Act unsustainable in the eye of law.
The Revenue challenged the aforesaid order before the Hon'ble High Court in (supra). The Hon'ble High Court upheld the findings of the Tribunal observing as under:-
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
Therefore, under the facts of the present case, considering the foregoing discussion and the enunciation of law settled through judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration.
Consequently, the appeal stands dismissed. Pending application(s), if any, are also disposed of.
10. The assessee has also placed reliance on the order of Tribunal in the case of Neetu Nayyar in & 1989/Del/2022 for AY 2016-17 & 2017-18, respectively. The co-ordinate Bench vide composite order dated 22.11.2013 quashed assessment following order in the case of assessee in to 1285/Del/2020 for AY 2011-12 to 2014-15 (supra).”
Further, we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCIT vs. Anju Bansal (supra) wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire assessment proceedings. The relevant operative part of the said order is reproduced below:-
"12. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error.
In another words, it was emphasized that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter:
17.1 However, in the present case, we have no hesitation instating that there is complete non -application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs.87,20,580/ - , Similarly, when the total assessed income as per the AO comes to Rs.16,69,42,560/ -, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560/ - had he applied his mind. The addition of Rs. 15,04,35,000/ - made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes . 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (supra).In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 143(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed".
In this appeal, we are required to examine whether any substantial question of law arises for our consideration.
Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act.
We are not inclined to interdict the order of the Tribunal."
In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in holding that the approval u/s 153D of the Act has been granted by the ld. Additional Commissioner of Income Tax in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. We find that the order issuing authority has not discharged its statutory duties cast upon him even by assigning cogent reasons in respect of the issues involved in the matter. Thus granting approval in the absence of due application of independent mind to the material on record for each assessment year in respect of the assessee’s case separately vitiates the entire proceedings; the same is found to be arbitrary and erroneous and therefore, liable to be quashed. We are also inspired by the ratio laid down in the Judgment narrated relying upon the same with the above observation, we quash the entire proceeding initiated under Section 153Ar.w.s 144 of the Act in the absence of a valid approval granted by the Learned Additional Commissioner of Income Tax, Central Range-5, New Delhi.
12 In the result, the appeal of the assessee is allowed.
Order pronounced in open court on 25.06.2025.