Loading judgment…
Facts
The assessee is in appeal against the order of the CIT(A) which sustained additions made by the AO. The primary grounds of appeal relate to the validity of the assessment orders and demand notices due to the absence of DIN numbers and non-compliance with CBDT circulars, and the mechanical approval granted by the Addl. CIT under Section 153D of the Act without proper application of mind.
Held
The Tribunal held that the approval granted by the Addl. CIT under Section 153D of the Act was mechanical and without due application of mind, making it invalid and consequently vitiating the assessment order. Therefore, the appeal of the assessee was allowed.
Key Issues
Whether the assessment orders are invalid due to the mechanical approval under Section 153D without due application of mind by the approving authority?
Sections Cited
143(3), 156, 153D, 69A, 153A, 292B
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI BENCH: ‘A’: NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI SUDHIR PAREEK
Assessee by : Sh. Raj Kumar, CA & Sh. J.P. Sharma, CA Revenue by : Sh. Javed Akhtar, CIT DR Date of Hearing : 03.04.2025 Date of Pronouncement : 28.05.2025 ORDER PER SUDHIR PAREEK, JM By way of instant appeal, the assessee assails the order dated 14.08.2024 passed Commissioner of Income Tax (Appeals)-28, New Delhi [hereinafter referred as ‘the Ld. CIT (A)’] arising out of the order of the Learned Assessing Officer [hereinafter referred as ‘the Ld. AO’] dated 31.12.2019 under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘Act’) for A.Y. 2018-19.
The assessee has raised following grounds of appeal for adjudication: -
1. That under the facts and circumstances, the impugned manual asstt. order is unsustainable in law and should be deemed to never have been issued in the absence of quoting DIN No. in the body of asstt. order and for not complying with the mandatory conditions and requirements of CBDT Circular No.19/2019 Dtd. 14.08.19 applicable w.e.f. 01.10.19.
2. That under the facts and circumstances, in the absence of any DIN on demand notice U/s.156 Dtd.31.12.19, the impugned demand notice and consequentially the asstt. order Dtd.31.12.19 are nonest and unsustainable in view of non compliance of the mandatory requirements of CBDT Circular No.19/2019 Dtd.14.08.19 applicable w.e.f. 01.10.19.
3. That in the absence of DIN in the communication Dtd.29.12.19 by Addl. CIT to A.O. granting approval U/s.153D, the approval as well as the resultant asstt. orders U/s, 143(3)
Page 2 of 18 are nonest and unsustainable in law in view of CBDT Circular No.19/2019 Dtd. 14.08.19 applicable w.e.f. 01.10.19.
4 That in view of the approval U/s.153D by Addl. CIT being mechanical and of without application of mind, apart from without providing an opportunity of hearing, the impugned approval U/s.153D and consequential asstt. order are unsustainable in law.
5. That under the facts and circumstances and in view of the explanations and evidences filed, the Ld. CIT(A) erred in law and on merits in sustaining addition of Rs.34,64,594/- U/s.69A for seized jewellery as unexplained of assessee and other family members jointly (Mrs. Vijay Gupta - Mother, Mrs. Vani Gupta -Wife & Ms. Shivani Gupta - Daughter) out of total addition made by the A.O. at Rs.47,65,105/- in case of assessee and Rs.40,56,260/- in the case of Mrs. Vijay Gupta (mother) by considering and examining the source of complete jewellery found whether seized or not from above persons/family. The Ld. CIT(A) should had deleted the complete, addition.
At the outset, the Learned AR has submitted that he is not pressing ground 1 to 3. Hence, above grounds dismissed as not pressed.
Heard rival submissions and carefully perused the material available on In the course of hearing the Ld. AR submitted that the Ld. AO sought approval under Section 153D of the Act in 69 group of cases on 29.12.2019 vide single letter dated 29.12.2019 and on very same day the Addl. Commissioner of Income Tax granted approval in all aforesaid 69 cases vide single approval order dated 29.12.2019 and in the approval in question simply stated that the approval as per provisions of section 153D of the Act in respect of draft assessment order submitted in the above mentioned cases , hereby accorded and in this regard it is submitted in the said approval order even do not mentioned that the Ld. Addl. CIT has gone through the draft order/ assessment order or even other material and it is hardly possible to grant approval on a single day in 69 search cases by examining the record and applying independent mind so in this case approval in question is mechanical in nature without application of mind .
Per contra, the Ld. DR submitted that the combine letter dated 29.12.2019 giving approval under Section 153D of the Act and letter dated 29.12.2019 seeking approval under Section 153D of the Act make it evident that in the instant case the Addl. Commissioner of Income Tax applied mind properly and independently in accordance with law and also submitted that approval of the approving authority underlines that he has examined the assessment records, relevant copies of seized document and relevant issues arising from the material available on record. It is also submitted that the assessee/ appellant has to prove that there is a case of non-application of mind in the light of the submission that the approval in question u/s 153D is an administrative approval. It is also submitted that it cannot be inferred in any manner that the approval was granted in mechanical manner without application of mind because in search cases an Addl. CIT is well aware about assessment of assessment proceedings relevant issues of different assessee, nature and context of the seized material in the light of the facts that as per CBDT guideline copy of approval shared by wherein with both the Ld. AO and joint CIT and as per the prevailing practice and guidelines the approving Page 5 of 18 authority has good idea of issues involved in particular case before i.e. and before the cases sent to him for approval.
The Ld. AR in support of his submission, relied upon the judgment passed by Hon’ble Delhi High Court in the case of Principal Commissioner of Income Tax Vs. Shiv Kumar Nayyar dated 15.05.2024 of which relevant to para 17 and 18 which reproduced as under: -
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.
Therefore, under the facts of the present case, considering the judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration. 7. The Ld. AR also placed reliance upon the case of ACIT Vs. Serajuddin and Company [2023] 150 taxmann.com 146 (Orissa) in which Hon’ble Orrisa High Court held regarding approval under Section 153D of the Act, the bare minimum requirement of the approving authority having to indicate what the thought process involved in approval in question and while elaborate reasons need not be given, there has to be some indication that approving authority had examined draft orders and finds that it meets requirement of law and also that where approval is granted mechanically, it would vitiate assessment order itself .
8. The Ld. AR has furnished the approval letter of Asstt. Commissioner of Income Tax, CC-14, New Delhi which is as under:-
Page 7 of 18 Page 8 of 18 Page 9 of 18
The Ld. AR also draws our attention and relied upon the order of the coordinate Bench titled Rajesh Kumar Gupta Vs. ACIT in for A.Y. 2018-19 of which relevant extract has given below :- “5.1 From the above, it is apparently clear that Addl. Commissioner of Income Tax has given approval in all 69 number of cases and the approval thereof is purely mechanical and without application of mind. In such cases, the assessment loses its validity. The case laws refereed by the Ld. Counsel for the assessee are germane and supports the case of the assessee. We further note that Delhi Bench of the Tribunal in the case of M/s Infolance Software Solutions Pvt. Ltd. vs. ACIT, CC-13, New Delhi in to 4107/Del/2019 (Ayrs. 2011-12, 2013-14 & 2014-15) and ITA No. 4289/Del/2019 (AY 2013-14) & Others vide its order dated 26.11.2024 has considered the exactly similar issue and has held as under: -
Further, we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCIT vs. Anju Bansal in ITA 368/2023 order dated 13.07.2023 wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a Page 10 of 18 quasi-judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search 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.
12.1 More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order.
In another words, it was emphasised 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 in stating 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 Page 11 of 18 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 Page 12 of 18
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. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed".
[Emphasis is ours]
14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration.
15. 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 Section 153D. It is not Page 13 of 18
an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act.
16. 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. JCIT 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 decisions of the Hon'ble Orissa High Court; Hon'ble Allahabad High Court and Hon’ble Jurisdictional High Court (Delhi High Court) referred to supra. Hence, we find lot of force in the arguments advanced by the Ld. AR in support of the additional grounds raised for all assessment years under consideration before us for all the assessees. Accordingly, the Additional Grounds raised by all the assessees for all the assessment years under consideration are hereby allowed.
Since, pursuant to the allowing of the additional grounds, the entire search assessment framed in the hands of all the assessees is to be declared illegal and bad in law, the other legal grounds and grounds on merits raised by the assessees
Page 14 of 18 for various assessment years need not be gone into as adjudication of the same would be merely academic in nature and, hence, they are left open.
In the result, all the appeals of the assessee are allowed and appeal of the revenue in in the case of Brij Kishore for Asst Year 2010-11 is dismissed.
In view of above observations and respectfully following the judicial precedent, we have no hesitation in holding that the approval u/s 153D of the Act granted by Learned JCIT in the instant cases were in mechanical manner without due application of mind. Accordingly, the grounds by all the assessees for all the assessment years under consideration are allowed.”
We further find that Hon’ble Delhi High Court in Pr. CIT 6. Vs. Shiv Kumar Nayyar in & CM Appl 28994/2024 vide its order dated 15.5.2024 has dealt the similar issue and held as under:-
“…17. Notably, the order of approval dated 30.12.2020 which was produced by 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
Page 15 of 18 cannot lose sight of the fact that the instant cases, 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….”
Respectfully following the aforesaid judicial precedents , we are in strong agreement that in this case approval under Section 153D granted by the Ld. Addl. Commissioner of Income Tax, Central Range-4 is quite mechanical in nature without due application of mind as it lacks the indication of any thought process in granting said approval order. it is also relevant that as 69 cases were approved in a single day and accordingly, we inclined to quash the assessment by allowing the appeal of the assessee.