DCIT CENTRAL CIRCLE-25, NEW DELHI vs. JBM AUTO LTD, NEW DELHI

per law and, therefore, the other grounds raised in the 67 appeals

of the assessees as well as of the department on the merits of the

confirmation/deletion of the additions made in the respective

assessment orders do not remain academic and needs to be

deliberated upon and decided on its merits and, therefore, the case

may be fixed for hearing accordingly in due course of time.

P a g e | 111 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 10. In the result, the applications made by the assessees under

Rule 27A challenging the validity of the respective approvals given

under Section 153D of the Act by the Addl. CIT, Central Cricle-7,

New Delhi vide his respective letters in all the 67 appeals are

dismissed.

PER VIKAS AWASTHY, JM

By the order of President, ITAT vide U.O. No.F.28- Cent.Jd(AT)/2025 dated 3rd July, 2025, the undersigned has been nominated as Third Member to adjudicate the difference of opinion between the ld. Judicial Member (JM) and ld. Accountant Member (AM) on the following questions:- “1. As to whether under the present facts and circumstances of the matters whether the assessment orders based on the erroneous, non-speaking orders of approval under section 153D of the Income Tax Act, dated 29.12.2019 issued by the Ld. Addl. CIT are sustainable in the eyes of law or not. 2. Whether in the facts and circumstances of the case, the respective approvals under section 153D of the Income Tax Act, 1961 dated 29.12.2019 granted by the Addl. CIT for the assessment orders subject matter of the appeals are as per law or not?”

P a g e | 112 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 assessments in the case of all group concerns, which inter alia include JBM Auto Ltd., Jay Bharat Maruti Ltd., Sunil Kumar Aggarwal, Neel Industries Pvt. Ltd., JBM Industries Ltd., and JBM Auto Ltd. (amalgamated company of M/s JBM Auto Systems Pvt. Ltd. and JBM MA Automotive Pvt. Ltd.), were made under sections 153A/153C of the Act for multiple assessment years. In the present set of 67 appeals by various group entities, 61 appeals are by the Department and 6 cross-appeals have been filed by the assessees. The details of the appeals are already given in the cause title. 3. The respondents/assessees in appeals by the Department have made Applications under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1962, raising a legal ground challenging validity of the assessments, alleging that approval accorded u/s.153D of the Act in the respective cases is mechanical, arbitrary and without there being any application of mind. Thus, the assessees are seeking quashing of the assessment orders for the impugned assessment years being null and void. Both sides have unanimously stated that the facts germane to the legal ground raised in the applications under Rule 27 are identical in all the appeals. 4. In so far as admission of the legal ground raised by the assessees/respondents under Rule 27 is concerned, the ld. Members were at consensus-ad idem thus, the legal ground raised by the assessees/respondents was admitted for adjudication. The difference of opinion between the ld. JM and the ld. AM is with regard to the manner of approval accorded by the Additional

P a g e | 113 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 Commissioner of Income Tax (Addl. CIT) u/s.153D of the Act. The ld. JM, after examining the approval letters and referring to decisions of various Hon’ble High Courts on the issue, held the approval accorded by the Addl. CIT u/s. 153D to be mechanical in nature. Based on the said opinion, it was held that the assessment orders are liable to be quashed. 5. Au contraire, the ld. AM, after examining the same approvals was of the opinion that the same are valid and in accordance with the provisions of section 153D of the Act. Hence, there arose a difference of opinion on the issue of validity of approval u/s. 153D accorded by the Addl. CIT. 6. Shri Salil Aggarwal, Senior Advocate, appearing on behalf of the assessees, submits that the approvals u/s.153D of the Act in respect of 67 appeals under consideration are placed at page 1 to 7 of the paper book. The ld. Counsel submitted that a perusal of the approvals u/s.153D of the Act granted by the Addl. CIT would show that the approvals have been accorded on the same date on which the Assessing Officer (AO) forwarded the letters seeking approval. For example, in the case of JBM Auto Ltd., the AO forwarded a bunch of 11 cases for different assessment years on 29.12.2019 for approval and on the same date, the Addl. CIT accorded approval u/s.153D of the Act. Likewise, in the case of other assessees, the Addl. CIT granted approval under section 153D of the Act on the same date on which the AO forwarded the letters seeking approval. It is humanly impossible to examine the seized material, appraisal

P a g e | 114 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 report in each case in such a short span of time and to accord approval under section 153D of the Act with proper application of mind. 7. The ld. Counsel submitted that the mechanical approval u/s.153D of the Act accorded by Addl. CIT is also evident from the fact that search was carried out in the case of JBM Group on 05.10.2017 and the AO sought approval for making assessment u/s.153A of the Act for AY 2008-09 which clearly falls beyond the period of six years from AY 2008-09 and the Addl. CIT(A) has granted approval for making assessment for AY 2008-09. 8. The ld. Counsel submitted that in the case of assessees group concern i.e. Neel Metal Products Ltd. in ITA No. 295/Del/2021 for AY 2010-11 and other group appeals, the assessee in appeal by the Revenue before Tribunal had moved an Application under 27 Rule, raising a legal ground challenging validity of approval accorded u/s.153D of the Act by the Addl. CIT, on identical ground that the approval is mechanical and without there being application of mind by the Superior Authority. The Coordinate Bench vide order dated 09.07.2024 after examining the approval came to the conclusion that since approval was accorded on the same date and even the final order was passed on the same date gives arise to a valid apprehension that there was complete non-application of mind and mechanical approval was granted by the higher authority. Accordingly, the issue was decided in favour of the assessee.

P a g e | 115 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 9. The ld. Counsel submits that approval u/s.153D of the Act for multiple assessment years granted by the competent authority vide single non-speaking order on the same date on which the application is made by the AO for seeking approval is mechanical and without proper application of mind and thus, is liable to be quashed. To buttress his multi-faceted arguments on the issue, the ld. Counsel placed reliance on following decisions:- (i) PCIT vs. Shiv Kumar Nayyar; 163 taxmann.com 9; (ii) PCIT vs. Anuj Bansal; 165 taxmann.com 2; (iii) PCIT vs. Sapna Gupta; 147 taxmann.com 288; (iv) ACH vs. Serajuddin& Co.; 454 ITR 312; (v) PCIT vs. Anuj Bansal; 165 taxmann.com 3;& (vi) ACIT vs. Serajuddin& Co.; 163 taxmann.com 118. 10. He further pointed that in the case of Deeraj Chaudhary vs. ACIT in ITA Nos. 6158/Del/2018, 6159/Del/2018, 6160/Del/2018, 6214/Del/2018, 6215/Del/2018 & 6216/Del/2018, AYs. 2009-10 to 2014-15, decided on 12.09.2025, wherein identical issue assailing approval u/s.153D of the Act was raised by way of legal ground and their was difference of opinion between the Members, the Third Member concurring with the Judicial Member held that approval granted by the Addl. CIT u/s.153D of the Act is not sustainable in the eye of law being mechanical. 11. On the other hand, Shri Shlok Chandra, Special Counsel representing the Department, vehemently defending the approval under section 153D of the Act, submits that the approval was granted by the Competent Authority after examining appraisal report on 10.05.2019. The seized material was furnished by the AO

P a g e | 116 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 before the Addl. CIT on 22.05.2019, and thereafter, the approval was granted on 29.12.2019. It is not a case where the approval was granted on the same date on which the letter was written by the AO seeking approval. The AO and the Addl. CIT were having constant discussion on seized material and appraisal report. It is thereafter, the approval was accorded by the Addl. CIT and the assessment order was passed by the AO. The ld. Special Counsel for the Department placing reliance on the decision in the case of PCIT vs. Agroha Fincap Ltd. in ITA No. 60/2024, decided on 16.10.2024 submitted that the Hon’ble Delhi High Court has distinguished between the approval granted in a single word “approved” and where the approval has been granted with the expression “Yes I am satisfied”. The Hon’ble High Court has held that the use of mere expression “approved” says nothing and cannot be considered as application of mind, whereas, the satisfaction recorded with the words “Yes I am satisfied” shows application of mind. The said expression satisfies the mandate of section 151A of the Act. Hence, such approval cannot be held to be mechanical. The ld. Special Counsel further placed reliance on the decision rendered in the case KK Leisure & Tourism International (P) Ltd. vs. DCIT, (2025) 8 TMI 541, ITAT Cochin and in the case of Yamini Kapoor vs. DCIT, 171 taxmann.com 247 (Delhi-Trib.) where the approval u/s.153D of the Act was held to be valid. 11. The ld. Special Counsel further submitted that initial burden to prove that the approval is improper lies on the assessee. In the present case, the assessee has failed to discharge such onus. The

P a g e | 117 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 Addl. CIT while according approval u/s.153D of the Act has considered information available on record, appraisal report and the seized material. It is thereafter, the Addl. CIT has granted approval u/s.153D of the Act. Therefore, it cannot be said that the Addl. CIT has not examined the relevant material or has not applied mind before granting the approval. 11.2. The ld. Special Counsel submitted that the facts in the case of PCIT vs. Anuj Bansal (supra) are distinguishable. In the said case, there were blatant errors in the approval granted u/s. 153D of the Act; hence, the approval was rightly held to be invalid. Whereas, in the present case, there are no such errors in the approval. The ld. Special Counsel for the Department, while concluding his submissions placed reliance on findings of the ld. AM in paras 7 to 9 of his dissenting opinion. 12. Rebutting the submissions made on behalf of the Department, Shri Salil Aggarwal asserted that the decision referred to by the ld. Special Counsel for the Department in the case of Agroha Fincap Ltd. (supra) is distinguishable. It is also per incuriam, as while rendering the judgment in the case of Agroha Fincap Ltd.(supra), the Hon’ble High Court has not consider the prior judgment in the case of Vinod Kumar Solanki vs. ACIT, reported as 166 taxmann.com 71 (Delhi). The Hon’ble High Court, in the said case, has held that granting of approval/sanction by the competent authority is neither an empty formality nor a mechanical exercise. Where there is no whisper as to what material had weighed with the authority in

P a g e | 118 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 granting approval, such sanction or approval does not fulfil the requirement of section 151 of the Act. With regard to the submissions made by the ld. Special Counsel that, before passing the assessment order, the competent authority granting approval had examined the appraisal report, seized material, etc., the ld. Counsel pointed that during the course of hearing of appeal, an opportunity was granted to the Department to furnish any material or correspondence containing discussion notes between the AO and the Addl. CIT with respect to the assessment order approved by the Addl. CIT. However, the Department failed to produce such material, stating that it forms part of internal records and cannot be shared. Now, the Department in absence of any cogent material cannot argue that there was discussion between the AO and the Addl. CIT before granting approval under section 153D of the Act and that the seized material was examined by the Addl. CIT before granting approval. He further pointed that, in any case, the Department, during the course of hearing of appeal, never raised this plea that the appraisal report/seized material, etc. was examined by the Addl. CIT before according approval under section 153D of the Act. The ld. Counsel for the assessee, while concluding his submissions, placed reliance on findings of the ld. JM in paras 13 to 15 of the proposed order. 13. A specific query was raised by the Bench to the ld. Special Counsel for the Department regarding his arguments that the assessment order was passed by the AO in consultation with the Addl. CIT, juxtapose to the law explained by the Hon’ble High Court

P a g e | 119 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 in the judgment rendered in the case of FinDoc Finevest Pvt. Ltd. vs. DCIT, 172 taxmann.com. 773 (Punjab & Haryana High). In response to the said query, the ld. Special Counsel furnished written submissions as under:

“Applicability of FinDocFinvest (P) Ltd. v. Deputy Commissioner of Income Tax, Central to the facts of JBM Auto Ltd. 1. It is respectfully submitted that FinDocFinvest (P) Ltd. v. Deputy Commissioner of Income Tax, Central ("FinDocFinvest") was passed by the Punjab & Haryana High Court in the context of passing of assessment order u/s 143(3) by the assessing officer. 2. In the present case, there was administrative oversight by the Addl CIT never any interference over the manner in which the assessment order was to be passed. Therefore, the case FinDoCFinvest has no applicability or relevant to the facts of the present case. The administrative supervision exercised by the Addl CIT cannot be said to exercising or wielding any influence over the manner in which the draft assessment order is passed. In fact, if there is any glaring error in the draft assessment order it would be very much within the domain of the Addl. CIT to point out such error to the assessing officer. 3. Further, the issue whether the assessing officer was in any manner influenced by the Addl CIT is not only incorrect, there is no factual basis to make that assumption and lastly, such issue is beyond the scope of reference in the present case.” 14. The issue under reference is the validity of the approval under section 153D of the Act granted by the Addl. CIT. Before proceeding further, it would be relevant to refer to one such approval accorded by the Addl. CIT u/s. 153D of the Act on 29.12.2019. The same is reproduced herein below:-

P a g e | 120 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25

The approvals under section 153D of the Act in the cases of other respondents/assessees are identically worded and are in identical manner i.e. single approval for multiple assessment years.

P a g e | 121 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 bare perusal of the approval u/s.153D of the Act reproduced here in above would show that Addl. CIT has not examined or perused the appraisal report, seized material and any other document available on record. The Addl. CIT in the said approval has categorically stated, “on the basis of detailed discussion with you time to time, information available on record, facts mentioned in the Appraisal Report and relevant seized documents perused by you and brought to the notice of undersigned”. This clearly shows that the relevant seized documents and Appraisal Report were never examined by the Addl. CIT. The Addl. CIT only on the basis of information brought to his notice by the AO has accorded approval. To put it in other words, the Addl. CIT merely on the basis of hearsay has accorded the approval without examining relevant seized documents, facts mentioned in the appraisal report and the information available on record. The manner in which approval has been accorded clearly shows that the approval has been reduced merely to the level of formality instead of a structural safeguard against arbitrary exercise of power as envisaged under the Act. The Courts have repeatedly emphasized that the competent authority granting approval must considered the relevant material placed before it and form an independent opinion. A meaningful safeguard as provided under the provisions of section 153D of the Act has been reduce to ritualistic exercise by the Addl. CIT while granting the approval. 16. In the case of ACIT vs. Serajuddin& Co. (supra), the Department assailed findings of the Tribunal in holding approval

P a g e | 122 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 u/s.153D of the Act invalid, as the approving authority had not applied its mind for giving approval. Following submissions were made on behalf of the Department as under:- “8. Mr. T.K. Satapathy, learned Senior Standing Counsel for the Revenue made the following submissions: (i) In the present case, prior approval had in fact been taken by the AO from the Additional CIT and there was no illegality in that regard. (ii) The approval of the superior officer was distinct from the assessment order. It was a mere administrative order and not open to challenge before a court of law. In other words, it was submitted that the approval granted by the Additional CIT was not justiciable and could not form the basis for challenging the assessment order. (iii) What could only be challenged is want of sanction. Reliance was placed on the decision of the ITAT, Mumbai in Pratibha Pipes &Structurals Ltd. v. Dy. CIT [IT Appeal No. 3874 (Mum.) of 2015, dated 10-4-2019]. (iv) There was no requirement for any hearing to be given to the Assessee by the supervisory officer prior to giving approval although Clause-9 of the Manual of Office Procedure stipulates it. This, therefore, cannot be said to be mandatory. Reliance was placed on the decisions of the Karnataka High Court in Gopal S. Pandit v. CIT [2018] 96 taxmann.com 233/257 Taxman 300 and Rishabchand Bhansali v. Dy. CIT [2004] 136 Taxman 579/267 ITR 577 and of the Madras High Court in Sakthivel Bankers v. Asstt. CIT [2002] 124 Taxman 227/255 ITR 144 which were all in the context of Section 158 BG of the Act. (v) The mere irregularity in granting approval in the context of Section 158BG of the Act was held not to be fatal to the assessment order. Reliance was placed on the orders of the Kolkata ITAT in Shaw Wallace & Co. Ltd. v. Asstt. CIT [1999] 68 ITD 148 and of the Delhi ITAT in Kailash Moudgil v. Dy. CIT [2000] 72 ITD 97 (SB). Reliance was also placed on the decision of the Karnataka High Court in Gayathri Textiles v. CIT [2000] 111 Taxman 123 where it was held that for the purpose of section 271(1)(c) of the Act, the failure to obtain prior permission from the IAC for imposing penalty was only a procedural error and not fatal to the order of penalty. (vi) Since the entire documents were already available to the Additional CIT in the file sent for approval, there was no need for exchange of the said documents prior to the grant of formal approval under section 153D of the Act. (vii) Lastly, it was submitted that even if there had been a violation of the principles of natural justice, unless prejudice were

P a g e | 123 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 shown by the Assessee, no interference with the assessment orders was warranted. Reliance was placed on the decisions in Dharampal Satyapal Ltd. v. Dy. CCE [2015] 58 taxmann.com 90/51 GST 197 (SC)/8 SCC 519; Managing Director, ECIL v. B. Karunakar [1993] 4 SCC 727; Haryana Financial Corporation v. Kailash Chandra Ahuja [2008] 9 SCC 31; State Bank of Patiala v. S.K. Sharma [1996] 3 SCC 364; P.D. Agrawal v. State Bank of India [2006] 8 SCC 776 and State of U.P. v. Sudhir Kumar Singh [Civil Appeal No. 3498 of 2020, dated 16-10-2020] It was then submitted that where initiation was valid but completion was not correct, the order may not be invalid but only irregular because the intervening irregularity is a curable one. Reliance was placed on the decision of the Kerala High Court in (CGG) Panicker v. CIT [1999] 237 ITR 443 and CIT v. N. Krishnan [1999] 235 ITR 386. It was submitted that mere technicality should not defeat justice.” The Hon’ble High Court after examining provisions of section 153D of the Act held, that a plain reading of section 153D of the Act itself makes its abundantly clear that the legislative intent was to obtain “prior approval” by the AO when he is below the rank of a Joint Commissioner, before he passes an assessment order or reassessment order u/s. 153A or 153B of the Act. Such an approval of a Superior Officer cannot be a mechanical exercise. Where the approval is granted mechanically it would vitiate the assessment order itself. The Hon’ble High Court further after considering Manual of Office Procedure issued by the CBDT in February 2003 and the decisions rendered by the Hon’ble Supreme Court of India in the case Sahara India (Firm) vs. CIT, 169 Taxman 328, Rajesh Kumar vs. DCIT, 157 Taxman 168 and the decision of Hon’ble Delhi High Court in the case of Yum Restaurant Asia Pte. Ltd. Vs. DIT, 99 taxmann.com 457 held 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 CIT. The letter simply grants an approval. In other words, even

P a g e | 124 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 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 'see' 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 AO 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] The aforesaid decision of Hon’ble Orissa High Court was upheld by the Hon’ble Apex Court, as the SLP filed by the Department i.e. ACIT vs. Serajuddin& Co., 163 taxmann.com 118 against the said decision was dismissed. 17. The Hon’ble Jurisdictional High Court in the case of PCIT vs. Anuj Bansal (supra) in a similar case where validity of approval u/s.153D of the Act was held to be invalid by the Tribunal for want of application of mind by the approving authority, and the Department carried the issue in appeal before the Hon’ble High court, the Hon’ble Court held that where the ACIT granted approval u/s.153D of the Act without noticing discrepancy in the assessment order or search material such a mechanical approval without application of mind would be in valid in eyes of law. In the instant case, the Addl. CIT has granted approval without realizing the fact

P a g e | 125 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 that the AO has sought approval in some of the case which are beyond period of limitation. Thus, the approval granted by the Addl. CIT u/s.153D of the Act was absolutely without application of mind and mechanical. 18. In the case of PCIT vs. Shiv Kumar Nayyar (supra), the substantial question of law for consideration of Hon’ble Delhi High Court was:- "Whether the ITAT has erred in law, in considering the Assessment Order under Section 153A of the Act, as invalid and bad in law by stating that the approval granted by the Range head under section 153D of the Act is void as the same was granted in a mechanical manner without application of mind?" The Hon’ble High Court after examining provisions of section 153D of the Act held 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 Pr. CIT v. Sapna Gupta [2023] 147 taxmann.com 288/[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

P a g e | 126 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 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." 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. [Emphasis supplied] 19. The Hon’ble High Court also placed reliance on the decision rendered in the case of ACIT vs. Serajuddin& Co. (supra) and also noted the fact that the SLP preferred by the Revenue in the case of Serajuddin& Co. (supra) was dismissed by the Hon’ble Supreme Court of India. The Hon’ble High Court noted that the approval was granted on the same day when the draft assessment order was sent for approval by the AO, as are the facts in the present set of appeals. The Hon’ble High Court on such single approvals for multiple assessment years observed 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

P a g e | 127 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 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. 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.” 20. The Third Member decision in the case of Deeraj Chaudhary vs. ACIT in ITA Nos. 6158/Del/2018, 6159/Del/2018, 6160/Del/2018, 6214/Del/2018, 6215/Del/2018 & 6216/Del/2018, AYs. 2009-10 to 2014-15, decided on 12.09.2025, wherein there was difference of opinion on similar set of facts, the Third Member opined as under:- “21. I note the above observations of learned Accountant Member and is of the view that assessment proceedings or any proceedings under the Act before the Assessing Officer which affect the levy of tax on the subject are judicial in nature. It is well-settled that the Assessing Officer upon whom jurisdiction has been conferred to make all orders judicially, has to act independently. The Assessing Officer, while framing assessment, cannot act on the advice given by an outsider even though he may be an authority higher in rank to him in official hierarchy. Higher authorities that include Additional CIT/JCIT under whom the Assessing Officer is administratively under control, are not entitled to give opinion or advice in regard to assessment proceedings being quasi-judicial in nature. This is, however, subject to the provisions of Section 144A of the Act, where the assessee or the Assessing Officer suo-moto can refer the matter but, for that, he has to invoke this provision. This view is supported by Hon'ble Bombay High Court in the case of Dinshaw Darabshaw Shroff Vs. CIT – [1943] 11 ITR 172 (Bom), wherein it is held that although the Assessing Officer making an assessment is not acting as a court of law, it is clear that while framing assessment is acting in quasi-judicial capacity, and he ought to conform to the more elementary rules of judicial procedure, and in particular to conduct the case himself, and not allow somebody else, even his superior officer, to interfere in the conduct of the case. What to talk of superior authority, Hon'ble Supreme Court in the case of Union of India Vs. Tata

P a g e | 128 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 Engineering & Locomotive Co.Ltd. – AIR 1998 SC 287, 288, held that the Assessing Officer is entitled to complete the assessment as per the provisions of Section 143(3) of the Act and, for this purpose, he can call for and examine whatever document he considers relevant. Hon'ble Supreme Court held that, if the Assessing Officer fails to follow any judgment of the High Court or of the Supreme Court, the assessee has adequate statutory remedies by way of an appeal and revision against the assessment order but, the Court should not try to control the mode and manner in which an assessment should be made. Hence, the higher authority including the Additional CIT/JCIT or CIT or CCIT, being administrative controlling authorities of the Assessing Officer, are not entitled to interfere in the judicial process of the Assessing Officer while framing assessment. In view of the above, I am of the view that, while making an assessment, the Assessing Officer is solely to be guided by the provisions of law and he cannot avail of any instructions or directions given by his higher authority including CBDT in making a particular assessment in a particular way. While passing assessment orders, he is only bound by what, if any, has been directed under Section 144A of the Act by his Additional CIT/JCIT or the instructions issued by the CBDT under Section 119 of the Act or what has been decided by the appellate authorities as mentioned in the Act. He has also to follow the precedence established by Hon’ble High Courts or the Supreme Court. The proceeding under Section 153D for granting approval is entirely different from the process of making assessment. Once draft assessment is prepared, the process of approval starts under Section 153D of the Act. Then the authority prescribed under Section 153D i.e., the Additional CIT/JCIT has to apply his mind for grant of approval after verifying the assessment records, seized records, etc. 22. I noted that the common thread discussed by Hon’ble Orissa High Court in the case of Serajuddin& Co. (supra), by Hon'ble Delhi High Court in the case of Anuj Bansal (supra) and by Hon’ble Allahabad High Court in the case of Sapna Gupta (supra) is that the requirement of previous approval of assessment by the Additional CIT/Joint CIT in terms of provisions of Section 153D of the Act being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty formality. Needless to say that before granting approval, the Additional CIT/Joint CIT, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer and the approval must reflect the application of mind to the facts of the case. The CBDT itself recognized the importance of this provision and the above laid down principle and hence issued Manual of Office Procedure in February, 2023 in exercise of powers under Section 119 of the Act. Vide Para 9 of Chapter 3 of Volume-II (Technical), a clear procedure is devised i.e., how an approval is to be

P a g e | 129 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 granted for draft assessment for passing of assessment order in search cases. According to the Manual, the Assessing Officer should submit the draft assessment order for such approval well in time along with docketed in the order sheet, a copy of the draft assessment order, covering letter filed in the relevant miscellaneous records folder. Even, it is noted that due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. It is further noted that once such approval is granted, it must be in writing and filed in the relevant folder indicating above after making due entry in the order sheet. This is the mandate provided in the office manual of the Department. In view of above, I am of the view that the ‘approval’, as mandated u/s 153D of the Act, signifies a product of human thoughts based on the given set of facts and interpretation of the applicable law. It provides equality in treatment and thus prevents bias, prejudice and arbitrariness. It also prevents and avoids inconsistent and divergent views. The power of approval to the specified authority i.e., Superior authority has been envisaged with the objectives that no illegality or biasness, to either of the sides i.e., the assessee or the Revenue, remains.” 21. The law as emerges from the decisions referred above is unambiguous that approval u/s.153D of the Act is not merely a formality but substantive condition ensuring exercise of power by the superior competent authority for independent scrutiny at a higher level. The provision of section 153D of the Act casts responsibility on the approving authority to accord approval only after examination of the relevant material and not as an ornamental approval. The provisions of section 153D of the Act are inbuilt jurisdictional safeguard which should not be reduced merely to a ritualistic exercise. 22. The ld. Special Counsel for the Department has argued that the AO before passing assessment order was in constant discussion with the Addl. CIT. Thus, the Addl. CIT was always in the loop and was aware of the facts of the case. I find that similar submissions

P a g e | 130 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 were made by the Revenue in the case of PCIT vs. Shiv Kumar Nayaar (supra) and in the case of FinDocFinvest (P) Ltd. vs. DCIT (supra). Though, the ld. Special Counsel has tried to distinguish the aforesaid decision, but I am of considered opinion that the ratio laid down in the case of FinDocFinvest (P) Ltd. vs. DCIT (supra) squarely applies on the facts of the case and the arguments raised on behalf of the Department. The Hon’ble High Court emphasizing independence of Assessing Officer in passing the assessment order held as under:- “23. Section 116 of the Act, defines the Income Tax Authorities as different and distinct authorities. Such different and distinct authorities have to exercise its powers in accordance with law in specified circumstances. Thus, the Assessing Officer would have to exercise its own discretion to reach a conclusion and would not be influenced by any other officer. In view thereto, we find force in the contention raised by the learned senior counsel for the petitioner that the concerned Assessing Officer was influenced by the consultation and discussion with his superior officers. In fact the order passed by the Assessing Officer appears to have been already prepared even before the reply was received as the consultations have been conducted on 26.10.2023, 11.01.2024 and 14.03.2024 by the Assessing Officer as mentioned by him in the order itself. Again after the reply was received and the order was passed by the Assessing Officer, the same has been approved by the Joint Commissioner. As such, we find that the Joint Commissioner has in fact comprehensively and actively participated in the making of the assessment order while his role was only limited to the approval of the assessment order in terms of the CBDT Circular. Thus, we find the order to be vitiated in law. 24. In view of the above, the assessment order cannot be result of an independent application of mind and exercise of discretionary power by the Assessing Officer in terms of Section 143(3) of the Act and but is an order passed under the influence and directions of the superior officers. It is to be noticed that the consultation with a superior officer would be akin to directions of the superior. There is no room available for discretion where consultation is sought from a superior

P a g e | 131 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 officer while if a superior officer consults his subordinates, the discretion continues to stay with him. He may choose not to follow the advice of his subordinate but the opposite would be untrue. We are, thus, of firm view that the order has been passed whereby the Assessing Officer has abdicated his authority and, therefore, the order has become vitiated in law.” [Emphasized by us] Thus, the argument by Special Counsel for the Department that the assessment order was passed in consultation/coordination with the Addl. CIT would itself makes the assessment order invalid. as such assessment order is passed in violation of fundamental concept of independence of the AO in framing the assessment. 23. The ld. Special Counsel for the Revenue has placed reliance on the decision in the case of PCIT vs. Agroha Fincap Ltd. (supra), to contend that the expression “Yes I am satisfied” are sufficient to show that the approving authorities has applied its mind and approval is not mechanical. In the instant case, it is apparent from the approval u/s.153D of the Act accorded by the Addl. CIT that there is no whisper that he has examined the documents and has nowhere in the approval u/s.153D of the Act has expressed his satisfaction while granting the approval. Therefore, the decision rendered in the case of PCIT vs. Agroha Fincap Ltd. (supra) does not support the cause of Revenue. The ld. Special Counsel for the Revenue has also placed reliance on decision in the case of KK Leisure & Tourism International (P) Ltd. vs. DCIT (supra). I find that the Division Bench of the Tribunal in the said case has not expressed any opinion on the issue. In fact, the Bench has expressed its inability to judge

P a g e | 132 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 whether the approval was mechanical or not in the absence of relevant material. Further, the Special Counsel has placed reliance on the decision in the case of Smt. Yamini Kapoor vs. DCIT (supra). I find that complete facts are not emerging from the said order of the Division Bench on the basis of which approval has been held to be valid. Hence, no reliance can be placed on the said decisions. 24. In the present case, the ld. JM after examining approvals u/s.153D of the Act accorded by the Addl. CIT, judicial precedents on the issue and the other material available on record has quashed the approval and the consequent assessment proceedings. Whereas, the ld. AM has expressed his dissenting opinion primarily emphasizing on the procedural aspect of granting approval and inter-se communication between AO and the Addl. CIT before grating approval. As recorded in the preceding paragraphs, the Revenue has not brought on record any material whatsoever to substantiate that at any point of time appraisal report or the relevant seized material was forwarded by the AO to the Addl. CIT before according approval u/s. 153D of the Act. Nor it is emanating from the records made available to the Bench that the Appraisal Report, relevant seized material or other relevant documents were examined/perused by the Addl. CIT before according approval. 29. In light of above discussion and the legal position, I answer the question referred as under:- Question framed by the Bench Answer to the Questions 1. As to whether under the present In the given facts of the case and the facts and circumstances of the legal position, I am of considered matters whether the assessment opinion that the approvals u/s.153D

P a g e | 133 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 orders based on the erroneous, non- of the Act accorded by the Addl. CIT speaking orders of approval under on 29.12.2019, 30.12.2019, section 153D of the Income Tax Act, 26.02.2021. 07.04.2021 dated 29.12.2019 issued by the Ld. &19.04.2021 are mechanical and Addl. CIT are sustainable in the eyes fails to qualify the test of valid of law or not. approval u/s.153D of the Act. Hence, 2. Whether in the facts and the approvals (supra) are not in circumstances of the case, the accordance with law. respective approvals under section 153D of the Income Tax Act, 1961 dated 29.12.2019 granted by the Addl. CIT for the assessment orders subject matter of the appeals are as per law or not? 30. In view of the above, I concur with the view of ld. JM in quashing the impugned assessments. 31. The matter now be placed before the regular Bench for passing appropriate orders, in accordance with the majority opinion.

PER MUDHUMITA ROY, JM

This bunch of cross appeals preferred by the respective parties

are against the orders passed by the Ld. Commissioner of Income

(A) of the respective zones, arising out of the orders passed by the

Assessing Officer under Sections 153A/143(3) of the Income Tax

Act, 1961, (hereinafter referred to as ‘the Act’) for Assessment Years

2008-09 to 2018-19 respectively in respect of different assessees.

P a g e | 134 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 Since, common question of law and common grounds of appeals are

raised in all the matters, these are heard analogously and are being

disposed of by a common order for the sake of convenience.

theJudicial Member allowed the legal issue as supported by the

assessees in their applications under Rule 27 of the Income Tax

(Appellate Tribunal) Rules, 1962 preferred in the appeals filed by

Revenue on which the assessees were granted relief by the order

passed by the Ld. CIT(A) raising the ground of approval under

Section 153D of the Act is not sustainable since the same is

mechanical in nature and consequently upheld the order passed by

the Ld. CIT(A).

P a g e | 135 67 Appeals, JBM Auto Ltd. Vs. ACIT, CC-25 Hon’ble President ITAT under Section 255(4) of the Act. The Hon’ble President by and under the order dated 03.07.2025 nominated the Third Member to decide the reference. The Ld. Third Member by and under the order dated 13.04.2026 concurred with the view of the Judicial Member. Consequent to the opinion of the Third Member, appeals of the assesseesare allowed by quashing the impugned assessments and the Revenue appeals, therefore, having no legs to stand on are dismissed.

Order pronounced in the open on 20.04.2026 Sd/- Sd/- (Brajesh Kumar Singh) (Madhumita Roy ) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated 20.04.2026 dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

ITAT NEW DELHI