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Facts
A search operation was conducted on 18.10.2019. Based on seized documents, the Assessing Officer recorded satisfaction under section 153C of the Income-tax Act, 1961. The assessee's representative argued that the satisfaction note did not clearly link the seized material to the assessee's income.
Held
The Tribunal referred to judicial precedents from the Allahabad High Court and Delhi High Court, which held that the approval granted under section 153D of the Act is not a mechanical exercise and must reflect an application of mind. It was noted that in the present case, approval was granted for multiple assessment years on the same day, which was questioned.
Key Issues
Whether the Assessing Officer's satisfaction under Section 153C and the subsequent approval under Section 153D were recorded with due application of mind and proper linkage to the seized material and the assessee's income.
Sections Cited
Section 153C, Section 153D, Section 153A
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Income Tax Appellate Tribunal, DELHI BENCH “F”, DELHI
Before: SHRI.RIFAUR RAHMAN & SHRI SUDHIR KUMAR
Since the issues involved in all the appeals are common and the appeals are interconnected, they were heard together and are being disposed of by this consolidated order. For the sake of convenience, for Assessment Year 2014-15 is treated as the lead case.
carried out on 18.10.2019 in the cases of Shri Alok Kumar Agarwal, Shri Ankit Agarwal, Alankit Ltd. and Alankit Assignments Ltd. Based on the information and documents seized during the said search, the Assessing Officer recorded satisfaction under section 153C of the Income-tax Act, 1961, a copy of which is placed at page 83 of the paper book dated 24.12.2021.
It was further submitted that the same Assessing Officer had jurisdiction over both the searched persons as well as the assessee. The Ld. AR contended that the satisfaction recorded by the Assessing Officer in the case of the assessee is a consolidated satisfaction, which has been placed at page 84 of the paper book. He submitted that the issue under consideration is squarely covered in favour of the assessee by various decisions of the Hon’ble Jurisdictional High Court as well as the Jurisdictional ITAT. The Ld. AR drew our attention to several such decisions placed in the case-law paper book.
It was also submitted that the assessee does not wish to press the DIN- related grounds raised in the appeal. Further, the Ld. AR pointed out that in the satisfaction note recorded by the Assessing Officer, there is no mention as to how the seized material found during the search of the searched persons has any bearing on the income of the assessee under consideration. Nowhere in the pertains to or relates to the assessee.
In support of his contention, the Ld. AR placed heavy reliance on the decision of the Coordinate Bench of the Tribunal in the case of Sashi Agarwal in ITA Nos.
4216-4223/Del/2025 dated 28.11.2025, a copy of which has been placed in the paper book.
Per contra, the Ld. DR relied upon the orders of the authorities below and strongly opposed the submissions of the Ld. AR. She submitted that the approval granted under section 153D of the Act is merely an administrative approval and that the procedure relating to such approval has no bearing on the assessee or the assessment proceedings. According to her, the approval process under section 153D is only an administrative requirement and does not confer any substantive right upon the assessee. She, therefore, relied upon the findings of the lower authorities.
We have considered the rival submissions and carefully perused the material available on record. We have specifically examined the approval granted under section 153D of the Act and the judicial precedents cited by the Ld. AR, as placed in the paper book and referred to during the course of hearing. We find that Hon’ble jurisdictional Allahabad High Court in the case of PCIT Central vs. Siddharth Gupta Revenue, which was upheld by Hon’ble Supreme Court in SLP (Civil) (supra) and Hon’ble High Court held as under :-
“The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval under Section 153D is pre-requisite to pass an order of assessment or re-assessment.
Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of "each assessment year" referred to in Clause (b) of sub-section (1) of Section 153A which provides for assessment in case of search under Section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of "each assessment year" falling within six assessment years (and for the relevant assessment year or years), referred to in Clause (b) of sub-section (1) of Section 153A. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years).
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 orders under Section 153A.”
We further find that Hon’ble Delhi High Court in the case of PCIT vs. Shiv Kumar Nayyar (supra) has decided the similar legal issue in favour of the assessee and against the Revenue. The relevant findings of the Hon’ble Delhi High Court are reproduced as under :-
“15. 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 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 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. NeetuNayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. NeetuNayyar 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. NeetuNayyar. 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."
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 foregoing discussion and the enunciation of law settled through This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration.”
We also find that ITAT Delhi Bench in the case of Sakshi Agarwal vs. DCIT 10.
(supra) has dealt the similar legal issue and decided the same in favour of the assessee. The relevant findings of the Coordinate Bench are reproduced as under:-
5. We have given our thoughtful consideration to the assessee's and the Revenue's respective stands. We make it clear that not only the learned Assessing Officer's satisfaction herein had given a miss to section 153C wherein he had failed to make it clear as to whether the relevant seized material had any bearing on the determination of the assessee's total income but also hon'ble jurisdictional high court's decision extracted in the preceding paragraphs holding such an approach as not sustainable in law which stands upheld in [2025] 175 taxmann.com 849(SC) as well. We thus find merit in the assessee's arguments that the learned Assessing Officer had failed to record a proper section 153C satisfaction before setting into motion the relevant proceedings in question. We accordingly quash the impugned satisfaction as well as consequential assessment framed by the leaned Assessing Officer in the instant lead" appeal in very terms. All other remaining pleadings between the parties stand rendered academic.”
Respectfully following the aforesaid judicial precedents on the issue of consolidated satisfaction and improper satisfaction recorded by the Assessing Officer, we are inclined to allow the grounds raised by the assessee on this issue. related grounds raised by the assessee have already been dismissed as not pressed, we refrain from adjudicating the remaining grounds of appeal and accordingly keep them open.
In the result, the appeal in for the Assessment Year 2014-15 is partly allowed.
As regards the appeals for Assessment Years 2013-14 and 2015-16 to 2020- 21, since the facts involved therein are identical to those in Assessment Year 2014- 15, our findings recorded for Assessment Year 2014-15 shall apply mutatis mutandis to Assessment Years 2013-14 and 2015-16 to 2020-21. Accordingly, the appeals being and 3803 to 3808/Del/2025 for Assessment Years 2013- 14 and 2015-16 to 2020-21 filed by the assessee are also partly allowed.
To sum up: all the appeals filed by the assessee are partly allowed.