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Facts
The assessee filed appeals against orders for assessment years 2012-13 to 2014-15 and 2017-18 to 2018-19. A key legal ground raised was that the assessment orders passed under section 153A/143(3) were invalid due to the lack of proper approval from higher authorities under section 153D.
Held
The Tribunal held that the approval granted under section 153D was bad in law as it was a common approval for multiple assessees and assessment years, indicating a lack of application of mind. Consequently, the proceedings initiated under section 153C r.w.s. 153A were quashed.
Key Issues
Validity of assessment orders passed under sections 153A/143(3) when the mandatory approval under section 153D was granted mechanically without due application of mind.
Sections Cited
153A, 143(3), 153C, 153D
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Income Tax Appellate Tribunal, DELHI BENCH, ‘C’: NEW DELHI
Before: SHRI C.N. PRASAD & SHRI M. BALAGANESH
Date of Hearing 06.01.2026 Date of Pronouncement 28.01.2026 ORDER PER C.N. PRASAD, JM, These appeals are filed by the assessee against different common orders of the Ld.Commissioner of Income Tax (Exemptions)/ NFAC, Delhi dated 16.12.2021 for the A.Ys 2012-13 to 2014-15, 2017-18 and 2018-19.
The Ld. Counsel for the assessee at the outset submitted that in all these appeals the assessee had raised following additional grounds stating that the impugned assessment orders passed u/s.153A/143(3) of the Act are without obtaining approval from the higher authorities u/s.153D of the Act in accordance with law :-
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned order passed by Ld. AO u/s 153A/143(3) as there was no search on the assessee as confirmed by Income Tax Department in RTI order passed u/s 7(1) dated 23.01.2023.
Without prejudice to above ground, that in any case and in any view of the matter, the addition cannot be made in the hands of assessee as the same is not based on the document found in the search of assessee and it is bad in law as held in the judgements of Hon'ble Supreme Court of India in the case of Pr. CTT vs. Abhisar Buildwell P. Ltd., Civil Appeal No. 6580 of 2021, dated 24.04.2023 and High Court of Delhi in the case of CIT vs. Kabul Chawla, (2016) 380 ITR 0573.
Without prejudice to above grounds, the assumption of jurisdiction by Ld. AO, if any, could be taken in the case of assessee, under section 153C, as the addition was made by Ld. AO on the basis of document found at the place of third party (searched person) i.e. M/s Karma Kitchen & Bar Pvt. Ltd.
Without prejudice to the above grounds, that in any case and in any view of the matter, the assumption of jurisdiction u/s 153C is bad in law and without recording mandatory satisfaction u/s 153C for AY 2012-13 and without issuing notice u/s 153C for AY 2012-13 and thus the impugned order passed is invalid in the eyes of law.
That in any case and in any view of the matter, impugned assessment order passed u/s 153A/143(3) is bad in law and against the facts and circumstances of the case for not making compliance of jurisdictional conditions u/s 153C and thus Ld. CIT(A) ought to have quashed the impugned assessment order.
That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned order passed by Ld. AO u/s 153A/143(3) as the same was passed without obtaining approval of the higher authority u/s 153D in accordance with law.”
Referring to ground No.6 of the additional grounds Ld. Counsel for the assessee stated that since this is a purely legal ground the same may be admitted for adjudication in view of the decision of the Hon’ble Supreme Court in the case of CIT Vs. Sinhgad Technical Educational Society (397 ITR 344).
On hearing both the parties and perusing the additional ground of appeal
No.6, we find that the additional ground No.6 of grounds of appeal is purely a legal ground and respectfully following the decision of the Hon’ble Supreme court in the case of CIT Vs. Sinhgad Technical Education Society (supra) we admit this additional grounds for adjudication.
5. Coming to the merit in the additional ground, the Ld. Counsel for the assessee submitted that identical issue came up for consideration before the Tribunal in various cases wherein a common approval given by the ACIT, Central Circle -14, u/s.153D for various assessee’s and for various assessment years, the Tribunal quashed the entire proceedings initiated u/s.153C r.w.s. 153A of the Act in the absence of valid approval granted by the ACIT, Central Circle -
14. The Ld. Counsel for the assessee placed a copy of the order of the Tribunal in the case of Anu Nagpal Vs. ACIT in dated 16.04.2025 wherein the very same common approval dated 30.12.2019 issued in the case of the Assessee was considered by the Tribunal.
6. On the other hand the Ld. DR supported the orders of the authorities below and submitted that the approval had been granted after due consideration of the records by the Page | 3 ACIT, Central Circle-14 who had duly applied his mind and, therefore, cannot be said to be an approval granted mechanically and invalid.
Heard rival submissions, perused the orders of the authorities below and the submissions made before us. We find that identical issue came up for consideration before the Tribunal in the case of Smt. Anu Nagpal in dated 16.04.2025 wherein validity of the very same common approval dated 30.12.2019 u/s.153D of the Act came up for consideration and the Tribunal quashed the proceedings initiated u/s.153C r.w.s. 153A holding that there was no valid approval granted by the Ld. ACIT, Central Circle- 14 through order dated 30.12.2019 u/s.153D of the Act by observing as under :- “3. We have heard both the parties and perused the records, especially, the copy of approval u/s. 153D of the Act dated 30.12.2019 granted in total 28 assessees cases wherein, the present assessee’s name is mentioned at serial no. 2 and also perused the Tribunal’s order dated 10.1.2025 passed in the case of PrateekNagpal’s case whose name also mentioned at serial no. 3 of the said approval u/s. 153D of the Act. In view of the aforesaid factual matrix, we find considerable cogency in the contention of the Ld. AR that exactly on similar facts and circumstances of the case, the Coordinate Bench of the Delhi Tribunal vide its common order dated 10.01.2025 passed in another family member’s case viz. PrateekNagpal vs. ACIT of the present assessee, which has been decided in (AY 2012-13), ITA No. 521/Del/2022 (AY 2013-14) & ITA no. 522/Del/2022 (AY 2014-15), wherein similar legal issue was decided in favour of the assessee by quashing the entire proceedings initiated under section 153C r.w.s. 153A of the Act in the absence of a valid approval granted by the ACIT, Central Range-4, New Delhi. The relevant findings of the Coordinate Bench are reproduced as under:- “3. Before deciding the legal issue in dispute, we may gainfully reproduce the approval u/s. 153D of the Income Tax Act (for short ‘the Act’), which read as under:-
At the time of hearing, Ld. AR of the assesseefiled a Paper Book containing pages 1 to 404 wherein, plethora of case laws have been referred, whereby the legal issue in dispute has been decided in favour of the assessee. However, more particularly,ld.
AR drew our attention towards the ITAT Delhi Bench decision viz. M/s MilleniumVinimay (P) Ltd. vs. ACIT, dated 31.5.2024, copy of which has been placed at page nos.10- 20 of the paper book and Hon’ble jurisdictional High Court decision in the case of PCIT vs. Shiv Kumar Nayyar in (Del), dated 15.05.2024, a copy thereof is placed at page nos.21-26 of the paper book and submitted that by following the ratio of the aforesaid two case laws, the legal issue involved in the instant appeals may be allowed.
Per contra, ld. DR of the Revenue relied upon the orders of the authorities below and objected to the submissions of the ld. AR. He submitted that the approval u/s 153D of the Act is administrative approval. The procedure to approval process has no relevance to the assessee and his proceedings.
Considered the rival submissions and material placed on record. We have especially perused the approval granted u/s. 153D of the Act and the case laws cited by the ld. AR in the paper book.
We find that ITAT Delhi Bench in the case of M/s MilleniumVinimay (P) Ltd. vs. ACIT, (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:- “15. There are several decisions, which supports the view that approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D of the Act. Such perfunctory approval has no legal sanctity in the eyes of the law. The decision of the co-ordinate bench in ShreelekhaDamani vs. DCIT 173 TTJ 332(Mum.) which has been approved by jurisdictional High Court subsequently, reported in 307 CTR 218 affirms the plea of the Assessee, wherein the Hon'ble Bombay High Court held as under:- "1. This appeal is filed by the Revenue challenging the judgment of Income Tax Appellate Tribunal ("the Tribunal" for short) dated 19th August, 2015.
Following question was argued before us for our consideration: "Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that there was no 'application of mind' on the part of the Authority granting approval?
Brief facts are that the Tribunal by the impugned judgment set aside the order of the Assessing Officer passed under Section 153A of the Income Tax Act, 1961 ("the Act" for short) for Assessment Year 2007- 08. This was on the ground that the mandatory statutory requirement of obtaining an approval of the concerned authority as flowing from Section 153D of the Act, before passing the order of assessment, was not complied with.
This was not a case where no approval was granted at all. However, the Tribunal was of the opinion that the approval granted by the Additional Commissioner of Income Tax was without application of mind and, therefore, not a valid approval in the eye of law. Tribunal reproduced the observations made by the Additional CIT while granting approval and came to the conclusion that the same suffered from lack of application of mind. The Tribunal referred to various judgments of the Supreme Court and the High Courts in support of its conclusion that the approval whenever required under the law, must be preceded by application of mind and consideration of relevant factors before the same can be granted. The approval should not be an empty ritual and must be based on consideration of relevant material on record.
The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid.
Having heard the learned Counsel for the both sides and having perused the documents on record, we have no hesitation in upholding the decision of the Tribunal. The Additional CIT while granting an approval for passing the order of assessment, had made following remarks : "To, The DCIT(OSD)1, Mumbai Subject: Approval u/s 153D of draft order u/s 143(3) r.w.s. 153A in the case of Smt. ShreelekhaNandanDamani for A.Y. 2007-08 reg.
Ref: No. DCIT (OSD)1/ CR7/Appr/2010-11 dt. 31.12.2010 As per this office letter dated 20.12.2010, the Assessing Officers were asked to submit the draft orders for approval u/s 153D on or before 24.12.2010. However, this draft order has been submitted on 31.12.2010. Hence there is no much time left to analyze the issue of draft order on merit. Therefore, the draft order is being approved as it is submitted. Approval to the above said draft order is granted u/s 153D of the I. T. Act, 1961."
In plain terms, the Additional CIT recorded that the draft order for approval under Section 153D of the Act was submitted only on 31st December, 2010. Hence, there was not enough time left to analyze the issues of draft order on merit. Therefore, the order was approved as it was submitted. Clearly, therefore, the Additional CIT for want of time could not examine the issues arising out of the draft order. His action of granting the approval was thus, a mere mechanical exercise accepting the draft order as it is without any independent application of mind on his part. The Tribunal is, therefore, perfectly justified in coming to the conclusion that the approval was invalid in eye of law. We are conscious that the statute does not provide for any format in which the approval must be granted or the approval granted must be recorded. Nevertheless, when the Additional CIT while granting the approval recorded that he did not have enough time to analyze the issues arising out of the draft order, clearly this was a case in which the higher Authority had granted the approval without consideration of relevant issues. Question of validity of the approval goes to the root of the matter and could have been raised at any time. In the result, no question of law arises.
Accordingly, the Tax Appeal is dismissed."
In the case of ACIT, Circle-1 (2) Vs. Serajuddin and Co. the Hon'ble Supreme Court in SLP (Civil) Dairy No. 44989/2023 vide order dated 28/11/2023, dismissed the Appeal filed by the Department of Revenue against the order dated 15/03/2023 in passed by the Hon'ble High Court of Orissa at Cuttack, wherein the Hon'ble High Court had quashed the Assessment Order on the ground of inadequacy in procedure adopted for issuing approval u/s 153D of the Act by expressing discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act.
Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the arguments advanced by the Ld. the Assessee's Representative on the Additional Ground of Appeal
. In our considered opinion the approvals so granted under the shelter of section 153D of the Act does not pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments orders in the captioned appeals are non-est and a nullity and hence the same are quashed.
18. In view of prima facie merits found in the legal objections raised in the Addl. Grounds of the Assessees, we do not consider it expedient to look into the aspects on merits of additions/disallowance as the legal objections on sanction granted under Section 153D of the Act has been answered in favour of the Assessee. Thus the other Grounds raised in the Appeals of the Assessee in both the Appeals have rendered in- fructuous, which do not need any separate adjudication.
19. In the result, the Appeals filed by the Assessee in and are allowed.
11. Upon considering the entire aspect of the matter, we find that the approval has been granted not separately for each assessment year for the assessee whereas the provision of Section 153D of the Act stipulates conditions that no order of assessment or reassessment shall be made by an Assessment Officer below the rank of Joint Commissioner in respect of each assessment year referred to in Clause (b) of Sub Section (1) of Section 153A of the Act or the assessment year referred to in Clause (b) of Sub Section 153B of the Act except the prior approval of the Joint Commissioner. It further appears from the approval dated 08.06.2018 that the same was a common and composite order whereas the Addl. Commissioner is required to verify and approve that each of assessment year is complied with as well as procedural laid down under the Act. Such fact clearly reveals non-application of mind on the part of the Learned Addl. Commissioner of Income Tax, Central Range-7, New Delhi. Thus granting approval for all the common years instead of approval under Section 153B for each assessment year separately de horse the rules. The said approval is found to have been given in a mechanical and routine manner. 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 hereinabove passed by the Hon'ble Jurisdictional High Court and respectfully relying upon the same with the above observation, we quash the entire proceeding initiated under Section 153C r.w.s 153A of the Act in the absence of a valid approval granted by the Learned Additional Commissioner of Income Tax, Central Range-7, New Delhi.
In the result, appeal of the assessee is allowed.”
We further find that Hon’ble jurisdictional 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 Page | 11 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.”
Respectfully following the above precedents, we quash the entire proceedings initiated under section 153C r.w.s. 153A of the Act in the absence of a valid approval granted by the Ld. ACIT, Central Range-4, New Delhi.
We are refrained from adjudicating the other grounds of appeal
and at this stage, we keep the other grounds of appeal open.
16. In the result, the appeal being for assessment year 2012-13 stands partly allowed.
17. With regard to appeals for AYs 2013-14 & 2014-15 are concerned, since the facts are exactly similar to AY 2012-13 our above findings in AY 2012-13 are applicable mutatis mutandis in AYs 2013-14 & 2014-
15. Accordingly, the appeals being & 522/Del/2022 for AYs 2013-14 &2014-15 filed by the assesseearealso partly allowed.
18. To sum up : all the three appeals filed by the assessee are partly allowed.”
4. In the background of the aforesaid discussions and respectfully following the precedents, as cited above, we quash the entire proceedings initiated under section 153C r.w.s. 153A of the Act in the absence of a valid approval granted by the Ld. ACIT, Central Range-4, New Delhi dated 30.12.2019 and accordingly, allow the legal ground raised by the assessee.
5. In the result, the appeal filed by the assessee stands allowed.”
8. The above decision squarely applies to the facts of the assessee’s case. Respectfully following the said decision we hold that the approval granted u/s.153D dated 30.12.2019 by the ACIT, Central Circle-14 is bad in law and consequently the Page | 13 proceedings u/s.153C r.w.s. 153A of the Act are also bad in law and thus, the assessments framed consequent to such approval are also bad in law and the same are hereby quashed for the A.Y.2012-13 to 2014-15, 2017-18 and 2019-20. Additional ground No.6 of the assessee is allowed for all these assessment years.
9. Since we have quashed the assessment order for all these assessment years on a legal ground No.6, all other legal grounds on merits need not be adjudicated at this stage since they become academic in nature and hence they are left open.
In the result, all these appeals filed by the assessee are partly allowed as indicated above. Order pronounced in the open court on 28.01.2026.