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Facts
Proceedings under section 153C were initiated against the assessee following a search and seizure operation that uncovered documents related to accommodation entries. The Assessing Officer (AO) made additions for unexplained credits and expenditure, leading to an assessment order. The assessee's appeal before the CIT(A) was dismissed.
Held
The Tribunal held that the approval granted under Section 153D of the Act for the assessment order was mechanical and not based on an independent application of mind. The approval was a single order for multiple assessment years, which is contrary to legal requirements. Consequently, the assessment order was quashed.
Key Issues
The validity of the assessment order due to a mechanically granted approval under Section 153D, which was for multiple assessment years and lacked independent application of mind by the approving authority.
Sections Cited
153C, 143(3), 68, 69C, 153D, 132, 139, 250, 127(3), 127(2)(a)
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Income Tax Appellate Tribunal, DELHI A BENCH: NEW DELHI
Before: SHRI RAJ KUMAR CHAUHAN & SHRI MANISH AGARWAL
ITA No.5004/Del/2025
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “A” BENCH: NEW DELHI BEFORE SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.5004/Del/2025 [Assessment Year: 2015-16] Onus Plantations & Argo vs Dy. Commissioner of Ltd. 702, Arunachal Income Tax, Building, 19, Barakhamba Central Circle-6 Road, Connaught Place, Delhi New Delhi-110001 PAN-AAMCS1810K APPELLANT RESPONDENT Appellant by Shri Neeraj Mangla, CA Respondent by Shri Jitender Singh, CIT DR Date of Hearing 16.12.2025 Date of Pronouncement 16.01.2026
ORDER PER MANISH AGARWAL, AM: The present appeal is filed by the assessee against the order dated 17.07.2025 of Ld. Commissioner of Income Tax (A)-24, New Delhi [“Ld. CIT(A)”] in Appeal No.24/10977/2014-15 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of the assessment order dated 22.12.2021 passed u/s 153C r.w.s. 143(3) of the Act pertaining to Assessment Year 2015-16.
Brief facts of the case are that a search & seizure action u/s 132 of the Act was carried out in the Ashish Begwani Group of cases who was involved in facilitation of accommodation entry alongwith the Kolkata based entry providers Shri Gopal Kumar Aggarwal and his son, Shri Vikas Kumar Aggarwal which fact was also admitted by
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him in his statement recorded u/s 132(4) of the Act that he was involved in facilitation of accommodation entry through which he earned commission income. Various books of accounts and various documents seized during the search operation disclosed that certain documents related to “accommodation entry” were seized from various premises of Group. In the seized material some sheets containing list of beneficiaries and their transactions of accommodation entries facilitated by Shri Ashish Begwani to various beneficiaries including the assessee were found. Accordingly, the proceedings u/s 153C of the Act were initiated in the case of assessee. The assessee furnished its original return of income u/s 139 of the Act on 25.03.2016, declaring total income of INR 4,930/- and the same income was declared in the return filed in response to notice u/s 153C of the Act. Thereafter, the AO assessed the income of the assessee vide assessment order dated 22.12.2021 passed u/s 153C r.w.s. 143(3) of the Act at INR 22,70,930/- by making addition of INR 22,00,000/- on account of unexplained credits u/s 68 of the Act taken from two companies namely M/s Libra High Rise Pvt. Ltd. of INR 6.00 lacs and M/s Bhargabi Vinimay of INR 18.00 lacs and INR 66,000/- towards unexplained expenditure for obtaining such entries.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 17.07.2025, dismissed the appeal of the assessee.
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Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-
That the orders passed by Ld. AO u/s 153C of the Act as well as appellate order passed by Ld. CIT(A) are bad in law and are passed in contravention of prevailing law as well as facts of the case, therefore liable to be annulled. 2. That assumption of jurisdiction of Ld. AO in consequence of order passed by Ld. PCIT u/s 127(3) of the Act of the Act is illegal and not tenable under the law because of said order being mechanical and being passed without recording reasons for transfer of case of assessee which was mandatory pre-condition specified as per the provisions of Sec. 127(2)(a) of the Act. 3. That the assessment proceedings undertaken in case of assessee by Ld. AO u/s 153C of the Act are illegal and not tenable under the law because recording of consolidated satisfaction note for A.Y. 2011-12 to Α.Υ. 2017-18. 4. That the assessment order passed by Ld. AO is further not sustainable under the law because of not getting and granting of proper approval u/s 153D of the Act as such the Ld. AO could not provide the same in reply to RTI filed as well. 5. That the Ld. AO grossly erred in law and in facts of the case in assessing repaid loan of Rs. 22,00,000/- as unexplained cash credit u/s 68 of the Act. 6. That the Ld. AO grossly erred in law and in facts of the case in assessing loan of Rs. 22,00,000/- as unexplained cash credit u/s 68 of the Act despite discharge of onus cast upon assessee to substantiate genuineness of the same. 7. That the Ld. AO grossly erred in law and in facts of the case in making addition of Rs. 66,000/- u/s 69C of the Act. 8. That Ld. AO grossly erred in law and in facts of the case in not adjudicating objections to satisfaction note filed by assessee company during assessment proceedings. 9. That the Ld. AO grossly erred in law and in facts of the case in making additions to income of assessee relying on statements and evidences which were not provided to assessee for rebuttal during assessment proceedings.
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That the assessment order passed u/s 153C of the Act is further not sustainable under the law as no opportunity of cross- examination of persons whose statements were relied upon was allowed. 11. That the appellant craves leave to add, alter or delete the above grounds of appeal at the time of hearing.”
Before us, ld. AR for the assessee made submission on grounds of appeal No.4. and submits that from the perusal of approval order it could be seen that common approval is given for various assessment years which is contrary to the section 153D which provides that approval should be given for each assessment year separately, thus it is mechanical approval. The reliance in this regard is placed on the order of the Hon’ble Delhi High Court in the case PCIT vs. Sapna Gupta (2023) 147 taxmann.com 288 (All) and PCIT vs. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Delhi). Further, the Ld. counsel has relied on the judgement of the Third Member of ITAT Delhi in the case Dheeraj Chaudhary Vs. ACIT in ITA No. 6158/Del/2018 dt. 10.11.2025, to contend that in case of common and mechanical approval u/s 153D of the Act for various assessment years, the assessment is liable to be quashed.
On the other hand, Ld. CIT DR for the Revenue supports the order of AO and submits that approval was not granted on the same day and not mechanical approval. As per CBDT Circular dated 22.12.2006 the Range head i.e. the JCIT/ Addl. CIT is fully aware of the assessment proceedings and actively discussed with the AO from time to time with reference to the issues relating to different assessment years and the nature of contents of the seized material. He thus submits that by any stretch of imagination, it cannot be
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inferred that Range Head was not in a position to apply his mind independently in a judicious manner while granting approval under section 153D of the Act. The CBDT guidelines explicitly emphasize the close coordination required in search and seizure assessments. Therefore, it is reasonable to conclude that, in accordance with prevailing administrative practices and guidelines, the approving authority has a comprehensive understanding of the issues involved in a particular case well in advance, prior to the case being submitted to him for approval under section 153D of the Act. It is thus prayed by Ld. CIT DR that the contentions of the assessee on the issue of approval u/s 153D of the Act may please be rejected and the order of the AO may please be upheld. He also filed written submission which reads as under:
“Issue pertaining to Section 153 D approval. 3.1 With respect to the issue pertaining to grant approval u/s 153D, it is stated that the Range Head, Ld.CIT OSD has duly applied his mind as is evident from the approval dated 21.12.2021. Moreover, Range Head, CIT OSD had issued specific direction in granting approval with specific remarks. He while granting approval has specifically mentioned that the approval has been granted "in view of the details furnished, perusal of assessment records and various discussions". 3.2 From perusal of the approval letter, the following facts may be observed: i). The AO had submitted proposal for approval along with draft order on 17.12.2021. The RANGE HEAD, CIT OSD granted approval on 21.12.2021 based on perusal of the thus submitted assessment records and draft Assessment order. ii). It may also be noted that the AO had submitted only 07 case files of the Assessee company to the Range Head, CIT OSD for approval which he perused and gave approval. iii). The case laws cited by the assessee are those in which approval u/s 153D was given mechanically without application of mind due to time constraint. But, the facts of the impugned case are completely different. Perusal of 07 files is undoubtedly a humanly possible
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task. Thus, it cannot be considered by any stretch of imagination that the approving authority was not in a position to apply his mind to the facts of the case and issues involved while granting approval under section 153D of the Act. The approving authority had sufficient time to go through all the records and relevant material to arrive at decision granting approval Under Section 153D of the IT Act in judicious manner in the instant case, Hence, there is no illegality in the approval at all. 3.3 It is not a gainsaying that the assessment is a continuous process involving administrative as well statutory roles being donned by the Range Head. It is incumbent upon the Range Head to examine and monitor the assessments which can't be denied if the same is not reduced in writing at every point of time till the finalization of the assessment. The approval of the approving authority underlines that he has examined the assessment records, relevant copies of seized documents and the relevant issues arising from the material on record judiciously in independent manner by way of due application of mind. It would not be out of place to mention here that the assessee has not come out with any case that there is case of non-application of mind. The Hon'ble Supreme Court in the case of Chuharmal vs. CIT 172 ITR 250had held that there was a presumption in law, specifically section 114(e) of the Evidence Act that Judicial and Official Acts supposed to be performed in a particular manner had actually been performed in the way they were supposed to be conducted. There could not be presumption of illegality. 3.4 There is no reason to hold the assessments to be invalid on account of any irregularity in the approval process. It was submitted that cases had come up for decision where there was absolute lack of approval and there too the Courts had not held such assessments to be invalid. The lack of approval had been held to be a procedural irregularity that was not fatal to the order passed. Our attention was invited to the judgment of the Hon'ble Karnataka High Court in the case of Gayathri Textiles vs. CIT (2000) 111 taxman 123 (Kar) wherein the Id. CIT(A) had cancelled the penalty levied under section 271(1)(c), holding that the Id. AO had not obtained the previous approval of the IAC as required under section 274(2). On appeal by the Revenue, the Tribunal had reversed the order, holding that the failure to obtain the previous permission from the IAC for imposing penalty under section 271(1)(c)was only a procedural error and it not fatal to the order of penalty under section 271(1)(c). The Hon'ble High Court held that in the said case, the proceedings were validly initiated and the proceedings under section 271(1)(c)(iii) only require prior approval of the IAC for direction for payment of penalty and not for the initiation of proceedings. 3.5 The assessee has to positively prove that there is a case of non- application of mind in light of the submission that the approval u/s Page | 6
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153D is an administrative approval. Here, it would not be out of place to highlight that the relevant seized documents in a case are always part of the assessment records as per practice, and requirement of the work. They are not kept separately as relevant seized material is frequently referred to by the assessing officer during the course of assessment proceedings and also made part of assessment order most of the time. In fact, as per the law, seized material is considered as part of records before Assessing Officer and all such seized records, return of income, notices etc. used during an assessment proceeding when considered collectively is known as Assessment record'. Therefore, from the letter seeking approval, it is evident that the entire assessment records which included seized material was placed before the approving authority for the purpose of taking decision with regard to approval under section 153D of the Act. 3.6 Further, in the present case, the Range Head (JCIT/AddI CIT) had been involved and hence, was well aware about the progress of the assessment proceedings, relevant issues of the assessee, nature and content of the seized material in light of the fact that the as per the CBDT guideline F. No. 286/161/2006-IT (Inv. II) dt. 22.12.2006, copy of appraisal report is shared by Investigation Wing with both the assessing officer and Addl. CIT. In fact, CBDT guideline dt. 22.12.2006 on the subject of the search and Seizure Assessments clearly outlines such close coordination. Thus, as per the prevailing Practice and Guidelines, the approving authority has good idea of issues involved in particular case before hand i.e. much before the cases are sent to hint for approval Under Section 153D of the Act. This guideline of CBDT is relevant piece of information, which throws light on the way search assessments are taken up by the filed officers. Therefore, in light of such peculiar fact of instant case, it cannot be inferred that the approval granting authority was not in a position to independently apply his mind in judicial manner to the case of assessee on the same day. 3.5. In this regard, it is further submitted that on perusal of case laws on the issue of requirements for proper approval under section 153D, it is found that Hon'ble jurisdictional high court has emphatically held that such an issue is essentially a question of fact and has to be decided based of factual matrix of a particular case, Further, it has been held that approval cannot be reduced to a mechanical exercise and approving authority is required to apply his/her independent mind while granting such an approval. Thus, all the cases have been decided on this point by Hon'ble Tribunal and Hon'ble High court in light of peculiar facts of those cases only. Some of such peculiar facts of such cases are outlined here in under to emphasize upon distinguishing nature of facts of instant cases from those cases.: Page | 7
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Reliance is placed in the case of Home Finders Housing Ltd. Vs Income-tax Officer Ward-2(3), Chennai [2018] 93 taxmann.com 371 (Madras) wherein it was held that in case an order is passed without following a prescribed procedure, the entire proceedings would not be vitiated. 26. We therefore make the position clear that non-compliance of the procedure indicated in the GKN Driveshafts (India) Ltd.'s case (supra) would not make the order void or non-est. Such a violation in the matter of procedure is only an irregularity which could be cured by remitting the matter to the authority, Later, the Hon'ble Supreme Court also dismissed the SLP raised in the matter. Further, reliance is also placed on the judgement of Hon'ble Kerala High Court in OP(C) No. 340 of 2019 against the order in IA 3123/2018 in OS 125/2018 of II Additional Sub Court, Ernakulam dated 23.06.2022, wherein it is held that the on default." "S......... Courts should endeavor to dispose of a case on merits rather than
The Apex Court in the case of Improvement Trust, Ludhiyana vs Ujagar Singh & Ors on 09.06.2010 in Civil Appeal NO. 2395 of 2008 also held that "......After all, justice can be done only when the matter is fought on merits and in accordance with law rather to dispose it of on such technicalities and that too at the threshold. Both sides had tried to argue the matter on merits but we refrain ourselves from touching the merits of the matter as that can best be done by the Executing Court which had denied an opportunity to the appellant to lead evidence and to prove the issues so formulated. In our opinion, ends of justice would be met by setting aside the impugned orders and matter is emitted to the Executing Court to consider and dispose of appellant's objections filed under Order 21 Rule 90 of CPC on merits and in accordance with law, at an early date. It is pertinent to point out that unless malafides are writ large on the conduct of the party, generally as a normal I rule, delay should be condoned. In the legal arena, an attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technicalities." 3.6. The Hon'ble ITAT Mumbai in the case of Smt. Usha Satish Salvi vs ACIT Central Circle-4(4), Mumbai in ITA Nos. 4239,4237 & 4238/Mum/2023 dated 23.01.2025 has examined all the following judgements of the Tribunal and Hon'ble High Courts [Para 6.2] and rejected the objection raised by the assessee that approval granted u/s 153D of the Act has been accorded on presumption and without application of mind rather opined that approval was granted by the Addi CIT after due application of mind: Page | 10
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6.2 (i) Decision dated 06/06/2024 of Delhi bench of the Tribunal in the case of Shri Guvinder Singh Duggal in ITA No. 860 to 863/Del/2021 for AY 2012-13 to 2018-19. (ii) Decision dated 29/04/2024 of Delhi Bench of Tribunal in the case of MDLR Airline (P) Ltd. in ITA No. 1420 & 1421/Del/2023 for AY 2007-08 and 2008-09. (iii) Decision of Hon'ble Allahabad High Court in the case of PCIT vs Sapna Gupta in ITA No. 88 of 2022. (iv) Decision of Hon'ble Delhi High Court in the case of PCIT vs Shiv Kumar Nayyar in ITA 285/2004 & CM Appela 28994/2024 (v) Decision of Mumbai Bench of Tribunal in the case of Arch Phamalabs Ltd in ITA No. 6656/Mum/2017 for AY 2011-12 and other appeals. (vi) Decision of Hon'ble Delhi High Court in the case of PCIT Vs M/s Hotels P Ltd in ITA 593/2023 (vii) Decision dated 24/04/2024 of Delhi Bench of Tribunal in the case of Veena Singh in ITA No. 294 & 295/Del/2022 for AY 2016-17 and 2017-18. 3.7. It is submitted that Central Ranges are specialized ranges designated for assessment of search and seizure cases. The structure ensures deep involvement of the Addl. Commissioner with each case. These are not routine assessments; the number of cases is limited, and the Addl. CIT plays a crucial role throughout the lifecycle of the case. The assumption by the assessee that the Addl. CIT was a stranger to the assessment work is factually erroneous and perverse. It is further submitted that there cannot be any presumption drawn against the approving authority with regard to application of mind merely on the ground that number of cases approved in a day were high. There cannot be any threshold limit set for the same. How many cases will be considered unreasonably high and how many cases will be considered reasonable? It is submitted that every approval needs to be examined in light of its peculiar facts such as number of issues involved, nature of issue involved, modus- operandi involved, number of cases involved and inter-relationship among facts of such cases. If identical issues are involved involving same modus-operandi and cases are of same search group only, it would not be unreasonable to consider that an approving authority will be able to apply its independent mind judiciously to relatively larger number of cases in a single day. Ultimately, it boils down to factual matrix of the cases sent for approval. In the instant case, in light of the factual matrix that additions were made in different cases of the group on the same ground based on same factual position with regard to same accommodation entry provider and involving same Page | 11
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modus-operandi, it would be justified to consider that the approving authority would have been in a position to apply his mind to all such cases sent for approval by the AO on the same day, particularly when number of such cases is not too high and facts/issues involved are in the knowledge of approving authority beforehand i.e. before receiving proposal for approval. 3.8. It is submitted that Section 153D does not prescribe any specific procedure or method for the grant of approval. As long as Ld. Addl. CIT is satisfied with the draft assessment order and conveys his approval, the mandate of law stands fulfilled. 3.9. In the present case, the approval was in fact granted under Section 153D. There is no finding that the assessment was so fundamentally flawed as to render it unfit for any reasonable authority to approve it. This is not a case where Approval has not been granted. 3.10. It is relevant to point out that approval u/s 153D of the Act needs to be put at a different pedestal in comparison to sanction u/s 151 of the Act. Section 151 deals with prior approval for issuing notices for reopening assessments (such as under section 148). The approval here is for cases where the Assessing Officer believes income has escaped assessment; higher authorities' consent is required before such notices are issued. If the sanction u/s 151 is not proper, the jurisdictional notice issued u/s 148 has been held to be void. However, the approval u/s 153D has to be granted by the Ld. Add. CIT once the draft assessment order is prepared by the Ld. Jurisdictional Officer making the assessments u/s 153A/153C of the Act. In this case, there is no challenge to the validity of search, procedure followed by the Department in search, however the only challenge raised by the assessee before this Hon'ble Tribunal is that the approval granted by Ld. Addl. CIT is mechanical. No evidence to prove the same have been sufficiently submitted by the assessee. CBDT has issued guideline for search and seizure assessments in F. No. 286/161/2006-IT (Inv. II) on 22.12.2006 contained in Appendix V of the Search & Seizure Manual 2007, involves the Range Head in the assessment process right from the stage of receipt of the appraisal report and the seized material to the granting of the final approval. As brought out by the Id. DRs, it is observed that the Range Head (approving authority) is involved in scrutinizing the appraisal report and the seized material at the time of preparation of the examination note to decide which cases were to be taken up under section 153A, 153C or section 148. Subsequently, he was also supposed to vet the action note prepared by the AO within 90 days of receipt of seized material after methodological examination of the seized material and it has been brought to our knowledge by the DRs that usually these action notes are prepared by the Id. AO and the Range Head in consultation with each other. We also observe that the Range Head has been directed to ensure proper satisfaction note Page | 12
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are recorded before issuance of notices under section 153C or under section 148, Furthermore, it appears that the Board envisaged that the Range Head was to be associated with the preparation of the detailed questionnaire and could even give directions under section 144A where it was considered necessary. Therefore, when the Range Head has been actively monitoring the assessment proceedings the whole year, then it can not be averred that the same officer granted several other approvals during the same period resulted in non-application of mind. 3.11. Even if the said approval is held to be mechanical, then the submissions of the Revenue is that the matters may be remanded back to the Assessing Officer for curing the defect. Hon'ble Madhya Pradesh High Court in the case of CIT vs. Vijay Dal Mills (1998) 230 ITR 301 (M.P.) following its earlier order in the case of Prabhudayal Amichand vs. CIT (1989) 180 ITR 84 (M.P.) which in turn held that a procedural irregularity not involving the question of jurisdiction can be cured. Similarly, Hon'ble Kerala High Court in the case of G. Manoharan vs. ACIT (2006) 155 taxman 569 (Ker), Hon'ble Kolkata High Court in the case of Sagar Dutta vs. CIT (2014) 44 taxman.com 311 (Calcutta) and Hon'ble Supreme Court in the case of Guduthur Bros. vs Income-Tax Officer (1960) 40 ITR 298 (SC) and the Hon'ble ITAT (Allahabad Bench) in bunch matters of Ramji Vaish v DCIT & Vijay Stone Product v ACIT (ITA Nos. 30, 31, 32, 33/ALLD/2019) had taken a similar view that in case an illegality vitiated the proceeding after it was lawfully initiated, the proceedings were to be restored back to the stage at which the illegality occurred and not quashed altogether.
Heard both the parties and perused the material available on record. Before going further, we first consider the approval granted by Ld. Adl. CIT, Central Range-2, New Delhi in the case of assessee. The letter by AO seeking approval from DCIT, CC-6, Delhi and the approval given by Adl. CIT, Central Range (as available at pages 1-3 of PB) are reproduced as under:
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The Adl. CIT, Central Range-2, New Delhi while granting approval, needs to examine all the material including the assessment records, full appraisal report and seized material pertaining to each Assessment Year with reference to the addition proposed by the AO for which approval is sought and the draft assessment order and after considering all the material should accord the approval. It is further provided that approval has to be granted for each assessment year separately and independently. From the perusal of the approval letter as reproduced above, it is seen that common approval was given for Sevene assessment years vide single order.
The Hon’ble Jurisdictional High Court in the case of Shiv 9. Kumar Nayyar (supra) has held that the approval u/s 153D of the Act has to be granted for each Assessment year independently. The relevant observations of the judgement of Hon’ble High Court are 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 PCIT v. Sapna Gupta [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
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"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 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." [Emphasis supplied] 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. 13. Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads 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 Commissioner of Income-tax. The letter simply grants an approval. In other words, even 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
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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 "seen" 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 Assessing Officer 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] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023. 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. 16. 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 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. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is
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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. Neetu Nayyar. 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." 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."
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 07 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.
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Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph No.22 of the said decision reads 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 Commissioner of Income-tax. The letter simply grants an approval. In other words, even 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 "seen" 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 Assessing Officer 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]
It is relevant to mention that Special Leave Petition preferred by the Revenue against the decision in the case of Asst. CIT v. Serajuddin and Co. (supra), stood dismissed by the Hon’ble Supreme Court vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023.
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
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ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.
Recently the hon’ble Third member in the case of Dheeraj Chaudhary Vs. ACIT in ITA Nos. 6158 to 6160/Del/2018 after considering all the judgements relied upon by the ld. CIT DR and further after detailed analyzing the provisions of section 153D, power and independence of assessing authority and the CBDT manual referred by the revenue has held that the common approval granted for various year and for various assessee without making any reference to the material seen is mechanical approval and cannot sustained in the eyes of law. A reference is also made the CBDT manual issued in respect to the procedure to be followed in this regard. The relevant observations of the hon’ble Third Member are as under: 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 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 Page | 21
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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. 23. In the present case before me, the above procedure is not at all followed as is evident from the proposal sent by the Assessing Officer as reproduced in Paragraph 10. It means that the approval granted is mechanical in manner and without application of mind by the approving authority i.e., by the Additional CIT.
In the present case notably, the order of approval dated 21.12.2021 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. A single approval u/s 153D has been accorded in respect of Seven Assessment Years through single order on the request of the AO made vide letter dt. 17.12.2021 which is filed in the paper book pages 01 & 02 of the assessee. There is no other material to show involvement of the superior authority during the assessment proceedings.
Regarding revenue’s reliance on the judgement of Co-ordinate Bench of Mumbai Tribunal in the case of Usha Satish Salvi Vs. ACIT in ITA No. 4237 to 4239/Mum/2023 order dated 23.01.2025 relied by the revenue, it is seen that in the said judgement, no comments
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were made on the decision of jurisdictional high court in the case of Shiv Kumar Nayyar (supra) relied by the assessee in that case and thus the ratio laid down by the Mumbai bench is not applicable.
Thus, applying the ratio of judgements delivered as noted above, the assessment order based on ritualistic approval stands vitiated and is hereby quashed by allowing Ground of appeal No. 4 taken by the Assessee.
Since we have already quashed the assessment order for Assessment Year 2015-16 by allowing Ground of appeal No. 4 taken by the assessee, regular grounds of appeal taken by the assessee become academic and thus, not adjudicated.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 16.01.2026.
Sd/- Sd/- (RAJ KUMAR CHAUHAN) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:-16.01.2026 *Amit Kumar, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI