Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI SUDHIR KUMAR & SHRI MANISH AGARWAL
(ASSESSMENT YEAR 2016-17) (ASSESSMENT YEAR 2017-18) Shweta Puneet Kulthia DCIT, 7, Basement Floor, Model Town, Central Circle-14, North-Ex, Near DAV School, Vs. Delhi. North West Delhi, Delhi-110009. PAN-BNPPK9679C (Appellant) (Respondent) Shri Pranav Yadav, Adv. Assessee by Shri Amit Goel, CA Department by Ms. Amisha S. Gupta, CIT- DR Date of hearing 28.10.2025 Date of pronouncement 27.11.2025 O R D E R
PER MANISH AGARWAL, AM:
The above captioned appeals are filed by the assessee against the respective orders dated 30.01.2025 passed by Ld. Commissioner of Income Tax (A)-26, New to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT Delhi [“Ld. CIT(A) in short”] u/s 250 of the Income Tax Act, 1961 [“the Act in short”] arising from the respective assessment orders tabulated as under:
. Years CIT(A)’s Sr. Section under which Nos. Order Dated Assessment orders passed 1. 1054/Del/2025 2013-14 30.01.2025 153C r.w.s. 143(3) of the Income Tax Act, 1961. 1055/Del/2025 2014-15 30.01.2025 2 -do- 3. 1056/Del/2025 2015-16 30.01.2025 -do- 4. 1057/Del/2025 2016-17 30.01.2025 -do- 5. 1058/Del/2025 2017-18 30.01.2025 -do-
At the time of hearing, it was stated that the issues involved in all the appeals filed by the assessee for captioned assessment years are common, interlinked and arising from the search action on the assessee and other persons. Hence, all these cases have been heard together and accordingly, adjudicated by this common order.
ITA NO.1054/Del/2025 for AY 2013-14
3. First we take up the appeal of the assessee in for Assessment year 2013-14.
Brief facts of the case are that a search and seizure operation was carried out by the Investigation Wing, Meerut in the case of Shweta Puneet Kulthia group of cases on 08.03.2017. Thereafter proceedings u/s 153C of the Act were initiated in the case of assessee by issued of notice u/s 153C on 11.10.2021. In response thereto, assessee filed return of income on 26.10.2021, declaring total income of Rs. 9,17,710/-. Thereafter, notices u/s 143(2) and 142(1) with questionnaire were issued and served upon the assessee which were duly complied with by the assessee and to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT detailed submissions were filed from time to time. The AO after considering the submission made and the material available before him, assessed the income at INR 19,98,710/- vide order dt. 27.12.2022 passed u/s 153C/143(3) of the Act.
Against the order of AO, the assessee preferred appeal before Ld. CIT(A), who after considering the submissions of the assessee, partly allowed the appeal of the assessee.
Aggrieved by the order of Ld. CIT(A), the assesse preferred appeal before Tribunal by taking following grounds of appeal:-
1. On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is bad-in-law, barred by limitation and without jurisdiction and, therefore, the said notice along with the assessment order passed on the foundation of such notice are liable to be quashed. and CIT(A) erred in not holding so.
2. On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is illegal and without jurisdiction. The assessing officer has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly, the notice u/s 153C along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
On the facts and circumstances of the case and in law, the satisfaction note (s) recorded u/s 153C of the Act are bad-in-law and without jurisdiction and, accordingly, the assessment proceedings initiated on the foundation of such satisfaction note(s) and also the consequent assessment order passed are liable to be quashed.
4. On the facts and circumstances of the case and in law, the addition of Rs. 10,81,000/- made by the assessing officer on the account of alleged unexplained money u/s 69A of the Act, the addition made is beyond the scope/jurisdiction of provisions of section 153C read with section 153A of the Income Tax Act, 1961. CIT(A) erred in not holding so.
5. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in confirming the addition made by the assessing officer of Rs. 10,81,000/- on account of
6. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to the provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so.
7. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is non-est as it does not have DIN on the body of the assessment order and CIT(A) erred in not holding so.”
Before us, ld. AR of the assessee, made submissions on Ground of appeal No. 6 wherein validity of approval granted u/s 153D of the Act is challenged. The Ld.AR for the assessee submits that in the present case, approval was granted by Ld. Adl. CIT, Central Range-4, New Delhi vide letter dt. 27.12.2022 which is mechanical approval and common for all the Seven (7) assessment years. Ld. AR submits that Ld. Adl. CIT granted approval for AY 2011-12 to 2017-18 in terms of letter No. Addl.CIT/CR-4/Approval u/s 153D/2022-23/2575 dated 27.12.022 which is mechanical approval as no separate approval for each individual Assessment Year was given rather combined approval was given by a single order for all the assessment years.
8. Ld.AR further submits that from the perusal of the approval, it could be seen that Adl. CIT while granting approval has observed that he has perused the draft assessment order and case records, without referring to any material which was considered by him such as seized material, including replies filed by the assessee with reference to the additions/ disallowance proposed in the drafts assessment order, etc. It was pointed out that the mandate of law u/s 153D is that the approval should be granted by independent application of mind after considering the material to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT on record for each assessment year separately. Further the approval was granted on the same day i.e. on the same day when the same was sought by the AO. The reliance in this regard was 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 the judgement of the Hon’ble Delhi High Court in the case PCIT vs. Anuj Bansal (2024) 165 taxmann.com 2 (Delhi) and decision of the coordinate Bench of ITAT Delhi in the case MDLR Airlines Pvt. Ltd. vs. DCIT, dated 24.04.2024 in & 1421/Del/2023, to contend that in case of mechanical approval u/s 153D of the Act, the assessment is liable to be quashed. He also placed reliance in the case of Shri Puneet Kulthia, husband of the assessee wherein under identical circumstances, “E” bench of ITAT Delhi has allowed the appeals of the assessee by holding the common approval as invalid in to 1154/Del/2025.
On the other hand, Ld. CIT-DR for the Revenue supports the orders of lower authorities and submits that the Ld. Addl. CIT has granted approval after due consideration of the material available before him. Therefore, ld. CIT DR requested that the approval granted was valid approval.
Heard the contentions of 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-4, New Delhiin the case of assessee which is reproduced as under:
The Additional CIT, Central Range 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 additions 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. From the perusal of the approval letter as reproduced above, it is seen that common approval was given for all the seven assessment years vide single order.
The Hon’ble Jurisdictional High Court in the case of Shiv Kumar Nayyar in [TS-343-HC-2024-Delhi] 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 "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 to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT 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 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 to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT 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 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 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."
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."
Similarly, the Hon'ble Orissa High Court in the case of ACIT vs Serajuddin & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act. The Hon’ble Orissa to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT High Court made wide-ranging observations towards the manner and legality of approval under s. 153D of the Act. The Hon'ble High Court inter-alia observed that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justifiable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is not even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgement in the case of ACIT vs Serajuddin & Co. was dismissed as reported in (2024) 163 taxmann.com 118 (SC).
The ratio of judgement delivered in the case of ACIT vs Serajuddin & Co., Orrisa and in PCIT vs Anuj Bansal in (Delhi High Court) has held to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT in chorus that the approval granted under s. 153D of the Act, if granted mechanically, will vitiate the assessment order itself.
Recently the hon’ble Third member in the case of Dheeraj Chaudhary Vs. ACIT in 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 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 to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT 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.
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.
16. Such mechanical approval cannot be sustainable in law in the light of judicial dicta available. The approval memo is totally silent on the issues involved and has granted omnibus approval without any thoughtful process being discernible. 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 on the very same day vide letter dt. 27.12.2022 as could be seen from the first para of the approval order as reproduced above. Thus, applying the ratio of judgements delivered as noted above, the assessment order based on ritualistic approval stands vitiated and thus quashed by allowing ground of appeal No. 6 taken by the Assessee.
17. Since we have already quashed the assessment order by allowing the ground of No.6 taken by the assessee thus other grounds of appeal taken by assessee become academic and thus not adjudicated.
In the result, the appeal filed by the assessee is allowed. to 1058/Del/2025 for AY 2014-15 to AY 2017-18]
Before us, both the parties have agreed that the facts involved are common in all the assessment years. In these years also, assessee has taken ground of appeal challenging the validity of assessment order passed u/s 143(3) r.w.s. 153C in light of provisions of section 153D of the Act which issue has been decided in favour of to1058/Del/2025 Shweta Puneet Kulthia vs. DCIT the assessee in for AY 2013-14, hereinabove. As admitted by both the parties, the facts are identical, and the approval was granted by Adl. CIT for all these assessment years also by a common order vide letter No. Addl. CIT/C.R.-4/Approval u/s153D/2022-23/2575 dated 27.12.2022 for AYrs. 2013-14 to 2017-18, as reproduced above, thus following our aforesaid observations which are Mutatis Mutandis applied to the facts of these cases, the ground of appeal taken by the assessee are allowed.
In the final result, all the appeal filed by the assessee are allowed. Order pronounced in the open Court on 27 .11.2025.