DILEEP K GUPTA,DELHI vs. DCIT CC-31, DELHI

O R D E R PER M. BALAGANESH, A. M.: 1. These appeals in to 153/Del/2025 for AYs 2015-16 to 2021- 22, arise out of the order of the Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] dated 29.11.2024 against the order of assessment passed u/s 153A r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 30.03.2022 by the Assessing Officer, DCIT, Central Circle-31, New Delhi (hereinafter referred to as „ld. AO‟). Identical issues are involved in these appeals and hence they are taken up together and dispose by this common order.

2. The preliminary issue raised by the assessee is challenging the assessment framed u/s 153A r.w.s. 143(3) of the Act on the ground that approval u/s 153D of the Act had been granted by the ld Joint Commissioner of Income Tax, Central Range-8, New Delhi in a mechanical manner. to 153/Del/2025 Dileep K. Gupta

4. We find that similar approval has been granted for AYs 2011-12 to 2021- 22 by the ld JCIT independently for each assessment year. The ld AR placed on record the order sheet entries, on perusal of which, there is absolutely no mention in the order sheet regarding the forwarding of seized documents, to 153/Del/2025 Dileep K. Gupta assessment folders, investigation report etc to the ld JCIT for obtaining approval u/s 153D of the Act by the ld JCIT. Further, it is a fact that the ld AO had sought for approval u/s 153D of the Act by forwarding the draft assessment order alone for the years under consideration vide letter dated 28.03.2022 upto AY 2019-20 and on 30.03.2022 for AY 2021-22. Evidences in this regard were duly placed o record before us. It is the case of the ld AR that an approval u/s 153D of the Act had been granted by the ld JCIT on 29.03.2022 up to AY 2019-20 and on 31.03.2022 for AY 2021-22 of more than 100 assessees on the same date. On perusal of the aforesaid approval granted u/s 153D of the Act, wherein it has been stated that the draft assessment order as proposed by the ld AO had been amended by the ld JCIT and that the amended draft order has been accorded approval u/s 153D of the Act by the ld JCIT. But it is pertinent to note that nowhere in the order sheet noting suggests even forwarding of original draft assessment order by the ld AO to the ld JCIT. This goes to prove that a standard format is being used by the ld JCIT for granting approval u/s 153D of the Act as the contents written thereof are not supported by the order sheet notings placed on the record. The ld JCIT granted approval u/s 153D of the Act by relying on the certificate given by the ld AO with regard to the perusal of the verification of the seized documents by the ld AO. This goes to prove that that ld JCIT had not examined the seized documents while granting approval u/s 153D of the Act. The ld AR before us placed on record the coordinate decision of Delhi Tribunal in the case of Manoj Kumar Singh vs DCIT in and for AY 2012-13 dated 19.09.2025, wherein the very same JCIT, Central Circle -8 New Delhi had accorded approval u/s 153D of the Act on 30.03.2022. The relevant operative portion of the order is reproduced as under:-

“7. Ld. Sr. Counsel has submitted that the approval has been granted in consolidated manner and taking the Bench across pages 1 to 2 of the paper book, having letter seeking approval and pages 3-12 of PB, the impugned approval letters, it was submitted that separate approvals for AY 2011-12 to AY 2020-21 were issued u/s 153D of the Act on 30.03.2022 and all are verbatim similar, which shows there was non-application of mind and in a routine manner, the approvals were granted. The ld. Sr. Counsel submitted that in fact, the said approving to 153/Del/2025 Dileep K. Gupta authority has granted numerous approvals u/s 153D of the Act on 30.03.2022 and a list of same has been provided at pages 13 and 14 of the paper book. The ld. Sr. Counsel relied on a catena of decisions of Coordinate Benches at Delhi and decision of Hon‟ble Delhi High Court in the case of Pr. CIT vs Shiv Kumar Nayyar [2024] 163 taxmann.com 9 (Delhi) and Hon‟ble Supreme Court in the case of M/s Serajuddin and Company 163 taxmann.com 118, which has sustained decision of Hon‟ble Orissa High Court, to submit that the law is now settled that approval granted u/s 153D of the Act should exhibit application of mind and cannot be a routine feature of completing the search assessment.

9. However, leaving apart the contentions of ld. Sr. Counsel that tenor of approval does not show application of mind or that multiple approval were granted so to presume that there was not application of mind what we find after taking into consideration, the copy of approval granted for relevant assessment years, is that approving authority has mentioned that the impugned letter of approval that the approval has been granted to the draft assessment order „as amended‟. This phrase „as amended‟ is quite ambiguous, and actually nothing could be explained or justified by ld. DR for using these words and thus rather than helping the case of Revenue and Ld. DR, it puts the case of the Revenue in docks as there is nothing in letter dated 28.03.22 by the AO to mention that at any stage before 28.03.22, there was any communication between the two authorities. The AO merely mentions that cases of assessee for AYs 2011-12 to 2021 are being put up for approval. It does not even mention of forwarding records and that any previous direction on the drafts is given effect. There is no mention that any time between this letter dated 28.03.2022 or 30.03.2022, the two authorities have gone through the draft assessment order afresh, so as to justify the use of words „as amended‟ in the approval letter. to 153/Del/2025 Dileep K. Gupta

12. In this context, we may also note that Digital Evidence Investigation Manual,2014 (hereinafter called „the Manual‟) of the Central Board of Direct Taxes provides a detailed procedure with regard to collection of digital evidences and the manner in which the same has to be relied during the assessment proceedings. The Manual is self contained code where Board has consciously and very articulately examined various facet of collection, examining and reproducing the digital evidences, on the basis of judicial decisions and provisions of law as enshrined in Evidence Act or Information Technology Act. To bolster this conclusion of ours, we would like to observe that the CBDT in its Manual while feeling the relevance of the question with regard to admissibility of electronic evidences and taking note of sea change in the information and technology used in the business transactions has observed as to how in a relevant statutory provisions have been made with regard to recognizing electronic record as evidence and as for convenience we reproduce the aforesaid from para 1.1 of the Manual:- “The law of the country has also taken cognizance of this reality. The Information Technology Act, 2000 has been enacted recognizing electronic records as evidence, governing access to and acquisition of digital and electronic evidence from individuals, corporate bodies and/or from the public domain. By way of this enactment, amendments were also brought in other laws like Indian Penal Code, to 153/Del/2025 Dileep K. Gupta Indian Evidence Act and Criminal Procedure Code, (Cr.PC). The Income-tax Act, 1961 has also been amended thrice by way of Finance Act 2001, Finance Act 2002 and Finance Act 2009 thereby according recognition to electronic evidence, facilitating access to them and giving when need be, powers to impound and seize them. By Finance Act, 2001, Clause (22AA) was inserted in Section 2 to provide that the term “document” in Income Tax Act, 1961, includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000. By Finance Act, 2002, Clause (iib) was inserted in Sub-Section (1) of Section 132 requiring any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; and by Finance Act, 2009, clause (c) was inserted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service.”

13. Further it can be observed that in para 1.5 the objectives of the Manual are mentioned which states that the aim of this Manual is to apprise the user of “basic legal provisions relating to digital evidence in Income-tax Act and other laws including Information Technology Act and Indian Evidence Act.”

“2.7.1 The Information Technology Act-2000 has been enacted to provide legal recognition to transactions carried out by means of electronic data interchange and other means of electronic communication, which involve the use of alternatives to paper-based methods of communication and storage of information. The same enactment has also brought amendments in the Indian Penal Code, 1861, the Indian Evidence Act, 1872, the Bankers' Books Evidence Act, 1891 and the Reserve Bank of India Act, 1934. 2.7.2 As far as Income-tax Act, 1961 is concerned, it has been amended thrice by way of Finance Act, 2001, Finance Act, 2002 and Finance Act, 2009 respectively. Page | 8 to 153/Del/2025 Dileep K. Gupta • By way of first amendment, provisions of sub-section (12A) of section 2 was inserted to give legal recognition to the books of account maintained on computer and sub-section (22A) to section 2 was inserted to provide definition of 'document' which included “electronic record" as defined under Information Technology Act 2000. Under Information Technology Act 2000 an electronic record has been defined to include data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro file. This definition of electronic record is wide enough to cover person in possession of computer, storage device, server, mobile phone, i-Pod or any such device. The above amendment has thus specifically given recognition to electronic record as admissible evidence at par with a 'document'. Further, the powers to impound/copy a document during a survey action u/s 133A and power to seize a document during a search and seizure operation has also been automatically extended to electronic records as a result of the amendment. • By way of second amendment, provisions of section 132 (l)(iib) were inserted facilitating access to the electronic devices including computer, containing document or books of accounts in the form of electronic records by making it obligatory for the person under control of such device to afford the necessary facility to inspect such records. By Finance Act, 2009, clause (c) was inserted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service. 2.7.3 Under Indian Evidence Act there are several references to documents and records and entries in books of account and their recognition as evidence. By way of the THE SECOND SCHEDULE to the Information Technology Act Amendments to the Indian Evidence Act have been brought in so as to, incorporate reference to Electronic Records along with the document giving recognition to the electronic records as evidence. Further, special provisions as to evidence relating to electronic record have been inserted in the Indian Evidence Act, 1872 in the form of section 65A & 65B, after section 65. These provisions are very important. They govern the integrity of the electronic record as evidence, as well as, the process for creating electronic record. Importantly, they impart faithful output of computer the same evidentiary value as original without further proof or production of original. Accordingly, while handling any digital evidence, the procedure has to be in consonance of these provisions. to 153/Del/2025 Dileep K. Gupta 2.7.4 Under Indian Penal Code several acts of omission and commission relating to various documents and records are treated as offences. By way of the THE FIRST SCHEDULE to the Information Technology Act, Amendments to the Indian Penal Code have been brought in, so as to incorporate reference to Electronic Records along with the document.”

15. Now, the Manual very categorically lays down the importance of chain of custody and how the Manual lays down procedure to be followed by authorities for reporting and analysis of digital evidences and as to how the AO has to deal with the digital evidences and its analyse in the assessment order and what is the importance of chain of custody of digital evidences. The relevant para 9.1 and 9.6 of the Manual which:- “9.1 Reporting of Analysis of Digital Evidence in the Assessment Order should be done in a simple lucid manner, so that any person can understand. The report should give description of the items, process adapted for analysis, chain of custody on the movement of digital evidence, hard and soft copies of the findings, glossary of terms etc .The presentation and use of digital evidence in assessment order and presentation of the same in court of the law in matters of appeal involves stating the credibility of the processes employed during analysis for testing the authenticity of the data. Some guidelines that assessing officer need to follow when using the Digital Evidence Analysis in the assessment order etc, are as follows:  Brief description of the case, details/description of the objects, date and time of collection of the objects, Status of the objects when collected (On or Off), Seized from - person, organization, location etc should be included in the Assessment Order. • Digital Evidence Collection Form, Mobile Phone Evidence Collection Form should be enclosed in the order to show the initial state of the Digital Evidence. • Digital Forensic Report( Given by Forensic Examiner) containing details of hash value and the details of all mahazar drawn to open the digital evidence at various times to gather further evidences should be included as an annexure to the assessment order. If the chain of custody form is present, the same can be annexed to the assessment order. This will establish the integrity of the data before any court of law. • The Key digital evidences retrieved if deleted along with the description of the same, in case of business Page | 10 to 153/Del/2025 Dileep K. Gupta application software, a note on how the business application software is and the technical details of all critical components. • Whether these digital evidences have been confronted to the assessee under any section of the law? The relevant portions of the statement under various sections of Income Tax Act should be included in the order. • Circumstantial evidences and other key physical evidences seized/impounded should be linked to the digital evidence. Usually the physical evidences like loose papers, sheets gives details of one particular transaction, while the .digital evidences may help in unearthing the entire consolidated data for the whole year. Such digital evidences should be linked to the physical evidences seized during the course of search to establish the genuineness of the data and also to quantify to the total unaccounted income.

9.6 Handling the digital evidence at a later stage In the Income Tax Department, the digital evidence stored is used in the assessment proceedings and at later stages in case of legal tangles. In order to maintain the sanctity of data stored/seized, there is a need to maintain a chain of custody while handling the digital evidence during the course of assessment proceedings and at later stages. Due to the lengthy legal proceedings involved, it may be needed to retain evidence indefinitely. Hence, a chain of custody of digital evidence should be created in order to know the details of who is accessing data, if anyone who accessed the data had tampered with the data etc.

“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 to 153/Del/2025 Dileep K. Gupta 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.

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.”

“B. With regard to issue regarding 153D approval, it is submitted that 1. Copy of approval is placed as Annexure 'A'. The learned Joint Commissioner of Income-tax received proposal for approval alongwith draft assessment order and sized material on 28.03.2025 and the JCIT accorded approval after due application of mind on 29.03.2025. It may also be noted that the JCIT has granted approval for single asseessee with single Assessment Year with the following remarks in Para 2 and 3 of the JCIT approval:- 2. Approval is hereby accorded u/s 153D of the Income Tax Act, 1961 to the draft assessment order as amended in the following case, on the basis of the detailed discussion with you time to time, information available on record, facts mentioned in the Appraisal Report and relevant seized documents perused by you & brought to the notice of undersigned. to 153/Del/2025 Dileep K. Gupta

3. Copies of the final assessment orders should be forwarded to this office immediately after passing the orders. Proposal for retention of seized material should also be forwarded to this office within time as per IT Act, 1961. Before passing the final order, in case, there is requirement of protecting the interest of revenue, permission u/s 2818 from Pr. CIT(C)-3, New Delhi should be taken. Office note indicating additions in relevant assessment years should be indicated in all Assessment Years. You have certified about perusal and verification of data seized in electronic format through working copies having certified hash values as that of original hard drives/CDs/pen drives/mobile data & any other electronic data. You have also certified to the undersigned that all information available in AIR/CIB/from other Law Enforcement Agencies have been properly scrutinized by you before finalizing the draft assessment order." 2. Section 153 D of the Act was inserted vide amendment in Finance Act 2007 provides for the prior approval for the assessment in cases of search or requisition. Prior to the amendment vide Finance Act 2007 the existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A, does not provide for any approval for such assessment. Accordingly new section 153D has been inserted to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 1324. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 3. Section 153D of the Act is for administrative purposes and does not require that an opportunity of hearing is required to be given to the assessee. The Hon'ble Supreme Court in S. Narayanappa vs. CIT 63 ITR 219 (SC) as to whether such approval is merely an administrative act or whether such approval can be brought under judicial scrutiny. The apex court held that the stage of obtaining approval from higher authority was administrative in character and not a quasi judicial act. What is to be seen is whether the Approving Authority is competent to grant approval is important and under scheme of things the JCIT is the competent authority to grant approval u/s 153D of the Act. In view of the above, it is to 153/Del/2025 Dileep K. Gupta submitted that aforementioned ground of appeal

on the issue of invalid approval under section 153D of the IT Act may kindly be dismissed for the reason mentioned above. 3.1 The Hon'ble High Court of Karnatka in Rishabhchand Bhansali vs. DCIT in 136 taxman 579 held the approval granted by the JCIT is an administrative act and does not create any right to the appellant. The Hon'ble High Court noted"

4. Section 158BG provides that no order of assessment for the Block period shall be passed by the Assessing Officer without the previous approval of the Joint Commissioner in respect of a search initiated under section 132. The assessee contends that before granting previous approval under section 158BG for an order of assessment made under section 158BC, the Joint Commissioner should have given a hearing to the assessee. It is submitted that the power to grant previous approval under section 158BG is an amalgam of appellate and revisional power and therefore, the right to a hearing should be read into section 158BG. It is also contended that the Tribunal failed to consider this ground though specifically urged before it. 4.1 Chapter XIV-B contains a special procedure for assessment of search cases. Section 158BC prescribes the procedure for block assessment. Clause (c) of section 158BC enables the Assessing Officer, on determination of the undisclosed income of the block period, to pass an order of assessment and determine the tax payable by him on the basis of such assessment. Clause (b) requires the Assessing Officer to proceed in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144, while determining the undisclosed income of the block period. It is thus evident that the procedure clearly contemplates the Assessing Officer giving a hearing to the assessee before making an assessment order in regard to the block period. 4.2 Clause (k) of section 246A provides for an appeal against the order of assessment for the block period made by the Assessing Officer under clause (c) of section 158BC, Sub-section (2) of section 250 provides for a hearing of the appeal. Thus, the assessee is heard by the Assessing Officer before making the assessment order under section 158BC. If the assessee is aggrieved by the assessment order he had a remedy by way of an appeal under section 246A where also he is heard. There is no need therefore for the Joint Commissioner, to give a hearing before giving previous approval under section 158BG. Firstly, the statute to 153/Del/2025 Dileep K. Gupta does not provide for such a hearing; secondly, principles of natural justice also do not require such a hearing having regard to the fact that the assessee gets a hearing before the assessment and also a hearing if he files an appeal against the order of assessment; and thirdly the order passed by the Joint Commissioner granting previous approval under the proviso to section 158BG is in exercise of administrative power on being satisfied that the order of assessment has been made in accordance with the provisions of Chapter XIV-B. The previous approval is purely an internal matter and it does not decide upon any rights of the assessee. The Joint Commissioner, while examining the matter under the proviso to section 158BG does not examine or adjudicate upon the rights or obligations of the assessee, but only considers whether the Assessing Officer has fulfilled the requirements of Chapter XIV-B. 4.3 In V.C. Shukla v. State AIR 1980 SC 962, the Supreme Court gave the following example: In cases where law requires sanction to be given by the appointing authority before a prosecution can be launched against a Government servant, it has never been suggested that the accused must be heard before sanction is accorded..... 4.4 Where a statute requires the Executive to take an administrative action after being satisfied or after forming an opinion as to the existence of a state of circumstances, the action is based on the subjective satisfaction. It is well-settled that any administrative actions based either on policy or on subjective assessment, if does not prejudicially affect any vested right or interest, need not be preceded by a hearing, unless the statute specifically provides for the same. Therefore, in the absence of any provision for opportunity of hearing in section 158BG, there is no need for the Joint Commissioner to give a hearing to the assessee before granting "previous approval under section 158BG. The first question is, therefore, answered against the asseeeee." 3.2 The Hon'ble ITAT Mumbai in the case of Smt. Usha Satish Salvi vs ACIT Central Circle-4(4), Mumbai in 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: to 153/Del/2025 Dileep K. Gupta 6.2 (1) Decision dated 06/06/2024 of Delhi bench of the Tribunal in the case Singh Duggal in to 863/Del/2021 for AY of Shri Guvinder 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 & 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 of 2022. (iv) Decision of Hon'ble Delhi High Court in the case of PCIT vs Shiv Kumar in ITA 285/2004 & CM Appela 28994/2024 (v) Ltd in ITA Decision of Mumbai Bench of Tribunal in the case of Arch Phamalabs 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 ITA 593/2023 (vii) Veena Singh Decision dated 24/04/2024 of Delhi Bench of Tribunal in the case of in ITA No. 294 & 295/Del/2022 for AY 2016- 17 and 2017-18.

to 153/Del/2025 Dileep K. Gupta (iii) Further, from the content of approval letter, it is also noticed that based on the material including assessment records, the Joint CIT also reached to the conclusion that the Assessing Officer had given proper opportunity of being heard to the assessee. In the given facts, the Joint CIT had applied his mind on the issues involved and accorded his approval in accordance with the provisions of the Act. It is not a gainsaying that the Joint CIT hold the concurrent jurisdiction and that the assessment is a continuous process involving administrative as well statutory roles being donned by the Joint CIT. And it is incumbent on the approving authority 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 appellant has not come out with any case that there is case of non-application of mind. The appellant has to positively prove that there is a case of non-application of mind in light of the submission that the approval u/s 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. In view of the same, it cannot be inferred in any manner from the letter seeking approval by the AO and the letter granting approval by the Joint CIT that approval under section 153D of the Act was granted in mechanical manner without independent application of mind by the Joint CIT. to 153/Del/2025 Dileep K. Gupta

3. It would also be pertinent to submit that in these cases, letter granting approval in the instant case mentioned name of assessee only. This cases were approved by the approving authority vide aforesaid letter dated 29.03.2022 and 31.03.2022 (for A.Y 2021-22). As can be seen from the approvals received in the case:-

SI. Name of the A.Y Reference of 153D approval No. Case 1 2015-16 JCIT/CR-8/153D/2021-22/3041 dated 29.03.2022 2 Dileep Kumar 2016-17 JCIT/CR-8/ 153D/2021-22/3042 dated 29.03.2022 Gupta 3 2017-18 JCIT/CR-8/153D/2021-22/3058 dated 29.03.2022 4 2018-19 JCIT/CR-8/153D/2021-22/3059 dated 29.03.2022 5 2019-20 JCIT/CR-8/ 153D/2021-22/3060 dated 29.03.2022 6 2021-22 JCIT/CR-8/153D/2021 -22/3218 dated 31.03.2022 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 I.T Act in judicious manner in the instant case. Further, in search cases, a Joint CIT is well aware about progress of the assessment proceedings, relevant issues of different 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 that the assessing officer and Joint CIT. In fact, CBDT guideline dt. 22.12.2006 (Copy enclosed) 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 him 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 Joint CIT was not in a position to independently apply his mind in judicial manner to the case of assessee on the same day.

Case Name and Peculiar Facts of cases in Distinguishing facts Citation mentioned in first col. of the instant case HIGH COURT OF DELHI -No Assessment records were Appellant has not been in the case of PCIT vs. sent along with draft assessment able to prove that its case Anuj Bansal ITA 368/2023 order and facts are in alliance Dated July 13,2023 -There were infirmities in the with the cited case. figures of Original Return of Further, there is nothing income and Assessed income. on the record to suggest -Addl. CIT did not apply his that in the instant case of mind as he did not notice such the assessee, there were errors/infirmities. some factual infirmities in the order granting approval. None of the peculiar factual aspects are present in the instant case. Therefore, the case of Anuj Bansal had distinguishable facts than those of instant case. HIGH COURT OF DELHI The approval order failed to make Further, in the instant in the case any mention of the fact case, approval is given of Principal Commissioner that the draft assessment orders for the case of assessee of Income-tax v. Shiv were perused at all, much less only. Kumar Nayyar [2024] 163 perusal of the same with an Therefore, facts of the taxmann.com 9 (Delhi) independent application of mind. instant case are Also, in this case of Shiv Kumar distinguishable. Nayyar, there was no fact brought on the record by the Revenue to prove that identical issues (involving similar facts) were involved in different cases submitted for approval by the AO. It was in absence of such factual information that granting of approval for 43 cases in a single day was viewed by the Hon’ble High Court.

ITAT NEW DELHI in the The approving authority had In the instant case, case of Seh Realtors Pvt. granted approval in 232 cases in approval is given for the Ltd. v. ACIT Central a single day. Therefore, issue of case of assessee only and to 153/Del/2025 Dileep K. Gupta Circle-8 ITA judicious approval for such large that too in each separate no.2503/Del/2017 Dated number of cases from the angle of Assessment year. 23.07.2024 human limitations was an issue Therefore, facts of the before Hon’ble Bench. instant case are distinguishable.

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 “5 Courts should endeavor to dispose of a case on merits rather than on default.” 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 he 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 1 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 technalities.”

6. We find that the aforesaid submissions of the ld DR were considered by the coordinate bench decision of the Delhi Tribunal in the case of Shri Himanshu Verma Vs. ACIT dated 29.04.2025 reported in (2025) TMI 1296-ITAT Delhi. Further, we find that the issue in dispute is also decided in favour of the assessee by the recent Third Member decision of the Delhi Tribunal in the case of Dheeraj Chaudhary Vs. ACIT 178 taxmann.com 360 (Delhi Tribunal) (TM ) dated 10.09.2025. For the sake of convenience, relevant Third member decision of Delhi Tribunal is reproduced below:-

“10. Coming to the fact that the Assessing Officer while sending draft assessment orders has not enclosed any assessment folder, assessment material, search material seized from the assessee‟s premises and other related material including the replies filed by the assessee qua the additions made by the Assessing Officer. It is noted that the Assessing Officer has made additions for the respective assessment years which is given in the proposal for approvalsent by the Assessing Officer. The approval granted has already been reproduced by me in this order at Paragraph 5, but, the proposal for approval under Section 153D of the Act sent by the to 153/Del/2025 Dileep K. Gupta Assessing Officer is being reproduced for the sake of brevity and clarity as under:- “F.No.ACIT/Central Cir.-08/2016-17/1311 Dated: 27.12.2016 To, The Addl. Commissioner of Income Tax, Central Range-02, New Delhi. Madam, Subject :- Proposal for approval u/s 153D of the I.T. Act, 1961 in the case of Sh. Dheeraj Chaudhary [PAN : AASPK9267B], Flat No.-1A, Empire Estate, Sultanpur, New Delhi – 110030 – Reg. Kindly refer to the above. Please find enclosed herewith draft assessment orders in the case of above mentioned assessee for the assessment years 2009-10 to 2015-16 (being search case) for your kind approval as required u/s 153D of the Income Tax Act-1961.

Name of the PAN A.Y. Section Returned Assessed Income assessee Income Sh. Dheeraj AASPK9267B 2009-10 153A Rs.1,37,940/- Rs.13,40,304/- Chaudhary Sh. Dheeraj AASPK9267B 2010-11 153A Rs.3,07,943/- Rs.1,02,41,352/- Chaudhary Sh. Dheeraj AASPK9267B 2011-12 153A Rs.4,03,908/- Rs.1,50,00,460/- Chaudhary Sh. Dheeraj AASPK9267B 2012-13 153A Rs.4,38,939/- Rs.2,30,94,073/- Chaudhary Sh. Dheeraj AASPK9267B 2013-14 153A Rs.10,18,269/- Rs.1,09,03,269/- Chaudhary Sh. Dheeraj AASPK9267B 2014-15 153A Rs.5,84,183/- Rs.3,09,11,700/- Chaudhary Sh. Dheeraj AASPK9267B 2015-16 143(3) Rs.10,04,820/- Rs.2,21,68,040/- Chaudhary Yours Faithfully, Sd/- (Pratibha Singh) Asst. Commissioner of Income Tax Central Circle-08, New Delhi” From the above proposal, it is clear that the same is not 11. accompanied by any assessment folder, seized material or any other related documents for completion of assessment. It means that before the Additional CIT, only a proposal vide letter F.No.ACIT/Central Cir.-08/2016-17/1311 dated 27th December, to 153/Del/2025 Dileep K. Gupta 2016 was sent by the Assessing Officer. In the given facts, whether this approval granted by the Additional CIT is mechanical or there is due application of mind or not.

by the Assessee is accordingly allowed.” On the other hand, learned CIT-DR relied upon the decision of 18. Hon'ble Supreme Court in the case of Spacewood Furnishers (P) Ltd. – [2015] 374 ITR 595 (SC) and Mumbai ITAT decision in the case of Pratibha Pipes and Structural Ltd. in ITA No.3874/Mum/2015. She also relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. – [2002] 256 ITR 1(Delhi). She also to 153/Del/2025 Dileep K. Gupta relied on the decision of Hon'ble Supreme Court in the case of Kunhayammed Vs. State of Kerala – [2000] 245 ITR 360(SC) and Khoday Distilleries Ltd. Vs. MahadeshwaraSahakaraSakkareKarkhane Ltd. – [2019] 104 taxmann.com 25(SC).

19. I noted that the case law cited by the learned CIT-DR of Spacewood Furnishers (P) Ltd. (supra) relates to warrant of authorization issued under Section 132 of the Act for carrying of search by the Income-tax Department and whether the assessee has right to inspection of documents or communication of reasons for belief at the stage of issuing of authorization. Hon'ble Supreme Court has categorically said No but also said that the requisite material may have to be disclosed at the stage of commencement of assessment proceedings. Hence, this case cannot be equated with the present controversy regarding approval under Section 153D of the Act. Regarding the case law of this Tribunal in the case of Pratibha Pipes &Structurals Ltd. (supra), the only issue before the Tribunal was whether the approval under Section 153D is granted or not. In the given facts and circumstances of that case, the Tribunal reached to a conclusion that there is approval granted under Section 153D of the Act and nothing else. Hence, on facts, this is clearly distinguishable. As regards the decision of Kelvinator of India Ltd. (supra), that was the case of reopening and whether the reason to belief of Assessing Officer is founded on an information which has been received by the Assessing Officer after completion of assessment and that can be a sound foundation for exercising power under Section 147 read with Section 148 of the Act. Hence, this decision also cannot be equated with the approval as amended under Section 153D of the Act. As regards the other decisions cited by the learned CIT-DR of Kunhayammed (supra) and Khoday Distilleries Ltd. (supra), these relate to the concept of merger of High Court order in question with Supreme Court‟s order while dismissing the SLP. Here, that is not the question, rather, the question is whether approval is mechanical or not. Whether approval granted under Section 153D of the Act is on application of mind or not in the given facts and circumstances of the case. Hence, these decisions are clearly distinguishable on facts and principle of law.

In terms of the above, I concur with the decision of learned Judicial Member quashing the above assessments.”

8. Since, the entire assessment is quashed, the adjudication of other grounds become academic in nature and hence, they are left open.

Order pronounced in the open court on 19/11/2025.