ASHU ASHOK,NEW DELHI vs. ACIT, CENTRAL CIRCLE-17, NEW DELHI

4. That on facts and in the circumstances of the case and in law, the Learned Commissioner of Income-lax (Appeals) has erred in not cancelling the penalty proceedings initiated u/s 271( 1)( c) as there was no concealment of income.”

4. At the outset of the hearing, ld. AR for the assessee submitted that assessee has filed additional ground of appeal under Rule 11 of the Income Tax (Appellate Tribunal) Rules and it is purely legal issue and the same is reproduced below :- “That on facts and circumstances of the case the approval accorded under section 153D of the Act (if any) is a mechanical and arbitrary approval without there being independent approval for each assessment year, without any application of mind and also without satisfying the statutory preconditions of the Act and as such the assessment so framed is null and void and deserves to be quashed.”

5. Since the above grounds of appeal are purely legal, do not require fresh facts to be investigated and go to the root of the matter, ld. AR of the assessee 1045 & 1046 1044, 1045 & 1046/DEL/2022 prayed that the same may be admitted in view of the judgement of NTPC prayed that the same may be admitted in view of the judgement of NTPC prayed that the same may be admitted in view of the judgement of NTPC Ltd. vs. CIT, (1998) 229 ITR

03. Ltd. vs. CIT, (1998) 229 ITR 0383 (SC).

6. On the other hand, ld. DR for the Revenue has no objection of admitting the On the other hand, ld. DR for the Revenue has no objection of admitting the On the other hand, ld. DR for the Revenue has no objection of admitting the additional ground of appeal

being purely legal issue. additional ground of appeal being purely legal issue.

7. In view of the reliance made by the ld. AR for the assessee on the judgment In view of the reliance made by the ld. AR for the assessee on the judgment In view of the reliance made by the ld. AR for the assessee on the judgment of Hon’ble Supreme Court in the case of of Hon’ble Supreme Court in the case of NTPC Ltd. (supra) and issue being NTPC Ltd. (supra) and issue being purely legal, we proceeded to admit the additional ground of appeal being a purely legal, we proceeded to admit the additional ground of appeal being a purely legal, we proceeded to admit the additional ground of appeal being a legal issue.

8. Before deciding the Before deciding the legal issue in dispute, we may gainfully reproduce the may gainfully reproduce the approval u/s. 153D of the Income Tax Act approval u/s. 153D of the Income Tax Act (for short ‘the Act’) he Act’), which read as under:-

9. At the time of hearing, Ld. AR of the assessee referred to various case laws whereby the legal issue in dispute has been decided in favour of the assessee. However, more particularly, ld. AR drew our attention towards the ITAT Delhi Bench decision viz. M/s Millenium Vinimay (P) Ltd. vs. ACIT, dated 31.5.2024 and Hon’ble jurisdictional High Court decision in the case of PCIT vs. Shiv Kumar Nayyar in (Del), dated 15.05.2024, and submitted that by following the ratio of the aforesaid two case laws, the legal issue involved in the instant appeals may be allowed.

10. Per contra, ld. DR of the Revenue relied upon the orders of the authorities below and objected to the submissions of the ld. AR. He submitted that the approval u/s 153D of the Act is administrative approval. The procedure to approval process has no relevance to the assessee and his proceedings. In this regard, ld. DR of the Revenue submitted written submissions and for the sake of brevity, the same is reproduced below :- “1. Preliminary Submissions • At the outset, it is respectfully submitted that the assessee's allegation of mechanical approval under section 153D of the Act is baseless, speculative, and unsupported by any material evidence. • The approval under section 153D is a statutory procedural safeguard meant to ensure that the supervisory authority - being the Additional Commissioner of Income Tax - examines the assessment record and proposal before finalization. It is not a judicial order but an administrative approval to ensure the correctness and legality of the assessment proposal.

1045 & 1046/DEL/2022 • The burden lies upon the assessee to positively establish that such approval was granted mechanically and without application of mind. Mere conjecture or assumption cannot invalidate a duly granted approval.

2. Role and Jurisdiction of the Approving Authority under Section 153D • It is not a matter of dispute that the Addl. CIT holds concurrent jurisdiction over the assessment proceedings in search cases and that such assessments are a continuous administrative process involving regular supervision and monitoring. • The approving authority is seized of the facts, seized materials, and progress of assessments from inception to completion. The absence of written notings at intermediate stages does not imply lack of application of mind. • The approval signifies due satisfaction of the Addl. CIT after examining the assessment records, including seized documents and relevant issues arising from them. • The assessee has failed to produce any material or evidence demonstrating non-application of mind by the Addl. CIT.

4. Presumption of Regularity and Burden of Proof • As per Section 114 (e) of the Indian Evidence Act, 1872, official acts are presumed to have been regularly performed. Therefore, the approval granted by the Addl. CIT under Section l53D enjoys a presumption of validity unless rebutted by credible evidence. • The burden to prove non-application of mind squarely lies on the assessee, and such burden must be discharged through cogent material and not by conjectures or assumptions. • The Hon'ble ITAT Delhi in Kailash Gahlot (supra) (para 16) held: "The assessee has not placed anything on record to suggest that the AO and Addl. CIT did not go through the relevant seized material or appraisal report. Allegations of non-application of mind, based merely on absence of recitals in the approval order, cannot stand. " The Revenue is not required to prove the converse unless the assessee has discharged this primary onus. The presumption of regularity remains unrebutted in the instant case.

1045 & 1046/DEL/2022 • Similarly, the ITAT Delhi in Seh Realtors Pvt. Ltd. v. ACIT (ITA No. 25031De1l2017, dated 23.07.2024) found mechanical approval only because 232 cases were approved in one day. The instant case is factually distinguishable, involving only cases of AY 2013-14,2014-15,2015-16 and few loose papers on the basis of which addition was made, which was simple to verify.

6. Reliance on Judicial Precedents • In the recent decision of KK. Leisure & Tourism International (P) Ltd. v. DCIT (2025 (8) TMI 541), the Hon 'ble ITA T, Cochin Bench, categorically held that:  "The issue whether the JCIT had accorded the approval mechanically or not has to be judged based on the material on the basis of which the JCIT formed the opinion and accorded the approval. In the present case, no material was produced before us to show that JCIT had accorded approval u/sec. 153D mechanically."  The Tribunal further observed that mere bald assertions that approval was mechanical, without any supporting material, cannot vitiate the assessment.  The ratio laid down in KK. Leisure & Tourism (supra) squarely applies to the present case, wherein the assessee has not placed any evidence on record to establish that the approval granted by the Addl. CIT was mechanical. Hence, no relief can be granted on mere presumptions.

7. One-Day Approval Does Not Imply Mechanical Approval • The assessee's argument that approval granted on the same day implies mechanical approval is misconceived. The law does not prescribe any minimum time for the approving authority to form satisfaction. • In the present case, there were only few loose papers forming the basis of the addition for all the three Assessment Years. The factual matrix was limited and straightforward. The Addl. CIT, being already apprised of the facts through continuous supervision, was fully capable of examining and approving the draft order on the same day. • Therefore, a one-day approval in such circumstances cannot be equated with mechanical approval, particularly when the record demonstrates that due procedure was followed.

by the assessee before the Hon'ble ITAT for the first time, relating to the validity of approval under section 153D. • Reliance is placed on the judgment of ITAT Allahabad in Ramji Vaish v. DCIT (Order dated 31.10.2025), wherein it was held that:  An additional ground on section 153D approval, raised for the first time before the ITAT, is not maintainable.  Such an issue neither emanates from the order of the CIT(A) nor falls within the appellate jurisdiction of the ITA T under section 253(1) of the Act.  Documents like the AO's letter seeking approval and the JCIT's approval letter are additional evidences within the meaning of Rules 11, 18, and 29 of the ITAT Rules, 1963, and cannot be entertained without recorded reasons. • Therefore, the additional ground does not arise from the order of the CIT(A) and falls outside the jurisdiction of the Tribunal, and must be rejected in limine.

11. Principles of law and Jurisprudential Contentions • The rigors of satisfaction in criminal law cannot be imported into civil tax proceedings where approval is post-facto and administrative in nature.

1045 & 1046/DEL/2022 • Absence of recitals in an administrative order cannot, by itself, indicate non-application of mind. In law, "non-application of mind" means failure to exercise independent and conscious judgment. • Under Section 114 (e) of the Evidence Act, the onus is upon the assessee to prove non-application of mind by cogent evidence. The Revenue need not prove the reverse until the assessee discharges this burden. • The Supreme Court has held that there is no violation of natural justice unless actual prejudice is demonstrated. Hence, an assessee alleging non- application of mind must establish tangible prejudice that could have been avoided had additional recitals been made in the approval order. • Approval under Section 153D is mandatory arid supervisory, intended to protect the interests of the Revenue, not to adjudicate the rights or liabilities of the assessee. • Prejudice, if alleged, must be viewed within the scope of the prescribed CBDT SOPs and duties of the approving authority. • The prejudice must relate to procedure, not to the merits of the assessment. The Addl. CIT does not act as an appellate body under Section 153D. • A claim of non-application of mind must rest on specific factual findings identifying procedural lapses. CIT(A) or ITAT cannot presume non- application without such evidence. • Since the approval is post-jurisdictional and administrative, if any irregularity is alleged, it must be verified factually. Quashing of assessment without such enquiry would be contrary to judicial principles; at most, the matter may be remanded to AO for rectification. In view of the foregoing:

1. 1. The approval under section 153D was granted after due consideration of assessment records and seized material.

2. The one-day approval cannot be termed mechanical given the limited factual matrix of few documents which could be examined in a single day.

3. The assessee has produced no evidence to substantiate its claim of non- application of mind.

4. The decisions cited by the assessee are distinguishable on facts, while recent authorities like KK. Leisure & Tourism International (P) Ltd. (ITAT Cochin) and Ramji Vaish v. DCIT (ITAT Allahabad) directly support the Department's stand.

1045 & 1046/DEL/2022 5. The additional ground regarding section 153D is not maintainable and should not be admitted. Accordingly, it is respectfully prayed that the Hon'ble Tribunal may be pleased to reject the contention of the assessee on this ground and uphold the assessment order passed by the Assessing Officer.”

12. We find that ITAT Delhi Bench in the case of M/s Millenium Vinimay (P) Ltd. vs. ACIT, (supra) has dealt the similar legal issue and decided the same in favour of the assessee. The relevant findings of the Coordinate Bench are reproduced as under:-

15. There are several decisions, which supports the view that approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D of the Act. Such perfunctory approval has no legal sanctity in the eyes of the law. The decision of the co- ordinate bench in Shreelekha Damani vs. DCIT 173 TTJ 332(Mum.) which has been approved by jurisdictional High Court subsequently, reported in 307 CTR 218 affirms the plea of the Assessee, wherein the Hon'ble Bombay High Court held as under:-

1. This appeal is filed by the Revenue challenging the judgment of Income Tax Appellate Tribunal ("the Tribunal" for short) dated 19th August, 2015.

5. The learned Counsel for the Revenue submitted that the question of legality of the approval was raised by the assessee for the first time before the Tribunal. He further submitted that the Additional CIT had granted the approval. The Tribunal committed an error in holding that the same is invalid.

8. Accordingly, the Tax Appeal is dismissed."

16. In the case of ACIT, Circle-1 (2) Vs. Serajuddin and Co. the Hon'ble Supreme Court in SLP (Civil) Dairy No. 44989/2023 vide order dated 28/11/2023, dismissed the Appeal filed by the Department of Revenue against the order dated 15/03/2023 in passed by the Hon'ble High Court of Orissa at Cuttack, wherein the Hon'ble High Court had quashed the Assessment Order on the ground of inadequacy in procedure adopted for issuing approval u/s 153D of the Act by expressing discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act.

17. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the arguments advanced by the Ld. the Assessee's Representative on the Additional Ground of Appeal

. In our considered opinion the approvals so granted under the shelter of section 153D of the Act does not pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments orders in the captioned appeals are non-est and a nullity and hence the same are quashed.

18. In view of prima facie merits found in the legal objections raised in the Addl. Grounds of the Assessees, we do not consider it expedient to look into the aspects on merits of additions/disallowance as the legal objections on sanction granted under Section 153D of the Act has been answered in favour of the Assessee. Thus the other Grounds raised in the Appeals of the Assessee in both the Appeals have rendered in- fructuous, which do not need any separate adjudication.

19. In the result, the Appeals filed by the Assessee in and ITA No. 295/Del/2022 are allowed.

11. Upon considering the entire aspect of the matter, we find that the approval has been granted not separately for each assessment year for the 1045 & 1046/DEL/2022 assessee whereas the provision of Section 153D of the Act stipulates conditions that no order of assessment or reassessment shall be made by an Assessment Officer below the rank of Joint Commissioner in respect of each assessment year referred to in Clause (b) of Sub Section (1) of Section 153A of the Act or the assessment year referred to in Clause (b) of Sub Section 153B of the Act except the prior approval of the Joint Commissioner. It further appears from the approval dated 08.06.2018 that the same was a common and composite order whereas the Addl. Commissioner is required to verify and approve that each of assessment year is complied with as well as procedural laid down under the Act. Such fact clearly reveals non-application of mind on the part of the Learned Addl. Commissioner of Income Tax, Central Range-7, New Delhi. Thus granting approval for all the common years instead of approval under Section 153B for each assessment year separately de horse the rules. The said approval is found to have been given in a mechanical and routine manner. We find that the order issuing authority has not discharged its statutory duties cast upon him even by assigning cogent reasons in respect of the issues involved in the matter. Thus granting approval in the absence of due application of independent mind to the material on record for each assessment year in respect of the assessee's case separately vitiates the entire proceedings; the same is found to be arbitrary and erroneous and therefore, liable to be quashed. We are also inspired by the ratio laid down in the Judgment narrated hereinabove passed by the Hon'ble Jurisdictional High Court and respectfully relying upon the same with the above observation, we quash the entire proceeding initiated under Section 153C r.w.s 153A of the Act in the absence of a valid approval granted by the Learned Additional Commissioner of Income Tax, Central Range-7, New Delhi.

“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 1045 & 1046/DEL/2022 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.

and at this stage, we keep the other grounds of appeal open.

16. Since the facts in AYs 3025-16 & 2015-16 are exactly similar to Assessment Year 2013-14, our above findings in AY 2013-14 are applicable mutatis mutandis in Assessment Years 2014-15 & 2015-16. Accordingly, the appeals filed by the assessee for AYs 2014-15 & 2015-16 are allowed.