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Facts
The assessee filed eight appeals against the common order of CIT(A) concerning assessment years 2012-13 to 2019-20. The core issue was the validity of assessments framed under Section 153A of the Income Tax Act, 1961.
Held
The Tribunal held that the Section 153D approval, being a common approval for all assessment years, was not sustainable in law. Consequently, the impugned Section 153A assessments were quashed.
Key Issues
The primary issue was whether assessments framed under Section 153A are valid when based on a common Section 153D approval issued for multiple assessment years.
Sections Cited
153A, 143(3), 153D, 148, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
: Asstt. Year : 2013-14 : Asstt. Year : 2014-15 ITA No. 3172/Del/2025 : Asstt. Year : 2015-16 ITA No. 3173/Del/2025 : Asstt. Year : 2016-17 ITA No. 3174/Del/2025 : Asstt. Year : 2017-18 ITA No. 3175/Del/2025 : Asstt. Year : 2018-19 ITA No. 3176/Del/2025 : Asstt. Year : 2019-20 Vasudev Garg, Vs DCIT, FCA 50, Mukesh Colony, Ballabgarh, Central Circle-1, Faridabad, Haryana-121004 Faridabad, Haryana-121001 (APPELLANT) (RESPONDENT) PAN No. AFLPG8975Q Assessee by : Dr. Rakesh Gupta, Adv. & Sh. Somil Agarwal, Adv. Revenue by : Sh. Dayainder Singh Sidhu, CIT-DR Date of Hearing: 22.09.2025 Date of Pronouncement: 22.09.2025 ORDER
Per Satbeer Singh Godara, Judicial Member:
1. The assessee’s eight appeals to 3176/Del/2025; for assessment years 2012-13 to 2019-20, arise against the CIT(A)-3, Gurgaon’s common order dated 25.03.2025 passed in case No. 10210, 10377, 10688, 11299, 11627, 10608, 10860/CIT(A) GGN-3/2011-12, 2012-13, 2013- 14, 2014-15, 2015-16, 2016-17, 2017-18, 2018-19, in proceedings u/s 153A/143(3) of the Income Tax Act, 1961 (in short “the Act”), respectively.
It emerges at the outset that there arises the first and foremost issue of validity of all the impugned assessments framed u/s 153A of the Act by the learned Assessing Officer, in furtherance to the search in question herein dated 30.07.2018 for want of a valid section 153D approval. This is for the precise reason that learned counsel representing the assessee has filed before us a copy of the prescribed authority followed by the latter’s approval dated 16.06.2021, a common one right from assessment years 2012-13 to 2019-20, as the case may be. This being the clinching fact, we note that the tribunal’s recent co-ordinate bench order dated 24.02.2025 in DCIT Vs. Empire Realtech Pvt. Ltd., as held such an assessment itself has not sustainable in law for want of valid section 153D approval as under:
“5. It is in this factual backdrop that the learned CIT- DR could hardly dispute the clinching fact that the assessee’s cross objection raises the foregoing legal issue of validity of the impugned assessment framed by the Assessing Officer dated 18.02.2015 itself; for want of a valid section 153D approval in furtherance to the search in question carried out by the departmental authorities on 23.11.2012. We make it clear that the learned Assessing Officer’s section 153D approval sought dated 12.02.2015 forms part of the records before us which is found to be a common one for assessment years 2009-10, 2010-11 and 2012-13, which stood granted on 16.02.2015.
6. Faced with this situation, we invited Revenue’s attention to various recent decisions that such an assessment based on a common section 153D approval is not sustainable in law in light of learned co-ordinate to 3176/Del/2025 Vasudev Garg bench’s order in Aditya Sharma Vs. ACIT, to 3621/Del/2019 vide order dated 15.01.2025 holding as under: “3. We next note that there arises the first and foremost issue of validity of all the impugned assessments framed u/s 143(3) r.w.s. 153A of the Act; dated 02.03.2017, in consequence to the search action herein dated 15.02.2014, on the ground that the learned prescribed authority had not accorded a valid approval thereto u/s 153D of the Act. The Revenue could hardly dispute that the instant legal ground sought to be raised at the assessee’s behest goes to the root of the matter and therefore, we quote National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC); as considered in Allcargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 287 (SB) (Mum), that such an additional ground could very well be allowed to be raised in section 254(1) proceedings, in order to determine the correct tax liability of an assessee provided all the relevant facts form part of the records.
It is in this factual backdrop that we admit the assessee’s instant legal ground and note with the able assistance coming from both the parties that the learned Assessing Officer had sought the prescribed authority’s approval on 27.02.2017 which stood granted on 02.03.2017. The clinching fact which from page 10 in the assessee’s paper book is that the learned Assessing Officer herein had infact sought a common approval for all these assessment years from 2008-09 to 2013-14 which stood granted, and therefore, we quote PCIT Vs. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Del.), PCIT Vs. MDLR Hotels (P) Ltd. (2024) 166 taxmann.com 327 (Del.) and ACIT vs. Serajuddin and Co. (2024) 163 taxmann.com 118 (SC), to conclude that such a combined section 153D approval indeed vitiates the entire assessment itself. We draw strong therefrom to quash all the impugned assessments framed herein in assessee’s case in assessment years 2008-09 to 2013-14 in very terms.”
7. Learned CIT-DR has filed a copy of Revenue’s written submissions as under: “Sub: Written Submission in the above case on the legal ground of validity of Section 153D approval granted by the JCIT/Addl. CIT- reg. In the above case, it is humbly submitted that in addition to the oral arguments submitted by the undersigned, the following legal issues/legal to 3176/Del/2025 Vasudev Garg submissions, relevant to section 153D approval and two vital Judgments of the Hon. Supreme Court, on the legality and legal requirements of the Administrative Orders of government or executive authorities, may kindly be considered:-
1. 1. The word/phrase - “written approval” is not mentioned in the section 153D of the Income tax Act, 1961. The only phrase used is “the prior approval”. Therefore, the contents of the written order of the JCIT/Addl. CIT are legally not required to be examined or considered, for meeting the legal or factual requirements of the approval under section 153D.
2. The order by the Addl. CIT/JCIT under section 153D is an Administrative Order, by the higher authority i.e. JCIT/Addl. CIT to the lower authority, i.e. AO. Such an order is not a quasi-judicial or judicial order. Therefore, the legal requirements and benchmarks regarding the principles of “the application of mind" and “the speaking order” are not as strict or high, as they are in the case of quasi- judicial or judicial order.
3. In respect of the legal requirements and the benchmarks regarding the administrative orders, the Hon. Supreme Court has given many comprehensive judgements, which are enclosed and the relevant portions/parts are quoted as under:- (i) Decision of Hon’ble Supreme Court in the case of Municipal Council Neemuch vs Mahadeo Real Estate, dated 17 September, 2019, AIR 2019 SC 4517, 2019 (10) SCC 738. “.....
14. In the present case, the learned Judges of the Division Bench have arrived at a finding that such a sanction was, in fact, granted. We will examine the correctness of the said finding of fact at a subsequent stage. However, before doing that, we propose to examine the scope of the powers of the High Court of judicial review of an administrative action. Though, there are a catena of judgments of this Court on the said issue, the law laid down by this Court in the case of Tata Cellular Vs. Union of India reported in (1994) 6 SCC 651 lays down the basic principles which still hold the field. Paragraph 77 of the said judgment reads thus: “77. The duty of the court is to confine itself to the question of legality. Its concern should be:-
Whether a decision-making authority exceeded its powers? 2. Committed an error of law, 3. committed a breach of the rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:- (i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. V. Secretary of State for the Home Department, ex Brind, (1991) 1 AC 696, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, ‘consider whether something has gone wrong of a nature and degree which requires its intervention”. 15. It could thus be seen that the scope of judicial review of an administrative action is very limited. Unless the Court comes to a conclusion, that the decision maker has not understood the law correctly that regulates his decision-making power or when it is found that the decision of the decision maker is vitiated by irrationality and that too on the principle of “Wednesbury Unreasonableness” or unless it is found that there has been a procedural impropriety in the decision-making process, it would not be permissible for the High Court to interfere in the decision making process. It is also equally well settled, that it is not permissible for the Court to examine the validity of the decision but this Court can examine only the correctness of the decision making process. to 3176/Del/2025 Vasudev Garg 16. This Court recently in the case of West Bengal Central School Service Commission Vs. Abdul Halim reported in 2019 SCC OnLine SC 902 had again an occasion to consider the scope of interference under Article 226 in an administrative action.”
In exercise of its power of judicial review, the Court is to see whether the decision impugned is vitiated by an apparent error of law. The test to determine whether a decision is vitiated by error apparent on the face of the record is whether the error is self-evident on the face of the record or whether the error requires examination or argument to establish it. If an error has to be established by a process of reasoning, on points where there may reasonably be two opinions, it cannot be said to be an error on the face of the record, as held by this Court in Satyanarayan v. Mallikarjuna reported in AIR 1960 SC 137. If the provision of a statutory rule is reasonably capable of two or more constructions and one construction has been adopted, the decision would not be open to interference by the writ Court. It is only an obvious misinterpretation of a relevant statutory provision, or ignorance or disregard thereof, or a decision founded on reasons which are clearly wrong in law, which can be corrected by the writ Court by issuance of writ of Certiorari.
32. The sweep of power under Article 226 may be wide enough to quash unreasonable orders. If a decision is so arbitrary and capricious that no reasonable person could have ever arrived at it, the same is liable to be struck down by a writ Court. If the decision cannot rationally be supported by the materials on record, the same may be regarded as perverse. Municipal Council Neemuch vs Mahadeo Real Estate on 17 September, 2019 Indian Kanoon - http://indiankanoon.org/doc/83894917/ 6.
However, the power of the Court to examine the reasonableness of an order of the authorities does not enable the Court to look into the sufficiency of the grounds in support of a decision to examine the merits of the decision, sitting as if in appeal over the decision. The test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has led to manifest injustice. The writ Court does not Interfere, because a decision is not perfect. to 3176/Del/2025 Vasudev Garg 17. It could thus be seen that an interference by the High Court would be warranted only when the decision impugned is vitiated by an apparent error of law, i.e., when the error is apparent on the face of the record and is self evident. The High Court would be empowered to exercise the powers when it finds that the decision impugned is so arbitrary and capricious that no reasonable person would have ever arrived at. It has been reiterated that the test is not what the court considers reasonable or unreasonable but a decision which the court thinks that no reasonable person could have taken. Not only this but such a decision must have led to manifest injustice ....................................................................
In the present case, we find that the Commissioner had acted rightly as a custodian of the public property by pointing out the anomalies in the proposal of the Municipal Council to the State Government and the State Government has also responded in the right perspective by authorizing the Commissioner to take an appropriate decision. We are of the considered view that, both, the Commissioner as well as the State Government, have acted in the larger public interest, We are unable to appreciate as to how the High Court, in the present matter, could have come to a conclusion that it was empowered to exercise the power of judicial review to prevent arbitrariness or favoritism on the part of the State authorities, as has been observed by it in paragraph 13. We are also unable to appreciate the finding of the High Court in para 17 wherein it has observed that the impugned decision of the authorities are found not to be in the public interest. We ask the question to us, as to whether directing re-tendering by inviting fresh tenders after giving wide publicity at the National level so as to obtain the best price for the public property, would be in the public interest or as to whether awarding contract to a bidder in the tender process where it is found that there was no adequate interest or as to whether publicity and also a possibility of there being a cartel of bidders, would be In the public interest. We are of the considered view that the decision of the Commissioner which is set aside by the High Court is undoubtedly in larger public Interest, which would ensure that the Municipal Council earns a higher revenue by enlarging the scope of the competition. By no stretch of imagination, the decision of the State Government or the Commissioner could be termed as illegal, improper, unreasonable or irrational, which parameters only to 3176/Del/2025 Vasudev Garg could have permitted the High Court to interfere. Interference by the High Court when none of such parameters exist, in our view, was totally improper. On the contrary, we find that it is the High Court, which has failed to take into consideration relevant material.
In the result, the impugned Orders are not sustainable in law. The appeals are, accordingly, allowed and the Impugned orders dated 31.08.2017 and 05.07.2018 are quashed and set aside. The petition of respondent No. 1 stands dismissed………..” (ii) Decision of Hon’ble Supreme Court in the case of West Bengal Central School Service ... vs Abdul Halim dated 24 July, 2019, AIR 2019 SC 4504, AIRONLINE 2019 SC 2188 AIR 2020 SC (CIV) 82. “………………..31. The sweep of power under Article 226 may be wide enough to quash unreasonable orders. If a decision is so arbitrary and capricious that no reasonable person could have ever arrived at it, the same is liable to be struck down by a writ Court. If the decision cannot rationally be supported by the materials on record, the same may be regarded as perverse.
However, the power of the Court to examine the reasonableness of an order of the authorities does not enable the Court to look into the sufficiency of the grounds in support of a decision to examine the merits of the decision, sitting as if in appeal over the decision. The test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has led to manifest injustice. The writ Court does not interfere, because a decision is not perfect.
33. In entertaining and allowing the writ petition, the High Court has lost sight of the limits of its extraordinary power of judicial review and has in fact sat in appeal over the decision of the respondent No. 2…………….”
8. We have given our thoughtful consideration to the assessee’s pleadings and Revenue’s vehement contentions as well as it’s written submission. We find no reason to uphold the validity of the impugned assessment as it has come on record that the same has been framed in furtherance to a common section 153D approval already held as not sustainable in law. We order accordingly.”
4. The learned CIT-DR at this stage seeks to distinguish the above preposition by filing the Revenue’s written submissions as follows: “A. Contentions of the Departmental Representative on Issue of Approval under Section 153D 1. Jurisdiction and Role of Approving Authority It is respectfully submitted that the Additional Commissioner of Income Tax (Addl. CIT) exercises concurrent jurisdiction over assessment proceedings in search and seizure cases. The assessment is a continuous and composite process, wherein the Addl. CIT assumes both administrative and statutory functions. The statutory approval envisaged under section 153D is not a mere empty formality, but a substantive safeguard requiring the approving authority to judiciously and independently examine the assessment records, seized documents, and issues arising therefrom. In the present case, the assessee has failed to demonstrate that such approval was granted mechanically or without application of mind. The burden of proof lies on the assessee to positively establish non-application of mind, which has not been discharged. 2. Findings Recorded in Approval Order The approval granted by the Addl. CIT, Central Range, Gurugram dated 16.06.2021 specifically records in Paragraph 2 that: a) The assessee was afforded proper opportunity of being heard during assessment proceedings; b) The issues arising from material on record were duly examined by the Assessing Officer and considered at the time of approval; and c) The relevant seized documents were duly verified before the passing of the draft assessment order. These categorical findings recorded in the approval order itself dispel the allegation of non-application of mind. They demonstrate that the Addl. CIT not only examined the draft order but also satisfied himself to 3176/Del/2025 Vasudev Garg with respect to the seized material and procedural safeguards. 3. Seized Material Forms Integral Part of Assessment Records It is a settled proposition that seized documents form part of the assessment records and are continuously referred to by the AO during proceedings. Such documents are neither segregated nor excluded but are incorporated into the material on record relied upon while framing the assessment.
Therefore, when the AO forwarded the draft order and records for statutory approval, the entire body of records including seized documents stood before the approving authority. Hence, the allegation that approval was granted without consideration of seized material is devoid of merit.
4. No Inference of Mechanical Approval The approval letter itself makes it evident that the Addl. CIT had perused the assessment records and seized material. Accordingly, it cannot be inferred that the approval was accorded in a mechanical or perfunctory manner.
Prior Knowledge of Issues by Approving Authority In search cases, the Addl. CIT remains apprised of the facts, seized material, and developments of assessment proceedings. This is further fortified by CBDT Instruction F. No. 286/161/2006- IT(Inv.II) dated 22.12.2006, which mandates that the appraisal report is shared with both the Assessing Officer and supervisory authorities. Therefore, much prior to the forwarding of the draft assessment order, the Addl. CIT was well- informed about the facts and issues. The fact that approval was granted on the same day as receipt of the proposal does not imply mechanical approval.
6. Approval - A Question of Fact The Hon’ble Jurisdictional High Court has repeatedly held that validity of approval under section 153D is essentially a question of fact, to be determined based on the factual matrix of each case. The cases relied upon by the assessee are clearly distinguishable, as evident below:
Case & Citation Facts Considered by Distinguishing Features Court in Present Case PCIT vs. Anuj No assessment In present case, seized Bansal, ITA records sent; material and assessment 368/2023 (Del HC) infirmities in figures records were forwarded; no overlooked infirmities shown Seh Realtors Pvt. Approval in 232 cases Present case concerns only Ltd. v. ACIT, ITA in one day; human 8 cases of same group with 2503/Del/2017 limitations questioned identical modus operandi (ITAT Delhi)
Accordingly, reliance placed by the assessee is wholly misplaced.
No Presumption Against Approving Authority A No adverse presumption can be drawn merely because multiple approvals were granted on a particular date. The question of whether approvals were mechanical depends upon facts such as commonality of issues, number of cases, and inter- relationship of facts. In the instant search group, the issues were based on identical accommodation entries and common modus operandi, enabling the Addl. CIT to efficiently apply his mind across connected cases.
Judicial Support - Procedural Irregularities Not Fatal Reliance is placed on Home Finders Housing Ltd. v. ITO [2018] 93 taxmann.com 371 (Mad HC), wherein it was held that non-compliance of procedural requirements does not vitiate assessment proceedings but is at best a curable irregularity. The Hon’ble Supreme Court also dismissed the SLP against this decision. Similarly, in Improvement Trust, Ludhiana v. Ujagar Singh (CA No. 2395/2008), the Hon’ble Supreme Court emphasized that justice must be rendered on merits and not defeated on technicalities. Thus, even assuming some procedural irregularity, it cannot invalidate the substantive assessment framed on merits. In light of the above submissions, it is respectfully submitted that: 1. The Addl. CIT duly discharged his statutory obligation under section 153D; to 3176/Del/2025 Vasudev Garg 2. The approval order itself records application of mind to seized documents and issues; 3. The facts of the assessee’s case are distinguishable from cited precedents; and 4. Procedural objections cannot vitiate valid assessment orders.
5. Accordingly, the objection raised by the assessee regarding validity of approval under section 153D deserves to be rejected in toto.”
5. We see no merit in the learned CIT-DR foregoing arguments. This is for the precise reason that there is no such procedure of getting the field authorities affidavit in support of their respective orders under the provisions of the Act that stated in the case records. Case law Hindustan Lever Ltd. Vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.) has already settled the issue; in section 148/147 jurisprudence, that even reasons recorded by the assessing authority could not be allowed to be improved of any latter stage which have to be read as standalone basis. The very legal proposition is applicable in administrative law as well as in hon’ble apex court’s landmark decision in Mohinder Singh Gill & Anr. Vs. CEC (1978) 1 SCC 405 (SC) wherein their held as under: “The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds latter brought out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji. “Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the office making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities to 3176/Del/2025 Vasudev Garg are meant to have public effect and are intended to effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” Orders are not like old wine becoming better as they grow older”.
We thus conclude in this factual backdrop that given the fact that the section 153D approval herein dated 16.06.2021 is a common one in all these assessment years, the impugned section 153A assessments herein are not non-est in the eyes of law. The same are hereby quashed in very terms. Ordered accordingly.
7. All other pleadings on merits stand rendered academic.