ASHISH GARG,NOIDA vs. DCIT, CENTRAL CIRCLE-2, NOIDA

Order : .09.2025 O R D E R PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :

2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.1381/Del/2022 for AY 2009-10 as lead case.

3. The assessee has taken the following grounds of appeal in AY 2009-10 :-

1. On the facts and circumstances of the case and in law, the initiation of assessment proceedings and issue/service of notices are not in accordance with the provisions of law and accordingly the assessment order passed on foundation of such notice(s) is liable to be quashed and CIT(A) erred in not holding so.

1. 2. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is without jurisdiction and barred by limitation and CIT(A) erred in not holding so.

3. On the facts and circumstances of the case and in law, the addition of Rs.6,00,000/- made by assessing officer on account of loans received is beyond the scope/jurisdiction of the provisions of section 153A of the Income Tax Act, 1961 and CIT(A) erred in not holding so.

4. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs.6,00,000/- made by assessing officer on account of alleged loans received .

5. On the facts and circumstances of the case and in law, the addition of Rs.30,000/- made by assessing officer on account of alleged salary income is beyond the scope/jurisdiction of the provisions of section 153A of the Income Tax Act, 1961 and CIT(A) erred in not holding so.

6. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs.30,000/- made by assessing officer on account of alleged salary income.

7. On the facts and circumstances of the case and in law, the addition of Rs.1,03,561/- made by assessing officer on account of interest on capital is beyond the scope/jurisdiction of the provisions of section 153A of the Income Tax Act, 1961 and CIT(A) erred in not holding so.

8. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs.1,03,561/- on account of interest on capital.

9. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to provisions of sections 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so.”

4. At the outset of the hearing, ld. AR for the assessee raised the legal ground being Ground No.9 that the assessment order passed by the Assessing Officer is contrary to the provisions of section 153D of the Income-tax Act, 1961 (for short ‘the Act’) and brought to our notice the provisions of section 1543D of the Act as under :- "no order of assessment or reassessment shall be passed by the assessing officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of Section i53A or assessment year referred to in clause (b) of sub-section (1) of Section i53E except with the prior approval of Joint Commissioner. "

5. Ld. AR submitted that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. He submitted that the approval of JCIT should reflect application of mind and the requirement of approval cannot be treated as mere formality and the mandate of the Act is that the approving authority has to act in a judicious manner by due application of mind in a manner of a quasi-judicial authority. If the approval has been granted by the approving authority in a mechanical manner, the very purpose of obtaining approval to 1395/Del/2022 under section 153D of the Act and the mandate of the enactment by the legislature will be defeated. He submitted that in the present case, the approval by JCIT is not valid in view of the following reasons: - (i) As per section 153A of the Act, for making assessment, notice is required to be issued for each year separately for which the assessments are to be made. The notice u/s 142(1) is also issued separately for each of the years. The assessment order is also passed separately for each of the year. As per mandate of section 153D, the approval of JCIT is also required separately for each of the assessment year. In the present case, the JCIT has given combined approval for 7 year which is not in conformity with law. This issue stands covered in favour of the assessee by the decision of Hon’ble jurisdictional High Court. (ii) The assessing officer has sent the letter for approval to JCIT on 10.01.2018 and JCIT has granted approval on 11.01.2018. The JCIT has been approval for 21 cases of the group on the same date. Thus, it was not possible for the JCIT to properly examine the facts of the case, the seized material and the issue involved. (iii) The approval has been granted by the JCIT on the basis of undertaking/ certificate from the assessing officer that the contents of the appraisal report, seized material etc have been examined by him. Thus, the JCIT has not made any independent application of mind. (iv) The JCIT has not mentioned that he has gone through the appraisal report, assessment records, seized material and other materials. to 1395/Del/2022 ITA No.1547/Del/2022 (v) The approval granted by the JCIT is without going through the seized material, appraisal report and other material on record. (vi) There is not even a token mention in the approval that the draft assessment orders have been perused by the JCIT. Even the bare minimum requirement of approving authority having to indicate what the thought process involved was is missing. vii. The approval given by JCIT is not final. He has directed the assessing officer that the fact of the initiation of penalty proceedings, wherever applicable, must be incorporated in the assessment order.

6. Ld. AR for the assessee relied on various decisions of Hon’ble jurisdictional High Court, other Hon’ble High Courts and the decisions of the ITAT and accordingly, ld. AR of the assessee prayed that the entire proceedings may be quashed and allow the appeal.

7. 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 for approval process has no relevance to the assessee and his proceedings.

8. Before deciding the legal issue in dispute, we may gainfully reproduce the approval u/s. 153D of the Act, which read as under:- to 1395/Del/2022

“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 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. It was noted that the obligations of the approval of the Approving Authority serves two purposes: (i) On the one hand, he has to apply his mind to ensure the interest of the revenue against any omission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year. (ii) On the other hand, superior authority is also responsible and duty-bound to do justice with the tax-payer by granting protection against arbitrary or creating baseless tax liability on the assessee. The Tribunal has further noted that the provisions contained in Sections 153A to Section 1530 provide for separate notice to be given to assessee for assessment for each year as specified in Section 153A of the Act; the assessee has to file separate ITR for each year as specified in Section 153A of the Act; separate assessment orders are to be passed for each year as specified in Section 153A of the Act. to 1395/Del/2022 It was observed that this is an important concept mentioned in Section 153A of the Act, which is peculiar to the scheme of the said Section. Keeping in view of this basic fundamental features of Section 153A, if Section 1530 is scrutinized, then, it would become manifest that an important phrase is employed in the text of Section 153D, which is "each assessment year". The reading of the provisions in Section 153A and 153D conjointly makes it clear that separate approval of draft assessment order for each year is to be obtained under Section 153D of the Income Tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the "approval" as defined in Black's Law Dictionary as also the decisions of the Apex Court in the case of Sahara India vs. CIT and Others (2008) 300 ITR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned into an empty ritual. The Apex Court has held therein that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The above discussion made in the judgement of Tribunal dated 3.08.2021 in the case of Navin Jain Vs. Dy. C.I.T. (Supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under Section 153D of the Act would vitiate the entire proceedings in the instant case. For the reasoning given in the case of Navin Jain (Supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income Tax Act. The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval to 1395/Del/2022 ITA No.1547/Del/2022 under Section 1530 is pre-requisite to pass an order of assessment or re- assessment. Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of "each assessment year" referred to in Clause (b) of sub-section (1) of Section 153A which provides for assessment in case of search under Section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of "each assessment year" falling within six assessment years (and for the relevant assessment year or years), referred to in Clause (b) of sub-section (1) of Section 153A. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years). 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. In the instant case, the draft assessment order in 85 cases, i.e. for 85 assessment years placed before the Approving Authority on 30.12.2017 was approved on same day i.e. 30.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 85 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record.”

“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. to 1395/Del/2022

16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- "10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 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."

12. We find that ITAT Delhi Bench in the case of M/s Millenium Vinimay (P) Ltd. vs. ACIT, dated 31.5.2024 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.

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 assessee whereas the provision of Section 153D of the Act stipulates conditions that no order of assessment or reassessment shall be made by an to 1395/Del/2022 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.

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

15. In the result, the appeal being for assessment year 2009-10 is allowed. to 1395/Del/2022

17. With regard to cross appeal filed by the Revenue for AY 2013-14 being since we have quashed the entire proceedings initiated under section 153A r.w.s. 143(3) of the Act in assessee’s appeal for AY 2013-14, the appeal filed by the Revenue is dismissed.

18. To sum up : all the appeals filed by the assessee are allowed and the appeal filed by the Revenue for AY 2013-14 is dismissed.. Order pronounced in the open court on this 17th day of September, 2025.