LENIENT CONSULTANTS PVT LTD,DELHI vs. DCIT,CENTRAL CIRCLE-2, NOIDA

आदेश /O R D E R PER C.N. PRASAD, J.M.

A) “That Ld. CIT(A) vide impugned order passed u/s 250 of the Act, 1961 erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is totally unlawful, illegal and without valid assumption of jurisdiction under the Act.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. B) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act, 1961 erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is without “valid”/requisite approval u/s 153D of the Act; C) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act, 1961 erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is in total violation of principle of natural justice (lack of valid Show cause notice/SCN and lack of cross examination and relevant relied upon material being provided to assessee etc.); D) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act, 1961 erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is in violation of mandatory/binding CBDT instruction. E) That Ld.CIT(A) vide impugned order passed u/s 250 of the Act erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is totally arbitrary and without application of mind. F) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is made in abdicated manner without any iota of independent inquiry/examination being done during asst. qua subject/impugned additions made/sustained in the impugned orders. G) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is without valid/requisite incriminating material qua subject/impugned additions made/sustained in the impugned orders. H) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is classical case of impermissible aprobate and reprobate as evident 2

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. from subject/impugned additions made/sustained in the impugned orders. I) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act erred in not deleting the subject/impugned additions made/sustained in the impugned orders. J) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act erred in not accepting the additional grounds raised and thus erred in not quashing the impugned assessment framed u/s 153A/144 of the Act.”

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. (450 ITR 534 & 526) held that such common approval granted by the approving authority in 123 cases in a day is nothing but a mechanical exercise of power. The Ld. Counsel for the assessee further submitted that the Hon’ble Jurisdictional High Court held that section 153D requires the Assessing Officer to obtain prior approval of the approving authority in respect of each assessment year and the careful and conjoint reading of section 153A(i) and section 153D suggest that the approval has to be obtained with respect to each assessment year on the draft assessment order before passing the assessment orders u/s 153A of the Act. Ld.

Counsel for the assessee submitted that in all these cases the approval u/s 153D has been granted within a gap of two days for assessment years 2012-13 to 2018-19 in the case of eleven assessees by way of common approval which is nothing but a mechanical exercise and since the approval has not been obtained for each assessment year, in view of the decision of the Jurisdictional High Court in the case of PCIT vs. Siddharth Gupta (supra) the common approval granted u/s 153D dated 28.12.2019 is bad in law and consequently the assessments framed u/s 153A r.w.s. 144 of the Act are also bad in law and void ab initio. Ld. Counsel for the assessee further submitted that the Spl. Leave

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD.

Petition filed by the Revenue against the decision of the Jurisdictional Allahabad High Court in the case of PCIT vs. Siddharth Gupta (supra) is dismissed by the Hon’ble Apex Court.

The Ld. Counsel for the assessee also placed on the following decisions in support of his above contentions:

S. No. Case law/precedent description 1. Hon’ble Apex court SLP dismissal of revenue in case of PCIT Central vs. Siddharth Gupta SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 43280/2023 (09.08.2024) approving Hon’ble Allahabad High Court in case of PCIT vs. Siddharth Gupta ITA 90/2022 dated 12.12.2022 (450 ITR 534 & 526) 2. Hon’ble Allahabad High Court in case of PCIT vs. Siddharth Gupta ITA 90/2022 dated 12.12.2022 (450 ITR 534 & 526) 3. Hon’ble Delhi High Court in case of PCIT vs. Anuj Bansal 2023 SCC OnLine Del 4159 (466 ITR 251) 4. Hon’ble Apex Court in case of PCIT vs. Anuj Bansal approving above Hon’ble Delhi High Court order reported at 466 ITR 254 5. Hon’ble Delhi High Court in case of PCIT vs. MDLR Hotels Pvt. Ltd. ITA 593/2023 (30.07.2024) approving ITAT impugned order on sec. 153D.

6. Hon’ble Delhi High Court in case of Vinod Solanki vs. ACIT W.P. (C) 4196/2002 (14.08.2024) on issue of quality of sanction/approval u/s 151 and sec. 153D.

7. Hon’ble Delhi High Court in case of PCIT vs. Shiv Kumar Nayyar (approving Delhi bench ITAT order) ITA 285/2024 (15.05.2024) 8. Hon’ble Delhi High Court in case of PCIT vs. Subhash Dabas (ITA 243/2023 17.05.2014) 9. Tish Consultants P. Ltd. vs. DCIT & 2311/Del/2025 dated 16.06.2025.

4. Ld. Counsel for the assessee further submitted that the coordinate bench of the Delhi Tribunal had considered the very same approval dated 28.12.2019 granted by the Addl. CIT, Meerut in one of the group cases namely Tish Consultants Pvt. Ltd. vs. DCIT & 2311/Del/2025 dated 16.06.2025, whether a ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. valid approval or not and the Hon’ble Tribunal following the decisions of the Hon’ble Jurisdictional High Court in the case of PCIT vs. Siddharth Gupta (supra), PCIT vs. Subodh Aggarwal (149 taxmann.com 373) and PCIT vs. Sapna Gupta (147 taxmann.com 288) held that this common approval granted for various assessment years for various assessees is in violation of provision of section 153D of the Act and thereby making the approval granted in a mechanical manner without due application of mind. Consequently the assessments framed u/s 153A r.w.s 144 were quashed.

Therefore, the Ld. Counsel for the assessee submitted that since this approval is common for the assessees in appeal as well as Tish Consultants Pvt. Ltd. which was considered by the coordinate bench & 3211/Del/2025 dated 16.06.2025, the decision is squarely applies to the assessees in appeal before the Tribunal and thus, requested that the same may be followed.

4.1 Ld. Counsel for the assessee further submitted that recently the Hon’ble Third Member decided similar issue in favour of the assessee in the case of Shri Dheeraj Choudhary vs. ACIT in ITA Nos.

6158 to 6160/Del/2018 and 6214 to 6216/Del//2018 dated 12.09.2025 holding that the common approval given by the Addl.

CIT for assessment years 2009-10 to 2015-16 is bad in law.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. 5. On the other hand, the Ld. DR strongly supported the order of the Ld. CIT(Appeals) in rejecting the ground raised by the assessee.

Ld. DR further submitted that the Ld. CIT(A) has considered the submissions of the assessee on this ground and placing reliance on the decision of the Hon’ble Chattisgarh High Court in the case of Hitesh Golcha vs. ACIT reported at Tax(C) No.76/2024 dated 10.04.2024, held that the approval granted by the Addl. CIT, Meerut is proper and the contention of the assessee that it is only a mechanical approval has been rejected by the Ld. CIT(A).

“B) That Ld. CIT(A) vide impugned order passed u/s 250 of the Act (1961 Act) erred in not quashing the impugned assessment order passed u/s 153A/144 of the Act which is without “valid”/requisite approval u/s 153D of the Act.” It is the contention of the Ld. Counsel for the assessee that the common approval u/s 153D granted by the Addl. CIT, Meerut dated 28.12.2019 in the case of all 11 assessees of Samtle Group of cases for the assessment years 2012-13 to 2018-19 is mechanical, without application of mind and further the approval since not granted for each assessment year the same is bad in law and consequently the assessment framed u/s 153A 7

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. r.w.s. 144 of the Act in all these assessees before us for various assessment years is bad in law. Reliance was placed on various decisions referred to above including the following jurisdictional Allahabad High Court decisions:

7. The Hon’ble Jurisdictional High Court in the case of PCIT vs. Siddharth Gupta (supra) held as under:

“16. 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 ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. 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 under section 153D is pre-requisite to pass an order of assessment or re-assessment.

17. 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).

18. 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 orders under section 153A.

19. In the instant case, the draft assessment orders in 123 cases, i.e. for 123 assessment years placed before the Approving Authority on 30-12-2017 and 31-12-2017 were approved on 31-12-2017, 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 123 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.” 7.2 As could be seen from the above, the Hon’ble High Court held that the draft assessment orders in 123 cases for 123 assessment years which were placed before the approving authority on 30.12.2017 and were approved on 31.12.2017 is 9

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. mechanical exercise of power. It was also further held that on 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 AO on the draft assessment order before passing the assessment orders u/s 153A of the Act.

Therefore, in the absence of such an approval granted by the approving authority u/s 153D the Hon’ble High Court upheld the order of the Tribunal in holding that such an approval is mechanical and is in violation of the provisions of section 153D of the Act.

8.1 The Hon’ble Jurisdictional High Court in the case of PCIT vs. Subodh Aggarwal (supra) held as under: -

“The Tribunal while quashing the assessment order had relied upon its earlier decision in Navin Jain and Others (Supra) wherein a detailed discussion has been made with regard to the requirement of prior approval of superior authority on the draft assessment order under Section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word 'approval' though has not been defined in the Income Tax Act but the general meaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a 10

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered.

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 ommission 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 153D 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.

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 153D 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 11

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. 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 JTR 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 ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. 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 under Section 153D 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 38 cases, i.e. for 38 assessment years placed before the Approving Authority on 31.12.2017 was approved on same day i.e. 31.12.2017, 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 38 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.”

8.2 As could be seen from the above, the Hon’ble High Court held that the draft assessment orders in 38 cases for 38 assessment years which were placed before the approving authority on 31.12.2017 and were approved on 31.12.2017 is mechanical exercise of power. It was also further held that on conjoint reading of section 153A(1) and section 153D leave no 13

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. room, for doubt that approval with respect to “each assessment year” is to be obtained by the AO on the draft assessment order before passing the assessment orders u/s 153A of the Act.

Therefore, in the absence of such an approval granted by the approving authority u/s 153D the Hon’ble High Court upheld the order of the Tribunal in holding that such an approval is mechanical and is in violation of the provisions of section 153D of the Act.

9.1 The Hon’ble Jurisdictional High Court in the case of PCIT vs. Sapna Gupta (supra) held as under: -

“The submission is that the substantial question of law which arises for consideration before this Court is about the justification of the act of the Tribunal in ignoring the findings recorded by the Assessing Officer and setting-aside the assessment order on the sole ground of defect in the approval to the draft assessment order granted by the competent Approving Authority. Learned counsel for the Assessee, however, defended the order of the tribunal for the reasoning given therein. Considering the submissions of the learned counsel for the parties and having perused the order of the Tribunal, in view of the undisputed facts before us about the manner in which the approval to the draft assessment order was granted under Section 153D for the assessment proceedings, by a letter dated 30.12.2017 in 85 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal. To answer the same, we are required to go through the relevant provisions of the Income Tax Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income Tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under Section ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD.

132, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, 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), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return required to be furnished under Section 139.

Section 153D of the Act relevant for our purposes is to be noted hereinunder:

"Prior approval necessary for assessment in cases of search or requisition. 153D.?No order of assessment or reassessment shall be passed by an 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 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner."

Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA.

The Tribunal while quashing the assessment order had relied upon its earlier decision in Navin Jain and Others (Supra) wherein a detailed discussion has been made with regard to the requirement of prior approval of superior authority on the draft assessment order under Section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word 'approval' though has not been defined in the Income Tax Act but the general meaning of the word 'approval' in Black's Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. manner by due application of mind in a manner of a quasi judicial authority, has been considered.

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 153D 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.

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 153D 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 16

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. 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 JTR 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 ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. record and the approval must reflect the application of mind to the facts of the case. The requirement of approval under Section 153D 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.

As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeal being in the nature of second appeal. No substantial question of law arises for consideration before us.”

9.2 As could be seen from the above, the Hon’ble High Court held that the draft assessment orders in 85 cases for 85 assessment years which were placed before the approving authority on 30.12.2017 and were approved on 30.12.2017 is ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. mechanical exercise of power. It was also further held that on 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 AO on the draft assessment order before passing the assessment orders u/s 153A of the Act.

Therefore, in the absence of such an approval granted by the approving authority u/s 153D the Hon’ble High Court upheld the order of the Tribunal in holding that such an approval is mechanical and is in violation of the provisions of section 153D of the Act.

9.3 In the appeal under consideration the JCIT, Meerut accorded approval u/s 153D on 28.12.2019 on the request made by the Assessing Officer vide letter dated 26.12.2019 in as much as eleven assessees and 77 assessment years in all within a spam of two days.

10. Hon’ble Third Member in the case of Shri Dheeraj Choudhary vs. ACIT in to 6160/Del/2018 and 6214 to 6216/Del/2018 dated 12.09.2025 held that common approval given by the Addl. CIT u/s 153D of the Act for various assessment years is bad in law and consequently the assessments were quashed observing as under: 19

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD.

PER MAHAVIR SINGH, VICE PRESIDENT (AS THIRD MEMBER) By the order of President, ITAT vide U.O. No.F.28- Cent.Jd(AT)/2025 dated 24th March, 2025, the undersigned has been nominated to adjudicate the difference of opinion between the learned Judicial Member and learned Accountant Member on the following question:- “As to whether under the present facts and circumstances of the matters, the approval granted by the ACIT, dated 27.12.2016 under Section 153D of the Income Tax Act, 1961 are sustainable in the eyes of law or not.” 2. Brief facts are that a search under Section 132 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) was carried out on the assessee group of cases on 27th April, 2014. Consequently, for the assessment years 2009-10 to 2015-16, notices under Section 153A of the Act were issued by the Revenue to the assessee. The assessee, during the course of assessment proceedings, submitted that the original returns filed be considered as returns filed in response to notices under Section 153A of the Act. Accordingly, assessments were framed by the ACIT, Central Circle-8, New Delhi for the relevant assessment years 2009-10 to 2015-16 vide different orders dated 27th December, 2016 under Section 153A read with Section 143(3) of the Act. Aggrieved by the additions made by the Assessing Officer, the assessee preferred appeals before learned CIT(A) and learned CIT(A) also passed appellate orders for these above assessment years. Aggrieved against the appellate orders, assessee preferred appeals before the Tribunal. The assessee, vide letter dated 27th October, 2021, for these assessment years, raised additional ground in all these appeals. The ground as raised is identical and hence, I will take the ground raised

in assessment year 2009-10, which reads as under:- “3. The CIT(A) has erred in law in confirming the addition made by the AO, without considering that the mandatory approval given by the Addl. CIT in this case u/s 153D has been given, in a complete mechanical manner, without application of mind and the same therefore makes the entire assessment order bad in law and void ab initio.”

3. This ground was adjudicated by the learned Judicial Member and learned Accountant Member after admitting the same and there is no dispute about admissibility of this ground. Before me, learned Counsel for the assessee filed copy of approval (which is in Hindi language but assessee filed a translated copy), which reads as under:- “F.No./A.C.I.T./C.R.-2/2016-17/1029 Dated:- 27-12-2016

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To, The Assistant Commissioner of Income Tax (Central) (Circle)-8, New Delhi. Subject:- Karan Luthra Group Income Tax Rules 153D for approval and closing proceedings. Please refer to letter F.No. Assistant Commissioner of Income Tax/Central Circle-08/2016-17/1311, dated – 27/12/2016 received in this office from Assistant Commissioner of Income Tax/Central Circle-08, New Delhi regarding the above subject. These draft orders are sent by you for approval under section 153D.

S.No. Name of the Section PAN AY Filed Assessed Assessee Income Income 1. Mr. Dheeraj 153A AASPK9267B 2009-10 137940 1340304 Choudhary 2. Mr. Dheeraj 153A AASPK9267B 2010-11 307943 10241352 Choudhary 3. Mr. Dheeraj 153A AASPK9267B 2011-12 403908 15000460 Choudhary 4. Mr. Dheeraj 153A AASPK9267B 2012-13 438939 23094073 Choudhary 5. Mr. Dheeraj 153A AASPK9267B 2013-14 1018269 10903269 Choudhary 6. Mr. Dheeraj 153A AASPK9267B 2014-15 584183 30911700 Choudhary 7. Mr. Dheeraj 153A AASPK9267B 2015-16 1004820 321698040 Choudhary The above proposed orders are approved with the direction that the assessment orders be passed before the prescribed time limit. It is also specified that a copy of the final orders passed be sent to this office. (Rinku Singh) Additional Commissioner of Income Tax Central Range-2, New Delhi”

4. Learned Counsel stated that the copy of approval is obtained through RTI and Department, vide letter dated 2ndAugust, 2021, provided this approval. Accordingly, the additional grounds are raised vide application dated 27th October, 2021. Learned Counsel for the assessee made argument that as per the mandate of Section 153D of the Act, the approval is to be granted to the assessment order by the Additional CIT/JCIT after due application of mind. Learned Counsel for the assessee stated that this approval dated 27.12.2016 was granted in lieu of proposal sent by the Assessing Officer i.e. the Assistant Commissioner of Income Tax, Central Circle-08, New Delhi dated 27.12.2016. It means, according to learned Counsel, the Additional CIT granted approval of these seven draft assessment orders on the same date. He further explained that ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD.

as per this proposal, the Assessing Officer, no assessments records, search materials, replies filed by assessee or any material related to these assessments was provided or examined by the 41 6159, 6160, 6214, 6215 & 6216/Del/2018 Dheeraj Chaudhary Additional CIT. In view of these facts, learned Counsel argued that that this issue is now settled by the decision of Hon'ble Delhi High Court in the case of PCIT(Central)-2 Vs. Anuj Bansal – [2024] 165 taxmann.com 2 (Delhi) and PCIT Vs. Shiv Kumar Nayyar – [2024] 163 taxmann.com 9 (Delhi). Even this issue has been dealt with by Hon’ble Orissa High Court in the case of ACIT Vs. Serajuddin& Co. – [2023] 150 taxmann.com 146(Orissa). Similar view is taken by Hon’ble Allahabad High Court in the case of PCIT Vs. Sapna Gupta – [2023] 147 taxmann.com 288 (Allahabad). Learned Counsel argued that the jurisprudence arising out of the above case laws is that an approval under Section 153D of the Act is considered to be as given with no application of mind and given in a mechanical manner when the approval itself does not reflect any application of mind. He narrated the facts of the present case stating that on 27th December, 2016, the Assessing Officer sent the draft assessment order to the Additional CIT for approval and on the very same date i.e., 27th December, 2016, the Additional CIT granted approval. He produced before us the said letter of the Assessing Officer along with approval granted by the Additional CIT. From a perusal of the above said approval, it was argued that there is not even a token of mention of the draft orders having been perused by the Additional CIT, rather, the letter simply grants approval. He argued that even the bare minimum requirement of the approving authority, having to indicate what the thought process was involved was, is missing in the aforementioned approval order. In the approval order, there is no whisper in regard to the fact that the Additional CIT has examined the seized documents or the proposed additions made in the draft assessment order as the same was forwarded to him for her perusal. From the approval, it is clear that there is no reason given and it is bare minimum for the approving authority that there should have been some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the Act. In terms of the above, learned Counsel for the assessee stated that the above approvals are mechanical and without application of mind and hence, the assessment orders approved without application of mind is to be quashed. He supported the order of learned Judicial Member.

5. On the other hand, learned CIT-DR Ms. Pooja Swaroop submitted that as pointed out during the course of hearing, there is a mistake in the question of law framed, as reproduced below:- “As to whether under the present facts and circumstances of the matters, the approval granted by the ACIT, dated 27.12.2016 under Section 153D of the Income Tax Act 1961 are sustainable in the eyes of law or not.”

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She submitted that approvals under Section 153D of the Act are granted by the Joint/Additional CIT. However, in the present case, ACIT has been stated, which is incorrect, because ACIT is actually Assistant Commissioner of Income Tax and not Additional Commissioner of Income Tax. Without prejudice to the above, she drawn our attention to Paragraph 11 and 14 to 17 of the draft order of learned Accountant Member. She also produced copies of relevant guidelines enunciated by the Search & Seizure Manual and relevant SOPs for search assessments issued by the CBDT. She also referred to Appendix-V of the Assessment Manual issued by the Income-tax Department in regard to search and seizure assessments dated 22nd December, 2006 vide 43 F.No.286/161/2006-IT(Inv.II). She particularly referred to Paragraph 1.3 and argued that the Range Head i.e., Additional CIT/JCIT is involved in scrutinizing the seized material and issuance of notices under Section 153A, 153C and 148 of the Act and also where assessment in other than the searched person is to be done. The relevant Paragraph 1.3 referred by her reads as under:- “1.3 On receipt of the appraisal report and seized material, the Assessing Officer and Range Head should jointly scrutinize the appraisal report and seized material and prepare an Examination Note to decide: i. Cases where notices u/s 153A of the Income-tax Act, 1961 (the Act) are required to be issued. ii. Cases where notices u/s 153C of the Act are required to be issued. iii. Cases where notices u/s 148 of the Act are required to be issued. iv. Cases where seized material pertains to persons other than those whose cases have been centralized.”

6. Subsequently, she referred to Paragraph 2.9 and stated that in case the Assessing Officer is not in agreement with any findings/conclusions drawn in the Appraisal Report, the matter should be brought to the knowledge of the Additional CIT/JCIT who should resolve the issue with the concerned Addl./Joint DIT(Inv) and also with CIT(Central) or DIT(Inv). She further referred to Paragraph 2.10 of the Manual and stated that even the Additional CIT/JCIT can issue instructions to the Assessing Officer in terms of Section 144A of the Act. She stated that even the Additional CIT/JCIT is involved in the preparation of final assessment order by way of instructing the Assessing Officer issuing final show cause notice. She referred to Paragraph 3.2 of the Manual, which reads as under:- “3.2 All the issues and evidence that is going to be relied upon in the assessment order should be made available to the ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. assessee. The final show cause notice should be prepared in consultation with the Addl. CIT and should contain: i. The proposed structure of the order; ii. The evidence in possession of the department; iii. The case laws being relied upon; iv. The opportunity of rebuttal being provided to the assessee.” In view of the above, she prayed that approval under Section 153D of the Act is neither invalid nor bad in law nor given without application of mind by the Additional CIT, as emphasized by the learned Accountant Member in his order.

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 under section 153D 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).

20. 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.

21. 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.”

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9. In the present case before me also, as is evident from the copy of approval, as reproduced above, granted by the Additional CIT, is for all the six assessment years vide one approval. Hence, on this count also, the approval granted by the Additional CIT is bad in law and consequent assessment order passed in all these six assessment years is bad in law.

Name of PAN AY Section Returned Assessed Income the Income Assessee Sh. Dheeraj AASPK9267B 2009-10 153A Rs.1,37,940/- Rs.13,40,304/- Choudhary Sh. Dheeraj AASPK9267B 2010-11 153A Rs.3,07,943/- Rs.1,02,41,352/- Choudhary Sh. Dheeraj AASPK9267B 2011-12 153A Rs.4,03,908/- Rs.1,50,00,460/- Choudhary Sh. Dheeraj AASPK9267B 2012-13 153A Rs.4,38,939/- Rs.2,30,94,073/- Choudhary Sh. Dheeraj AASPK9267B 2013-14 153A Rs.10,18,269/- Rs.1,09,03,269/- ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. Choudhary Sh. Dheeraj AASPK9267B 2014-15 153A Rs.5,84,183/- Rs.3,09,11,700/- Choudhary Sh. Dheeraj AASPK9267B 2015-16 153A Rs.10,04,820/- Rs.2,21,68,040/- Choudhary Yours Faithfully, Sd/- (Pratibha Singh) Asst. Commissioner of Income Tax Central Circle-08, New Delhi”

11. From the above proposal, it is clear that the same is not 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, 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.

12. I have gone through the case law of Hon’ble Orissa High Court in the case of Serajuddin & Co. (supra), wherein Hon’ble High Court has considered the meaning of approval and what must containwhile granting of approval as discussed by Hon'ble Supreme Court in the case of Rajesh Kumar Vs. DCIT – [2006] 157 Taxman 168 (SC), wherein Hon'ble Supreme Court, in the context of Section 142(2A) of the Act which empowers the Assessing Officer to direct a special audit and obtaining a prior approval, has explained the approval as under:- “58. An order of approval is also not to be mechanically granted. The same should be done having regard to the materials on record. The explanation given by the assessee, if any, would be a relevant factor. The approving authority was required to go through it. He could have arrived at a different opinion. He in a situation of this nature could have corrected the assessing officer if he was found to have adopted a wrong approach or posed a wrong question unto himself. He could have been asked to complete the process of the assessment within the specified time so as to save the Revenue from suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/or the entries made therein. While exercising its power, the assessing officer has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief Commissioner or the Commissioner, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given.”

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14. Further, in the case of Serajuddin & Co. (supra), Hon’ble Orissa High Court has also considered the issue of approval, according to the Revenue, it is itself not justiciable. Hon'ble Supreme Court has considered where approval granted is mechanical and it would vitiate the assessment order itself. Hon'ble Supreme Court, in the case of Sahara India (Firm) Vs. CIT – [2008] 169 Taxman 328 (SC), has considered this issue as under:- “8. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty ritual. Needless to emphasize that before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer. The approval must reflect the application of mind to the facts of the case.”

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17. Further, Hon'ble Delhi High Court in the case of PCIT Vs. Shiv Kumar Nayyar – [2024] 163 taxmann.com 9 (Delhi) and PCIT(Central- 2) Vs. Anuj Bansal – [2024] 165 taxmann.com 2(Delhi), has considered the identical issue wherein it was emphasized that approval was granted without examining the assessment records or the searched material and, Hon’ble High Court in Paragraph 13, extracted the findings of the Tribunal as under:- “13. In another words, it was emphasized that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: “17.1 However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs.87,20,580/-. Similarly, when the total assessed income as per the AO comes to Rs.16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs.1,65,07,560/- had he applied his mind. The addition of Rs.15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes. 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (supra). In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed income and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl.CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD.

approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed.”

18. On the other hand, learned CIT-DR relied upon the decision of 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 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 31

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. 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.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. a court of law, it is clear that while framing assessment is acting in quasi-judicial capacity, and he ought to conform to the more elementary rules of judicial procedure, and in particular to conduct the case himself, and not allow somebody else, even his superior officer, to interfere in the conduct of the case. What to talk of superior authority, Hon'ble Supreme Court in the case of Union of India Vs. Tata Engineering & Locomotive Co. Ltd. – AIR 1998 SC 287, 288, held that the Assessing Officer is entitled to complete the assessment as per the provisions of Section 143(3) of the Act and, for this purpose, he can call for and examine whatever document he considers relevant. Hon'ble Supreme Court held that, if the Assessing Officer fails to follow any judgment of the High Court or of the Supreme Court, the assessee has adequate statutory remedies by way of an appeal and revision against the assessment order but, the Court should not try to control the mode and manner in which an assessment should be made. Hence, the higher authority including the Additional CIT/JCIT or CIT or CCIT, being administrative controlling authorities of the Assessing Officer, are not entitled to interfere in the judicial process of the Assessing Officer while framing assessment. In view of the above, I am of the view that, while making an assessment, the Assessing Officer is solely to be guided by the provisions of law and he cannot avail of any instructions or directions given by his higher authority including CBDT in making a particular assessment in a particular way. While passing assessment orders, he is only bound by what, if any, has been directed under Section 144A of the Act by his Additional CIT/JCIT or the instructions issued by the CBDT under Section 119 of the Act or what has been decided by the appellate authorities as mentioned in the Act. He has also to follow the precedence established by Hon’ble High Courts or the Supreme Court. The proceeding under Section 153D for granting approval is entirely different from the process of making assessment. Once draft assessment is prepared, the process of approval starts under Section 153D of the Act. Then the authority prescribed under Section 153D i.e., the Additional CIT/JCIT has to apply his mind for grant of approval after verifying the assessment records, seized records, etc.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. formed by the Assessing Officer and the approval must reflect the application of mind to the facts of the case. The CBDT itself recognized the importance of this provision and the above laid down principle and hence issued Manual of Office Procedure in February, 2023 in exercise of powers under Section 119 of the Act. Vide Para 9 of Chapter 3 of Volume-II (Technical), a clear procedure is devised i.e., how an approval is to be granted for draft assessment for passing of assessment order in search cases. According to the Manual, the Assessing Officer should submit the draft assessment order for such approval well in time along with docketed in the order sheet, a copy of the draft assessment order, covering letter filed in the relevant miscellaneous records folder. Even, it is noted that due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. It is further noted that once such approval is granted, it must be in writing and filed in the relevant folder indicating above after making due entry in the order sheet. This is the mandate provided in the office manual of the Department.In view ofabove, I am of the view that the ‘approval’, as mandated u/s 153D of the Act,signifies a product of human thoughts based on the given set of facts and interpretation of the applicable law. It provides equality in treatment and thus prevents bias, prejudice and arbitrariness. It also prevents and avoids inconsistent and divergent views. The power of approval to the specified authority i.e., Superior authority has been envisaged with the objectives that no illegality or biasness, to either of the sides i.e., the assessee or the Revenue, remains.

Question framed by the Bench Answer to the Question As to whether under the present facts In the given facts and circumstances and circumstances of the matters, of the case and discussion carried the approval granted by the ACIT, above, the approval granted by dated 27.12.2016 under section 153D Additional CIT dated 27.12.2016 u/s of the Income Tax Act, 1961 are 153D of the Act is not sustainable in sustainable in the eyes of law or not. the eyes of law. In terms of the above, I concur with the decision of learned Judicial Member quashing the above assessments. The matter shall now be placed before the regular Bench for passing appropriate orders in accordance with the majority opinion.

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PER BENCH: These appeals were filed by the assessee against the orders all dated 31.07.2018 passed by the CIT(A)-31, New Delhi, arising out of the orders passed by the ACIT, Central Circle-8, New Delhi under Section 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for the assessment years 2009-10 to 2014-15. 60 After hearing the appeals, the Judicial Member allowed the appeals preferred by the assessee. The Accountant Member opined otherwise and wrote a separate order. On account of difference of opinion between the Members constituting the Bench, a reference was made to the Hon’ble President ITAT u/s 255(4) of the Act. The Hon’ble President vide order dated 24.03.2025 nominated Third Member to decide the reference. The ld. Third Member vide order dated 10.09.2025 concurred with the view of Judicial Member. Consequent to the opinion of Third Member, appeals of the assessee are allowed. Order pronounced in open court on 12.09.2025” 11.1 Ld. Counsel for the assessee also placed reliance on the decision of the Delhi Tribunal in the case of Tish Consultants Pvt. Ltd. vs. DCIT in & 2311/Del/2025 dated16.06.2025. On perusal of the decision of the coordinate bench in the case of Tish Consultants Pvt. Ltd. vs. DCIT (supra)

we observed that the Tribunal had considered the very same approval u/s 153D dated 28.12.2019 granted by the Addl. CIT, Meerut in one of the assessee’s group cases i.e., Tish Consultants Pvt. Ltd. (supra) which approval is common for Tish Consultants Pvt. Ltd. and also various assessees before us namely M/s CEA Consultants Pvt. Ltd., Lenient Consultants Pvt. Ltd., (assessee in appeal) SW Consultants Pvt. Ltd. and the coordinate bench following the decisions of the Jurisdictional 35

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Allahabad High Courts in the cases of PCIT vs. Siddharth Gupta (supra); PCIT vs. Subodh Aggarwal (supra) and PCIT vs. Sapna Gupta (supra) held that the common approval granted by the Addl. CIT, Meerut for various assessment years for various assessees is in a mechanical manner and without due application of mind and therefore such approval which has not been granted for each assessment year separately is in violation of provisions of section 153D of the Act observing as under:

“2. Though the assessee has raised several grounds before us, the preliminary issue raised by the assessee is with regard to mechanical approval given by the Learned Additional Commissioner of Income Tax (Ld. Addl CIT) under section 153D of the Act. This goes to the root of the matter and hence we proceed to adjudicate this issue first.

3. We have heard the rival submissions and perused the materials available on record. A search and seizure operation under section 132(1) of the Act was carried out in the case of Samtel Group on 18-01-2018. Various residential and business premises of the directors and group companies were covered under the search and survey operations. Warrant was issued in the name of M/s Tish Consultants Pvt. Ltd i.e. assessee herein. In view of the search operation, the group case was centralized to Central Circle II, Noida vide order passed by the Learned PCIT under section 127 of the Act on 15-04-2019. Pursuant to the search, notice under section 153A of the Act stood issued to the assessee on 23-04-2019. In response to the notice, the assessee electronically filed its return of income on 08-12-2019 declaring total income of Rs. Nil. It is pertinent to note that assessee had also filed its original return of income for Assessment Year 2016- 17 on 28-09-2016 declaring total income of Rs. Nil. The search assessment was completed under section 153A read with section 144 of the Act on 29-12-2019 for Assessment Year 2016-17 determining total income of the assessee at Rs. 51,54,04,230/-. This assessment order was framed by the Learned AO after getting approval under section 153D of the Act from the Learned Additional Commissioner of Income Tax Central Range, Meerut vide proceedings dated 28-12-2019. The assessee preferred an ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. appeal before the Learned CIT(A), wherein the fact of approval under section 153D of the Act being granted in a mechanical manner by the Learned Additional CIT thereby making the entire assessment proceedings void ab initio, was indeed raised, vide Ground No. 1.1. The case of the assessee falls under the jurisdiction of Hon‟ble Allahabad High Court. Hence, the decision of Hon‟ble Allahabad High Court would become Jurisdictional High Court decision for the assessee and would be binding on all the subordinate authorities. Accordingly, the assessee placed reliance on the decision of Hon’ble Jurisdictional Allahabad High Court in the case of PCIT vs Siddharth Gupta reported in 450 ITR 534 (All) in support of its contentions. The assessee also pointed out that the Special Leave Petition (SLP) preferred by the revenue against this decision before the Hon’ble Supreme Court has been dismissed by the Hon’ble Supreme Court in Special Leave Petition (Civil) Diary No. 43280/2023 dated 9.8.2024. However, the Learned CITA chose to rely on the decision of Hon‟ble Chhattisgarh High Court in the case of Hitesh Golcha vs ACIT reported in TAXC No. 76 of 2024 dated 10.4.2024, wherein it was held that there cannot be any presumption as to non-application of mind by the Learned Addl. CIT while granting approval under section 153D of the Act. No comments were made by the Learned CITA regarding the non- applicability of decision of Jurisdictional High Court decision of Allahabad.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. presumption of approval are validly granted. The Learned DR further stated that merely because the approvals were granted by one letter does not mean that it was not granted for each assessment year. 6. For the sake of convenience, the approval granted under section 153D of the Act by the Learned Additional CIT, Meerut is reproduced below:-

7. On perusal of the above, we find that the Learned Additional CIT, Central Range, Meerut had granted approval in terms of Section 153D of the Act for all the cases for all assessment years vide consolidated approval in F.No.Addl. CIT/CR/MRT/Approval/153D/2019-20/1516 dated 28.12.2019. Hence, it is very clear that a common approval was given by the Learned Additional CIT under section 153D of the Act vide Approval No. 1516 dated 28.12.2019 for various assessees‟ for various assessment years. This goes to prove that the approval 38

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. under section 153D of the Act has not been given by the Learned Addl. CIT for ‘each assessment year’ and for ‘each assessee’ separately which is mandate of the provisions of Section 153D of the Act. This issue is no longer res integra in view of the decision of the Hon’ble Jurisdictional Allahabad High Court in the case of PCIT vs Sidharth Gupta reported in 450 ITR 534 (All) wherein it was held as under:- “16. 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 under section 153D is pre-requisite to pass an order of assessment or re-assessment.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD.

Assessing Officer on the draft assessment order before passing the assessment orders under section 153A.

10. Since the issue is covered by the decision of Hon’ble Jurisdictional Allahabad High Court, the decision of Hon’ble Chhattisgarh High Court relied upon by the Learned DR need not be gone into in view of the principles of binding precedents.

ITANo.2331/Del/2025 LENIENT CONSULTANTS PVT LTD. manner without due application of mind. Hence, the Ground No. B raised by the assessee is hereby allowed. Consequentially the assessment framed for Assessment Years 2016-17 and 2018-19 are hereby quashed. Since, the assessments are quashed based on Ground No. B, the other grounds raised by the assessee need not be gone into and they are left open.” 11.2 As could be seen from the above decision of the coordinate bench the common approval u/s 153D dated 28.12.2019 issued by Addl. CIT, Meerut in various assessees including the assessees in appeal before us for various assessment years was subject matter of consideration in the appeal in the case of Tish Consultants Pvt. Ltd., and the decision therein squarely applies to the assessees before us being a common approval.

13. As we have quashed the assessment allowing ground no. B) of the grounds of appeal of the assessee, all other technical grounds as well as grounds on merits are need not be gone into as it would be of only academic exercise at this stage and therefore they are left open.

Order pronounced in the open court on 17.09.2025