“mechanical approval”
The decision most relied on for mechanical approval is PCIT v. Shiv Kumar Nayyar (163 Taxmann.com 9), cited in 597 judgments on BharatTax.
Leading authorities on mechanical approval
Approval under Section 153D for search assessments is invalid if granted mechanically, hastily, or without due application of mind, such as on the same day as the proposal or in a bunched manner. Such an invalid approval renders the consequential assessment order under Section 153A void ab initio.
A mechanical approval by the prescribed authority under Section 151, made without independent application of mind, vitiates and renders the entire reassessment proceedings invalid. Such approvals, often indicated by brief, unreasoned endorsements, lead to the quashing of the reopening of assessment.
An approval under Section 153D of the Income Tax Act must demonstrate that the approving authority applied its mind to the draft assessment order, and a perfunctory or mechanical approval invalidates subsequent adjustments.
Approval granted by a superior authority under Section 153D in a mechanical or perfunctory manner, without proper application of mind, lacks legal sanctity and renders the subsequent assessment order null and void.
Approval of draft assessment orders under Section 153D must be granted with due application of mind, not mechanically. Approving multiple cases, such as 38 in a single day, without proper scrutiny amounts to mechanical approval, rendering the assessment invalid.
A sanction for issuing a notice under section 148 is invalid if the sanctioning authority grants approval mechanically, merely recording 'Yes, I am satisfied' without proper application of mind to the reasons for reassessment. The authority must demonstrate proper consideration to fulfill the statutory obligation under section 151.
An approval under Section 153D of the Income Tax Act, 1961, is considered mechanical and invalid if granted without application of mind and without perusing relevant assessment records, including seized material. This principle has been affirmed by multiple High Courts and the Supreme Court.
Statutory approvals required under the Income Tax Act, particularly for assessments, must reflect a genuine application of mind by the approving authority and cannot be mechanical or granted without due consideration.
