Section 153B of the Income Tax Act

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 granted under Section 153D of the Income-tax Act, 1961, requires proper application of mind by the sanctioning authority; perfunctory approval lacks legal sanctity and invalidates the assessment. The High Court affirmed the Tribunal's finding that there was no application of mind.

When a statutory authority takes action that can lead to civil or adverse consequences for an individual, the principles of natural justice, particularly the right to be heard (audi alteram partem), must be implicitly followed, even if the relevant statute does not expressly provide for it.

This case establishes principles for determining the validity of a special audit direction issued under Section 142(2A) and its impact on the extended period of limitation under Section 153(3) Explanation 1(iii), often considered in the context of natural justice.

A search operation is continuous and concludes only when the search party leaves the premises carrying the seized material, thereby fully implementing the search authorization. A restraint order under Section 132(3) is valid only when there is a practical difficulty in seizing material representing undisclosed income; otherwise, the officer is obligated to seize it.

A search under Section 132 must be a continuous quest for hidden assets, not a mere inspection, and the panchnama must clearly reflect that a search was carried out, with any splitting of the search requiring cogent reasons. An order under Section 132(3) is not automatically applicable for the period under Section 132(8A) and cannot be passed to ascertain undisclosed income from regular account transactions.

CBDT circulars, instructions, or directions issued under Section 119 cannot override or detract from the provisions of the Income-tax Act, as a delegated authority lacks the power to amend law enacted by Parliament.