Section 153D of the Income Tax Act
The decision most relied on for Section 153D is National Thermal Power Co. Ltd. v. CIT (229 ITR 383), cited in 5,796 of the 1,384 judgments on BharatTax that turn on this section.
Leading authorities on Section 153D
An appellate authority can admit additional grounds of appeal, even if not raised before, if they are purely legal in nature and all relevant facts for their adjudication are already on record. These grounds can include challenging jurisdictional issues.
The Income Tax Appellate Tribunal can allow an assessee to raise an additional legal ground in appeal proceedings under Section 254(1) to determine the correct tax liability, provided all relevant facts are already part of the records.
The validity of reassessment proceedings initiated under Section 147, by issuing a notice under Section 148, must be judged solely on the reasons originally recorded by the Assessing Officer. These recorded reasons cannot be supplemented, improved upon, or modified at any later stage.
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.
Approval under Section 153D for search assessments is not a mere formality; it requires the approving authority to apply its mind judiciously to the subject matter and ensure satisfaction of legal and procedural requirements for each assessment year.
Approval under Section 153D of the Income Tax Act is mandatory for assessment orders in search cases. While elaborate reasons for approval are not required, the approving authority must provide some indication that it has examined the draft orders and found them to meet the requirements of law.
For initiating proceedings under Section 153C, the Assessing Officer of the searched person must record a satisfaction that seized material pertains to a third party, and the Assessing Officer of that third party must also record satisfaction that the material has a nexus to undisclosed income.
Strict adherence to approval protocols under Section 153D, including those in the Departmental Manual of Office Procedure, is essential for search assessments. An assessment is invalid if the approving authority fails to apply its mind or consider all relevant seized material before granting approval.
In search assessments conducted under Section 153A of the Income-tax Act, additions to the assessee's income can be made even in the absence of incriminating material found during a search operation conducted under Section 132.
An Assessing Officer cannot reopen an assessment under Section 147 based on a mere change of opinion regarding the same material available during the original assessment. Reopening requires fresh, tangible material or information that leads to a reason to believe income has escaped assessment.
Judgments on Section 153D
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