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 5,834 of the 2,907 judgments on BharatTax that turn on this section.
Leading authorities on Section 153D
Appellate authorities can consider new claims and additional grounds if the relevant facts are already on record. The purpose of assessment is to correctly determine tax liability, allowing both parties to raise issues.
In non-abated assessments, the Assessing Officer can make additions under section 153A based on books of accounts or documents found during a search but not produced during the original assessment, provided such material is incriminating.
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.
The recording of a satisfaction note by the Assessing Officer is a jurisdictional prerequisite for assessments under Section 153C, and the six-year limitation period for such assessments is reckoned from the date this satisfaction is recorded.
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.
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.
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.