Statutory Approval Given by Quasi-Judicial Authority u/s 153D of Income Tax Act without Due Application of Mind Results in Fatal of Entire Search Assessment: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the statutory approval given by quasi-judicial authority under Section 153D of the Income Tax Act, 1961 without due application of mind results in the fatal of the entire search assessment.

A search and seizure action under Section 132 of the Income Tax Act was conducted in the Nayyar group wherein the assessee was also covered. Accordingly, a notice under Section 153A of the Income Tax Act was issued to the assessee. The return of income was filed by the assessee declaring a total income of Rs.3,96,800/-.

The Authorized Representative submitted that the said statutory approval was granted by the Additional Commissioner under Section 153D of the Income Tax Act enabling the Assessing Officer to complete the search assessment, which was a mere mechanical approval without due application of mind on the part of the Additional Commissioner of the Income Tax.

It was further submitted that the meaning of ‘approval’ as contemplated under Section 153D of the Income Tax Act is that the Additional CIT is required to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind and ascertain whether the entire facts have been properly appreciated by the Assessing Officer.

The Departmental Representative submitted that the role of an Additional CIT, Central Range is totally different from the role of an Additional CIT in the normal range and the Central Range, the Additional CIT is involved in the search assessment proceedings right from the time of receipt of the appraisal report from the Investigation Wing and is involved with the Assessing Officer from time to time while issuing various questionnaires to the assessee.

In the case of PCIT vs. Anju Bansal in ITA 368/2023 order dated 13.07.2023 the jurisdictional High Court held that statutory approval given by a quasi-judicial authority without due application of mind as contemplated in section 153D of the Income Tax Act would be fatal to the entire search assessment proceedings.

The Two-member bench comprising of Saktijit Dey (Vice-President) and M. Balaganesh (Accountant member) held that there is no hesitation in holding that the approval under Section 153D of the Income Tax Act has been granted by the Additional CIT in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual.

Thus, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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