Delhi HC dismisses Revenue's appeal over Mechanical Search Assessment Approvals made under Income Tax Act [Read Order]
The bench relied on its own decisions in M/s MDLR Hotels Pvt. Ltd. and Pr. Commissioner of Income Tax -7 vs. Pioneer Town Planners Pvt. Ltd., where it had held that an approval must reflect the authority's satisfaction and cannot be a mere formality
Delhi High Court, Income Tax Act, Delhi HC dismisses
Delhi High Court, Income Tax Act, Delhi HC dismisses
The Delhi High Court has dismissed an appeal filed by the Revenue, upholding a decision that invalidated search-related assessments due to mechanically granted approvals. The bench relied on its own decisions where it had held that an approval must reflect the authority's satisfaction and cannot be a mere formality.
The appeal, filed by the Pr. Commissioner of Income Tax, challenged a common order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2007-08 concerning M/s Believe Constructions P. Ltd. The central issue was whether the approvals granted under Section 153D of the Income Tax Act for assessments arising from a search were valid.
The Revenue's counsel argued that the matter was covered by the court's previous decisions. However, the court found that the Additional Commissioner of Income Tax had accorded approval to as many as 246 proposed assessments through a single, generic letter.
A division bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar reiterated its stance from prior judgments, stating that such mechanical approvals defeat the legislative intent of Section 153D. The court emphasized that the statute requires a superior authority to apply its mind to the specific seized material and assessment records before granting approval. The generic approval, which merely stated that the draft orders were approved 'as proposed,' showed no application of mind and was akin to 'rubber stamping'.
The bench relied on its own decisions in M/s MDLR Hotels Pvt. Ltd. and Pr. Commissioner of Income Tax -7 vs. Pioneer Town Planners Pvt. Ltd., where it had held that an approval must reflect the authority's satisfaction and cannot be a mere formality.
Finding that the questions raised were already settled and no substantial question of law arose, the court concluded that the ITAT was justified in setting aside the assessment orders. Accordingly, the High Court dismissed the Revenue's appeal, ruling in favor of the assessee, M/s Believe Constructions P. Ltd.
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