Income Tax Assessments on Basis of Consolidated Approval u/s 153D is Void Ab Initio: ITAT [Read Order]
The Tribunal held that consolidated approval granted under Section 153D of the Income Tax Act, 1961, lacked independent application of mind and was therefore invalid. Consequently, the search-related assessments framed against the assessee were quashed in their entirety
ITAT, Income Tax Assessments, Income Tax
ITAT, Income Tax Assessments, Income Tax
The Income Tax Appellate Tribunal (ITAT), Delhi, ruled that income tax assessments framed pursuant to search proceedings were void ab initio as they were based on a consolidated approval under Section 153D of the Income Tax Act, 1961. The Tribunal observed that such consolidated approvals were mechanical in nature and contrary to the statutory mandate requiring independent consideration for each assessment year.
The appeals were filed by Shakuntalam Investment and Leasing Limited, New Delhi, challenging assessment orders for Assessment Years 2016–17 and 2017–18. The orders were passed under Section 153A read with Section 143(3) of the IncomeTax Act, 1961, following search and seizure operations conducted in the Sachdeva Group on 31 August 2017. The additions made by the Assessing Officer (AO) related to unsecured loans, share application money, and depreciation.
The Appellant represented by R.P. Mall, contended that the assessment orders were void ab initio since they were based on a consolidated approval under Section 153D of the Income Tax Act, 1961, issued mechanically by the Joint Commissioner of Income Tax (JCIT) without examining the assessment records for each year separately.
It was argued that such a process violated the statutory requirement that each assessment year must receive an independent approval.
The Revenue Authorities represented by Monika Singh, argued that approval under Section 153D was an administrative act and need not be subjected to judicial scrutiny. It was submitted that the JCIT had sufficient knowledge of the case records and the approval was granted after due consideration.
The Bench comprising of Judicial Member, Anubhav Sharma and Accountant Member, Krinwant Sahay held that the consolidated approval granted for multiple assessment years by one letter did not meet the statutory requirement of Section 153D.
The Tribunal placed reliance on the approval letter dated 26 December 2019, issued by the Joint Commissioner of Income Tax, which granted consolidated approval for multiple years. The mechanical nature of this approval, without reference to seized material or assessment records, was central to the Tribunal’s finding.
The Tribunal relied on the Delhi High Court rulings in PCIT v. Shiv Kumar Nayyar and Anuj Bansal, and the Supreme Court’s dismissal of the Revenue’s appeal in ACIT v. Serajuddin & Co., which had underscored that approvals under Section 153D must not be mechanical.
The Tribunal concluded that the approvals in the present case were vitiated.
Accordingly, the assessments were quashed.
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