Income Tax Search Assessment Invalid Where Approval u/s 153D Granted Without Application of Mind: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, that the search assessments cannot be sustained if the mandatory approval under Section 153D of the Income Tax Act, 1961, is granted without application of mind by the approving authority.

The Tribunal held that the approval is not merely a formality and must be an expression of the satisfaction of the authority before the assessment order is passed. The Tribunal quashed the assessments framed against the assessee for various assessment years.

The assessee Periwal Polymers Pvt. Ltd., filed an appeal before the Tribunal for the orders that were passed by the Commissioner of Income Tax (Appeals) for the assessment years from 2018-19 to 2021-22.

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The assessee had also raised an important ground that the approval that was granted under Section 153D of the Income Tax Act by the Additional Commissioner of Income Tax was mechanical and was done through a consolidated note for various assessment years.

The assessments had already been completed under Section 153C read with Section 143(3) relying on the approval granted by the higher authority.

The assessee stated that the approval under Section 153D must be granted after examining the assessment records and exercising independent judgment. It was further contended that in the present case a single consolidated approval had been issued for different assessment years which clearly showed the absence of application of mind on the part of the approving authority.

Further, the Revenue argued that the orders of the lower authorities had been validly framed based on the approval obtained under the statutory provisions.

After going through the material on record the Tribunal consisting of Shri C.N. Prasad (Judicial Member) and Shri M. Balaganesh (Accountant Member), relied on various judicial precedents including the judgments of the Delhi High Court, which held that the approval under Section 153D cannot be a mere rubber-stamp approval.

Therefore, the tribunal highlighted the fact that the approving authority must apply its mind separately for each assessment year before granting the approval. Further,it observed that the approval in the present case was granted in a consolidated manner and that the requirement of the law under Section 153D was not satisfied.

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