S.153D Approval Granted Without Application of Mind Voids Income Tax Assessment: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench held that an assessment framed under Section 144 of the Income Tax Act, 1961, was invalid as the mandatory approval under Section 153D of the Act had been granted mechanically. The Tribunal annulled the assessment, ruling in favour of the assessee and against the Revenue.

The appeal was filed by Shri Vipin Kapur, who challenged the order dated 14 March 2014 passed by the Commissioner of Income-tax (Appeals)-XXXII, New Delhi. The assessment in question was framed under Section 144 of the Act by the DCIT, Central Circle-8, New Delhi, pursuant to a search.

The assessee invoked provisions of Rule 11 and Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, contending that the very jurisdiction of the assessment stood vitiated due to improper approval under Section 153D.

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The assessee, represented by Ved Jain and Aayush Garg, argued that the approval under Section 153D was mechanical and devoid of any application of mind. It was pointed out, based on information obtained under the Right to Information Act, that the draft assessment was sent on 28 November 2011, received by the office of the Additional Commissioner on 29 November 2011.

Approval was granted the very next day, on 30 November 2011. The appellant contended that such a perfunctory exercise rendered the assessment void in law.

The Revenue, represented by Monika Singh, defended the assessment order. It was submitted that approval under Section 153D is essentially administrative in nature and does not require detailed reasoning in writing.

The Department contended that the Additional Commissioner was involved throughout the search assessment process and that the approval granted was valid and in line with statutory requirements. It was further argued that procedural irregularities, if any, should not nullify the assessment.

The Bench composed of Judicial Member, Anubhav Sharma and Accountant Member, Krinwant Sahay examined the approval letter and noted that it lacked any indication of independent application of mind. Citing binding precedents, including the decision of the Delhi High Court in PCIT v. Shiv Kumar Nayyar (2024) and of the Orissa High Court in Asst. CIT v. Serajjudin & Co. (2023), the Bench held that approvals under Section 153D cannot be a mere ritualistic formality or rubber-stamping exercise.

The Tribunal acceded to the decision of a co-ordinate Bench in the case of ACIT vs. Sant Lal Aggarwal (2017) and found the approval letter, obtained by the assessee under the Right to Information Act, 2005 clearly reflected that the sanction had been accorded without substantive consideration. This record became central in demonstrating the absence of application of mind by the approving authority.

Since the approval in this case was found to be mechanical, the Tribunal annulled the assessment order.

Therefore, ITAT dismissed the Revenue’s appeal.

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