Section 153D requires Joint Commissioner's prior approval on each draft assessment under Section 153A; batch approvals are mechanical

HC held that Section 153D mandates prior approval of the Joint Commissioner for each assessment year covered by Section 153A, and such approval must be on the draft assessment order before finalizing assessments. Approval of 85 draft orders on the same day was found to be a mechanical exercise, as it was unrealistic to independently consider each file in one day; the Tribunal's finding to that effect was upheld. Factual disputes arising from the AO's findings could not be reopened in this second appeal.

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Issues Involved:
1. Validity of the assessment order under Section 153A/143(3) of the Income Tax Act.
2. Requirement and validity of prior approval under Section 153D of the Income Tax Act.
3. Allegation of mechanical approval by the Approving Authority.
4. Examination of substantial question of law regarding the Tribunal's decision.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order under Section 153A/143(3):
The case pertains to the assessment year 2014-15, following a search and seizure operation under Section 132 of the Income Tax Act on 31.08.2015. The assessee filed the return under Section 153A on 12.07.2017, originally e-filed on 19.08.2016. The assessment was completed under Section 153A/143(3) by the Dy. C.I.T., Central Circle-1, Kanpur, on 31.12.2017, with various additions made.

2. Requirement and Validity of Prior Approval under Section 153D:
The assessee contended that the Assessing Officer, before passing the assessment order under Section 153A, must obtain prior approval from the Joint C.I.T. under Section 153D if the officer is below the rank of Joint C.I.T. This approval should be based on a thorough review of all search materials, seized documents, appraisal reports, and other evidence. In this case, the draft assessment order was prepared on 30.12.2017, and the approval was granted on the same day, with the final assessment order passed on 31.12.2017.

3. Allegation of Mechanical Approval by the Approving Authority:
The Tribunal noted that the Additional C.I.T. granted approval for 85 cases, including the present assessee, on 30.12.2017. The Tribunal concluded that it was humanly impossible for the Approving Authority to peruse all the material in one day, indicating a mechanical approval process. This mechanical approval vitiated the entire proceedings. The Tribunal relied on its earlier decision in Navin Jain & Others vs. Deputy C.I.T., where it was held that the approval must involve due application of mind and cannot be a mere formality.

4. Examination of Substantial Question of Law Regarding the Tribunal's Decision:
The Revenue argued that the prior approval under Section 153D was valid and the Tribunal erred in quashing the assessment order on the grounds of mechanical approval. The Revenue cited the High Court of Karnataka's judgment in Commissioner of Income Tax, Bangalore vs. Smt. Annapoornamma Chandrashekar, emphasizing that "approval" in an administrative context involves confirming or consenting to the act of a lower authority. However, the Tribunal's decision was defended, noting that the approval process under Section 153D is a safeguard against arbitrary or unjust exercise of power by the Assessing Officer.

Conclusion:
The High Court examined the relevant provisions of the Income Tax Act, particularly Sections 132, 153A, and 153D. It concurred with the Tribunal's finding that the approval process was mechanical and lacked due application of mind. The Court emphasized that the approval under Section 153D must be an independent and thorough review of the material for each assessment year. The Tribunal's reliance on the Navin Jain case was upheld, affirming that mechanical approval vitiates the proceedings. The appeal was dismissed, with the Court concluding that no substantial question of law arose for consideration.

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