Bulk search-assessment draft orders for 123 assessment years approved in two days held mechanical, 153D invalidating assessments; appeals dismissed.

Section 153D mandates prior approval of the draft assessment order for each assessment year before an assessment under section 153A is passed. The HC upheld the Tribunal's finding that the approving authority granted section 153D approval mechanically, since draft orders covering 123 assessment years were placed on two consecutive days and approved on the same day, making meaningful application of mind humanly impossible. As the material facts were admitted and the remaining challenges related only to factual findings beyond the scope of a second appeal, the HC held that no substantial question of law arose. The revenue's appeals were dismissed.

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Issues Involved:
1. Validity of the assessment orders passed 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. Mechanical exercise of power by the Approving Authority in granting approval under Section 153D.

Issue-wise Detailed Analysis:

1. Validity of the assessment orders passed under Section 153A/143(3) of the Income Tax Act:
The case involves appeals filed by the Department-Revenue against the order of the Income Tax Appellate Tribunal, which quashed the assessment orders and the consequent orders of CIT (A) for assessment years 2013-14, 2015-16, and 2016-17. The assessments were completed under Section 153A/143(3) following a search and seizure operation conducted on 31.08.2015. The Tribunal concluded that the assessment orders were invalid due to the mechanical manner in which the approval under Section 153D was granted.

2. Requirement and validity of prior approval under Section 153D of the Income Tax Act:
Section 153D mandates that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner without the prior approval of the Joint Commissioner. The Tribunal noted that the approval letters dated 30.12.2017 and 31.12.2017 covered 123 cases, including the respondent-assessee's cases. The Tribunal held that it was humanly impossible for the Approving Authority to peruse all the material in such a short time, indicating a mechanical exercise of power.

3. Mechanical exercise of power by the Approving Authority in granting approval under Section 153D:
The Tribunal relied on its earlier decision in Navin Jain & Others Vs. Deputy C.I.T., Central Circle-II, Kanpur, where it was held that approval under Section 153D requires due application of mind by the Approving Authority. The Tribunal emphasized that the approval must reflect the application of mind to the facts of the case and cannot be a mere formality. The Tribunal concluded that the approval in the present case was mechanical, as the Approving Authority could not have perused the records of 123 cases in one day.

Conclusion:
The High Court upheld the Tribunal's decision, stating that the approval under Section 153D must be granted only on the basis of material available on record and must reflect the application of mind. The Court held that the requirement of prior approval under Section 153D is an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer. The Court found that the approval in the present case was a mechanical exercise, vitiating the entire proceedings. Consequently, the appeals were dismissed, and no substantial question of law was found for consideration.

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