Year-wise Joint Commissioner approval for s.153A search assessments u/s153D challenged; mass same-day approvals held mechanical, appeal dismissed.

Section 153D mandates the AO to obtain prior approval of the Joint Commissioner on the draft assessment order for each assessment year covered by s.153A search assessments. On a conjoint reading of ss.153A(1) and 153D, year-wise approval is a condition precedent to a valid assessment order. Where draft orders for 38 assessment years (including other group cases) were placed before the approving authority and approved on the same day, the Tribunal's inference that approval was granted mechanically without independent application of mind was not perverse. Consequently, no substantial question of law arose in the second appeal, and the revenue's appeal was dismissed.

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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.

Issue-wise Detailed Analysis:

1. Validity of the assessment order under Section 153A/143(3) of the Income Tax Act:
The dispute pertains to the assessment year 2015-16, following a search and seizure operation conducted on 31.8.2015. The assessee was required to file an Income Tax return under Section 153A of the Act. 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. The Tribunal quashed the assessment order and the consequent order of CIT (A), concluding that the approval under Section 153D was granted mechanically, vitiating the entire proceedings.

2. Requirement and validity of prior approval under Section 153D of the Income Tax Act:
The primary contention was the necessity and validity of prior approval from the Joint C.I.T. under Section 153D before passing the assessment order. The Tribunal noted that the approval was given on the same day the draft assessment order was prepared, which included 38 cases. The Tribunal concluded that it was humanly impossible for the Approving Authority to peruse the material for all 38 cases in one day, deeming the approval a mechanical exercise, thus invalidating the proceedings.

The Tribunal relied on its earlier decision in Navin Jain & Others Vs. Deputy C.I.T., emphasizing that the approval under Section 153D must be a judicious exercise with due application of mind. The Tribunal highlighted that the approval process serves to protect against arbitrary or unjust assessments. The Tribunal's decision was based on the premise that the approval must reflect an independent and thorough examination of the material on record for each assessment year and each assessee separately.

The Tribunal referred to various judicial precedents, including the High Court of Karnataka's decision in Commissioner of Income Tax, Bangalore vs. Smt. Annapoornamma Chandrashekar and the Apex Court's decision in Ashok Kumar Sahu Vs. Union of India, to underline the importance of the approval process as a safeguard against arbitrary actions by the Assessing Officer.

The Tribunal's conclusion was that the approval granted in a mechanical manner without proper application of mind vitiated the entire assessment proceedings. The High Court upheld the Tribunal's decision, agreeing that the approval process under Section 153D is a crucial safeguard and must be conducted with due diligence and independent assessment.

Conclusion:
The High Court dismissed the appeal, affirming the Tribunal's decision that the mechanical approval under Section 153D invalidated the assessment order. The Court emphasized that the approval process must involve a thorough and independent examination of the material for each assessment year, ensuring the protection of both the revenue's interest and the taxpayer's rights. No substantial question of law arose for consideration, and the appeal was deemed devoid of merit.

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