Prior approval under Section 153D requires application of mind; mechanical approval invalidates search assessment orders.

Prior approval under Section 153D for search assessment orders is a mandatory supervisory safeguard and must reflect real application of mind by the Joint Commissioner. The approving authority must at least examine the draft assessment and relevant material; a mere rubber-stamp approval is insufficient. Here, the approval only stated that the draft orders were approved, with no indication of consideration of the records or draft assessments, and the assessment orders themselves did not disclose that approval had been sought or granted. The mechanical approval therefore violated the prescribed procedure and invalidated the assessment orders; the challenge to the assessments succeeded and the Revenue's appeals failed.

---

---

Issues: Whether prior approval under Section 153D of the Income-tax Act, 1961 for search assessment orders must reflect application of mind and whether a mechanical approval vitiates the assessment orders.

Analysis: Section 153D creates a supervisory safeguard requiring previous approval of the Joint Commissioner before assessment or reassessment orders are passed in search cases. The approval cannot be an empty formality and must show, at least in a minimal way, that the approving authority examined the draft orders and the material placed before it. The Court treated the CBDT Manual of Office Procedure and the Board's circular as binding on the Department and found that the approval in question merely stated that the draft orders were approved, without any indication of consideration of the records or draft assessments. The assessment orders themselves also did not disclose the fact of seeking or granting approval, reinforcing non-compliance with the prescribed procedure.

Conclusion: Prior approval under Section 153D is mandatory and must be granted with application of mind; the approval in the present case was mechanical and therefore invalidated the assessment orders.

Final Conclusion: The legal challenge to the assessments succeeded, and the Revenue's appeals failed.

Ratio Decidendi: Where a statute requires prior supervisory approval before completion of a search assessment, the approving authority must independently apply its mind to the draft order and relevant material, and a mechanical or rubber-stamped approval vitiates the resulting assessment.

---