Search assessments under Section 153A quashed due to mechanical approval under Section 153D lacking proper consideration

ITAT Delhi held that search assessments u/s 153A were invalid due to mechanical approval granted u/s 153D. The JCIT approved 40 draft assessment orders for multiple assessment years on a single day (29.12.2017), demonstrating lack of due application of mind. The tribunal found that granting single approval for all assessment years together, rather than individual approvals as required by s.153D, violated statutory requirements. Following precedents from Orissa HC and Delhi HC, the tribunal concluded that mechanical approval without judicious consideration renders the entire search assessment proceedings invalid. Assessment orders were quashed in favor of the assessee.

---

---

Issues Involved:

1. Validity of search assessments framed under Section 153A of the Income Tax Act, 1961.
2. Legality of approval granted under Section 153D of the Act by the Joint Commissioner of Income Tax (JCIT).

Summary:

Issue 1: Validity of Search Assessments under Section 153A

The search and seizure operation under Section 132 of the Income Tax Act, 1961, was carried out on 23.07.2015 at the premises of certain groups and individuals. Various incriminating documents were found, leading to the centralization of the case to the Assistant Commissioner of Income Tax (ACIT), Central Circle 13, New Delhi. Notices under Section 153A were issued, and returns were filed by the respective parties. The assessments were made under Section 153A read with Section 143(3) on 29.12.2017 and 26.12.2017, with substantial additions being made to the returned incomes.

Issue 2: Legality of Approval under Section 153D

The core issue was whether the approval granted by the JCIT under Section 153D was done in a judicious manner with due application of mind. The assessees contended that the approval was granted mechanically, without proper examination of the draft assessment orders and the seized documents. The JCIT granted approval for 40 cases on the same day the draft orders were forwarded, raising doubts about the thoroughness and validity of the approval process.

The Tribunal examined the approval process and found that the JCIT's approval was granted on the same day the draft assessment orders were received, indicating a lack of due application of mind. The Tribunal referenced several High Court judgments, including those from the Orissa High Court and the Allahabad High Court, which emphasized that the approval under Section 153D must be a judicious process involving independent application of mind.

The Tribunal concluded that the approval granted by the JCIT was mechanical and did not meet the statutory requirements, rendering the entire search assessments invalid. Consequently, the additional grounds raised by the assessees were allowed, and the search assessments were quashed.

Conclusion:

The Tribunal held that the approval granted by the JCIT under Section 153D was invalid due to the lack of application of mind. As a result, the search assessments framed under Section 153A were declared illegal and bad in law. The appeals of the assessees were allowed, and the revenue's appeal was dismissed.

Order Pronounced:

The order was pronounced in the open court on 10/01/2024.

---