Mechanical section 153D approval vitiates search assessments and also renders consequential penalty orders unsustainable.

Prior approval under section 153D for search assessments must involve real, independent application of mind to the draft assessment order, seized material, questionnaires, and replies; a perfunctory or mechanically granted approval does not satisfy the statutory mandate. Where approval is granted in an empty formality, the assessment is rendered vulnerable for want of valid jurisdictional compliance. Consequential penalty orders dependent on such assessments also cannot stand once the underlying assessments are treated as invalid. The note therefore emphasises that section 153D approval is a mandatory safeguard and that mechanical approval can vitiate both the assessment and related penalty proceedings.

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Issues: (i) Whether approval granted under section 153D for the search assessments was mechanical and without due application of mind, and therefore invalid; (ii) whether the penalty orders, being consequential to the assessments, could survive once the assessments were held bad in law.

Issue (i): Whether approval granted under section 153D for the search assessments was mechanical and without due application of mind, and therefore invalid.

Analysis: The approval under section 153D is a mandatory pre-condition for completion of search assessments under section 153A and requires the approving authority to examine the draft assessment order, seized material, questionnaires, and replies with independent application of mind. Approval cannot be reduced to an empty formality. On the facts, the approving authority granted approval in a very short time and for multiple years together, which showed that the exercise was not performed judiciously. Following the binding jurisdictional precedent on invalid mechanical approval, the approval was held to be an empty ritual and not a valid compliance with the statutory mandate.

Conclusion: The approval under section 153D was invalid, mechanical, and without application of mind, and the search assessments were vitiated in favour of the assessee.

Issue (ii): Whether the penalty orders, being consequential to the assessments, could survive once the assessments were held bad in law.

Analysis: The penalty orders arose from and depended upon the validity of the underlying assessments. Once the assessments were declared illegal and bad in law for want of valid approval under section 153D, the penalty orders could not independently survive.

Conclusion: The penalty orders were unsustainable and were set aside in favour of the assessee.

Final Conclusion: The assessee's challenge succeeded on the jurisdictional defect in approval under section 153D, which rendered the search assessments invalid and led to deletion of the consequential penalties.

Ratio Decidendi: Prior approval under section 153D for search assessments must reflect real, independent application of mind to the draft order and material on record; a mechanical or perfunctory approval vitiates the assessment and any consequential penalty order.

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