2025 (7) TMI 1800 - AT - Income Tax

Approval under Section 153D invalid without proper examination of assessment records, deemed a mechanical rubber stamp decision

Rishi Raj Jain Versus ACIT, Central Circle-13, Delhi

The ITAT Delhi held that the approval granted under section 153D was invalid as the Approving Authority did not examine the assessment record or seized ... Validity of approval u/s 153D - consolidated approval u/s 153D - HELD THAT:- A careful reading of the approval granted u/s 153D of the Act clearly indicates that the Approving Authority has accorded approval without examining the assessment record and the seized materials, if any. The approval also reveals that only draft assessment order was sent for approval without any assessment record or seized material. On the very same day the letter of the AO with draft assessment order was received, consolidated approval u/s 153D of the Act in respect of multiple assessee’s was granted by the Approving Authority. The aforesaid facts clearly reveal that the Approving Authority, while granting approval u/s 153D of the Act has acted as a mere rubber stamp. The approval granted is completely mechanical and without application of mind. Thus, approval granted u/s 153D of the Act is not in accordance with the provisions contained u/s 153D of the Act. Thus, the approval granted u/s 153D of the Act is invalid. Assessee appeal allowed. ISSUES: Whether delay in filing appeal before the Tribunal can be condoned on grounds of office staff negligence and unintentional delay.Validity and legality of assessment/reassessment order passed under Section 143(3) read with Section 115BBE of the Income Tax Act, 1961, on account of unexplained jewellery.Whether the approval granted under Section 153D of the Income Tax Act, 1961, was valid, reflecting due application of mind by the approving authority.Whether a consolidated approval granted for multiple cases on the same day without specific reference to individual cases or seized materials constitutes valid approval under Section 153D.Whether an assessment order passed pursuant to an invalid or mechanical approval under Section 153D is a nullity and liable to be quashed.Whether other grounds of appeal require adjudication once the assessment order is quashed on the ground of invalid approval under Section 153D. RULINGS / HOLDINGS: The delay of 526 days in filing the appeal before the Tribunal was condoned as there was a 'sufficient and reasonable cause' due to unintentional mistake by the office staff, and the delay was 'beyond the control of the applicant.'The assessment order confirming addition on account of unexplained jewellery under Section 69B read with Section 115BBE was challenged but the primary legal issue addressed was the validity of approval under Section 153D.The approval granted under Section 153D was held to be invalid as it was 'mechanical,' 'perfunctory,' and 'without any real application of mind,' given that the approving authority granted consolidated approval for 178 cases on the same day without examination of individual draft orders, appraisal reports, or seized materials.Such consolidated and generic approval letters lacking any reference to specific facts or issues do not satisfy the statutory mandate of Section 153D, which requires 'due application of mind' and a 'conscious, considered, and deliberate examination' by the approving authority.Consequently, the assessment order passed pursuant to such invalid approval is 'non-est and invalid in the eyes of law' and 'liable to be quashed.'Since the assessment order was quashed on the ground of invalid approval under Section 153D, other grounds raised on merits became 'in-fructuous' and did not require adjudication. RATIONALE: The Court applied the statutory framework of Section 153D of the Income Tax Act, 1961, which mandates that no assessment or reassessment order under Sections 153A or 153B shall be passed by an Assessing Officer below the rank of Joint Commissioner without prior approval of the Joint Commissioner.The Court relied on binding precedents including the Tribunal's decision in Mysore Bhaskara Pankaja vs. ACIT and GD Goenka Pvt. Ltd. vs. ACIT, which held that approvals granted en masse on the same day for multiple cases without specific reference to individual cases or seized materials are 'mechanical' and lack 'application of mind,' rendering such approvals invalid.The Court referenced judicial pronouncements from High Courts and the Supreme Court affirming that approval under Section 153D is a statutory safeguard requiring 'due application of mind' and cannot be a mere 'empty ritual' or 'rubber stamp.' Approvals granted without examination of relevant materials and issues are invalid.The Court noted that the approval letter in the instant case was a 'common approval letter' covering numerous cases on a single day, with no indication that the approving authority examined the draft assessment orders, appraisal reports, or seized materials, thus failing the statutory requirement.The Court emphasized that the purpose of Section 153D is to provide an 'inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO,' which is defeated by mechanical approvals.The Court also discussed procedural irregularity where the draft assessment order was submitted under Section 143(3) but the final order was passed under Section 143(2), highlighting further legal infirmity.The Court exercised discretion to condone delay in filing appeal to ensure adjudication on merits, reflecting the principle of subserving the 'ends of justice.'