Jyoti Mediservices Private Ltd. Vs. DCIT, Central Circle (ITAT Allahabad)
Assessment Annulled Due to Mechanical 153D Approval—ITAT Finds No Application of Mind; Common 153D Approval for Multiple Years Invalidates Entire Assessment—ITAT Applies Binding Precedents; Borrowed Satisfaction Cannot Sustain 153A Assessments—ITAT Quashes Orders for Invalid 153D Approval; JCIT’s Last-Minute Approval Held Invalid; Assessments Annulled for Lack of Due Process; No Second Innings for Revenue—ITAT Refuses Remand and Quashes 153A Assessments; Invalid 153D Approval Void Ab Initio; All Additions Rendered Academic; Tribunal Rejects Precedent Allowing Fresh Approval; Mechanical 153D Sanction Invalidates Assessment; Seized Material Not Examined; 153D Approval Based on Appraisal Report Held Invalid.
In these appeals before the Income Tax Appellate Tribunal (ITAT) Allahabad, the central issue concerns the validity of approvals granted under Section 153D of the Income Tax Act for assessments framed under Section 153A. The Tribunal analyzed two critical aspects: first, the legal consequences when approval under Section 153D is found invalid; and second, whether the specific approvals granted in these appeals suffered infirmities rendering them invalid. The Tribunal relied heavily on binding precedents, including multiple decisions of the Allahabad High Court, Delhi High Court, Orissa High Court, Gujarat High Court, and the Supreme Court, as well as earlier decisions of the Tribunal itself.
The Tribunal referred to its recent order dated 30 September 2025 in Minto Developers Pvt. Ltd., which had examined identical approvals issued through a common approval letter dated 31 July 2017. In that case, it had noted binding authorities including the Allahabad High Court decisions in Pr. CIT v. Sapna Gupta and Pr. CIT v. Siddharth Gupta, Delhi High Court’s judgment in Pr. CIT v. Shiv Kumar Nayyar, the Orissa High Court’s judgment in ACIT v. Serajuddin & Co., and the Delhi High Court’s affirmation of Tribunal orders in Pr. CIT v. Anuj Bansal, Pr. CIT v. Pioneer Tour Planner Pvt. Ltd., and Pr. CIT v. MDLR Hotels Pvt. Ltd.. These decisions consistently upheld ITAT orders quashing assessments where Section 153D approval was mechanical, lacked application of mind, or was invalid in any manner. The Supreme Court had dismissed Special Leave Petitions challenging several of these decisions, giving them finality.
The Tribunal noted that mechanical or common approvals for multiple years or multiple assessees violate statutory requirements because Section 153D mandates separate approvals for each assessment year. The Tribunal also stressed that such approval must reflect the approving authority’s application of mind, even if detailed reasons are not given. Judicial precedents held that absence of such application of mind renders the approval invalid and the assessment order void ab initio.
The Tribunal contrasted two earlier decisions: Satvik Polychem Pvt. Ltd., where the same Bench had quashed assessments due to invalid approval under Section 153D, and Ramji Vaish, where the same Members had instead remanded matters for fresh approval. The Tribunal held that Ramji Vaish was contrary to binding High Court precedents and even the Tribunal’s own earlier decision in Satvik Polychem, and therefore could not be treated as a valid precedent. The Tribunal observed that remanding the matter for fresh approval was legally impermissible because it would constitute granting a “second inning” to the Revenue and allow circumvention of statutory limitation periods. It also emphasized that approval under Section 153D must be contemporaneous and cannot be cured later.
The Tribunal further held that remanding the matter would also be impractical and unimplementable. An Assessing Officer cannot resubmit a draft order prepared years earlier by a predecessor, since the new officer must apply independent mind; but if a fresh draft is prepared, the earlier approval becomes infructuous. Either scenario invalidates the original approval.
The Tribunal relied upon the Supreme Court’s ruling in Hope Textiles Ltd. v. Union of India, which held that courts cannot issue directions compelling tax authorities to pass belated orders beyond limitation, emphasizing that statutory limitation periods cannot be extended. Similarly, the Gujarat High Court in Pr. CIT v. Sunrise Finlease Pvt. Ltd. held that lack of valid Section 153D approval is not curable and renders the assessment void ab initio. Comparable views were taken by the Nagpur Bench in Umesh Sadashiv Thakre v. ACIT and Maheshwari Coal Benefication & Infrastructure Pvt. Ltd. v. DCIT, both confirming that absence of valid approval is a substantive defect.
The Tribunal then restated the principles it had earlier summarized in Minto Developers. These include: (i) approval under Section 153D cannot be mechanical and requires independent application of mind; (ii) Revenue’s argument that such approvals are administrative and not justiciable is incorrect; (iii) the approving authority must indicate its consideration of materials, even briefly; (iv) mandatory instructions in the CBDT Search Manual apply; (v) approval must be separate for each assessment year; (vi) draft orders must be submitted in time to allow opportunity of hearing; (vii) superior officers cannot interfere with assessment functions except as permitted by statute; and (viii) if approval is invalid, the entire assessment is vitiated and must be annulled.
Turning to the facts of the present appeals, the Tribunal observed that the very same common approval letter dated 31 July 2017, examined earlier in Minto Developers, was used to grant approval for these assessment years. In Minto Developers, the Tribunal had found the approval to be mechanical, without application of mind, and issued in a manner akin to “rubber stamping.” The approving JCIT had joined office only on 21 July 2017, barely days before granting approval for 63 different assessments pertaining to 11 assessees, making application of mind humanly impossible. The Tribunal also highlighted that the Assessing Officer and JCIT were posted in different cities—Allahabad and Varanasi—further reducing the feasibility of meaningful consultation. The Tribunal rejected Revenue’s contentions that prior consultation between the Assessing Officer and JCIT validated the approval. It held such consultation was irrelevant and could even invalidate the assessment, as it indicated improper interference in the quasi-judicial process.
The Tribunal also found troubling the argument that the JCIT was not required to examine seized materials directly and could rely solely on the Investigation Wing’s appraisal report. The Tribunal held that this amounted to an admission of non-application of mind by both the Assessing Officer and the JCIT. The Tribunal reiterated that approval cannot be based on borrowed satisfaction or appraisal of others. It also rejected Revenue’s attempts to introduce fresh evidence such as affidavits from the JCIT, citing principles laid down by the Supreme Court in Mohinder Singh Gill v. CEC and the Madras High Court in CBDT v. Regen Infrastructure & Services Pvt. Ltd., which prohibit supplementing reasons after the fact.
Based on all these considerations and applying its earlier reasoning in Minto Developers, the Tribunal concluded that the approval under Section 153D in these appeals suffered from multiple infirmities, including mechanical issuance, lack of application of mind, absence of separate year-wise approvals, non-compliance with mandatory procedures, reliance on borrowed satisfaction, and failure to examine seized materials. Consequently, the Tribunal held the approvals invalid in law.
Given that the approvals were invalid, the assessments framed under Section 153A were annulled as void ab initio. All grounds on the merits of additions became academic and were not adjudicated. The Tribunal also dismissed grounds relating to penalty proceedings as not maintainable. The Revenue’s appeal for Assessment Year 2012–13 was dismissed for statistical reasons, while the assessee’s appeals for Assessment Years 2011–12 to 2013–14 were allowed for statistical purposes.
