Capital Power Systems Limited Vs ACIT (ITAT Delhi)
Mechanical 153D Approval Vitiates Search Assessments; Single Sanction for 7 Years Held Invalid – ITAT Delhi
The Delhi Bench of the ITAT, in a batch of cross appeals in Capital Power Systems Ltd. vs. ACIT and DCIT vs. Capital Power Systems Ltd. (ITA Nos. 54, 55, 651 & 652/Del/2024 and ITA Nos. 330, 864 & 857/Del/2024; AYs 2016-17 to 2019-20; order dated 19-12-2025), quashed the search assessments framed u/s 153A on the ground of invalid and mechanical approval u/s 153D.
The Tribunal found that the Addl. CIT had granted a single, consolidated approval for seven assessment years on the very same day, without any discussion or indication of independent application of mind to the draft assessment orders for each year. The approval was held to be a mere ritualistic / perfunctory sanction, defeating the statutory safeguard built into section 153D.
Relying heavily on binding precedents of the Delhi High Court in PCIT vs. Shiv Kumar Nayyar, Allahabad High Court in PCIT vs. Sapna Gupta, and Orissa High Court in ACIT vs. Serajuddin & Co. (SLP dismissed by the Supreme Court), the ITAT reiterated that approval u/s 153D must be year-specific and must reflect conscious scrutiny of the draft orders. A blanket or omnibus approval for multiple years was held to be contrary to law.
The Tribunal rejected the Revenue’s contention that section 153D requires only existence of approval and not application of mind, holding that such an interpretation would reduce the provision to an empty formality. It was further observed that an approval which does not even indicate perusal of draft orders cannot sustain the consequential assessments.
Accordingly, the ITAT quashed the assessment orders for AYs 2016-17 to 2019-20, allowed the Assessee’s appeals on the jurisdictional ground alone, and held that the Revenue’s appeals became infructuous. Other grounds on merits were left open and not adjudicated.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Assessee filed captioned Appeals pertaining to Assessment Years 2016-17, 2017-18, 2018-19 and 2019-20 and the Revenue filed an Appeal for Assessment Years2017-18, 2018-19 and 2019-20, wherein both the parties assailed the orders of Ld. Commissioner of Income Tax (Appeals)-23, New Delhi,(Ld. ‘CIT(A)’ for short), dated 17/11/2023 (A.Y 2016-17), 21/11/2023 (A.Y 2017-18), 13/12/202 (A.Y 2018-19), 14/12/2023 (A.Y 2019-20)respectively.
