Omnibus Section 153D Approval Invalid, Entire Search Assessment Quashed

Reshmi Jain Vs DCIT (ITAT Gauhati)

Omnibus 153D Approval for 10 Assessees Is No Approval at All: Guwahati ITAT Quashes Entire Search Assessments

Guwahati ITAT, Guwahati Bench, in a batch of appeals led by Reshmi Jain, Karishma Jain & Others Vs DCIT (ITA Nos.306 to 310/GTY/2019; AYs 2015-16 & 2016-17; order dated 18-12-2025), quashed the entire search assessments framed u/s 153A r.w.s. 143(3) solely on the ground of invalid and mechanical approval u/s 153D.

The Tribunal found that the Additional CIT had granted a single, consolidated approval dated 28-12-2018 covering 10 assessees/entities and multiple assessment years, without any indication of year-wise or assessee-wise application of mind. The approval letter did not even record that the draft assessment orders were examined, reducing the statutory safeguard u/s 153D to a mere rubber stamp exercise.

Relying on binding precedents including PCIT vs Anuj Bansal (Delhi HC & SC), ACIT vs Serajuddin & Co. (Orissa HC, affirmed by SC), PCIT vs Sapna Gupta (Allahabad HC) and PCIT vs Shiv Kumar Nayyar (Delhi HC), the Tribunal reiterated that approval u/s 153D is an in-built protection for the assessee, requiring independent application of mind for each assessee & each assessment year. Grant of approval for multiple cases in one go was held to be humanly impossible and legally unsustainable.

Rejecting the Revenue’s plea that the Addl. CIT was otherwise involved in the assessment process, the Tribunal held that statutory approval cannot be presumed or inferred—it must be explicit, reasoned and demonstrable from the record. Once the foundation approval failed, the entire superstructure of assessment collapsed.

Accordingly, the ITAT quashed the approvals u/s 153D as well as all consequential assessments, allowing all appeals in full, without entering into the merits of additions such as alleged bogus LTCG. The ruling reinforces that mechanical or omnibus approvals will vitiate search assessments in toto

FULL TEXT OF THE ORDER OF ITAT GAUHATI

These are appeals preferred by the different assessee against the orders of the Commissioner of Income-tax (Appeals), Guwahati (hereinafter referred to as the “Ld. CIT(A)”] all dated 08.04.2019 for the AYs2015-16 & 2016-17.

2. As the facts and circumstances in all the cases in ITA Nos. 306 to 310/GTY2019, of different assesses are similar , hence, for the sake of brevity and convenience, we take ITA No.306/GTY/2029 as our lead case and decide the all the appeals accordingly.

ITA No. 306/GTY/2019

For A.Y. 2015-16

3. The assessee raised the additional ground which is extracted as under:-

“FOR THAT the Ld. Commissioner of Income Tax (Appeals), Guwahati-1 acted unlawfully in upholding the assessment order framed u/s. 153A/143(3) of the Income Tax Act, 1961 as framed by the Ld. Deputy Commissioner of Income Tax, Circle 1, Guwahati without any valid approval required u/s 153D of the Income Tax Act, 1961 from the ld. Additional Commissioner of Income Tax, Range I. Guwahati as required under the statute and the purported action on that behalf is thoroughly opposed to law””

3.1. The facts in brief are that a search action u/s 132 of the Act was conducted in the CMG group and SM group of cases during the period from 02.06.2016 to 01.08.2016. A search action u/s 132 of the Act was also conducted on 02.06.2016 on the residential premises of Smt. Reshmi Jain at 402, Raheja Haven Prananjali, 10^th Road, JVPD, Mumbai. During the course of search certain incriminating documents, paper folders, mobile data were found and seized. Besides cash of ₹80,500/- was also found and inventoried as per annexure-2 of Panchanama. Notice u/s 153A of the Act was issued on 31.08.2017, calling upon the assessee to filing the return of income. The assessee filed the return of income online on 27.10.2018, declaring total income of ₹69,84,340/-. Thereafter, notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued which were duly complied with by the assessee. Finally, the assessment was framed u/s 153A/153D/143(3) of the Act vide order dated 31.12.2018, making an addition of ₹37 lacs on account of bogus long term capital gain.

3.2. The appeal of the assessee was also dismissed by the ld. CIT (A) after taking into consideration the reply and contention of the assessee by upholding the order of the ld. Assessing Officer.

3.3. The ld. AR vehemently submitted before us that the assessment framed by the ld. AO u/s 153A/ 143(3) of the Act is invalid and nullity in the eyes of law as the same is consequent to the invalid approval granted u/s 153D of the Act by Addl. Commissioner of Income Tax, Range-1, Guwahati, without application of mind and in a mechanical manner. The ld. AR referred to the approval granted u/s 153D of the Act dated 28.12.2018, and submitted that the approval granted for ten persons/entities together. The ld. AR therefore prayed that the said approval is granted by the Addl. Commissioner of Income Tax in a mechanical manner and without application of mind and therefore, the same is invalid and the assessment framed u/s 153A of the Act consequent thereto is also invalid and may kindly be quashed. The ld. AR in defense of his arguments relied on a series of decisions namely; ACIT vs. Serajuddin and Co. [2024] 163 taxmann.com 118 (SC) dated 28-11-2023, ACIT vs. Serajuddin& Co. [2023] 150 taxmann.com 146 (Orissa) [15-03-2023],PCIT vs. Anuj Bansal [2024] 165 taxmann.com 3 (SC) dated [11-07-2024], PCIT vs. Anuj Bansal [2024] 466 ITR 251 (Delhi)[13-07-2023], DCIT vs. Jhansi Development Authority [2024] 165 taxmann.com 9 (Delhi – Trib.)/[2024] [08-07-2024]. The ld. AR therefore prayed that in view of the ratio laid down of the above decisions, the approval granted u/s 153D of the Act as well as the assessment framed u/s 153A of the Act are invalid and may kindly be quashed.

3.4. The ld. DR on the other hand relied heavily on the approval granted u/s 153D of the Act stating the same to be invalid and in accordance with the provisions of the Act. The ld. DR has submitted that this is not an approval which was granted in isolation but the authority granting the approvals was involved and associated with the assessment proceedings right from the beginning. The ld. DR submitted that the Addl. CIT was informed regularly about the progress of the assessments and only final approval u/s 153D of the Act was granted after a draft assessment order is sent to the Addl. CIT. Therefore, the arguments of the ld. AR that it was granted in a mechanical manner and without application of mind and also for more than one assessee’s is devoid of any merit and may kindly be dismissed.

3.5. After hearing the rival contentions and perusing the materials available on record including the approval granted u/s 153D of the Act dated 28.12.2018, we find that in this case the draft assessment was sent to the Addl. CIT, Range-1, Guwahati and he granted an approval u/s 153D of the Act vide letter dated 28.12.2018 in the cases of Shri MG Group thereby granting approval to ten persons/entities including the assessee. For the sake of ready reference and convenience, the same is extracted below:-

3.6. Therefore, considering the approval granted u/s 153D of the Act for ten persons/entities together is not a valid approval and curtained the approval is granted in a machenical manner and without application of mind. In our cosndiered opinion the approval has to be granted afgter perusing the draft assessment order carefully in each case separately however the Add. CIT granted consolidated approval which is invalid and has to be quashed.

3.7. The case of the assessee is squarely covered by the decision of Hon’ble Delhi High Court in the case of Shiv Kumar Nayyar, reported in [2024] 163 taxmann.com 9 (Delhi High Court), wherein the Hon’ble Delhi High Court has held as under:-

“1. The solitary question which stands posted before us for adjudication pertains to whether, under the facts of the present case, the specified authority has granted approval in accordance with the mandate of Section 153D of the Income Tax Act, 1961 [“Act”]?

2. The instant appeal, at the instance of the Revenue, impugns the order of the Income Tax Appellate Tribunal [“ITAT”] dated 26.07.2023, whereby, the assessment order has been held to be illegal for lack of appropriate approval under Section 153D of the Act.

3. As per record, the appeal pertains to Assessment Year [“AY”] 2015-16. The dispute essentially emanates from a search and seizure operation which was conducted on 18.11.2016 under Section 132 of the Act by the Investigation Wing in Nayyar Group of cases, including the residential premises of the assessee. The said operation was followed by a survey operation under Section 133A of the Act.

4. Pursuant to the aforenoted search, an order under Section 127 of the Act was passed which led to centralization of the case of the assessee. Consequently, a notice under Section 153A of the Act was issued to the assessee on 22.09.2017. In response to the said notice, the assessee filed its Income Tax Return [“ITR”] on 14.08.2018, declaring an income of ₹18,48,450/- and the same was processed as per the provisions of Section 143(1) of the Act. Subsequently, the case of the assessee was picked up for scrutiny assessment and a notice under Section 143(2) was duly issued.

5. Thereafter, on 30.12.2018, an assessment order was passed by the assessing officer [“AO”] under Section 153A read with Section 143(3) of the Act, whereby, the total taxable income of the assessee was pegged at ₹5,19,85,970/-. Being aggrieved by the additions made by the AO, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [“CIT(A)”]. Vide order dated 09.07.2021, the CIT(A), while partly allowing the appeal of the assessee, deleted certain additions made by the AO.

6. However, the Revenue preferred an appeal against the order of the CIT(A) before the ITAT, wherein, the approval under Section 153D of the Act by the competent authority was found to be flawed and mechanical in nature and as a sequitur, the entire search assessment was declared to be illegal.

7. Learned counsel for the Revenue submitted that there is no infirmity in the approval granted by the concerned authority and therefore, the ITAT has erred in declaring the assessment order to be invalid. He contended that merely because the approval was granted on the same day when the draft assessment orders were sent by the AO, the same cannot be a ground to hold that the approval was accorded without any application of mind. According to him, since the authority granting approval has been involved in the assessment proceedings from the initial days, the same cannot be divested of its right to accord approval on the same day. He, therefore, mainly proposed the following substantial question of law for our consideration: –

“Whether the ITAT has erred in law, in considering the Assessment Order under Section 153A of the Act, as invalid and bad in law by stating that the approval granted by the Range head under section 153D of the Act is void as the same was granted in a mechanical manner without application of mind?”

8. Per contra, learned counsel for the assessee vehemently opposed the submissions. He submitted that the competent authority has granted approval in a mechanical manner inasmuch as the draft assessment orders for multiple AYs were accorded approval on the same date on which they were sent, which reflects a complete non- application of mind. It was, therefore, contended that the ITAT has correctly relied upon the decision of this Court in PCIT v. Anuj Bansal [ITA 368/2023] as well as various other High Courts to reach the conclusion that the approval was given in the teeth of the provisions of Section 153D of the Act.

9. We have heard the learned counsels appearing on behalf of the parties and perused the record.

10. Before embarking upon the analysis of the factual scenario of the instant appeal, we deem it apposite to examine the underlying intent of the relevant provision of the Act i.e., Section 153D, which is culled out as under:-

“153-D. Prior approval necessary for assessment in cases or requisition.–No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub­section (1) of Section 153-A] or the assessment year referred to in clause (b) of sub-section (1) of Section 153-B, except with the prior approval of the Joint Commissioner :

Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] under sub-section (12) of Section 144-BA.“

11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for “each assessment year” referred to in clause (b) of sub-section (1) of Section 153A of the Act. It is beneficial to refer to the decision of the High Court of Judicature at Allahabad in the case of PCIT v. Sapna Gupta [2022 SCC Online All 1294] which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- “each assessment year” used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:-

“13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for “each assessment year” in respect of “each assessee” separately. The words ‘each assessment year’ used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the “approval” as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power.

***

19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to “each assessment year” is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A.“

[Emphasis supplied]

12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for “each assessment year” for “each assessee” separately.

13. Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC Online Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:-

“22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere “rubber stamping” of the letter seeking sanction by using similar words like “seen” or “approved” will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein,

(i) the Assessing Officer should submit the draft assessment order “well in time”. Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii) the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order.

[Emphasis supplied]

14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated 28.11.2023 in SLP (C) Diary no. 44989/2023.

15. A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.

16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:-

“10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together.”

17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 in the case of the assessee. The said order also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, we cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the ITAT, succinctly encapsulated in the order extracted above.

18. Therefore, under the facts of the present case, considering the foregoing discussion and the enunciation of law settled through judicial pronouncements discussed hereinabove, we are unable to find any substantial question of law which would merit our consideration.

19. Consequently, the appeal stands dismissed. Pending application(s), if any, are also disposed of.

3.8. Similarly, the Hon’ble Allahabad High Court in the case of Sapna Gupta, reported in [2023] 147 taxmann.com 288/[2022] SCC Online All 1294], the Hon’ble High Court has held that approval u/s.153D of the Act is to be granted by the competent authority on the draft assessment order for each year separately. The operative part of the said judgment is extracted below :-

“Considering the submissions of the learned counsel for the parties and having perused the order of the Tribunal, in view of the undisputed facts before us about the manner in which the approval to the draft assessment order was granted under Section 153D for the assessment proceedings, by a letter dated 30.12.2017 in 85 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal.

To answer the same, we are required to go through the relevant provisions of the Income Tax Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income Tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under Section 132, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years (and for the relevant assessment year or years) referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may apply accordingly as if such return were a return required to be furnished under Section 139.

Section 153D of the Act relevant for our purposes is to be noted hereinunder:

“Prior approval necessary for assessment in cases of search or requisition.

153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner.”

Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or] Commissioner under sub-section (12) of section 144BA.

The Tribunal while quashing the assessment order had relied upon its earlier decision in Navin Jain and Others (Supra) wherein a detailed discussion has been made with regard to the requirement of prior approval of superior authority on the draft assessment order under Section 153D, before passing the assessment order by the Assessing Officer. It was noted that the word ‘approval’ though has not been defined in the Income Tax Act but the general meaning of the word ‘approval’ in Black’s Law Dictionary, 6th Edition was to be seen. The decision of the Apex Court in Vijayadevi Naval Kishore Bharatia vs. Land Acquisition Officer (2003) 5 SCC 83 wherein the distinction between Approving Authority and Appellate Authority was drawn, had been noted. The decision of the High Court of Gauhati in Dharampal Satyapal Ltd. vs. Union of India (2019) 366 ELT 253 (Gau.) has been noted to record that grant of approval means due application of mind on the subject matter approved which satisfies all the legal and procedural requirements. There is an exhaustive discussion on the requirement of prior approval under Section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered.

It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for “each assessment year” in respect of “each assessee” separately. The words ‘each assessment year’ used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the “approval” as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power.

It was noted that the obligations of the approval of the Approving Authority serves two purposes:

(i) On the one hand, he has to apply his mind to ensure the interest of the revenue against any omission or negligence by the Assessing Officer in taxing right income in the hands of right person and in right assessment year.

(ii) On the other hand, superior authority is also responsible and duty-bound to do justice with the tax-payer by granting protection against arbitrary or creating baseless tax liability on the assessee.

The Tribunal has further noted that the provisions contained in Sections 153A to Section 153D provide for separate notice to be given to assessee for assessment for each year as specified in Section 153A of the Act; the assessee has to file separate ITR for each year as specified in Section 153A of the Act; separate assessment orders are to be passed for each year as specified in Section 153A of the Act.

It was observed that this is an important concept mentioned in Section 153A of the Act, which is peculiar to the scheme of the said Section. Keeping in view of this basic fundamental features of Section 153A, if Section 153D is scrutinized, then, it would become manifest that an important phrase is employed in the text of Section 153D, which is “each assessment year”. The reading of the provisions in Section 153A and 153D conjointly makes it clear that separate approval of draft assessment order for each year is to be obtained under Section 153D of the Income Tax Act. In its erudite judgement with the discussion on the legislative intent of Section 153A to 153D and the meaning of the “approval” as defined in Black’s Law Dictionary as also the decisions of the Apex Court in the case of Sahara India vs. CIT and Others (2008) 300 JTR 403 (SC) where the discussion on the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of Section 142(2A) of the Act had been made, it was noted that the Apex Court has held therein that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned into an empty ritual. The Apex Court has held therein that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case.

The above discussion made in the judgement of Tribunal dated 3.08.2021 in the case of Navin Jain Vs. Dy. C.I.T. (Supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under Section 153D of the Act would vitiate the entire proceedings in the instant case.

For the reasoning given in the case of Navin Jain (Supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of Section 153D of the Income Tax Act.

The approval of draft assessment order being an in-built protection against any arbitrary or unjust exercise of power by the Assessing Officer, cannot be said to be a mechanical exercise, without application of independent mind by the Approving Authority on the material placed before it and the reasoning given in the assessment order. It is admitted by Sri Gaurav Mahajan, learned counsel for the appellant-revenue that the approval order is an administrative exercise of power on the part of the Approving Authority but it is sought to be submitted that mere fact that the approval was in existence on the date of the passing of the assessment order, it could not have been vitiated. This submission is found to be a fallacy, in as much as, the prior approval of superior authority means that it should appraise the material before it so as to appreciate on factual and legal aspects to ascertain that the entire material has been examined by the Assessing Authority before preparing the draft assessment order. It is trite in law that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The requirement of approval under Section 153D is pre-requisite to pass an order of assessment or re-assessment.

Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of “each assessment year” referred to in Clause (b) of sub­section (1) of Section 153A which provides for assessment in case of search under Section 132. Section 153A(1)(a) requires that the assessee on a notice issued to him by the Assessing Officer would be required to furnish the return of income in respect of “each assessment year” falling within six assessment years (and for the relevant assessment year or years), referred to in Clause (b) of sub-section (1) of Section 153A. The proviso to Section 153A further provides for assessment of the total income in respect of each assessment year falling within such six assessment years (and for the relevant assessment year or years).

The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to “each assessment year” is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A.

In the instant case, the draft assessment order in 85 cases, i.e. for 85 assessment years placed before the Approving Authority on 30.12.2017 was approved on same day i.e. 30.12.2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 85 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record.

As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeal being in the nature of second appeal. No substantial question of law arises for consideration before us.

The Appeal is dismissed being devoid of merit.

3.9. Similar position has been laid down in various decisions passed by various Hon’ble High Courts and coordinate benches of the Tribunal. Similarly, Hon’ble Orissa High Court in the case of M/s Serajuddin & Co., reported in 454 ITR 312 (Orissa-HC), has held as under :-

“21. It is seen that in the present case, the AO wrote the following letter seeking approval of the Additional CIT:

GOVERNMENT OF INDIA
OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX,
CIRCLE-1(2), BHUBANESWAR

No. ACIT/C-1(2)//Approval/2010-11/5293 Dated, Bhubaneswar, the 27/29th December, 2010

To
The Addl. Commissioner of Income-tax,
Range-1, Bhubaneswar.

Sub: Approval of draft orders u/s 153D of the I.T. Act 1961 in the case of M/s. Serajuddin& Co. 19A, British India Street, Kolkata (in Serajuddin Group of Cases)- matter regarding.

Sir, Enclosed herewith kindly find the draft orders u/s 153A of the I.T.Act, 1961 along with assessment records in the case of M/s Serajuddin& Co., 19A, British India Street, Kolkata for kind perusal and necessary approval u/s.153D. No. Name of the assessee Section under which order passed Asst. Year

1 M/s Serajuddin& Co, 19A, u/s.153A/143(3)/144/145(3) 2003-04 British India Street, Kolkata

2. -do- -do- 2004-05

3. -do- -do- 2005-06

4. -DO- -do- 2006-07

5. -DO- -DO- 2007-08

6. -DO- -DO- 2008-09

7. -DO- U/s.143(3)/144/153B(B)/145(3) 2009-10

3) The above cases will be barred by limitation on 31.12.2010.

Encl: As above

Yours faithfully,
Sd/-
Asst. Commissioner of Income-tax,
Circle-1(2), Bhubaneswar

OFFICE OF THE ADDL. COMMISSIONER OF INCOME TAX, 3 Floor, Range-1,
Bhubaneswar

No. Addl. CIT/R-1/BBSR/SD/2010-11/5350 Dated, Bhubaneswar, the 30th December, 2010 ITA Nos.284-290/CTK/2025

To

The Assistant Commissioner of Income Tax,
Circle-1(2), Bhubaneswar.
Sub: Approval u/s 153D-in the case of M/s Serajuddin& Co., 19A, British India Street,
Kolkata-Matter regarding.

Ref: Draft Orders u/s 153A/143(3)/144 for the A.Y. 2003- 04 to 2008-09 u/s.143(3)/153B (b)/144 of the A.Y.2009-10 in the case of above mentioned assessee.

Please refer to the above The draft orders u/s 153A/143(3)/144 for the A.Y. 2003-04 to 2008-09 and u/s. 143(3)/153B(b)/144 for the A.Y. 2009-10 submitted by you in the above case for the following assessment years are hereby approved:

You are requested to serve these orders expeditiously on the assessee, submit a copy of final order to this office for record.

Sd/-
Addl. Commissioner of Income Tax, Range-1,
Bhubaneswar

22. As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft orders having been perused by the Additional CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere “rubber stamping” of the letter seeking sanction by using similar words like ‘see’ or ‘approved’ will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of Section 158BG of the Act, it would equally apply to Section 153D of the Act. There are three or four requirements that are mandated therein, (i) the AO should submit the draft assessment order “well in time”. Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his ITA Nos.284-290/CTK/2025 mind; (ii) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order.

23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure.

24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under Section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 (165) E.L.T. 257 (S.C.) the Supreme Court observed as under:

“Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute.

(2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board.

(3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars.”

25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order ITA Nos.284-290/CTK/2025 of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without application of mind by the Additional CIT resulting in vitiating the assessment orders themselves.

26. The question of law framed is therefore answered in the affirmative i.e., in favour of the Assessee and against the Department.

3.10. We note that in the said decision the Hon’ble Orissa High Court has held that the approval granted in mechanical manner by the competent authority without application of mind is not a valid approval. The said decision of the Hon’ble Orissa High Court has been affirmed by the Hon’ble Supreme Court on the SLP filed by the revenue, reported in 163 taxmann.com 118 (SC). In view of the above, we do not find any merit in the contention of the ld. CIT-DR that the competent authority i.e. Addl./JCIT are usually involved in the assessment proceedings right from stage 1 till the end and, thus, they are aware of all the facts and proceedings. Therefore, the argument of the ld. CIT-DR that granting of approval by way of consolidated order was valid, is devoid of any merit as in all the aforesaid decisions, it has categorically been held by various Courts/judicial forums that the approval shall be granted separately for each year. Therefore, considering the facts of the present case before us, in the light of the ratio laid down in the above decisions, we are inclined to quash the approval granted u/s 153D of the Act and also the assessment framed by the AO on the ground of being framed on the basis on invalid and mechanical approval granted u/s.153D of the Act.

3.11. The appeal of the assessee is allowed.

ITA Nos. 307 to 310/GTY/2019

For A.Ys. 2015-16 &2016-17

4. The issue raised in these appeals are similar to one as decided by us in ITA No. 306/GTY/2019. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee in ITA Nos.307 to 310/GTY/2019 for A.Y. 2015-16 & 2016-17 as well. Hence, the appeals of assessee are allowed.

5. In the result, the all the appeals of the assessees are allowed.

Order pronounced in the open court on 18.12.2025.