Ankur Chaudhary Vs DCIT (ITAT Delhi)
Search Assessments Vitiated by Defective 153D Approval Held Mechanical- ITAT Delhi Quashes Assessments- Consolidated Approval Cannot Replace Independent Application of Mind
Assessees challenged the assessments primarily on the ground that the mandatory approval u/s 153D was invalid, as the approval letter was silent & ambiguous, granting consolidated approval for three different assessees across multiple years without demonstrating any application of mind. It was argued that such mechanical sanction defeated the legislative intent of section 153D which requires approval for each assessee & each assessment year separately. Reliance was placed on several judicial pronouncements where courts have consistently held that “rubber-stamp” approvals or bulk clearances without independent examination are illegal.
Revenue defended the approvals contending that section 153D approval is only an administrative act, that there is no requirement of elaborate reasoning, & that the approving authority had in fact considered the material & applied his mind. Reference was made to CBDT guidelines & case law to submit that the Addl. CIT was well aware of the facts of the group cases & the approval could not be said to be mechanical.
The Tribunal, however, observed that the approval letter itself did not indicate consideration of issues involved for each assessee & each year. When consolidated approval is granted in respect of multiple cases, it raises a presumption of non-application of mind. The Bench relied heavily on the Delhi High Court ruling in Shiv Kumar Nayyar which, following the Orissa High Court judgment in Serajuddin & Co. & the Allahabad High Court in Sapna Gupta, categorically held that section 153D requires independent approval for each assessment year & each assessee. The Supreme Court’s dismissal of SLP against the Orissa High Court decision in Serajuddin further fortified this position.
