Tavleen Resorts & SPA Pvt. Ltd. Vs DCIT (ITAT Delhi)
Conclusion: Assessments framed under Section 153A based on mechanical approval under Section 153D were invalid in law as Additional Commissioner of Income Tax (Addl. CIT) had accorded omnibus and perfunctory approval to multiple draft assessment orders without application of mind, thereby vitiating the assessments.
Held: Assessee was engaged in developing a resort-cum-hotel, was subjected to search and seizure under section 132. Assessments for AYs 2014–15 to 2018–19 were framed under section 143(3) r.w.s. 153A, making various additions unconnected with any incriminating material found during the search. Assessee challenged the additions before CIT(A) and later before Tribunal, contending that (i) the assessments for unabated years were concluded and could not be reopened without incriminating material; and (ii) the approval granted by the Addl. CIT under section 153D was mechanical and without application of mind. It was demonstrated that the Addl. CIT had granted consolidated approval for six assessment years within a day, merely endorsing the AO’s assertions without verifying the seized material or the draft assessment orders. Additionally, the basis of additions under Section 69A also challenged, contending that alleged cash payments lacked factual or documentary support. Revenue argued that due process was followed and that the approvals under Section 153D were valid. Further, once approval was accorded, a presumption of due application of mind should apply. It was held that the approval granted by Addl. CIT was a mere “technical approval” issued without any discussion or scrutiny of the material facts of each assessment year. Tribunal held that Section 153D was enacted as a statutory safeguard to ensure supervisory oversight and to prevent arbitrary assessments in search cases. The Bench cited several precedents, including ACIT v. Serajuddin & Co. (2023), and PCIT v. Shiv Kumar Nayyar (2024), reaffirming that mechanical approvals were fatal to the validity of assessments. Tribunal did not consider it necessary to adjudicate on other grounds relating to jurisdiction under Section 153A or the merits of the additions. Tribunal noted that Addl. CIT’s approval memo itself revealed reliance solely on the AO’s assurances and lacked any indication of independent satisfaction. The combined approval for multiple complex assessments was held to be in violation of the legislative intent of Section 153D, rendering the resultant assessments invalid, ipso facto. Accordingly, Tribunal quashed the assessments for A.Y.s 2014-15 to 2018-19, ruling that the approvals under Section 153D were non est in law.
