PCIT Vs Believe Constructions P. Ltd. (Delhi High Court)
Search Assessment Quashed: Delhi HC Rules Mechanical Approval Under Section 153D Invalid; Prior Approval Failure: ITAT Order Confirmed Due to Mechanical 153D Sanction; Search Assessments Set Aside: Superior Authority Failed to Scrutinize Material for 153D; When Superiors Don’t Scrutinize, Assessments Don’t Survive- Mechanical 153D Approval Invalid – Delhi HC.
Delhi High Court dismissed Revenue’s appeal against the order of ITAT which had quashed assessments framed u/s 153A/153D on the ground that the mandatory approval required u/s 153D was granted mechanically & without due application of mind. The appeal pertained to AY 2007-08 arising from a common ITAT order dated 08.02.2023 which had also been challenged in earlier matters of PCIT v. MDLR Hotels Pvt. Ltd. & PCIT v. King Buildcon Pvt. Ltd., both of which had been dismissed by the same Court.
Revenue contended that the issues in the present case were identical to those already dealt with in MDLR Hotels Pvt. Ltd. where approval u/s 153D had been accorded to 246 draft assessments by one composite letter merely stating “approved with direction to pass orders before limitation.” ITAT had found that the Additional CIT had granted approvals for numerous assessments en masse without referring to any seized material or showing independent consideration, which defeated the very legislative intent behind Section 153D. The section, as explained in CBDT Circular No.3/2008, was inserted to ensure that search-related assessments are subject to prior, meaningful scrutiny by a superior authority before being finalised.
