PCIT-1 Vs Vrushali Sanjay Shinde (Bombay High Court)
The Bombay High Court dismissed the Revenue’s appeal and affirmed the decision of the Income Tax Appellate Tribunal (ITAT) holding that a mechanical approval under Section 153D of the Income-tax Act vitiates proceedings initiated under Section 153C. The appeal had been admitted to consider whether the ITAT was justified in presuming that the statutory approval was mechanical and without application of mind, even though the Act does not expressly require the approving authority to record satisfaction.
The controversy centered on an approval dated 6 August 2010 granted by the Additional Commissioner of Income Tax, Central Range, Thane, for initiating proceedings under Section 153C. The ITAT examined the approval letter—transcribed in the impugned order—and found that it did not disclose even prima facie application of mind. On that basis, the ITAT held that the approval was mechanical and, consequently, the proceedings under Section 153C were incompetent.
The Revenue argued that the case involved a raid by the State Police, followed by a special audit under Section 142(2A), recording of the assessee’s statements, and additions largely based on the special audit report. It was submitted that despite opportunities, the assessee did not provide clarifications or details. The Revenue contended that the approval was granted in the context of this material and that an approval under Section 153D is not required to be a reasoned or speaking order.
