Avtar Singh Kochar Vs DCIT (ITAT Delhi)
Mechanical Sanction Vitiates Search Assessment: ITAT Quashes 153A Order for Invalid Approval under Section 153D
The Delhi Bench of the Income Tax Appellate Tribunal quashed the search assessment for AY 2019-20, holding that the mandatory approval under section 153D was granted in a mechanical and non-speaking manner, rendering the entire assessment void ab initio.
In this case, a search under section 132 and a survey under section 133A were conducted at the premises of the assessee, a petrol pump proprietor. The assessment under section 143(3) read with section 153A was framed after obtaining a single, consolidated approval from the Additional CIT covering seven assessment years (AYs 2013-14 to 2019-20) within an extremely short time.
The Tribunal noted that the approval letter merely recorded a routine endorsement and did not demonstrate any independent application of mind, particularly when the assessment was heavily based on digital and electronic evidence (WhatsApp chats, Excel files, data from electronic devices). The approving authority failed to examine whether the CBDT Digital Evidence Investigation Manual, 2014, including requirements relating to hash values, chain of custody, admissibility under sections 65A/65B of the Evidence Act, had been complied with.
Relying on authoritative precedents including ACIT v. Serajuddin & Co. (Orissa HC) (affirmed by the Supreme Court), PCIT v. Shiv Kumar Nayyar (Delhi HC) and PCIT v. Sapna Gupta (Allahabad HC), the Tribunal reiterated that approval under section 153D cannot be a ritual or rubber-stamp exercise. Even though elaborate reasons are not required, the approval must reflect conscious examination of the draft assessment for each assessment year separately.
Since the approval in the present case was found to be casual, omnibus and mechanical, the Tribunal held that the statutory safeguard under section 153D stood violated. Consequently, the entire assessment order was quashed, the assessee’s appeal was allowed, and the Revenue’s cross-appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
These cross appeals preferred by the assessee and revenue against the order dated 28.03.2025 of the Ld. Commissioner of Income Tax(A)-31 Delhi, (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No : ITBA/APL/S/250/2024-25/1075172746(1) arising out of the order dated 14.07.2021 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the DCIT, CC-25, for AY: 2019-20.
