Neetal Relan Vs ACIT (ITAT Delhi)
Mechanical Approval Under Section 153D Vitiates Search Assessments: ITAT Quashes 153C Orders for Two Years
The Delhi Bench ‘E’ of the ITAT, in Neetal Relan v. ACIT (AYs 2017-18 & 2018-19), quashed the assessments framed under section 153C read with section 143(3) on the ground that the mandatory approval under section 153D was granted in a mechanical and omnibus manner, rendering the entire proceedings void.
The case arose from a search in the Nagpal Group on 10.01.2018, pursuant to which proceedings under section 153C were initiated against the assessee based on certain seized loose papers allegedly indicating unexplained investment/expenditure. Additions of ₹10 lakh (AY 2017-18) and ₹51 lakh (AY 2018-19) were made, which were confirmed by the CIT(A).
Before the Tribunal, the assessee raised additional legal grounds, contending that the approval under section 153D was invalid as the Additional CIT had granted a single common approval for three assessment years through one letter, without indicating any independent application of mind or examination of seized material. The Tribunal admitted the additional grounds, being purely legal and going to the root of jurisdiction.
Relying on authoritative precedents including PCIT v. Shiv Kumar Nayyar (Delhi HC), PCIT v. Sapna Gupta (All HC), ACIT v. Serajuddin & Co. (Orissa HC, SLP dismissed) and the Third Member decision in Dheeraj Chaudhary, the ITAT held that section 153D requires year-wise, independent approval, and that a ritualistic or rubber-stamp sanction defeats the statutory safeguard built into search assessments. The approval in the present case was found to be omnibus, mechanical and silent on application of mind, and therefore invalid.
Once the approval under section 153D was held to be defective, the entire assessments stood vitiated, making all other grounds on merits academic. Accordingly, the ITAT quashed the assessments for both assessment years and allowed the appeals in full
FULL TEXT OF THE ORDER OF ITAT DELHI
