DCIT Vs Key Events (ITAT Delhi)
A search was conducted in the Kohli Tent Group on 03.05.2018. Based on seized material, proceedings u/s 153C were initiated against Key Events. In response to notice, Assessee filed return & assessments were completed u/s 153C/143(3) making huge additions on account of alleged suppressed business receipts, unexplained money & revenue sharing income. CIT(A) partly allowed Assessee’s appeal by estimating profit at 10% of certain receipts and deleting separate addition for revenue sharing with Umrao Hotels. Revenue filed appeals challenging deletion of additions, while Assessee filed cross objections challenging the very validity of assessment u/s 153C on multiple legal grounds including absence of incriminating material & invalid approval u/s 153D.
The primary legal issue argued was regarding approval u/s 153D. Assessee contended that the Additional CIT granted a single common approval on 23.03.2022 covering multiple assessment years (2016-17 to 2019-20) & multiple assessees, without independent year-wise satisfaction. The approval did not discuss any seized material or issues and merely stated “approved”, which showed mechanical sanction without application of mind. Reliance was placed on Delhi High Court in Shiv Kumar Nayyar, Allahabad High Court in Sapna Gupta, Orissa High Court in Serajuddin & Co. (affirmed by Supreme Court), and Delhi High Court in Anuj Bansal, all holding that approval u/s 153D must be separate for each year & each assessee and mechanical approval vitiates assessment.
