One-Size-Fits-All Approval Invalid – Absence of Mindful 153D Approval Vitiates Entire Assessment

Melody Enterprises Pvt. Ltd. Vs ACIT (ITAT Delhi)

Background

• Search & seizure: Conducted u/s 132 at premises of Shri Deepak Agarwal, Shri Mukesh Kumar & others, wherein documents relating to assessee were seized.
• Assessment: Order passed on 24.12.2018 u/s 143(3) r.w.s. 153A, making additions.
• CIT(A) (28.10.2022): Dismissed assessee’s appeal.
• Before ITAT: Assessee challenged legality of assessment on ground that approval u/s 153D was mechanical & perfunctory, hence assessment void.

Tribunal’s Observations

1. Nature of Approval u/s 153D

• Approval letter (24.12.2018) from Addl. CIT, Central Range-4, New Delhi, reproduced in order.
• It merely stated: “Approval u/s 153D … is hereby accorded.”
• No discussion of seized material, draft orders, or independent application of mind.
• A single composite approval was granted for 49 assessees across multiple years.
• ITAT noted this smacked of mechanical “rubber-stamp” approval without judicial scrutiny.

2. Judicial Precedents

Referred to:

• PCIT v. Shiv Kumar Nayyar (Del HC) – approval must be for each assessee & each AY separately.
• PCIT v. Sapna Gupta (All HC, 2022) – mechanical approval defeats legislative intent.
• ACIT v. Serajuddin & Co. (Orissa HC, 2023, 454 ITR 312) – approval without thought process invalid; SLP dismissed by SC (163 taxmann.com 118).
• PCIT v. Anuj Bansal (Del HC) & PCIT v. Subhash Dabas – reiterated same principle.

Held: Approval must show application of mind; otherwise assessment order stands vitiated.