Wine Connection Vs ACIT (ITAT Mumbai)
Section 153D Approval Must Be Specific: Proforma ‘Rubber-Stamp’ Voids Entire Assessment; ITAT Upholds Consistency: No Scrutiny in 153D Approval Renders Assessment Null and Void; No Application of Mind: Why Common Approval Letter Invalidates All Assessment Years; Mechanical Approval u/s 153D vitiates entire assessment – ITAT Delhi
Assessee filed three appeals against orders passed u/s 153C r.w.s. 143(3) for AYs 2015-16 to 2017-18. The main legal ground raised was that the approval granted u/s 153D by the Additional Commissioner was mechanical, non-speaking & without application of mind, thereby rendering the assessments null & void. CIT(A) had upheld the assessments. The Addl. CIT issued a single common approval dated 28-12-2021 for four assessment years of the assessee. The approval letter did not discuss any seized material or specific issues/additions, nor indicate that the draft orders were examined. The Tribunal observed that such “proforma approval” amounted to a symbolic & perfunctory exercise of statutory power u/s 153D.
Tribunal’s Discussion
The Bench relied on a catena of High Court judgments:
- Delhi HC in PCIT v. Shiv Kumar Nayyar [2024] 163 taxmann.com 9 – held that approval u/s 153D must be given for each assessment year separately, with independent application of mind.
- Allahabad HC in PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] – emphasized that approval cannot be a mere ritual; approving authority must verify the AO’s draft order for each assessee/year.
- Orissa HC in ACIT v. Serajuddin & Co. [2023 SCC OnLine Ori 992 / 454 ITR 312] – held that mere rubber-stamping or repeating statutory words is insufficient; absence of reasoning or indication of scrutiny vitiates the assessment. The SLP against this judgment was dismissed by the Supreme Court on 28-11-2023.
- Delhi HC in PCIT v. Anuj Bansal & PCIT v. Subhash Dabas – reaffirmed that mechanical approvals defeat legislative intent.
ITAT reproduced the key Delhi HC observations that the approving authority must record a conscious satisfaction after perusing the draft assessment order and related material; otherwise, such approval is invalid
