Ashish Garg Vs DCIT (ITAT Delhi)
Conclusion: Approval under Section 153D was invalid, as it was granted mechanically and collectively for several years, without independent application of mind. Such perfunctory approval defeats the statutory safeguard intended by the legislature. Consequently, the entire proceedings and assessments were quashed.
Held: The key legal issue raised by assessee was that the assessment orders passed u/s 153A r.w.s. 143(3) were invalid for want of proper approval u/s 153D. Assessee contended that the approval granted by the JCIT under Section 153D was mechanical and without application of mind, violating the statutory mandate; the approval was a composite one for seven years, whereas the Act required separate approval for each assessment year; JCIT granted approval within one day for 21 cases of the group, making it humanly impossible to examine each case judiciously; the approval was granted based on an undertaking from the AO, without independent examination of seized material, appraisal reports, or draft assessment orders; there was no indication in the approval letter that the JCIT perused the assessment records or applied independent judgment; assessee relied on various decisions including PCIT v. Sapna Gupta (Allahabad HC), PCIT v. Shiv Kumar Nayyar (Delhi HC), and Shreelekha Damani v. DCIT (Bombay HC) to argue that mechanical approval vitiated the assessment. Revenue contended that the approval under Section 153D was merely administrative and not quasi-judicial and the procedure of granting approval was an internal process and did not affect the validity of assessment. It was held that approval u/s 153D must be specific to each assessment year. The approving authority must apply an independent mind to the material and issues involved. Granting a combined approval for multiple years or approving dozens of cases in a single day constituted a mechanical exercise and violated the legislative intent. Applying these principles, ITAT found that the JCIT’s approval in the present case was mechanical, composite, and devoid of independent scrutiny, thus vitiating the entire assessment proceedings. Accordingly, Tribunal quashed the assessments made under Section 153A r.w.s. 143(3) for all the assessment years involved.
