ITAT Delhi: Mechanical Approval Under Section 153D Vitiates Entire Assessment; Orders Quashed in Swift Impex Case

Key Facts and Tribunal Findings

The Delhi ITAT, in a batch of six appeals filed by Swift Impex Pvt. Ltd. for AYs 2015–16 to 2020–21, quashed assessment orders passed under Sections 153C/153A on the ground that approval granted under Section 153D was mechanical and lacked independent application of mind. The assessee challenged the validity of assessments primarily on the legal ground that the mandatory approval under Section 153D—required before passing assessment orders in search cases—was granted in a routine and perfunctory manner.

On examination, the Tribunal noted that the approval letters for all assessment years were identically worded, effectively carbon copies, and did not reflect any independent evaluation by the approving authority. The language of the approval indicated reliance on materials “perused by the Assessing Officer” rather than independent scrutiny by the approving authority. The ITAT further observed that there was no indication that the approving authority had examined seized materials, draft assessment orders, or year-specific issues before granting approval. Additionally, the assessment orders themselves did not record the fact of obtaining approval under Section 153D.

Relying on judicial precedents, including decisions of High Courts and coordinate benches, the Tribunal held that approval under Section 153D must involve active application of mind and cannot be a mere formality or rubber-stamping exercise. Given these deficiencies, the Tribunal concluded that the statutory mandate under Section 153D was violated. Consequently, the assessment orders were held to be invalid and quashed in entirety for all relevant years.

Legal Analysis and Practical Implications

The ruling reinforces the jurisdictional nature of approval under Section 153D in search assessments. The Tribunal clarified that such approval is not a procedural formality but a substantive safeguard requiring independent and conscious evaluation by the approving authority.A key legal principle emerging from the decision is that mechanical or identical approvals across multiple years or entities indicate non-application of mind and render the entire assessment void ab initio. The approval must demonstrate consideration of seized material, draft orders, and year-specific issues.

The Tribunal also emphasized that absence of reference to such approval in the assessment order itself further weakens the validity of the proceedings, particularly in light of procedural guidance under CBDT manuals.