Income Tax Appellate Tribunal, Delhi “C” Bench on Approval under Section 153D of Income Tax Act, 1961.

Headnote:

The ITAT Delhi “C” Bench quashed the assessment framed under Section 153C read with 153D of the Income Tax Act, 1961 on the ground that approval accorded under Section 153D was mechanical and ritualistic. The Tribunal held that a single approval for multiple assessment years without application of mind, and without reference to seized material, vitiates the assessment order. Reliance was placed on the judgments of the Hon’ble Delhi, Orissa, and Allahabad High Courts, including PCIT v. Shiv Kumar Nayyar, ACIT v. Serajuddin & Co., and PCIT v. Anuj Bansal.

Background:

1. A search and seizure operation under Section 132 of the Act was carried out on 10 August 2018 at the premises of Vibhu Prakash Bansal, Vineet Prakash Bansal, and M/s Ravi Prakash & Sons, Saraffa Bazar.
2. Certain incriminating material and unexplained cash were found.
3. Assessment under Section 153C was completed on 14 June 2021, adding ₹10,54,665 as undisclosed income of the assessee.
4. The assessee appealed before CIT(A), Lucknow-3, which dismissed the appeal on 17 March 2023.
5. The assessee filed the present appeal before ITAT.

Assessee’s Contentions:

1. Approval under Section 153D dated 25 June 2021 was mechanical, arbitrary, and lacked application of mind.
2. Single approval granted for two assessment years (2018-19 & 2019-20), contrary to statutory requirements.
3. No mention of perusal of seized material in the approval.
4. Relied on Pr. CIT v. Shiv Kumar Nayyar (163 Taxmann.com 9, 2024) and other judicial precedents.
5. Sought quashing of assessment orders.

Revenue’s Contentions:

1. Draft assessment orders were perused by Additional CIT while granting approval under Section 153D.
2. Approval granted as per law; no absence of application of mind.
3. Requested dismissal of assessee’s grounds.

Tribunal Observations:

Approval under Section 153D:

Approval dated 25 June 2021 was in the nature of a performa approval, without reference to the subject matter of additions.

Single approval granted for two assessment years, contrary to statutory mandate.

Approval did not indicate perusal or application of mind regarding seized documents.

Judicial Precedents:

PCIT v. Shiv Kumar Nayyar, PCIT v. Anuj Bansal, ACIT v. Serajuddin & Co., and PCIT v. Subhash Dabas established that mechanical approvals under Section 153D vitiate the assessment.

Approval must be for each assessment year and each assessee, with clear application of mind.

Practical Impossibility:

Approval for 43 cases in a single day indicates impossibility of judicious approval.

Single approval across multiple assessment years further contravenes the statutory requirement.

Conclusion:

Approval under Section 153D in the present case was ritualistic and mechanical.

Assessment framed under such approval is vitiated.

Decision

1. ITA No. 1500/Del/2023 (Assessee’s Appeal): Allowed
2. Assessment under Section 153C read with 153D is quashed.
3. No need to examine other legal/factual grounds of the appeal.

Citation: 2025:DEL:1500

Case: Vivaan Prakash v. DCIT/ACIT, Moradabad

Court: Income Tax Appellate Tribunal, Delhi “C” Bench, New Delhi

Coram: Shri S. Rifaur Rahman, Accountant Member & Shri Yogesh Kumar U.S., Judicial Member

Date of Hearing: 18 September 2025