Income Tax Appellate Tribunal, Delhi on Invalid Common Approval under Section 153D of the Income Tax Act, 1961.

Headnote:

The ITAT Delhi “C” Bench held that a common or mechanical approval under Section 153D of the Income Tax Act, 1961, for multiple assessment years is invalid. The Tribunal quashed the assessments framed under Section 153A/143(3), observing that the Additional CIT failed to apply an independent mind to each assessment year. Relying on decisions of the Delhi High Court in PCIT v. Shiv Kumar Nayyar (2024), PCIT v. Anuj Bansal (2024), and PCIT v. Sapna Gupta (2023), the ITAT reaffirmed that approval under Section 153D must be specific to each assessment year, based on due consideration of the respective records and material.

Background:

• A search was conducted under Section 132 at the premises of Kohli Tents Pvt. Ltd. and related entities.

• Assessments were framed under Section 153A read with Section 143(3) after obtaining a common approval under Section 153D for multiple years from the Additional CIT.

• The assessee contended that the approval was mechanical and invalid, vitiating the entire assessment.

• The Revenue argued that approval was duly granted in accordance with law and procedural irregularity, if any, did not affect validity.

Court’s Observations:

• Section 153D mandates prior approval of the Joint/Additional CIT before passing assessment orders under Section 153A or 153C.

• The approval must be year-specific, reflecting application of mind to each year’s seized material, findings, and proposed additions.

• A common consolidated approval for multiple years, without separate consideration, defeats the statutory safeguard and is invalid.

• The Tribunal relied on PCIT v. Shiv Kumar Nayyar, PCIT v. Sapna Gupta, and PCIT v. Anuj Bansal to hold that mechanical approval is a jurisdictional defect, not a curable irregularity.

Held:

• The common approval under Section 153D was invalid and rendered the assessment proceedings void ab initio.

• Assessments under Section 153A/143(3) were quashed.

• Revenue’s appeals dismissed; assessee’s cross-objections allowed.

Legal Provisions Discussed:

• Section 153A – Assessment in case of search or requisition.

• Section 153D – Prior approval necessary for assessment in search cases.

• Section 143(3) – Regular assessment.

Result: Revenue’s Appeals Dismissed; Assessee’s Cross-Objections Allowed.

Citation: ITA Nos. 2956 & 2594–2597/Del/2023 and C.O. Nos. 127–130/Del/2023

Case: DCIT, Central Circle-16, Delhi v. Kohli Tents Pvt. Ltd.

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

Coram: Shri Challa Nagendra Prasad (Judicial Member) & Shri Manish Agarwal (Accountant Member)

Assessment Years: 2013–14 to 2016–17 & 2018–19