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Informative

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

Update / Judgement Date

27 Oct 2025

Source

WCP News Bulletin

Author

Sakshi Bhardwaj — WCP Legal Desk

Reading Time

3 min read

Financial ManagementOther Legal Matters
Income Tax Appellate Tribunal on Validity of Approval under Section 153D of the Income Tax Act, 1961.
WCP News Bulletin
Headnote:

The ITAT held that the approval granted under Section 153D for framing assessment under Section 153A was invalid as it was issued in a mechanical manner without independent application of mind. The Tribunal observed that the statutory requirement of prior approval was not a mere formality but a safeguard to ensure fairness in search-based assessments. Since the approval was granted in a “rubber-stamp” fashion covering several cases simultaneously, the entire assessment order was declared void.


Background:
  1. The assessee, Saloni Narang, faced a search and seizure operation under Section 132 of the Income Tax Act on 23 August 2011.
  2. The Assessing Officer passed an order under Section 153 read with Section 143(3) on 5 March 2015 for AY 2012-13, making additions totaling ₹2,06,79,144 on account of alleged unexplained investments in jewellery and interest from a foreign bank account.
  3. The CIT(A) partly deleted the additions, leaving a balance of ₹1,68,58,913 in dispute.
  4. The assessee challenged the assessment before the ITAT, arguing that the mandatory approval under Section 153D was granted mechanically without any independent scrutiny of her case.


Court’s Observations:
  1. Section 153D requires that the Joint Commissioner must grant prior approval for each assessment year before the Assessing Officer finalizes an order under Section 153A.
  2. In this case, the approval letter covered multiple years and several cases on a single day, indicating lack of individual consideration.
  3. The approving authority did not record any satisfaction or show evidence of having examined the seized material or draft assessment order.
  4. The Tribunal noted that when the law requires a safeguard such as prior approval, it must be exercised with due care and not treated as a procedural formality.
  5. Consequently, the ITAT held that the approval under Section 153D was invalid, rendering the corresponding assessment under Section 153 read with Section 143(3) void ab initio.


Legal Provisions Discussed:
  1. Section 153A – Assessment in case of search or requisition for preceding six assessment years.
  2. Section 153D – Prior approval necessary for passing assessment or reassessment under Section 153A or Section 153B.
  3. Section 69A – Unexplained investments.
  4. Section 143(3) – Regular assessment procedure.
  5. Rule 27, ITAT Rules, 1963 – Right of the respondent to support the order on any ground decided against them.


Key Takeaways:
  1. Approval under Section 153D must be granted separately for each assessment year after due examination of the record.
  2. Blanket or mechanical approvals covering multiple cases are invalid and vitiate the entire assessment process.
  3. The provision aims to ensure objectivity, prevent arbitrary assessments, and uphold procedural fairness in search-based proceedings.
  4. This ruling reiterates that statutory safeguards must be meaningfully observed, not reduced to administrative formalities.

Citation: 2025:ITAT:DEL:1496

Case: Saloni Narang v. Assistant Commissioner of Income Tax, Central Circle–15, New Delhi

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

Coram: Shri Anubhav Sharma (Judicial Member) & Shri Amitabh Shukla (Accountant Member)

ITA No.: 1496/Del/2018 (Assessment Year 2012–13)