Delhi HC: Mechanical Bulk Approvals Under Section 153D Invalid; ITAT Order Upheld
The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961, challenging a common order passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2007-08 against the said assessee. The dispute revolved around the validity of approvals granted under Section 153D of the Act in search-related assessments, where the Additional Commissioner of Income Tax had approved hundreds of assessment orders through a single, standard approval letter.
ITAT’s Decision: The Revenue said such approval satisfied the statutory mandate and that similar issues had been raised in related appeals. Whereas the appellant argued that the approval was mechanical and lacked independent application of mind, contrary to legislative intent under Section 153D. The tribunal accepted this contention, quashing the assessment.
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Main Issue: Whether bulk approvals granted under Section 153D without demonstrating independent application of mind by the approving authority satisfy the statutory requirement under the Income Tax Act.
HC’s Decision: The Hon’ble Court dismissed the appeal, holding that no substantial question of law arises in the present case. Relying upon MDLR Hotels Pvt. Ltd. (2024) and King Buildcon Pvt. Ltd. (2024), the Court reiterated that approvals under Section 153D must reflect a genuine application of mind and cannot be issued in a perfunctory or mechanical manner. The Court reiterated the tribunal’s finding that the Additional Commissioner’s “single-letter approval” for 246 bulk assessments violated the spirit and purpose of the provision.
The Court observed that such approvals ignored the statutory safeguard meant to ensure meaningful supervisory oversight in search assessments. It further noted that the question regarding the interplay of Section 144A and the Search and Seizure Manual, 2007, remains open for consideration in future cases.
The appeal was dismissed in favour of the assessee, with the Tribunal’s order upheld.
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