Income Tax Appellate Tribunal - Delhi
Tarun Kumar Sahay (Huf),Jhandewalan ... vs Deputy Commissioner Of Income Tax ... on 20 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E': NEW DELHI
BEFORE SHRI MAHAVIR SINGH, HON'BLE VICE PRESIDENT
AND
SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No.5217 to 5222/Del./2025
(A.Y. 2014-15, 2015-16, 2016-17, 2017-18, 2019-20, 2018-19)
Tarun Kumar Sahay (HUF) Vs. DCIT,
171, First Floor, Central Circle-26
Cycle Market, New Delhi
Jhandewalan Extn.
New Delhi
PAN: AACHT1105P
(Appellant) (Respondent)
Assessee by Shri Sumit Lalchandani, Adv.
Sh. Salil Kapoor, Adv.
Sh. Shivam Yadav, Adv.
Revenue by Sh. Sanjeev Kumar Yadav, CIT- DR
Date of Hearing 12/02/2026
Date of Pronouncement 20/03/2026
ORDER
PER S. RIFAUR RAHMAN, AM
1. These appeals are filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals)-25, New Delhi ["ld. CIT(A)", for short] dated 12.06.2025 ITA No. 5217 to 5222/Del/2025 for Assessment Years 2014-15, 2015-16, 2016-17, 2017-18, 2019-20 & 2018-
19.
2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee's appeal being ITA No.5217/Del/2025 for AY 2014-15 as lead case.
3. The assessee has taken the following grounds of appeal in AY 2014-15: -
"1. That the notice issued and the assessment order passed under Section 153C of the Income Tax Act, 1961 ('the Act') by the Assessing Officer ('AO') are fundamentally flawed, being without jurisdiction, barred by limitation, and passed in violation of the statutory framework governing such proceedings, thereby rendering them legally unsustainable.
2. The notice issued under Section 153C of the Act and the consequent assessment proceedings are illegal, void ab initio, and without jurisdiction, as the statutory preconditions for invoking Section 153C of the Act were not satisfied, rendering the proceedings bad in law and liable to be quashed.
3. That on the facts and in the circumstances of the case, the AO has erred in failing to record the requisite satisfaction as mandated under law, thereby rendering the impugned proceedings invalid, bad in law, and without jurisdiction.
4. That the approval granted under Section 153D of the Act for passing the assessment order under Section 153C is invalid, as it has been granted in a mechanical manner, without independent application of mind, rendering the assessment order bad in law.
5. That on the facts and in law, the approval under section 153D stands vitiated due to non-application of mind, as both the proposal and the approval are mere carbon copies across years and group entities, issued in the fag end, in breach of the statutory mandate.2
ITA No. 5217 to 5222/Del/2025
6. That the approval under Section 153D of the Act is bad in law as both the proposal and the approval under Section 153D were invalid being issued without a Document Identification Number (DIN) in violation of CBDT Circular No. 19/2019 dated 14.08.2019,
7. On the facts and in law, the AO/CIT(A) failed to appreciate that, in the absence of incriminating material found during the search, the interference with a completed assessment and additions under Section 153C of the Act are unsustainable and without jurisdiction.
8. On the facts and in law, Excel sheets and tally data retrieved from electronic devices are inadmissible as evidence due to non-compliance with Section 65B of the Indian Evidence Act. 1872, and the CBDT Manual, rendering the additions made by the AO liable to be deleted. 9 On the facts and circumstances of the case and in law, the AO has erred in relying upon the retracted statements and material seized from the residential premises of Mr. Sunil Kumar Gupta without providing an opportunity to cross-examine, despite a specific request.
10. On the facts and circumstances of the case and in law, the AO erred in passing the assessment order under Section 153C of the Act without generating, allotting, quoting. and communicating a valid DIN, in contravention of Circular No. 19 of 2019 dated 14.08.2019, rendering the entire proceedings and assessment order invalid. That the CIT(A) erred in upholding the validity of the notice and assessment under Section 153C and in sustaining the additions, without independent application of mind and without properly considering the detailed submissions filed, rendering the order arbitrary and legally unsustainable.
12. On the facts and circumstances of the case, the CIT(A) failed to appreciate the fact that the additions/disallowances made by the AO are beyond the scope of the satisfaction note.
13. On the facts and circumstances of the case and in law, the AO erred in making illegal additions and completing the assessment at the income of Rs. 3,32,77,362/-.3
ITA No. 5217 to 5222/Del/2025
14. On the facts and circumstances of the case, AO has wrongly made an addition of Rs. 1,58,77,698/-under Section 68 of the Act, and CIT(A) has erred in upholding the same.
15. On the facts and circumstances of the case, AO has wrongly made an addition of Rs. 1,52,36,984/- under Section 69A of the Act, and CIT(A) has erred in upholding the same.
16. On the facts and circumstances of the case, AO has wrongly made an addition of Rs. 9,33,440/-under Section 69C of the Act, and CIT(A) has erred in upholding the same.
17. On the facts and circumstances of the case. AO has wrongly invoked the provisions of Section 68, Section 69A and Section 69C of the Act, and the CIT(A) has erred in upholding the same.
18. On the facts and circumstances of the case and in law, the AO erred in charging interest and initiating penalty proceedings under Section 271(1)(c) of the Act.
That in view of the facts and circumstances of the case, the appellant craves leave to add, amend or alter any of the grounds of appeal."
4. At the outset of the hearing, ld. AR for the assessee raised the legal ground being Ground No.4-6 that the assessment order passed by the Assessing Officer is contrary to the provisions of section 153D of the Income-tax Act, 1961 (for short 'the Act') and in this regard, he submitted a detailed submission as under:
"1. At the outset, it is respectfully submitted that the assessment order impugned in the present appeal is rendered wholly without jurisdiction on account of a fundamentally defective approval purportedly granted under Section 153D of the Income-tax Act, 1961. The material on record demonstrates that the approval is vitiated by total non-application of mind, constitutes a purely mechanical exercise of power, and fails to satisfy the statutory precondition mandated under the search assessment scheme. A valid approval under Section 153D is 4 ITA No. 5217 to 5222/Del/2025 not an empty procedural formality but a substantive jurisdictional safeguard; where such approval is non-est, the entire assessment proceedings collapse.
2. It is further submitted that the approval has been granted solely on the basis of an undertaking or certification furnished by the Assessing Officer stating that the records, including seized electronic data and information from AIR/CIB and other agencies, had been perused. The approval itself records that the Assessing Officer "has certified" such perusal and verification. Thus, the sanction is not founded upon the Approving Authority's own examination of the material but rests entirely upon the assurance of the very authority whose action is to be supervised. This strikes at the core of the legislative intent underlying Section 153D, which contemplates a meaningful prior scrutiny by a superior officer as an independent jurisdictional check against arbitrary or unsustainable assessments.
3. In the present case, the Approving Authority has resorted to a standardised, pre-drafted template to accord approval, without demonstrating any examination whatsoever of the facts of the case, seized material, appraisal report, draft assessment order, or issues specific to the assessee. The approval order is completely bereft of reasons, analysis, discussion, or even a minimal indication that the statutory duty of independent scrutiny was discharged. There is no year-wise evaluation, no reference to incriminating material, and no articulation of satisfaction regarding the legality or sustainability of the proposed additions. The language employed is generic, formulaic, and indistinguishable from approvals issued in numerous other cases, thereby revealing that the exercise was conducted in a routine and ritualistic manner rather than as a conscious quasi-judicial determination.
4. It is asserted that where the statute entrusts a specific function to a designated authority, that function must be performed personally by that authority and cannot be delegated, outsourced, or substituted by reliance on another officer's satisfaction. The law does not permit the 5 ITA No. 5217 to 5222/Del/2025 designated authority to act on borrowed or derivative satisfaction. The approval in the present case unmistakably reflects such impermissible "borrowed satisfaction," as the Approving Authority has not formed any independent opinion but has merely endorsed the proposal of the Assessing Officer. It is well settled that when the statute requires the satisfaction of a particular authority, such satisfaction must be real, conscious, and demonstrable; second-hand or proxy satisfaction is no satisfaction in the eyes of law and renders the entire exercise void. [Reference - Anirudh Sinhji Karan Sinhji Jadeja v. State of Gujarat (1995) 5 SCC 302; CIT v. SPL's Siddhartha Ltd. (2012) 345 ITR 223 (Del); Ghanshyam K. Khabrani v. ACIT (2012) 346 ITR 443 (Bom);
CIT v. B. Sumangaladevi (2009) 314 ITR 127 (Kar); CIT v. Aquatic Remedies (P.) Ltd. (2018) 406 ITR 545 (Bom); T. Varghese George v. Kora K. George (2012) 1 SCC 369; Sona Exports v. Director of Mines & Geology MANU/AP/0869/1998; Varkey Chacko v. CIT (1993) 203 ITR 885 (SC); Ericsson India (P.) Ltd. v. ACIT W.P.(C) 7435/2015 (Del HC, decided on 25.09.2018); CIT v. Naveen Khanna ITA No. 21/2009 (Del HC, decided on 18.11.2009); State of Bihar v. J.A.C. Saldanna AIR 1980 SC 326; State of Gujarat v. Shantilal Mangaldas AIR 1969 SC
634.]
5. Significantly, the approval order contains no discussion of the assessment records, no indication that the draft assessment orders were examined, and no reference to the seized evidence forming the basis of additions. Instead, the operative portion consists primarily of generic administrative directions to the Assessing Officer, such as forwarding copies of final orders, seeking permission under Section 281B where necessary, indicating additions in office notes, and complying with procedural requirements relating to retention of seized material. These directions are ex facie prospective and ministerial in nature and pertain to post-assessment formalities rather than pre-assessment scrutiny. An approval which speaks only of future compliance and administrative steps, without evaluating the merits of the proposed assessment, cannot be regarded as a valid sanction under Section 153D.
6ITA No. 5217 to 5222/Del/2025
6. The proposal seeking approval under Section 153D and the grant of such approval on the within 24 hours- clearly demonstrate complete non-application of mind. It is humanly impossible for the approving authority to independently examine the draft assessment order, seized documents (both physical and electronic), appraisal report, and the proposed additions within such a short span of time. Approval granted within 24 hours under Section 153D fundamentally defeats the statutory scheme, which mandates conscious and informed application of mind. The timing itself constitutes intrinsic evidence of non- application of mind, as held in multiple decisions where same-day or bulk approvals have been treated as per se indicative of mechanical exercise of power.
7. The proposal submitted by the AO is wholly deficient, as it fails to specify essential jurisdictional facts, including the date of search, the person searched, the incriminating material relatable to the assessee, the nature of seized documents, or the nexus between such material and the proposed additions.
8. Correspondingly, the approving authority has also failed to record any independent satisfaction. There is no indication as to which seized documents were examined, which additions are based on which material, what deliberation or discussion took place, or what aspects of the draft order were independently verified prior to granting approval.
9. The defect is further aggravated by the material on record demonstrating that the very same Approving Authority has been issuing approvals in an identical, verbatim format across multiple assessment years and across different assessees, including group concerns, with only superficial changes in particulars such as name, PAN, or quantum of additions. The language, structure, and operative portion of the approval have remained textually unchanged over several years, thereby conclusively establishing that no case-specific scrutiny was undertaken. The uniformity of wording across unrelated assessees and 7 ITA No. 5217 to 5222/Del/2025 distinct factual matrices shows that the approval process has been reduced to a standardized, pre-fabricated exercise rather than an individualized evaluation of each case.
10. In order to substantiate this systemic pattern, the assessee, apart from relying on the approval granted in its own case and in the cases of group concerns, places reliance on several orders of the Hon'ble ITAT forming part of the Case Law Compilation, wherein approvals issued by the same authority in identical language have been examined at length. In those decisions, the Hon'ble Tribunal has categorically held that such carbon-copy approvals, bereft of case-specific reasoning or independent analysis, are mechanical in nature and legally unsustainable. The consistent judicial findings in these cases reinforce the conclusion that the impugned approval suffers from complete non- application of mind and constitutes a ritualistic endorsement rather than a valid exercise of statutory power.
11. Though rendered in the context of Section 151, the ratio of Chhugamal Rajpal v. S.P. Chaliha (1971) 79 ITR 603 (SC) squarely applies to Section 153D approvals, as both provisions mandate an independent satisfaction of the approving authority and not a mere endorsement of the Assessing Officer's action. In the present case, the so-called approval under Section 153D merely records that the Ld. AO has carried out verification of seized material, examined electronic data, and scrutinized information from various sources. The approving authority has simply accepted and endorsed these certifications of the AO without recording any independent satisfaction as to the correctness of the proposed additions or the fitness of the case for passing the assessment order. The approval is thus reduced to a mere endorsement of the AO's verification, rather than an independent evaluation. This is precisely what the Hon'ble Supreme Court in Chhugamal Rajpal (1971) 79 ITR 603 (SC) has disapproved--where the authority grants approval mechanically without applying its own mind or recording reasons indicating satisfaction. Such an approval, 8 ITA No. 5217 to 5222/Del/2025 based solely on the AO's assertions and devoid of independent reasoning, renders the statutory safeguard under Section 153D illusory.
12. In a recent decision arising out of the very same search proceedings, the Hon'ble ITAT, Delhi Bench, in Pack Plast India Pvt. Ltd. v. DCIT (ITA Nos. 5079 to 5081/Del/2025, order dated 04.02.2026), has decided this issue in favour of the assessee on materially identical facts. The Tribunal held that approval under Section 153D must be founded upon personal and independent examination of the assessment records, appraisal report, draft assessment orders, and seized material by the Approving Authority itself. In that case, as in the present one, the approval was granted on the premise that the relevant documents had been "perused by the Assessing Officer and brought to the notice" of the approving authority. The Tribunal categorically held that such reliance on the Assessing Officer's perusal does not satisfy the statutory requirement, since the law mandates formation of an independent opinion by the approving authority and not a mere endorsement of the Assessing Officer's view.
13. It was emphatically held that approval under Section 153D cannot be granted on borrowed satisfaction, nor can the statutory duty be discharged by relying upon the diligence or certification of the Assessing Officer whose action is itself subject to supervisory control. The ratio of the said decision squarely applies to the present case and conclusively vitiates the impugned approval.
14. In the facts of the present case, a conjoint reading of the proposal forwarded by the Assessing Officer and the approval granted thereon further reveals a complete failure to comply with the statutory mandate in substance. The proposal itself is skeletal and does not meaningfully set out the material relied upon, the reasoning behind the proposed additions, or the evidentiary basis warranting approval. When such a perfunctory proposal is met with an equally cryptic approval couched in boilerplate language, the inevitable inference is that the statutory safeguard has been reduced to a hollow formality. There is no 9 ITA No. 5217 to 5222/Del/2025 indication that the approving authority examined whether the proposed additions were supported by incriminating evidence, whether they were legally tenable, or whether they were proportionate to the material found during search.
15. It is respectfully submitted that approval under Section 153D is a mandatory condition precedent for the assumption of jurisdiction to pass an assessment order under the search assessment scheme. The provision is designed as a vital supervisory control to prevent arbitrary or excessive assessments and to ensure that the drastic powers conferred in search cases are exercised with due circumspection. Where this jurisdictional precondition is not satisfied, the consequential assessment order is rendered void ab initio and cannot be sustained in law.
16. In addition thereto, the Hon'ble ITAT, New Delhi in Naveen Narang v. DCIT (ITA Nos. 3393 to 3395/Del/2024) has dealt with an identically worded approval dated 30.03.2022, which is pari materia to the approval granted in the present case. The Tribunal, after examining such approval, categorically held that where the approving authority merely proceeds on the basis of an implied certification/undertaking of the Assessing Officer regarding verification of seized material, without itself recording any satisfaction or demonstrating independent examination of the appraisal report, seized material or draft assessment order, such approval is vitiated for complete absence of application of mind. The ITAT further observed that there was not even a token indication that the approving authority had perused the draft assessment order or underlying material, and that such approval reduces the statutory safeguard under section 153D to a mere formality.
17. Applying the aforesaid ratio to the facts of the present case, it is submitted that the approval granted herein suffers from the same vice of mechanical exercise of power. The approving authority has merely endorsed the proposal of the Assessing Officer without recording any independent satisfaction, without demonstrating any examination of 10 ITA No. 5217 to 5222/Del/2025 seized material or appraisal report, and without even a minimal reflection of conscious application of mind. The approval, thus, is nothing but a mere certification or rubber stamp, which is impermissible in law. It is now well-settled that the requirement of approval under section 153D is not an empty ritual but a substantive safeguard intended to ensure a quasi-judicial scrutiny by a superior authority. As also recognised in judicial precedents compiled herein, including ACIT v. Serajuddin & Co. , where even absence of a token indication of examination of draft orders was held fatal, any approval granted in a mechanical manner vitiates the entire assessment proceedings. Therefore, the impugned approval, being devoid of independent application of mind and merely based on the AO's endorsement, is legally unsustainable, rendering the consequent assessment order bad in law.
18. Very recently, the Hon'ble ITAT, Delhi Bench in Manoj Kumar Singh v. DCIT (ITA No. 2237/Del/2025, order dated 19.09.2025) has examined an approval under section 153D granted in the context of assessments founded predominantly on electronic/digital evidence, and has unequivocally held that where the approving authority merely relies upon the certification of the Assessing Officer, without undertaking any independent verification of such evidence, the approval stands vitiated. The Tribunal specifically noted that the approving authority recorded that "you have certified about perusal and verification of data seized in electronic format...", which clearly demonstrates that without any independent examination, the AO's certification was accepted, leading to the inescapable conclusion that the approval was mechanical and based on borrowed satisfaction . The Hon'ble ITAT further emphasized that in cases involving digital evidence--where issues of admissibility, integrity and evidentiary value assume critical importance--the approving authority is duty-bound to apply its own mind and cannot merely act as a conduit for the AO's conclusions.
11ITA No. 5217 to 5222/Del/2025
19. Applying the aforesaid binding ratio to the present case, it is submitted that the approval impugned herein is identically worded and suffers from the very same infirmity as noticed in Manoj Kumar Singh. The approval reflects no independent consideration of the electronic evidence forming the basis of additions, nor does it record any satisfaction regarding its legal admissibility or correctness. Instead, it proceeds entirely on the basis of the Assessing Officer's certification, thereby clearly evidencing a carbon-copy, template-based approval and complete absence of independent application of mind. Such an approval is nothing but a borrowed satisfaction, rendered in a mechanical manner, and thus fails to meet the mandatory jurisdictional requirement of section 153D. Consequently, the assessment framed pursuant to such defective approval is liable to be held void ab initio.
20. Again, the Hon'ble ITAT, Delhi Bench in Kehar Singh v. DCIT (ITAs No. 2835 to 2841/Del/2024) has dealt with an identically worded, template-based approval under section 153D and held that such standardized language, even referring to electronic data which was not actually seized, clearly demonstrates that the approval was granted in a perfunctory manner without application of mind. The Tribunal observed that such generic observations reflect a pre-drafted format, mechanically applied without reference to the actual facts of the case.
21. In Dileep K. Gupta v. DCIT (ITA Nos. 148 to 153/Del/2025), the Hon'ble ITAT noted that the approval under section 153D was granted in a uniform and identical language across multiple years, clearly reflecting that the approving authority had relied upon a standardized, template format rather than undertaking any independent examination. The use of such repetitive and carbon-copy language in the approval was indicative of absence of application of mind and a mere mechanical endorsement of the draft assessment orders.
22. In the present case, the approval being founded on a pre-drafted template, delegated scrutiny, borrowed satisfaction, absence of 12 ITA No. 5217 to 5222/Del/2025 independent examination, and a demonstrable pattern of identical approvals across cases, fails to meet the statutory requirements in every material respect. The purported sanction is therefore non-est in law. Consequently, the assessment order passed pursuant thereto lacks jurisdiction, is void ab initio, and deserves to be quashed in its entirety.
23. That the Hon'ble Delhi High Court has laid down this principle in a series of landmark rulings. In PCIT v. Anuj Bansal [(2024) 466 ITR 251 (Del)], the Court categorically held that mechanical and omnibus approvals do not meet the statutory requirement under Section 153D. The Supreme Court, by dismissing the Revenue's SLP in the said case [(2024) 466 ITR 254 (SC)], has affirmed the legal correctness of this proposition.
24. A similar view was reiterated in PCIT-15 v. Shiv Kumar Nayyar [(2024) 467 ITR 186 (Del); 2024 SCC OnLine Del 6346], where the Delhi High Court quashed assessments in 43 cases approved in a single day, observing that such bulk disposal of files, bereft of individual analysis, is jurisdictionally untenable. The Court emphasized that approval must be granted separately for each assessee and for each assessment year after due consideration of the assessment material. In PCIT-7 v. Subash Dabas & Anr. [ITA 243 of 2023] and PCIT-7 v. Tirupati Buildings & Offices Pvt. Ltd. [ITA 447 of 2024], the Court continued to uphold this standard, invalidating template-based approvals that lacked case-specific reasoning. Further, in PCIT v. MDLR Hotels (P.) Ltd. [(2024) 166 taxmann.com 327], the Court observed that cryptic notings such as "seen and approved" without any substantive discussion do not satisfy the requirement of conscious approval and must be rejected as legally insufficient.
25. The same principle has been robustly endorsed by other High Courts. The Hon'ble Allahabad High Court, in PCIT v. Siddharth Gupta [(2023) 450 ITR 534 (All.)], quashed assessments where 123 cases were approved on a single day, calling the exercise "humanly impossible" and violative of statutory intent. This reasoning was 13 ITA No. 5217 to 5222/Del/2025 followed in PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] and PCIT v. Subhodh Agarwal [(2023) 149 taxmann.com 373 (All.)], where the Court emphasized that the approving authority must independently examine the facts and apply its mind to the draft orders before granting sanction. Similarly, the Hon'ble Orissa High Court in ACIT v. Serajuddin & Co. [(2023) 454 ITR 312 (Orissa)] held that a mere rubber-stamp approval, without any indication of scrutiny or deliberation, is impermissible in law. The approval, in that case failed to even mention whether the draft assessment orders were examined, and the High Court found the process to be devoid of legality. Notably, the Hon'ble Supreme Court dismissed the Revenue's SLP in that case as well [SLP (C) Diary No. 44989/2023], thereby giving binding force to the proposition.
26. The importance of meaningful, case-specific approval has also been underscored by the Hon'ble Supreme Court in broader statutory contexts. In Sahara India (Firm) v. CIT [(2008) 14 SCC 151], the Court held that statutory approvals by senior officers are intended as safeguards and must not become empty rituals. Before granting approval, the high-ranking authority is expected to have before it the material that forms the basis of the decision and must reflect the application of mind. Similar emphasis on the sanctity of procedural safeguards can be seen in Rajesh Kumar v. DCIT [(2007) 2 SCC 181] and Ashok Kumar Sahu v. UOI [(2006) 6 SCC 704], where the Supreme Court reiterated that perfunctory approvals defeat the very purpose of statutory oversight and violate principles of fairness and justice. In light of it is respectfully submitted that any approval under Section 153D that lacks independent, year-wise application of mind, and is instead rendered in a mechanical, template-driven, or bulk format is jurisdictionally flawed and liable to be set aside. The facts of the present case, wherein the same-day approvals were granted using carbon copy formats, squarely fall within the mischief sought to be addressed by the above precedents. The vitiation of the statutory safeguard under Section 153D is thus complete and undeniable.
14ITA No. 5217 to 5222/Del/2025
27. While considering the aforesaid submissions, the Assessee also places reliance upon the judgments of the Hon'ble ITAT, Delhi in Dheeraj Chaudhary v. ACIT [2025] 178 taxmann.com 360 (Delhi - Trib.) (para 22); Tavleen Resorts & SPA Pvt. Ltd. v. DCIT (ITA Nos. 3361 to 3366/Del/2024) (para 16.4); and Mysore Finlease Pvt. Ltd. & Ors. (ITA Nos. 8821 to 8826/Del/2019) (paras 9, 10 & 15)
28. In light of the aforesaid submissions, it is respectfully submitted that the impugned approval under Section 153D is ex facie vitiated by complete non-application of mind, having been granted in undue haste, within an implausibly short time frame, and without any independent examination of the draft assessment order, seized material, or appraisal report. The approval is founded entirely on the certification of the Assessing Officer, thereby reflecting impermissible borrowed satisfaction. Further, the use of standardised, template-based language--identical across multiple assessees and assessment years-- clearly establishes that the exercise was mechanical and devoid of any case-specific scrutiny. There is a conspicuous absence of reasoning, discussion, or even a minimal indication of independent satisfaction by the Approving Authority, thereby reducing the statutory safeguard under Section 153D to a mere ritualistic formality.
29. Such a fundamental failure to adhere to the mandate of law strikes at the very root of jurisdiction and is not a curable procedural irregularity but a substantive illegality. The prejudice caused to the Assessee is grave and far-reaching, as the entire assessment stands founded on an invalid and non-est approval. The consistent judicial position, including the decisions relied upon by the Assessee, unequivocally holds that where the statutory requirement of prior approval is not fulfilled in its true spirit, the resultant assessment cannot be sustained. Accordingly, the impugned assessment order, having been passed in breach of a mandatory jurisdictional condition, is liable to be quashed in its entirety as being void ab initio."
5. On the other hand, Ld. DR submitted s under: -
15ITA No. 5217 to 5222/Del/2025 "Whether Additional Commissioner/Joint Commissioner can actively participate in the assessment proceedings and whether such an act of the Assessing Officer tantamount to order passed under influence and direction of superior Officer and therefore is bad in law."
Before going in to the issue it is imperative to understand the importance of section 153D in the assessment proceeding of search cases. reproduce section 153D of IT Act 1961. Section 153D of the Act, as applicable during the relevant assessment year, mandates that no order of assessment or reassessment shall be passed by an assessing officer except with prior approval of joint commissioner of income Tax.
The purpose and object of section 153D is to provide a safeguard mechanism and ensure proper application of mind by a senior officer before finalizing assessments involving search cases, thereby preventing arbitrary or unjustified additions/disallowances. The requirement of approval u/s 153D is mandatory and not merely directory in nature.
This Approval has been mandated vide Instruction of CBDT dated 15.07.2022, which states that no order under section 143(3)/144 of the Act shall be passed by an Assessing Officer in central charge below the rank of Joint Commissioner except with the prior Approval of Additional Commissioner/Joint Commissioner.
The appellant relied on Findoc Finvest Pvt Ltd. Vs DCIT in CWP/9658/2024 (Punjab & Haryana High Court).
The facts of the case in Findoc Finvest Pvt Ltd. Vs DCIT in CWP/9658/2024 (Punjab & Haryana High Court) Order dated 07-03-2025 are as under-
➤ Assessment was completed for A.Y.2022-23 at an income of Rs. 332.8 Cr against returned income of Rs. 25.2 Cr. The case was centralized with Central charge, as a FT&TR reference was made during CASS scrutiny proceedings calling for information from foreign Jurisdiction.
One of the Grounds raised by the Assessee in Writ -
The Assessee took the ground, "Whether in the facts and circumstances of the case, the impugned assessment order is vitiated an account of illegal and invalid approval granted by Respondent No. 2, which tantamount to abdication of power/jurisdiction otherwise vested in 16 ITA No. 5217 to 5222/Del/2025 respondent no. 1 and this the same is liable to be quashed on this ground alone?"
The Assessee also challenged the order on other grounds that adequate opportunity has not been given and also that the order was time barred. One of the arguments taken by the AR of the Assessee was that Instruction of CBDT dated 15.07.2022 is contrary to provisions of section 119 of the Act as it required the Assessing Officer to carry out assessment of the Assessee in a particular manner and therefore the Instruction would interfere with the quasi-judicial power of the Assessing Officer would be post to abdicate his quasi-judicial function in favour of Superior Officers. However, the Hon'ble High Court has held para 20 of their order that the Instruction of CBDT dated 15.07.2022 comes within the ambit of power available to CBDT as it is for efficient management of assessment work and collection of revenue. However, in Para 21 to 24 of the order, the Hon'ble High Court has held the order of the Assessing Officer to be bad in law. The Hon'ble Court has held that the Assessing Officer would have to exercise its own discretion to reach a conclusion and would not be influenced by any other officer. In view thereto, the Hon'ble Court found force in the contention raised by the learned senior counsel for the petitioner that the concerned Assessing Officer was influenced by the consultation and discussion with his superior officers. In fact, the order passed by the Assessing Officer appears to have been already prepared even before the reply was received as the consultations have been conducted on 26.10.2023, 11.01.2024 and 14.03.2024 by the Assessing Officer as mentioned by him in the order itself. Again, after the reply was received and the order was passed by the Assessing Officer, the same has been approved by the Joint Commissioner. As such, the Court held that the Joint Commissioner has in fact comprehensively and actively participated in the making of the assessment order while his role was only limited to the approval of the assessment order in terms of the CBDT Instruction. Thus, the order was held to be vitiated in law, 17 ITA No. 5217 to 5222/Del/2025 The power or duty to approve assessment orders/ reopening under section 148 etc. have been statutorily provided in most of the cases.
(i) Under section 144A of the Act, power has been given to Joint Commissioner to issue directions. However, the section itself says that as per this provision no direction which is prejudicial to the assessee is to be issued before an opportunity is given to the assessee to be heard.
Therefore, the Act provides that where the supervisory authority is taking the view adverse to a taxpayer then he has to be heard. However, the Explanation to the Section carves out an exception that where the Range Head is giving directions for lines of investigation, then no opportunity to the taxpayer needs to be given.
(ii) In the case of Section 148, the provision for approval by supervisory authority has been provided in the Act/faceless assessment scheme.
(iii) The power to Approve assessment order in the instant case has been authorized not by statue but by CBDT Instruction dated 15.07.2022 This CBDT Instruction has been held as intra vires by Hon'ble Court. In the instant case, it is obvious that there has been consultation between the assessing officer and the JCIT. It can't be inferred that the supervisory authority has usurped the jurisdiction of the AO and discretion of the AO. The JCIT has not given any directions to the AO which will prejudice the Assessee. The discussion between these two would be in the realm of lines of investigation. Furthermore, the Joint Commissioner has a responsibility to fully comprehend the issues in any case that they approve. Given the workload, especially in Central Charges where over 1,000 cases may arise in a fiscal year, it is impractical to expect the Joint Commissioner to understand and approve numerous cases in a single day without prior discussions. Assessee often extend assessment proceedings until the deadline, making it essential for the approving authority to have prior discussions to grasp each case's details fully. Therefore, internal procedures involving discussions with the Joint Commissioner on different dates are necessary to ensure the approving authority has a comprehensive understanding before granting approval.
18ITA No. 5217 to 5222/Del/2025 Further, it is important to note that in addressing whether an AO can consult with the JCIT during assessments without relinquishing their authority, the Hon'ble Punjab & Haryana High Court referred the case of Anirudhsinhji Karansinhji Jadeja & Anr. v. State of Gujarat. This 1995 Supreme Court case pertained to the Terrorist and Disruptive Activities (Prevention) Act, 1987 (TADA), which falls under the Ministry of Home Affairs and is unrelated to income tax matters. The reliance on this case is questionable because TADA's legal framework and objectives differ significantly from those of the Income Tax Act.
The Income Tax Act contains many provisions for granting approval as discussed in above paragraph, which provides for guidance by Supervisory Authority to the Assessing officer in the assessment proceedings. Last but not the least, the most critical question that arises for consideration is whether an approval should be granted after a comprehensive understanding and due application of mind, or whether it can be a mere mechanical formality. In the present case, the Hon'ble High Court has explicitly observed that the role of the JCIT should be limited strictly to granting approval. However, the Court has treated any discussions or deliberations preceding such approval as an unwarranted interference with the discretionary powers vested in the AO In this regard, it is important to underscore that the Hon'ble Supreme Court has consistently held that the approval of an assessment order by the Range Head (CIT/AddI. CIT) cannot be mechanical or perfunctory, rather, such approval must be the outcome of a meticulous application of mind, which can only come after deliberation and discussion between AO and range head. Judicial forums have time and again emphasized this requirement, and numerous courts and benches of the ITAT have deprecated mechanical or routine approvals lacking independent application of mind.
A number of judicial precedents reaffirm that the absence of proper application of mind while granting such approvals has rendered the corresponding assessment orders invalid. The key judgments in this area include:
19ITA No. 5217 to 5222/Del/2025
1. ACIT vs Serajuddin & Co. [2023] 150 taxmann.com 146 (Orissa) -
SLP against this judgment has been dismissed by the Hon'ble Supreme Court.
2. Shreelakha Damani vs DCIT [ITA No. 4061/Mum/2012) Bombay High Court
3. MBM India Holdings vs DCIT [2019] 71 ITR (Trib.) 451 (Delhi).
4. Vrushali Sanjay Shinde vs DCIT [2023] 154 taxmann.com 324 (Mumbai-Trib).
5. Sanjay Duggal vs ACIT [ITA No. 1813/Del/2019).
6. PCIT vs Anuj Bansal-466 ITR 254 & 251-Delhi HC-SLP Dismissed
7. PCIT vs Shiv Kumar Nayyar-467 ITR 186.
8. PCIT vs Subhash Dabas - [ITA No. 243/2023) Order dated 17.05.2024.
9. Daze Construction Pvt. Ltd. vs ACIT - [ITA Nos. 594 to 598/Del/2023] Order dated 30.09.2024, In addition, a common judgment delivered by the ITAT, Delhi Bench in a series of appeals-ITA Nos. 3302, 3304, 3305, 3306, 3333, 3334, 3332, 3352 & 3314/Del/2024-set aside the assessment orders on the ground that the approval granted by the Addl. CIT was mechanical in nature. The Tribunal noted the absence of any material on record to indicate meaningful participation or thoughtful involvement of the approving authority during the assessment proceedings. The relevant portion of the judgement is reproduced hereunder:
"...15. As noted in the instant case, the approval memo is totally silent on the issues involved and has granted omnibus approval without any thoughtful process being discernible. The Order Sheet has not docketed any interaction or directions of the Lal. Addl. CIT in the course of assessment either. There is no other material to show involvement of the superior authority in the course of assessment.
16. in the first para of the approval memo, it is mentioned that draft assessment order has been received for approval and in the second para of the approval memo, it was stated that the draft assessment order has been approved. Nothing else is discernible. Such mechanical approval 20 ITA No. 5217 to 5222/Del/2025 cannot be countenanced in law in the light of judicial dicta available. Applying the ratio of judgments delivered as noted above, the assessment order based on ritualistic approval stands vitiated and thus quashed...".
Furthermore, it is also significant to mention a noteworthy judgement in this matter which rendered by the Hon'ble Orissa High Court in the case of ACIT vs Serajuddin & Co. & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 1530 of the Act. The Orissa High Court made wide ranging observations towards the manner and legality of approval under s. 1530 of the Act. The Hon'ble High Court inter-alia observed that the approval under s. 1530 of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the Court finds that the approval is granted mechanically. it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is no even a token mention that draft order has been perused by the Ld. Addl. CTT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves 21 ITA No. 5217 to 5222/Del/2025 as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgement in the case of ACIT vs Serajuddin & Co. Kolkata was dismissed as reported in (2024) 163 taxmann.com 118 (SC).
Hon'ble Punjab & Haryana High Court in the case under consideration i.e. Findoc Finvest Pvt Ltd, has disregarded already established principles by Hon'ble Supreme Court and has upturned the existing settled issue that the approval cannot be mechanical or perfunctory.
In view of the above discussion, it is clear that observation that the Assessing Officer has abdicated his authority is misplaced and wrong, and the order has been passed under the influence of directions of the Joint Commissioner, who comprehensively and actively participated in the making of the assessment order, while his role was only limited to the approval of the assessment order, whereas, the approval by the Joint Commissioner as per CBDT Instruction dated 15.07.2022 pre-supposes consultation, which includes discussion, which are sine-qua-non for according approval."
6. Before deciding the legal issue in dispute, we may gainfully reproduce the approval u/s. 153D of the Act, dated 28/02/2024 which read as under: -
22ITA No. 5217 to 5222/Del/2025 23 ITA No. 5217 to 5222/Del/2025
7. Considered the rival submissions and material placed on record. We have especially perused the approval granted u/s. 153D of the Act and the case laws cited by the ld. AR in the paper book. We observed that the Co-ordinate Bench has decided the similar issues in the case of Pack Plast India Pvt. Ltd. vs. DCIT, ITA No. 5079 to 5081/Del/2025 for A.Y. 2014-15 to 2017-18 dated 04.02.2026 the relevant paragraph of which is reproduced as under:
24ITA No. 5217 to 5222/Del/2025 "7. The ground no. 4, 5 and 6 pertains to the non-following of provisions of Section 153D of the Act as the sanction allegedly having been granted in a mechanical manner and without independent application of mind, rendering the assessment order bad in law.
8. We have heard the Ld. AR for the Assessee and Ld. DR for the Revenue. The Ld. AR at the very outset, submitted that the impugned order is not legally sustainable because the procedure laid down u/s 153D of the Act has not been followed and the approval was granted in mechanical manner and therefore, confined his arguments to the legal ground Nos. 4 and 5 pertaining to Section 153D of the Act.
9. The assessee has also filed written submissions wherein the assuming of the jurisdiction u/s 153C of the Act was alleged to be vitiated at the very inception on the ground that the satisfaction recorded by the assessing officer of the searched person and the Ld. A.O. of the assessee were patently mechanical, non-speaking and contrary to the mandatory requirement embedded in Section 153C(1) of the Act. Therefore, both the satisfaction notes demonstrably failed to meet their statutory threshold because the searched person's AO has not established as to how the document allegedly seized can be said to "belong to" the assessee and the jurisdictional AO has wholly failed to record any finding that material has any bearing on the assessee's income. Secondly, he has argued that Hon'ble Delhi High Court in Saksham Commodities Ltd. Vs. ITO, [2024] 161 taxmann.com 485, order dated 09.04.2024 has expounded upon the meaning of the expression used in Section 153C of the Act i.e. "having a bearing on the determination of the total income", it is submitted that the Hon'ble Delhi High Court in the above case came to the conclusion that mere discovery of books, documents or assets would not justify the initiation of proceedings u/s 153C of the Act and the jurisdictional assessing officer must be satisfied upon receiving of the said material that those material would have an impact on the determination of total income of the assessee. Thirdly, It is argued that the bare perusal of the satisfaction note would show that the Ld. AO has blatantly erred in not recording the satisfaction as per the mandate of the law. The Ld. AO has failed to determine as to how the information gathered during the search has a bearing on the 25 ITA No. 5217 to 5222/Del/2025 determination of total income of the assessee. Fourthly, without there being any actual document belonging to the appellant, the Ld. AO have proceeded to frame the assessment agaisnt the assessee on the basis of assumptions and presumption on incorrect facts.
Fifthly, the exercise of the power u/s 153C of the Act, to assess or reassess six preceding assessment years or even the relevant assessment year is not an automatic power and the jurisdiction can be invoked only when the AO is satisfied that the seized books, documents or assets have bearing on the determination of the total income of the particular year which is sought to be reopened (Saksham Commodities Ltd. (supra) relied).
10. Sixthly, The satisfaction note failed to indicate the quantum of undisclosed income for the relevant assessment year and instead generically covers multiple years in a consolidated manner and as such there is no clear identification of seized material corresponding to each assessment year, making the AO's satisfaction illusory and legally untenable. In that regard another recent judgment of the Hon'ble Delhi High Court in Pr. CIT (Central)-3 vs. Ridgeview Construction Pvt. Ltd. ITA No. 618/2019 & 621/2019 order dated 13.02.2025 is relied. In the said case it was held that it is incombent upon the AO of the non-searched assessee to form a prima facie opinion that such material forwarded to him by the AO of the searched person indicated undisclosed income or was likely to impact the assessment. It was further held that the seized material must relate to undisclosed income and must meaningfully connect with the assessment year sought to be reopened. Thus, it was held that the satisfaction is not a formality, and as such no proceedings under section 153C of the Act can be triggered unless the AO of the other person independently evaluates and finds that the material incriminating for the particualr assessment year.
26ITA No. 5217 to 5222/Del/2025
11. Seventhly, It was also argued by the Ld. AR for the assessee that the approval u/s 153D of the Act was mechanical due to non- application of mind by the authority which stand proved from the fact that in the assessment order, there is no mention of approval taken u/s 153D of the Act. The Ld. Counsel further pointed out that the copy of the approval placed on record during the arguments as paper book no. 2 would show from the contents of para no. 2 that the approving authority has not applied its mind before according approval as it has not perused any of the seized document/material. It is therefore argued that on this sole ground the case of the Revenue falls and assessment order is liable to be quashed.
12. The Ld. DR on behalf of the Revenue has supported the judgment of the Ld. Lower authorities stating that the ld. CIT(A) has categorically elaborated the manner and procedure adopted by the approving authority for granting approval u/s 153D of the Act and the legislative requirement of the said provision has been fulfilled. It is therefore argued that the approval in this case has been given separately for each year and is not mechanical and the assessment proceeding has been carried lawfully and appeal is liable to be dismissed.
13. We have considered the rival submission and examined the record. The separate approval granted dated 28.03.2024 and copy of approval of the each case is extracted as below:
27ITA No. 5217 to 5222/Del/2025 28 ITA No. 5217 to 5222/Del/2025 29 ITA No. 5217 to 5222/Del/2025 30 ITA No. 5217 to 5222/Del/2025
14. From the contents of para 2 of the approval in each case similarly worded shows that the approval is accorded on the basis of detail discussion held with the AO from time to time and also on the facts mentioned in the appraisal report and relevant seized documents perused by the AO had not by the approving authority. The word used are "relevant seized document perused by you and brought to the notice of undersigned". Now the question before us is whether the wording of the approval as noted above would satisfy the requirement of Section 153D of the Act?
15. The Commissioner of Income Tax, Central Circle, Central Range- 7, New Delhi while granting approval, needed to examine all the material including the assessment records, full appraisal report and seized material pertaining to each assessment year with reference to the addition proposed by the AO for which approval is sought and the draft assessment order and after considering all the material should accord the approval. From the perusal of the approval letter as reproduced above, it is seen that similarly worded and same dated approval was given without perusal of the seized material.
16. In that regard, we find that the Hon'ble Delhi High Court in the case of PCIT vs. Shiv Kumar Nayyar reported in 163 taxmann.com 9 dated 15.05.2024 in ITA No. 285/2004 (CMP No. 28994/2024) was pleased hold that "for granting approval u/s 153D of the Act, the approving authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" seperately", it was further held that "approval" as contemplated u/s 153D of the Act requires the approving authority i.e. Joint Commissioner to verify the issues raised by the AO in draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the AO or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power.
31ITA No. 5217 to 5222/Del/2025
17. We also noticed that the Hon'ble Allahabad High Court in case of PCIT v. Sapna Gupta [2023] 147 taxmann.com 288 (Allahabad) was pleased to hold that the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "seen" or "approved" will not satisfy the requirement of the law. We further noticed that Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin & Company (2023) 150 taxmann.com 146 (Orissa), it was held that while elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it needs the requirement of the law. It was further held that this is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein: "(i) the Assessing Officer should submit the draft assessment order "well in time". (ii) the final approval must be in writing; (iii) in fact that approval has been obtained, should be mentioned in the body of the assessment order." Regarding the above, the observations of the Hon'ble Orissa High Court in para 22 of the judgment can be quoted with profit and extracted below:
"As rightly pointed out by learned counsel for the Assessee there is not even a token mention of the draft orders having been perused by the Additional CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like 'see' or 'approved will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (7) the AO should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind: (i) the final approval must be in writing; (iii) The fact that approval has been obtained, should be mentioned in the body of the assessment order."32
ITA No. 5217 to 5222/Del/2025 The SLP filed against the aforesaid judgment in the case of ACIT vs. Sirajjudin & Co. (supra) was dismissed by the Hon'ble Supreme Court as reported in (2024) 163 taxmann.com 118 (SC).
18. In the case of PCIT vs. Anuj Bansal, ITA No. 368/2023 dated 13.07.2023, it was reiterated that the exercise of powers u/s 153D of the Act cannot be done mechanically. The grant of approval u/s 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. Further, we noticed that the Ld. Co-ordinate Bench in the case of DCIT vs. Ramesh Sharma, ITA No. 6881/Del/2014, order dated 23.01.2026 regarding mechanical granting of the approval u/s 153D of the Act which relevant part is reproduced as under:
"8. Significantly, the Hon'ble Orissa High Court in the case of ACIT vs Serajuddin & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act. The Orissa High Court made wide ranging observations towards the manner and legality of approval under s. 153D of the Act. The Hon'ble High Court inter-alia observed that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is no even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the 33 ITA No. 5217 to 5222/Del/2025 assessment order. The SLP filed against the aforesaid judgement in the case of ACIT vs Serajuddin & Co. Kolkata was dismissed as reported in (2024) 163 taxmann.com 118 (SC).
9. The ratio of judgement delivered in the case of ACIT vs Serajuddin & Co. Kolkata; PCIT vs Anuj Bansal; PCIT vs Shiv Kumar Nayyar; and PCIT vs Subhash Dabas (supra) has held in chorus that the approval granted under s. 153D of the Act, if granted mechanically, will vitiate the assessment order itself. Hence, applying the ratio of judgements delivered as noted above, the assessment 16 order based on ritualistic approval stands vitiated and thus quashed by allowing additional Ground of appeal of the Assessee."
19. On perusal of the aproval u/s 153D of the Act and the assessment order, we have noticed that there is no mention of taking of the approval u/s 153D of the Act in the assessment order which has violated the para 9 of chapter 3 of valume II (Technical) manual of office procedure issued by CBDT in February 2003, in exercise of its powers u/s 109 of the Act, which were discussed and approved by Hon'ble Orissa High Court in Sirajuddin & Co. Case (supra) extracted below as under:
"9. Approval for assessment-An assessment order under Chapter XIV-B can be passed only with the previous approval of the range JCIT/ADDL.CIT (For the period from 30-6-1995 to 31-12-1996 the approving authority was the CIT.). The Assessing Officer should submit the draft assessment order for such approval well in time. The submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering letter filed in the relevant miscellaneous records folder. Due opportunity of being heard should be given to the assessee by the supervisory officer giving approval t the proposed block assessment, at least one month before the time barring date. Finally once suc. approval is granted, it must be in writing and filed in the relevant folder indicated above after making a due entry in the order-sheet. The assessment order can be passed only after the receipt of such approval. The fact that such approval has been obtained should also be mentioned in the body of the assessment order itself."
20. Further, the approval granted by the concerned authority in these cases as noted by us was not on the basis of perusal of the material by the approving authority as the approving authority has not perused the seized material personally and merely relied upon the perusal of the seized documents by the AO/ applicant and there is no personal satisfaction of the officer granting approval which makes the said approval u/s 153D of the Act as mechanical having 34 ITA No. 5217 to 5222/Del/2025 been granted without independent satisfaction and non-application of mind.
21. Thus, the assessment order based on mechanical approval stand vitiated and is hereby quashed by allowing the ground no. 4 and 5 of appeal taken by the assessee."
8. Further, we observed that the Co-ordinate Bench has decided the similar issues in the case of Manoj Kumar Singh vs. DCIT, ITA No. 2237/Del/2025, A.Y. 2012-13, the relevant paragraphs of the order is reproduced as under:
"3. On hearing both the sides on this issue, the relevant facts that transpire are that assessee's return of income was selected for scrutiny and assessment proceedings u/s 143(3) of the Act were concluded on 30.03.2015 and assessed the income of Rs.22,05,420/- and thereafter a search and seizure operation was carried out on 14.10.2020 in the case of assessee, his associates and various parties. During the course of search proceedings, it was allegedly established that the assessee entered into unaccounted cash transactions with the various person/entities and accordingly proceedings u/s 153A of the Act was initiated which were responded by the assessee by filing return on 22.11.2021 and subsequently mandatory notices were issued. The assessment order speaks that during the course of search proceedings certain Excel files amongst others were found and seized. Further, pen- drive were seized from the residence of Shri Devesh Singh, a key employee of Shri Manoj Kumar Singh, containing Excel files allegedly containing the details of cash transactions. A laptop was found and seized from the residence of Shri Devesh Singh also allegedly had excel files having details of cash transactions. A pen drive was found and seized from the possession of Shri Chander Prakash, employee of M/s Singh and Associates which also contains excel file recording allegedly cash transaction. Printouts found and seized from the residence of Shri Devesh Singh of the said excel files were also considered to be 35 ITA No. 5217 to 5222/Del/2025 incriminating material. Then, diaries were impounded from office of M/s. Singh and Associates, which were also impounded as per provisions of section 131(3) of the Act and allegedly these diaries contained the same transactions as were given in the excel sheets. The said entries given in the excel sheet pertained to period 2009 to 2020 wherein the assessment order has also mentioned of the fact of recovery of cash in October 2019 by the police authority from Shri Devesh Singh and from his phone certain data in the form of excel files were extracted and printouts were impounded. The assessment order men oned that all the excel sheets and etc. were confronted to Shri Devesh Singh in his statement recorded on oath u/s 132(4) of the Act.
4. Now, a perusal of the assessment order shows that extensively electronic evidence alone have been relied including some forensically imaged data seized from the phone of assessee. A er going through the assessment order, it appears that based on excel files and electronic evidences and the statements recorded, the AO has drawn conclusions leading to the addi ons of Rs.4,01,14,250/- u/s 28 of the Act, Rs.51,51,000/- u/s 69A of the Act and Rs,.29,06,780/- u/s 69AC of the Act. The assessee has challenged the same before the ld. CIT(A), where the assessee had succeeded partly as the Ld. CIT(A) has restricted the addi ons u/s 69C of Rs.62,75,991/- and accordingly both sides are in appeal.
5. Then from the copies of approval made available at pages 3-12 of the paper book, we observe that the approval for all the AYs for which assesse was show caused for search assessment u/s 153A, are similar in format and content. As for further convenient discussion, the approval given u/s 153D for AY 2013-14 is scanned and reproduced below;36
ITA No. 5217 to 5222/Del/2025
6. At the same time it is relevant to take note of fact as to how, this issue has been considered and dismissed by the ld. CIT(A) by following observations in para 22 of the order, which is reproduced as under:-
"22. Ground No. 2 and Additional ground.2: The appellant challenges the assessment as being in violation of section 153D, alleging that the approval granted by the JCIT was mechanical and lacked application of mind. The AO explicitly stated that the assessment order was passed with the prior approval of the JCIT, Central Range-8 as documented in F.No.JCIT/CR-8/153D/2021- 22/145 dated 30.03.2022. The provisions of section 153D do not require the JCIT to record satisfaction in any specific format or language. The appellant has failed to substantiate its claim of 37 ITA No. 5217 to 5222/Del/2025 mechanical approval. No evidence was provided to demonstrate non-application of mind by the JCIT. The approval under section 153D was validly granted. This ground is dismissed."
7. Ld. Sr. Counsel has submitted that the approval has been granted in consolidated manner and taking the Bench across pages 1 to 2 of the paper book, having letter seeking approval and pages 3-12 of PB, the impugned approval letters, it was submitted that separate approvals for AY 2011-12 to AY 2020-21 were issued u/s 153D of the Act on 30.03.2022 and all are verbatim similar, which shows there was non- application of mind and in a routine manner, the approvals were granted. The ld. Sr. Counsel submitted that in fact, the said approving authority has granted numerous approvals u/s 153D of the Act on 30.03.2022 and a list of same has been provided at pages 13 and 14 of the paper book. The ld. Sr. Counsel relied on a catena of decisions of Co-ordinate Benches at Delhi and decision of Hon'ble Delhi High Court in the case of Pr. CIT vs Shiv Kumar Nayyar [2024] 163 taxmann.com 9 (Delhi) and Hon'ble Supreme Court in the case of M/s Serajuddin and Company 163 taxmann.com 118, which has sustained decision of Hon'ble Orissa High Court, to submit that the law is now settled that approval granted u/s 153D of the Act should exhibit application of mind and cannot be a routine feature of completing the search assessment.
8. The ld. DR has opposed the aforesaid contentions and has submitted that approval granted is administrative in nature and there is no strict format for grant of the approval. It was submitted that approval mentions specific fact about the draft assessment order "as amended"
being approved and further that evidences including electronic evidences were considered. It was further submitted that the procedure of search assessment includes active participation of the approving authority and therefore approving authority can be presumed to be sufficiently aware of the incriminating materials. It was submitted that particularly in the case of the present assessee, the approval was sought on 28.03.2022 and approval has been granted on 30.03.2022, thus, there was sufficient opportunity with competent authority to further go into the draft assessment orders.38
ITA No. 5217 to 5222/Del/2025
9. However, leaving apart the contentions of ld. Sr. Counsel that tenor of approval does not show application of mind or that multiple approval were granted so to presume that there was not application of mind what we find after taking into consideration, the copy of approval granted for relevant assessment years, is that approving authority has mentioned that the impugned letter of approval that the approval has been granted to the draft assessment order 'as amended'. This phrase 'as amended' is quite ambiguous, and actually nothing could be explained or justified by ld. DR for using these words and thus rather than helping the case of Revenue and Ld. DR, it puts the case of the Revenue in docks as there is nothing in letter dated 28.03.22 by the AO to mention that at any stage before 28.03.22, there was any communication between the two authorities. The AO merely mentions that cases of assessee for AYs 2011- 12 to 2021 are being put up for approval. It does not even mention of forwarding records and that any previous direction on the drafts is given effect. There is no mention that any time between this letter dated 28.03.2022 or 30.03.2022, the two authorities have gone through the draft assessment order afresh, so as to justify the use of words 'as amended' in the approval letter.
10. It can be further appreciated from the material on record and discussion aforesaid that this is a case where excessive reliance has been placed on the electronic/digital evidence, and the approving authority does not mention in the approval letter that electronic evidences were examined and were tested on principles of law governing the relevancy and admissibility of electronic evidences seized during search or analyzed later on. Rather, the approving authority by mentioning para- 3 of the approval letter that "you have certified about perusal and verification of data seized in electronic format through working copies having certified hash values as that of original hard drives/CDs/pen drives/mobile data & any other electronic data" admits that without any independent verification, the AO's certification was relied to accept that the electronic evidences were collected and relied in accordance with law.
39ITA No. 5217 to 5222/Del/2025
11. The ld. Sr. Counsel has pointed out that so far as the addition of Rs.2,69,06,780/- is considered, which has been restricted partly by the ld. CIT(A), from the assessment order, even the CIT(A) was unable to make out as to how this amount of Rs.2,69,06,780/- was arrived on the basis of electronic evidences and allegedly contains various payments have been made for personal expenses. In this regard, if we appreciate the order of the ld. CIT(A), we find that even a remand report was called from the AO to explain the rational of additions but no clarification was given by the AO and the relevant findings of the ld. CIT(A) in para 18.4 is reproduced as under:-
"As per the first remand report, AO stated that the rationale of additions made has been already mentioned assessment order. Further, letter was issued for seeking report for clarifications on the basis of addition from AO vide F. No. 243/RR/CIT(A) - 30/ Delhi/2024-25/207 dated 17.10.204, but the clarifications were not given by AO till date. In para 33 of the assessment order, the year-wise details of unexplained expenditure in cash is given which is without any detailed working and bifurcation. The said table is extracted here as under from AO's order: -
Assessment Year Amount (in Rs.)
2011-12 6,99,67,910/-
2012-13 2,69,06,780/-
2013-14 11,87,34,210/-
2014-15 19,45,74,000/-
2015-16 4,84,67,930/-
2016-17 1,98,61,880/-
2017-18 1,89,44,720/-
2018-19 7,59,26,530/-
2019-20 6,65,35,410/-
2020-21 9,65,03,710/-
40
ITA No. 5217 to 5222/Del/2025
2021-22 63,39,100/-
Total 74,27,62,170/-
Since, the working is not available on records till date, I am constrained decide on the basis of available facts on record. Even appellant denied have received any bifurcation of the same. Thus, the only recourse is to rely and peruse the available records.
ii. As per assessment order, the AO made an addition of Rs. 2,69,06,780/-based on excel data 'MyData xIsx' and 'Sunnyxisx' which contain various of payments have been made for personal expenses. Appellant contended that there is no basis of calculation of unexplained expenditure, which is correct."
11.1 This shows that AO has made certain conclusions which are not even substantiated from the analysis of evidences and prima facie non-comprehensible, and same could have escaped the attention of authority granting approval u/s 153D of the Act, if there was non- application of mind to the contents of draft assessment order.
12.In this context, we may also note that Digital Evidence Investigation Manual,2014 (hereinafter called 'the Manual') of the Central Board of Direct Taxes provides a detailed procedure with regard to collection of digital evidences and the manner in which the same has to be relied during the assessment proceedings. The Manual is self contained code where Board has consciously and very articulately examined various facet of collection, examining and reproducing the digital evidences, on the basis of judicial decisions and provisions of law as enshrined in Evidence Act or Information Technology Act. To bolster this conclusion of ours, we would like to observe that the CBDT in its Manual while feeling the relevance of the question with regard to admissibility of electronic evidences and taking note of sea change in the information and technology used in the business transactions has observed as to how in a relevant statutory provisions have been made with regard to recognizing electronic record as evidence and as for convenience we reproduce the aforesaid from para 1.1 of the Manual:-
41ITA No. 5217 to 5222/Del/2025 "The law of the country has also taken cognizance of this reality. The Information Technology Act, 2000 has been enacted recognizing electronic records as evidence, governing access to and acquisition of digital and electronic evidence from individuals, corporate bodies and/or from the public domain. By way of this enactment, amendments were also brought in other laws like Indian Penal Code, Indian Evidence Act and Criminal Procedure Code, (Cr.PC). The Income-tax Act, 1961 has also been amended thrice by way of Finance Act 2001, Finance Act 2002 and Finance Act 2009 thereby according recognition to electronic evidence, facilitating access to them and giving when need be, powers to impound and seize them. By Finance Act, 2001, Clause (22AA) was inserted in Section 2 to provide that the term "document" in Income Tax Act, 1961, includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000. By Finance Act, 2002, Clause (iib) was inserted in Sub-Section (1) of Section 132 requiring any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-
section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; and by Finance Act, 2009, clause (c) was inserted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service."
13. Further it can be observed that in para 1.5 the objectives of the Manual are mentioned which states that the aim of this Manual is to apprise the user of "basic legal provisions relating to digital evidence in Income-tax Act and other laws including Information Technology Act and Indian Evidence Act."
14. Then, we would like to reproduce from this Manual as to how the Board perceived the relevance of various provisions of the different 42 ITA No. 5217 to 5222/Del/2025 statutes and how specifically referred to the provisions of section 65A and 65B of the Indian Evidence Act, 1872 and directed that "accordingly while handling any digital evidence, the procedure has to be in consonance of these provisions.". The relevant part in para 2.7.3 is as follows:-
"2.7.1 The Information Technology Act-2000 has been enacted to provide legal recognition to transactions carried out by means of electronic data interchange and other means of electronic communication, which involve the use of alternatives to paper-based methods of communication and storage of information. The same enactment has also brought amendments in the Indian Penal Code, 1861, the Indian Evidence Act, 1872, the Bankers' Books Evidence Act, 1891 and the Reserve Bank of India Act, 1934.
2.7.2 As far as Income-tax Act, 1961 is concerned, it has been amended thrice by way of Finance Act, 2001, Finance Act, 2002 and Finance Act, 2009 respectively.
• By way of first amendment, provisions of sub-section (12A) of section 2 was inserted to give legal recognition to the books of account maintained on computer and sub-section (22A) to section 2 was inserted to provide definition of 'document' which included "electronic record" as defined under Information Technology Act 2000.
Under Information Technology Act 2000 an electronic record has been defined to include data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro file. This definition of electronic record is wide enough to cover person in possession of computer, storage device, server, mobile phone, i-Pod or any such device.
The above amendment has thus specifically given recognition to electronic record as admissible evidence at par with a 'document'. Further, the powers to impound/copy a document 43 ITA No. 5217 to 5222/Del/2025 during a survey action u/s 133A and power to seize a document during a search and seizure operation has also been automatically extended to electronic records as a result of the amendment.
• By way of second amendment, provisions of section 132
(l)(iib) were inserted facilitating access to the electronic devices including computer, containing document or books of accounts in the form of electronic records by making it obligatory for the person under control of such device to afford the necessary facility to inspect such records.
By Finance Act, 2009, clause (c) was inserted in sub-section (1) of Section 282 providing that service of notice in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000) will constitute valid service.
2.7.3 Under Indian Evidence Act there are several references to documents and records and entries in books of account and their recognition as evidence. By way of the THE SECOND SCHEDULE to the Information Technology Act Amendments to the Indian Evidence Act have been brought in so as to, incorporate reference to Electronic Records along with the document giving recognition to the electronic records as evidence.
Further, special provisions as to evidence relating to electronic record have been inserted in the Indian Evidence Act, 1872 in the form of section 65A & 65B, after section 65. These provisions are very important. They govern the integrity of the electronic record as evidence, as well as, the process for creating electronic record. Importantly, they impart faithful output of computer the same evidentiary value as original without further proof or production of original. Accordingly, while handling any digital evidence, the procedure has to be in consonance of these provisions.
44ITA No. 5217 to 5222/Del/2025 2.7.4 Under Indian Penal Code several acts of omission and commission relating to various documents and records are treated as offences. By way of the THE FIRST SCHEDULE to the Information Technology Act, Amendments to the Indian Penal Code have been brought in, so as to incorporate reference to Electronic Records along with the document."
15. Now, the Manual very categorically lays down the importance of chain of custody and how the Manual lays down procedure to be followed by authorities for reporting and analysis of digital evidences and as to how the AO has to deal with the digital evidences and its analyse in the assessment order and what is the importance of chain of custody of digital evidences. The relevant para 9.1 and 9.6 of the Manual which:-
"9.1 Reporting of Analysis of Digital Evidence in the Assessment Order should be done in a simple lucid manner, so that any person can understand. The report should give description of the items, process adapted for analysis, chain of custody on the movement of digital evidence, hard and soft copies of the findings, glossary of terms etc .The presentation and use of digital evidence in assessment order and presentation of the same in court of the law in matters of appeal involves stating the credibility of the processes employed during analysis for testing the authenticity of the data.
Some guidelines that assessing officer need to follow when using the Digital Evidence Analysis in the assessment order etc, are as follows:
Brief description of the case, details/description of the objects, date and time of collection of the objects, Status of the objects when collected (On or Off), Seized from - person, organization, location etc should be included in the Assessment Order.45
ITA No. 5217 to 5222/Del/2025 • Digital Evidence Collection Form, Mobile Phone Evidence Collection Form should be enclosed in the order to show the initial state of the Digital Evidence.
• Digital Forensic Report( Given by Forensic Examiner) containing details of hash value and the details of all mahazar drawn to open the digital evidence at various times to gather further evidences should be included as an annexure to the assessment order. If the chain of custody form is present, the same can be annexed to the assessment order. This will establish the integrity of the data before any court of law.
• The Key digital evidences retrieved if deleted along with the description of the same, in case of business application software, a note on how the business application software is and the technical details of all critical components.
• Whether these digital evidences have been confronted to the assessee under any section of the law? The relevant portions of the statement under various sections of Income Tax Act should be included in the order.
• Circumstantial evidences and other key physical evidences seized/impounded should be linked to the digital evidence. Usually the physical evidences like loose papers, sheets gives details of one particular transaction, while the .digital evidences may help in unearthing the entire consolidated data for the whole year. Such digital evidences should be linked to the physical evidences seized during the course of search to establish the genuineness of the data and also to quantify to the total unaccounted income.
"9.6 Handling the digital evidence at a later stage In the Income Tax Department, the digital evidence stored is used in the assessment proceedings and at later stages in case of legal tangles. In order to maintain the sanctity of data 46 ITA No. 5217 to 5222/Del/2025 stored/seized, there is a need to maintain a chain of custody while handling the digital evidence during the course of assessment proceedings and at later stages. Due to the lengthy legal proceedings involved, it may be needed to retain evidence indefinitely.
Hence, a chain of custody of digital evidence should be created in order to know the details of who is accessing data, if anyone who accessed the data had tampered with the data etc."
16. However, after examining the assessment order, we are of the considered view that it is not a case where a single issues was involved or same set of incriminating evidence, being some physical evidences, was relied by the AO. The incriminating evidences were multiple electronic evidences found form multiple digital devices thus in regard to same the approving authority should have made sure, before granting of approval, that at time of search and thereafter the investigation wing authorities and so also the AO has duly followed the instructions of the Board as laid in the Manual. The aforesaid directions of Board in para 9.1 and 9.6 of the Manual, requiring as to what all material should be annexed to the assessment order in case the assessment is outcome of electronic or digital evidences seems to be completely ignored by the AO. Even if for sake of arguments it is accepted that they are not instructions u/s 119 of the Act, but then that does not lead to inference that the instructions of Board could be neglected by AO and while granting approval u/s 153D of the Act, too, the same can be left out of consideration by the competent authority on assumption that it is merely an administrative function. Rather, as discussed here above the approving authority casually records that veracity of electronic evidences have been accepted as certified by the AO. Same only leads to one conclusion that approval was mechanical.
17. The law in this regard has quite crystallized by now. The Hon'ble Orissa High Court in the case of ACIT vs Serajuddin& Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act.
47ITA No. 5217 to 5222/Del/2025 The Hon'ble High Court made wide ranging observations towards the manner and legality of approval under s. 153D of the Act by observing that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justifiable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon'ble High Court inter-alia observed that there is no even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like 'approval' will not, by itself, meet the requirement of law. The Hon'ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon'ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgment in the case of ACIT vsSerajuddin& Co. Kolkata was dismissed as reported in (2024) 163 taxmann.com 118 (SC).
18. Though there are catena of decision of coordinate bench in favour of assessees, we rely Hon'ble Jurisdictional High Court decision in case of Shiv Kumar NayarPCIT vs Shiv Kumar Nayyar reported in 163 taxmann.com 9 which has also relied this decision in case of Serajuddin(supra) and held in para 10 to 15 as follow;
48ITA No. 5217 to 5222/Del/2025 "10. Before embarking upon the analysis of the factual scenario of the instant appeal, we deem it apposite to examine the underlying intent of the relevant provision of the Act i.e., Section 153D, which is culled out as under:-
"153-D. Prior approval necessary for assessment in cases or requisition.--No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of Section 153-A] or the assessment year referred to in clause (b) of sub-section (1) of Section 153-B, except with the prior approval of the Joint Commissioner :
Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the [Principal Commissioner or Commissioner] under sub-section (12) of Section 144-BA."
11. A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for "each assessment year"
referred to in clause (b) of sub-section (1) of Section 153A of the Act. It is beneficial to refer to the decision of the High Court of Judicature at Allahabad in the case of PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- "each assessment year" used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:-
"13. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by 49 ITA No. 5217 to 5222/Del/2025 the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power.
***
19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A."
[Emphasis supplied]
12. It is observed that the Court in the case of Sapna Gupta (supra)refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that 50 ITA No. 5217 to 5222/Del/2025 the authority granting approval has to apply its mind for "each assessment year" for "each assessee" separately.
13. Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under: -
"22. As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasoned not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "seen" or "approved" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the Assessing Officer should submit the draft assessment order" well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii)the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order."
[Emphasis supplied] 51 ITA No. 5217 to 5222/Del/2025
14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order dated28.11.2023 in SLP (C) Diary no. 44989/2023.
15. A similar view was taken by this Court in the case of Anuj Bansal (supra), whereby, it was reiterated that the exercise of powers under Section 153D cannot be done mechanically. Thus, the salient aspect which emerges from the abovementioned decisions is that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind."
19. In the light of the aforesaid, we are inclined to sustain the ground no.2, which vitiates the whole assessment proceedings and consequential orders. Accordingly, the appeal of the assessee is allowed and consequently, the appeal of the Revenue deserves to be dismissed. Resultantly, the impugned assessment order is quashed."
9. Respectfully following the above precedents, we quash the entire proceedings initiated under section 153A r.w.s. 143(3) of the Act in the absence of a valid approval granted by the Ld. JCIT, Central Range, Meerut.
10. We are refrained from adjudicating the other grounds of appeal and at this stage, we keep the other grounds of appeal open.
11. In the result, the appeal being ITA No. 5217/Del/2025 for Assessment Year 2014-15 is allowed.
12. With regard to appeals for AYs 2015-16, 2016-17, 2017-18, 2019-20 and 2018- 19 are concerned, since the facts are exactly similar to A.Y. 2014-15 and above 52 ITA No. 5217 to 5222/Del/2025 findings in A.Y. 2014-15 are applicable mutatis mutandis in A.Ys. 2015-16 to 2019-20. Accordingly, the appeals being ITA Nos. 5217 to 5222/Del/2022 for A.Ys. 2015-16 to 2018-19 filed by the assessee are also allowed.
Order pronounced in the open court on this 20th March, 2026.
Sd/- Sd/-
(MAHAVIR SINGH) (S. RIFAUR RAHMAN)
VICE PRESIDENT ACCOUNTANT MEMBER
Dated: 20.03.2026
Binita, Sr. PS
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)-XXVI, New Delhi.
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI
53