DEPUTY COMMISSIONER OF INCOME TAX, CC-1, , LUDHIANA V. AFI AGRO PVT. LTD., KHANNA

ITA 179/CHANDI/2025

AI Insights

The case involves AFI Agro Private Limited and the DCIT, Central Circle-1, Ludhiana, in a series of cross-appeals concerning the assessment orders for the years 2017-18, 2018-19, and 2019-20. The primary legal issue was the validity of the approval granted under section 153D of the Income Tax Act, 1961, by the Additional Commissioner of Income Tax, which was challenged by the assessee on grounds of it being mechanical and ritualistic. The Tribunal examined the procedural compliance with section 153D and the substantive application of mind required in granting such approvals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778609 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 04-02-2025
• Other Referred Cases: M/s Aman Feed Industries Vs DCIT, Abhisar Buildwell Pvt. Ltd. vs. PCIT, Serajuddin and Co. vs. ACIT, Anuj Bansal vs. PCIT, MDLR Hotels (P.) Ltd vs. PCIT, Shiv Kumar Nayyar vs. PCIT, Sapna Gupta vs. PCIT, Siddarth Gupta vs. PCIT, Subodh Agarwal vs. PCIT, Smt. Shreelekha Damani vs. Deputy Commissioner of Income-tax, Vrushali Sanjay Shinde vs. Deputy Commissioner of Income-tax, SMW Ispat (P.) Ltd. vs. Additional Commissioner of Income-tax, S.P Singla Constructions Private Limited vs. The DCIT, CC-1, Chandigarh, Maine Steel Works Pvt. Ltd. vs. The DCIT, CC-II, Gurgaon, Tejpal Singh vs. The DCIT, Shri. Krishan Kumar vs. The DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAV BANSAL
• Assessee Lawyers: ASHWANI KUMAR; KULBHUSHAN GOYAL; DEEPALI AGGARWAL
• Keywords: Question of law; Document seized; Documents seized; Reopening of assessment; Principle of natural justice; Block assessment; Assessment record; Competent authority; Audi alteram partem
• Section: 143(3); 132; 153A

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA Nos. 1256, 1257,1258/CHD/2024 Ǔनधा[रण वष[ / A.Y.: 2017-18, 2018-19, 2019-20 AFI Agro Private Limited, A-1, Focal Point, Khanna. Vs The DCIT, Central Circle-1, Ludhiana. èथायी लेखा सं./PAN NO: AAECA6479L अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent आयकर अपील सं./ ITA Nos. 179,180,373/CHD/2025 Ǔनधा[रण वष[ / A.Y.: 2017-18, 2018-19, 2019-20 The DCIT, Central Circle-1, Ludhiana. Vs AFI Agro Private Limited, A-1, Focal Point, Khanna. èथायी लेखा सं./PAN NO: AAECA6479L अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Ashwani Kumar, Shri Kulbhushan Goyal & Ms. Deepali Aggarwal, CAs Revenue by : Shri Manav Bansal, CIT DR Date of Hearing : 28.07.2025 Date of Pronouncement : 16.10.2025 PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP It is a group of six cross-appeals against separate orders of ld.CIT (Appeals) dated 13.12.2024 passed in Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 2 assessment year 2017-18 and 2018-19 and dated 14.12.2024 passed in assessment year 2019-20. In other words, assessee and Revenue, both are in appeal against above orders in each assessment year. 2. Since common issues are involved in all the appeals, therefore, we deem it appropriate to dispose off them by this common order. The assessee has taken 7 grounds of appeal in each assessment year, whereas Revenue has taken 5, 7 and 6 grounds of appeal in assessment year 2017-18, 2018-19 and 2019-20 respectively. 3. The assessee has challenged approval granted by the ld. Addl. Commissioner of Income Tax u/s 153D of the Income Tax Act, 1961. It has pleaded that this approval was merely mechanical and ritualistic which has been granted without application of mind, hence, the assessment orders are not sustainable and consequently they deserve to be quashed. 4. Though the facts on all vital points are common, but for the facility of reference, we will be taking facts mainly from Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 3 assessment year 2017-18. 5. The brief facts of the case are that assessee is engaged in the business of manufacturing cattle feed. It has filed its return of income u/s 139(1) of the Act on 31.10.2017 and 23.10.2018 declaring total income of Rs.69,19,320/- and Rs.1,82,43,700/- in assessment year 2017-18 and 2018-19 respectively. In assessment year 2019-20, the return was filed u/s 139(4) of the Income Tax Act declaring total income at Rs.2,19,19,960/-. A search u/s 132 of the Income Tax Act was carried out on the premises of the assessee on 25.04.2018. In order to give logical end to the search proceeding, notice u/s 153A was issued and served upon the assessee requiring it to file its return of income. Such notice was issued on 23.01.2020 in assessment year 2017- 18 and 2018-19. The assessee has filed its return of income on 27.02.2020 declaring the same income as was declared in the return filed u/s 139(1) of the Income Tax Act. Thereafter, AO has issued notices u/s 143(2)/142(1) in all these assessment years and framed the assessment order on 08.09.2021. Dissatisfied with the assessment order, assessee filed appeals Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 4 in each assessment year and the appeals have been partly allowed by the CIT (Appeals). Therefore, both the sides are in cross appeals. 6. With the assistance of the ld. Representative, we have gone through the record carefully. We find that a common approval has been granted by the ld. Addl. CIT vide its order dated 03.09.2021. We have already considered this common approval in ITA No.1252 to 1255/CHD/2024 in the case of a group concern, namely, M/s Aman Feed Industries Vs DCIT. The discussion made by us reads as under : “8. As far as construction/interpretation and scope of Section 153A is concerned, it is no more in res-integra. However, we deem it appropriate to bear in mind the scope of this Section as explained by the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. 454 ITR 212 before embarking upon an enquiry on the facts of the present case because originally, there were two schools of thoughts propounded by different High Courts, namely Hon'ble Delhi High Court in the case of Kabul Chawla 380 ITR 573, Hon'ble Gujrat High Court in the case of Saumya Construction 387 ITR 521 and Hon'ble Bombay High Court in the case of Continental Warehousing Corporation 374 ITR 645. They were of the view that income in consequent to the search u/s 153A is to be assessed on the basis of seized material found during the course of search whereas Hon'ble Karnataka High Court in the case of Canara Housing and Kerala High Court did not concur with the view taken by rest of the High Courts in the country. The dispute ultimately travelled to the Hon'ble Supreme Court in the case of PCIT Vs Ab Abhisar Buildwell Pvt. Ltd. reported in 149 taxman.com 399 wherein Hon'ble Supreme Court has concurred with the view taken by the Hon'ble Delhi High Court in the case of Kabul Chawla and Hon'ble Gujrat High Court in the case of Saumya Construction. The conclusions drawn by the Hon'ble Supreme Court in paragraph No. 12 read as under : Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 5 \"12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other .material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153 A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed' unabated assessments shall abate. \" 9. A perusal of the grounds of appeal taken by both the sides would reveal that Ground No. 1 in assessee's appeal for assessment year 2015-16 and 2017-18 are general in nature which do not call for recording of any finding. However, in Ground No.2 in assessment year 2015-16, 2017-18 and Ground No.1 in 2018-19 and 2019- 20, assessee has pleaded that assessment orders are not sustainable because approval granted by the ld. Addl. CIT u/s 153D was merely mechanical and ritualistic without any application of mind. Since this is a jurisdictional ground raised by the assessee in all the years, therefore, we deem it appropriate to take this ground first. 9.1 The ld. counsel for the assessee while impugning the orders of the ld.CIT (Appeals) as well as of the AO contended that in the scheme of block assessment contemplated u/s 153A, if AO is below the rank of Joint Commissioner, then he has to take mandatory approval u/s 153D before passing the final assessment. This approval is not an administrative order, rather it is a statutory approval which ld. Addl. CIT ought to have decided after due application of mind. He drew our attention towards the letter of the AO dated 18.08.2021 vide which he sought an approval of 42 assessment orders of different assessees in different assessment years. The copy of this letter is available on page 15 and 16 of the Paper Book. We deem it appropriate to take note of this letter, which reads as under : Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 6 9.2 The approval granted by the Addl. CIT is also available on page 17. The scanned copy of this approval reads as under: Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 7 Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 8 Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 9 9.3 He submitted that though ld. Addl. Commissioner had made an observation that he has gone through the papers i.e. Appraisal Report, conclusion of investigation etc. and thereafter approved these orders. However, no such documents have been referred by the AO in her forwarding letter. She has only sent draft assessment orders relating to AFI Group. He pointed out that after draft orders of assessee group for six years are looked into, then they themselves are more than 500 pages because one assessment order is running into roughly more than 80 pages and these assessment orders were referred. If all the documents are to be included, then it will be more than 2000 pages. What to talk of other assessment orders of other assessees which have been referred simultaneously and a joint approval has been granted by the ld. Addl Commissioner. He also submitted that during this very period, large number of other approvals have been granted by the ld. Addl CIT in the month of September. The ld. Addl. CIT has also granted approval to more than 100 assessments. He made reference to the order of ITAT where identical aspect was considered and a reference of large number of assessment orders were by a common order. Thus, according to the ld. counsel for the assessee, the approval was not in consonance with the statutory requirements, hence the assessment orders are not sustainable. In support of his contention, he relied upon following decisions, whose copies have been placed in the Paper Book : Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 10 SNo Particulars A. Approval granted by the competent authority u/s 153D of the Act without application of mind. 1. Judgement passed by Hon'ble Supreme Court in the case of Additional Commissioner of Income-tax v. Serajuddin and Co. [2024] 163 taxmann.com 118 (SC) 2. Judgement passed by Hon'ble High Court of Orrisa in the case of Additional Commissioner of Income-tax vs. Serajuddin and Co. [2023] 454 ITR 312 (Orrisa) 3. Judgement passed by Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax v. Anuj Bansal [2024] 466 ITR 254 (SC) 4. Judgement passed by Hon'ble High Court of Delhi in the case of Principal Commissioner of Income Tax (Central)-2 v. Anuj Bansal [2024] 466 ITR 251 (Delhi) 5. Judgement passed by Hon'ble High Court of Delhi in the case of Principal Commissioner of Income v. MDLR Hotels (P.) Ltd [2024] 166 taxmann.com 327 (Delhi) 6. Judgement passed by Hon'ble High Court of Delhi in the case of Principal Commissioner of Income-tax v. Shiv Kumar Nayyar [2024] 163 taxmann.com 9 (Delhi) 7. Judgement passed by Hon'ble High Court of Allahabad in the case of Principal Commissioner of Income-tax v. Sapna Gupta [2023] 147 taxmann.com 288 (Allahabad) 8. Judgement passed by the Hon'ble High Court of Allahabad in the case of Principal Commissioner of Income-tax Vs. Siddarth Gupta [2023] 450 ITR534 (Allahabad) 9. Judgement passed by the Hon'ble High Court of Allahabad in the case of Principal Commissioner of Income-tax Vs. Subodh Agarwal [2023] 149 taxmann.com 373 (Allahabad) 10. Order passed by the Hon'ble ITAT Mumbai Bench-F in the case of Smt. Shreelekha Damani Vs. Deputy Commissioner of Income-tax (OSD-1), CR-7, Mumbai [2017] 88 taxmann.com 383 (Mumbai) 11. Order passed by the Hon'ble ITAT Mumbai Bench-F in the case of Vrushali Sanjay Shinde v. Deputy Commissioner of Income-tax [2023] 107 ITR(T) 274 12. Order passed by the Hon'ble ITAT Pune Bench-B in the case of SMW Ispat (P.) Ltd. Vs. Additional Commissioner of Income-tax [2024] 112 ITR(T) 224 (Pune - Trib.) 13. Judgement passed by the Hon'ble ITAT Chandigarh Bench-B in the case of S.P Singla Constructions Private Limited Vs. The DCIT, CC-1, Chandigarh ITA Nos. 140 TO 145/CHD/2024 14. Judgement passed by the Hon'ble ITAT Delhi Bench-E in the case of Mainee Steel Works Pvt. Ltd. Vs. The DCIT, CC-II, Gurgaon ITA Nos.3371 to 3377/Del/2024 B. Application of section 115BBE on amount of excess cash found and offered for taxation 15. Judgement passed by the Hon'ble ITAT Amritsar Bench in the case of Tejpal Singh Vs. The DCIT [2024] 158 taxmann.com 679 16. Judgement passed by the Hon'ble ITAT Chandigarh Bench-A in the case of Shri. Krishan Kumar Vs. The DCIT [2024] 162 taxmann.com 518 Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 11 10. The ld. CIT DR, on the other hand contended that in some of the cases relied upon by the ld. counsel for the assessee, the facts are distinguishable because in those cases, approval was granted on the same day and therefore, Courts have construed that these approvals were granted by not looking into the facts and circumstances, therefore, these decisions are specific to those facts. In the present case, AO has sent the letter on 18.08.2021 and approval was granted on 03.09.2021. Thus, there was sufficient time to the ld. Addl. CIT to go through the details. He also took us through the order of approval passed by the ld. Addl. CIT available on page No. 17 of the Paper Book (extracted supra). 11. We have duly considered the rival contentions and gone through the record carefully. The Hon'ble Orissa delivered the judgement on this issue in the case of ACIT Vs Serajuddin & Co. and is reported in 454 ITR 312, 292 taxman 566. This judgement has been upheld by the Hon'ble Supreme Court and the judgement of Hon'ble Supreme Court is reported in 299 taxman 448. In this judgement, Hon'ble Orissa High Court had taken into consideration the scheme of 153D and what are the necessary requirements. The line of arguments raised by the Revenue before the Hon'ble High Court has been briefly noticed in paragraph No.8 of the judgement, which read as under : 8. Mr. T.K. Satapathy, learned Senior Standing Counsel for the Revenue made the following submissions: (i) In the present case, prior approval had in fact been taken by the AO from the Additional CIT and there was no illegality in that regard. (ii) The approval of the superior officer was distinct from the assessment order. It was a mere administrative order and not open to challenge before a court of law. In other words, it was submitted that the approval granted by the Additional CIT was not justiciable and could not form the basis for challenging the assessment order. (iii) What could only be challenged is want of sanction. Reliance was placed on the decision of the ITAT. Mumbai in Pratibha Pipes & Structurals Ltd. v. Dy. CIT [IT Appeal No. 3874 (Mum.) of 2015, dated 10-4-2019]. (iv) There was no requirement for any hearing to be given to the Assessee by the supervisory officer prior to giving approval although Clause-9 of the Manual of Office Procedure stipulates it. This, therefore, cannot be said to be mandatory. Reliance was placed on the decisions of the Karnataka High Court in Gopal S. Pandit v. CIT [20181 96 taxmann.com 233/257 Taxman 300 and Rishabchand Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 12 Bhansali v. Dy. CIT 120041 136 Taxman 579/267 ITR 577 and of the Madras High Court in Sakthivel Bankers v. Asstt. CIT [20021 124 Taxman 227/255 ITR 144 which were all in the context of Section 158 BG of the Act. (v) The mere irregularity in granting approval in the context of Section 158BG of the Act was held not to be fatal to the assessment order. Reliance was placed on the orders of the Kolkata ITAT in Shaw Wallace & Co. Ltd. v. Asstt. CIT [ 19991 68 ITD 148 and of the Delhi ITAT in Kailash Moudgil v. Dy. CIT [20001 72 ITD 97 (SB). Reliance was also placed on the decision of the Karnataka High Court in Gayathh Textiles v. CIT [2000] 111 Taxman 123 where it was held that for the purpose of section 271(l)(c) of the Act, the failure to obtain prior permission from the IAC for imposing penalty was only a procedural error and not fatal to the order of penalty. (vi) Since the entire documents were already available to the Additional CIT in the file sent for approval, there was no need for exchange of the said documents prior to the grant of formal approval under section 153D of the Act. (vii) Lastly, it was submitted that even if there had been a violation of the principles of natural justice, unless prejudice were shown by the Assessee, no interference with the assessment orders was warranted. Reliance was placed on the decisions in Dharampal Satyapal Ltd. v. Dy. CCE [2015]_58 taxmann.com 90/51 GST 197 (SO/8 SCC 519: Managing Director, ECIL v. B. Karunakar [1993] 4 SCC 727; Haryana Financial Corporation v. Kailash Chandra Ahuja [2008] 9 SCC 31; State Bank o f Patiala v. S.K. Sharma [1996] 3 SCC 364; P.D. Agrawal v. State Bank o f India [2006] 8 SCC 776 and State o f U.P. v. Sudhir Kumar Singh [Civil Appeal No. 3498 of 2020, dated 16-10-2020] It was then submitted that where initiation was valid but completion was not correct, the order may not be invalid but only irregular because the intervening irregularity is a curable one. Reliance was placed on the decision of the Kerala High Court in (CGG) Panicker v. CIT [19991 237 ITR 443 and CIT v. N. Krishnan [1999] 235 ITR 386. It was submitted that mere technicality should not defeat justice.” 11.1 The Hon'ble Court, thereafter made reference to Section 153D and the CBDT Circular dated 12.03.2008 which has explained the requirement of Section 153D of the Act. The discussion made by the Hon'ble Court in this regard from paragraph No. 15 onwards reads as under : 15. A plain reading of section 153D itself makes it abundantly clear that the legislative intent was to be obtaining of \"prior approval\" by the AO when he is below the rank of a Joint Commissioner, before he passes an assessment order or reassessment order under section 153A(l)(b) or 153B(2)(b) of the Act. Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 13 16. That such an approval of a superior officer cannot be a mechanical exercise has been emphasized in several decisions. Illustratively, in the context of section 142 (2-A) which empowers an AO to direct a special audit. The obtaining of the prior approval was held to be mandatory. The Supreme Court in Rajesh Kumar (supra) observed as under: \"58. An order of approval is also not to be mechanically granted. The same should be done having regard to the materials on record. The explanation given by the assessee, if any, would be a relevant factor. The approving authority was required to go through it. He could have arrived at a different opinion. He in a situation of this nature could have corrected the assessing officer if he was found to have adopted a wrong approach or posed a wrong question unto himself. He could have been asked to complete the process of the assessment within the specified time so as to save the Revenue from suffering any loss. The same purpose might have been achieved upon production of some materials for understanding the books of accounts and/ or the entries made therein. While exercising its power, the assessing officer has to form an opinion. It is final so far he is concerned albeit subject to approval of the Chief Commissioner or the Commissioner, as the case may be. It is only at that stage he is required to consider the matter and not at a subsequent stage, viz., after the approval is given.\" 17. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself. In Sahara India (Firm) (supra), the Supreme Court explained as under: \"8. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty ritual. Needless to emphasise that before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer. The approval must reflect the application of mind to the facts of the case.\" 18. The contention of the Revenue in those cases that the non- compliance of the said requirement does not entail civil consequences was negatived. Reiterating the view expressed in Rajesh Kumar (supra), the Court in Sahara India (Firm) (supra) held as under: Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 14 \"29. In Rajesh Kumar (2007) 2 SCC 181 it has been held that in view of section 136 of the Act, proceedings before an Assessing Officer are deemed to be judicial proceedings. Section 136 of the Act, stipulates that any proceeding before an Income-tax Authority shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of Indian Penal Code, 1860 and also for the purpose of section 196 of I.P.C. and every Income-tax Authority is a court for the purpose of section 195 of Code of Criminal Procedure, 1973. Though having regard to the language of the provision, we have some reservations on the said view expressed in Rajesh Kumar's case (supra), but having held that when civil consequences ensue, no distinction between quasi judicial and administrative order survives, we deem it unnecessary to dilate on the scope of section 136 of the Act. It is the civil consequence which obliterates the distinction between quasi judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away. Therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see: Maneka Gandhi v. Union of India [1978] 1 SCC 248 and S.L. Kapoor v. Jagmohan [1980] 4 SCC 379). 30. As already noted above, the expression \"civil consequences\" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. Anything which affects a citizen in his civil life comes under its wide umbrella. Accordingly, we reject the argument and hold that since an order under section 142 (2A) does entail civil consequences, the rule audi alteram partem is required to be observed.\" 19. To the same effect, are the decisions of the Delhi High Court in Yum! Restaurants Asia Pte. Ltd. (supra)which dealt with the requirement under section 151 (2) of the Act for initiating proceedings under section 147 read with 148 of the Act. It was observed as under: \"11. The purpose of section 151 of the Act is to introduce a supervisory check over the work of the AO, particularly, in the context of reopening of assessment. The law expects the AO to exercise the power under section 147 of the Act to reopen an assessment only after due application of mind. If for some reason, there is an error that creeps into this exercise by the AO, then the law expects the superior officer to be able to correct that error. This explains why section 151 (1) requires an officer of the rank of the Joint Commissioner to oversee the decision of the AO where the return originally filed was assessed under Section 143 (3) of the Act. Further, where the reopening of an assessment is sought to be made after the expiry of four years from the end of the relevant AY, a further check by the further superior officer is contemplated.\" 20. The non-compliance of the requirement was held to have vitiated the notice for reopening of the assessment. Likewise, in Synfonia Tradelinks (P.) Ltd. (supra) the Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 15 Delhi High Court disapproved of the rubber stamping by the superior officer of the reasons furnished by the AO for issuance of the sanction. 21. It is seen that in the present case, the AO wrote the following letter seeking approval of the Additional CIT: GOVERNMENT OF INDIA OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), BHUBANESWAR No. ACIT/C-l(2)//Approval/2010-ll/5293 Dated, Bhubaneswar, the 27/29th December, 2010 To The Addl. Commissioner of Income-tax, Range-1, Bhubaneswar. Sub: Approval of draft orders u/s 153D of the I.T. Act 1961 in the case of M/s. Serajuddin & Co. 19A, British India Street, Kolkata (in Serajuddin Group of Cases)- matter regarding. Sir, >Enclosed herewith kindly find the draft orders u/s 153A of the I.T Act, 1961 along with assessment records in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata for kind perusal and necessary approval u/s.l53D. No. Name of the Assessee Section under which order passed. Assessment year 1. M/s. Serajuddin & Co., 19A, u/s 153A/143(3)/144/145(3) British India Street, Kolkata. 2003-04 2. -do- -do- 2004-05 3. -do- do- 2005-06 4. -DO- -DO- 2006-07 5. -DO- -DO- 2007-08 6. -DO- -DO- 2008-09 7. -DO- U/s.l43(3)/144/153B(B)/145( 3) 2009-10 The above cases will be barred by limitation on 31-12-2010. Encl: As above Yours faithfully, Sd/- Asst. Commissioner of Income-tax, Circle-1(2), Bhubaneswar of the Tribunal itself Government of India OFFICE OF THE ADDL. COMMISSIONER OF INCOME TAX, 3 Floor, Range-1, Bhubaneswar No. Addl. CIT/R-l/BBSR/SD/2010-11/5350 Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 16 Dated, Bhubaneswar, the 30th December, 2010 To The Assistant Commissioner of Income Tax, Circle-1(2), Bhubaneswar. Sub: Approval u/s 153D-in the case of M/s Serajuddin & Co., 19A, British India Street, Kolkata-Matter regarding. Ref: Draft Orders u/s 153A/143(3)/144 for the A.Y. 2003-04 to 2008-09 u/s.l43(3)/153B (b)/144 of the A.Y.2009-10 in the case of above mentioned assessee. Please refer to the above The draft orders u/s 153A/143(3)/144 for the A.Y 2003-04 to 2008-09 and u/s. 143(3)/153B(b)/144 for the A.Y. 2009-10 submitted by you in the above case for the following assessment years are hereby approved: Assessment Year Income Determined (Rs) 2003-04 11,66,22,771 2004-05 36,46,80,016 2005-06 65,70,12,805 2006-07 60,02,65,791 2007-08 130,03,13,307 2008-09 274,68,87,069 2009-10 301,17,05,952 You are requested to serve these orders expeditiously on the assessee, submit a copy of final order to this office for record. Sd/- Addl. Commissioner of Income Tax, Range-1, Bhubaneswar 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 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, (i) the AO should submit the draft assessment order \"well in time\". Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 17 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; (in) The fact that approval has been obtained, should be mentioned in the body of the assessment order. 23. In the present case, it is an admitted position that the assessment orders are totally silent about the AO having written to the Additional CIT seeking his approval or of the Additional CIT having granted such approval. Interestingly, the assessment orders were passed on 30th December 2010 without mentioning the above fact. These two orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. 24. The above manual is meant as a guideline to the AOs. Since it was issued by the CBDT, the powers for issuing such guidelines can be traced to Section 119 of the Act. It has been held in a series of judgments that the instructions under section 119 of the Act are certainly binding on the Department. In Commissioner of Customs v. Indian Oil Corporation Ltd. 2004 taxmann.com 1061 (SCV2004 (165) E.L.T. 257 (SC) the Supreme Court observed as under: \"Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: 2002 (1.43) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC 528. The principles laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars.\" 25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or re-assessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Act and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the ITAT that in the present cases such approval was granted mechanically without Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 18 application of mind by the Additional CIT resulting in vitiating the assessment orders themselves. 26. The question of law framed is therefore answered in the affirmative i.e., in favour of the Assessee and against the Department. 27. The appeals are accordingly dismissed, but in the circumstances, with no order as to costs.” 11.2 Similarly, Hon'ble Delhi High Court has also considered this issue in the case of PCIT Vs Anju Bansal 466 ITR 251 wherein Hon'ble Court has observed that approval was granted without examining the assessment record or the search material. The observation of the Hon'ble Delhi High Court from paragraph No. 13 deserves to be noticed here : 13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: \"17.1 However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs 87,20,580/-. Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560/- had he applied his mind The addition of Rs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene it the final assessed income shows volumes. 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanja; Duggal (supra). In that case, at least the assessment folders were sent whereas in the instant case, a appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed income and the Add CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore approval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. W therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 19 thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 43(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed\". [Emphasis is ours) 14. In this appeal, we are required to examine whether any substantial question of law arises for o consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal. 11.3 The Hon'ble Allahabad High Court has rendered his decision on this issue in the case of Pr. CIT Vs Sapna Gupta reported in 147 taxman.com 288. In paragraph No. 13 of the judgement, Hon'ble High Court has observed that this approval is not only to be granted after application of independent mind to the material on record but this approval has to be granted for each assessment year in respect of each assessee separately. We deem it appropriate to take note of this observation from paragraph No. 13, which reads 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 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, Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 20 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 mechanical exercise of power.” A perusal of the above observation of Hon'ble Allahabad High Court would reveal that Hon'ble Court has emphasized that approving authority should consider independent material of each assessment year qua each assessee, however, in the case in hand, ld. Addl. CIT granted approval by way of a common order qua 7 assessees and in 42 assessment orders, therefore, this approval is not sustainable in view of the authoritative pronouncement of Hon'ble Allahabad High Court which has been subsequently followed by other Hon'ble High Courts in the judgements extracted supra. 11.4 The ITAT Delhi in the case of Seth Realtors ITA No. 2503 & 2693/Del/2017 has considered the entire scheme of search assessment alongwith necessity of approval. It has taken into consideration the observation of the ld. CIT DR before us. We deem it appropriate to take note of the findings of ITAT, Delhi in this connection, which read as under : \"8. We find as per the scheme of the Act, for framing search assessments, the Ld. AO can pass the search assessment order u/s 153A or u/s 153C of the Act only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the Id. JCIT, in terms of section 153D of the Act. This is a mandatory requirement of law. The said approval granting proceedings by the Id. JCIT is a quasi judicial proceeding requiring application of mind by the Id. JCIT judiciously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme of the Act, it is the bounden duty of the Ld. AO to seek to place the draft assessment order together with copies of the seized documents before the Id. JCIT well in time much before the due date of completion of search assessment. The Id. JCIT is supposed to examine the seized documents, questionnaires raised by the Ld. AO on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Ld. AO and the conclusions drawn by the Ld. AO vis- a-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, are to be performed by the Id. JCIT in a judicious way after due application of mind. Even though as vehemently argued by the Ld. CIT-DR, the Id. JCIT is involved with the search assessment proceedings Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 21 right from the time of receipt of appraisal report from the Investigation Wing, still, the Id. JCIT, while granting the approval u/s I53D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld. AO in the draft assessment order. The copy of the appraisal report submitted by the Investigation Wing to the Ld. AO and Id. JCIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from Id. JCIT u/s 15 3D of the Act. The Id. JCIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the Ld. AO as well as the Id. JCIT to even ignore the conclusions drawn in the appraisal report by the Investigation Wing and take a different stand in the assessment proceedings, the fact of Id. JCIT getting involved in the search assessment proceedings right from the receipt of copy of appraisal report, as argued by the Ld. CIT DR, has no substance. In other words, irrespective of the conclusions drawn in the appraisal report by the Investigation Wing, both the Ld. AO and the Id. JCIT are supposed to independently apply their mind in a judicious way before drawing any conclusions on the contents of the seized documents while framing the search assessments. As far as the argument of the Ld. CIT DR that the details were normally filed by the assessee at the last moment is concerned, the Id. AO has got every right to reject the said replies if not filed within the stipulated time. It is not the case of the revenue that the details were filed by the assessee in the instant case at the last moment. Even if it is so, as stated above, it is the prerogative of the Id. AO to accept the said letter containing details or reject the same as it was not filed within the stipulated time. On the contrary, if the Id. AO himself grants time to the assessee to furnish the details till the last moment, then no fault could be attributed to the assessee. In such circumstances, the only irresistible conclusion that could be drawn is that the Id. AO is not serious about the statutory deadlines provided in the Act. In our considered opinion, if the arguments of the Ld. CIT DR are to be appreciated that the Id. JCIT need not apply his mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose. The law provides only the Ld. AO to frame the assessment, but. certain checks and balances are provided in the Act by conferring powers on the Id. JCIT to grant judicious approval u/s 153D of the Act to the draft assessment orders placed by the Id. AO. 9. Let us now examine whether in the aforesaid background of the scheme of the Act, whether the approval in terms of section 153D of the Act has been granted by Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 22 the Id. JCIT in a judicious way after due application of mind or not, in the instant case. We have gone through the approval granted by the Id. 140-Chd-2024 & Others - S.P. Singla Constructions 20 JCIT on 27.03.2015 u/s 153D of the Act. The said approval letter clearly states that a letter dated 27.03.2015 was filed by the Ld. AO before the Id. JCIT seeking approval of draft assessment order u/s 153D of the Act. The Id. JCIT has accorded approval for the said draft assessment order on the very same day i.e. on 27.03.2015 for various assessment years for 232 files on a single day. In any event, whether is it humanly possible for an approving authority like the Id. JCIT to grant judicious approval u/s 153D of the Act for all the assessment years on a single day is the subject matter of dispute before us. Further, we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCITvs. Anju Bansal in ITA 368/2023 order dated 13.07.2023 wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. The relevant operative part of the said order is reproduced below:- \"12. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. 12.1 More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order. 13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: \" 17.1 However, in the present case, we have no hesitation in stating thai there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs.87,20,580/-, Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560,'-, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560 -had he applied his mind. The addition ofRs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes. 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (supra). In that case, at least the assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 23 without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in. the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 143(3) has to be quashed, thus ordered accordingly. The ground raised by the Assessee is accordingly allowed\". [Emphasis is ours] 14. In this appeal, we are required to examine whether any substantial question of law arises for our consideration. 15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292BoftheAct. 16. We are not inclined to interdict the order of the Tribunal.\" 10. The Id. AR also placed on record the recent decision of Hon'ble Jurisdictional High Court in the case of PCIT vs Shiv Kumar Nayyar reported in 163taxmann.com9 (Del) wherein it was held that where order of approval u/s 153D of the Act for relevant assessment year was granted by Additional Commissioner who had granted approval for 43 cases on a single day without perusing the draft assessment, orders at all and without an independent application of mind, impugned assessment order was rightly declared to be illegal by Tribunal.\" 12. In the light of the above, if we appreciate the order of Addl. CIT dated 03.09.2021 extracted supra, vide which approval was granted u/s 153D, it would reveal that he has not discussed any aspect, any seized material and this order does not exhibit the reasons which have operated in the mind of Addl. CIT to approve the assessments, however he made a reference about Appraisal Report, conclusions of the investigations. It is pertinent to note that in the forwarding letter, these materials are not Printed from counselvise.com ITA Nos.1256 to 1258/CHD/2024 & ITA Nos.179, 180 & 373/CHD/2025 24 discernible. Moreover, he has approved 42 assessment orders by this common approval letter. It, nowhere reflects which of the facts pertaining to each assessee was considered by him. Therefore, it is only a mechanical manner, rather we may observe that a pre-drafted proforma is being used where names of the assessees are fed in. Hence, in view of the jurisprudence propounded across the country by all Hon'ble High Courts, we are of the view that the approval has not been granted according to the scheme as contemplated by the legislature. Hence, the assessment orders are not sustainable. Accordingly, this ground of appeal is allowed in all the years and assessment orders are quashed.” 7. Since we have quashed the assessment orders on account of non-availability of proper approval u/s 153D of the Income Tax Act, 1961, therefore, we do not deem it necessary to decide the other issues. Therefore, we allow all the appeals of the assessee and dismiss all the appeals of the Revenue. 8. In the result, all the appeals of the assessee are allowed and all the appeals of the Revenue are dismissed. Order pronounced on 16.10.2025. Sd/- Sd/- (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 5. गाडᭅ फाईल/ Guard File Assistant Registrar Printed from counselvise.com "