M/S PERIWAL POLYMERS PVT. LTD,NEW DELHI V. DCIT CC-13 JHANDEWALAN, DELHI, DELHI

ITA 2429/DEL/2025

AI Insights

The case involves M/s. Periwal Polymers Pvt. Ltd., the appellant, contesting the orders of the Commissioner of Income Tax (Appeals) for the Assessment Years 2018-19 to 2021-22. The primary contention was regarding the approval process under Section 153D of the Income Tax Act, which the appellant argued was mechanical, improper, and without application of mind, thereby vitiating the entire assessment proceedings. The Tribunal examined precedents and judicial interpretations concerning the approval process under Section 153D, noting that such approvals must reflect an appropriate application of mind and cannot be mere ritualistic formalities.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840116 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 12-04-2025
• Other Referred Cases: PCIT Vs. Shiv Kumar Nayyar, PCIT Vs. Anuj Bansal, PCIT Vs. Subhash Dabas, PCIT Vs. Tirupati Buildings & Offices Pvt. Ltd., PCIT Vs. Serajuddin & Co.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Question of law; Assessment record; Procedural lapse
• Section: 143(3); 153A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘A’: NEW DELHI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.2429 to 2432/Del/2025 Assessment Year 2018-19 to 2021-22 M/s. Periwal Polymers Pvt. Ltd. A-134, DDA Sheds, Okhla Industrial Area, Phase-11, New Delhi -110020 PAN No.AAACP5324M Vs. DCIT Central Circle -13 Jhandewalan, Delhi Appellant Respondent Appellant Sh. Mohit Chaudhary, Advocate Sh. Harish Chaudhary, Advocate Ms. Mitika, Advocate Respondent Sh. Amit Kumar Jain, CIT DR Date of Hearing 19.02.2026 Date of Pronouncement 25.02.2026 ORDER PER C.N. PRASAD, JM, These appeals are filed by the assessee against different orders of the Ld.Commissioner of Income Tax (Appeals) dated 25.02.2025 for A.Y’s 2018-19 to 2021-22. 2. The assessee in all these appeals has raised various technical grounds and grounds on merits challenging the order of the Ld. CIT(A). One of the common grounds of appeal in all Printed from counselvise.com Page | 2 these appeals by the assessee is in respect of approval obtained u/s.153D of the Act as mechanical, improper, illegal, bad in law and without application of mind and therefore, it vitiates entire assessment proceedings. The relevant grounds are as under :- “13. That on the facts and circumstances of the case and provisions of law, Ld CIT(A) has failed to appreciate that the approval obtained u/s 153D is mechanical and improper, illegal, bad in law and without application of mind and is therefore illegal and bad in law. 14. On the facts and in the circumstances of the case Ld. CIT (A) has erred both on facts and in law, in sustaining the action of AO as satisfaction note/approval obtained from higher authorities is illegal and bad in law because consolidated satisfaction note/approval had been recorded for different assessment years, it vitiates entire assessment proceedings.” 3. The Ld. Counsel for the assessee at the outset referring to above grounds of appeal submitted that in the case of the assessee a common approval u/s.153D of the Act was granted by the Addl. CIT, Central Range and such an approval is mechanical, without application of mind, illegal, bad in law as it is a consolidated approval for different assessment years. The Ld. Counsel submits that since the approval granted u/s.153D of the Act is bad in law, the consequential assessments made u/s.153C are also bad in law and void ab inito. Reliance was placed on the following decisions wherein the Hon’ble High Courts have held that consolidated satisfaction note is bad in law and consequently the assessments framed are also bad in law :- Printed from counselvise.com Page | 3 1. PCIT Vs. Shiv Kumar Nayyar (467 ITR 186) 2. PCIT Vs. Anuj Bansal (466 ITR 254) SLP dismissed by the Hon’ble Apex court 3. PCIT Vs. Subhash Dabas of Hon’ble Delhi High Court in ITA No.243/2023 dated 17.05.2024 4. PCIT Vs. Tirupati Buildings & Offices Pvt. Ltd. ITA 447/2024 order dated 20.08.2024 4. On the other hand the Ld. DR strongly supported the orders of the authorities below. 5. Heard rival contentions and perused the orders of the authorities below. In this case a consolidated approval u/s.153D of the Act was issued by the Addl. CIT which is as under :- 6. We observe that the Hon’ble Delhi High Court in the case of PCIT Vs. Shiv Nayyar held as under :- Printed from counselvise.com Page | 4 9.3 Hon'ble delhi high court in case of Sec 153D: Hon'ble Delhi high court in case of PCIT vs Shiv Kumar Navvar (approving delhi bench ITAT order) ITA 285/2024 (15.05.2024) 467 ITR 186 \"The solitary question which stands posited before us for adjudication pertains to whether, under the facts of the present case, the specified authority has granted approval in accordance with the mandate of Section 153D of the Income Tax Act, 1961 [\"Act\"]? Thus, the sallent 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. 17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 in the case of the assessee. The said order also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, we cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the ITAT, succinctly encapsulated in the order extracted above.\" 7. Similarly, the Hon’ble Delhi High court in the case of PCIT Vs. Anuj Bansal (supra) held as under :- \"9.2 hon'ble delhi high court decision in case of PCIT vs ANUJ BANSAL reported at 466 ITR 254 & 251 resp Hon'ble apex court SLP dismissal order in case of PCIT VS ANUJ BANSAL The Tribunal has via the impugned order set aside the additions made qua the income of the respondent/asseessee inter alia, on the ground that there was no application of mind by the Additional Commissioner of Income Tax (In short, \"ACIT\"] in granting approval under Section 153D of Income Tax Act, 1961, [in short, the Act\".... 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 Printed from counselvise.com Page | 5 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 40 in the instant case is completely out of the scene in the final assessed income shows volumes. 17:2 Even the fachial 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 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 Addl. CIT while giving his approval has not supplied 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 1534 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 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 292B of the Act. Printed from counselvise.com Page | 6 8. We find that the Tribunal in the case of Sohan Lal Singla (AOP) Vs. DCIT in ITA No.711 to 714/Del/2023 dated 08.05.2025 following the decision of the Jurisdictional High Court in the case of PCIT Vs. Shiv Kumar Nayyar held as under :- “9. The Hon'ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax Vs. Shiv Kumar Nayyar (supra) held as under:- \"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 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. This is a digitally signed order. Printed from counselvise.com Page | 7 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 requires the authority, Le Joint approving 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 conjoint reading of Section room for doubt that and careful 153A(1) and Section 153D leave no 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 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 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. (2023) SCC OnLineOri 992) to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:- Printed from counselvise.com Page | 8 \"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 reasons This is a digitally signed order. The authenticity of the order can be re- verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 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 \"seen\" or \"approved\" will not satisfy the requirement of the law. This is where the Technical Manual Office Procedure becomes important. Although, it was in 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\". 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.\" [Emphasis supplied] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Printed from counselvise.com Page | 9 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 dated 28.11.2023 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. 16. In the present case, the ITAT, while specifically noting that the approval was granted on the same day when the draft assessment orders were sent, has observed as under:- \"10. We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states This in a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 that a letter dated 30.12.2018 was filed by the Id. AO before the Id. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The Id. Addl. CIT has accorded approval for the said draft assessment orders on the very same day Le., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. NeetuNayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. NeetuNayyar from Central Public Information Officer who is none other than the Id. Addl. Printed from counselvise.com Page | 10 Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the Id. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. NeetuNayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together.\" 17. Notably, the order of approval dated 30.12.2020 which was produced before us by the learned counsel for the assessee clearly signifies that a single approval has been granted for AYs 2011-12 to 2017-18 in the case of the assessee. The said order also fails to make any mention of the fact that the draft assessment orders were perused at all, much less perusal of the same with an independent application of mind. Also, we cannot lose sight of the fact that in the instant case, the concerned authority has granted approval for 43 cases in a single day which is evident from the findings of the ITAT, succinctly encapsulated in the order extracted above,\" 10. 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 Section 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 Printed from counselvise.com Page | 11 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 Where the Court finds that the approval is granted justiciable. mechanically, it would vitiate the assessment order itself. 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. 11. The ratio of judgment delivered in the case of ACIT US 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. The SLP filed against the aforesaid judgment in the case of ACIT vs Serajuddin & Co. Kolkata was dismissed as reported in (2024) 163 taxmann.com 118 (SC). 12. As noted above, in the instant case, a single approval u/s 153D has been accorded in respect of seven Assessment Years pertaining to the Assessee, there is no mentioning of seized material in the other material to show involvement of the superior authority in the approval granted by the ACIT. Applying the ratio of judgments delivered as noted above, the assessment orders based on ritualistic approval Printed from counselvise.com Page | 12 stands vitiated and thus we quash the respective impugned Assessment Orders and the consequential orders of the Ld. CIT(A) by allowing the additional ground No. 6 of the respective Appeals. 9. Facts being identical, respectfully following the decision of the Hon’ble Delhi High Court in the case of PCIT Vs. Shiv Kumar Nayyar (supra) and the decision of the Tribunal referred to above, we hold that the common approval granted by the Addl. CIT u/s.153D is mechanical, without application of mind and bad in law and void ab initio and consequently the assessments framed for the A.Ys. 2018-19 to 2021-22 u/s. 153C r.w.s. 143(3) of the Act are hereby quashed. Ground Nos. 13 and 14 are allowed. 10. Since we have quashed the assessments for the AYs 2018-19 to 2021-22 on the above legal grounds all other grounds on merit need not be adjudicated as they become only academic in nature and therefore, they are left open. 11. In the result, the appeals of the assessee are partly allowed as indicated above. Order pronounced in the open court on 25.02.2026. Sd/- Sd/- [M. BALAGANESH] [C.N. PRASAD] ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.02.2026 NEHA , Sr.P.S.* Printed from counselvise.com Page | 13 Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "