M/S. SHAHI EXPORTS PVT. LTD.,NEW DELHI V. ACIT, NEW DELHI

ITA 2415/DEL/2017

AI Insights

The case involves Shahi Exports P. Ltd., the appellant, contesting the validity of an assessment order for the Assessment Year 2009-10. The primary contention was that the approval for the assessment order under section 153D of the Income Tax Act, 1961, was granted in a mechanical manner by the JCIT, without any substantive examination or application of mind. The Tribunal examined similar precedents and found that the approval process in this case was indeed mechanical and without due consideration of the individual circumstances of the assessee, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717733 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2017
• Other Referred Cases: SEH Realtors P. Ltd. vs. ACIT, PCIT vs. Shiv Kumar Nayyar, Usha Satish Salvi vs. ACIT, PCIT vs. MDLR Hotels P. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: S M.P RASTOGI; SHIVAM YADAV; DEEPAK MALIK; ADVOCATES
• Keywords: Set aside; Question of law; Search and seizure; Assessment record; Validity of assessment
• Section: 143(3); 153A

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “जी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी एम. बालगणेश, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI M. BALAGANESH, ACCOUNTANT MEMBER आअसं.2415 /िदʟी/2017 (िन.व. 2009-10) ITA No. 2415 /DEL/2017 (A.Ys. 2009-10) Shahi Exports P. Ltd., F-88, Okhla Indl. Area, Phase-1, New Delhi PAN No: AAJCS-1175-L ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, Central Circle-8, Jhandewalan, New Delhi ..... ᮧितवादी/Respondent Assessee by : S/Shri M.P Rastogi, Shivam Yadav, Deepak Malik, Advocates Department by : Shri Mahesh Kumar, CIT(DR) सुनवाई कᳱ ितिथ/ Date of hearing : 20/05/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 13/08/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-24, New Delhi [in short ‘the CIT(A)’] dated 28.02.2017, for Assessment Year 2009-10. 2. The assessee has raised an additional ground of appeal challenging validity of the assessment order on the ground that approval u/s. 153D of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) has been granted in a mechanical manner and without application of mind by the JCIT. The additional ground of appeal raised by the assessee reads as under:- Printed from counselvise.com 2 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) “That the approval as granted by Addl./ Joint Commr. of Income tax us 153D of the Income Tax Act, 1961, approving the order of the Assessing Officer, in a mechanical manner and without application of mind and consequently the order as passed by the Assessing Officer in furtherance of such alleged mechanical approval is invalid and bad in law.\". 3. The ld. DR vehemently opposed the additional ground of appeal raised by the assessee at belated stage. 4. After considering the application of the assessee for admitting additional ground of appeal and objection of the ld. DR, we are of considered view that the assessee by way of additional ground has raised a legal issue which goes to the root of validity of assessment order, hence, the same deserves to be admitted. Accordingly, the aforementioned additional ground of appeal is admitted for adjudication. 5. Shri M. P Rastogi, appearing on behalf of the assessee placed on record copy of approval dated 27.03.2015 granted u/s. 153D of the Act and submitted that the Assessing Officer (AO) on 27.03.2015 sent 115 Draft Assessment Orders in the case of various assessees and for multiple assessment years for approval u/s. 153D of the Act. The Joint Commissioner of Income Tax (in short ‘JCIT’) on the same date i.e. 27.03.2015 vide singe order granted approval to all the Draft Assessment Orders. The ld. Counsel submitted that the manner in which approval has been granted by the JCIT clearly shows non application of mind. The approval has been granted in a mechanical manner. He further placed on record other approvals from the same JCIT dated 27.03.2015, the JCIT had granted approval in as many as 232 cases u/s. 153D of the Act on a single day. It is humanly impossible that approval in 232 cases can be granted in a single day after examining draft assessment order and incriminating Printed from counselvise.com 3 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) material and other relevant documents. The ld. Counsel placing reliance on the decision of the Coordinate Bench in the case of SEH Realtors P. Ltd. vs. ACIT in ITA No. 2503/Del/2017 for AY 2013-14 decided on 23.07.2024, wherein, the Tribunal after following decision rendered in the case of PCIT vs. Shiv Kumar Nayyar reported as 163 taxmann.com 9 (Delhi) held that the approval granted u/s. 153D of the Act was in a mechanical manner and without application of mind. The assessment framed consequent to such mechanical approval was quashed. He pointed that approval to SEH Realtors P Ltd. for AY 2013-14 (supra) and the assessee for impugned assessment year was granted by the JCIT vide same order. The ld. Counsel submitted that in light of the decision of Coordinate Bench of the Tribunal in the case of SEH Realtors P. Ltd. (supra) the present assessment order dated 30.03.2015 in the case of assessee is liable to be quashed, as the same arises from approval granted u/s. 153D of the Act in a mechanical manner without proper application of mind. 6. Per contra, Shri Mahesh Kumar, representing the department vehemently opposed the additional ground of appeal raised by the assessee. The ld. DR submitted that the additional ground challenging validity of approval u/s. 153D of the Act was raised before the Tribunal on 10.02.2022, whereas, the appeal was filed by the assessee before the Tribunal in April 2017. The additional ground raised by the assessee is highly belated. The ld. DR further contended that before passing the assessment order u/s. 153A r.w.s. 153D and 143(3) of the Act, the AO as mandated under the Act had taken prior approval of the JCIT, Central Range-2, New Delhi u/s. 153D of the Act. He referred to CBDT Guidelines F.No.286/161/2006-IT(INV.II) dated 22.12.2006. The said guidelines mandate that assessment in all cases be it search of group or an assessee, assessment are framed simultaneously to ensure coordinated decision making and eliminate the possibility of assessments being made in the Printed from counselvise.com 4 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) wrong hands or for the incorrect assessment years. In search cases, the Range had i.e. (Additional/Joint Commissioner of Income Tax) is fully aware of the progress of the assessment proceedings, the relevant issues concerning different assessees and the nature and content of the seized material. The ld. DR pointed that the aforesaid CBDT Guidelines explicitly emphasis the close coordination required in search and seizure assessments. Therefore, it is reasonable to conclude that, in accordance with prevailing administrative practices and guidelines, the approving authority as a comprehensive understanding of the issues involved in a particular case well in advance, prior to the case being submitted to him for approval u/s. 153D of the Act. The ld. DR asserted that by no stretch of imagination it should be inferred that the JCIT has granted approval in a routine and casual manner without considering the facts of the case. The JCIT before granting approval examines the record and is always engaged in discussions with the Assessing Officer from time to time as per the CBDT Guidelines referred above. The assessee has merely made bald assertions of approval u/s. 153D of the Act in a mechanical manner, without furnishing any supporting documents or specific evidence to substantiate such claim. 7. The ld. DR further contended that the expression used in section 153D of the Act \"each assessment year\", refers to the year involved in the search, and does not imply the necessity of separate approval for each individual year. The argument raised by the Counsel of the assessee therefore lacks statutory foundation and fails to recognize legislative intent behind section 153D of the Act. The ld. DR in support of his submissions placed reliance on the decision of Mumbai Bench of Tribunal in the case of Usha Satish Salvi vs. ACIT in ITA No. 4239/Mum/2023 for AY 2012-13 decided on 23.01.2025. Printed from counselvise.com 5 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) 8. We have heard the submissions made by rival sides and have examined the orders of authorities below. The assessee at this stage has raised solitary legal issue assailing validity of approval u/s. 153D of the Act. The assessee has placed on record copy of the approval dated 27.03.2015 u/s. 153D of the Act, the same is reproduced herein below:- Printed from counselvise.com 6 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) Printed from counselvise.com 7 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) Printed from counselvise.com 8 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) 9. As per the documents available on record the Assessing Officer vide communication dated 27.03.2015 sought approval u/s. 153D of the Act in as many as 115 cases. A perusal of such communication shows that the assessee had only sent Draft Assessment Orders to the JCIT. The JCIT on the same date i.e. 27.03.2015 accorded approval u/s. 153D of the Act in all 115 cases. It is not emanating from the said approval so whether that the JCIT has examined the Draft Assessment Orders or seized material or any relevant material in respect of each of the cases. The approval has been accorded by the JCIT without application of mind in a mechanical manner. The Coordinate Bench in the case of SEH Realtors P. Ltd. (supra) wherein, the same approval was under challenge [The approval in the case of SEH Realtors P. Ltd. (supra) for AY 2013-14 (at serial no. 7) and the case of assessee was same], following the decision rendered in the case of PCIT vs. Anuj Bansal 165 taxmann.com 2 (Delhi) and PCIT vs. Shiv kumar Nayyar (supra) held that the approval u/s. 153D of the Act granted by JCIT is in a mechanical manner without due application of mind, thus, making the approval process a mere ritual. The Tribunal quashed the assessment order based on such mechanical approval. For the sake of completeness, the relevant excerpts from the order of Tribunal are extracted herein under:- “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 the ld. 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 ld. 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 ld. JCIT seeking approval of draft assessment order u/s 153D of the Act. The ld. 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 ld. 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, Printed from counselvise.com 9 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCIT vs. 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 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 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 without any assessment records what to say about the search material. As mentioned earlier, Printed from counselvise.com 10 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) 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 292B of the Act. 16. We are not inclined to interdict the order of the Tribunal.\" 10. The ld. 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. 11. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in holding that the Printed from counselvise.com 11 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) approval u/s 153D of the Act has been granted by the ld. JCIT in the instant case before us in a mechanical manner without due application of mind, thereby making the approval proceedings by a high ranking authority, an empty ritual. Such an approval has neither been mandated by the provisions of the Act nor endorsed by the decisions of the Hon'ble Orissa High Court; Hon'ble Allahabad High Court and Hon‟ble Jurisdictional High Court (Delhi High Court) referred to supra. Hence, we find lot of force in the arguments advanced by the Ld. AR in support of the ground raised in the Cross Objections of the assessee. Hence the assessment framed for the Asst Year 2013-14 by the ld. AO is hereby declared as void abinitio and is hereby quashed. Accordingly, the ground raised by the assessee in the Cross Objection is hereby allowed.” 10. The Hon'ble Delhi High Court in the case of PCIT vs. MDLR Hotels P. Ltd. 163 taxmann.com 327 (Delhi) held that where approval u/s. 153D of the Act has been accorded to as many as 246 proposed assessments by way of a single letter such approval is without application of mind in a mechanical manner. 11. Thus, in light of the fact that approval u/s. 153D of the Act has been granted in the case of assessee along with other 154 cases in a single day without examining the assessment folders such approval fails the test of judicial scrutiny. The Coordinate Bench of Tribunal in the case of SEH Realtors P Ltd. (supra) has already held the said approval as mechanical and without application of mind by the JCIT and has quashed the assessment order. We see no reason to take a different view in the case of present assessee to whom approval has been granted in the same very communication dated 27.03.2015. 12. The ld. DR has argued that in search cases the Range head i.e. Additional/Joint CIT is fully aware of the progress of the assessment proceedings, the relevant issues concerning different assessees and content of the seized material. However, the said assertions are unsubstantiated. Nowhere it is emanating from records or the Printed from counselvise.com 12 ITA No. 2415 /DEL/2017 (A.Y. 2009-10) approval granted u/s. 153D of the Act that the JCIT has examined the seized material before according approval under section 153D of the Act. In light of facts of the case, we hold the assessment order dated 30.03.2015 passed u/s. 153A r.w.s. 153C and 143(3) of the Act for impugned assessment year in valid and the same emanates from the approval granted in a mechanical manner. 13. In the result, impugned order is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Wednesday the 13th day of August, 2025. Sd/- Sd/- (M. BALAGANESH) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 13 /08/2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "