PANACEA BIOTEC LTD.,NEW DELHI V. ACIT, NEW DELHI

ITA 5562/DEL/2015

AI Insights

The case involves multiple appeals by the Revenue against M/s Panacea Boitec Ltd. concerning assessments for the years 2005-06 to 2012-13. The primary issue was the validity of the assessments made under section 153A read with section 143(3) of the Income Tax Act, following a search and seizure operation. The Revenue challenged the CIT(A)'s decision which had allowed the assessee's appeal against the additions made by the Assessing Officer (AO) on grounds of bogus purchases. The Tribunal examined whether the approval under section 153D for these assessments was granted in a manner compliant with the statutory requirements, particularly whether it involved a mechanical and arbitrary process without proper application of mind.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841688 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 24-09-2015
• Other Referred Cases: CIT vs Krishnaveni Ammal, CIT vs Motor General Finance Ltd., ACIT vs Sant Lal Aggrawal group, PCIT vs Shiv Kumar Nayyar, PCIT vs Anuj Bansal, PCIT vs Sapna Gupta, ACTT vs Serajuddin & Co., PCTT vs Anuj Bansal, ACIT vs Serajuddin & Co., Millenium Vinimay Pvt. Ltd. vs ACIT, M.G. Metalloy Pvt. Ltd. vs DCIT, Shiv Kumar Nayyar vs ACIT, Arvind Kumar Jain vs ACIT, Parasram Holdings Pvt. Ltd. vs DCIT, Income-tax Officer vs Bishambhar Dayal Agrawal, Asstt. CIT Central Circle-2(1) vs M/s GM Modular Pvt. Ltd., Income Tax Officer vs Parmanand Gupta, ACIT vs Splendor Landbase Lts.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RESPONDENT ASSESSEE FILED AN
• Assessee Lawyers: SALIL AGARWAL
• Keywords: Set aside; Question of law; Corroborative evidences; Documents seized; Bogus purchase; Onus to prove; Gift; Search and seizure; Accommodation entries; Competent authority; Tangible material; Procedural lapse; Bogus
• Section: 148; 143(3); 142(1); 132; 153A; 10; 14A; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA Nos.5615 to 5622/Del/2015 (ASSESSMENT YEARS 2005-06 to 2012-13) DCIT, Central Circle-05, New Delhi. Vs. M/s Panacea Boitec Limited, G-3/B-1 Extension, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi-110044. PAN-AAACP5335J (Appellant) (Respondent) ITA Nos.5562 & 5563/Del/2015 (ASSESSMENT YEARS 2010-11 & 2011-12) M/s Panacea Boitec Limited, G-3/B-1 Extension, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi-110044. PAN-AAACP5335J Vs. ACIT, Central Circle-05, New Delhi. (Appellant) (Respondent) Assessee by Shri Salil Agarwal, Adv. Shri Shailesh Gupta, Adv. & Shri Madhur Agarwal, Adv. Department by Ms. Monika Singh, CIT-DR Date of Hearing 28.01.2026 Date of Pronouncement 27.02.2026 O R D E R PER VIMAL KUMAR, JM: The above captioned eight appeals filed by the Revenue are against separate orders dated 24.07.2015 of Learned Commissioner of Income Tax (Appeals)-24 New Printed from counselvise.com 2 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. Delhi [hereinafter referred to as ‘the Ld. CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’), arising out of distinct assessment orders dated 28.03.2013 passed by the Assessing Officer/DCIT, Central Circle-20, New Delhi [herein referred to as ‘the AO’] u/s 148/143(3) of the Act for Assessment Years 2005-06 to 2012-13 respectively. 2. Assessee filed appeals No.5562/Del/2015 and 5563/Del/2015 against orders of Ld. CIT(A)-24, New Delhi dated 27.07.2015 arising out of Assessment Orders dated 30.03.2015 u/s 153A r.w.s 143(3) o the Act for Assessment Years 2010-11 & 2011-12 respectively. 3. All appeals involve similar facts, grounds of appeal and issues. Therefore, these appeals were taken up together and heard. All are being disposed off by this common order for the sake of convenience. 4. First we take up the appeal of Revenue for Assessment Year 2005-06 in ITA No.5615/Del/2015. 5. The brief facts of the case are that the assessee filed return of income declaring income of Rs.17,57,02,520/- and book profit u/s 115JB of Rs.42,93,50,253/- on 30.10.2005. Assessment u/s 143(3) of the act was completed at income of Rs.17,88,19,076/-. Under normal course. A search and seizure operation u/s 132 of the Act was carried out in the case of assessee on 10.01.2012. The case of assessee was transferred to the AO u/s 127 by the orders of Ld. CIT (Central)-1, Delhi vide Order F. No. CIT-V/Centralization/2012-13/773 dated 19.07.2012. The case of the assessee was reopened u/s 148 on pretext that certain purchases from a company named Central Plus Overseas Limited, Hong Kong are not genuine and a Notice u/s 148 of the Income Tax Act, 1961 dated 29.03.2012 was issued to the assessee requiring it file the return of Printed from counselvise.com 3 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. income for the AY 2005-06. Return of income for the AY 2005-06, in reply to this notice was filed by the assessee on 27.04.2012 in Circle 14(1), New Delhi declaring a total income of Rs.17,57,02,520/-. Notice u/s 143(2) and 142(1) along with a questionnaire were issued to the assessee on 05.03.2013 requiring it to file necessary details. Shri Sunil Kapoor, Advocate and Authorized Representative of the assessee, attended the proceedings and filed power of Attorney and other details from time to time. On completion of proceedings, Ld.AO vide order dated 28.03.2013 made addition of Rs.27,20,24,922/- for AY 2005-06. 6. Similarly, the Ld.AO vide separate orders dated 28.03.2013 made additions for Assessment Year 2006-07 to 2012-13. 7. Against orders dated 28.03.2013 the assessee filed appeals before the Ld. CIT(A) which were allowed vide orders dated 24.07.2015. 8. Being aggrieved, the Department of Revenue preferred aforesaid eight appeals i.e., ITA No.5615 to 5622/Del/2015. The grounds of appeal of ITA No.5615/Del/2015 are as under: “01. That the Learned Assessing Officer is unjustified in disallowing Rs.27,20,24,922/- onthe pretext that such purchases were bogus and unaccounted for the Asst. Year 2005-06. 02. That the Appellant craves for permissions to the file and/or amend any grounds of appeal either before or at the time of hearing of the appeal. That the above addition/disallowance merits to be deleted.” 9. The Learned Authorized Representative for respondent assessee filed an application under Rule 27 of the Income Tax Appellate Tribunal, 1963 dated 19.09.2025 with following additional ground:- “1. Additional Ground No. 1 That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in overlooking the basic fact that no Printed from counselvise.com 4 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. incriminating material was found during the course of search and the assessment as contemplated under section 153A is not a de novo assessment and as such, the additions so made by assessing officer are beyond the scope of assessment under section 153A of the Act and are liable to be deleted in totality Additional Ground No. 2 That on the facts and circumstances of the case the approval accorded under section 153D of the Act (if any) is a mechanical and arbitrary approval without there being any application of mind and also without satisfying the statutory preconditions of the Act and as such, the assessment so framed is null and void and deserves to be quashed.\" 10. Ld. Authorized Representative for respondent assessee submitted that: “At the outset and in support of Additional Ground No. 2 so raised in Rule 27 Application by the assessee - respondent, it is most humbly submitted that that in the aforesaid matter, approval under section 153D of the Act is a common approval bearing common numbers i.e., 153D/CC-16/2013-14/1225 dated 30.03.2015. Said common approval pertains to? assessment years i.e. AY 2006-07 to 2012-13, which has been accorded by learned JCIT under section 153D of the Act. 2. Copies of assessment orders under section 153A / 143(3) of the Act in aforesaid matters is enclosed in the paper book at S. No. 2 (Relevant pages 22 to 28 of the PB-III which shows that common approval is accorded by JCIT). As such, it is most humbly submitted that even though, copy of approval u/s 153D has not been submitted by the Revenue, though specific directions have been given by Hon'ble Bench on various occasions, and even though copy of forwarding letter dated 27.03.2015 by AO to JCIT seeking approval, was submitted by learned CIT DR which is again consolidated and cannot be construed as approval under section 153D by JCIT. It is submitted that it is a trite law, if the best evidence is not placed before the court despite a specific direction by the ITAT,AN adverse inference can be drawn against the person who ought to have produce it before the Cover Reliance is placed on following case laws on the aforesaid proposition: CIT vs Krishnaveni Ammal (Madras High Court) reported in 158 ITR 826. CIT vs Motor General Finance Ltd. (Delhi High Court) reported in 254 ITR 449. 3. clear that the approval accorded under section 153D of the instant-case is a mechanical approval without there being separate approval for each assessment year. Reliance is placed on following case laws on the aforesaid proposition: Particulars Order of Hon'ble ITAT Delhi in the case of Sh. Ramesh Sharma in ITA No. 6881/Del/2014 (Annexure - A) - under similar circumstances Order of Hon'ble ITAT Delhi in the case of Smt. Usha Sharma in ITA No. 480/Del/2025 (Annexure - B) under similar circumstances Printed from counselvise.com 5 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. Order of Hon'ble ITAT Delhi in the case of ACIT vs Sant Lal Aggwral group in ITA No. 6195/Del/2017, pertaining to same group. wherein, identical issue has been decided by Hon'ble ITAT Delhi and it has been held that approval under section 153D is bad in law and thus, assessments so made are vitiated in law(Annexure-C) under similar circumstances Judgment of Hon'ble High Court of Delhi in the case of PCIT vs Shiv Kumar Nayyar reported in 163 taxmann.com 9. Judgment of Hon'ble High Court of Delhi in the case of PCIT vs Anuj Bansal reported in 165 taxmann.com 2. Judgment of Hon'ble High Court of Allahabad in the case of PCIT vs Sapna Gupta reported in 147 taxmann.com 288. Judgment of Hon'ble High Court of Orissa in the case of ACTT vs Serajuddin & Co. reported in 454 ITR 312 Judgment of Hon'ble Supreme Court in the case of PCTT vs Anuj Bansal reported in 165 Taxmann.com. Judgment of Hon'ble Hon'ble Supreme Court in the case of ACIT vs Serajuddin & Co. reported in 163 taxmann.com 118. Order of Hon'ble ITAT Delhi in the case of Millenium Vinimay Pvt. Ltd. vs ACIT in ITA No. 458/Del/2022. Order of Hon'ble ITAT Delhi in the case of M.G. Metalloy Pvt. Ltd. vs DCIT in ITA No. 3693/Del/2018. Order of Hon'ble ITAT Delhi in the case of Shiv Kumar Nayyar vs ACIT in ITA No. 1282 to 1285/Del/2020. Order of Hon'ble ITAT Delhi in the case of Arvind Kumar Jain vs ACIT in ITA Nos. 1373 to 1377/Del/20202. Order of Hon'ble ITAT Delhi in the case of Parasram Holdings Pvt. Ltd. vs DCIT in ITA No. 2824 to 2827/Del/2023. 3. Further, with regard to the admissibility of the legal grounds under Rule 11 and Rule 27 of the ITAT Rules, it is most humbly submitted that scope of powers of this Tribunal under section 254(1) of the Act is very wide and exhaustive, which gives right to Tribunal to pass any order \"as it thinks fit\". Rule 11 only complements the wide powers conferred upon the Tribunal under section 254(1) to render substantive justice to the party before it. Thus, it is submitted that that a constructive reading of section 254(1) of the Act and Rule 11 of ITAT Rules makes it amply clear that Tribunal is competent to consider any ground or issue not even taken by either of the parties, if the same is found relevant to decide the appeal pending before it. Reliance is placed on the judgment of Hon'ble Guwahati High Court in the case of Assam Co. (India) Ltd. v. Commissioner of Income-tax. [2003] 133 Taxman 159, 176 CTR 406 (Gauhati). It is further, submitted that it is otherwise well settled proposition of law that the respondent is entitled to raise a legal ground at any stage of the proceedings, even though he may not have filed an appeal against such an order. The judicial pronouncements in support of the aforesaid propositions are as under: i) 436 ITR 676 (Bom) (Peter Var vs CIT) ii) 83 ITR 223 (Bom) B.R. Bamsi vs. CIT) iii) 2016 3 SCC 643 Shree Bhagwati Steel Rolling Mill vs CCE (SC) iv) 129 ITR 475 (All) (Moralia& Sons / CIT) Printed from counselvise.com 6 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. v) 220 ITR 398 (Ker) (CIT vs Cochin Refinieries Ltd) vi 176 CTR 406 (Gun) (Assam Company (1) Ltd vis CIT) vii) 162 ITD 189 (Del) (ITO vs Gurvinder Kaur) viii) 284 TTR 80 (SC) CIT V. Varas International P.Ltd.( ix) 149 Taxmann 456 (Guj) Kharid Vechan Sangh Ltd. vs CIT. x) 397 ITR 282 (All) CTT vs Jindal Polyster Ltd. 4. Further reliance is placed on the orders of Hon'ble benches of the Tribunal on the cases of I) Income-tax Officer v. Bishambhar Dayal Agrawal [2024] 161 taxmann.com 1063 (Raipur - Trib.), ii) Asstt. CIT Central Circle-2(1) v. M/s GM Modular Pvt. Ltd.. ITA Nos. 3033 40 3038/MUM/2022 order dated 31/05/2023, ii) Income Tax Officer v. Parmanand Gupta [2023] 156 taxmann.com 551 (Raipur - Trib.) and iv) ACIT vs Splendor Landbase Lts. In ITA No. 2462/Del/2016 (Delhi ITAT), wherein. Hon'ble Tribunal has allowed the assesset to raise a ground of appeal which is jurisdictional in nature and goes to the root of the matter by invoking Rule 27 of the ITAT Rules irrespective of the fact that the whether such, ground was raised before the CIT(A) or not. 5. That further, with regards to additional ground no. I relevant for AY 2006-07 to 2010- 11, which were admittedly concluded on the date of search and it is submitted that additions therein, could not have been made beyond the incriminating material found during the course of search. A bare perusal of all the above assessment orders would demonstrate that the additions have only been made on the hasis of entries already recorded in the books of accounts of the assessee and as such, are beyond the scope of assessments so made under section 153A of the Act. Thus, it is most humbly submitted that, instant proceedings can be quashed on this ground also (additions being beyond the scope of provisions of section 153A of the Act), reliance is placed on following case laws: a) PCIT vs Abhisar Buildwell (P) Ltd. (SC) reported in 454 ITR 212 b) Commissioner of Income Tax, (Central) - III Vs Kabul Chawla ITA по 707/2014, (Delhi High Court) reported in 380 ITR 573. c) CIT vs Singhad Technical Education Society (SC) 397 ITR 344 d) Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (Delhi HC) reported in 395 ITR 526. 6. In view of the aforesaid, it is most humbly submitted that, instant assessment orders u/s 153A of the Act be held to be bad in law, being without jurisdiction for lack of proper approval under section 153D of the Act and additional ground no. 2 (relevant to AY. 2006- 07 10 2012-13) so raised in Rule 27 of the Act be allowed. That further, even with regards to additional ground no. I relevant for AY 2006-07 to 2010-11 the additions made are beyond the scope of assessment under section 153A of the Act, as such, the same may also be allowed.” Ld. Authorized Representative for respondent assessee submitted as under: “1. Assessee Company filed return of income for the impugned assessment year declaring an income of a sum of Rs. 17, 57, 82, 520/- on 30.10.2005, which was assessed under section 1433) of the Act at a sum of Rs.17,88,18,076/- on 31.12.2007. Printed from counselvise.com 7 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. Thereafter, rea proceedings were initiated under section 147 of the Act vide issuance of notice under section 148 of the Act dated 29.01.2012. Further, reassessment order was passed under section 148 1433) of the Act dated 28.01.2013, wherein, disallowance was made of a sum of Rs. 27, 20, 24, 922/-on account of alleged bogus purchases from M/s Central Plus Overseas Ltd. 1.1 Thereafter, learned CTT (A) vide order dated 24.07.2015 allowed the appeal of assessee company by holding that the purchases made from M/s Central Plus Overseas Ltd. were genuine and allowable expenditure, gist of findings of learned CIT (A) are as followed: 1.2 Assessee has been procuring goods through Mie Central Plus Overseas Lad, since the year 2001 and all the requisite documentary evidences were submitted by the assessor with regards to purchases made from the said company, Further, prior to year 2006 there was no requirement to enter into any agreement with the supplier distributor, however, WHO to whom the appellant further sold its products came with a requirement in the year 2006 that the appellant should sign agreement with distributors through which it procures its goods. At that stage, the assessee changed as distributor to M/s Biotech Asia Co. Lad, because agreement with M/s Central Plus Overseas Ltd. not progressing satisfactorily (Pg. 6 and 7 para 4.3.7 of CIT (A) order) 1.3 Further, with regards to findings of learned AO with regards to mismatch in custom documents, learned CIT (A) after examining the material on record held that the allegation of learned AO that in some cases date of Airway bills and date of receipts of goods is well after the date of submission of bill of entry is misconceived and on wrong understanding of facts by learned AO. Since, the vaccines are shipped in cold chain system at-40 degree Celsius in a highly controlled temperature environment and these goods cannot be allowed to wait in custom warehouse for long due to their perishable nature, as such, the bill of entry if submitted to the customs department for processing well before the arrival of the goods so that the goods are immediately cleared upon physical verification of the custom authorities. After examining the same, learned CIT (A) was satisfied and held that there is no discrepancy in custom documents, as has been held by leaked AO (Pg. 7 to 9 para 4.3.8 to 4.1.11 of CIT (A) order). 1.4 Further, learned CIT (A) after calling of a remand report from learned AO held that report received from Government of Indonesia unequivocally states that the Indonesian Manufacturer M/s PT. Bio Pharma exported to M/s Central Plus Overseas Lid, boat delivery of goods was made to Panacea Biotec Ltd, thus, establishing the link among the appellant, Central Plus Overseas Lad, and the supplier (Pg. 11 to 12 para 4.3.14 to 4.3.15). 1.5 That further, even going by the principles of consistency there is no need for any disallowance account of purchases from M/s Central Plus Overseas Lad, since, in Printed from counselvise.com 8 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. the past. AY 2002-03 to 2004-05, purchases made from said entity have been accepted by the Revenue in assessments made under section 143(3) of the Act, as such, the same needs to be allowed in impugned AY 2005-06, there being change in facts and circumstances. 1.6. That at this juncture, reliance is placed on the judgments of Hon'ble Calcutta High Court in the case of Prahlad Bhattacharya vi CIT reported in 386 ITR 708 and Hon'ble Jurisdictional Delhi High Court in the case of CIT vs Mis Surendra Bildtech Pvt. Ltd. in ITA No.141/2012 on the proposition that “Revenue has failed to rebut the findings so recorded by Learned CIT(A) by brining any contrary material on record, as such, the finding so recorded by lower authority based on documentary evidences need be upheld.” 2. In view of the aforesaid, it most humbly prayed that appeal of the Revenue be dismissed. 11. Ld. Authorized Departmental representative submitted as under: “Assessee has filed application under rule 27 of the Income tax appellate Tribunal, Rules, 1963 Raised 2 Additional Grounds, which are reiterated herein below: “a. Additional Ground No, I That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in overlooking the basic fact that no incriminating material was found during the course of search and the assessment as contemplated under section 153A is not a de novo assessment and as such, the additions so made by assessing officer are beyond the scope of assessment under section 153A of the Act and are liable to be deleted in totality b. Additional Ground No. 2 That on the facts and circumstances of the case the approval accorded under section 153D of the Act (if any) is a mechanical and arbitrary approval without there being any application of mind and also without satisfying the statutory preconditions of the Act and as such, the assessment so framed is null and void and deserves to be quashed. INTRODUCTION The assessee has filed an application under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, seeking to raise two additional grounds: 1) No incriminating material was found during search, rendering the assessment u/s 153A beyond jurisdictional scope; and 2) The Section 153D approval was mechanical and arbitrary, vitiating the assessment. The Revenue respectfully submits that both grounds are statutorily inadmissible under Rule 27 and factually and legally baseless on merits. II. RULE 27 STATUTORY REQUIREMENT A. The Two Mandatory Prerequisites Rule 27 of the ITAT Rules, 1963, reads: Printed from counselvise.com 9 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. \"The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.\"  The ground must be filed before the previous appellate authority CIT/A or equivalent).  The ground must be specifically decided against the respondent in that authority's order. Both conditions are conjunctive. The failure of either renders the application non- maintainable. B. Judicial Interpretation The ITAT, in ACIT v. Faridabad Presswell Pvt. Ltd. ITA No. 2801/Del/2024, Bench I, Delhi ITAT, squarely rejected an identically worded additional ground relating to mechanical Section 153D approval. The Tribunal held: \"For a ground to be raised under Rule 27, it must have been filed before the previous appellate authority and subsequently decided against the respondent in that order... the assessee had not taken any ground w. r. 1. mechanical approval under section 153D...and therefore this ground was neither before the previous appellate authority nor was it adjudicated against the assessee. In view of the facts and circumstances of the case, it is apparent beyond doubt that the assessee does not satisfy the prerequisites of Rule 27...and hence, is NOT eligible to file application under Rule 27.\" Further, the ITAT applied the Sanjay Sawhney v. PCIT Delhi HC, 18.05.2020, 2020 116 Taxmann.com 701 standard, which provides that for Rule 27 invocation, the legal issue must be explicitly raised and rejected by the lower authority, or at minimum sufficiently ventilated in appellate proceedings. Generic grounds do not suffice; specific legal contentions must be canvassed. Revenue presses that in the Instant Case Both additional grounds fail this test categorically. II. ADDITIONAL GROUND NO. 1 \"NO INCRIMINATING MATERIAL FOUND\" RULE 27 INADMISSIBILITY A. Ground Not Raised or Decided by CIT(A) AY 2009-2010 (Lend Year) The CIT (A) order dated 27.07.2015 addresses three substantive grounds raised by the assessee Form-35  Doctors' Expenditure Rs. 13.36 Crores): The CIT(A) examined whether the MCI Guidelines prohibition (amended 10.12.2009) had retrospective application. The CIT (A) held that the prohibition was prospective and therefore did not invalidate FY 2008 09 AY 2009 10) expenditure. Additionally, the CIT A) verified that Fringe Benefit Tax had been discharged on these amounts' u/s 115WA. The ground for deletion was substantive application of the prospective principle not absence of incriminating material.  Farmaco Corporation Rs. 2.86 Crores): The CIT (A) examined the BVI incorporation claim, verified the production of Certificates of Incorporation and Good Standing, and held that payments through banking channels to an identified party (even if internal irregularities existed in the payee's corporate Printed from counselvise.com 10 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. history) were valid under the doctrine of Royal British Bank v. Turquand. The ground for deletion was substantive finding of genuine transaction not absence of incriminating material.  Section 14A Disallowance Rs. 5.21 Crores): The CIT (A) examined whether Section 14A applied absent dividend income earned. Following the Delhi High Court's decision in CIT v. Holcim India Pvt. Ltd., the CIT (A) held that Section 14A could not be invoked. The Assessee's CIT (A) Grounds Did Not Raise This Issue Rule 27 Conclusion: The ground was neither filed before CIT (A)) nor addressed by CIT (A). It is statutorily barred. IV. ADDITIONAL GROUND NO. 2 \"MECHANICAL SECTION 153D APPROVAL\"- RULE 27 INADMISSIBILITY A. Ground Not Raised or Decided by CIT (A) The CIT (A) order makes no mention of the Section 153D approval process, its validity, or the way it was granted. The order is entirely devoted to substantive merits of the three additions, not to jurisdictional or procedural defects in the assessment. Section 153D approval is not mentioned in any paragraph. The assessee's original grounds (Ground 1-4, Para 2) do not specifically challenge Section 153D approval either. While Ground 1 is generic (\"not correct in law and facts\"), it does not surface the specific legal issue of mechanical approval under Section 153D. The Delhi HC in Sanjay Sawhney v. PCIT 2020 held that while Rule 27 may, in rare circumstances, permit grounds not formally written but sufficiently \"ventilated\" in appellate proceedings, the issue must have been raised with sufficient specificity for the lower authority to comprehend and address it Here, there is no ventilation, explicit or implicit, of the Section 153D approval issue before the CIT (A) Rule 27 Conclusion: The ground is statutorily inadmissible. Moreover, The Supreme Court, in S. Narayanappa v. CIT 1967 631TR219 SC, held that the stage of obtaining approval from a higher authority is administrative in character, not quasi-judicial. The Court observed: \"The earlier stage of the proceeding for recording the reasons of the Income-tax Officer and for obtaining the sanction of the Commissioner are administrative in character and are not quasi-judicial.\" Application to Section 153D. The approval by the competent JCIT is an administrative gatekeeping function, not a merits-evaluation forum. The statute mandates:  The AO must be below the rank of ICIT.  Approval must be granted by a competent JCIT.  Approval must be prior to passing the order. The statute does NOT mandate:  That the JCIT conduct independent substantive review.  That the JCIT provide elaborate reasons.  That the JCIT re-examine all seized material. Printed from counselvise.com 11 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd.  That the JCIT agree with the AO's conclusions The assessee's argument that \"without application of mind\" the approval is mechanical and voidable conflates administrative approval with merits adjudication. This conflation contradicts S. Narayanappa. V. MERITS CONTEMPORANEOUS EVIDENCE NEGATES BOTH GROUNDS A. The Section 153D Approval Letter Dated 27.03.2015 The ACIT, CC 5, New Delhi, submitted a letter dated 27.03.2015 to the JCIT, Central Range-II (Copy enclosed) That directly and categorically refutes both additional grounds: B. Incriminating Material Was Abundantly Found and Verified The A CIT's explicit statement that draft orders were prepared \"after verifying the seized material\" directly establishes that: Seized material existed (compute media, panchnamas, detailed annexures). Such material was examined and analyzed (the Appraisal Report synthesized issues arising therefrom), The verification was substantive, not perfunctory (reference to specific categories of seized material and detailed review process). Doctors' Expenditure:  Annexure A-9, Annexures AA 3 to AA 15 AO Order, Pages 1-21 Holiday vouchers, Doctors Meet Ledger, CME Ledger, Conference Meeting Ledger, rooming lists.  These documents were seized, analyzed, and cross-checked against doctors' statements u/s 131.  Incriminating Finding: Dr. Sanjiv Saxena's affidavit explicitly denying receipt of travel reimbursement and gifts, contradicting seized ledger entries Farmaco Corporation:  Ledgers, agreements, MOUs, payment records AO Order, Pages 21-31.  FT&TR investigation (government-to-government inquiry via CBDT Investigation Wing).  Incriminating Finding: Four separate UK entities named Farmaco Corporation Ltd.intermittently dissolved Reg. 05039184 dissolved 16.06.2005; payments made Oct 2008 Mar 2009-three years after entity dissolution). The assessee's assertion that \"no incriminating material was found\" is factually belied by the assessment order itself and categorically refuted by the Section 153D approval letter's certification. C. Section 153D Approval Was Not Mechanical The approval letters affirmatively demonstrate substantive, non-mechanical approval:  After verifying the seized material including compute media, panchnamas and its annexures  The issues mentioned in the Appraisal Report and arising out of seized material have been examined Printed from counselvise.com 12 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd.  Statements recorded and Inquires conducted  The return of income has also been verified with reference to the balance sheet, profit and loss account and other relevant details\"  The inquiries wherever necessary have been carried out Sequential Compliance with Section 153D D. Contrast with Mechanical Approval Cases: Cases such as Rajat Minerals Pvt. Ltd. ITAT Ranchi) or Tarachand Khatri ITAT Jabalpur) found mechanical approval where:  No approval letter was on file or approval was undated.  Approval was granted on the same date as the assessment order (suggesting post-facto).  The JCIT's approval letter stated he \"merely believed the AO without independent review. None of these red flags exist in Panacea Biotech: Approval letter exists, dated 27.03 2015. Assessment order dated 30.03 2015 3 days later compliant). ACIT's approval letter contains detailed narration of substantive verification. E. The Assessee Cannot Impugn Approval Without Evidence of Procedural Defect To successfully challenge Section 153D approval, the assessee must allege and prove specific procedural defects:  No approval was granted: Contradicted by approval letter dated 27.03.2015.  Approval was post-facto: Contradicted by assessment order dated 30.03.2015.  Approving authority was incompetent: No allegation; JCIT is the prescribed competent authority.  Approval was conditional or qualified: No evidence; the certification is unqualified.  Approval was obtained fraudulently: No allegation or evidence. The assessee has alleged none of these defects. In the absence of specific, proven procedural non-compliance, approval cannot be impugned. To permit otherwise would elevate administrative approval into a merits-review forum, contradicting S. Narayanappa. VI. Revenue's Final Submission A search and seizure action was conducted on M/s Panacea Biotec Ltd on 19.01.2012 u/s 132 of the Income Tax Act, 1961. The details of the additions made in various assessment years are as under: TABLE Printed from counselvise.com 13 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. As per AO'S Order: A. Addition of bogus expenses on doctors was made based on assessee's failure to furnish any documentary evidence to substantiate the claim of expenses incurred other than on doctors. Further, the addition was based on analysis of seized material. The Annexure A-9 contains Holiday vouchers, cycle meet ledger, doctors meet ledger, meeting & conference ledger, rooming list etc., which are expenses related to doctors. Hence, Annexure A-9 is clearly related to expenses made by assessee on doctors. Therefore, the addition is clearly based on the seized material. B. Addition of bogus expenditure of Farmaco Corporation was made based on information and documents seized during search operation. As per assessment order, M/s Farmaco Corporation Limited, UK, had already been struck off from the records of the UK Registrar of Companies during the relevant period, rendering it a non- existent legal entity. The Assessing Officer held that a non-existent foreign company could not have entered into valid business agreements with the assessee in India, and therefore the transactions lacked credibility. Despite repeated opportunities through questionnaires, show-cause notices and personal hearings, the assessee failed to furnish adequate supporting evidence to substantiate the transactions. Consequently, the Assessing Officer concluded that Farmaco Corporation Limited was a fake entity user to route bogus transactions, and the payments were treated as bogus expenditure and added back to the assessee's income for the relevant assessment year. C. Addition of bogus/inflated purchase from Central Plus Overseas Ltd: The addition on account of bogus/inflated purchase from Central Plus Overseas Ltd was made based on information received from FT & TR and documents seized during search operation. No company by the name of M/s Central Plus Overseas Ltd existed on its address in Hong Kong. It was seen that OPV Bulk were purchased from PT Bio Pharma & price was inflated using fake entity M/s Central Plus Overseas Pvt Ltd, Hong Kong. Hence, Assessing Officer found that apart from actual purchase, major amounts of bogus/inflated purchase existed in books of assessee in name of M/s Central Plus Overseas Pvt. Ltd VII PRAYER The Revenue respectfully submits to the Tribunal Printed from counselvise.com 14 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. The Rule 27 application must be summarily rejected for non-compliance with the mandatory prerequisites established in ACTT v. Faridabad Presswell Pvt. Ltd. and Sanjay Sawhney v. PCIT. Neither additional ground was raised before or decided by the CTT (A). On merits, both grounds fall entirely 1. Incriminating material was abundantly found, verified, and documented in the Section 153D approval letter and assessment order. 2. Section 153D approval was substantive and non-mechanical, as evidenced by the contemporaneous approval letter dated 27 03 2015 containing detailed narration of verification steps. 3. No procedural defect in approval has been alleged or proven. The assessments passed u/s 153A with Section 153D approval are valid and sustainable, and the CIT A's substantive deletions (if upheld on independent grounds) should not be disturbed based on jurisdictional or procedural challenges now raised for the first time at the ITAT stage.” 11.1 Revenue’s argument before the Tribunal are as under: “Ground 1 & 2 (Effective Combined Ground) On the facts and in the circumstances of the cave, the CITA) has erred to low and on fach in deleting the addition of 27.20.24.922- made by the 10 on account of bopus flared purchases from M's Central Plus Overseas Laid. Hong Kong A. Burden of proof and evidentiary standard in bogus purchase cases At the threshold, it is submitted that the present case is not a routine scrutiny but flows from a search a's 132, in which incriminating documents pertaining to purchases routed through Central Plus Overseas were found. Once such material raised a strong prima facie inference of manipulation in purchases, the initial onus shifted heavily on the assessee to establish the genuineness of the alleged intermediary and the commercial reality of the transactions. The statutory scheme under sections 68/69C (though formally invoked here through disallowance of purchases) consistently holds that where an explanation offered by the assessee about a credit, expenditure or transaction is unsatisfactory, the AO is entitled to treat the amount as income. The Supreme Court in CTT v. Durga Prasad More (82 ITR 540, SC, para 9-11) held that taxing authorities are entitled to look at the surrounding circumstances to see whether the assessee's story is true and are not required to put on blinkers in face of apparent camouflage. The principle is that mere paper documentation does not override the test of human probabilities. Likewise, in Sumati Dayal v. CIT (214 ITR 801, SC, para 12-14), the Court emphasised that apparent must be considered in the light of surrounding circumstances and the test of human probabilities. Where documentary evidence is internally inconsistent with conduct, timings and business realities, the AO is entitled to reject the assessee's version. Printed from counselvise.com 15 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. The AO, in the present case, marshalled a series of circumstances: absence of Central Plus in regulatory records in Hong Kong, direct shipment from manufacturers, stock register naming only manufacturers, absence of genuine commercial justification for an intermediary despite existing JV/purchase agreements, inconsistent payment pattern without interest and non-production of the core agreement. These objective facts, cumulatively. bring the case squarely within the ratio of Durga Prasad More and Sumati Dayal. The CIT(A), however, has approached the matter as if the AO was required to demonstrate, beyond doubt, that no goods were imported at all. This is a misdirection in law. Even if goods were physically received, the question is whether the routing through Central Plus and the booking of inflated or sham purchases in its name represented a colourable device to siphon profits. The Supreme Court in McDowell & Co. Ltd. v. CTO (154 ITR 148, SC, para 17-20) makes it clear that tax planning through colourable devices deserves to be unmasked. Here, the AO's case is precisely that the interposition of Central Plus, not the physical import of goods, is the sham B. Identity, genuineness and creditworthiness of Central Plus Overseas In substance, the assessee has claimed to have incurred a huge liability of 27.20 crore (USD 6,000,991) towonde Central Plus Overseas. The three classic ingredients identity, genuineness and capacity (or, in this context, commercial reality of the counter-party) must be established by the assessee, especially after a search yields incriminating material. The FT&TR-driven enquiry through the Consulate of India, Hong Kong, unambiguously reported that no such company was found on the Hong Kong business register and that physical verification did not reveal existence of Central Plus at the stated address. This is not a mere third-party letter, it is official material obtained under international cooperation mechanism and carries high evidentiary value under section 90/90A. In CIT v. Precision Finance Pvt. Ltd. (208 ITR 465, Cal, para 5-7), it was held that where the assessee fails to prove identity and capacity of the creditor and the genuineness of transactions, the AO is justified in treating credits as unexplained. The principle applies with greater force where the alleged counter-party is a foreign entity that does not even figure in the jurisdictional registry and disappears from its address. The CIT(A) has erroneously brushed this aside on the reasoning that non-existence after eight years is not conclusive. Respectfully, this is a reversal of onus: once the official foreign report states that no such entity exists at the registered address and in the business registry, the assessee must adduce credible primary evidence of its real identity such as certificate of incorporation, tax registration, audited accounts, or direct confirmation. No such material is forthcoming. The reliance on internal ledger accounts, email printouts and unilateral payment instructions cannot substitute for proof of the counter-party's legal existence and capacity. Courts have consistently held that self-serving entries do not establish Printed from counselvise.com 16 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. genuineness of a transaction. (See CIT v. N.R. Portfolio Pvt. Ltd. 263 CTR 456 (Del). para 24-29, where the Delhi High Court upheld addition when alleged share applicants lacked basic corporate trail.) The Indonesian report, which CIT(A) treats as \"clinching\", in fact reinforces the AO's case that the underlying commercial relationship was really between PT Bio Farma and the assessee. The report merely states that PT Bio Farma's sales invoices were raised in the name of Central Plus while the goods were shipped to Panacea and payment was received in a particular bank account. It does not establish that Central Plus was a real independent commercial principal performing sourcing, risk-taking or value-adding functions. On the contrary, in an arm's-length situation, such a large intermediary would leave a robust corporate and regulatory footprint in Hong Kong, which is missing. C. Commercial abnormality and test of human probabilities The AO has recorded that the assessee had (1) a 50:50 joint venture with Chiron Holdings SRL, since January 2004 and (ii) a purchase agreement with PT Bio Pharma, yet chose to interpose Central Plus in Hong Kong for procurement of the same bulk vaccines. The assessee offered only a generic explanation that this was a business decision for timely procurement. In high-value, regulated pharmaceutical supply chains, routing sensitive vaccines through an opaque entity in a tax-favoured financial centre, when the manufacturer is already contractually bound to the assessee, is commercially implausible. Under the doctrines laid down in CIT v. Durga Prasad More and Sumati Dayal v. CIT, the Tribunal is obliged to test the assessee's story against common business sense and probabilities. The CIT(A) has accepted the explanation without any independent benchmark or third-party corroboration. The Supreme Court in CIT v. P. Mohankala (291 ITR 278, SC, para 20-25) upheld additions in respect of remittances claimed as gifts from abroad, emphasising that surrounding circumstances and human conduct are decisive. Similarly, in share- capital/bogus purchase cases (e.g. N.R. Portfolio, supra), courts have looked at pattern, timing, and functionality to decide genuineness. Here, the short-lived relationship with Central Plus, confined to two years and then abruptly discontinued, without any authenticated corporate profile of the Intermediary, strongly suggests a conduit introduced for a limited tax-driven purpose. The CIT(A) relied heavily on the fact that goods were ultimately sold to WHO and tested by Central Drugs Institute. This only proves that the assessee was in the business of genuine vaccine manufacture, it does not answer whether the margin attributed to Central Plus was artificial. The sham lies in the routing and valuation, not in the existence of the final product. D. Documentary inconsistencies and unexplained conduct The AO has tabulated several objective anomalies: Printed from counselvise.com 17 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd.  Bills of entry pre-dating airway bills for highly perishable cold-chain goods.  Stock register showing only manufacturers and omitting Central Plus as supplier.  Invoice credit terms of 60-90 days while payments are made much later without interest. Failure to retain or reproduce the central agreement with Central Plus, allegedly destroyed in floods, with no FIR and no soft copy though other agreements were preserved. The assessee's explanations, accepted by CIT(A), remain largely self-serving:  For advance bills of entry, reliance is placed on section 46(3) of the Customs Act and the need for quick clearance. Even if advance filing is permissible, the AO's observation was not merely about advance filing but about chronology discrepancies which, on aggregate with other factors, pointed to accommodation entries. The CIT(A) has treated the statutory possibility of advance filing as a complete answer without reconciling specific instances.  For stock registers, the assessee cites Drug Control Rules requiring manufacturer's name, but this does not preclude mention of the actual supplier/intermediary. A large global intermediary would normally appear somewhere in purchase or inventory records. Its total absence bolsters the AO's suspicion.  For delayed payment, the assessee produced selective purchase orders with 365-day terms and emails allegedly evidencing extension without interest. Such concessions, especially without any commercial quid pro quo and over multiple invoices, are atypical in genuine arm's-length dealings and are classic indicia of controlled conduit relationships.  For non-production of agreement, the \"flood\" explanation, without FIR or insurer's schedule specifically showing the lost agreement, is rightly viewed as unsatisfactory. Courts have repeatedly held that unexplained absence of core transactional agreements in cross-border dealings entitles the AO to draw adverse inference (see CIT v. Bholanath Polyfab Pvt. Ltd. 355 ITR 290 (Guj), para 26-29, where failure to prove source/suppliers allowed the AO to partly treat purchases as non-genuine).  The CIT(A)'s approach is to treat each anomaly in isolation and search for any conceivable explanation, whereas the AO's finding is based on cumulative assessment. The Tribunal, as final fact-finding body, ought to consider the totality of circumstances, in line with Durga Prasad More, rather than dissecting each factor in watertight compartments. E. FT&TR material - proper appreciation The CIT(A) has used the Indonesian report as conclusive exoneration, Respectfully, that report should instead be read as neutral or even supportive of the AO: Printed from counselvise.com 18 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd.  It confirms that PT Bio Farma exported goods in 2004 and 2005 under invoices in the name of Central Plus, while the goods were shipped directly to Panacea, and payments were received in a bank account.  It does not state anything about the ownership, functions or substance of Central Plus.  It is entirely compatible with a situation where Central Plus is a mere booking entity, lacking substance, introduced to inflate purchase price or shift margins. Under section 147/143(3), the AO is entitled to rely on such material to draw reasonable inferences about tax evasion. The jurisprudence on use of FT&TR information (e.g. in transfer-pricing and foreign bank account cases) recognises that such government-to-government communications are valid evidence. The CIT(A) has selectively used one part of the report (reference to Central Plus in invoices) while ignoring that the same report, read with Hong Kong non-existence, raises a serious question whether Central Plus had any real economic role. F. Distinguishing assessee's case-law & contentions: The assessee relied before AO on India Terminal Connector Systems Ltd. v. DCIT (2011) 16 taxmann.com 196 (Del) to argue that mere allegation of mismatch without specific discrepancies cannot justify reopening. That case is wholly distinguishable:  It was a challenge to reopening based on vague reasons, not a search-based reassessment backed by seized material and FT&TR inputs.  There, no incriminating material demonstrating bogus purchases was found; here, the AO has catalogued detailed anomalies and foreign authority responses.  In India Terminal Connector, the Court stressed absence of tangible material; in the present case, tangible and specific material exists (Hong Kong non- existence report, Indonesian report, stock registers, statements, etc.). Any reliance by the assessee (or implicit by CIT(A)) on decisions where purchases were accepted because sales and stock were not doubted (such as certain Gujarat High Court rulings treating purchases as accommodation entries but allowing only profit element to be taxed) is also distinguishable, In those cases, the suppliers were identifiable local parties and revenue evidence showed \"grey market\" purchases at lower prices; the courts therefore estimated profit element. Here, the supplier is an offshore, untraceable entity, and the quantum in dispute is the entire alleged liability to that non-existent intermediary, not the cost of actual vaccines from recognized manufacturers. The AO is justified in treating the whole amount as bogus liability. Likewise, assessee's emphasis on customs clearance and compliance with Customs Act cannot override the Income-tax Act's enquiry into the pricing and routing of the transaction, Customs focuses on import of goods and duty, not whether an intermediary in another jurisdiction is a genuine commercial principal. The two regimes address different risks. G. Conclusion Printed from counselvise.com 19 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. On a holistic appreciation, the AO's order is a reasoned, evidence-based conclusion that the alleged purchases from Central Plus Overseas are not genuine and represent a sham routing to inflate expenses and suppress taxable income. The circumstances align with the jurisprudential principles laid down in Durga Prasad More, Sumati Dayal, McDowell, P. Mohankala, and line of High Court decisions requiring the assessee to prove not only paper documentation but the substantive reality of the counter-party and transaction. The CIT(A) has erred in:  Misplacing the burden of proof by treating the AO's well-founded suspicion as rebutted by self-serving internal records and email printouts.  Minimising the probative value of official Hong Kong and Indonesian reports obtained through FT&TR channels.  Ignoring the commercial implausibility of interposing a foreign intermediary where the assessee already had direct relationships with the manufacturers.  Applying an unduly benevolent standard of \"benefit of doubt\" inconsistent with settled law on bogus purchases and sham entities. 1. The Tribunal, as the final fact-finding authority, is respectfully urged to restore the AO's addition of 27,20,24,922 and uphold the assessment order in full, by allowing Revenue's appeal and setting aside the contrary findings of the CIT(A).” 12. From examination of record, in light of aforesaid rival contention, it is crystal clear that Ld. CIT(A) vide separate orders dated 24.07.2015 set aside the assessment orders dated 28.03.2013 of Ld. AO regarding additions on account of bogus/inflated purchase from Central Plus Overseas Ltd. 13. In additional Ground No.2, Respondent assessee pleaded additional ground that the approval accorded u/s 153D of the Act being mechanical and arbitrary approval without being any application of mind and also without satisfying statutory pre- conditions of the Act being common approval for all assessment years and as such the assessment so framed is null and void is deserves to be quashed. 14. The common approval bearing common numbers i.e. 153D/CC-16/2013- 14/1225 dated 30.03.2015. Said common approval pertains to 7 assessment years i.e. AY 2006-07 to 2012-13, which has been accorded by learned JCIT under section 153D of the Act. Printed from counselvise.com 20 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. 15. The Co-ordinate Bench in ITA No.688/Del/2014 titled as DCIT, Central Circle- 20, vs. Ramesh Sharma order dated 23.01.2026 in para No. 3 to 9 held as under: “3. We have carefully considered the prayer for admission of additional ground and heard both the counsels on the issue. In our considered opinion in the light of the Hon’ble Apex Court decision in the case of NTPC Ltd. vs. CIT (1998) 229 ITR 0383 (SC), we admit the following additional ground raised by the assessee as the same is a purely legal ground and goes to the root of the matter. “Additional Ground No. 1 That on the facts and circumstances of the case the approval accorded under section 153D of the Act (if any) is a mechanic al and arbitrary approval without there being any application of mind and also without satisfying the statutory preconditions of the Act and as such, the assessment so framed is null and void and deserves to be quashed.” 4. At the outset, Ld. Sr. Counsel for the assessee in support of the aforesaid Additional Ground No. 1 so raised in Rule 27 application by the assessee- respondent, submitted that in the instant matter, approval under section 153D of the Act is a common approval bearing common numbers i.e. 153D/CC-16/2013- 14/1334 dated 30.03.2013. It was further submitted that the said common approval pertains to 7 assessment years i.e. AY 2006-07 to 2012-13, which has been accorded by Ld. Addl. CIT under section 153D of the Act. To support his contention, he filed the copies of assessment years under section 153A/143(3) of the Act in the aforesaid matters at Paper Book Serial No. 2 to 8 at pages 11, 22, 32, 44, 58, 64 and 68 which shows that common approval is accorded by the Addl. CIT. Even though, the copy of approval u/s. 153D has not been submitted by the Revenue, despite specific directions given by the Hon’ble Bench on various occasions. However, still bare perusal of the common approval number makes it amply clear that the approval accorded under section 153D of the Act in the instant case is a mechanical approval without there being separate approval for “each assessment year”. He relied upon the decision of the Coordinate Bench in the case of the assessee’s wife namely Smt. Usha Sharma in ITA No. 480/Del/2015 under similar circumstances. He further relied upon the decision of the Coordinate Bench in the case of ACIT vs. Sant Lal Aggrawal group in ITA No. 6195/Del/2017, pertaining to same group, wherein, identical issue has been decided by the ITAT, Delhi and wherein, it has been held that approval under section 153D is bad in law and thus, assessments so made are vitiated in law, under similar circumstances. He further relied upon various case laws including the Judgment of the Jurisdictional High Court in the case of Pr. Commissioner of Income Tax Vs. Shiv Kumar Nayyar reported in 163 taxmann.com 9 dated 15/05/2024 in ITA No. 285/2024 (CMP No. 28994/2024), sought for allowing the Additional Ground of Appeal and prayed for quashing the assessment order and also dismiss the appeal of the Revenue. Printed from counselvise.com 21 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. 5. Per contra, the Ld. Departmental Representative submitted that the draft assessment order has been perused by the Additional Commissioner of Income Tax while according approval u/s 153D of the Act, which was made available in the file and the approval has been granted and there is no absence of application of mind, thus sought for dismissal of the Additional Ground of Appeal and also requested to allow the appeal of the Revenue. 6. We have carefully considered the submissions of the parties and also verified, material available on record and the case laws cited. The legal objection of transgression of requirement of approval under s. 153D of the Act is in question which has the effect on the very substratum of the assessment and consequential appellate proceedings. 7. For the purpose of deciding the issue of legality of approval accorded u/s 153D of the Act and the consequential assessment proceedings, we find considerable cogency in the contention of the Ld. Sr. Counsel that in the instant matter, approval under section 153D of the Act is a common approval bearing common numbers i.e. 153D/CC-16/2013-14/1334 dated 30.03.2013. It is noted that the said common approval pertains to 6 assessment years i.e. AY 2006-07, 2007-08, 2009-10 to 2012- 13, which have been accorded by Ld. Addl. CIT under section 153D of the Act. We find that in assessment orders passed under section 153A/143(3) of the Act placed at Paper Book Serial No. 2, 3, 5 to 8 at pages 11, 22, 44, 58, 64 and 68 which shows that exactly common approval with common numbers are accorded by the Addl. CIT. For the sake of clarity, we may gainfully refer here the common approval for assessment years 2006-07, 2007-08, 2009-10 to 2012-13 mentioned at page nos. 11, 22, 44, 58, 64 & 68 of the Paper Book mentioned against Serial No. 2, 3, 5 to 8 of the Paper Book of the Assessee. “AY 2006-07 (Paper Book Page No. 11) 22. This order is passed after obtaining prior approval u/s. 153D of the Income Tax Act, 1961 of the Addl. Commissioner of Income Tax, Central Range-4, New Delhi received vide letter No. F.No. 153D/CC-16/2013-14/1334 dated 30.3.2014. AY 2007-08 (Paper Book Page No. 22) 16. This order is passed after obtaining prior approval u/s. 153D of the Income Tax Act, 1961 of the Addl. Commissioner of Income Tax, Central Range-4, New Delhi received vide letter No. F.No. 153D/CC-16/2013-14/1334 dated 30.3.2014. AY 2009-10 (Paper Book Page No. 44) 18. This order is passed after obtaining prior approval u/s. 153D of the Income Tax Act, 1961 of the Addl. Printed from counselvise.com 22 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. Commissioner of Income Tax, Central Range-4, New Delhi received vide letter No. F.No. 153D/CC-16/2013-14/1334 dated 30.3.2014. AY 2010-11 (Paper Book Page No. 58) 19. This order is passed after obtaining prior approval u/s. 153D of the Income Tax Act, 1961 of the Addl. Commissioner of Income Tax, Central Range-4, New Delhi received vide letter No. F.No. 153D/CC-16/2013-14/1334 dated 30.3.2014. AY 2011-12 (Paper Book Page No. 64) 12. This order is passed after obtaining prior approval u/s. 153D of the Income Tax Act, 1961 of the Addl. Commissioner of Income Tax, Central Range-4, New Delhi received vide letter No. F.No. 153D/CC-16/2013-14/1334 dated 30.3.2014. AY 2012-13 (Paper Book Page No. 68) 13. This order is passed after obtaining prior approval u/s. 153D of the Income Tax Act, 1961 of the Addl. Commissioner of Income Tax, Central Range-4, New Delhi received vide letter No. F.No. 153D/CC-16/2013-14/1334 dated 30.3.2014.” 7.1 On perusing the aforesaid, it is amply clear that the common approval with common numbers have been accorded under section 153D of the Act in the instant case is a mechanical approval. We further find that the Coordinate Bench in the case of the assessee’s wife namely Smt. Usha Sharma in ITA No. 480/Del/2015 under similar circumstances has quashed the assessment by allowing the similar additional ground of appeal. We further find that the Coordinate Bench in the case of ACIT vs. Sant Lal Aggrawal group in ITA No. 6195/Del/2017, pertaining to same group, on identical issue has held that approval under section 153D is bad in law and thus, assessments so made are vitiated in law, under similar circumstances. We further find that the Hon’ble High Court of Delhi in the case of Pr. Commissioner of Income Tax Vs. Shiv Kumar Nayyar reported in 163 taxmann.com 9 dated 15/05/2024 in ITA No. 285/2024 (CMP No. 28994/2024), 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 Printed from counselvise.com 23 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. 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. 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 approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. *** 19. The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to \"each assessment year\" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A.\" [Emphasis supplied] 12. It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that 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 OnLine Ori 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 24 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. \"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 of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the Assessing Officer should submit the draft assessment order \"well in time\". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii) the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order.\" [Emphasis supplied] 14. During the course of arguments, learned counsel for the assessee apprised this Court that the Special Leave Petition preferred by the Revenue against the decision in the case of Serajuddin (supra), came to be dismissed by the Supreme Court vide order 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:- Printed from counselvise.com 25 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. \"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 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 that a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. 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. Neetu Nayyar. 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.” 8. Significantly, the Hon’ble Orissa High Court in the case of ACIT vs Serajuddin & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act. The Orissa High Court made wide ranging observations towards the manner and legality of approval under s. 153D of the Act. The Hon’ble High Court inter-alia observed that the approval under s. 153D of the Act being mandatory, while elaborate reasons Printed from counselvise.com 26 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon’ble High Court inter-alia observed that there is no even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like ‘approval’ will not, by itself, meet the requirement of law. The Hon’ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon’ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgement in the case of ACIT vs Serajuddin & Co. Kolkata was dismissed as reported in (2024) 163 taxmann.com 118 (SC). 9. The ratio of judgement delivered in the case of ACIT vs Serajuddin & Co. Kolkata; PCIT vs Anuj Bansal; PCIT vs Shiv Kumar Nayyar; and PCIT vs Subhash Dabas (supra) has held in chorus that the approval granted under s. 153D of the Act, if granted mechanically, will vitiate the assessment order itself. Hence, applying the ratio of judgements delivered as noted above, the assessment order based on ritualistic approval stands vitiated and thus quashed by allowing additional Ground of appeal of the Assessee. 16. In view of above material facts and judicial precedent, it is held that the common approval accorded u/s 153D dated 30.03.2015 is mechanical and arbitrary approval without their being any application of mind for all the years as such the assessment orders being vitiated deserved to be quashed. As such the grounds of appeal of Revenue are rejected. ITA No.5562 & 5563/Del/2015 Assessment Years 2010-11-2011-12 17. Brief facts of case in ITA No.5562/Del/2015 are that a search and seizure operation u/s 132 conducted on M/s Panacea Biotec Ltd. on 10.01.2012 u/s 132 of the Printed from counselvise.com 27 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. Income Tax Act, 1961. The case of assessee was transferred to the AO u/s 127 by the orders of Ld. CIT (Central)-1, Delhi vide order F. No. CIT-V/Centralization/2012- 13/773 dated 19.07.2012. Notice u/s 153A dated 22.05.2023 was issued to the assessee. Assessee submitted its return of income for Assessment Year 2010-11 on 12.06.2013 declaring total income/loss of Rs. Nil. Notice u/s 143(2) of the Act dated 26.07.2013 was issued. None attended on 07.08.2013. Detailed questionnaire u/s 142(1) of the Act dated 03.10.2013 was issued for the Assessment Year 2006-07 to 2012-13. On 18.10.2013 none attended the proceedings. Show cause notice u/s 271(1)(b) of the Act dated 30.10.2013 was issued. On 08.11.2013 Sh. Sunil Kapoor, AR attended proceedings and filed reply dated 08.11.2013. On 01.12.2014 again show cause notice u/s 271(1)(b) issued. On 09.12.2014 penalty order u/s 271(1)(b) of the Act was passed. Notice u/s 142(1) dated 10.12.2014 was issued Sh. Sunil Kapoor, AR of the company attended on 17.12.2014. Order u/s 127 was passed vide No. CIT(C)- 1/127/2014-15/2364 dated 02.01.2015. The case was transferred from Central Circle - 8, New Delhi to Central Circle -5, New Delhi. Notice u/s 142(1) dated 12.011.2015 was issued. AR of the assessee company did not file details on the earlier detailed questionnaire dated 03.10.2013. A show cause notice was issued on 04.03.2015. On 16.03.2015 Sh. Sunil Kapoor, AR of the company attended the case and filed part reply. On completion of proceedings, Ld. AO vide order dated 30.03.2015 made additions of Rs.16,86,16,069/- on account of expenditure on Doctors and Rs.2,63,14,123/- on account of bogus expenditure of Pharmaco Corporation for the Asst. Year 2010-11. Similarly, Ld. AO passed order dated 30.03.2015 making additions for Assessment Year 2011-12. 18. Against the orders dated 30.03.2015 of Ld. AO assessee filed the appeal before ld. CIT(A) which was partly allowed vide order dated 27.07.2015 upholding additions on account of expenditure incurred under the head of Doctor gift sales promotions etc. Printed from counselvise.com 28 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. 19. Being aggrieved appellant assessee filed appeals before the Ld. CIT(A)-24, New Delhi dated 27.07.2015 arising out of Assessment Orders dated 30.03.2015 u/s 153A r.w.s 143(3) o the Act for Assessment Years 2010-11 and 2011-12 respectively with similar grounds in ITA No.5562/Del/2015 is as under: “That the Learned CIT(Appeals) is unjustified in sustaining the addition to the tune of Rs.1,63,00,000/- vide his order dated 27.07.2015 on account of expenditure incurred under the head Doctors Gifts & Sales Promotion etc.” 20. Ld. Authorized Representative for appellant assessee submitted that the assessment orders dated 30.03.2015 are in pursuance to common approval u/s 153D dated 30.03.2015 mentioning No. Joint CIT(CR)-02/2014-15/1225 dated 30.03.2015. 21. Ld. Departmental Representative reiterated submissions herein above. 22. From perusal of record, it is evident that Ld. CIT(A) vide order dated 27.97.2015 upheld order dated 30.03.2015 of Ld. AO u/s 153A r.w.s 143(3) of the Act. The assessment orders dated 30.03.2015 are in pursuance to approval u/s 153D bearing No. No. Joint CIT(CR)-02/2014-15/1225 dated 30.03.2015. 23. In view of the findings in the Revenue appeal hereinabove, it is held that the common approval accorded u/s 153D dated 30.03.2015 is mechanical and arbitrary without their being any application of kind as such the assessment orders being vitiated are set aside. 24. In the final result, all the appeals filed by the Revenue are dismissed and both appeals filed by the assessee are allowed. Order is pronounced in the Open Court 27.02.2026. Sd/- Sd/- (S. RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:27.02.2026 *PK, Sr. Ps* Printed from counselvise.com 29 ITA Nos.5615 to 5622, 562 &5563 /Del/2015 DCIT vs. M/s Panacea Boitec Ltd. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "