ITAT Strikes Down Income Tax Orders for Mindless 153D Approval

ITAT Strikes Down Income Tax Orders for Mindless 153D Approval

The Income Tax Appellate Tribunal (ITAT) quashed the assessments for AY 2016–17 and 2018–19 passed against the assessee company, citing a mechanical and consolidated approval under Section 153D of the Income Tax Act, 1961. A search and seizure operation under Section 132(1) of the Income-tax Act was conducted on a business group on 18 January 2018, covering various residential and business premises. As a result, the case of one of the entities was centralized to the jurisdiction of a central circle by an order under Section 127 dated 15 April 2019.

After receiving a single, consolidated approval from the Additional CIT, dated December 28, 2019, the Assessing Officer finished the assessments under Section 153A, read with Section 144, for multiple assessees and multiple years on December 29. The assessee challenged the assessment, alleging the approval was granted mechanically without independent application of mind.

Issue Raised: Whether a consolidated and non-specific approval under Section 153D could render the assessments invalid when separate approvals were required for each assessee and each year.

ITAT’s Decision: The Tribunal held that such an approval violated Section 153D, which mandates prior approval for each assessment year and each assessee. It relied on binding precedent from the High Court in PCIT v. Siddharth Gupta, where the Supreme Court had also dismissed the Revenue’s SLP. The Tribunal noted that granting approval for 11 assessees and 7 assessment years in a single letter reflected non-application of mind and was mechanical.

Accordingly, the assessments for both years were quashed, and other grounds were left open as the primary issue was sufficient for disposal.

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