RAJESH KUMAR GUPTA vs ACIT, CENTRAL CIRCLE-14, NEW DELHI, ITA NO. 4063/Del/2024, ITAT DELHI
The Income Tax Appellate Tribunal (ITAT) Delhi has ruled in the case of Rajesh Kumar Gupta vs. ACIT (A.Y. 2018-19) that an approval granted under Section 153D in a mechanical manner, without application of mind, renders the entire assessment invalid.
Key Facts of the Case
• A search operation was conducted on 29.11.2017.
• The Assessing Officer (AO) passed an order under Section 143(3) on 13.12.2019, making an addition of ₹1.02 crore for undisclosed income and ₹5.67 crore for undisclosed jewellery.
• The Additional CIT granted approval under Section 153D for 69 cases in a single day (29.12.2019) without mentioning whether the draft assessment orders were examined.
• The CIT(A) deleted most of the additions but sustained ₹90.71 lakh under Section 69A for seized jewellery.
Key Observations by ITAT
Approval Was Mechanical:
• The Additional CIT granted approval for 69 cases in a single day without demonstrating independent application of mind.
• The approval order did not mention reviewing draft assessment orders.
• ITAT cited CIT vs. Shiv Kumar Nayyar (Delhi HC), where approval for 43 cases in one day was held to be mechanical and invalid.
Judicial Precedents Support This View:
• Delhi HC in PCIT vs. Anju Bansal (2023) ruled that if the approving authority fails to independently verify the records, the approval is invalid.
• Orissa HC in ACIT vs. Serajuddin & Co. (2023) quashed assessments where multiple cases were approved in one day without specific examination.
• Allahabad HC in PCIT vs. Subodh Aggarwal (2022) emphasized that Section 153D approval cannot be a mere formality.
Final Verdict
• ITAT ruled that the entire assessment is invalid due to the mechanical and non-judicious approval under Section 153D.
• The assessment order was quashed, and the assessee’s appeal was allowed.
Key Takeaway for Taxpayers
If an assessment is framed under Section 153A, ensure that the approval under Section 153D is not granted mechanically. If the approval is rushed, generic, or lacks evidence of review, it can be challenged and struck down based on this ruling.