Assessment Quashed: Combined Section 153D Approval for Multiple Years Invalid

By | November 25, 2025
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Assessment Quashed: Combined Section 153D Approval for Multiple Years Invalid

Issue

Whether an assessment order passed under Section 153C (consequent to search) is legally valid if the mandatory prior approval under Section 153D was granted by the Joint Commissioner via a single combined letter covering multiple assessment years, rather than granting specific approval for each assessment year separately.

Facts

  • Proceedings: Search and seizure proceedings led to the initiation of assessment under Section 153C read with Section 143(3) for the Assessment Year 2015-16.

  • The Approval: Before passing the assessment order on 23.12.2021, the Assessing Officer obtained approval from the Prescribed Authority (Addl./Joint CIT) under Section 153D.

  • The Defect: The approval was granted vide a common letter dated 22.12.2021. This single document covered seven different assessment years (AY 2011-12 to 2017-18) for the assessee.

  • Assessee’s Challenge: The assessee sought to annul the assessment, arguing that a mechanical, combined approval for multiple years without year-specific application of mind violates the mandatory requirements of Section 153D.

Decision

  • The ITAT Delhi Bench allowed the appeal and quashed the assessment order.

  • Invalid Approval: The Tribunal held that the approval under Section 153D is not a mere formality. It requires independent application of mind for each specific year.

  • Binding Precedents: Relying on landmark judgments like PCIT Vs. Shiv Kumar Nayyar (Delhi HC), PCIT Vs. Anuj Bansal (Supreme Court), and PCIT Vs. MDLR Hotels (Delhi HC), the Tribunal affirmed that approval must be accorded separately for each and every assessment year.

  • Outcome: Since the combined approval indicated a lack of application of mind, the foundational requirement of Section 153D was not met. Consequently, the assessment order framed on 23.12.2021 was held to be void ab initio and was annulled.

Key Takeaways

  • No Omnibus Approvals: A single approval letter covering a block of assessment years (e.g., 6 years in search cases) is legally unsustainable. The Approving Authority must demonstrate they reviewed the draft order for each specific year.

  • Jurisdictional Safeguard: Section 153D is a safeguard against arbitrary search assessments. Failure to strictly comply with it (i.e., mechanical approval) strips the AO of jurisdiction to pass the order.

  • Supreme Court Finality: With the citation of PCIT vs. Anuj Bansal (SC), this principle—that combined mechanical approvals vitiate search assessments—is now settled law.

THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: ‘A’ NEW DELHI
DS Spiceco Pvt. Ltd
New Delhi
Vs.
DCIT,
Central Circle-6,Delhi
ITA No.4255/Del/2025
Date of pronouncement 24.11.2025

Source :- 1763986529-qJ9pYb-1-TO