Mass 153A Assessments Quashed: High Court Says 153D Approvals Were “Ritualistic, Not Real”:

Mass 153A Assessments Quashed: High Court Says 153D Approvals Were “Ritualistic, Not Real” A large batch of income tax appeals filed by the Principal Commissioner of Income Tax challenged a common order of the ITAT dated 30 April 2024. The ITAT had quashed multiple assessments framed under Section 153A on the ground that the mandatory “prior approval” under Section 153D was granted mechanically, without any real application of mind. The Tribunal noted several glaring inconsistencies, including approvals being issued on the same day when proposals were received late evening, draft assessment orders already containing approval numbers even before approval was granted, and numerous factual and legal errors in the draft orders that went unnoticed by the supervisory authority. Main Issue: Whether the ITAT was justified in holding that the “prior approval” under Section 153D was vitiated by complete non-application of mind, thereby rendering assessments under Section 153A invalid. HC Held: The Hon'ble High Court upheld the ITAT’s conclusions, finding no perversity or legal infirmity. The Court held that the factual matrix showed an unmistakable pattern, dozens of approvals issued within minutes or hours, identical approval orders with no reference to the specific facts of each case, and draft assessments containing approval details even before the approval was formally granted. Such circumstances showed a “ritualistic” and mechanical approach, defeating the very purpose of Section 153D, which functions as a statutory safeguard against arbitrary assessments. The Court further noted that glaring defects, such as referencing non-existent companies, applying provisions like Section 115BBE to years where they were not yet in force, and ignoring contradictory material, do not show a genuinely applied mind. The Court held that approvals under Sections 151 and 153D must reflect some level of independent application of mind, even if brief. Therefore, while condoning the short delays in filing, the Court dismissed all the Revenue’s appeals. To Read Full Judgment, Download PDF Given Below