The Income Tax Appellate Tribunal, Delhi, has delivered a decisive ruling invalidating seven assessment orders framed under Section 153C read with Section 144 of the Income Tax Act, 1961, due to a fundamental procedural flaw in the approval process under Section 153D. This judgment clarifies a critical compliance requirement in search and seizure cases, reinforcing that statutory mandates cannot be circumvented by administrative convenience.
Background & Facts
The Dispute
The appellant, Nilesh Kumar Thakkar, faced assessment proceedings initiated by the Income Tax Department following a search operation conducted on 28.12.2020. Based on the materials seized during the search, the Assessing Officer proposed to frame assessments for seven consecutive assessment years: 2015-16 to 2021-22. The assessments were ultimately framed on 14.02.2024 under Section 153C read with Section 144, after the Assessing Officer obtained a common approval from the Principal Commissioner of Income Tax (PCIT) dated 23.01.2024.
Key Facts
- Search operation conducted on 28.12.2020 under Section 132 of the Income Tax Act
- Assessing Officer sought approval under Section 153D for framing assessments in seven assessment years: 2015-16 to 2021-22
- PCIT granted a single, common approval dated 23.01.2024 covering all seven years
- Assessments were framed on 14.02.2024 based on this common approval
- The Commissioner of Income Tax (Appeals) upheld the assessments by orders dated 30.07.2025, 12.08.2025, and 13.08.2025
- The appellant challenged the assessments before the Income Tax Appellate Tribunal on the ground of invalid approval under Section 153D
Procedural History
- 28.12.2020: Search conducted under Section 132
- 23.01.2024: PCIT granted common approval under Section 153D for assessment years 2015-16 to 2021-22
- 14.02.2024: Assessments framed under Section 153C read with Section 144
- 30.07.2025 to 13.08.2025: CIT(A)-28 passed seven orders upholding the assessments
- 09.03.2026: Hearing before ITAT Delhi
- 24.03.2026: ITAT delivered judgment
Relief Sought
The appellant sought quashing of the assessments framed on 14.02.2024 for all seven assessment years on the ground that the common approval under Section 153D was legally invalid and vitiated the entire assessment process.
The Legal Issue
The central question was whether a single approval granted under Section 153D of the Income Tax Act, 1961 for multiple assessment years, in the context of a single search operation, satisfies the statutory requirement for valid assessment under Section 153C.
Arguments Presented
For the Appellant
The appellant’s counsel, Dr. Kapil Goel, argued that Section 153D mandates a specific approval for each assessment year, as the provision is designed to ensure judicial oversight on a year-by-year basis. Relying on PCIT v. Shiv Kumar Nayyar (2024) 163 taxmann.com 9 (Del.), PCIT v. MDLR Hotels (P) Ltd. (2024) 166 taxmann.com 327 (Del.), and ACIT v. Serajuddin and Co. (2024) 163 taxmann.com 118 (SC), he contended that a blanket approval covering multiple years is a legal nullity. The provision requires separate, distinct approvals to reflect individualized scrutiny of each year’s income, and a combined approval defeats the legislative intent.
For the Respondent
The Revenue, represented by Ms. Monika Singh, CIT-DR, argued that the common approval was administratively efficient and did not prejudice the assessee. It was submitted that since the search was conducted on a single date and the materials seized pertained to a continuous financial pattern, a unified approval was sufficient. The Revenue relied on procedural convenience and the absence of any actual prejudice to the assessee.
The Court's Analysis
The Tribunal examined the language and purpose of Section 153D, which requires the prescribed authority to grant approval for the framing of assessments under Section 153C. The provision does not contemplate a single approval for multiple years. The Tribunal emphasized that the statutory framework under Sections 153C and 153D is designed to prevent arbitrary assessments by ensuring that each year’s income is independently scrutinized with judicial oversight.
"The approval under Section 153D is not a mere formality; it is a statutory precondition that must be fulfilled for each assessment year separately. A common approval for multiple years is a legal nullity and vitiates the entire assessment process."
The Tribunal noted that the Supreme Court in ACIT v. Serajuddin and Co. had already held that non-compliance with Section 153D renders the assessment void ab initio. The Delhi High Court decisions in Shiv Kumar Nayyar and MDLR Hotels further reinforced that the requirement is mandatory and not directory. The Tribunal rejected the Revenue’s argument of administrative convenience, stating that statutory compliance cannot be diluted on grounds of efficiency. The fact that the approval was granted after the search and before the assessments does not cure the defect of a single approval covering multiple years.
The Tribunal concluded that the absence of individual approvals for each assessment year meant the assessments were legally invalid from inception.
The Verdict
The appellant succeeded. The Tribunal allowed all seven appeals and quashed the assessments framed on 14.02.2024 for assessment years 2015-16 to 2021-22. The orders of the CIT(A) dated 30.07.2025, 12.08.2025, and 13.08.2025 were set aside. The case was directed to be remanded to the Assessing Officer for fresh consideration, subject to compliance with Section 153D by obtaining separate approvals for each assessment year.
What This Means For Similar Cases
Approval Must Be Year-Specific
- Practitioners must verify that each assessment year under Section 153C has a distinct, individual approval under Section 153D
- A single approval covering multiple years is now legally untenable and grounds for immediate quashing
- Revenue authorities must issue separate approval letters for each assessment year, even if arising from the same search
Procedural Non-Compliance Is Fatal
- The Tribunal reaffirmed that non-compliance with Section 153D is not a curable procedural lapse but a jurisdictional defect
- Assessments framed without valid approvals are void ab initio, regardless of the correctness of the income determination
- Appeals against such assessments must be framed on the ground of invalid approval, not merely on merits
Strategic Implications for Tax Litigation
- In pending cases involving search-based assessments, counsel should immediately examine the Section 153D approval for multiplicity of years
- If a common approval exists, the assessment can be challenged on jurisdictional grounds without engaging with complex valuation issues
- This judgment provides a powerful tool for taxpayers to challenge assessments without having to prove income is incorrectly computed
