Invalidating Search Assessments: ITAT Jodhpur's Stance on Mechanical Approvals Under Section 153D
The procedural safeguards embedded within the Income Tax Act 1961 are not mere administrative formalities; they are statutory mandates designed to protect the assessee from arbitrary and unexamined actions by tax authorities. A prime example of such a safeguard is the mandatory approval required from a superior authority before finalizing search assessments.
In a recent and highly significant judicial pronouncement, the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, delivered a decisive ruling in the case of Mahender Jakhar Vs ITO. The Tribunal unequivocally quashed the assessment orders framed under Section 153A and Section 153B of the Act, fundamentally because the statutory approval granted under Section 153D was found to be a mechanical exercise, completely devoid of any independent application of mind by the approving authority.
This comprehensive legal summary delves into the factual matrix, the arguments presented, the extensive judicial precedents relied upon by the Tribunal, and the broader implications of this ruling for future search and seizure assessments.
Factual Matrix of the Dispute
The genesis of the dispute lies in a search and seizure operation that culminated in assessment proceedings against the assessee. The Assessing Officer (AO) framed the assessment order on 06.08.2025 under Section 143(3) read with the relevant search assessment provisions. Aggrieved by the additions made, the assessee escalated the matter to the Commissioner of Income Tax (Appeals) [CIT(A)], who subsequently dismissed the appeal, thereby upholding the AO's actions.
The assessee's challenge before the ITAT was multifaceted, encompassing both procedural irregularities and substantive disputes on merits. The primary substantive grievance revolved around an addition of Rs. 35,30,000/- made under Section 69A of the Income Tax Act 1961. This amount represented cash found and seized by police authorities, which the Revenue treated as the assessee's unexplained money. The assessee vehemently contended that he was not the real owner of the cash; rather, he was acting merely as a commission agent, having received the funds on behalf of farmers against agricultural sales. The assessee argued that the CIT(A) had ignored crucial legal evidence, including affidavits from the farmers, and had relied on third-party statements without affording the assessee an opportunity for cross-examination, thereby violating the principles of natural justice.
However, the cornerstone of the assessee's appeal was a critical procedural flaw: the validity of the assessment order itself, rooted in the manner in which the supervisory approval was obtained and granted.