ITAT Delhi Invalidates Section 153A Assessment Due to Mechanical Approval Under Section 153D

In a pivotal ruling concerning search and seizure assessments, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has reinforced the sanctity of the approval process mandated under the Income Tax Act, 1961. In the case of Gaurav Kathuria Vs ACIT, the Tribunal quashed the assessment order passed under Section 153A, declaring it void ab initio. The primary ground for this dismissal was that the approval granted by the Additional Commissioner of Income Tax (Addl. CIT) under Section 153D was merely ritualistic, mechanical, and lacked independent application of mind.

Factual Matrix of the Case

The dispute originated from a search and seizure operation conducted under Section 132 of the Act on 11.01.2019, covering the Shri Krishan Group of cases in Rohtak, which included the assessee. Following the search, the Assessing Officer (AO) issued a notice under Section 153A(1) on 20.01.2020.

In compliance, the assessee filed a Return of Income on 05.05.2020, declaring a total income of INR 19,97,280. However, the AO, after scrutinizing the submissions, passed an assessment order on 08.06.2021. The AO assessed the total income at INR 29,70,280, thereby making an addition of INR 9.73 lakh.

Aggrieved by this addition, the assessee approached the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A), vide order dated 18.09.2024, upheld the AO's assessment. Consequently, the assessee moved the Tribunal for relief.

Before the Tribunal, the assessee invoked Rule 11 of the Income Tax Appellate Tribunal Rules, 1963 to raise additional legal grounds that went to the root of the jurisdiction.