Section 153D Approval Cannot Be a Rubber Stamp: ITAT Delhi Quashes Search Assessments in Kehar Singh Case
Overview
A significant ruling has emerged from the Income Tax Appellate Tribunal (ITAT), Delhi Bench, in the matter of Kehar Singh Vs DCIT, where the Tribunal quashed search assessments spanning Assessment Years 2014-15 through 2020-21. The core finding was that the approval granted under Section 153D of the Income Tax Act, 1961 was a purely mechanical exercise, devoid of genuine application of mind. The decision reaffirms a growing line of judicial authority holding that statutory approval under Section 153D is not a procedural formality — it is a substantive safeguard that must be exercised with independent thought and deliberate scrutiny.
Background: Search, Notices, and Assessments
Search and seizure operations were conducted at the premises of Shri Kehar Singh on 04.03.2020. Following the search, the Assessing Officer (AO) issued a notice under Section 153A of the Income Tax Act, 1961 on 08.06.2021. Subsequently, notices under Section 142(1) were issued on 07.07.2021 and 09.08.2021.
The assessee claimed that none of these notices were actually served upon him and, consequently, no reply was filed in response to them. Given the non-compliance, the AO issued a show cause notice under Section 144 on 17.09.2021, which the assessee similarly claimed was not served. The AO ultimately completed the proceedings under Section 153A read with Section 144 of the Income Tax Act, 1961 vide order dated 28.09.2021.
Additions Made by the Assessing Officer
The AO made the following additions across the relevant assessment years:
| Assessment Year | Section 69 – Unexplained Investment in Land |
Section 68 – Unexplained Bank Credits |
Chapter VI-A Disallowance | Undisclosed Income | Section 69A – Unexplained Jewellery |
Section 69A – Unexplained Cash |
Total Additions |
|---|---|---|---|---|---|---|---|
| 2014-15 | ₹6,40,000 | ₹4,85,429 | — | — | — | — | ₹11,25,429 |
| 2015-16 | — | ₹14,841 | — | — | — | — | ₹14,841 |
| 2016-17 | — | ₹1,18,115 | — | — | — | — | ₹1,18,115 |
| 2017-18 | — | ₹5,479 | ₹1,66,311 | — | — | — | ₹1,71,790 |
| 2018-19 | — | ₹1,12,430 | ₹1,64,563 | — | — | — | ₹2,76,993 |
| 2019-20 | — | ₹9,91,048 | ₹1,65,652 | — | — | — | ₹11,56,700 |
| 2020-21 | — | ₹49,38,960 | ₹1,29,756 | ₹16,00,000 | ₹15,46,016 | ₹20,600 | ₹82,55,422 |
Note: The figures above are reproduced exactly as they appear in the ITAT order. These are real case figures and have not been altered.
First Appellate Stage: CIT(A) Dismisses Appeals
Aggrieved by the orders dated 28.09.2021, the assessee filed appeals before the Commissioner of Income-tax (Appeals)-29, New Delhi. The CIT(A) dismissed all the appeals vide order dated 22.05.2024, covering Appeal Nos. CIT(A), Delhi-29/10451/2013-14 (for AY 2014-15); CIT(A), Delhi-29/10618/2014-15 (for AY 2015-16); CIT(A), Delhi-29/10981/2015-16 (for AY 2016-17); CIT(A), Delhi-29/10614/2016-17 (for AY 2017-18); CIT(A), Delhi-29/10487/2017-18 (for AY 2018-19); CIT(A), Delhi-29/10576/2018-19 (for AY 2019-20); and CIT(A), Delhi-29/10521/2019-20 (for AY 2020-21). The assessee then approached the ITAT Delhi.
Key Issue Before the Tribunal: Validity of Section 153D Approval
Before the Tribunal, the authorised representative for the assessee concentrated the primary argument on Ground No. 5, challenging the legality of the approval granted under Section 153D of the Income Tax Act, 1961. It was contended that the approval was granted in a wholly mechanical manner and did not reflect any independent scrutiny of the draft assessment orders or the underlying material.
The Departmental Representative, on the other hand, defended the approval by asserting that it had been granted on the basis of all relevant material, including the assessment record, the appraisal report, and incriminating evidence — and that it was issued separately for each assessment year.