M/s Corporate International Financial Services Limited vs ACIT, Central Circle-4, New Delhi

“1.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction u/s 153A and passing of the impugned assessment order u/s 153A/143(3) dated 20-04-2021 is illegal, bad in law, as the order has been passed and impugned addition made therein without there being incriminating material found as a result of search.

2.

That in any case and in any view of the matter, assumption of jurisdiction for passing of the impugned assessment order u/s 153A/143(3) dated 20-04-2021, is illegal, bad in law and against the facts and circumstances of the case.

3.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs.13,78,12,200/- on account of share capital and share premium by treating it as alleged unexplained cash credit u/s 68 and that too without there being incriminating material found during the course of search and impugned addition has been made by recording incorrect facts and findings and in violation of principles of natural justice and without confronting the adverse material to the assessee company and without providing the opportunity of cross examination of the alleged deponents.

4.

That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making aggregate addition of Rs.13,78,12,200/- on account of share capital and share premium u/s 68, is bad in law and against the facts and circumstances of the case.

5.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.5,96,700/- on account of alleged commission paid by treating it as alleged unexplained expenditure u/s 69C and that too without there being incriminating material found during the course of search and impugned addition has been made by recording incorrect facts and findings and in violation of principles of natural justice.

6.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned order u/s 153A which is illegal, bad in law and nullity in the eyes of law as the same was passed without obtaining valid approval u/s 153D in accordance with law.

7.

That having regard to the facts and circumstances of the case, assumption of jurisdiction for passing of the impugned assessment order u/s 153A dated 20-04-2021 is illegal, bad in law, inter alia for the reason that the impugned assessment order dated 20-04-2021 as well as approval u/s 153D have been issued/passed without DIN number as is must as held in the judgment of Ashok Commercial Enterprises vs ACIT date of order 04-09-2023 (Bombay High Court) and Tata Medical Centre Trust [TS-561-HC-2023(Calcutta)] and CBDT Circular No.19/2019 dated 14-08-2019.

8.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 2343 and 234C of Income Tax Act, 1961.

9.

That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

“1.

Shri Dheeraj Chaudhary vs. Asstt. CIT, ITA Nos. 6158-6160/2018 & 6214-6216/2018, dated 12.09.2025 (Del) (Third Member).

2.

ACIT vs. Sh. Honey Arora, ITA No. 889/2025, 998/2025, 1012/2025 & 1014-1015/2025 and CO Nos. 259-263/2025, dated 09.01.2026 (Del).

3.

Asstt. CIT vs. Saloni Narang, ITA No. 1496/2018, dated 27.10.2025 (Del).

4.

Pr. CIT vs. Shiv Kumar Nayyar, (2024) 467 ITR 186 (Del).

5.

Pr. CIT vs. Sapna Gupta, (2023) 147 taxmann.com 288 (All)

6.

Pr. CIT vs. Subodh Agarwal, (2023) 149 taxmann.com 373 (All).”

“6.

We have heard both the parties and perused the material available on record. For the purpose of examining the legality or otherwise of the approval accorded u/s 153D of the Act and the consequential assessment proceedings, we shall advert to approval accorded u/s 153D of the Act. The approval accorded u/s 153D of the Act dated 17-12-2019/18-12-2019 granted by Additional Commissioner of Income Tax, Central Range 8, New Delhi to DCIT Central Circle, 32, New Delhi is reproduced as under:-

7.

On a perusal of the approval dated 17/18-12-2019 addressed by the Addl. CIT, Central Range-8, New Delhi to the AO, it emerges that the Addl. CIT, has not uttered a single word on the subject matter of additions. The approval is in the nature of Performa approval; the approval granted is nothing but mechanical one and the approving authority has exercised symbolic powers vested under s. 153D of the Act. Apart from the same, a single approval has been granted for seven Assessment Years in total.

8 The Hon’ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax Vs. Shiv Kumar Nayyar (supra) held as under:-

“11.

A plain reading of the aforesaid provision evinces an uncontrived position of law that the approval under Section 153D of the Act has to be granted for "each assessment year" referred to in clause (b) of sub-section (1) of Section 153A of the Act. It is beneficial to refer to the decision of the High Court of Judicature at Allahabad in the case of PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] which captures with precision the scope of the concerned provision and more significantly, the import of the phrase- "each assessment year" used in the language of Section 153D of the Act. The relevant paragraphs of the said decision are reproduced as under:-

"13.

It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under Section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under Section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for "each assessment year" in respect of "each assessee" separately. The words 'each assessment year' used in Section 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of Section 153A to 153D is fulfilled. It was held that the "approval" as contemplated under 153D of the Act, This is a digitally signed order. requires the approving authority, i.e. Joint Commissioner to verify the issues raised by the Assessing Officer in the draft assessment order and apply his mind to ascertain as to whether the required procedure has been followed by the Assessing Officer or not in framing the assessment. The approval, thus, cannot be a mere formality and, in any case, cannot be a mechanical exercise of power. ***

19.

The careful and conjoint reading of Section 153A(1) and Section 153D leave no room for doubt that approval with respect to "each assessment year" is to be obtained by the Assessing Officer on the draft assessment order before passing the assessment order under Section 153A." [Emphasis supplied]

12.

It is observed that the Court in the case of Sapna Gupta (supra) refused to interdict the order of the ITAT, which had held that the approval under Section 153D of the Act therein was granted without any independent application of mind. The Court took a view that the approving authority had wielded the power to accord approval mechanically, inasmuch as, it was humanly impossible for the said authority to have perused and appraised the records of 85 cases in a single day. It was explicitly held that the authority granting approval has to apply its mind for "each assessment year" for "each assessee" separately.

13.

Reliance can also be placed upon the decision of the Orissa High Court in the case of Asst. CIT v. Serajuddin and Co. [2023 SCC OnLine Ori 992] to understand the exposition of law on the issue at hand. Paragraph no.22 of the said decision reads as under:-

"22.

As rightly pointed out by learned counsel for the assessee there is not even a token mention of the draft orders having been perused by the Additional Commissioner of Income-tax. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 20/05/2024 at 21:34:51 need not be given, there has to be some indication that the approving authority has examined the draft orders and finds that it meets the requirement of the law. As explained in the above cases, the mere repeating of the words of the statute, or mere "rubber stamping" of the letter seeking sanction by using similar words like "seen" or "approved" will not satisfy the requirement of the law. This is where the Technical Manual of Office Procedure becomes important. Although, it was in the context of section 158BG of the Act, it would equally apply to section 153D of the Act. There are three or four requirements that are mandated therein, (i) the Assessing Officer should submit the draft assessment order "well in time". Here it was submitted just two days prior to the deadline thereby putting the approving authority under great pressure and not giving him sufficient time to apply his mind ; (ii) the final approval must be in writing ; (iii) the fact that approval has been obtained, should be mentioned in the body of the assessment order."

"10.

We have gone through the approval granted by the ld. Addl. CIT on 30.12.2018 u/s 153D of the Act which is enclosed at page 36 of the paper book of the assessee. The said letter clearly states This is a letter dated 30.12.2018 was filed by the ld. AO before the ld. Addl. CIT seeking approval of draft assessment order u/s 153D of the Act. The ld. Addl. CIT has accorded approval for the said draft assessment orders on the very same day i.e., on 30.12.2018 for seven assessment years in the case of the assessee and for seven assessment years in the case of Smt. Neetu Nayyar. It is also pertinent in this regard to refer to pages 68 and 69 of the paper book which contains information obtained by Smt. Neetu Nayyar from Central Public Information Officer who is none other than the ld. Addl. Commissioner of Income-tax, Central Range-S, New Delhi, under Right to Information Act, wherein, it reveals that the ld. Addl. CIT had granted approval for 43 cases on 30.12.2018 itself. This fact is not in dispute before us. Of these 43 cases, as evident from page 36 of the paper book which contains the approval u/s 153D, 14 cases pertained to the assessee herein and Smt. Neetu Nayyar. The remaining cases may belong to some other assessees, which information is not available before us. In any event, whether it is humanly possible for an approving authority like ld. Addl. CIT to grant judicious approval u/s 153D of the Act for 43 cases on a single day is the subject matter of dispute before us. Further, section 153D provides that approval has to be granted for each of the assessment year whereas, in the instant case, the ld. Addl. CIT has granted a single approval for all assessment years put together."

9.

The Hon’ble Orissa High Court in the case of ACIT vs Serajuddin & Co. 454 ITR 312 (Orissa) had an occasion to examine substantial question of law on the propriety of approval granted under s. 153D of the Act. The Hon’ble High Court made wide ranging observations towards the manner and legality of approval under s. 153D of the Act by observing that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law. The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justifiable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The Hon’ble High Court inter-alia observed that there is no even a token mention that draft order has been perused by the Ld. Addl. CIT. The approval letter simply grants approval. In other words, even the bare minimum requirement of approving authority having to indicate what thought process involved leading to the aforementioned approval has not been provided. As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like ‘approval’ will not, by itself, meet the requirement of law. The Hon’ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon’ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order. The SLP filed against the aforesaid judgment in the case of ACIT vs Serajuddin & Co. Kolkata was dismissed as reported in (2024) 163 taxmann.com 118 (SC).

10.

The ratio of judgement delivered in the case of ACIT vs Serajuddin & Co. Kolkata; PCIT vs Anuj Bansal; PCIT vs Shiv Kumar Nayyar; and PCIT vs Subhash Dabas (supra) has held in chorus that the approval granted under s. 153D of the Act, if granted mechanically, will vitiate the assessment order itself.”

8.3.

In view of above materials facts and well settled of principle of law, the exercise of jurisdiction by Ld. AO u/s 153A r.w.s. 143(3) of the Act in pursuance to common approval order u/s 153D dated 20.04.2021 being mechanical in manner without due application of kind is illegal. Therefore, impugned orders dated 25.04.2025 of Ld. CIT(A) and 20.04.2021 of Ld. AO are set aside. The grounds of appeal Nos. 1 & 2 are accepted and Grounds of appeal Nos 3 to 9 are being not pressed are left open. The appeal ITA No.3617/Del/2015 is allowed.

ITA No.3619/Del/2025 for Assessment Year 2012-13