Delhi HC Upholds Quashing Of Atul Kumar Bansal’s Search Assessments, Says Section 153D Approval Must Be Year-Specific

The Revenue appealed under Section 260A of the Income-tax Act, 1961, against the ITAT’s common order concerning assessment years 2008–09 to 2013–14.

The assessments followed a search during which documents relating to alleged accommodation-entry activity were seized; the Assessing Officer made additions for unexplained bank credits and commission income

The ITAT quashed the assessments after finding that the Additional Commissioner had granted a consolidated Section 153D approval covering multiple assessment years.

The Revenue challenged that conclusion before the High Court

1. Whether the ITAT was correct in quashing the assessments under Sections 153A and 143(3) because the approval under Section 153D was consolidated rather than granted separately for each assessment year

2. Whether the issue raised a substantial question of law warranting interference under Section 260A, particularly in light of another coordinate Bench having framed questions on the validity and effect of common approvals

Section 153D requires prior approval by the Joint Commissioner before an Assessing Officer below that rank passes a search assessment; read with Sections 153A and 153B, the approval must relate to each assessment year

The approving authority must apply its mind to the material and draft assessment for each relevant year; approval cannot be a mechanical formality or rubber stamp

The Court relied on *PCIT v. Shiv Kumar Nayyar*, *PCIT v. Sapna Gupta*, *ACIT v. Serajuddin and Co.*, and *PCIT v. Anuj Bansal* for those principles

It also applied the principle that where a statute prescribes how a power must be exercised, it must be exercised in that manner, relying on *Taylor v. Taylor*, *Nazir Ahmad v. King-Emperor* and *Captain Sube Singh v. Lieutenant Governor of Delhi*

The Court accepted that the approval in this case covered several assessment years through a consolidated order.

It held that Section 153D’s requirement of approval for each assessment year is inconsistent with an omnibus approval that does not separately address the circumstances and material for each year; such an approach would render the year-specific requirement ineffective

The Revenue pointed to a coordinate Bench order that had framed questions concerning common approvals, but the Court found that order did not cast doubt on the earlier authorities interpreting Section 153D.

In the Court’s view, its existing interpretation was consistent with the Allahabad and Orissa High Courts, leaving no substantial question of law for determination in these appeals

It dismissed the Revenue’s appeals under Section 260A because no substantial question of law arose for consideration; the ITAT’s order quashing the assessments therefore remained undisturbed