S. 292BC Can’t Retroactively Validate Defective S. 153D Approvals Issued Before April 1, 2021: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed assessment orders passed against a taxpayer after holding that the mandatory approval granted under Section 153D of the Income Tax Act, 1961 was merely a “technical approval” issued without proper application of mind. The bench of Anubhav Sharma (Judicial Member) and Amitabh Shukla (Accountant Member) has observed that although Section 292BC was given retrospective effect from April 1, 2021, it could not be applied to approvals granted before that date. Since the impugned approval had been issued on December 30, 2016, the amendment did not come to the Revenue’s rescue. The central question before the Tribunal was whether an approval granted under Section 153D can be treated as valid when the approving authority merely records a “technical approval” without independently examining the assessment records, seized material, and findings of the Assessing Officer. The Tribunal answered the question in the negative, holding that such mechanical approvals defeat the very purpose of the statutory safeguard embedded in Section 153D. The appeals arose from assessments framed under Section 153C read with Section 143(3) following search proceedings. During the appellate proceedings, the assessee challenged the validity of the assessments primarily on the ground that the approval obtained under Section 153D was not granted in accordance with law. The approval letter issued by the Joint Commissioner of Income Tax, Central Range, Meerut, covered as many as sixteen assessees and multiple assessment years. The approving authority recorded that a “technical approval” was being granted for passing the assessment orders based on draft assessment orders submitted by the Assessing Officer. The Tribunal carefully examined the wording of the approval letter and noted several deficiencies. First, the approving authority expressly described the approval as a “technical approval,” indicating that the exercise was carried out as a procedural formality rather than a substantive review. Second, the approving authority directed the Assessing Officer to ensure that seized documents, appraisal reports, and other materials were properly considered. According to the Tribunal, such directions themselves demonstrated that the approving authority had not independently examined those materials before granting approval. Third, the authority also instructed the Assessing Officer to ensure initiation of appropriate penalty proceedings under the relevant provisions. The Tribunal viewed this as another indication that the approval had been granted without meaningful scrutiny of the individual facts of each case. The Bench further observed that the approval covered numerous assessees and several assessment years without even specifying whether the draft orders related to proceedings under Sections 153A, 153C, or 143(3). Such an approach, according to the Tribunal, reflected a complete absence of individualized consideration. While reaching its conclusion, the Tribunal referred to judicial precedents holding that approval under Section 153D is not an empty formality but a mandatory safeguard requiring due application of mind. The Bench particularly relied on earlier decisions emphasizing that the approving authority must independently evaluate the seized documents; the appraisal report; queries raised by the Assessing Officer; replies furnished by the taxpayer; and the conclusions proposed in the draft assessment order. The Tribunal reiterated that the approval process is quasi-judicial in nature and exists to provide checks and balances in search assessments. Treating the exercise as a mere formality would render Section 153D ineffective. The department attempted to defend the approval by relying on newly introduced Section 292BC, inserted through the Finance Act, 2026. According to the Department, the provision clarifies that approval under Section 153D is a supervisory and administrative function and that deficiencies in recording reasons should not invalidate assessments. However, the Tribunal rejected this argument. The Tribunal observed that the mere fact that the appeal was being heard after the enactment of Section 292BC did not make the provision applicable to approvals granted years earlier. The order also records that after the hearing had concluded and judgment had been reserved, the Department sought release of the matter on the ground that a reference had been made for the constitution of a Special Bench on issues relating to Section 153D approvals. The Tribunal declined the request, noting that the issue was already covered by binding jurisdictional High Court precedent and that there was no justification for releasing a matter after arguments had been completed and the order reserved. The ITAT held that the approval granted under Section 153D was mechanical and lacked the independent application of mind required by law. Since the approval itself was invalid, the resulting assessments could not survive. Consequently, the Tribunal quashed the assessment orders for both assessment years. Case Details Case Title: Max City Developers Versus DCIT Citation: JURISHOUR-1585-ITA-2026(DEL) Case No.: ITA Nos.6140 & 6141/Del/2025 Date: 20.05.2026 Counsel For Appellant: C.S. Anand Adv. Counsel For Respondent: Kirti Sankratyayan, CIT, DR Click Here To Read Order Read More: Earn Salary and Trade in F&O? Small Profit Could Now Trigger Tax Audit Under New Income Tax Act

S. 292BC Can’t Retroactively Validate Defective S. 153D Approvals Issued Before April 1, 2021: ITAT

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