Section 153D – Prior approval necessary for assessment in cases of search or requisition

 

This provision ensures a check and balance on assessments made pursuant to search and seizure or requisition actions.

Applicability

1.  Applies to assessments or reassessments made under Section 153A (assessment in case of search or requisition) and Section 153C (assessment of income of any other person).

2.  Covers assessments of 6 years + relevant extended years (depending on law applicable at the time).

Requirement of Approval

The Assessing Officer (AO) cannot pass the assessment/reassessment order under 153A or 153C without the prior approval of:

Joint Commissioner of Income Tax (JCIT), or Additional Commissioner of Income Tax (Addl. CIT) (both are of the same rank).

Objective

To ensure that assessments in search cases (which are often high-pitched, sensitive, and prone to litigation) are not framed arbitrarily.

The JCIT/Addl. CIT acts as a supervisory authority, reviewing the draft order prepared by the AO.

Judicial Views

1.  In THE PR. COMMISSIONER OF INCOME TAX AND ANOTHER VERSUS SAPNA GUPTA – 2022 (12) TMI 887 – ALLAHABAD HIGH COURT, the High Court held that Section 153D requires that the Assessing Officer shall obtain prior approval of the Joint Commissioner in respect of “each assessment year” referred to in Clause (b) of sub-section (1) of Section 153A which provides for assessment in  case  of  search  under Section 132.

2.  In Mdlr Airlines (P) Ltd., New Delhi vs Dcit (ITA No. 1420/DEL/2023) it was held that approval under Section 153D must be specific, speaking, and show thought process – not just a blanket or omnibus approval. If approval is granted in a mechanical manner (same day, covering many years / assessees, without perusal of records), that approval is void.

The copy of the order is as under:

1714389567-ITA 1420 & 1421 of 2023 & 1718, 1719 of 2023 NDLR Airlines P Ltd