Section 153D

Section 153D — the law in short

What the courts have decided on section 153D, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• K.K. Builders v DCIT High CourtHelps taxpayerValidity unconfirmed
  I argued before the Tribunal that the s.153D approval was mechanical and its order says nothing about it. Can I take that straight to the High Court?
  Not usefully. The Kerala High Court declined to answer any issue affirmatively, set aside the Tribunal's order and remitted the appeal for fresh consideration, because the Tribunal had recorded the s.153D ground as one of three issues before it and had not specifically answered it. Every relevant issue must receive the Tribunal's attention before the High Court can adjudicate on it as an appellate forum.
• PCIT v MDLR Hotels Pvt Ltd High CourtHelps taxpayerValidity unconfirmed
  The Additional Commissioner approved my search assessment along with hundreds of others in a single letter that says nothing but 'approved'. Is that enough under s.153D?
  No. Where the approving authority accorded approval to 246 proposed assessments by one letter that merely directed that the orders be passed before limitation and copies sent for record, the Delhi High Court held there was no substantial question of law in the Tribunal's conclusion that the approval was mechanical, and dismissed eighteen Revenue appeals. Approval that neither mentions the seized material nor shows that the draft orders were examined is a ritual, not the safeguard s.153D creates.
• ACIT v Serajuddin & Co High CourtCuts both ways
  What must an approval under s.153D actually show on its face, and does last-minute bulk approval survive?
  Draft search assessments were sent to the Additional CIT two days before limitation expired and approval issued with nothing to show the drafts had been read. The Orissa High Court held that while elaborate reasons are not required, there must be some indication that the approving authority examined the draft orders and found they met the requirements of law. The assessments were held invalid, and the Supreme Court later dismissed the Revenue's SLP.
• PCIT v Shiv Kumar Nayyar High CourtCuts both ways
  Does a single, same-day approval covering many years and many cases satisfy s.153D, or does it vitiate the assessment?
  The approving authority granted one approval covering assessment years 2011-12 to 2017-18 and cleared 43 cases in a single day. The Delhi High Court held that approval under s.153D cannot be a ritualistic formality or rubber stamping and must reflect an appropriate application of mind, and upheld the Tribunal's annulment of the search assessments.
• Dhiren Rambhai Bharwad v ACIT ITATHelps departmentValidity unconfirmed
  Is the mechanical-approval argument under s.153D a certainty? My approval covers several years in one order, given on the day the draft orders went up.
  It is not a certainty. On facts of exactly that kind — one approval covering multiple assessment years, granted on the same day as or immediately after the Assessing Officer's proposal and with reference to the draft assessment orders — the Ahmedabad Bench found no infirmity in the s.153D approval and dismissed the ground. The library should carry this because the s.153D line is not one-way at Tribunal level.
• Finesse International Design v DCIT ITATHelps taxpayerValidity unconfirmed
  The section 153D approval for my search assessment carries no DIN, even though the assessment order itself does. Does that invalidate the assessment?
  Yes, on this Tribunal's view. The Delhi Bench held that CBDT Circular No. 19/2019 requires a computer-generated DIN in the body of every departmental communication issued from 1 October 2019, and that a communication issued without one is invalid and deemed never to have been issued. The approval under section 153D dated 19 February 2021 carried no DIN. Because that approval is the fulcrum on which the final order rests, the Tribunal treated it as non est in law, and quashed the section 153A assessment and the section 156 demand notice built on it. It did not go into the merits.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.