Prior Approval Of The Superior Officer Before Passing Of The Assessment/Reassessment Order Pursuant To A Search Operation Is A Mandatory Requirement: Orissa High Court

The high court of Orissa passed a judgment on 15 March 2023, stating that prior Approval Of The Superior Officer Before Passing Of The Assessment/Reassessment Order Pursuant To A Search Operation Is A Mandatory Requirement in case of ACIT, Circle-1(2), Bhubaneswar Versus M/s. Serajuddin & Co. Kolkata (IT Appeal No. 0019/00-01) passed by the division bench of Chief Justice S. Muralidhar and Justice M.S. Raman.


Facts of Case:

The assessee or respondent was the subject of a search and seizure operation. The assessee received service of a notice pursuant to Section 153A. Under Sections 143(3), 144, and 153A of the Act, the Assistant Commissioner of Income Tax (ACIT) issued assessment orders that made different additions and disallowances. Before the CIT, the assessee filed the appeals (A). The violation of Section 153D, which calls for the previous consent of the Additional Commissioner of Income Tax, was one of the reasons for the challenge. Additional CIT had given it before the assessment order was passed. Nonetheless, the CIT (A) ruled that it is not required to indicate the Additional CIT’s permission in the assessment order’s main body. Further appeals were made by the assessee to the ITAT. The assessee claimed that the Central Board of Direct Taxes (CBDT), in its Circular No. 3 of 2008, dated March 12, 2008, had not been followed. The additional CIT’s alleged permission under Section 153D had been handed down mechanically and without consideration. The ITAT ruled that before approving the AO under Sections 143(3), 144, or 153A, the approving authority had not given due consideration to the pertinent assessment records or the draught assessment orders. As a result, the evaluation orders were annulled.

The agency argued that the superior officer’s approval stood apart from the evaluation order. That was merely an administrative order, not subject to legal dispute. In other words, it was argued that the Additional CIT’s approval was invalid and could not serve as a basis for contesting the assessment order.



The court remarked that there is not even a passing reference of the Additional CIT having looked at the draft orders. Simply enough, the letter expresses approval. In other words, the aforementioned permission order did not even meet the very minimal criterion of the authorizing authority needing to specify what the thinking process comprised. Explanatory justifications are not required, but there must be some indication that the approving authority has reviewed the draft orders and determined that they comply with the law.

When upholding the tribunal’s order, the court ruled that simply repeating the statute’s language or “rubber stamping” a letter asking for approval by using phrases like “see” or “approved” will not suffice to meet the legal requirements.

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