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 18.03.2023 and has held that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of Section 153D of the Income Tax Act, in the case of ACIT, Circle-1(2), Bhubaneswar Versus M/s. Serajuddin & Co. Kolkata (I.T.A. Nos. 39, 40, 41, 42, 43, 44 & 45 of 2022), passed by division bench of Chief Justice S. Muralidhar and Justice M.S. Raman.

Facts of the 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. 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. 

In affirming the tribunal’s judgment, the court noted 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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