ITAT Agra Quashes Search Assessments Against Hydrise Foods; Finds Section 153D Approval Mechanical and Without Application of Mind
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT), Agra Bench, has set aside the search assessments framed against Hydrise Foods Pvt. Ltd. for AY 2017–18 and AY 2018–19, holding that the mandatory approval under Section 153D of the Income Tax Act, 1961 was granted in an entirely mechanical manner, without independent application of mind.
The Bench comprising M. Balaganesh (Accountant Member) and Sunil Kumar Singh (Judicial Member) noted that the Assessing Officer sent the draft assessment orders to the Additional Commissioner on 29 September 2021 and received Section 153D approval on the very same day. The Tribunal observed that such same-day approval was granted despite involving multiple assessees across different assessment years and separate sets of seized material, making a meaningful examination of the record practically impossible. The Tribunal highlighted that the Assessing Officer is situated in Agra while the Additional Commissioner is stationed in Kanpur, further strengthening the presumption that the approval could not have followed any supervisor-level scrutiny of material.
The Tribunal emphasised that Section 153D approval is not a clerical endorsement but a statutory safeguard meant to ensure that additions proposed in search assessment cases are scrutinised by a superior authority before finalisation. Referring to prevailing judicial precedents, the Tribunal reiterated that the purpose of Section 153D is to prevent arbitrary or unjust assessments in search matters and to ensure that the approving authority applies its mind to the seized documents, replies, draft conclusions, and assessment records. It found that the approval granted through a consolidated order covering around a dozen entities in one day demonstrated a clear lack of independent examination and suggested that the authority acted merely as a symbolic signatory rather than fulfilling its legal duty.
The order also noted that the assessment order itself specifically recorded that it was passed only after receiving approval under Section 153D, and the copy of approval placed on record confirmed that the Additional Commissioner approved 13 assessees on the same date, including Hydrise Foods Pvt. Ltd., without any indication of separate reasoning or scrutiny. The Bench observed that the nature, scope and function of Section 153D approval do not permit such mass clearances and that the law does not treat such approval as an empty procedural formality.
Relying extensively on the binding precedents including the Third Member decision of the Delhi Tribunal in Shri Dheeraj Chaudhary v. ACIT, the Tribunal held that approvals granted under Section 153D must demonstrate a product of human thought, rather than a routine sign-off by a superior officer. The Tribunal also referenced judicial reasoning from multiple High Courts holding that mechanical grant of approval vitiates the entire assessment.
Having held that the Section 153D approval in this case lacked independent application of mind, the Tribunal concluded that the assessment orders themselves stood invalid in the eyes of law. The Tribunal categorically held that “the approval granted under Section 153D is mechanical in nature and without application of mind,” leading to the inevitable consequence that the search assessments cannot survive. Since the statutory safeguard under Section 153D was violated, the ITAT quashed the assessments for both AY 2017–18 and AY 2018–19 on jurisdictional grounds and allowed the appeals of the assessee. As a result, the Tribunal did not adjudicate on the merits of the additions, leaving all other grounds open.
Appearance
Counsel For Appellant: Gaurav Jain, Tarun Chanana
Counsel For Respondent: Sukesh Kumar Jain, CIT DR
Cause Title: Hydrise Foods Pvt. Ltd Versus DCIT
Case No: ITA Nos. 86 & 87/AGR/2024
Coram: M. Balaganesh (Accountant Member) and Sunil Kumar Singh (Judicial Member)
