[Opinion] Effect of Section 292BC on Jurisprudence under Section 153D

Ajay Wadhwa & Shivam Garg – [2026] 185 taxmann.com 149 (Article)

1. Statutory Setting

1.1 Section 153D mandates that no assessment or reassessment order in a search or requisition case, by an Assessing Officer below the rank of Joint Commissioner, shall be passed except with the prior approval of the Joint Commissioner in respect of each assessment year. The legislative object behind insertion of section 153D, as noticed in CBDT Circular No. 3 of 2008 and in later judicial decisions, was to provide an inbuilt supervisory check in search assessments, which are unusual proceedings with potential serious civil and criminal consequences.

1.2 Courts have therefore consistently held that the requirement of approval under section 153D is not an idle formality. Although the approving authority is not expected to write a detailed adjudicatory order, the approval must nevertheless indicate that the authority examined the relevant material and granted approval upon due application of mind. The approval is intended to be a real statutory safeguard, not a ritualistic endorsement.

2. Judicial Position Prior to Insertion of Section 292BC

2.1 Prior to section 292BC, the Tribunal and Hon’ble High Courts had invalidated search assessments where the approval under section 153D was found to be mechanical or perfunctory. The principal grounds emerging from the case law were these:

(a) the approval did not demonstrate any application of mind;

(b) the approval did not indicate that the draft assessment order and relevant records like the appraisal report, assessment record etc., had been examined;

(c) one omnibus approval was granted for multiple assessment years and, in some cases, for multiple assessees, contrary to the phrase “each assessment year” being an explicit requirement in section 153D;

(d) the approval was granted on the same day, or within an implausibly short time after the proposal, suggesting that there was no realistic opportunity to examine the records;

(e) the approval stage under section 153D was treated by the Courts as a distinct statutory stage, and not something that could be justified by pointing to the approving authority’s earlier general involvement in the assessment proceedings.

2.2 In Serajuddin, the Orissa High Court held that there was not even a token indication that the Additional CIT had perused the draft orders; it observed that while elaborate reasons were not necessary, there had to be some indication of the thought process. The Court also emphasised that a draft put up only two days before the limitation placed the approving authority under undue pressure and impaired meaningful scrutiny.

2.3 The Hon’ble Delhi High Court has also treated the requirement seriously. It has emphasised that section 153D operates in respect of “each assessment year” and that the legislative intent behind the provision is that the superior authority must apply its mind to the material on the basis of which the assessment is proposed.

2.4 The Bombay High Court has gone further to state that although approval under section 153D need not be a detailed judgment, it must reflect at least minimum application of mind, and such a defect cannot be cured later by affidavit.

3. Text and Scope of the New Section 292BC

3.1 By Finance Act, 2026, Parliament inserted section 292BC with retrospective effect from 1 April 2021. The section provides, inter alia, that any approval given by an income tax authority in relation to assessment, reassessment or recomputation proceedings shall be deemed to be administrative and supervisory in nature and shall not be invalid merely by reason of insufficiency of the reasons recorded or by reason of any defect in the form or manner of its authentication or communication, including non appending of digital signature where the approval is granted electronically.

3.2 Section 292BC as inserted by Finance Act, 2026 is reproduced as under:

“292BC.Circumstances in which approvals by income-tax authority not to be invalid: Notwithstanding anything contained in this Act or in any judgment, order or decree of any Court, for the removal of doubts, it is hereby clarified that any approval given by an income-tax authority in relation to any assessment, reassessment or recomputation proceedings under this Act shall be deemed to be administrative and supervisory in nature and shall not be invalid or shall not be deemed to be invalid by reason of any insufficiency of the reasons recorded or by reason of any defect in the form or manner of its authentication or communication including whether digital signature have been appended to such approval or not, where such approval is granted electronically.”.

3.3 The amendment is thus clearly intended to blunt a category of challenges based on the nature and drafting of approval notes. It would be unrealistic to argue that the amendment has no effect at all. It does. It materially weakens contentions founded only on these propositions:

(a) that the approval note is too brief;

(b) that the reasons are inadequate in extent or detail;

(c) that the approval suffered from defects in form, authentication, digital signature or communication.