VIMAL MAHADEO GIDDE vs. INCOME TAX OFFICER WARD 2 2 KALYAN

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WP/12789/2023HC BombayHCBM01040342202325 October 2023Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that for Assessment Year 2016-2017, the sanction for issuing a notice under Section 148A should have been obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was deemed invalid. The Court reasoned that if the sanction is invalid, the notice issued under Section 148A(d) and the subsequent notice under Section 148 of the Act are also invalid and must be quashed. Following this logic, the assessment order passed under Section 147 read with Sections 144 and 144B, along with the consequential demand and penalty notices, which relied on the invalid notice, were also quashed and set aside. The ratio decidendi is that an assessment proceeding initiated based on an invalid sanction is void ab initio. The operative direction was to quash and set aside the impugned orders and notices.

What were the facts?

The Petitioner, Vimal Mahadeo Gidde, filed a writ petition before the Bombay High Court challenging actions taken by the Income Tax Officer, Ward 2(2), Kalyan, and others for Assessment Year 2016-2017. The petition raised grounds including the issue of improper sanction. The Petitioner sought to amend the petition, which was granted. The core of the dispute revolves around the validity of a notice issued under Section 148A and the subsequent assessment order.

What were the issues?

1. Whether the sanction for issuing a notice under Section 148A of the Income Tax Act, 1961, for Assessment Year 2016-2017 was validly obtained under the correct provision of Section 151 of the Act. Assessee's Contention: The Petitioner argued, by relying on the High Court's decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, that for Assessment Year 2016-2017, the sanction should have been obtained under Section 151(ii) and not Section 151(i) of the Act, rendering the sanction invalid. Revenue's Contention: The judgment does not record any specific arguments made by the Revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 151,Section 148A,Section 148,Section 147,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

1/2 4-aswp--12789-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 12789 OF 2023 Vimal Mahadeo Gidde …Petitioner Versus Income Tax Officer, Ward 2(2), Kalyan & Ors. …Respondents Mr. Jitendra Singh for Petitioner. Ms. Samiksha Kanani for Respondents. CORAM: K. R. SHRIRAM & NEELA GOKHALE, JJ. DATED: 25th October 2023 PC:-

1.

At the outset, Mr. Singh tenders draft amendment which is taken on record and marked ‘X’ for identification. Leave to amend granted. Amendment to be carried out and amended Petition to be served within one week from today.

2.

This Petition relates to Assessment Year 2016-2017. 3 Counsels state that in this Petition, the issue of improper sanction having been obtained has been raised among other grounds. Counsels further state that the issue of improper sanction has been decided by this Court in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others,1 wherein the Court has held that for Assessment Year 2016- 2017, the sanction should have been given under Section 151(ii) and 1. (2023) 457 ITR 647 (Bom.) Gaikwad RD 2023:BHC-AS:32263-DB

2/2 4-aswp--12789-2023.doc not under Section 151(i) of the Income Tax Act, 1961 (the Act) and consequently, the sanction is invalid. The Court has stated that in view of the invalid sanction, the notice issued itself will be invalid and has to be quashed. Therefore, if the notice itself has to be quashed, the assessment order passed following the notice relying on an incorrect sanction will also has to be quashed. 4 Counsels state that the findings in Siemens Financial Services Private Limited (Supra) squarely apply to this Petition as well on the issue of sanction. 5 Therefore, we hereby quash and set aside order passed under Section 148A(d) of the Act and notice under Section 148 of the Act both dated 27th July 2022, impugned assessment order dated 24th May 2023 passed under Section 147 read with Section 144 read with Section 144B of the Act along with consequential demand notice and penalty notice both dated 24th May 2023. 6 Petition disposed. (NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gaikwad RD Signed by: Raju D. Gaikwad Designation: PS To Honourable Judge Date: 26/10/2023 17:58:11

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