KISHORE NARAYAN PATIL vs. INCOME TAX OFFICER WARD 4 PANVEL AND ORS

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WP/9561/2023HC BombayHCBM01026829202329 September 2023Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE KAMAL KHATA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the issue of improper sanction, as raised by the petitioner, squarely applies to the present case. Citing its own decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, the Court reiterated that for Assessment Year 2016-2017, the sanction ought to have been granted under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). The Court found the sanction to be invalid. Consequently, the notice issued under Section 148, which is predicated on a valid sanction, was deemed invalid. The assessment order passed pursuant to this invalid notice, relying on an incorrect sanction, was also held to be invalid. Therefore, the Court quashed and set aside the order dated 25th July 2022 passed under Section 148A(d), the notice dated 26th July 2022 under Section 148, the notice dated 29th June 2021 (treated as a show cause notice under Section 148A(b)), the assessment order passed under Section 147 read with Section 144B, the notice of demand under Section 156, and the show cause notices for penalties under Sections 271(1)(b) and 274 read with 271(1)(c), all dated 17th May 2023. The ratio is that an assessment proceeding initiated with an invalid sanction is void ab initio.

What were the facts?

The petitioner, Kishore Narayan Patil, filed a writ petition before the Bombay High Court challenging various orders and notices related to Assessment Year 2016-2017. The core of the challenge, as stated by counsels for both parties, revolved around the issue of improper sanction obtained for reassessment proceedings. The petitioner argued that the sanction was invalid, rendering subsequent notices and the assessment order void. The revenue did not present a counter-argument on this specific point. The petition sought to quash the order passed under Section 148A(d), notices issued under Sections 148 and 147, demand notice under Section 156, and show cause notices for penalties under Sections 271(1)(b) and 274 read with 271(1)(c) of the Income Tax Act, 1961.

What were the issues?

1. Whether the sanction obtained for reassessment proceedings for Assessment Year 2016-2017 was invalid due to being issued under the incorrect provision of the Income Tax Act, 1961, thereby rendering the subsequent notice and assessment order void? (Question of law and mixed fact and law, turning on Section 151 of the Income Tax Act, 1961). Assessee's Contentions: The assessee contended that the sanction for reassessment was improperly obtained. They relied on the decision of this Court in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, which held that for Assessment Year 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i). Consequently, the sanction was invalid, the notice issued was invalid, and the assessment order passed based on such invalid sanction was also liable to be quashed. Revenue's Contentions: The judgment records no specific arguments presented by the revenue on the issue of improper sanction.

Which sections of the Income-tax Act were involved?

Section 151,Section 148A,Section 148,Section 147,Section 144B,Section 156,Section 271(1)(b),Section 274,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

1/2 458.WP-9561-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.9561 OF 2023 Kishore Narayan Patil

….Petitioner V/s. Income Tax Officer, Ward 4 & Ors. ....Respondents ---- Ms. Radha Halbe for petitioner. Mr. Ajeet Manwani a/w. Ms. Samiksha Kanani for respondents. ---- CORAM : K. R. SHRIRAM & KAMAL KHATA, JJ.

DATED : 29th SEPTEMBER 2023 P.C. : 1

This petition relates to Assessment Year 2016-2017. 2 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 Others1, wherein the Court has held that for Assessment Year 2016-2017, the sanction should have been given under Section 151(ii) and 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 1. Writ Petition No.4888 of 2022 dated 25th August 2023 Gauri Gaekwad 2023:BHC-AS:28802-DB

2/2 458.WP-9561-2023.doc incorrect sanction will also has to be quashed. 3 Counsels state that the findings in Siemens Financial Services Private Limited (Supra) should squarely apply to this petition as well on the issue of sanction. 4 Therefore, we hereby quash and set aside order dated 25th July 2022 passed under Section 148A(d), notice dated 26th July 2022 issued under Section 148, notice dated 29th June 2021 issued under Section 148 which is now treated as show cause notice under Section 148A(b) in pursuant of issue letter dated 30th May 2022 and assessment order passed under Section 147 read with Section 144B, notice of demand issued under Section 156, show cause notice initiating penalty under Section 271(1)(b) and show cause notice initiating penalty under Section 274 read with Section 271(1)(c) of the Act all dated 17th May 2023. 5 Petition disposed. (KAMAL KHATA, J.)

(K. R. SHRIRAM, J.) Gauri Gaekwad Signed by: Gauri A. Gaekwad Designation: PS To Honourable Judge Date: 30/09/2023 17:10:29

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