CHHAYA MOHAN KALE vs. INCOME TAX OFFICER WARD 5 PANVEL

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WP/11403/2024HC BombayHCBM01021455202430 September 2024Author: HON'BLE SHRI JUSTICE G. S. KULKARNI,HON'BLE SHRI JUSTICE SOMASEKHAR SUNDARESAN3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the petition deserves to be allowed. The Court noted that the reassessment proceedings were initiated after the expiry of three years from the relevant assessment year (2018-19). The sanction for these proceedings was admittedly issued by the Principal Commissioner of Income Tax (PCIT). The Court referred to its own decision in Vodafone Idea Limited vs. Deputy Commissioner of Income-Tax, which held that for reassessments initiated beyond three years from the relevant assessment year, the sanctioning authority must be the Principal Chief Commissioner of Income Tax (PCCIT) as provided under Section 151(ii) of the Act. The proviso to Section 151, which was inserted with effect from April 1, 2023, was not applicable to the present case. Consequently, as the sanction was invalid, the notice under Section 148 of the Act and all consequential actions were quashed and set aside. The operative direction was to quash and set aside the notice under Section 148 and all consequential actions.

What were the facts?

The petitioner, Chhaya Mohan Kale, has filed a Writ Petition challenging a Show Cause Notice dated April 7, 2022, issued under Section 148 of the Income Tax Act, 1961, an order dated April 7, 2022, passed under Section 148A(d) of the Act, and an Assessment Order dated March 22, 2024, passed under Section 147 read with Section 144B of the Act. The assessment year in question is 2018-19. The reassessment was initiated after the expiry of three years from the relevant assessment year. The petitioner argued that the petition is covered by the High Court's decision in Vodafone Idea Limited vs. Deputy Commissioner of Income-Tax. The revenue contended that the matter is not squarely covered as the sanction was issued by the Principal Commissioner of Income Tax (PCIT) and not the Principal Chief Commissioner of Income Tax (PCCIT) or other relevant authorities as stipulated in Section 151(ii) of the Act.

What were the issues?

1. Whether the reassessment proceedings initiated for Assessment Year 2018-19, after the expiry of three years from the relevant assessment year, are valid when the sanction for reassessment was granted by the Principal Commissioner of Income Tax (PCIT) and not the Principal Chief Commissioner of Income Tax (PCCIT) or other specified authorities under Section 151(ii) of the Income Tax Act, 1961. Assessee's Contention: The petition is squarely covered by the decision of the Division Bench of this Court in Vodafone Idea Limited vs. Deputy Commissioner of Income-Tax, Circle-5(2)(1) & Ors. (Writ Petition No. 2766 of 2022), which dealt with a similar situation for the same assessment year. Revenue's Contention: The matter is not squarely covered by the Vodafone Idea Limited decision because the sanction was admittedly issued by the Principal Commissioner of Income Tax and not by the Principal Chief Commissioner of Income Tax and other relevant authorities as set out in Section 151(ii) of the Act.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

1-WP 11403-24.DOC Prajakta Vartak IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 11403 OF 2024 Chhaya Mohan Kale ...Petitioner Vs. Income Tax Officer Ward 5, Panvel & Ors. ...Respondents _________ Mr. Sham Walve with Mr. Sameer Dalal and Mr. Bhavik Chheda for Petitioner. Mr. Akhileshwar Sharma for Respondents. __________ CORAM: G. S. KULKARNI & SOMASEKHAR SUNDARESAN, JJ. DATE: 30 SEPTEMBER 2024. P.C.

1.

Rule. Rule made returnable forthwith. Learned Counsel for the Respondents waives service. By consent of the parties, heard finally.

2.

Reply affidavit is taken on record.

3.

This Writ Petition challenges a Show Cause Notice dated 07 April 2022 issued under Section 148 of the Income Tax Act, 1961 (“the Act”), order dated 07 April 2022 passed u/s 148A(d) of the Act and the Assessment Order dated 22 March 2024 passed u/s 147 read with Section 144B of the Act. The assessment year in question is 2018-19. 4. The reassessment has been initiated after the expiry of three years from the relevant assessment year. Consequently, Mr. Walve, learned 30 September 2024 PRAJAKTA SAGAR VARTAK PRAJAKTA SAGAR VARTAK Date: 2024.10.04 11:06:56 +0530

1-WP 11403-24.DOC counsel for the petitioner submits that this petition is squarely covered by the decision of the Division Bench of this Court in Vodafone Idea Limited vs. Deputy Commissioner of Income-Tax, Circle-5(2)(1) & Ors. (Writ Petition No. 2766 of 2022).

5.

Mr. Suresh Kumar, learned counsel for the revenue does not agree that the matter would be squarely covered by the decision of the Division Bench of this Court in Vodafone Idea Limited (supra), in as much as the sanction has been admittedly issued by the Principal Commissioner of Income Tax and not by the Principal Chief Commissioner of Income Tax and other relevant authorities as set out in Section 151(ii) of the Act. It may be noted that the assessment year in Vodafone Idea Limited (supra), is the very same assessment year i.e. 2018-19. The following extract from the decision of Vodafone Idea Limited (supra) is relevant:- “3. In the impugned order dated 5th April 2022 and the impugned notice dated 6th April 2022, both state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year (“AY”) 2018-19 and since Income Tax & Ors., 1 the sanction is invalid and consequently, the impugned order dated 5th April 2022 and impugned notice dated 6th April 2022 under section 148A(d) and 148, respectively, of the Act are hereby quashed and set aside.” 30 September 2024

1-WP 11403-24.DOC

6.

In the result, this petition deserves to be allowed. It is accordingly allowed in terms of prayer clause (a). The notice under Section 148 of the Act and all consequential actions are hereby quashed and set aside. No costs. (SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.) 30 September 2024

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