BALKRISHNA BARSHA SUTAR vs. THE INCOME TAX OFFICER WARD 28 1 1 MUMBAI AND 4 ORS

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WP/6192/2024HC BombayHCBM01018513202429 April 2024Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the sanction for the order under Section 148A(d) and the notice under Section 148 were invalid. The assessment year was 2017-2018, and the impugned notices and order were issued on 20th July 2022. Since this was beyond a period of three years from the end of the relevant assessment year, the sanctioning authority ought to have been the Principal Chief Commissioner of Income Tax (PCCIT) as stipulated under Section 151(ii) of the Act. The proviso to Section 151, which came into effect from 1st April 2023, was not applicable to the present case. The Court followed its own decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors. The Court also observed that even if the Assessee had not responded to the notice, it would not validate an otherwise invalid notice. Consequently, the impugned order and notice were quashed and set aside. All rights and contentions were kept open.

What were the facts?

The Petitioner, Balkrishna Barsha Sutar, has filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961, and an order passed under Section 148A(d) of the Act, both dated 20th July 2022. A prior notice under Section 148A(b) was issued on 25th May 2022. The assessment year in question is 2017-2018. A key ground for challenge is that the sanction for the order under Section 148A(d) and the notice under Section 148 were issued by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT). The Revenue raised a preliminary objection regarding the maintainability of the petition due to the Assessee's failure to respond to the notice.

What were the issues?

1. Whether the sanction accorded by the Principal Commissioner of Income Tax (PCIT) for passing an order under Section 148A(d) and issuing a notice under Section 148 of the Income Tax Act, 1961, is valid when the assessment year is 2017-2018 and the impugned notices/orders are dated 20th July 2022, thereby falling beyond the three-year period from the end of the relevant assessment year. Assessee's Contention: The sanctioning authority should have been the Principal Chief Commissioner of Income Tax (PCCIT) as per Section 151(ii) of the Act, as the proviso to Section 151, which was inserted with effect from 1st April 2023, is not applicable. The Assessee relies on the High Court's order in Vodafone Idea Limited v. Deputy Commissioner of Income Tax. Revenue's Contention: The petition is not maintainable as the Assessee did not respond to the notice issued. However, the Revenue concedes that the issue might be covered by the Vodafone Idea Limited case.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A(d),Section 148A(b),Section 151,Section 151(ii)

AI-generated summary — verify with the full judgment below

1/3 426-aswp-6192-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 6192 OF 2024 Balkrishna Barsha Sutar …Petitioner Versus The Income Tax Officer, Ward No.28(1)(1), Mumbai & Ors. …Respondents Mr. Jitendra Singh, for Petitioner. Mr. Arjun Gupta, for Respondents/Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 29th April 2024 PC:-

1.

This petition relates to Assessment Year 2017- 2018. 2. Petitioner is impugning a notice issued under Section 148 of the Income Tax Act, 1961 (“the Act”) and the order passed under Section 148A(d) of the Act, both dated 20th July 2022 and the notice dated 25th May 2022 issued under Section 148A(b) of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (“PCIT”) and not by the Principal Chief Commissioner of Income Tax (PCCIT”). Gaikwad RD 2024:BHC-AS:19760-DB

2/3 426-aswp-6192-2024.doc

3.

Mr. Singh, at the outset, submitted that the sanction issue in this matter would be covered by the order dated 6th February 2024 passed by this Court in the case of Vodafone Idea Limited v. Deputy Commissioner of Income Tax, Circle-5(2)(1), Mumbai & Ors.1 Mr. Gupta though in fairness states that it can be covered by Vodafone Idea Limited (supra), he raised the question of maintainability of petition because Assessee did not even respond to the notice issued. But we ask ourselves a question, even if Assessee has not responded would that make an invalid notice valid. The answer is ‘NO’.

4.

The impugned order and the impugned notice both dated 20th July 2022 state that the Authority that has accorded the sanction is the PCIT-27, Mumbai. The matter pertains to Assessment Year (“AY”) 2017-2018 and since the impugned order as well as the notice are issued on 20th July 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 of the Act has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand.

5.

In the circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.2, the sanction is invalid and consequently, the impugned order

1.

Writ Petition No. 2768 of 2022.

2.

(2023) 457 ITR 647 (Bom.). Gaikwad RD

3/3 426-aswp-6192-2024.doc and impugned notice both dated 20th July 2022 under Sections 148A(d) and 148 of the Act are hereby quashed and set aside.

6.

Petition disposed. No order as to costs. All rights and contentions are kept open. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gaikwad RD Signed by: Raju D. Gaikwad Designation: PS To Honourable Judge Date: 30/04/2024 17:00:54

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