HOSTIN SERVICES PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1) AND ORS

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WP/5880/2024HC BombayHCBM01019084202425 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 of the Income Tax Act, 1961, was invalid. The court noted that the impugned order and notice, both dated April 13, 2022, pertained to Assessment Year 2018-19 and were issued beyond a period of three years. Consequently, the sanctioning authority should have been 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. Relying on its own prior decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the court found the sanction to be invalid. Accordingly, the impugned order and notice dated April 13, 2022, were quashed and set aside, along with any consequential assessment orders, demand orders, and penalty notices. The petition was disposed of with all rights and contentions kept open.

What were the facts?

The Petitioner, Hostin Services Pvt Ltd, filed a writ petition challenging a notice dated March 30, 2022, under Section 148A(b) of the Income Tax Act, 1961, an order dated April 13, 2022, under Section 148A(d), and a notice dated April 13, 2022, under Section 148. The assessment year in question is 2018-19. A key ground raised was that the sanction for the order under Section 148A(d) and the notice under Section 148 were invalid because the sanction was issued by the Principal Commissioner of Income Tax (PCIT) and not the Principal Chief Commissioner of Income Tax (PCCIT). The impugned notices and order were issued beyond three years from the end of the relevant assessment year, necessitating sanction from the PCCIT as per Section 151(ii) of the Act, as the proviso to Section 151 was not yet applicable.

What were the issues?

1. Whether the sanction for passing the order under Section 148A(d) and issuing the notice under Section 148 of the Income Tax Act, 1961, is invalid when issued by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), for an assessment year where the notices are issued beyond three years. Assessee's Contention: The Petitioner argued that the sanctioning authority must be the PCCIT, as the notices were issued beyond three years from the end of Assessment Year 2018-19. They relied on the judgment in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors. (2023) 457 ITR 647 (Bom). Revenue's Contention: The Respondent agreed with the Petitioner's submission and acknowledged that the matter is covered by the aforementioned High Court order.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

1/3 905-wp-5880-24.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 5880 OF 2024 Hostin Services Pvt Ltd

….Petitioner V/s. Assistant Commissioner of Income Tax Circle 1(1) & Ors.

....Respondents ---- Ms Radha Halbe for Petitioner. Mr. Arjun Gupta for Respondents. ---- CORAM : K. R. SHRIRAM & Dr. NEELA GOKHALE, JJ.

DATED : 25th APRIL 2024 P.C. : 1 This petition relates to Assessment Year 2018-19. 2 Commissioner of Income Tax, Circle 5(2)(1), Mumbai & Ors.1 Counsel for respondents agrees. 3 Petitioner is impugning a notice dated 30th March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 (“the Act”), the order dated 13th April 2022 passed under Section 148A(d) of the Act and the notice also dated 13th April 2022 issued under Section 148 of the Act. One of the 1 Writ Petition No.2768 of 2022 dated 6th February 2024 Meera Jadhav MEERA MAHESH JADHAV MEERA MAHESH JADHAV Date: 2024.04.26 17:47:18 +0530

2/3 905-wp-5880-24.doc 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 in as much 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”). 4 The impugned order and the impugned notice both dated 13th April 2022, state that the Authority that has accorded the sanction is the PCIT, Mumbai. The matter pertains to Assessment Year (“AY”) 2018-19. Since the impugned order as well as the notice are both issued on 13th April 2022, both have been issued beyond a period of three years; therefore, the Income Tax & Ors.2 the sanction is invalid. Mr. Gupta agrees. Consequently, the impugned order and impugned notice, both dated 13th April 2022, issued under section 148A(d) and 148, respectively, of the Act are hereby quashed and set aside. Consequential assessment orders, demand orders and penalty notices, etc. are also quashed and set aside. 2 (2023) 457 ITR 647 (Bom) Meera Jadhav

3/3 905-wp-5880-24.doc 6 Petition disposed. No order as to costs. All rights and contentions are kept open. (Dr. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Meera Jadhav

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