PRADIP HIMMATLAL SHAH vs. INCOME TAX OFFICER WARD 3 (2)

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WP/3115/2024HC BombayHCBM01010999202404 March 2024Author: 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 the sanction accorded by the PCIT for the order under Section 148A(d) and the notice under Section 148 was invalid. The Court reasoned that since the assessment year was 2018-2019 and the impugned order and notice were issued on April 7, 2022, they were issued beyond a period of three years. In such cases, the sanctioning authority must be the PCCIT, as stipulated 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. Following its own precedent in Siemens Financial Services Private Limited, the Court found the sanction to be invalid. Consequently, the impugned order dated April 7, 2022, under Section 148A(d) and the notice dated April 7, 2022, under Section 148 of the Act were quashed and set aside. The petition was disposed of, keeping all rights and contentions open.

What were the facts?

The petitioner, Pradeep Himatlal Shah, filed a writ petition before the Bombay High Court 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 April 7, 2022. A prior notice under Section 148A(b) dated March 21, 2022, was also challenged. The assessment year in question is 2018-2019. A key contention was that the sanction to pass the order under Section 148A(d) and issue the notice under Section 148 was invalid because it was issued by the Principal Commissioner of Income Tax (PCIT) and not the Principal Chief Commissioner of Income Tax (PCCIT). Both parties agreed that the petition was covered by a previous order of the Court.

What were the issues?

1. Whether the sanction granted by the Principal Commissioner of Income Tax (PCIT) for issuing a notice under Section 148 and an order under Section 148A(d) of the Income Tax Act, 1961, is valid when the assessment year is 2018-2019 and the notices/orders were issued on April 7, 2022, which is beyond three years from 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, because the proceedings were initiated beyond three years. The proviso to Section 151, which was inserted later, is not applicable. Revenue's Contention: The revenue's counsel agreed that the petition was covered by a previous order of the Court, implying agreement with the assessee's position on the validity of the sanction.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

1/2 486-aswp-3115-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.3115 OF 2024 Pradeep Himatlal Shah …Petitioner Versus Income Tax Officer Ward 3(2), Kalyan & Ors. …Respondents Mr. Dharan Gandhi, with Ms. Anchal Vyas, for Petitioner. Mr. Suresh Kumar, for Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 4th March 2024 PC:-

1.

This petition relates to Assessment Year 2018- 2019. 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 7th April 2022 and the notice dated 21th March 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”).

3.

Counsel for Petitioner states this petition is covered by the order dated 6th February 2024 passed by this Court in the case of Gaikwad RD 2024:BHC-AS:11376-DB

2/2 486-aswp-3115-2024.doc Vodafone Idea Limited v. Deputy Commissioner of Income Tax, Circle- 5(2)(1), Mumbai & Ors.

1.

Counsel for Respondents agrees.

4.

The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Thane-1. The matter pertains to Assessment Year (“AY”) 2018-2019 and since the impugned order as well as the notice are issued on 7th April 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 and impugned notice both dated 7th April 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.)

1.

Writ Petition No. 2768 of 2022.

2.

(2023) 457 ITR 647 (Bom.). Gaikwad RD Signed by: Raju D. Gaikwad Designation: PS To Honourable Judge Date: 08/03/2024 14:50:27

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