RESHMA MAHADEO GIDDE vs. INCOME TAX OFFICER WARD 2 2 KALYAN

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WP/12790/2023HC BombayHCBM01040347202325 October 2023Author: 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 issue of improper sanction raised by the petitioner squarely applied to their case, based on the precedent set 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 obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was invalid. The Court reasoned that an invalid sanction renders the notice issued under Section 148 of the Act invalid. Following this logic, any assessment order passed pursuant to such an invalid notice, relying on the incorrect sanction, would also be invalid and liable to be quashed. The Court quashed and set aside the order passed under Section 148A(d), the notice under Section 148, the assessment order under Section 147 read with Section 144B, and the consequential demand and penalty notices.

What were the facts?

The petitioner, Reshma Mahadeo Gidde, filed a writ petition challenging actions taken by the Income Tax Officer, Ward 2(2), Kalyan, and others for Assessment Year 2016-2017. The petition raised grounds including the issue of improper sanction. The Bombay High Court noted that the issue of improper sanction had been decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others. In that precedent, the Court held that for AY 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961, rendering the sanction invalid. Consequently, the notice issued based on such sanction and the subsequent assessment order were also deemed invalid and liable to be quashed.

What were the issues?

1. Whether the sanction for issuing a notice under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017, obtained under Section 151(i) instead of Section 151(ii), is invalid, thereby rendering the notice and subsequent assessment order void? (Question of law, turning on Section 151 and Section 148 of the Income Tax Act, 1961). Assessee's contention: The assessee argued that the sanction obtained was improper, relying on the Bombay High Court's decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, which held that for AY 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i), making it invalid. Revenue's contention: The judgment records no specific argument from the revenue on this issue.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

1/2 5-aswp--12790-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 12790 OF 2023 Reshma Mahadeo Gidde …Petitioner Versus Income Tax Officer, Ward 2(2), Kalyan & Ors. …Respondents Mr. Jitendra Singh for Petitioner. Ms. Samiksha Kanani for Respondents. CORAM: K. R. SHRIRAM & NEELA GOKHALE, JJ. DATED: 25th October 2023 PC:-

1.

At the outset, Mr. Singh tenders draft amendment which is taken on record and marked ‘X’ for identification. Leave to amend granted. Amendment to be carried out and amended Petition to be served within one week from today.

2.

This Petition relates to Assessment Year 2016-2017. 3 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 Others,1 wherein the Court has held that for Assessment Year 2016- 2017, the sanction should have been given under Section 151(ii) and 1. (2023) 457 ITR 647 (Bom.) Gaikwad RD 2023:BHC-AS:32264-DB

2/2 5-aswp--12790-2023.doc 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 incorrect sanction will also has to be quashed. 4 Counsels state that the findings in Siemens Financial Services Private Limited (Supra) squarely apply to this Petition as well on the issue of sanction. 5 Therefore, we hereby quash and set aside order passed under Section 148A(d) of the Act and notice under Section 148 of the Act both dated 27th July 2022, impugned assessment order dated 22nd May 2023 passed under Section 147 read with Section 144B of the Act along with consequential demand notice and penalty notice both dated 22nd May 2023. 6 Petition disposed. (NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gaikwad RD Signed by: Raju D. Gaikwad Designation: PS To Honourable Judge Date: 26/10/2023 17:59:08

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