REKHA VISHAL JADHAV vs. INCOME TAX OFFICER WARD 2 2 KALYAN

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WP/12785/2023HC BombayHCBM01040350202325 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, as raised by the petitioner, squarely applies to the present case. Citing its own decision 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 granted under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was deemed invalid. The Court reasoned that an invalid sanction renders the notice issued under Section 148 invalid, and any assessment order passed relying on such a notice and incorrect sanction would also be invalid and liable to be quashed. Therefore, the Court quashed and set aside the order passed under Section 148A(d) and the notice under Section 148, both dated 27th July 2022, the assessment order dated 29th May 2023, and the consequential demand and penalty notices dated 29th May 2023. The ratio decidendi is that a procedurally flawed sanction invalidates subsequent actions taken under the Income Tax Act.

What were the facts?

The petitioner, Rekha Vishal Jadhav, filed a writ petition challenging proceedings initiated by the Income Tax Officer, Ward 2(2), Kalyan, for Assessment Year 2016-2017. The core of the challenge revolved around the validity of the sanction obtained for issuing a notice under Section 148A(d) and Section 148 of the Income Tax Act, 1961. The petitioner argued that the sanction was improperly obtained. The Bombay High Court had previously dealt with a similar issue in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, concerning the same assessment year. The court noted that the petitioner sought leave to amend the petition, which was granted.

What were the issues?

1. Whether the sanction obtained for issuing a notice under Section 148A(d) and Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017 was valid, specifically concerning the authority under which it was granted (Section 151(i) versus Section 151(ii))? Assessee's Contention: The sanction was improperly obtained. The petitioner relies 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 Assessment Year 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i), rendering it invalid. Revenue's Contention: The judgment records no specific arguments from the revenue on this issue.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

1/2 2-aswp-12785-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 12785 OF 2023 Rekha Vishal Jadhav …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

2/2 2-aswp-12785-2023.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 29th May 2023 passed under Section 147 read with Section 144B of the Act along with consequential demand notice and penalty notice both dated 29th 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 17:55:47

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