JAGDISH ISHWARDAS NIHALANI vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE AND ORS

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WP/9507/2023HC BombayHCBM01028930202329 September 2023Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE KAMAL KHATA2 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. The Court referred to its own decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, which dealt with Assessment Year 2016-2017. In that case, the Court had ruled that the sanction ought to have been granted under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). The Court found the sanction to be invalid. Consequently, the notice issued under Section 148 was deemed invalid and liable to be quashed. Following this reasoning, the assessment order passed based on the invalid notice and incorrect sanction was also quashed and set aside. The operative direction was to quash and set aside all the impugned notices and the consequential assessment order. No issue was expressly left undecided.

What were the facts?

The petitioner, Jagdish Ishwardas Nihalani, filed a writ petition challenging various notices and orders related to Assessment Year 2016-2017. The core of the challenge, as stated by counsel, pertains to the improper sanction obtained for issuing notices under the Income Tax Act, 1961. The petitioner argued that the sanction was invalid, rendering subsequent notices and the assessment order void. The revenue was represented by the Assistant Commissioner of Income Tax and others. The procedural history involves the issuance of a notice under Section 148, an order under Section 148A(d), a further notice under Section 148, a consequential assessment order under Section 147 read with Section 144 and 144B, a notice of demand under Section 156, and a notice under Section 274 read with Section 271(1)(c).

What were the issues?

1. Whether the sanction obtained for issuing the notice under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017 was improper, rendering the notice and subsequent proceedings invalid? (Question of law and mixed fact and law, turning on Section 151). Assessee's Contentions: The assessee contended that the sanction for issuing the notice was improper. They relied on the decision of this Court 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 obtained under Section 151(ii) and not Section 151(i) of the Act, making the sanction invalid. Consequently, the notice and the assessment order based on it should be quashed. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 151,Section 148,Section 148A,Section 147,Section 144,Section 144B,Section 156,Section 274,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

1/2 457.WP-9507-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.9507 OF 2023 Jagdish Ishwardas Nihalani ….Petitioner V/s. Assistant Commissioner of Income Tax, Circle 1 & Ors. ....Respondents ---- Mr. Kumar Kale for petitioner. Mr. Ajeet Manwani a/w. Ms. Samiksha Kanani for respondents. ---- CORAM : K. R. SHRIRAM & KAMAL KHATA, JJ.

DATED : 29th SEPTEMBER 2023 P.C. : 1

This petition relates to Assessment Year 2016-2017. 2 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 Others1, wherein the Court has held that for Assessment Year 2016-2017, the sanction should have been given under Section 151(ii) and 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 1. Writ Petition No.4888 of 2022 dated 25th August 2023 Gauri Gaekwad 2023:BHC-AS:28801-DB

2/2 457.WP-9507-2023.doc quashed, the assessment order passed following the notice relying on an incorrect sanction will also has to be quashed. 3 Counsels state that the findings in Siemens Financial Services Private Limited (Supra) should squarely apply to this petition as well on the issue of sanction. 4 Therefore, we hereby quash and set aside notice dated 28th June 2021 issued under Section 148, order dated 28th July 2022 issued under Section 148A(d), notice dated 28th July 2022 issued under Section 148 and consequential assessment order issued under Section 147 read with Section 144 read with Section 144B, notice of demand issued under Section 156 and notice issued under Section 274 read with Section 271(1) (c) of the Act all dated 31st May 2023. 5 Petition disposed. (KAMAL KHATA, J.)

(K. R. SHRIRAM, J.) Gauri Gaekwad Signed by: Gauri A. Gaekwad Designation: PS To Honourable Judge Date: 30/09/2023 17:09:27

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