MANOJ RAJENDRA GUPTA vs. INCOME TAX OFFICER-WARD 1 (1) , NASHIK AND ORS

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WP/10442/2023HC BombayHCBM01027854202329 September 2023Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE KAMAL KHATA3 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal, following its own precedent in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, held that for Assessment Year 2016-2017, the sanction for reassessment proceedings should have been obtained 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 for reassessment void. Therefore, any assessment order passed pursuant to such a void notice would also be invalid and liable to be quashed. Accordingly, the Court quashed and set aside the notice dated 8th April 2021 (treated as a show cause notice under Section 148A(b)), the order dated 26th July 2022 passed under Section 148A(d), the notice dated 26th July 2022 under Section 148, the reassessment order dated 18th May 2023 under Section 147 read with Section 144B, the notice of demand dated 18th May 2023 under Section 156, and the penalty notices dated 18th May 2023 under Sections 271(1)(c), 271B, and 271(1)(b). All other grounds and contentions were kept open for future proceedings.

What were the facts?

The petitioner, Manoj Rajendra Gupta, filed a writ petition before the Bombay High Court challenging various notices and orders related to Assessment Year 2016-2017. The core of the challenge revolved around the alleged improper sanction obtained for issuing reassessment proceedings. The petitioner argued that the sanction was invalid, rendering subsequent notices and orders void. The revenue, represented by the Income Tax Officer, Ward 1(1) & Ors., was the respondent. The procedural history involved notices issued under Section 148A(b), an order under Section 148A(d), a notice under Section 148, a reassessment order under Section 147 read with Section 144B, a notice of demand under Section 156, and penalty notices under Sections 271(1)(c), 271B, and 271(1)(b).

What were the issues?

1. Whether the sanction obtained for initiating reassessment proceedings for Assessment Year 2016-2017 was invalid due to being issued under the incorrect provision of the Income Tax Act, 1961, thereby rendering the subsequent notice and assessment order void? (Question of law, concerning Section 151). Assessee's Contention: The assessee argued that the sanction for reassessment should have been obtained under Section 151(ii) of the Act, not Section 151(i), for Assessment Year 2016-2017. They relied on the High Court's decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, which held such sanction invalid and quashed the notice and consequential assessment order. Revenue's Contention: The judgment does not record 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,Section 156,Section 271(1)(c),Section 271B,Section 271(1)(b)

AI-generated summary — verify with the full judgment below

1/3 461.WP-10442-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.10442 OF 2023 Manoj Rajendra Gupta ….Petitioner V/s. Income Tax Officer, Ward 1(1) & Ors. ....Respondents ---- Mr. Devendra Jain a/w. Ms. Radha Halbe for petitioner. Mr. Suresh Kumar 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 quashed, the assessment order passed following the notice relying on an 1. Writ Petition No.4888 of 2022 dated 25th August 2023 Gauri Gaekwad 2023:BHC-AS:28820-DB

2/3 461.WP-10442-2023.doc 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 8th April 2021 issued under Section 148 which is now treated as show cause notice under Section 148A(b) in pursuant of issue letter dated 27th May 2022 and 2nd June 2022, order dated 26th July 2022 passed under Section 148A(d), notice dated 26th July 2022 issued under Section 148, order of re-assessment dated 18th May 2023 passed under Section 147 read with Section 144B, notice of demand dated 18th May 2023 issued under Section 156 and notices dated 18th May 2023 issued proposing to levy penalty under Section 271(1)(c), 271B and 271(1)(b) of the Act. 5 At this stage, Mr. Jain states that there are various other grounds raised in the petition and also the issues in this petition would also be covered by a judgment of this Court in the matter of Ashok Commercial Enterprises V/s. Assistant Commissioner of Income Taxation Central Circle – 2(4)

2.

All rights and contentions are kept open. If at all petitioner is served by fresh notice, all grounds could be raised at that stage.

2.

Writ Petition No.2595 of 2021 & Ors. dated 4th September 2023 Gauri Gaekwad

3/3 461.WP-10442-2023.doc 6 Petition disposed. (KAMAL KHATA, J.)

(K. R. SHRIRAM, J.) Gauri Gaekwad Signed by: Gauri A. Gaekwad Designation: PS To Honourable Judge Date: 03/10/2023 11:03:38

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