SEEMON GEORGE vs. INCOME TAX OFFICER WARD 9 1 PUNE AND 4 ORS

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WP/4173/2024HC BombayHCBM01007719202427 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 issue of improper sanction, as decided in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., squarely applies to the present petition. The Court reiterated its finding in the precedent case that for Assessment Year 2016-2017, sanction should have been granted under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961, rendering such a sanction invalid. Consequently, if the sanction is invalid, the notice issued based on it is also invalid and must be quashed. The Court further reasoned that if the notice is quashed, any subsequent assessment order passed relying on an incorrect sanction would also have to be quashed. Therefore, all notices and orders impugned in the petition, along with any consequential notices and assessment orders, were quashed and set aside. The Court clarified that other grounds could be raised in future proceedings.

What were the facts?

The petitioner, Seemon George, filed a writ petition before the Bombay High Court challenging actions of the Income Tax Officer, Ward 9(1), Pune, and others for Assessment Year 2017-2018. The core of the dispute involved the validity of the sanction obtained for issuing notices under the Income Tax Act, 1961. Both parties agreed that the issue of improper sanction was central to the case. The High Court had previously dealt with a similar issue in the case of Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., concerning Assessment Year 2016-2017.

What were the issues?

1. Whether the sanction obtained for issuing notices under the Income Tax Act, 1961, was improper, thereby rendering the notices invalid? (Question of law, turning on Section 151 of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that the sanction obtained was improper. They relied on the High Court's decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., which held that for Assessment Year 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i), making the sanction invalid. Revenue's Contention: The judgment records no specific contention from the revenue on this issue, other than agreeing that the issue of improper sanction was raised and that the findings in the Siemens Financial Services case would apply.

Which sections of the Income-tax Act were involved?

Section 151,Section 151(i),Section 151(ii)

AI-generated summary — verify with the full judgment below

1/2 916-WP-4173-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4173 OF 2024 Seemon George

….Petitioner V/s. Income Tax Officer, Ward 9(1), Pune and Ors. .…Respondents ---- Mr. Jitendra Singh for Petitioner. Mr. Vikas T. Khanchandani for Respondents-Revenue. ---- CORAM : K.R. SHRIRAM & DR. NEELA GOKHALE, JJ.

DATED : 27th MARCH 2024 P.C. :

1.

Mr. Khanchandani states that he will file Vakalatnama on behalf of respondents within one week from today. Undertaking accepted.

2.

This petition relates to Assessment Year 2017-2018. 3. & Ors.1 wherein the Court has held that for Assessment Year 2016-2017, the 1. (2023) 457 ITR 647 (BOM) Purti Parab PURTI PRASAD PARAB PURTI PRASAD PARAB Date: 2024.04.02 10:56:17 +0530

2/2 916-WP-4173-2024.doc 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. We would also add, if the notice has to be quashed, if there is an assessment order passed subsequently, that assessment order having been passed relying on an incorrect sanction, will also have to be quashed.

4.

Counsels further state that the findings in Siemens Financial Services Private Limited (supra) will squarely apply to this petition. Therefore, all notices and orders impugned in this petition are quashed and set aside. All consequential notices, assessment order and the consequential orders, if any, are also hereby quashed and set aside.

5.

Petition disposed.

6.

We clarify that all other grounds could be raised by the parties at appropriate stage in any other proceeding. (DR. NEELA GOKHALE, J.) (K.R. SHRIRAM, J.) Purti Parab

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