UMESH ARUN JAGTAP vs. INCOME TAX OFFICER AND ORS

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WP/10839/2022HC BombayHCBM01036378202205 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 for Assessment Year 2016-2017, the sanction 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 if the sanction is invalid, the notice issued based on it is also invalid and must be quashed. Furthermore, if an assessment order was passed relying on an incorrect sanction, that assessment order would also have to be quashed. The Court found that the principles laid down in Siemens Financial Services Private Limited (supra) squarely applied to the present petition. Therefore, all notices and orders impugned in the petition were quashed and set aside, along with any consequential notices, assessment orders, and subsequent orders for Assessment Year 2016-2017.

What were the facts?

The petitioner, Umesh Arun Jagtap, filed a writ petition before the Bombay High Court challenging actions taken by the Income Tax Officer and other respondents for Assessment Year 2016-2017. The petition raised grounds including the issue of improper sanction obtained for the proceedings. The High Court noted that this issue had been decided in a previous case, Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Ors. The petitioner and respondents agreed that the findings in the Siemens case would apply to the present petition. The High Court was informed that the Siemens case dealt with the validity of sanction under Section 151 of the Income Tax Act, 1961, for the relevant assessment year.

What were the issues?

1. Whether the sanction obtained for issuing notices was invalid for Assessment Year 2016-2017, as per Section 151 of the Income Tax Act, 1961? Assessee's contention: The assessee argued that improper sanction had been obtained, which rendered the subsequent notices and orders invalid. This contention was supported by the judgment in Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Ors. Revenue's contention: The revenue did not record any specific contention against the assessee's argument regarding improper sanction. Both counsels agreed that the findings in the Siemens Financial Services Private Limited case would apply.

Which sections of the Income-tax Act were involved?

Section 151

AI-generated summary — verify with the full judgment below

1/2 914-aswp-10839-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 10839 OF 2022 Umesh Arun Jagtap …Petitioner Versus Income Tax Officer & Ors. …Respondents Ms. Deepa Khare i/b Mint and Confreres for Petitioner. Mr. Ajeet Manwani for Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 5th March 2024 PC :

1.

This petition relates to Assessment Year 2016-2017. 2. Counsels state that the issue of improper sanction having been obtained has been raised among other grounds, in the petition as well as during the hearing. 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. Deputy Commissioner of Income Tax and Ors.1, 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. We would also 1. (2023) 457 ITR 647 (Bom.). Gitalaxmi

2/2 914-aswp-10839-2022.doc add, if the notice has to be quashed, if there is an assessment order passed subsequently, the assessment order having been passed relying on an incorrect sanction, will also have to be quashed.

3.

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 issued for Assessment Year 2016-2017, the assessment order and the consequential orders, if any, are also hereby quashed and set aside.

4.

Petition disposed.

5.

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.) Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR KRISHNA KOTAWADEKAR Date: 2024.03.08 14:18:33 +0545

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