ATAL REALTECH LTD. vs. INCOME TAX OFFICER WARD 1 (1) , NASHIK AND ORS

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WP/10597/2022HC BombayHCBM01036102202222 January 2024Bench: 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 the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to Assessment Year 2017-2018. In the cited case, the Court had ruled that for Assessment Year 2016-2017, sanction ought to have been obtained under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961. Consequently, the sanction was deemed invalid, leading to the invalidity of the notice issued. The Court further reasoned that if a notice is invalid, any assessment order passed relying on such an incorrect sanction must also be quashed. Applying this principle, the High Court quashed and set aside all notices, assessment orders, and consequential orders issued for Assessment Year 2017-2018 on the ground of invalid sanction. The petition was disposed of, with a clarification that other grounds could be raised in future proceedings.

What were the facts?

The petitioner, Atal Realtech Limited, filed a writ petition before the Bombay High Court challenging actions taken by the Income Tax Officer, Ward-1(1), Nashik, for Assessment Year 2017-2018. The core of the dispute revolved around the validity of the sanction obtained for issuing notices under the Income Tax Act, 1961. The petitioner argued that the sanction was improper. The High Court referred to its previous decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, which dealt with a similar issue for Assessment Year 2016-2017. The judgment notes that the issue of improper sanction was raised in the petition and during the hearing.

What were the issues?

1. Whether the sanction obtained for issuing notices under the Income Tax Act, 1961, for Assessment Year 2017-2018 was invalid due to being issued under the wrong sub-section of Section 151. Assessee's Contention: The petitioner argued that the sanction obtained was improper. 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 that for Assessment Year 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i), rendering the sanction invalid and the notice consequently invalid. Revenue's Contention: The judgment does not record any specific arguments made by the revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 151

AI-generated summary — verify with the full judgment below

1/2 404-aswp-10597-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 10597 OF 2022 Atal Realtech Limited …Petitioner Versus Income Tax Officer, Ward-1(1), Nashik & Ors. …Respondents Mrs. Madhuri Gamre i/b Ms. Pritesh Burad Associates for the Petitioner. Mr. Suresh Kumar for the Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 22nd January 2024 PC:- 1. This petition pertains to Assessment Year 2017-2018. 2. The issue of improper sanction having been obtained has been raised among other grounds, in the petition as well as during the hearing. Counsels 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. We would also add, if the notice has to be 1. (2023) 457 ITR 647 (Bom.) Gitalaxmi

2/2 404-aswp-10597-2022.doc 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. Ordered accordingly. 3. Counsels further state that the findings in Siemens Financial Services Private Limited (supra) would squarely apply to the Assessment Year 2017-2018 as well on the issue of sanction. Therefore, all such notices issued for Assessment Year 2017-2018, the assessment orders and the consequential orders are also 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 Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.01.23 11:00:31 +0545

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