AASHISH NIRANJAN SHAH vs. ASSI. COMMISSIONER OF INCOME TAX AND ORS

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WP/12146/2022HC BombayHCBM01038482202227 February 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 raised by the petitioner, was squarely covered by its prior decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others. In that precedent, for Assessment Year 2016-2017, the Court had ruled that the sanction ought to 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 further reasoned that if the sanction is invalid, the notice issued under Section 148 of the Act, which relies on such sanction, must also be invalid and quashed. Extending this logic, any assessment order passed subsequently, relying on an incorrect sanction, would also be liable to be quashed. Therefore, the Court quashed and set aside all notices issued for Assessment Year 2016-2017, the assessment orders, and any consequential orders. The petition was disposed of, with liberty to the parties to raise other grounds in appropriate proceedings.

What were the facts?

The writ petition concerns Assessment Year 2016-2017. The petitioner, Shri. Aashish Niranjan Shah, challenged an action by the Assistant Commissioner of Income Tax, Circle-7, Pune. A key ground raised was that improper sanction was obtained. The petitioner's counsel argued that this issue was decided by the Bombay High Court in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others. In that case, for AY 2016-2017, the Court held that sanction should have been under Section 151(ii) of the Income Tax Act, 1961, not Section 151(i), rendering the sanction invalid. Consequently, the notice issued based on such sanction was also held to be invalid and liable to be quashed. The petitioner contended that these findings would apply to the present case.

What were the issues?

1. Whether the sanction obtained for issuing notice under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017 was invalid due to being granted under the incorrect sub-clause of Section 151 of the Act? Assessee's Contentions: The assessee argued that the sanction obtained was improper. They relied on the Bombay High Court's decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, which held that for AY 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i). This invalidates the sanction and, consequently, the notice issued and any subsequent assessment order based on it. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 151,Section 148

AI-generated summary — verify with the full judgment below

1/2 903-aswp-12146-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 12146 OF 2022 Shri. Aashish Niranjan Shah …Petitioner Versus The Assistant Commissioner of Income Tax, Circle-7, Pune & Ors. …Respondents Mr. Sagar Tilak a/w Ms. Payal Rathod & Ms. Tanvi Phatak i/b Mr. Sachin K. Hande for Petitioner. Mr. Suresh Kumar for Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 27th February 2024 PC:- 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. It was raised during the hearing as well. 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”). Consequently, the sanction is 1. (2023) 457 ITR 647 (Bom.). Gitalaxmi

2/2 903-aswp-12146-2022.doc 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, the said 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) would squarely apply to this petition as well on the issue of sanction. 4. Therefore, all such notices issued for Assessment Year 2016- 2017, the 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.) Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.02.28 15:19:59 +0545

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