AAKASH INVESTMENTS THR. PARTNER vs. INCOME TAX OFFICER AND ORS

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WP/12148/2022HC BombayHCBM01038466202212 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 sanction obtained for the Assessment Year 2016-17 was improper. Citing its own precedent in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the Court reiterated that for AY 2016-17, the sanction should have been obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the Court found the sanction to be invalid. The reasoning was that an invalid sanction renders the notice issued based upon it invalid. Furthermore, if an assessment order was passed subsequently relying on such an incorrect sanction, that assessment order would also be invalid and liable to be quashed. Accordingly, all notices and orders impugned in the petition, along with any consequential notices, assessment orders, and other related orders, were quashed and set aside. The Court clarified that other grounds could be raised in appropriate proceedings.

What were the facts?

The petitioner, Aakash Investments, through its partner Shri Varun Vipul Shah, filed a writ petition challenging actions by the Income Tax Officer and other respondents for Assessment Year 2016-17. The core of the dispute, as presented by both counsels, revolved around the improper sanction obtained for issuing notices. The petitioner argued that the sanction was invalid, rendering the subsequent notices and any assessment orders based on them void. The High Court was informed that this specific issue concerning the validity of sanction for Assessment Year 2016-17 had been decided by the same court in a previous case, Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.

What were the issues?

1. Whether the sanction obtained for issuing notices under the Income Tax Act, 1961, for Assessment Year 2016-17 was improper, and if so, whether it renders the notices invalid? (Question of law, turning on Section 151 of the Income Tax Act, 1961). Assessee's Contention: The sanction obtained was improper and invalid. This contention is based on the High Court's decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., which held that for AY 2016-17, 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 argument from 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

1/2 656-WP-12148-22.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 12148 OF 2022 Aakash Investments Thr. Partner Shri Varun Vipul Shah ...Petitioner Versus Income Tax Officer & Ors ...Respondents ---- Mr. Sagar Tilak a/w Ms Payal Rathod i/b Mr. Sachin Hande for petitioner. Mr. Suresh Kumar for Respondents. ---- CORAM : K. R. SHRIRAM & DR. NEELA GOKHALE, JJ.

DATED : 13th FEBRUARY 2024 P.C. : 1 This petition relates to Assessment Year 2016-17. 2 Counsels state that in this petition 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 Vs. Deputy Commissioner of Income Tax & 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 1. (2023) 457 ITR 647 (BOM) Meera Jadhav MEERA MAHESH JADHAV Digitally signed by MEERA MAHESH JADHAV Date: 2024.02.15 10:51:41 +0530

2/2 656-WP-12148-22.doc 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. Ordered accordingly. 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, 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.) Meera Jadhav

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