DESAI BROTHERS LTD vs. ASSIATANT COMMISSIONER OF INCOME TAX AND ANR

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WP/12167/2022HC BombayHCBM01020463202220 February 2024Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the sanction for issuing the impugned notices under Section 148A(b) and orders under Section 148A(d) of the Income Tax Act, 1961, was invalid. The Court noted that the assessment year was 2018-2019, and the impugned actions were taken in 2022, which is beyond a period of three years from the assessment year. Consequently, according to Section 151(ii) of the Act, the sanctioning authority should have been the Principal Chief Commissioner of Income Tax (PCCIT). The Court clarified that the proviso to Section 151, which was inserted with effect from April 1, 2023, was not applicable to the present cases. Following its own precedent in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the Court quashed and set aside the impugned orders and notices. The petitions were disposed of with no order as to costs, keeping all rights and contentions open.

What were the facts?

The petitioners, various entities and individuals, have filed multiple writ petitions before the Bombay High Court. These petitions challenge notices issued under Section 148A(b) of the Income Tax Act, 1961, and the subsequent orders passed under Section 148A(d) of the Act. A common ground for challenge is the alleged invalidity of the sanction granted for these actions. Specifically, the petitioners contend that the sanction was issued by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), as required for assessments beyond a certain period. The assessment year involved in these cases is 2018-2019, and the impugned notices and orders were issued in 2022.

What were the issues?

1. Whether the sanction for issuing notices under Section 148A(b) and orders under Section 148A(d) of the Income Tax Act, 1961, is invalid if granted by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), when the assessment year is 2018-2019 and the notices/orders were issued in 2022? Assessee's Contention: The petitioners argue that for assessment years beyond three years from the relevant assessment year, the sanctioning authority must be the PCCIT, as stipulated under Section 151(ii) of the Act. They assert that the proviso to Section 151, which might alter this requirement, is effective from April 1, 2023, and thus not applicable to their cases. They rely on the High Court's decision in Vodafone Idea Limited v. Deputy Commissioner of Income Tax. Revenue's Contention: The respondents (revenue) agree with the petitioners' submissions.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d),Section 148,Section 151,Section 151(ii)

AI-generated summary — verify with the full judgment below

1/6 403_411, 413_422 & 424_426-oswp-2744-2022+.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION (403) WRIT PETITION NO. 2744 OF 2022 Kairav Chemofarbe Industries Limited (PAN - AACCK0615N) …Petitioner Versus The Deputy Commissioner of Income Tax, Circle-1(2)(1), Mumbai & Ors. …Respondents WITH (404) WRIT PETITION NO. 2772 OF 2022 Lokhandwala Construction Industries Private Limited …Petitioner Versus The Deputy Commissioner of Income Tax, Circle-4(3)(1) & Anr. …Respondents WITH (405) WRIT PETITION NO. 2788 OF 2022 Riddhi Siddhi Steels …Petitioner Versus Income Tax Officer, Ward-26(2)(1), Mumbai & Ors. …Respondents WITH (405) WRIT PETITION NO. 3501 OF 2022 Riddhi Siddhi Steels and Alloys …Petitioner Versus Income Tax Officer, Ward-26(2)(1), Mumbai & Ors. …Respondents WITH (406) WRIT PETITION NO. 2981 OF 2022 Godrej Projects Development Limited …Petitioner Versus The Deputy Commissioner of Income Tax, Circle-1(1)(1), Mumbai & Ors. …Respondents WITH (407) WRIT PETITION NO. 3539 OF 2022 Xerxes Noshir Talati …Petitioner Versus The Assistant Commissioner of Income Tax, Central Circle-7(1) & Ors. …Respondents Gitalaxmi

2/6 403_411, 413_422 & 424_426-oswp-2744-2022+.doc WITH (408) WRIT PETITION NO. 3864 OF 2022 Pawansut Dwellers Private Limited …Petitioner Versus The Deputy Commissioner of Income Tax, Circle-2(3)(1), Mumbai & Ors. …Respondents WITH (409) WRIT PETITION NO. 4235 OF 2022 Triangular Dot Creative Solutions Private Limited …Petitioner Versus Income Tax Officer, Ward-13(3)(1) & Ors. …Respondents WITH (410) WRIT PETITION NO. 4305 OF 2022 Standard Chartered Bank (Mauritius) Limited …Petitioner Versus The Assistant Commissioner of Income Tax (International Taxation), Circle-4(2)(2), Mumbai & Ors. …Respondents WITH (411) WRIT PETITION NO. 4382 OF 2022 Insearch Management Private Limited …Petitioner Versus Income Tax Officer, Ward 10(1)(1) & Ors. …Respondents WITH (413) WRIT PETITION NO. 4877 OF 2022 Montage Global Private Limited …Petitioner Versus The Assistant Commissioner of Income Tax, Circle-2(2)(1) & Anr. …Respondents WITH (414) WRIT PETITION NO. 5324 OF 2022 Stock Guardians India Private Limited …Petitioner Versus The Deputy Commissioner of Income Tax, Circle-3(3)(1) & Ors. …Respondents WITH (416) WRIT PETITION (L) NO. 22965 OF 2022 Sajney Kirkwood Private Limited …Petitioner Versus The Assistant Commissioner of Income Tax, Circle-14(1)(2), Mumbai & Ors. …Respondents Gitalaxmi

3/6 403_411, 413_422 & 424_426-oswp-2744-2022+.doc WITH (417) WRIT PETITION (L) NO. 26814 OF 2022 Manoj Maheshwari …Petitioner Versus Income Tax Officer, Ward 34(1)(1), Mumbai & Ors. …Respondents WITH (418) WRIT PETITION (L) NO. 28065 OF 2022 Patel KNR Infrastructures Limited …Petitioner Versus The Deputy Commissioner of Income Tax, Circle 2(3)(1), Mumbai & Ors. …Respondents WITH (419) WRIT PETITION (L) NO. 875 OF 2023 NVD Holdings …Petitioner Versus The Assistant Commissioner of Income Tax, INTL Tax, Circle-(3)(1) …Respondent WITH (420) WRIT PETITION NO. 1606 OF 2023 ENARR Advisors Private Limited …Petitioner Versus Income Tax Officer, Ward 6(2)(1), Mumbai & Anr. …Respondents WITH (421) WRIT PETITION NO. 1734 OF 2023 Deena Anant Shah …Petitioner Versus The Assistant Commissioner of Income Tax, Circle 17(1) & Ors. …Respondents WITH (422) WRIT PETITION NO. 1777 OF 2023 Anant G. Shah …Petitioner Versus The Assistant Commissioner of Income Tax, Circle 17(1) & Ors. …Respondents WITH (424) WRIT PETITION NO. 2034 OF 2023 Suresh Gopaldas Agrawal …Petitioner Versus Union of India through its Secretary & Ors. …Respondents Gitalaxmi

4/6 403_411, 413_422 & 424_426-oswp-2744-2022+.doc WITH (425) WRIT PETITION NO. 2077 OF 2023 Amit Suresh Agrawal …Petitioner Versus Union of India & Ors. …Respondents WITH (426) WRIT PETITION (L) NO. 8905 OF 2023 Bipin Mohanlal Soneta …Petitioner Versus The Assistant Commissioner of Income Tax, Circle 26(1) …Respondent WITH (415) WRIT PETITION NO. 12167 OF 2022 (CIVIL APPELLATE JURISDICTION) Desai Brothers Limited …Petitioner Versus Assistant Commissioner of Income Tax & Anr. …Respondents Mr. Devendra H. Jain a/w Ms. Radha Halbe for Petitioners in WP/2744/2022 & WPL/8905/2023. Dr. K. Shivaram, Senior Advocate a/w Mr. Rahul Hakani for Petitioner in WP/2772/2022. Mr. Dharan V. Gandhi for Petitioners in WP/2788/2022 & WP/3501/2022. Mr. Jeet Kamdar i/b Mr. Atul K Jasani for Petitioner in WP/2981/2022. Mr. B. V. Jhaveri a/w Mr. Navin P. Sachanandani for Petitioner in WP/3539/2022. Mr. Ruturaj H. Gurjar for Petitioner in WP/3864/2022. Mr. P. S. Jetly, Senior Advocate a/w Mr. Sham V. Walve and Mr. Sameer G. Dalal for Petitioner in WP/3864/2022. Mr. Gautam Thacker i/b Mr. Atul K. Jasani for Petitioners in WPL/22965/2022 & WP/4305/2022. Mr. Sham V. Walve a/w Mr. Abhishek Khandelwal for Petitioner in WP/4382/2022. Ms. Kavita Jha a/w Mr. Pankaj Soni i/b Vaish Associates for Petitioner in WP/4877/2022. Mr. Sham V. Walve a/w Mr. Sameer G. Dalal for Petitioner in WP/5324/2022. Mr. Nitesh Joshi a/w Mr. Gautam Thacker i/b Mr. Atul K Jasani for Petitioner in WPL/22965/2022. Mr. Gautam Thacker i/b Ms. Jinal Shah for Petitioner in WPL/26814/2022. Mr. Madhur Agrawal a/w Mr. Upendra Lokegaonkar i/b Mint and Gitalaxmi

5/6 403_411, 413_422 & 424_426-oswp-2744-2022+.doc Confreres for Petitioner in WPL/28065/2022. Mr. Sukhsagar Syal i/b Mr. Atul K. Jasani for Petitioner in WPL/875/2023. Mr. Rahul Hakani for Petitioner in WP/1606/2023. Ms. Dinkle Hariya a/w Ms. Rashmi Vyas for Petitioners in WP/1734/2023 & WP/1777/2023. Mr. Sukhsagar Syal i/b Mr. Vishal Thaker for Petitioners in WP/2034/2023 & WP/2077/2023. Ms. Deepa Khare i/b Mint and Confreres for Petitioner in WP/12167/2022. Mr. N. C. Mohanty for Respondents-Revenue in WP/3864/2022 & WPL/28065/2022. Ms. Sruti Kalyanikar i/b Mr. Subir Kumar for Respondents- Revenue in WPL/875/2023. Mr. Suresh Kumar for Respondents in rest of the petitions. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 20th February 2024 PC : 1. These petitions relate to Assessment Year 2018- 2019. 2. Petitioners are impugning notices issued under Section 148A(b) of the Income Tax Act, 1961 (“the Act”), the orders passed under Section 148A(d) of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (“PCIT”) and not by the Principal Chief Commissioner of Income Tax (PCCIT”). 3. Counsels for Petitioners state these petitions are covered by the order dated 6th February 2024 passed by this Court in the case of Gitalaxmi

6/6 403_411, 413_422 & 424_426-oswp-2744-2022+.doc Vodafone Idea Limited v. Deputy Commissioner of Income Tax, Circle- 5(2)(1), Mumbai & Ors.1. Counsels for Respondents agree. 4. The impugned orders and the impugned notices both state that the Authority that has accorded the sanction, is the PCIT, Mumbai-5. The matters pertain to Assessment Year 2018-2019 and since the impugned orders as well as the notices are issued in the year 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 of the Act has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matters at hand. 5. In the circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.2, the sanction is invalid and consequently, the impugned orders and impugned notices under Sections 148A(d) and 148 of the Act are hereby quashed and set aside. 6. Petitions disposed. No order as to costs. All rights and contentions are kept open. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) 1. Writ Petition No. 2768 of 2022. 2. (2023) 457 ITR 647 (Bom.). Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.02.22 17:48:32 +0545

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