VIJAY RAVJI GAJRA vs. INCOME TAX OFFICER WARD 28(3) AND ORS

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WP/12312/2022HC BombayHCBM01037986202217 October 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that for Assessment Year 2016-2017, the sanction for issuing notices 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 an invalid sanction renders the notice issued under it invalid, and any subsequent assessment order passed relying on such an incorrect sanction must also be quashed. The Court further held that the findings in the Siemens Financial Services Private Limited case would squarely apply to Assessment Year 2017-2018 as well. Therefore, all notices, assessment orders, and consequential orders for both assessment years, based on invalid sanctions, were quashed and set aside. All consequential notices/demands issued under Section 156 or 271 of the Act were also quashed. The Court clarified that other grounds could be raised at an appropriate stage in other proceedings.

What were the facts?

These writ petitions concern Assessment Years 2016-2017 and 2017-2018. The petitioners, Avani Rasik Sontakke and others, are challenging notices and subsequent assessment orders issued by the Income Tax Officer and other revenue authorities. A central issue raised by the petitioners is the alleged improper sanction obtained by the revenue for issuing these notices. The petitioners contend that the sanction was invalid. The revenue's position on this specific point is not explicitly recorded in the judgment, but their participation in the proceedings implies a defense of their actions.

What were the issues?

1. Whether the sanction for issuing notices under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017 was improperly obtained, specifically whether it should have been under Section 151(ii) instead of Section 151(i) of the Act, rendering the sanction and subsequent notice invalid? 2. Whether the findings in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax, which held that sanction under Section 151(ii) was required for AY 2016-2017 and that an invalid sanction invalidates the notice and subsequent assessment orders, apply to Assessment Year 2017-2018? Assessee's Contentions: The petitioners 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, which held that for AY 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i), making the sanction and notice invalid. They further contended that this finding would also apply to AY 2017-2018. Revenue's Contentions: The judgment does not explicitly record the revenue's arguments on the specific issue of improper sanction.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 151(i),Section 151(ii),Section 156,Section 271

AI-generated summary — verify with the full judgment below

Heard together (4 matters)

WP/5165/2022
WP/11870/2022
WP/12312/2022
WP(ST)/17167/2023

Read from the judgment's own cause title. This page is filed under one of them.

1/3 A.S. 912, 914, 915 & 936.WP-5165-2022& ors..doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION (912) WRIT PETITION NO.5165 OF 2022 Avani Rasik Sontakke

….Petitioner V/s. Income Tax Officer, Ward 2 & Ors. ....Respondents WITH (914) WRIT PETITION NO.11870 OF 2022 WITH (915) WRIT PETITION NO.12312 OF 2022 WITH (936) WRIT PETITION (ST.)NO.17167 OF 2023 ---- Mr. Riyaz Padvekar a/w. Mr. Tanzil Padvekar and Ms. Tejal Kharkar for petitioner in WP/5165/2022. Ms. Ritika Agarwal a/w. Ms. Ayesha Ansari i/b. Acelegal for petitioner in WP/11870/2022 and WP/12312/2022. Mr. Devendra Jain a/w. Ms. Radha Halbe and Mr. Ashwin Jain for petitioner in WP(ST)/17167/2023. Mr. Suresh Kumar for respondents–revenue in WP/5165/2022, WP/11870/2022 and WP/12312/2022. Mr. Manoj Shirsat for respondents-revenue in WP(ST)/17167/2023. ---- CORAM : K. R. SHRIRAM & NEELA GOKHALE, JJ.

DATED : 17th OCTOBER 2023 P.C. : 1 These are Petitions which relate to Assessment Year 2016- 2017 or 2017-2018. 2 Counsels state that in all these Petitions 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 Gauri Gaekwad 2023:BHC-AS:31458-DB

2/3 A.S. 912, 914, 915 & 936.WP-5165-2022& ors..doc 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 quashed, if there is an assessment order passed subsequently, those assessment orders 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 the Assessment Year 2017-2018 as well. Therefore, all such notices issued for Assessment Year 2017-2018, the assessment orders and the consequential orders are also quashed and set aside. 4 In view of the above, all consequential notices/demands issued under Section 156 or 271 of the Act will also have to be quashed. Ordered accordingly. 5 All Petitions disposed. 6 We clarify that all other grounds could be raised by the parties at appropriate stage in any other proceeding. 1. (2023) 457 ITR 647 (Bom.) Gauri Gaekwad

3/3 A.S. 912, 914, 915 & 936.WP-5165-2022& ors..doc 7 In view of disposal of Petitions, pending interim application, if any, also stands disposed of accordingly. (NEELA GOKHALE, J.)

(K. R. SHRIRAM, J.) Gauri Gaekwad Signed by: Gauri A. Gaekwad Designation: PS To Honourable Judge Date: 20/10/2023 12:37:43

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