DR. POORVA SHAH vs. INCOME TAX OFFICER, WARD 7(1) , PUNE AND ORS

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WP/13932/2023HC BombayHCBM01051422202307 November 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 the issue of improper sanction, as decided in Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Others, squarely applies to Assessment Year 2017-2018. The Court found that the sanction obtained for issuing notices was invalid because it should have been under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, all notices issued for Assessment Year 2017-2018 were quashed and set aside. Furthermore, if any assessment orders were passed subsequently relying on these invalid notices, such assessment orders were also quashed. The Court also ordered the quashing of all consequential notices/demands issued under Section 156 or Section 271 of the Act. The ratio decidendi is that an invalid sanction renders the consequential notice and subsequent assessment order void ab initio.

What were the facts?

These two writ petitions concern Assessment Year 2017-2018. In both petitions, the petitioners, Deepak Rajaram Kukreja and Poorva Shah, have raised the issue of improper sanction obtained for notices issued under the Income Tax Act, 1961. The counsels for both the petitioners and the revenue have agreed that this issue has been previously decided by the Bombay High Court in the case of Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Others. In that case, it was held that for Assessment Year 2016-2017, sanction should have been obtained under Section 151(ii) and not Section 151(i) of the Act, rendering the sanction invalid and consequently the notice issued invalid. The counsels submitted that these findings would apply equally to Assessment Year 2017-2018.

What were the issues?

1. Whether the sanction obtained for issuing notices for Assessment Year 2017-2018 was improper, specifically whether it should have been under Section 151(ii) instead of Section 151(i) of the Income Tax Act, 1961, rendering the notices invalid? Assessee's Contention: The assessee contends that the sanction obtained was improper, relying on the Bombay High Court's decision in Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Others, which held that for a similar assessment year, sanction under Section 151(ii) was required, and its absence under Section 151(i) invalidated the notice. Revenue's Contention: The revenue's counsel agreed with the assessee's submission that the issue of improper sanction had been decided by the High Court in Siemens Financial Services Private Limited (supra) and that the findings in that case would squarely apply to Assessment Year 2017-2018.

Which sections of the Income-tax Act were involved?

Section 151,Section 156,Section 271

AI-generated summary — verify with the full judgment below

1/3 910-WP-3416-2023 @ 912-WP-13932-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION (910) WRIT PETITION NO. 3416 OF 2023 Deepak Rajaram Kukreja ….Petitioner V/s. Assistant Commissioner of Income Tax Circle - 1 and Ors. …Respondents ---- Mr. Dharan Gandhi for Petitioner. Ms. Samiksha Kanani i/b Mr. Ajeet Manwani for Respondents-Revenue. ---- AND (912) WRIT PETITION NO. 13932 OF 2023 Poorva Shah ….Petitioner V/s. Income Tax Officer, Ward 7(1), Pune and Ors. …Respondents ---- Mr. Sham Walve a/w Mr. Sameer Dalal for Petitioner. Mr. Suresh Kumar for Respondents-Revenue. ---- CORAM : K.R. SHRIRAM & DR. NEELA GOKHALE, JJ.

DATED : 7th NOVEMBER 2023 P.C. : 1. Both these Petitions are relate to Assessment Year 2017-2018. 2. Counsels state that in both 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 Purti Parab PURTI PRASAD PARAB Digitally signed by PURTI PRASAD PARAB Date: 2023.11.09 11:26:54 +0530

2/3 910-WP-3416-2023 @ 912-WP-13932-2023.doc 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.

Counsels further state that the findings in Siemens Financial Services Private Limited (supra) will squarely apply to the Assessment Year 2017-2018 as well. 3. Therefore, all such notices issued for Assessment Year 2017- 2018 are quashed and set aside. 4. 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. 5. 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. 1 (2023) 457 ITR 647 (Bom) Purti Parab

3/3 910-WP-3416-2023 @ 912-WP-13932-2023.doc 6. Both Petitions disposed. (DR. NEELA GOKHALE, J.) (K.R. SHRIRAM, J.) Purti Parab

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