GARVE MOTORS PVT. LTD. THR ITS DIRECTOR vs. ASSISTANT COMMISSIONER OF INCOME TAX AND ORS

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WP/142/2023HC BombayHCBM01053765202227 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 decided in the case of Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax and Others, would squarely apply to the present petition concerning Assessment Year 2017-2018. In the cited case, the Court had ruled that for Assessment Year 2016-2017, sanction should have been obtained under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961. Consequently, the sanction was deemed invalid, rendering the notice issued based on it invalid. The Court further reasoned that if the notice is invalid, any subsequent assessment order passed relying on such an incorrect sanction would also have to be quashed. Therefore, all notices issued for Assessment Year 2017-2018 and the orders impugned in the petition were quashed and set aside, along with all consequential notices and orders.

What were the facts?

The petitioner, M/s. Garve Motors Private Limited, filed a writ petition before the Bombay High Court challenging actions taken by the Assistant Commissioner of Income Tax, Circle-1(1), Pune, for Assessment Year 2017-2018. The petition raised grounds including the issue of improper sanction. The counsels for both the petitioner and the revenue agreed that the issue of improper sanction had been raised. The High Court noted its prior decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax and Others, which dealt with a similar issue for Assessment Year 2016-2017.

What were the issues?

1. Whether the sanction obtained for issuing notice was improper, specifically whether it should have been granted under Section 151(ii) instead of Section 151(i) of the Income Tax Act, 1961, rendering the notice invalid. Assessee's contention: The assessee argued that the sanction obtained was improper, relying on the High Court's decision in Siemens Financial Services Private Limited, which held that for Assessment Year 2016-2017, sanction under Section 151(ii) was required, not Section 151(i), making the sanction invalid. Revenue's contention: The judgment does not record specific arguments from the revenue regarding the sanction issue, but the counsels for both parties agreed that the issue of improper sanction was raised and that the findings in Siemens Financial Services Private Limited would apply.

Which sections of the Income-tax Act were involved?

Section 151

AI-generated summary — verify with the full judgment below

1/2 904-aswp-142-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 142 OF 2023 M/s. Garve Motors Private Limited through its Director Shri. Vinayak Kishor Garve …Petitioner Versus The Assistant Commissioner of Income Tax, Circle-1(1), Pune & Ors. …Respondents Mr. Sagar Tilak a/w Ms. Payal Rathod & Ms. Tanvi Phatak i/b Mr. Sachin 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 2017-2018. 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 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

2/2 904-aswp-142-2023.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, that 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. Therefore, all such notices issued for Assessment Year 2017-2018 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.) Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.02.28 15:20:29 +0545

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