HALLIBURTON TECHNOLOGY INDIA PVT. LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1) , PUNE AND ORS

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WP/14525/2022HC BombayHCBM01043623202215 September 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 Section 148 invalid. Following the precedent set in Siemens Financial Services Private Limited, the Court held that if the notice is invalid, any assessment order passed subsequently, relying on that incorrect sanction, must also be quashed. The Court further held that all consequential notices and demands issued under Section 156 or Section 271 of the Act would also be quashed. The Court extended this finding to Assessment Year 2017-2018, stating that the principles from the Siemens Financial Services Private Limited case squarely apply. Therefore, all notices, assessment orders, and consequential orders for Assessment Year 2017-2018 were also quashed and set aside. The Court clarified that other grounds raised by the parties could be pursued in appropriate proceedings.

What were the facts?

The petitions before the Bombay High Court concern Assessment Years 2016-2017 and 2017-2018. The primary issue raised by the petitioners (assessees) is the improper sanction obtained by the Income Tax Officer (revenue) for issuing notices. The petitioners contend that the sanction was obtained under the wrong sub-section of Section 151 of the Income Tax Act, 1961. The High Court had previously dealt with a similar issue in the case of Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Others. The present petitions seek to apply the findings of that earlier judgment to their cases.

What were the issues?

1. Whether the sanction obtained by the Revenue for issuing notices under Section 148 of the Income Tax Act, 1961, was invalid for Assessment Year 2016-2017 due to being obtained under Section 151(i) instead of Section 151(ii) of the Act. 2. Whether, consequently, the notices issued under Section 148, the assessment orders passed relying on such notices, and any consequential notices/demands under Sections 156 or 271 of the Act are liable to be quashed. 3. Whether the findings in the Siemens Financial Services Private Limited case regarding improper sanction under Section 151 apply to Assessment Year 2017-2018. Assessee's Contentions: The assessees argue that the sanction for reassessment notices was improperly obtained under Section 151(i) when it should have been under Section 151(ii) for the relevant assessment year. They rely on the High Court's decision in Siemens Financial Services Private Limited, which held such a sanction to be invalid, rendering the notice and subsequent assessment order void. Revenue's Contentions: The judgment does not record specific contentions from the Revenue regarding the improper sanction. However, the Revenue is represented by counsel, indicating their participation in the proceedings.

Which sections of the Income-tax Act were involved?

Section 151,Section 148,Section 156,Section 271

AI-generated summary — verify with the full judgment below

Heard together (19 matters)

WP/9955/2022
WP/10555/2022
WP/11552/2022
WP/11866/2022
WP/11871/2022
WP/11915/2022
WP/12313/2022
WP/2501/2023
WP/5760/2023
WP/5858/2023
WP/7710/2023
WP/11121/2022
WP/11469/2022
WP/14525/2022
WP/317/2023
WP/2107/2023
WP/2536/2023
WP/2544/2023
WP/9037/2023

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

1/3 Corrected-907-aswp-3606-2022+.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NOS. 9955, 10555, 11121, 11469, 11552, 11866, 11871, 11915, 12313 & 14525 OF 2022 WITH WRIT PETITION NOS. 317, 2107, 2501, 2536, 2544, 5760, 5858, 7710 & 9037 OF 2023 Adil Aspi Engineer …Petitioner Versus Income Tax Officer, Ward 19(1)(1) & Ors. …Respondents Mr. Atul K. Jasani for Petitioner in WP/9955/2022. Ms. Ritika Agarwal a/w Ms. Rachna Bhanushali a/w Mr. Sandesh P. Salunkhe i/b ACE Legal for Petitioners in WP/10555/2022, WP/11552/2022,

WP/11866/2022,

WP/11871/2022, WP/11915/2022,

WP/12313/2022,

WP/2501/2023, WP/5760/2023, WP/5858/2023 and WP/7710/2023. Mr. Riyaz Padvekar a/w Mr. Tanzil Padvekar a/w Ms. Tejal Kharkar for Petitioner in WP/11121/2022. Mr. Rajesh Poojary i/b Mint and Confreres for Petitioner in WP/11469/2022. Mr. Devendra Jain a/w Mr. Ashwin Jain i/b Ms. Radha Halbe for Petitioner in WP/14525/2022. Mr. Anuj Kisnadwala i/b Mr. Govind G. Javeri for Petitioner in WP/317/2023. Mr. Suyog Bhave a/w Mr. Viraaj Y. Bhate i/b PDS Legal for Petitioner in WP/2107/2023. Dr. K. Shivram, Sr. Advocate a/w Mr. Rahul Hakani for Petitioners in WP/2536/2023 and WP/2544/2023. Ms. Ujjwala Chaturvedi for Petitioner in WP/9037/2023. Mr. Akhileshwar Sharma, Mr. Suresh Kumar, Mr. Ajeet Manwani, Mr. Manoj Shirsat, Ms. Swapna Gokhale, Ms. Sushma Nagaraj, Ms. Shilpa Goel, Ms. Samiksha Kanani and Ms. Kinjal Patel for Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. N. K. GOKHALE, JJ. DATED: 15th September 2023 PC:- 1. These are the Petitions which relate to Assessment Year 2016- Gitalaxmi Note: This order is modified by a Suo-motu Speaking to Minutes Order dated 26th September 2023. Corrections are shown in bold and italic.

2/3 Corrected-907-aswp-3606-2022+.doc 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. Counsels state that the issue of improper sanction has been decided by this Court in the case of Siemens Financial Services Private Limited v. 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. We would also add, if the notice has to be quashed even where 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. 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. 4. All Petitions disposed. 1. Writ Petition No. 4888 of 2022 dated 25th August 2023. Gitalaxmi Note: This order is modified by a Suo-motu Speaking to Minutes Order dated 26th September 2023. Corrections are shown in bold and italic.

3/3 Corrected-907-aswp-3606-2022+.doc 5. 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. 6. We clarify that all other grounds could be raised by the parties at appropriate stage in any other proceeding. (DR. N. K. GOKHALE, J.) (K. R. SHRIRAM, J.) Gitalaxmi Note: This order is modified by a Suo-motu Speaking to Minutes Order dated 26th September 2023. Corrections are shown in bold and italic. GITALAXMI KRISHNA KOTAWADEKAR Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2023.09.27 10:56:35 +0545

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