WADHWA BUILDCON LLP THR. ITS PARTNER vs. THE ASSISTANT COMMISSIONER OF INCOME TAX DEPARTMENT AND ORS

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WP/15662/2023HC BombayHCBM01056044202318 December 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE2 pages
AI SummaryRemanded

What did the High Court hold?

The Bombay High Court held that the sanction obtained for issuing the notice under Section 148 of the Income Tax Act, 1961, was improper. The Court relied on its previous decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., which established that for Assessment Year 2016-2017, the sanction ought to have been under Section 151(ii) and not Section 151(i). The Court reasoned that an invalid sanction renders the notice issued based upon it invalid. Consequently, any assessment order passed relying on such an incorrect sanction would also have to be quashed. The Court ordered the quashing and setting aside of the impugned notice dated May 6, 2021 (under Section 148), the notice dated May 27, 2022 (under Section 148A(b)), and the show cause notice dated May 26, 2023 (under Section 270A). All consequential notices and demands issued under Section 156 were also quashed. The Court clarified that other grounds could be raised in future proceedings.

What were the facts?

The petitioner, Wadhwa Buildcon LLP, filed a writ petition before the Bombay High Court challenging certain notices and orders related to Assessment Year 2017-2018. The core of the petitioner's argument revolved around an alleged improper sanction obtained by the revenue. The petitioner contended that the sanction was invalid, rendering the subsequent notices and any assessment orders based on them liable to be quashed. The petition specifically challenged notices dated May 6, 2021 (under Section 148), May 27, 2022 (under Section 148A(b)), and May 26, 2023 (under Section 270A). The petitioner also sought to quash consequential demands issued under Section 156.

What were the issues?

1. Whether the sanction obtained for issuing the notice under Section 148 of the Income Tax Act, 1961, was improper, rendering the notice invalid? (Question of law) Assessee's Contentions: The petitioner argued that the sanction for the notice was improper. They relied on the Bombay High Court's decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., which held that for Assessment Year 2016-2017, sanction should have been obtained under Section 151(ii) and not Section 151(i) of the Act, making the sanction invalid. The petitioner contended that this finding squarely applies to their case. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue on the issue of improper sanction.

Which sections of the Income-tax Act were involved?

Section 151,Section 148,Section 148A,Section 270A,Section 156

AI-generated summary — verify with the full judgment below

1/2 408.WP-15662-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.15662 OF 2023 Wadhwa Buildcon LLP through its Partner ….Petitioner V/s. The Assistant Commissioner of Income Tax Department and Ors.

....Respondents ---- Mr. Sumedh S. Modak for petitioner. Mr. Ajeet Manwani a/w. Ms. Samiksha Kanani for respondents – Revenue. ---- CORAM : K. R. SHRIRAM & DR. NEELA GOKHALE, JJ.

DATED : 18th DECEMBER 2023 P.C. : 1 This petition relates to Assessment Year 2017-2018. Counsel states that in this petition the issue of improper sanction having been obtained has been raised amongst other grounds. Counsel state that the issue of improper sanction has been decided by this court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.1 wherein the court has held that for A.Y. 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 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 1. (2023) 457 ITR 647 (BOM) Gauri Gaekwad GAURI AMIT GAEKWAD Digitally signed by GAURI AMIT GAEKWAD Date: 2023.12.20 09:41:13 +0530

2/2 408.WP-15662-2023.doc sanction, will also have to be quashed. Ordered accordingly. 2 Counsel further state that the findings in Siemens Financial Services Pvt Ltd. (Supra) would squarely apply to this petition as well on the issue of sanction. 3 Therefore, impugned notice dated 6th May 2021 issued under Section 148 of the Act and impugned notice dated 27th May 2022 issued under Section 148A(b) of the Act and impugned show cause notice dated 26th May 2023 issued under Section 270A of the Act are hereby quashed and set aside. 4 In view of the above, all consequential notices/demands issued under Section 156 of the Act will also have to be quashed. Ordered accordingly. 5 Petition disposed. 6 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.) Gauri Gaekwad

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