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The High Court held that the statutory requirement of serving a notice under Section 2(35)(b) of the Income Tax Act, 1961, was not complied with in the case of the petitioner. The Court noted that while the petitioner might fall under the category of persons connected with the management or administration of the company as per Section 2(35)(b), he could only be treated as a principal officer upon service of such a notice. The Department's claim of sending notices to the company and its directors was not sufficient, as the record did not indicate that the notice was delivered to the petitioner or that the Department took steps to ensure its delivery. The Court found that the Magistrate, in issuing the process, did not consider whether this mandatory notice was delivered to the accused. This non-compliance with the statutory condition was deemed to go to the root of the matter and vitiate the prosecution against the petitioner. Consequently, the criminal case and the orders passed thereunder were quashed and set aside qua the petitioner. The Court did not discuss other grounds raised in the petition as the non-compliance with Section 2(35)(b) was decisive.
The High Court quashed and set aside the impugned communication dated April 13, 2023. The Court found the Revenue's stand on limitation to be incorrect, as it erroneously considered the date of file transfer to Pune as the application date, despite the applications being filed in 2017. Furthermore, the Court noted that the order was signed by a Joint Commissioner on behalf of the PCCIT, when the application was to be heard and disposed of by the PCCIT itself, and no order had been passed by the PCCIT. The Court directed the PCCIT to personally consider the Petitioner's application for condonation of delay. If the delay is condoned, the PCCIT is to dispose of the Petitioner's application on merits after giving the Petitioner a personal hearing, with at least five working days' advance notice. The order to be passed by January 29, 2024, must be reasoned and deal with all submissions. The Court explicitly stated that no observations were made on the merits of the matter.
The High Court held that the Principal Chief Commissioner of Income Tax (PCCIT) did not consider the Petitioner's prayer for condonation of delay in its proper perspective. The Court found that the delay in responding to the notice of invalid return under Section 139(9) was neither deliberate nor on account of culpable negligence or mala-fides. The primary issue was the correction of the company's name in the returns to align with the PAN. The Court emphasized that the phrase 'genuine hardship' in Section 119(2)(b) should be construed liberally, prioritizing substantial justice over technical considerations. The Court noted that the PCCIT's rejection was based on an unduly restrictive approach and that the Petitioner had provided an acceptable explanation for the delay, establishing a case of genuine hardship. The Court quashed and set aside the impugned order dated 23rd December 2022 and directed the respondents to permit the Petitioner to correct its name in the returns for AY 2017-2018 from 'Optra Technologies Private Limited' to 'Optra Health Private Limited'. The portal was to be opened for rectification within two weeks of the order's upload. The Court explicitly stated that it had not examined the contents of the returns or the claims made therein, which would be subject to appropriate assessments.
The High Court held that the Petitioner is entitled to interest on the refund of Rs. 4,23,60,940/-. The Court reasoned that the principle laid down in Union of India v. Tata Chemicals Ltd., which states that the State, having received money without right and retained it, is bound to make the party good with interest, applies here. The Court noted that the refund was due by July 31, 2018, but was paid only on August 21, 2023. Therefore, the Petitioner is entitled to interest at the rate of 6% per annum, as prescribed under Section 244A of the Income Tax Act, from April 1, 2018, up to August 21, 2023. The Court also directed that if the interest is not paid by February 15, 2024, the rate will increase to 9% per annum, with the difference being recovered from the responsible officer.
The High Court held that the sanction obtained for the notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-2017 was invalid. The Court applied its prior ruling in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., which established that for AY 2016-2017, the sanction ought to have been granted under Section 151(ii) of the Act, not Section 151(i). Consequently, the Court found the sanction to be invalid. The reasoning was that an invalid sanction renders the notice issued based upon 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 be liable to be quashed. The operative direction was to quash and set aside the impugned notice dated 4th May 2021 (deemed under Section 148A(b)), the impugned order dated 26th July 2022 (under Section 148A(d)), and the impugned notice dated 26th July 2022 (under Section 148). All consequential notices were also quashed. The Court clarified that other grounds could be raised in future proceedings.
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.
The High Court held that disposing of a matter on the first date of hearing does not inherently violate the principles of natural justice. Regarding the contention that the order was non-speaking, the Court found that paragraph 5 of the ITAT's order provided sufficient reasoning by referring to paragraph 10 of the CIT(A)'s order. The ITAT stated that the appellant had not offered any explanation for cash deposits even before the CIT(A), and therefore, the CIT(A)'s order was considered reasoned and required no interference. The High Court found no reason to exercise its jurisdiction under Article 226 of the Constitution. The writ petition was dismissed, with the petitioner being advised to pursue their alternate remedy of filing an appeal against the ITAT's order.
The High Court quashed and set aside the order dated January 27, 2022, by which the Petitioner's objections were rejected. The matter was remanded for de novo consideration. The Court directed that within three weeks, the Petitioner be provided with copies of all documents and information received from the DDIT (Inv.), 4(1), Thane, which were relied upon in the reasons for reopening. Redactions are permitted for portions not pertaining to the Petitioner. Within two weeks of receiving these documents, the Petitioner is to file a comprehensive reply. The Assessing Officer is to pass a reasoned order after giving the Petitioner a personal hearing at least five working days in advance. The assessment order must be passed on or before March 31, 2024. The Court explicitly stated that no observations were made on the merits of the matter.
The High Court held that the issue of improper sanction raised by the petitioner would squarely apply to Assessment Year 2017-2018, following its prior decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others. In the Siemens case, the Court had ruled that if sanction was granted under the wrong sub-section of Section 151 (specifically, Section 151(i) instead of Section 151(ii) for the relevant assessment year), the sanction would be invalid. Consequently, any notice issued based on such invalid sanction would also be invalid and liable to be quashed. The High Court extended this reasoning to the present case, stating that all notices issued for Assessment Year 2017-2018, the assessment orders passed relying on incorrect sanction, and any consequential notices/demands under Section 156 or Section 271 of the Act are quashed and set aside. The petition was disposed of on this basis, with a clarification that other grounds could be raised in future proceedings.
The High Court declined to admit the appeal. Regarding the first issue, the Court found that no additional evidence was allowed to be produced and the additions were based on the evaluation of material before the Assessing Officer, which the Commissioner (Appeals) and ITAT disagreed with. The Court also noted the assessee's submission that contributions were routine revenue expenditures and no exemption under Section 80-G was claimed, which was accepted by the lower authorities. Thus, the first substantial question of law did not arise. Regarding the second issue, the Court held that Section 28(iv) contemplates benefits other than money or cash. Relying on the Supreme Court's decision in Commissioner V/s. Mahindra And Mahindra Ltd., the Court stated that if the benefit is in the form of money or cash, Section 28(iv) is not applicable. The Court found no dispute that there was no benefit other than in the form of money alleged to be received by the assessee, making the issue of additional evidence irrelevant. Therefore, the second substantial question of law also did not arise or would have to be answered against the Revenue.
The High Court held that while the Writ Petition was pending, subsequent events had occurred which necessitated a review. It noted that a similar Original Application before the CAT, Calcutta Bench, which relied on the impugned order, led to a direction by the Calcutta High Court for the formation of a Special Anomaly Committee. This committee's report was accepted by the Government of India and its recommendations were extended to the applicants before the Calcutta Tribunal. The Court found no distinguishing features presented by the Petitioners to justify a different course of action. Therefore, the High Court decided to dispose of the Writ Petition by directing the Petitioner (Union of India) to adopt the same course of action as followed for the applicants before the Calcutta Bench. This meant accepting the report of the Special Anomaly Committee and giving effect to subsequent orders. The impugned order of the CAT, Bombay Bench, dated January 17, 2012, was substituted/modified to reflect the benefits granted to the applicants before the Calcutta Tribunal. The Court directed that necessary action be taken as early as possible, preferably within three months.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue regarding exemption under section 11 was not a pure question of law suitable for an appeal under section 260A. Concurring with the ITAT and the Revenue's submissions, the Court found that under section 68 read with rule 46A, the onus was on the assessee to substantiate that the donations were not anonymous. The Court observed that the appellant failed to discharge this onus. Despite filing returns late, the appellant's attempts to furnish records and the Revenue's sample verification did not confirm the identity of most donors. Letters issued under section 133(6) were returned unserved, and inspection reports indicated donors were not found at given addresses. The Court noted that during verification, some donors denied making donations. The ITAT's adverse inference against the appellant, concluding that the donations were anonymous under section 115 BBC, was found to be justified on facts and in law, with no substantial question of law arising. The appeal was dismissed.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the sanction obtained for the Assessment Year 2016-2017 was invalid, as it should have been granted under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the notices issued based on this incorrect sanction were deemed invalid and quashed. Furthermore, any subsequent assessment orders passed relying on this invalid sanction were also quashed. The Court extended this finding to Assessment Year 2017-2018, holding that the principles from the Siemens Financial Services Private Limited case squarely apply. Therefore, all notices, assessment orders, and consequential orders issued for AY 2017-2018 were also quashed and set aside. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage in other proceedings. Petitions except WP No. 1093 of 2023 and WP No. 1094 of 2023 were disposed of.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the issue of improper sanction, as decided in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, squarely applies to the present petitions. For Assessment Year 2016-2017, the Court found that the sanction 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 if the sanction is invalid, the notice issued under Section 148 is also invalid and must be quashed. Furthermore, any subsequent assessment orders passed relying on such an incorrect sanction would also be quashed. This principle was extended to Assessment Year 2017-2018, leading to the quashing and setting aside of all notices, assessment orders, and consequential orders for that year. The Court clarified that other grounds raised by the parties could be pursued at an appropriate stage.
The High Court held that the Tribunal had misconstrued the prayers made by the assessee before the Small Causes Court and wrongly concluded that the assessee had not waived its right to receive rent. The prayers in the suit were claims pending adjudication, not a waiver. The Tribunal's observation that consideration was paid by IDBI was incorrect, as the assessee had returned cheques due to the termination of the sub-lease. The deposit order by the Small Causes Court was subject to the rights of the parties. The Tribunal was also incorrect in observing that rent paid under garnishee proceedings meant income accrued. The assessee had informed the Revenue and IDBI that garnishee proceedings were illegal post-termination. The Court found that the test of convergence failed for AY 1986-87, as there was neither ascertainment of rent nor any existing right due to termination and pending disputes. The facts of the assessee's case were similar to the Pal Properties case, supporting the assessee. Therefore, the Revenue was not justified in bringing to tax Rs. 3,42,720/- as accrued income for AY 1986-87 and other appealed years. The question was decided in favour of the assessee.
The High Court quashed and set aside the impugned order dated 31st March 2023. The delay in filing was condoned. The matter was remanded to the Principal Commissioner of Income Tax (respondent no.1) for de novo consideration on merits. The court directed that before passing any order, respondent no.1 shall grant a personal hearing to the petitioner, with at least 7 working days' advance notice. The order to be passed must be reasoned and deal with every submission made by the petitioner. Given the petitioner's age (over 81 years), the court directed that the application under Section 264 of the Act be disposed of on or before 31st January 2024. The court explicitly clarified that it had not expressed any opinion on the merits of the matter.
The High Court held that sub-clause (xviii) to Section 2(24) of the Income Tax Act, 1961, is constitutionally valid. The Court reasoned that matters of economic policy and fiscal legislation are within the domain of the legislature, and courts should not lightly interfere with such enactments. The insertion of the impugned sub-clause was seen as a legislative endeavor to align the definition of 'income' with evolving economic landscapes and judicial precedent, recognizing 'income' as an inclusive and elastic term. The Court found no perversity, gross disparity, or hostile discrimination in the amendment. The arguments presented by the petitioner were viewed as concerns about diminished profits and a narrow interpretation of income, which the Apex Court has consistently expanded. The Court concluded that the legislature's intent was to foster a comprehensive and equitable taxation regime, and the amendment reflects the established jurisprudential path to keep income tax laws attuned to economic realities. The petition was dismissed.
The High Court held that the reopening of assessment was not permissible. The Court noted that the proviso to Section 147 applies when more than four years have expired from the end of the relevant assessment year, requiring failure on the part of the assessee to disclose fully and truly all material facts. The reasons for reopening did not indicate any such failure; instead, they suggested a perusal of records and a re-evaluation of the deduction allowed. The Court found that the assessee had provided all requested details during the original assessment, and the fact that these were not explicitly discussed in the assessment order did not invalidate the original assessment. Citing Aroni Commercials Ltd., the Court stated that if a query is raised and replied to, it is deemed to have been considered. The Court reiterated that a change of opinion does not constitute a valid reason to believe that income has escaped assessment. The Court also noted that the Assessing Officer himself had initially disagreed with the audit objection. Therefore, the notice under Section 148 and the order rejecting objections were quashed and set aside.
The High Court allowed the Writ Petition. The Court held that the reopening of assessment was based on a 'change of opinion' of the Assessing Officer (AO), which is impermissible in law. The AO had already considered the issue of sale consideration and its comparison with stamp duty valuation in the original assessment order and in response to an audit objection. The information available to the AO at the time of reopening did not constitute 'information' as defined under the First Explanation to Section 148 of the Act, which suggests that income chargeable to tax has escaped assessment. The Court relied on the principle that reassessment cannot be based on a mere change of opinion, citing judgments like Kelvinator of India and Jet Speed Audio (P) Ltd. The Court found it unnecessary to go into other submissions as the reopening itself was found to be not permissible. Consequently, the notice under Section 148, the approval under Section 151, the order under Section 148A(d), and the notices under Section 148A(b) and Section 148 were quashed and set aside.
The High Court held in favour of the appellant on both substantial questions of law. Firstly, it found that the reassessment proceedings were initiated without fulfilling the jurisdictional pre-conditions under Section 147 of the Income Tax Act, 1961, making them without jurisdiction. Secondly, the Court held that the Rs. 28 Crores received by the appellant was not chargeable to tax. The reasoning was that the transaction constituted a family arrangement and settlement of disputes, not a transfer of capital assets or income. The Court relied on precedents that family arrangements and partitions are not considered 'transfer' under the Act, and therefore, no capital gains tax liability arises. The appeal was allowed, and the Tribunal's order was set aside.
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.
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 for Assessment Year 2016-2017, the sanction should have been under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961, making the sanction invalid and the notice issued consequently invalid and liable to be quashed. Following this precedent, the Court quashed and set aside all notices issued for Assessment Year 2017-2018 on the grounds of improper sanction. Furthermore, the Court held that any subsequent assessment orders passed relying on such incorrect sanction would also have to be quashed. Consequently, all consequential notices/demands issued under Section 156 or Section 271 of the Act were also quashed. No issue was expressly left undecided.
The High Court quashed and set aside the assessment order dated March 29, 2022. The Court found it impossible for the Faceless Assessing Officer (FAO) to have considered the uploaded objections and documents and passed the assessment order within the 20-minute timeframe between the acknowledgment of objections and the passing of the order. Therefore, the matter was remanded to the FAO for de novo consideration. The FAO is directed to grant a personal hearing to the petitioner, with at least five working days' notice, and then pass a reasoned assessment order considering all submissions. The assessment order is to be passed by January 31, 2024. All consequential demand and penalty notices were also quashed and set aside. The Court explicitly stated that no observations were made on the merits of the matter.
The High Court held that the reopening of assessment under Section 147 of the Income Tax Act, 1961, could not be sustained. The Court noted that the first proviso to Section 147 imposes a four-year limit for reopening assessments made under Section 143(3) unless there was a failure to disclose material facts. The reasons recorded for reopening were based on the effect given to the CIT(A)'s order and did not indicate any failure on the part of the assessee to disclose material facts. The Court found that the queries raised during the original assessment proceedings under Section 142(1) regarding the deductions under Section 36(1)(vii), 36(1)(viia), and 36(1)(viii) were answered by the assessee, and these claims were discussed in detail in the assessment order. The subsequent reopening was based on a change of opinion, which the Court stated is not permissible in law and does not constitute justification for believing that income chargeable to tax has escaped assessment. Consequently, the Rule was made absolute, and the petition was allowed, quashing the notice dated 24.03.2021 and the order dated 17.02.2022.
The High Court held that the findings in the case of Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others squarely apply to the present petition concerning the issue of sanction. The Court reiterated its previous finding that for Assessment Year 2016-2017, the sanction 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 if the sanction is invalid, the notice issued based on it is also invalid and must be quashed. Following this logic, any assessment order passed relying on an incorrect sanction and the subsequent notice would also be invalid and liable to be quashed. The Court quashed and set aside the order passed under Section 148A(d) and the notice under Section 148, both dated 27th July 2022, the assessment order dated 29th May 2023, and the consequential demand and penalty notices dated 29th May 2023.
The High Court held that the issue of improper sanction, as raised by the petitioner, squarely applies to the present case. Citing its own decision in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others, the Court reiterated that for Assessment Year 2016-2017, the sanction ought to have been granted 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, and any assessment order passed relying on such a notice and incorrect sanction would also be invalid and liable to be quashed. Therefore, the Court quashed and set aside the order passed under Section 148A(d) and the notice under Section 148, both dated 27th July 2022, the assessment order dated 29th May 2023, and the consequential demand and penalty notices dated 29th May 2023. The ratio decidendi is that a procedurally flawed sanction invalidates subsequent actions taken under the Income Tax Act.
The High Court held that the issue of improper sanction raised by the petitioner squarely applied to their case, based on the precedent set in Siemens Financial Services Private Limited V/s. Deputy Commissioner of Income Tax and Others. The Court reiterated that for Assessment Year 2016-2017, the sanction ought to have been obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Consequently, the sanction was invalid. The Court reasoned that an invalid sanction renders the notice issued under Section 148 of the Act invalid. Following this logic, any assessment order passed pursuant to such an invalid notice, relying on the incorrect sanction, would also be invalid and liable to be quashed. The Court quashed and set aside the order passed under Section 148A(d), the notice under Section 148, the assessment order under Section 147 read with Section 144B, and the consequential demand and penalty notices.
The High Court held that for Assessment Year 2016-2017, the sanction for issuing a notice under Section 148A 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 if the sanction is invalid, the notice issued under Section 148A(d) and the subsequent notice under Section 148 of the Act are also invalid and must be quashed. Following this logic, the assessment order passed under Section 147 read with Sections 144 and 144B, along with the consequential demand and penalty notices, which relied on the invalid notice, were also quashed and set aside. The ratio decidendi is that an assessment proceeding initiated based on an invalid sanction is void ab initio. The operative direction was to quash and set aside the impugned orders and notices.
The High Court held that the impugned order dated March 30, 2021, was bad in law and quashed and set it aside. The Court found that Respondent No. 2 had failed to provide a proper personal hearing to the Petitioner, which is a breach of natural justice. The Court emphasized that Section 264 of the Income Tax Act confers wide jurisdiction on the Commissioner, intended to provide relief to assessees who cannot approach appellate authorities. The Commissioner is bound to apply his mind to the merits of the case and is not limited to correcting subordinate authorities' errors. The Court noted that the Petitioner was directed to make its representation before the ITO (HQ), who was not the adjudicating authority for the Section 264 application. The High Court remanded the matter to Respondent No. 2 for de novo consideration, directing that a personal hearing be given at least five working days after issuing notice. The final order is to be reasoned and deal with all submissions, and the application is to be disposed of by January 31, 2024.
The High Court held that the impugned order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961, both dated 27th April 2023, are bad in law and liable to be quashed and set aside. The Court found that the matter was squarely covered by the Supreme Court's judgment in Principal Commissioner of Income Tax Vs. Maruti Suzuki India Ltd. and this Court's own decision in Alok Knit Exports Ltd. Vs. Deputy Commissioner of Income tax. The reasoning is that when jurisdiction is invoked under Section 148 on the basis of something fundamentally at odds with the legal principle that an amalgamating entity ceases to exist upon an approved scheme of amalgamation, the notice is invalid. The Court noted that the Petitioner had informed the Income Tax Authorities about the amalgamation, and despite this, the jurisdictional notice was issued in the name of the non-existent entity. The Court was not persuaded by the Revenue's attempt to argue otherwise. The operative direction is to quash and set aside the impugned order and notice.
The High Court held that the issue of improper sanction, as decided in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., squarely applies to the present petition. The Court reiterated its finding in the cited case that for AY 2016-2017, sanction should have been under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961, rendering the sanction invalid. Consequently, the notice issued based on this invalid sanction is also invalid and must be quashed. If an assessment order was passed relying on such an incorrect sanction, it too must be quashed. The impugned notice dated May 31, 2022, issued under Section 148A(b), and the impugned order and notice dated July 29, 2022, issued under Section 148, were quashed and set aside. The petition was disposed of, with a clarification that other grounds could be raised in appropriate proceedings.
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, rendering the notices issued based on it invalid and liable to be quashed. The Court further reasoned that if the notices are quashed due to invalid sanction, any subsequent assessment orders passed relying on such incorrect sanction would also have to be quashed. The Court extended this finding to Assessment Year 2017-2018, holding that the principles laid down in Siemens Financial Services Private Limited would squarely apply. Therefore, all notices, assessment orders, and consequential orders for AY 2017-2018 were also quashed and set aside. The Court also ordered the quashing of all consequential notices/demands issued under Section 156 or 271 of the Act. The ratio decidendi is that an invalid sanction under Section 151 invalidates the notice under Section 148 and all subsequent proceedings.
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.
The High Court held that the sanction obtained for issuing notices under Section 148 for Assessment Year 2016-2017 was invalid, as it should have been obtained under Section 151(ii) and not Section 151(i) of the Income Tax Act, 1961. Consequently, the notices issued based on this invalid sanction were also deemed invalid and liable to be quashed. The Court further reasoned that if the notice is quashed, any subsequent assessment order passed relying on such an incorrect sanction would also have to be quashed. The Court extended this finding to Assessment Year 2017-2018, holding that the same principle of invalid sanction applied, leading to the quashing of all related notices, assessment orders, and consequential orders. All consequential notices/demands issued under Section 156 or 271 were also ordered to be quashed. The Court clarified that other grounds raised by the parties could be pursued in appropriate proceedings.
The High Court held that the expenditure of Rs. 1,98,326/- towards entrance and subscription fees to WSC was revenue expenditure. The Court found no basis for the AO's belief that the expenditure was long-term or capital in nature. The petitioner had provided a breakup showing it was for a one-year membership and incurred for business purposes. Furthermore, the Schedule 9 of the profit and loss account indicated that membership and subscription were recurring annual expenditures for the years ended March 31, 2007, and March 31, 2006, demonstrating its recurring nature. The Court relied on the Bombay High Court's decision in CIT (Large Tax Payer Unit), Centre-1, Mumbai Vs. Lubrizol India Ltd. and the Delhi High Court's decision in Commissioner of Income Tax Vs. Samtel Color Ltd., which held that expenses incurred in obtaining club membership, including entrance fees, are revenue in nature when incurred wholly and exclusively for business purposes and do not add to the profit-earning apparatus. The rule issued was made absolute, and the impugned notice was quashed and set aside.
The High Court held that the impugned order of the Principal Commissioner rejecting the Section 264 application is quashed and set aside. The matter is remanded to the Principal Commissioner for de novo consideration. The Court reasoned that the objection raised by the Department regarding the scope of 'record' under Section 264 was hyper-technical and ran counter to the department's own stand in earlier assessments of the appellant. The Court referred to CBDT Circulars and judgments like Commissioner of Income Tax v. Sri. Manjunathesware Packing Products and Camphor Works, which indicate that the 'record' can include information from other sources that impact the issue, and that the power under Section 264 is wide and intended to prevent miscarriage of justice. The Court also noted that the figure of Rs. 2,95,859/- as renovation cost had been accepted in the assessment of another co-owner, Ravi R Agarwal, making it acceptable for the petitioner's case. A personal hearing will be given to the petitioner, and the application shall be disposed of within 8 weeks.
The High Court held that the notice dated March 29, 2023, issued under Section 148A(b) of the Income Tax Act, 1961, was invalid because it was issued to a deceased person. The Court found that the Assessing Officer had failed to conduct the mandatory inquiry as mandated under Section 148A of the Act. Had the Assessing Officer verified the Income Tax Portal, they would have discovered that the assessee had passed away on July 23, 2020. The Court found support for this view in the judgment of Dhirendra Bhupendra Sanghvi V/s. Assistant Commissioner of Income Tax Circle – 27(3) & Ors. Consequently, since the foundational notice under Section 148A(b) was invalid, the order dated April 18, 2023, passed under Section 148A(d) was also quashed and set aside. Furthermore, the Court found a total non-application of mind by the Assessing Officer, the Additional/Joint Commissioner, and the Principal Commissioner of Income Tax in granting approval under Section 151 of the Act. This was evidenced by the approval form, which incorrectly stated the time limit for current proceedings under Section 149(1)(b) as 'more than 3 years but not more than 10 years' for an assessment year (2019-2020) that fell within the three-year period. The Court held that if the approving authorities had read the file, they would have realized the lack of power to grant approval under such circumstances. Therefore, the order under Section 148A(d) and the consequent notice under Section 148 were quashed and set aside.
The Tribunal held that the notice dated March 30, 2013, issued under Section 148 of the Income Tax Act, 1961, for AY 2008-2009 was not justified and was liable to be quashed. The primary reasoning was that the reopening was based on a mere change of opinion by the Assessing Officer (AO). During the original assessment proceedings under Section 143(3), the AO had specifically raised a query regarding the applicability of Section 50C, to which the assessee had provided a detailed reply on July 16, 2010, explaining why it was not applicable. The AO had consciously considered this issue and dropped it from further consideration in the assessment order dated September 30, 2010. The reasons recorded for reopening, which cited a 'colorable device' and the applicability of Section 50C, did not introduce any new information or tangible material but merely reflected a different view on the same facts already on record. The Tribunal further noted that the reliance on audit objections, as argued by the revenue, was also not sustainable because the audit party had pointed to a question of law (applicability of Section 50C) rather than a factual error or omission, which is impermissible for reopening. The judgment cited *Jet Speed Audio (P) Ltd.* and *Commissioner of Income Tax Vs. PV.S. Beedies (P) Ltd.* to support the principle that reopening notices can only be sustained on the grounds mentioned in the reasons recorded and cannot be supplemented later. The issue of Section 50C was not a case of fresh information but a re-evaluation of existing facts, which is not permissible for reopening.
The High Court held that the impugned notice dated March 21, 2013, issued under Section 148 of the Act for AY 2006-07, is quashed and set aside. The Court noted that the notice was issued more than four years after the expiry of the relevant assessment year and the completion of the original assessment under Section 143(3). In such cases, the proviso to Section 147 of the Act applies, requiring a failure by the assessee to make a true and full disclosure of material facts. The Court found that the assessee had furnished all necessary details and relevant documents to the AO at the time of the original assessment, including information about shareholding in the five companies. The reasons recorded for reopening itself contained details available with the AO. The Court relied on its decision in CitiusTech Healthcare Technology Pvt. Ltd. v. Deputy Commissioner of Income Tax and the Apex Court's decisions in New Delhi Television Ltd. v. Deputy Commissioner of Income Tax and Calcutta Discount Company Ltd v. Income Tax Officer, emphasizing that the assessee's duty is to disclose primary facts, and it is the AO's responsibility to draw inferences. The Court concluded that there was no failure on the part of the assessee to make a full and true disclosure, and therefore, the reopening was not justified.
The High Court held that the sanction obtained for Assessment Year 2016-2017 was improper, as it should have been granted under Section 151(ii) of the Income Tax Act, 1961, and not Section 151(i). Consequently, the sanction was deemed invalid. The Court reasoned that an invalid sanction renders the notice issued based upon it invalid and liable to be quashed. Furthermore, any assessment order passed relying on such an incorrect sanction would also have to be quashed. The Court extended this reasoning to Assessment Year 2017-2018, holding that the findings in Siemens Financial Services Private Limited would squarely apply. Therefore, all notices, assessment orders, and consequential orders issued for both assessment years were quashed and set aside. The Court also ordered the quashing of all consequential notices/demands issued under Section 156 or 271 of the Act. Other grounds raised by the parties were left open to be raised at an appropriate stage in other proceedings.