2024 (2) TMI 1408 - HC - Income Tax

Validity of reassessment proceedings - sanction to pass the order issued by the Principal Commissioner of Income Tax ( PCIT ) and not by the Principal Chief Commissioner of Income Tax (PCCIT ) - HELD THAT - The matter pertains to Assessment Year ( AY ) 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The provisio to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand. In this circumstances, as held by this Court in Siemens Financial Services Private Limited 2023 (9) TMI 552 - BOMBAY HIGH COURT the sanction is invalid and consequently, the impugned order and impugned notice u/s 148A(d) and 148 of the Act are hereby quashed and set aside.

Summary

Issues:
Challenge to notice under Section 148A(b) of the Income Tax Act, validity of sanction under Section 148A(d), denial of copy of sanction, authority issuing sanction, time limit for issuance of notice, applicability of proviso to Section 151, quashing of impugned order and notice.

Analysis:
1. The petitioner contested a notice dated 19th March 2022 under Section 148A(b) of the Income Tax Act, 1961, along with an order under Section 148A(d) and another notice dated 7th April 2022 under Section 148 of the Act. The primary contention was the invalidity of the sanction for the order under Section 148A(d) and the notice under Section 148, as the sanction was issued by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT).

2. The petitioner's request for a copy of the sanction was denied, raising concerns about the Department's refusal to provide information that the assessee is entitled to receive. The Revenue's stance, as mentioned in the affidavit, was that the sanction would be made available during the reassessment proceeding, further complicating the matter.

3. The impugned order and notice from 7th April 2022 indicated that the PCIT, Mumbai 5, granted the sanction. However, since the matter pertained to Assessment Year 2018-19 and the orders were issued on 7th April 2022, beyond three years, the authority granting sanction should have been the PCCIT as per Section 151(ii) of the Act. The proviso to Section 151, effective from 1st April 2023, was deemed inapplicable to the current case.

4. Citing a previous ruling in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., (2023) 457 ITR 647 (Bom.), the court declared the sanction invalid, leading to the quashing of the impugned order and notice dated 7th April 2022 under Section 148A(d) and 148 of the Act.

5. The petition was disposed of with no costs imposed, and all rights and contentions were preserved. Additionally, the respondents were directed to provide the petitioner with a copy of the approval form and the approval granted for issuing the order under Section 148A(d) and Section 148 of the Act within one week from the order's publication for record completion.