2024 (4) TMI 1222 - HC - Income Tax

Validity of reassessment proceedings - sanction has been admittedly issued by the Principal Commissioner of Income-tax ( PCIT ) and not by the Principal Chief Commissioner of Income-tax ( PCCIT ) - HELD THAT - The impugned order and the impugned notice both dated July 20 2022 state that the authority that has accorded the sanction is the Principal Commissioner of Income-tax-27 Mumbai. The matter pertains to assessment year ( AY ) 2017-18 and since the impugned order as well as the notice are issued on July 20 2022 both have been issued beyond a period of three years. Therefore the sanctioning authority has to be the Principal Chief Commissioner of Income-tax as provided u/s 151(ii). The proviso to section 151 of the Act has been inserted only with effect from April 1 2023 and therefore shall not be applicable to the matter at hand. As held by this court in Siemens Financial Services Pvt. Ltd. 2023 (9) TMI 552 - BOMBAY HIGH COURT the sanction is invalid and consequently the impugned order and impugned notice both dated July 20 2022 u/s 148A(d) and 148 of the Act are hereby quashed. Decided in favour of assessee.

Summary

**Summary of the Judgment:**In the case before the Bombay High Court, the petitioner challenged the validity of a notice and an order issued under sections 148 and 148A(d) of the Income-tax Act, 1961, both dated July 20, 2022, for the assessment year 2017-18. The petitioner argued that the sanction for these actions was invalid as it was issued by the Principal Commissioner of Income-tax (PCIT) instead of the required Principal Chief Commissioner of Income-tax (PCCIT), as mandated by section 151(ii) of the Act for notices issued beyond three years.The court referenced the precedent set in "Vodafone Idea Ltd. v. Deputy CIT [2024] 468 ITR 346 (Bom)," which addressed similar issues regarding sanction authority. Despite the respondent's argument about the maintainability of the petition due to the assessee's lack of response to the notice, the court held that an invalid notice cannot be validated by non-response.The court concluded that the sanction was indeed invalid, as the proviso to section 151, which could potentially alter the sanctioning authority, was only effective from April 1, 2023, and thus not applicable to this case. As a result, the impugned order and notice dated July 20, 2022, were quashed and set aside. The petition was disposed of with no order as to costs, and all rights and contentions were kept open.