Bombay High Court Quashes Income Tax Assessments Against Agriculturist And Rickshaw Driver For Improper Sanction
The Bombay High Court has quashed the income tax assessments for the assessment year 2016-2017 against agriculturists and rickshaw drivers for improper sanction.The bench of Justice K.R. Shriram and Justice Neela Gokhale relied on its earlier decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors. The court held that the approval of the...
The Bombay High Court has quashed the income tax assessments for the assessment year 2016-2017 against agriculturists and rickshaw drivers for improper sanction.
The bench of Justice K.R. Shriram and Justice Neela Gokhale relied on its earlier decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors. The court held that the approval of the specified authority in terms of Section 151(ii) of the Income Tax Act is a jurisdictional requirement, and in the absence of complying with this requirement, the reopening of the assessment would fail.
The petitioners/assessee were the Agriculturist and rickshaw driver. The assessee challenged the income tax assessments for the assessment year 2016-2017 due to improper sanction under the Income Tax Act, 1961.
In light of the invalid sanction, the court ruled that the notices issued were also invalid and had to be quashed. Furthermore, the court emphasised that any assessment orders passed subsequently based on an incorrect sanction would also need to be set aside.
The Court quashed the impugned Assessment Order dated May 27, 2023, issued under Section 144 read with Section 147 of the Income Tax Act. This ruling has far-reaching implications as it nullifies all consequential proceedings, including Notice of Demand and Penalty proceedings.
The court clarified that while these specific grounds had been addressed, other grounds could be raised by the parties at an appropriate stage in any other proceeding.
The decision by the Bombay High Court sets a precedent and highlights the importance of proper sanction under the Income Tax Act to ensure the validity of assessments and related proceedings for the assessment year 2016-2017. It also underscores the significance of adhering to legal procedures and due process in tax-related matters.
Counsel For Petitioner: Karan Gajra
Counsel For Respondent: Samiksha Kanani
Case Title: Chandar Mahadev Naik Versus Income Tax Officer
Case No.: Writ Petition (L) No. 17578 Of 2023