2023 (6) TMI 1221 - HC - Income Tax

High Court invalidates Income Tax Act notice due to lack of proper approval, annuls related proceedings

Pinki Rajesh Modi Versus Income Tax Officer, Ward-5 (3), Nagpur, Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-Tax Officer, National Faceless Assessment Centre, New Delhi, Additional/Joint Commissioner of Income Tax, Nagpur, The Union of India, Central Board of Direct Taxes,

The High Court of Bombay set aside a notice issued under Section 148 of the Income Tax Act, 1961, dated 30/03/2021, due to jurisdictional issues. The ... Reopening of assessment - absence of jurisdiction with the issuing authority for reopening - as alleged approval as required u/s 151 had not been obtained - four years had expired - scope of provisions of Section 151 came to be amended with effect from 01/04/2021 - HELD THAT:- The impugned notice is liable to be set aside on the ground of absence of jurisdiction with the issuing authority. As decided in J M Financial and Investment Consultancy Services Private Limited [2022 (4) TMI 1446 - BOMBAY HIGH COURT] since four years had expired from the end of the relevant assessment year, as provided under Section 151(1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Additional Commissioner of Income Tax. As the stand taken by the respondents that by virtue of provisions of the Act of 2020, the approval of Assistant/Joint Commissioner of Income Tax as granted was valid has been turned down. In view of Section 151(1) of the Act of 1961 prior to its amendment it was only the Principal Chief Commissioner or the Chief Commissioner of Income Tax who could have accorded the approval. Thus a case for interference has been made out. Decided in favour of assessee. Issues involved:The judgment involves a challenge to a notice issued under Section 148 of the Income Tax Act, 1961, dated 30/03/2021, based on jurisdictional grounds.Details of the Judgment:Issue 1: Jurisdictional ChallengeThe petitioner, an individual assessed for the Assessment Year 2015-16, challenged the notice issued under Section 148 of the Act of 1961 on 30/03/2021. The petitioner sought details of the reasons for the notice, and it was revealed that the notice was issued due to alleged non-genuine profit/loss for the financial year 2014-15. The petitioner contended that the approval obtained under Section 151 of the Act was from the Additional/Joint Commissioner of Income Tax, Range-4, Nagpur. The petitioner argued that the notice was without jurisdiction as the satisfaction of the Joint Commissioner was necessary under the amended provisions of Section 151, effective from 01/04/2021. Relying on previous decisions, the petitioner claimed that the notice was liable to be set aside due to lack of proper approval.Issue 2: Respondent's DefenseThe respondents, represented by counsel, opposed the writ petition, asserting that the notice issued under Section 148 was in accordance with the law. They argued that under the provisions of the Taxation and Other Laws Act of 2020, sanction by the Assistant/Joint Commissioner of Income Tax sufficed. They contended that the notice, issued on 30/03/2021, was within the extended time limit granted by the Act of 2020, and thus, lawful. The respondents maintained that there was no basis to interfere with the impugned notice, and the writ petition should be dismissed.Judgment and ConclusionAfter considering the arguments and relevant material, the Court held that the notice dated 30/03/2021 lacked jurisdiction due to the absence of proper approval from the issuing authority. Citing previous decisions, the Court emphasized that under Section 151(1) of the Act prior to its amendment, only the Principal Chief Commissioner or Chief Commissioner could grant approval. Therefore, the approval from the Assistant/Joint Commissioner was deemed invalid. Consequently, the Court set aside the notice issued under Section 148 of the Act, along with any proceedings initiated and completed pursuant to it. The writ petition was allowed in favor of the petitioner, with costs not imposed.In conclusion, the High Court of Bombay held that the notice issued under Section 148 of the Income Tax Act, 1961, dated 30/03/2021, was set aside due to jurisdictional issues, specifically the lack of proper approval as required by law.