Court Invalidates Tax Order Over Wrong Sanction Authority Under Sections 148A(d) and 148 of Income Tax Act 1961

The court quashed the impugned order and notice dated 7th April 2022 under Section 148A(d) and Section 148 of the Income Tax Act, 1961, due to the invalidity of the sanction granted by the PCIT instead of the PCCIT, as required by Section 151(ii) for matters beyond three years. The proviso to Section 151 was deemed inapplicable. The petition was disposed of without costs, preserving all rights and contentions. The respondents were directed to provide the petitioner with a copy of the approval form and sanction within one week for record completion.

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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.

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