The Bombay High Court, has invalidated income tax assessments and subsequent proceedings for the assessment year 2016-2017 against agriculturists and rickshaw drivers due to improper sanction. The court, comprising Justice K.R. Shriram and Justice Neela Gokhale, stressed the jurisdictional requirement of obtaining approval from the specified authority under Section 151(ii) of the Income Tax Act. Failure to comply with this requirement renders the reopening of assessments ineffective, the Bombay High Court noted, citing its earlier ruling in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.
The petitioners, who were agriculturists and rickshaw drivers, contested the income tax assessments for the said assessment year, challenging the improper sanction under the Income Tax Act, 1961. Read More: ITAT Quashes levy of Penalty u/s 271(1)(c) of Income Tax Act on ground of Absence of Proper Opportunity of Hearing In light of the flawed sanction, the court declared the issued notices as invalid, necessitating their quashing. Additionally, the court asserted that any subsequent assessment orders based on an incorrect sanction must also be set aside.
Karan Gajra appeared for the Petitioners and Samiksha Kanani and Ajeet Manwani appeared for the Respondents-Revenue. The impugned Assessment Order dated May 27, 2023, issued under Section 144 read with Section 147 of the Income Tax Act, was annulled by the court. Read Also: GST Amendments set to be Considered in Sabha Winter Sessions along with 18 Other Bills In view of the above, all consequential proceedings including Notice of Demand and Penalty proceedings were also quashed and set aside. Emphasizing that while specific grounds had been addressed, parties could raise other grounds at an appropriate stage in any proceeding, the court clarified at this instance.