Vodafone Idea Limited Vs DCIT (Bombay High Court)
The Bombay High Court set aside reassessment proceedings initiated against Vodafone Idea Limited for Assessment Year 2018-19. The company challenged the notice dated 19 March 2022 under Section 148A(b), the order dated 7 April 2022 under Section 148A(d), and the consequential notice under Section 148 of the Income-tax Act, 1961. Its principal objection was that approval had been granted by the Principal Commissioner of Income Tax (PCIT), although the applicable law required approval from the Principal Chief Commissioner of Income Tax (PCCIT).
The Court found that the impugned order and notice dated 7 April 2022 had been issued more than three years after the end of the relevant assessment year. Under Section 151(ii), as applicable at that time, the PCCIT was the competent sanctioning authority. The Court also observed that the proviso inserted into Section 151 with effect from 1 April 2023 was not applicable to the proceedings.
The Bench questioned the Revenue’s refusal to provide the petitioner with a copy of the sanction. Even in its affidavit-in-reply, the Department maintained that the approval would be made available during reassessment proceedings. The Court considered this refusal unjustified and directed the Department to provide the approval form and the approval accorded for the proceedings.
Following the decision in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., (2023) 457 ITR 647 (Bom.), the Court held that the sanction was invalid. Consequently, it quashed the order under Section 148A(d) and notice under Section 148, both dated 7 April 2022. The petition was disposed of without costs, with all rights and contentions kept open.
Cases Discussed
Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., (2023) 457 ITR 647 (Bom.) — Followed on the requirement of sanction from the competent authority under Section 151(ii).
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Petitioner is impugning a notice dated 19th March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 (“the Act”), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (“PCIT”) and not by the Principal Chief Commissioner of Income Tax (PCCIT”).
2. Petitioner’s request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re-assessment proceeding.
3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year (“AY”) 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The provisio to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand.
1. In this circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.,1 the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside.
2. Petition disposed. No order as to costs. All rights and contentions are kept open.
6. For completion of record, Respondents are directed to make available to Petitioner copy of the approval form as well as the approval accorded for issuance of order under Section 148A(d) and Section 148 of the Act within one week from this order being uploaded.
Notes:
1 (2023) 457 ITR 647. (Bom.)
