Case Law Details
Vardhaman Multi Staet Cooperative Credit Society Ltd. Vs ITO (Bombay High Court)
Introduction: The Bombay High Court has quashed a notice under Section 148 for the Assessment Year (AY) 2016-17 in the case of Vardhaman Multi-State Cooperative Credit Society Ltd. vs. ITO. This decision comes in the aftermath of the court’s earlier ruling in Siemens Financial Services Pvt. Ltd. v. Deputy Commissioner of Income Tax, providing clarity on the applicable section for sanction under the Income Tax Act, 1961.
Detailed Analysis: In the judgment, the court emphasized that for AY 2016-17, the sanction should have been granted under Section 151(ii) and not under Section 151(i) of the Income Tax Act, 1961. The notice issued without the proper sanction is deemed invalid, leading to the quashing of the notice and all consequential actions.
Mr. Mohta, representing the respondents, acknowledged the alignment of facts and legal aspects with the Siemens Financial Services Pvt. Ltd. case. The court’s ruling brings attention to the crucial distinction between the two sections and their implications on the validity of notices.
The notice in question, dated 01/07/2022, referred to prior approval of the Principal CIT-1, Nagpur, aligning with Section 151(i) instead of Section 151(ii). This misapplication of the section led the court to invalidate the notice and set aside all consequential actions.
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