Case Law Details
Chandar Mahadev Naik Vs ITO (Bombay High Court)
Invalid Sanction: HC Quashes Notice & consequential Assessment Order, Demand Notice & Penalty proceedings
Introduction: The Bombay High Court, in the case of Chandar Mahadev Naik Vs ITO for the assessment year 2016-2017, recently quashed the assessment order, notice, and penalty proceedings. The court ruled that an improper sanction was obtained, rendering the entire process invalid. This decision aligns with the precedent set in Siemens Financial Services Pvt Ltd Vs. Deputy Commissioner of Income Tax & Ors. (2023) 457 ITR 647 (BOM).
Detailed Analysis: The crux of the matter revolves around the sanction obtained for the assessment year 2016-2017. The court, referring to the Siemens Financial Services case, clarified that the sanction should have been granted under Section 151(ii) of the Income Tax Act 1961 instead of Section 151(i). Consequently, the obtained sanction was deemed invalid. The court emphasized that due to the flawed sanction, the notice itself became invalid, warranting its quashing.
Furthermore, the court extended the ramifications of the invalid sanction to subsequent assessment orders. Any assessment orders relying on the incorrect sanction were also deemed invalid and were consequently quashed. This comprehensive ruling led to the quashing of the impugned Assessment Order dated 27th May 2023 issued under Section 144 read with Section 147 of the Act. As a result, all consequential proceedings, including the Notice of Demand and Penalty proceedings, were also quashed and set aside.
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