ITO Vs Srichand Mandhyan (Supreme Court of India)
Supreme Court considered a Special Leave Petition challenging an order passed by the Bombay High Court. After hearing the learned counsel for the parties and examining the material on record, the Supreme Court found no valid ground to interfere with the High Court’s decision. Accordingly, the Special Leave Petition was dismissed, and all pending applications, if any, were also disposed of.
Read HC Judgment in this case: Bombay HC Quashed Reassessment Notices Due to Invalid Sanction Under Wrong Provision
The underlying judgment of the Bombay High Court concerned multiple writ petitions relating to Assessment Years 2016–2017 and 2017–2018. One of the principal grounds raised in these petitions was that the sanction obtained for initiating reassessment proceedings was improper. The High Court noted that this issue had already been settled in an earlier decision, where it was held that for Assessment Year 2016–2017, the mandatory sanction for issuance of notice ought to have been obtained under Section 151(ii) of the Income Tax Act, 1961, and not under Section 151(i). Since the sanction had been granted under an incorrect provision, it was held to be invalid.
The High Court reiterated that when the sanction itself is invalid, the notice issued pursuant to such sanction is also invalid and must be quashed. It further clarified that even where assessment orders had subsequently been passed, those orders, having been made on the basis of an incorrect and invalid sanction, would also stand vitiated and were liable to be quashed.
Consequently, the High Court ordered that all notices and assessment orders for Assessment Year 2016–2017 issued on the basis of such invalid sanction be quashed. It further directed that all consequential notices and demands issued under Sections 156 or 271 of the Act would also have to be set aside.
The High Court also recorded the submission of counsel that the same legal position would apply to Assessment Year 2017–2018. Accepting this submission, the Court held that all notices, assessment orders, and consequential orders issued for Assessment Year 2017–2018 were equally liable to be quashed and set aside.
While disposing of the petitions, the High Court clarified that all other grounds raised by the parties were kept open and could be agitated at an appropriate stage in any other proceeding. With the disposal of the main petitions, all pending interim applications were also disposed of.
By dismissing the Special Leave Petition, the Supreme Court affirmed the Bombay High Court’s reasoning and conclusions, thereby allowing the High Court’s decision to attain finality.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Having heard the learned counsel appearing for the parties and having gone through the materials on record, we find no good ground to interfere with the impugned order passed by the High Court.
2. The Special Leave Petition is, accordingly, dismissed.
3. Pending application(s), if any, stands disposed of.
