The Bombay High Court held that the sanctioning authority should be the Principal Chief Commissioner of Income Tax ( PCCIT ) for issuing reopening notice after expiry of 3 years.
Petitioner is impugning a notice issued under Section 148 of the Income Tax Act, 1961 and the order passed under Section 148A(d) of the Income Tax Act, both dated 20th July 2022 and the notice dated 25th May 2022 issued under Section 148A(b) of the Income Tax Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Income Tax Act and issuance of notice under Section 148 of the Income Tax 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”).
The counsel for the petitioner submitted that the sanction issue in this matter would be covered by the order dated 6th February 2024 passed by this Court in the case of Vodafone Idea Limited v. Deputy Commissioner of Income Tax, Circle-5(2)(1), Mumbai & Ors.
The counsel for the respondent though in fairness stated that it can be covered by Vodafone Idea Limited (supra), he raised the question of maintainability of petition because Assessee did not even respond to the notice issued. But we ask ourselves a question, even if Assessee has not responded would that make an invalid notice valid. The answer is ‘NO’.
A Division Bench of Justices Dr Neela Gokhale and KR Shriram observed that “The impugned order and the impugned notice both dated 20th July 2022 state that the Authority that has accorded the sanction is the PCIT-27, Mumbai. The matter pertains to Assessment Year (“AY”) 2017-2018 and since the impugned order as well as the notice are issued on 20th July 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 proviso to Section 151 of the Act has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand.”
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