Appeals Not Accepting the Jurisdictional High Court Judgment or Working Mechanically Without Application of Mind may Attract Punishment on Concerned Authorities of Income Tax

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The Tax Publishers Income Tax--Appeals Not Accepting the Jurisdictional High Court Judgment or Working Mechanically Without Application of Mind may Attract Punishment on Concerned Authorities of Income Tax Akhilesh Kumar Sah A decision of the Supreme Court is binding on the lower courts. Sometimes, conflict arises that assessing/appellate authority, only agrees with the decision of jurisdictional High Court/ITAT, but, in a recent case decided by Bombay High Court at Goa, the JAO did not agree with the decision given by Bombay High Court earlier and Chief Commissioner accorded the mechanical sanction to the notice issued to petitioner. 1. Analysis of facts of Samp Furniture case In Samp Furniture Pvt. Ltd. v. ITO (WP No. 3290 of 2024) decided by Bombay High Court on 5-8-2024, the primary grievance of petitioner to actions initiated by concerned officers against the petitioner, was that the proceedings were initiated with gross non-application of mind and/or much more than mechanically, as the entire basis of such notice was the amount which was subject-matter of consideration of AO in the assessment order which had ultimately resulted in its deletion. Notice under section 148 of Income Tax Act, 1961 (for short, 'the Act') was issued contrary to the provisions of section 151A of the Act. It was submitted that actions/notices would be required to be held illegal, including on the basis of the principles as laid down by Division Bench of Bombay High Court in Hexaware Technologies Ltd. v. ACIT & Ors [(2024) 464 ITR 430 (Bom]. The sanction as accorded under section 151 of the Act was without application of mind and/or mechanical. A reply affidavit was filed by the petitioner. At the first instance, Jurisdictional Assessing Officer (for short, 'JAO') refused to acknowledge petitioners case in regard to an amount of Rs. 4 Crore already being considered on its merits in the assessment orders, wherein JAO had added such amounts to petitioners income. At the second instance, the deponent of the reply affidavit had not accorded any sanctity to the order passed by CIT(A) in appellate proceedings under section 250 of the Act, wherein on the very issue, such addition as made by AO stood deleted. High Court did not find that there was any acceptable/cogent reason or any justification, whatsoever, for AO not to consider, discard and overlook the legal effect of such orders passed by the appellate authority. Such significant material which had a direct bearing on any notice to be issued under section 148A(b) of the Act and an order to be passed thereon, and in issuance of further notice under section 148 of the Act, was certainly quite gross, amounting to a dereliction of duty, discarding from the path of law. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Appeals

Not Accepting the Jurisdictional High Court Judgment or Working Mechanically Without Application of Mind may Attract Punishment on Concerned Authorities of Income Tax

Akhilesh Kumar Sah

A decision of the Supreme Court is binding on the lower courts. Sometimes, conflict arises that assessing/appellate authority, only agrees with the decision of jurisdictional High Court/ITAT, but, in a recent case decided by Bombay High Court at Goa, the JAO did not agree with the decision given by Bombay High Court earlier and Chief Commissioner accorded the mechanical sanction to the notice issued to petitioner.

1. Analysis of facts of Samp Furniture case

In Samp Furniture Pvt. Ltd. v. ITO (WP No. 3290 of 2024) decided by Bombay High Court on 5-8-2024, the primary grievance of petitioner to actions initiated by concerned officers against the petitioner, was that the proceedings were initiated with gross non-application of mind and/or much more than mechanically, as the entire basis of such notice was the amount which was subject-matter of consideration of AO in the assessment order which had ultimately resulted in its deletion. Notice under section 148 of Income Tax Act, 1961 (for short, 'the Act') was issued contrary to the provisions of section 151A of the Act. It was submitted that actions/notices would be required to be held illegal, including on the basis of the principles as laid down by Division Bench of Bombay High Court in Hexaware Technologies Ltd. v. ACIT & Ors [(2024) 464 ITR 430 (Bom]. The sanction as accorded under section 151 of the Act was without application of mind and/or mechanical.

A reply affidavit was filed by the petitioner. At the first instance, Jurisdictional Assessing Officer (for short, 'JAO') refused to acknowledge petitioners case in regard to an amount of Rs. 4 Crore already being considered on its merits in the assessment orders, wherein JAO had added such amounts to petitioners income.

At the second instance, the deponent of the reply affidavit had not accorded any sanctity to the order passed by CIT(A) in appellate proceedings under section 250 of the Act, wherein on the very issue, such addition as made by AO stood deleted. High Court did not find that there was any acceptable/cogent reason or any justification, whatsoever, for AO not to consider, discard and overlook the legal effect of such orders passed by the appellate authority. Such significant material which had a direct bearing on any notice to be issued under section 148A(b) of the Act and an order to be passed thereon, and in issuance of further notice under section 148 of the Act, was certainly quite gross, amounting to a dereliction of duty, discarding from the path of law.