Memon Chamber Of Commerce vs Income Tax Officer Exemption Ward 2(1), ...
2025 Latest Caselaw 8300 Bom

Bombay High Court

Memon Chamber Of Commerce vs Income Tax Officer Exemption Ward 2(1), ... on 9 December, 2025

Author: B. P. Colabawalla

Bench: B. P. Colabawalla

2025:BHC-OS:24629-DB


                                                                    7-WP(L)-36619-2025.doc



                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                          ORDINARY ORIGINAL CIVIL JURISDICTION

                             WRIT PETITION (L) NO. 36619 OF 2025

           Memon Chamber of Commerce                                  .. Petitioner

                    Versus

           Income Tax Officer, Exemption Ward
           2(1), Mumbai and Ors.                                      .. Respondents


                Adv. Vasudev Ginde, i/b Adv. Kumar Kale, for the Petitioner.

                Adv. Prathamesh Bhosle, for the Respondents.



                                 CORAM:      B. P. COLABAWALLA &
                                             AMIT S. JAMSANDEKAR, JJ.

                                 DATE:       DECEMBER 9, 2025

           P. C.

1. Rule. Respondents waive service. With the consent of the parties,

Rule is made returnable forthwith and heard finally.

2. The present Writ Petition challenges the impugned order dated

30th September 2025 passed by Respondent No.1 whereby the notice dated

26th July 2022 issued under Section 148 of the Income-tax Act, 1961 (for

short "the IT Act") has been revived pursuant to the judgment and order

dated 3rd October 2024 passed by the Hon'ble Supreme Court in Union of

India V/s Rajeev Bansal [Civil Appeal No. 8629, 8631 of 2024 &

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

others, [2024] 167 taxmann.com 70 (SC). The Petitioner has also

challenged the assessment order dated 29th October 2025 passed by

Respondent No.1 under Section 147 of the IT Act and consequent notice of

demand dated 29th October 2025 issued under Section 156 of the IT Act and

the show cause notice dated 29th October 2025 issued under Section 271(1)

(c) of the IT Act.

3. Briefly stated, the relevant facts of the case are as under:

(i) The Petitioner is an Association of Persons registered

under Section 12A of the IT Act. For the A.Y. 2016-17, the

Petitioner filed its return of income on 31st August 2016,

declaring its total income of Rs.73,83,980/-. There was no

scrutiny assessment order passed under Section 143(3) of the IT

Act.

(ii) Subsequently, Respondent No.1 issued a notice dated 7th

April 2021 under the pre-existing Section 148 of the IT Act,

reopening the Petitioner's assessment for A.Y. 2016-17. On 15th

April 2021, the Petitioner furnished a return of income in

response to this notice.

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

(iii) While the assessment proceedings under Section 147 of the

IT Act initiated by virtue of the aforesaid notice was pending, the

Hon'ble Supreme Court in Union of India V/s Ashish

Agarwal [(2022) 138 taxmann.com 64 (SC)] directed that

all notices under Section 148 of the IT Act issued after 31st

March 2021 under the pre-existing regime be treated as notices

under Section 148A(b) of the IT Act, and further directed the

Revenue Officers to furnish the relevant material to the assessees

and follow the procedure as per Section 148A of the IT Act.

(iv) Accordingly, Respondent No.1 issued a letter dated 26th

May 2022 to the Petitioner asking the Petitioner to submit its

reply within two weeks. The Petitioner furnished its detailed

reply on 9th June 2022, requesting Respondent No.1 to not issue

any notice under Section 148. Rejecting the Petitioner's

submissions, Respondent No.1 passed an order under Section

148A(d) of the IT Act on 26th July 2022, after obtaining prior

approval under Section 151(i) of the IT Act of Respondent No.2,

i.e. the Principal Commissioner of Income Tax (Exemption),

Mumbai. A notice dated 26th July 2022 was also issued by

Respondent No.1 under Section 148 of the IT Act.

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

(v) The Petitioner challenged the aforesaid order under

Section 148A(d) of the IT Act as well as the notice under Section

148 of the IT Act in Writ Petition No. 4666 of 2022 filed before

this Court. This Writ Petition was disposed of by a consolidated

order dated 15th September 2023 along with several other Writ

Petitions, wherein following the judgment of this Court in

Siemens Financial Services Private Limited V/s Deputy

Commissioner of Income Tax and Others [Writ

Petition No.4888 of 2022, dated 25th August 2023], this

Court quashed the orders issued under Section 148A(d) of the IT

Act as well as notices issued under Section 148 of IT Act, on the

ground that sanction given under Section 151(i) of the IT Act was

invalid because sanction should have been obtained under

Section 151(ii) of the IT Act since the period of three years from

the end of the Assessment Year 2016-17 has already expired. In

this case, this Court held that the provisions of the Taxation and

Other Laws (Relaxation and Amendment of Certain Provisions)

Act, 2020 (for short "TOLA") were not applicable for the grant

of sanction under Section 151 of the IT Act for A.Y. 2016-17.

(vi) Being aggrieved, the Revenue filed a Special Leave Petition

[Civil Appeal No. 9344 of 2024] against this Court's aforesaid

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

order dated 15th September 2023 before the Hon'ble Supreme

Court in the Petitioner's case, which was tagged along with Civil

Appeal No. 8629 of 2024 [Union of India V/s Rajeev Bansal

(supra)] and was thus disposed of by the judgment dated 3rd

October 2024, wherein the aforesaid judgment of this Court was

set aside to the extent of the observations made by the Hon'ble

Supreme Court in Union of India V/s Rajeev Bansal (supra).

(vii) Thereafter, referring to the aforesaid judgment in Union of

India V/s Rajeev Bansal (supra), Respondent No.1 passed the

impugned order dated 30th September 2025, rejecting the

Petitioner's objections, and revived the notice dated 26th July

2022 issued under Section 148 of the Act, and proceeded further

to pass an assessment order under Section 147 of the IT Act on

29th October 2025.

(viii) The Petitioner, being aggrieved by the aforesaid orders

passed by Respondent No.1, has filed this Writ Petition.

4. Before us, the learned Counsel appearing for the Petitioner,

submitted that Respondent No.1 has misread the judgment in Union of India

V/s Rajeev Bansal (supra) inasmuch as he did not appreciate that the

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

specified authority referred to under Section 151(i) could have granted

sanction for A.Y. 2016-17 only up to 30th June 2021, even after considering

the extension granted by TOLA. In the Petitioner's case, however, the order

under Section 148A(d) of the IT Act was passed on 26th July 2022, and also

the notice under Section 148 of the IT Act was issued on 26th July 2022.

Therefore, a sanction under Section 151(ii) of the IT Act was necessary. But in

the Petitioner's case, a sanction was obtained from the Principal

Commissioner of Income Tax under Section 151(i) of the IT Act, which is not

valid. In support of this contention, the learned Counsel relied upon the

judgment of this Court in Ramesh Bachulal Mehta V/s. Income Tax

Officer [(2025) 177 taxmann.com 606 (Bombay)].

5. We have heard the learned Counsel for the parties.

6. In the present case, the period of three years from the end of the

Assessment Year 2016-17 fell for completion on 31st March 2020. We,

therefore, find that the present case is covered by the judgment of this Court

in Ramesh Bachulal Mehta (supra), wherein it was held thus:

"9. In the present case the period of three years from the end of the Assessment Year 2016-17 fell for completion on 31st March 2020. Since the expiry date fell during the time period of 20th March 2020 and 31st March 2021 contemplated under Section 3(1) of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short "TOLA"), the authority specified under Section 151(i) of the new regime could have granted sanction till 30th June 2021. On perusal of

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

the order, dated 13.07.2022, passed under Section 148A(d) of the Act, we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed after the expiry of three years from the end of the Assessment Year 2016-17, as per the substituted provisions of re- assessment, the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime.

10. The Hon'ble Supreme Court in the above case has drawn an illustration in paragraph 78 of it's order in the context of Assessment Year 2017-18, wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (here AY 2016-17) expired on 30.06.2021, whereas the Respondent No.1, despite passing the order on 13.07.2022 in respect of Assessment Year 2016-17, has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii).

11. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of the Respondent No. 1 to issue a notice under Section 148 of the Act.

12. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UPI v. Rajeev Bansal (supra). We accordingly hold that the order dated 13.07.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 15.07.2022 are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence they are required to be quashed and set aside."

7. We, therefore, find that the impugned order dated 30th

September 2025 passed by Respondent No.1 is, in fact, contrary to what the

Hon'ble Supreme Court held in paragraph 78 of its order in Union of India

V/s Rajeev Bansal (supra). We thus note that even if the order in Siemens

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

Financial Services Private Limited (supra) stands set aside by the Hon'ble

Supreme Court in Union of India V/s Rajeev Bansal (supra) on the ground

of applicability of the provisions of TOLA to Section 151, yet, the sanction

under Section 151(i) of the IT Act obtained by Respondent No.1 in the

Petitioner's case for the order dated 26th July 2022 passed under Section

148A(d) is still invalid as it was beyond 30th June 2021. Therefore, we are of

the clear view, that on the facts of the Petitioner's case, the judgment in

Union of India V/s Rajeev Bansal (supra) is in favour of the Petitioner on the

issue of sanction under Section 151. Respondent No.1, therefore, lacked

jurisdiction to revive the proceedings under Section 147/148 of the IT Act,

which he sought to do by virtue of the impugned order dated 30th September

2025. Therefore, the impugned order dated 30th September 2025 is required

to be quashed and set aside.

8. We, accordingly, quash and set aside the impugned order dated

30th September 2025 passed by Respondent No.1 whereby he revived the

proceedings under section 147/148 of the IT Act, and all consequential

orders/proceedings emanating therefrom, and allow this Writ Petition in

terms of Prayer Clause (a), which reads thus:

"(a) that this Hon'ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner's case and after going into the legality and propriety thereof, to quash and set

DECEMBER 9, 2025 Darshan Patil 7-WP(L)-36619-2025.doc

aside the order disposing objections dated 30.09.2025 ("Exhibit - N"), assessment order u/s. 147 dated 29.10.2025 ("Exhibit - R"), notice of demand u/s. 156 dated 29.10.2025 ("Exhibit - S") and notice u/s. 274 r.

w. s. 271(1)(c) dated 29.10.2025 ("Exhibit - T")."

9. Rule is made absolute in the aforesaid terms and the Writ

Petition also stands disposed of in terms thereof. However, there shall be no

order as to costs.

10. This order will be digitally signed by the Private Secretary/

Personal Assistant of this Court. All concerned will act on production by fax

or email of a digitally signed copy of this order.

[AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.]

DECEMBER 9, 2025 Darshan Patil

Signed by: Darshan Patil Designation: PA To Honourable Judge Date: 15/12/2025 11:19:48