Gabi Gafoor Vs DCIT (Kerala High Court)
Conclusion: Unless there were exceptional reasons like violation of the principles of natural justice or such other exceptional reasons, a challenge against an order under section 148A ought not to be entertained by the High Court under Article 226 of the Constitution of India.
Held: Assessee was served with a notice under section 148A(b) pointing out that for the assessment year 2017-18, enquiry conducted had brought out information suggesting that income had escaped assessment within the meaning of section 147. Assessee stated that he was an NRI having no taxable income in India except for some interest income. It was further stated that he had not been able to obtain details from the bank and pointed out that the details were not presently available to justify the cash deposit, except that it might have been his family members who would have deposited the amounts. As far as the debit was concerned, it was regrettably stated that he had no details but asserted that there was no income element in it. Assessee also questioned the time limit for issuing the notice under section 148. Subsequently, Department issued an order under Section 148A(d), after obtaining necessary approvals, stating that transactions remained unexplained. As the total income escaped exceeded ₹50 lakhs, the ten-year limitation applied, and hence the proceedings were deemed to be within the statutory period. A notice under Section 148 was issued, directing assessee to file a return of income. Assessee contended that the proceedings were based on a “roving enquiry” and that the notice was unsustainable in law, as it failed to meet the procedural safeguards outlined under Section 148A. Assessee argued that withdrawals had been erroneously included with deposits to inflate the income alleged to have escaped assessment beyond the permissible threshold. The counsel relied on decisions including Catchy Prop-Build Pvt. Ltd v. ACIT and Red Chilli International Sales v. ITO in support of the arguments. On appeal. It was held that Section 148A was introduced as a remedial measure by the Finance Act, 2021 to protect the interests of assessees and ensure a fair pre-assessment process. The provision was not intended to conduct a full-fledged enquiry but merely to provide assessee an opportunity to respond to information suggesting escapement of income. The Court observed that “An order under section 148A(d) only opens the stage for issuing a notice for reassessment. Thereafter, assessee will have every opportunity to contest the matter by filing the return. Therefore unless there are exceptional reasons like violation of the principles of natural justice or such other exceptional reasons, a challenge against an order under section 148A ought not to be entertained by the High Court under Article 226 of the Constitution of India. The specific time lines mentioned under section 148A indicates that it is a time bound procedure and cannot be prolonged by repeated challenges, that too, on the merits. At this stage of the proceedings, it is not proper for this Court to interfere in exercise of the powers under Article 226 of the Constitution of India.” Supreme Court also concluded precedents in Renu Singh v. PCIT and Anshul Jain v. PCIT, which held that writ petitions challenging notices under Sections 148 and 148A were not maintainable when effective alternative remedies were available under the Income Tax Act.
