Case Law Details
Sayed Muhammed M Vs CIT (Kerala High Court)
Introduction: The recent case of Sayed Muhammed M Vs CIT (Kerala High Court) revolves around a writ petition challenging an assessment order under Section 147 of the Income Tax Act. The petitioner contested the validity of the assessment order, primarily disputing unexplained cash deposits. Herein lies a detailed analysis of the judgment and its implications.
Detailed Analysis: The appellant, a businessman and income tax assessee, faced scrutiny due to high-value transactions, including substantial cash deposits during the relevant period. The assessing authority issued notices under various sections of the IT Act, but the appellant failed to respond adequately. Consequently, an assessment order (Ext.P6) was passed, identifying unexplained cash deposits amounting to Rs. 1,15,03,870 under Section 69A of the IT Act.
Despite the appellant’s explanation regarding the nature of transactions, the assessing authority upheld the unexplained cash deposits, leading to a demand notice of Rs. 1,91,95,312. Subsequent appeals before the appellate authority and the Income Tax Appellate Tribunal were dismissed. The appellant then approached the Kerala High Court via a writ petition, challenging the assessment order and appellate decisions.
However, the High Court upheld the dismissal, emphasizing the appellant’s failure to exhaust statutory appellate remedies. It reiterated that factual disputes cannot be adjudicated in a writ petition and directed the appellant to pursue relief through the appropriate appellate channels.
Conclusion: The Kerala High Court’s decision in Sayed Muhammed M Vs CIT reaffirms the significance of exhausting statutory remedies in tax matters. The judgment underscores the principle that writ petitions are not avenues for resolving factual disputes but are reserved for addressing legal errors or procedural irregularities. As such, taxpayers must diligently pursue available appellate remedies to seek redressal of grievances arising from tax assessments.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The appellant is the writ petitioner. He preferred the writ petition challenging Ext.P6 assessment order passed under Section 147 r/w section 144 and 144B of the Income Tax Act (for short, the IT Act) and Ext.P11 appellate order passed under Section 250 of the IT Act.
2. The appellant is a businessman and an income tax assessee. He did not file return of his income for the assessment year 2017-2018. The assessing authority noted several transactions of high value in the appellant’s account, including cash deposits of crores of rupees during the aforementioned period. Hence, the assessing authority issued a notice under Section 148 of the IT Act to the appellant on 26/3/2021. But there was no response. On 30/10/2021, the assessing authority issued a notice under Section 142(1) of the IT Act with a detailed questionnaire. There was no response to the said notice also. Thereafter, the assessing authority issued Ext.P4 draft assessment order along with a show cause notice alleging that a cash deposit of Rs.1,15,03,870/-is seen in the account of the appellant. The appellant offered an explanation that he was providing tour operator services, and for the purpose of booking air tickets on behalf of his clients, he used his personal credit card, which his customers reimbursed. Hence, the amount he spent was not of a personal nature but incurred for business purposes. After considering the explanation offered, the assessing authority finalised the assessment order, finding an unexplained cash deposit under Section 69A of the IT Act for an amount of Rs.1,15,03,870/- and profit from business and profession as Rs.2,44,008/-. Ext.P6 is the assessment order. A demand notice under Section 156 of the IT Act was issued to the appellant for an amount of Rs.1,91,95,312/-. Ext.P7 is the demand notice. The appellant challenged Ext.P6 before the appellate authority. However, the appeal was dismissed as per the Ext.P11 order. Thereafter, the appellant challenged Exts.P6 and P11 before the learned Single Judge. The learned Single Judge dismissed the writ petition, relegating the appellant to the statutory remedy of appeal before the Income Tax Appellate Tribunal. It is challenging the said judgment, the appellant is before us.
3. We have heard Sri. Jojo C. A, the learned counsel for the appellant and Sri. P.R. Ajithkumar, the learned Standing Counsel for the respondents.
4. The appellant has chosen to challenge Ext.P6 assessment order before the First Appellate Authority at the first The First Appellate Authority, on merits, dismissed the appeal. A further appeal is provided against the Ext.P11 order before the Income Tax Appellate Tribunal. The appellant has rushed to this court without exhausting the statutory appellate remedy. The appellant challenged Exts.P6 and P11 orders mainly on factual grounds, which is in dispute. The disputed question of fact cannot be adjudicated in the writ petition. As rightly held by the learned Single Judge, the remedy open to the appellant is to approach the Tribunal.
We find no merit in the appeal. Accordingly, it is dismissed.
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