Case Law Details
K. Abdul Majeed Vs ITO (Kerala High Court)
In a recent judgment dated 21st December 2023, the Kerala High Court addressed the case of K. Abdul Majeed vs. Income Tax Officer (ITO) concerning orders passed under Section 148(A)(d) of the Income Tax Act for the assessment years 2016-2017 and 2019-2020. The appellant challenged the orders, contending that they were issued without providing him with a hearing.
The High Court, in its judgment, upheld the appellant’s argument, finding that the orders were indeed passed without giving the appellant an opportunity to be heard. Consequently, the Court quashed the orders and remanded the matter back to the Income Tax Authority with a directive to afford the appellant a chance for a hearing before passing fresh orders under Section 148(A)(d).
However, during the proceedings of the appeal, the Court noted that the deposits in question, made in three bank accounts belonging to third parties, were treated as unexplained investments of individuals named Rejilal, Sajilal, and Pankajam under Section 69 of the Income Tax Act. Given this development, the Court questioned the continuation of proceedings against the appellant under Section 148.
After careful consideration, the High Court concluded that since the deposits had been attributed to individuals other than the appellant and were treated as unexplained investments under Section 69, there was no basis to continue the proceedings against the appellant under Section 148. Therefore, the Court allowed the writ appeal, setting aside the judgment of the Single Judge and quashing the impugned orders (Exts.P6 and P7) unconditionally. Additionally, the consequential orders (Exts.P8 and P9) and annexures produced in the writ petition and writ appeal were also quashed.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This writ appeal is preferred against the judgment dated 21.12.2023 of the learned Single Judge in W.P(C) No.14993 of 2023. In the writ petition, Exts.P6 and P7 orders that were passed under Section 148(A)(d) of the Income Tax Act (hereinafter referred to as the ‘I.T. Act’), in respect of assessment years 2016-2017 and 20192020 respectively, were impugned. The said orders recorded the satisfaction of the Income Tax Authority, that the case of the appellant was a fit one for issuance of notice under Section 148 of the I.T. Act for reassessment of the income of the appellant for those years.
2. The ground urged in the writ petition was that the appellant was not heard in person before passing Exts.P6 and P7 orders. The learned Single Judge found force in the said contention of the appellant and quashed Exts.P6 and P7 orders and remanded the matter back to the respondent with a direction to provide an opportunity of hearing to the appellant, and pass fresh orders under Section 148(A)(d) of the I.T. Act.
3. In the appeal before us, it is the submission of the learned counsel for the appellant that Exts.P6 and P7 orders recording the satisfaction of the assessing authority that the case against the appellant was a fit one for re-opening the assessment under Section 147 of the I.T. Act, was based on certain deposits made in three bank accounts that belonged to third persons, and which the department believed were paid into the said accounts by the appellant. It is the specific case of the appellant that he has nothing to do with the said bank accounts and that the money did not belong to him at any stage.
4 When the appeal came up for admission, we had issued notice before admission on 05.01.2024 and stayed further proceedings pursuant to the impugned judgment as against the appellant. Thereafter, when fresh reassessment proceedings were initiated on the same ground for the assessment year 2020-2021, we had, by our order dated 21.03.2024, granted an interim stay of further proceedings pursuant to Annexure A, pending disposal of the writ appeal. We had also directed the respondent to file an affidavit, stating the action if any, initiated against the account holders of the bank accounts in which the amounts referred to above had been deposited. By an affidavit filed on 01.04.2024, it is stated that the said deposits made in the bank accounts referred above, have been treated as the unexplained investment of Mr. Rejilal, Sajilal and Pankajam under Section 69 of the I.T. Act. If that be the case, then we fail to understand how proceedings under Section 148 can be continued against the appellant herein, more so when the assessment completed against the aforesaid Rejilal, Sajilal and Pankajam is not a protective assessment. We are therefore of the view that this writ appeal has to be allowed, by setting aside the impugned judgment of the learned Single Judge to the extent it remands the matter back to the respondent for passing fresh orders under Section 148(A)(d) of the I.T. Act.
In the result, the writ appeal is allowed and the writ petition is also allowed unconditionally by quashing Exts.P6 and P7 orders that were impugned therein. Needless to say, the consequential orders namely, Exts.P8 and P9 produced in the writ petition and Annexures A and B produced through I.A Nos.1 and 3 of 2024 in the Writ Appeal shall also stand quashed.
Author Bio
