Kerala High Court
Gabi Gafoor vs Deputy Commissioner Of Income Tax on 11 April, 2025
Author: Bechu Kurian Thomas
Bench: Bechu Kurian Thomas
W.P.(C) No.29137/24 1
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 11TH DAY OF APRIL 2025 / 21ST CHAITHRA, 1947
WP(C) NO. 29137 OF 2024
PETITIONER:
GABI GAFOOR,
AGED 44 YEARS, S/O.ABDUL GAFOOR,
RESIDING AT ARAKKAL VETTAH HOSUE,
PATTURAIKKAL, THRISSUR, PIN - 680025
BY ADV AMMU CHARLES
RESPONDENTS:
1 DEPUTY COMMISSIONER OF INCOME TAX,
DCIT CIRCLE 1(1) & TPS,
THRISSUR, PIN - 680001
2 ADDITIONAL COMMISSIONER OF INCOME TAX,
AAYKKAR BHAVAN, SAKTHAN THAMPURAN NAGAR,
THRISSUR, PIN - 680001
3 PRINCIPAL COMMISSIONER OF INCOME TAX,
AAYKKAR BHAVAN, NORTH BLOCK,
NEW ANNEXURE BUILDING, MANACHIRA,
KOZHIKODE, PIN - 673001
BY ADVS.
SRI.P.G.JAYASHANKAR, SR. SC
SRI.G.KEERTHIVAS, SC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
11.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) No.29137/24 2
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BECHU KURIAN THOMAS, J.
--------------------------------
W.P.(C) No.29137 of 2024
---------------------------------
Dated this the 11th day of April, 2025
JUDGMENT
Petitioner challenges an order issued under section 148A(d) of the
Income Tax Act, 1961 (for short 'the Act') for the assessment year 2017-18.
2. Petitioner is an assessee under the Act. On 20.02.2024, he was
served with a notice under section 148A(b) of the Act pointing out that for the
assessment year 2017-18, enquiry conducted has brought out information
suggesting that income had escaped assessment within the meaning of
section 147 of the Act and asked him to show cause why a notice under
section 148 of the Act should not be issued. The annexure referred to cash
deposits of Rs. 19,38,543/- and aggregate debit of Rs.1,35,37,590/- from the
account of the petitioner. An opportunity of hearing was also granted to him.
3. In the reply, petitioner stated that he is an NRI having no taxable
income in India except for some interest income. It was further stated that he
has not been able to obtain details from the bank and pointed out that the
details are 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. Petitioner also
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questioned the time limit for issuing the notice under section 148 of the Act.
4. Despite the above reply, Ext.P3 order was issued on 22.03.2024
under section 148A(d) of the Act after obtaining approval of the concerned
authority determining it to be a fit case to issue a notice under section 148 of
the Act observing that the deposits and withdrawal into and from the account
of the petitioner remains unexplained. As the amount exceeded
Rs.50,00,000/- the limitation was 10 years and hence it was observed that the
time limit had not expired. A notice under section 148 of the Act was also
issued, proposing to reassess the petitioner and directed him to file a return
of income.
5. A statement has been filed by the respondents pointing out that
the authorised representative of the petitioner was heard and the notice was
issued after analysing the contentions. It was found that the withdrawal to the
tune of Rs.1,35,37,590/- was not supported by deposits and the assessee
has not explained the source of deposits, thereby leaving an unexplained
income to that extent. It was also observed that the assessee had not filed
the return of income despite engaging in financial transactions exceeding the
threshold limit for filing a return. It was contended by the respondents that all
procedures contemplated under section 148A of the Act were complied with
and there was no reason to interfere under Article 226 of the Constitution of
India.
6. It is also pleaded by the petitioner that the respondent has
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proceeded on a roving enquiry unsupported by any material to assume that
withdrawal will constitute income. It is further stated that no proper enquiry as
required under section 148A(a) of the Act for issuing the notice was carried
out and therefore the proceedings are totally invalid.
7. Smt. Ammu Charles, the learned counsel for the petitioner
vehemently contended that the show cause notice issued under section
148A(b) as well as the order passed under section 148A(d) ought to be
interfered with, since the requirements under the statute have not been met.
According to the learned counsel, the assessee was never asked to explain
the source of funds and was instead issued with a show cause notice pointing
out the withdrawal. After issuing the show cause notice under section 148A(b)
of the Act referring to certain withdrawals from the bank account, the
respondents erred in deciding to issue notice under section 148 of the Act
alleging unexplained source of funds. According to the petitioner, the first
respondent has erroneously added withdrawals amounting to
Rs.1,35,37,590/- to the deposits for artificially inflating the alleged income
escaped assessment, beyond the threshold limits to initiate proceedings. The
learned Counsel relied upon the judgment of the High Court of Delhi in
Catchy Prop-Build Pvt. Ltd v. Assistant Commissioner of Income Tax
(2022) 448 ITR 671 (Delhi) and Red Chilli International Sales and Others
v. Income-tax Officer and Another (2023) 452 ITR 222 (SC) in support of
their contentions.
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8. Sri. Keerthivas Giri, the learned Standing Counsel for the
respondent on the other hand contended that the order under section 148A(d)
have been issued after considering the objections raised by the petitioner and
therefore grievance if any can be agitated before the assessing officer at the
time of re-assessment.
9. While considering the rival contentions, it needs to be mentioned
that section 148A of the Act was introduced by Finance Act 2021 as a
remedial measure, to protect the rights and interest of the assessee and to
act as pre-check before deciding to issue notice for reassessment. The
provision has subsequently been amended by Finance Act 2024 with effect
from 1st September 2024. Since the present issue relates to the period prior
to 01-09-2024, the provisions of section 148A as in existence prior to that
date applies. The said provision read as follows:
148A. The Assessing Officer shall, before issuing any notice under section
148,
(a) conduct any enquiry, if required, with the prior approval of
specified authority, with respect to the information which suggests
that the income chargeable to tax has escaped assessment,
(b) provide an opportunity of being heard to the assessee, by serving
upon him a notice to show cause within such time, as may be
specified in the notice, being not less than seven days and but not
exceeding thirty days from the date on which such notice is issued,
or such time, as may be extended by him on the basis of an
application in this behalf, as to why a notice under section 148
should not be issued on the basis of information which suggests that
income chargeable to tax has escaped assessment in his case for
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the relevant assessment year and results of enquiry conducted, if
any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in response to
the show-cause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply
of the assessee, whether or not it is a fit case to issue a notice under
section 148, by passing an order, with the prior approval of specified
authority, within one month from the end of the month in which the
reply referred to in clause (c) is received by him, or where no such
reply is furnished, within one month from the end of the month in
which time or extended time allowed to furnish a reply as per clause
(b) expires:
Provided that .... (omitted as not relevant).
10. A reading of the above provision will reveal that the proceedings
under section 148A of the Act is intended to give to the assessee an
opportunity of hearing by issuing a show cause notice prior to the issuance of
a notice under section 148 of the Act. The notice is intended to inform the
assessee that information has been obtained, suggesting that income
chargeable to tax has escaped assessment for the relevant assessment year
and calling upon him to explain why a notice itself should not be issued under
section 148 of the Act. The provision is not intended to be a full fledged
enquiry into every detail but only as a safeguard, granting an opportunity to
the assessee to explain why the proceeding should not travel to the stage of
reassessment. An order under section 148A(d) only opens the stage for
issuing a notice for reassessment. Thereafter, petitioner will have every
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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 of the Act 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.
11. Notwithstanding the above, in the show cause notice, petitioner
was called upon to explain the financial transactions including the withdrawal
of a huge sum of Rs.1,35,37,590/- from his bank account. When the
withdrawal of a certain amount and the financial transactions therein are
asked to be explained, petitioner cannot take shelter on vague replies. When
a withdrawal is questioned, corresponding source deposit ought to be
explained failing which, there is nothing wrong in the competent authority
proceeding to issue notice under section 148 of the Act. At that stage of the
proceeding also petitioner will get an opportunity to explain. In that view of
the matter, the contention on merits raised by the petitioner is also without
any legs to stand.
12. Apart from the above, in the decision in Renu Singh v.
Principal Commissioner of Income Tax and Others (2024) 467 ITR 24
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(SC) the three judge of the Supreme Court had clearly observed that the
notices under section 148 and 148A cannot be made the subject matter of
proceedings under Article 226 as the petitioner has efficacious remedy under
the Income Tax Act itself. In the decision in Anshul Jain v. Principal
Commissioner of Income Tax and Another (2022) 449 ITR 256 (SC) also
similar proposition has been laid down.
In view of the above, I find no merit in this writ petition and it is
dismissed.
Sd/-
BECHU KURIAN THOMAS
JUDGE
vps
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APPENDIX OF WP(C) 29137/2024
PETITIONER'S/S' EXHIBITS
Exhibit P1 TRUE COPY OF THE NOTICE UNDER CLAUSE(b) OF
SECTION 148A OF THE INCOME-TAX ACT,1961 DATED
20.02.2024 SENT BY THE 1ST RESPONDENT TO THE
PETITIONER
Exhibit P2 TRUE COPY OF THE REPLY DATED 13.03.2024
SUBMITTED BY THE PETITIONER BEFORE THE 1ST
RESPONDENT
Exhibit P3 TRUE A COPY OF THE ORDER OF THE 1ST
RESPONDENT DATED 22.03.2024
Exhibit P4 TRUE COPY OF THE NOTICE U/S 148 OF THE
INCOME-TAX ACT,1961DATED 22.03.2024 DIRECTING
THE PETITIONER TO FILE A RETURN OF INCOME
Exhibit P5 TRUE COPY OF THE PETITIONER'S BANK STATEMENT
OF THE SOUTH INDIAN BANK LTD DATED 04.03.2024
Exhibit P6 TRUE ACKNOWLEDGMENT COPY OF IT RETURN FOR THE
SUBJECT FINANCIAL YEAR DATED 02.11.2017 ALONG
WITH THE AUDITED FINANCIALS OF THE COMPANY
Exhibit P7 TRUE LEDGER COPY OF THE PETITIONER'S ACCOUNT
AS APPEARING IN THE BOOKS OF ACCOUNTS OF
PINNACLE MOTOR WORKS PRIVATE LIMITED FOR THE
PERIOD 01.04.2016 TO 31.03.2017
