HABEEB vs. THE INCOME TAX OFFICER

WP(C)/21046/2022HC KeralaKLHC01043308202209 November 2022Bench: HONOURABLE MR. JUSTICE GOPINATH P.5 pages

AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala quashed the assessment order (Ext.P5) solely on the ground that an unexplained cash deposit of Rs.13,13,200/- had been mistakenly treated as Rs.13,13,20,000/-. The Court clarified that it had not found any other mistake in the assessment order. The reasoning was based on the admitted factual error by the Income Tax Department, corroborated by the bank's letter confirming the correct deposit amount. The ratio decidendi is that an assessment order based on a demonstrably incorrect factual premise, especially concerning the quantum of a deposit, can be set aside. The operative direction was to quash the impugned order and permit the assessing officer to complete the assessment afresh in accordance with law, with notice to the petitioner. No other issue was expressly left undecided.

What were the facts?

The petitioner, Habeeb, approached the High Court of Kerala aggrieved by an assessment order for Assessment Year 2015-2016. The Assessing Officer had taxed an amount of Rs.13,13,20,000/- as unexplained cash deposits in the petitioner's savings bank account. The petitioner contended that the actual amount of cash deposit was Rs.13,13,200/- and not Rs.13,13,20,000/-. The Income Tax Department, through its Standing Counsel, filed a statement acknowledging that the information regarding the cash deposits transmitted by the bank was incorrect. The Branch Manager of the State Bank of India, Paipra ADB, in a letter dated July 12, 2022, admitted that the total cash deposits during the financial year 2014-15 were Rs.13,13,200/-, not Rs.13,13,20,000/-, due to an error in the Annual Information Return filed by the bank.

What were the issues?

1. Whether the assessment order, which treated an alleged cash deposit of Rs.13,13,20,000/- as unexplained, is vitiated by a factual error regarding the quantum of deposit, turning on the accuracy of information provided by a bank to the Income Tax Department. Assessee's Contention: The petitioner argued that the assessed amount of Rs.13,13,20,000/- as unexplained cash deposit was factually incorrect, and the actual deposit was Rs.13,13,200/-. The petitioner relied on the bank's subsequent admission of error. Revenue's Contention: The revenue, through its Standing Counsel, acknowledged that the information regarding the cash deposits transmitted by the bank was incorrect. The revenue admitted that the Branch Manager of the State Bank of India had confirmed the actual deposit amount to be Rs.13,13,200/-.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. WEDNESDAY, THE 9TH DAY OF NOVEMBER 2022 / 18TH KARTHIKA, 1944 WP(C) NO. 21046 OF 2022 PETITIONER: HABEEB AGED 41 YEARS EDAPPARAYIL PAIPRA PANCHAYAT PEZHAKKAPPILLY P.O, MUVATTUPUZHA ERNAKULAM- 686674 KERALA. BY ADVS. DIVYA RAVINDRAN NISHA JOHN RESPONDENTS: 1 THE INCOME TAX OFFICER WARD 1 & TPS THODUPUZHA MAHIMA TOWERS, TEMPLE ROAD THODUPUZHA KERALA-685584. 2 THE NATIONAL FACELESS ASSESSMENT CENTRE, MAYUR BHAWAN, CONNAUGHT LANE, BARAKHAMBA ROAD, NEW DELHI-110 001, REPRESENTED BY THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (NAFAC). 3 THE ADDITIONAL/JOINT/DEPUTY COMMISSIONER OF INCOME INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTER, INCOME TAX DEPARTMENT MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR E-RAMP, JAWAHARLAL STADIUM NEW DELHI-110003 4 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, CENTRAL REVENUE BUILDING, I.S. PRESS ROAD, KOCHI-682 018. ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C) No. 21046 of 2022 2 JUDGMENT Dated this the 09th day of November, 2022 The petitioner has approached this Court being aggrieved by the fact that while completing the assessment against the petitioner for the assessment year 2015-2016 vide Ext.P5 order, the assessing officer proceeded to tax an amount of Rs.13,13,20,000/- (Rupees Thirteen Crores thirteen lakhs and twenty thousand only) as unexplained cash deposits in the savings bank account of the petitioner. It is submitted that the amount of the cash deposit is actually Rs.13,13,200/- and not Rs.13,13,20000/-. It is submitted that a demand has been raised by the petitioner following Ext.P5 order treating the unexplained cash deposit as Rs.13,13,20,000/-. 2. The learned Standing Counsel has filed a statement. In paragraph 4 it is stated as follows. “4.However, now it turns out that the information

W.P.(C) No. 21046 of 2022 3 regarding the cash deposits made by the petitioner in his savings bank account with State Bank of India, Paipra ADB transmitted by the bank to the Income Tax Department as Rs. 13,13,20,000/- is in correct. The Branch Manager of State Bank of India, Paipra ADB by his letter dated 12.07.2022 in response to a letter dated 11.07.2022 of Income Tax Officer, Ward 1, Thodupuzha has admitted that the total cash deposits in the savings bank account of the petitioner with his bank during the financial year 2014-15 was only Rs.1313200/- instead of Rs.13,13,20,000/- wrongly reported in the Annual Information Return filed by the Bank before the Income Tax Authorities. It has also furnished the copy of the statement of accounts for the relevant period in support of this” 3. Having regard to the above, Ext.P5 order of assessment is quashed, making it clear that the assessment order is being quashed only on account of the fact that an unexplained cash deposit of Rs.13,13,200/- has been mistakenly treated as unexplained cash deposit of Rs.13,13,20,000/-. It is clarified that this Court has not found any other mistake in Ext.P5 order of assessment. It will be open to the

W.P.(C) No. 21046 of 2022 4 assessing officer to complete the assessment afresh in accordance with law, with notice to the petitioner. The Writ Petition is disposed of as above. Sd/- GOPINATH P. JUDGE RMV

W.P.(C) No. 21046 of 2022 5 APPENDIX OF WP(C) 21046/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT UNDER SECTION 148 OF THE ACT, DATED 31.3.2021. Exhibit P2 TRUE COPY OF THE NOTICE DATED 16.7.2021, ISSUED BY THE 1ST RESPONDENT UNDER SECTION 142(1). Exhibit P3 TRUE COPY OF THE NOTICE ISSUED BY THE 3RD RESPONDENT UNDER SECTION 142(1) DATED 14.2.2022. Exhibit P4 TRUE COPY OF THE, DRAFT ASSESSMENT ORDER DATED 8.3.2022, ISSUED BY THE 3RD RESPONDENT. Exhibit P5 TRUE COPY OF THE ASSESSMENT ORDER DATED 20.3.2022 ISSUED BY THE 3RD RESPONDENT UNDER SECTION 147 R.W.S 144. Exhibit P6 TRUE COPY OF THE BANK ACCOUNT WITH THE SBI BANK, FROM 7/5/2014 TO 17/4/2015 PAIPRA BRANCH, BEARING A/C NO. 57043747722. TRUE COPY P.A.TO JUDGE

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