PAREED ABDUL SALAM, vs. ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME-TAX OFFICER,

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WP(C)/30209/2022HC KeralaKLHC01064228202211 January 2024Bench: HONOURABLE MR. JUSTICE D. K. SINGH5 pages
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What did the High Court hold?

The High Court held that the petitioner has a statutory remedy of appeal against the assessment and penalty orders under the Income Tax Act, 1961. Therefore, the Court found no ground to interfere with the assessment order or the penalty order directly through a writ petition. The writ petition challenging these orders was dismissed. However, considering the petitioner's prayer for the disposal of his rectification petition (Exhibit P-6) filed under Section 254 of the IT Act, 1961, the Court issued a direction to the respondents (1st and 2nd respondents) to consider and pass an appropriate order on the said petition expeditiously, preferably within a period of two months. The ratio decidendi is that statutory remedies must be exhausted before approaching the High Court under its writ jurisdiction, but procedural applications filed within the statutory framework can be directed to be considered.

What were the facts?

The petitioner, Pareed Abdul Salam, filed a writ petition challenging a show cause notice and assessment order under the Income Tax Act, 1961. His case was selected under the 'AIMS' category. The petitioner had deposited Rs. 1,27,97,300/- in cash across accounts in Indusind Bank Limited and Punjab National Bank, which was not explained in his return. Consequently, the case was re-opened under Section 148 of the Act. Despite several notices under Section 142(1), the petitioner failed to provide substantiation for the cash deposits. An assessment order was finalized, adding these transactions as income from other sources under Section 69A read with Section 115BBE, resulting in a total assessed income of Rs. 1,28,19,600/-. Penalty proceedings under Section 271 AAC(1) were also initiated.

What were the issues?

1. Whether the High Court should entertain a writ petition challenging an assessment order and penalty order when the petitioner has a statutory remedy of appeal under the Income Tax Act, 1961? Assessee's Contention: The petitioner, while challenging the assessment and penalty orders, also sought a direction for the expeditious disposal of a rectification petition filed under Section 254 of the IT Act, 1961 (Exhibit P-6). Revenue's Contention: The revenue did not explicitly record any contentions in the judgment regarding the maintainability of the writ petition or the rectification application. However, the court's observation implies that the statutory appeal remedy was available and preferred.

Which sections of the Income-tax Act were involved?

Section 148,Section 142(1),Section 69A,Section 115BBE,Section 271 AAC(1),Section 254

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 11TH DAY OF JANUARY 2024 / 21ST POUSHA, 1945 WP(C) NO. 30209 OF 2022 PETITIONER: PAREED ABDUL SALAM, CHELAPEERUPARAMBIL HOUSE, ARUVITHURA P. O., ERATTUPETTA, KOTTAYAM, PIN – 686121. BY ADVS. SRI. A. KUMAR SRI. P. J. ANIL KUMAR, SC, KPHCC SMT. G. MINI(1748) SRI. P. S. SREE PRASAD SRI. JOB ABRAHAM RESPONDENTS: 1 ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX / INCOME-TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI, PIN – 110001. 2 THE INCOME TAX OFFICER-1, KOTTAYAM, PIN – 686001. 3 INDUS IND BANK LIMITED, FIRST FLOOR, JAIN TOWER-II, NEAR RAILWAY OVER BRIDGE, NH 17 BYPASS, EDAPPALLY, KOCHI, PIN – 680024. BY ADV. SRI. JOSE JOSEPH – SC - INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 30209 OF 2022 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.30209 of 2022 ------------------------- Dated this the 11th day of January, 2024 JUDGMENT 1. The present writ petition has been filed impugning the Show Cause Notice and assessment order in Exhibits P-1 and P-2 respectively under the provisions of the Income Tax Act, 1961 (hereinafter referred to as the IT Act,1961 for short). The petitioner’s case was selected under ‘AIMS’ (Actionable Information Management System) category of cases in ITBA (Income Tax Business Application). On verification of the data, it was noticed that the petitioner had deposited Rs. 1,27,97,300/- in cash in one account maintained in Indusind Bank Limited and in two accounts maintained in Punjab National Bank. In the return filed by the petitioner, the petitioner did not explain the cash deposit of Rs. 1,27,97,300/- and, therefore, the case was re-opened by issuing notice under Section 148 of the IT Act,1961 on 29.03.2021. The petitioner was issued several notices under Section 142 (1) of the IT Act,1961. However, the petitioner did not filed any reply to substantiate the cash deposit of the said amount of Rs. 1,27,97,300/-. The petitioner had also made payment of Rs. 22,300/- to New Delhi UP

WP(C) NO. 30209 OF 2022 3 Road Carrier Private Limited. As the petitioner did not come forward in pursuance to several notices, the assessment order came to be finalised adding the said transactions as income from other sources under Section 69A read with Section 115BBE of the IT Act, 1961. The petitioner’s total assessed income was Rs. 1,28,19,600/- on which the tax, interest and penalty has been demanded. The penalty proceedings have been initiated and penalty order in Exhibit P-13 has been passed under Section 271 AAC (1) of the Act, 1961 dated 23.09.2022. 2. The petitioner has remedy of filing appeal against the assessment and penalty order under the provisions of the IT Act, 1961 and this Court, therefore finds no ground to interfere with the assessment order or penalty order. 3. At this stage, the learned Counsel for the petitioner and submitted that the petitioner has moved application under Section 254 of the IT Act, 1961 for rectification of the assessment order in Exhibit P- 6 and a direction may be issued to the assessing authority to pass appropriate order on Exhibit P-6 rectification petition/application. 4. Considering the said prayer, the writ petition so far as challenge to the assessment order and penalty order is concerned, it is dismissed with liberty to the petitioner to approach the appellate authority

WP(C) NO. 30209 OF 2022 4 against the said order. However, a direction is issued to the 1st and 2nd respondents, as the case may be, to consider and pass appropriate order in Exhibit P-6 rectification petition/application filed by the petitioner under Section 254 of the IT Act, 1961 expeditiously, preferably within a period of two months. Sd/- DINESH KUMAR SINGH JUDGE Svn

WP(C) NO. 30209 OF 2022 5 APPENDIX OF WP(C) 30209/2022 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 16.03.2022 FOR ASSESSMENT YEAR 2017-18 EXHIBIT P2 TRUE COPY OF THE ASSESSMENT ORDER DATED 29.03.2022 EXHIBIT P3 TRUE COPY OF THE BANK STATEMENT OF THE INDUS IND BANK FOR THE PERIOD 20/11/2014 TO 01/04/2017 EXHIBIT P4 TRUE COPY OF THE BANK STATEMENT OF THE PUNJAB NATIONAL BANK EXHIBIT P5 TRUE COPY OF THE CERTIFICATE ISSUED BY INDUS IND BANK DATED 06.09.2022 EXHIBIT P6 TRUE COPY OF THE RECTIFICATION APPLICATION DATED 12.09.2022 EXHIBIT P7 TRUE COPY OF THE RECTIFICATION APPLICATION DATED 12.09.2022 EXHIBIT P8 TRUE COPY OF THE NOTICE DATED 03.08.2022 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 271AAC(1) EXHIBIT P9 TRUE COPY OF THE NOTICE DATED 03.08.2022 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 270A EXHIBIT P10 TRUE COPY OF THE REPLY FILED BY THE PETITIONER DATED: NIL EXHIBIT P11 TRUE COPY OF THE ORDER DATED 20/09/2022 ISSUED BY THE 2ND RESPONDENT EXHIBIT P12 TRUE COPY OF THE INTERIM ORDER DATED 23/09/2022 OF THIS HON’BLE COURT EXHIBIT P13 TRUE COPY OF THE PENALTY ORDER DATED 23/09/2022

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