2024 (3) TMI 1411 - HC - Income Tax

Reopening of assessment u/s 147 - as argued procedure contemplated by Section 148A as not been followed before issuing the impugned notices - petitioner said that the reference to Section 132A is only to get over the formalities contemplated by Section 148A and the facts and circumstances of the case indicate that Section 132A is not applicable - HELD THAT - It is clear from the judgment of this Court in R. Ravirajan and Others 2023 (9) TMI 1557 - KERALA HIGH COURT that when an item or cash as in this case is produced before a Criminal Court then it is not open to the Income Tax Department to issue a notice under Section 132A to the Court in question. Once the item is produced before the Court in connection with any criminal case registered by the Police or any other law enforcement agency an application for release of the same or for giving custody of the same to the Income Tax Department can only be in accordance with the provisions of the Code of Criminal Procedure and specifically Section 451 Cr.P.C. thereof. That does not take away the fact that the department had initiated proceedings u/s 132A to requisition the amount from the Station House Officer Nilambur Police Station. Therefore no option but to hold that this is a case covered by the 1st proviso to Section 148A. Therefore the procedure contemplated by the provisions of Section 148A need not be complied with before issuing notices under Section 148 of the 1961 Act. No other point has been raised.

Summary

The petitioner challenged notices issued under Section 148 of the Income-tax Act, 1961 for the assessment years 2020-2021 to 2023-2024, alleging that the procedure under Section 148A of the Act was not followed. The petitioner argued that the references to Section 132A of the Act in the notices were merely to circumvent the requirements of Section 148A, as the facts did not support the application of Section 132A. The petitioner contended that the cash seized by the police was not requisitioned under Section 132A and, therefore, the notices under Section 148 were illegal for not complying with the procedure under Section 148A.The petitioner's counsel argued that Section 148A mandates an inquiry and an opportunity for the assessee before issuing a notice under Section 148A, except in cases where a search is initiated under Section 132 or assets are requisitioned under Section 132A. The counsel highlighted that the cash seized from individuals was not requisitioned under Section 132A but was released by the court following a petition. Therefore, the petitioner asserted that the notices under Section 148 were unlawful for not adhering to the Section 148A procedure.In response, the Income Tax Department contended that a requisition under Section 132A was issued to the police station regarding the seized amounts, and an application under Section 451 Cr.P.C. was filed to release the cash. The department argued that the provisions of Section 132A were invoked in this case, despite the court's involvement, as per the judgment in R. Ravirajan and Others v. State of Kerala. The department maintained that the application under Section 451 Cr.P.C. did not invalidate the notices under Section 148, as the requisition under Section 132A was made in the circumstances of the case.The Court found that while the notices under Section 148 were issued without following the Section 148A procedure, they were not illegal in this case. The Court held that the situation fell under the 1st proviso to Section 148A, which exempts cases covered by Section 132A from the Section 148A requirements. The Court rejected the petitioner's argument that the filing of an application under Section 451 Cr.P.C. negated the applicability of Section 132A, emphasizing that the department had initiated proceedings under Section 132A to requisition the cash. The Court concluded that the case was indeed covered by the 1st proviso to Section 148A, and thus, the Section 148A procedure was not mandatory before issuing the notices under Section 148. Consequently, the Court dismissed the writ petition.In summary, the Court analyzed whether the notices under Section 148 of the Income-tax Act, 1961 were valid despite not following the procedure under Section 148A. The Court determined that the case fell under the exception provided in the 1st proviso to Section 148A, which allowed for the issuance of notices under Section 148 without complying with the Section 148A requirements in cases covered by Section 132A. The Court's decision was based on the specific circumstances of the case and the application of relevant legal provisions and precedents, ultimately leading to the dismissal of the petitioner's challenge to the notices.