Filing of Special Leave Petition invoking Constitutional Provisions is not a 'Proceeding under Income Tax Act': Kerala High Court [Read Order]

The Kerala High Court has held that the filing of a Special Leave Petition, being recourse by the assessee to the provisions of the Constitution, cannot be treated as “proceedings under the Income Tax Act, 1961.”

The Assessee, M/s Udaya Sounds has approached the High Court alleging that their title deeds are retained by the Income Tax department under the color of a search and seizure for the last more than twenty-two years. Alleging that the retention of the said documents is contrary to law, the petitioner has approached these Court seeking directions to return the originals of seven documents of title. Although the assessment proceedings revealed undisclosed income, the quantum of the same was reduced subsequently up to 25% from the originally assessed figure. The petitioner has preferred a Special Leave Petition before the Supreme Court and the same is under consideration of the Court.

Meanwhile, the respondents produced an order of the Principal Commissioner of Income Tax that accorded permission to retain the seized material till 28-02-2022. Upon coming to know of the same, the petitioner amended the plea and a challenge was raised against the Principal Commissioner's order.

The petitioner argued that such an order was never communicated to him and that no proceedings under the Act were pending that warranted continued retention of the documents. She further asserted that the impugned order was issued 17 years after the prescribed date under section 132(8) and its authenticity was doubted due to the absence of the mandatory document identification number (DIN).

The department, on the other side, contended that the assessment proceedings had not been finalised yet due to the petitioner's SLP pending before the Supreme Court.

Justice Bechu Kurian Thomas held that the statute confers authority to grant authorization for retaining the documents beyond the order of assessment only till the proceedings under the Act are completed.

“The word “proceedings under this Act” is a clear indication that the power of the officers empowered to grant authorization is available only till the statutory proceedings are completed. Once the statutory proceedings are completed, the authorities under the statute are denuded of the power to grant further authorization,” the Court said.

Holding that recourse by the assessee to the provisions of the Constitution by filing a special leave petition before the Supreme Court cannot be regarded as 'a proceeding under this Act, the bench held that “The word proceeding is a term of wide importance and it includes the original proceedings as well as the appellate proceedings as it is trite law that an appeal is a continuation of the original proceedings (see the decision in State of Tamil Nadu and Others v. S. Subramaniam [(1996) 7 SCC 509]. In the context in which the word ‘proceedings’ appear in section 132(8), it can be held to be used in a very comprehensive sense to include even revisional proceedings, provided the same is invoked under the statutory provisions of the Income Tax Act. Thus an assessment proceeding, appellate proceeding, and even revisional proceeding are all “proceedings under this Act.”

UDAYA SOUNDS PULLEPPADY vs THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL REVENUE BUILDING

CITATION: 2022 TAXSCAN (HC) 231

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.