A division bench of the Kerala High Court dismissed the writ petition on the availability of a statutory remedy for the issue of unexplained cash deposit under section 69 A of the Income Tax Act, 1961.
The writ petitioner, Sayed Muhammed M challenged the assessment order passed under Section 147 r/w section 144 and 144B of the Income Tax Act (the Act) and the appellate order passed under Section 250 of the IT Act. The appellant is a businessman and an income tax assessee. He did not file the return of his income for the assessment year 2017-2018. The assessing authority noted several transactions of high value in the appellant’s account, including cash deposits of crores of rupees during the aforementioned period.
The assessing authority issued a notice under Section 148 of the Act to the appellant on 26/3/2021. The assessing authority issued a notice under Section 142(1) of the Act with a detailed questionnaire. There was no response to the said notice also. Thereafter, the assessing authority issued a draft assessment order along with a show cause notice alleging that a cash deposit of Rs.1,15,03,870/-is seen in the account of the appellant. The appellant offered an explanation that he was providing tour operator services, and to book air tickets on behalf of his clients, he used his credit card, which his customers reimbursed. Hence, the amount he spent was not personal but incurred for business purposes.
After considering the explanation offered, the assessing authority finalised the assessment order, finding an unexplained cash deposit under Section 69A of the IT Act for an amount of Rs.1,15,03,870/- and profit from business and profession as Rs.2,44,008/-. A demand notice under Section 156 of the IT Act was issued to the appellant for an amount of Rs.1,91,95,312/-.
The appellant challenged the assessment order before the appellate authority. However, the appeal was dismissed. The Single Judge dismissed the writ petition, relegating the appellant to the statutory remedy of appeal before the Income Tax Appellate Tribunal ( ITAT ).
Sri. Jojo C. A, the counsel appeared for the appellant and Sri. P.R. Ajithkumar, the Standing Counsel appeared for the respondents.
The appellant has chosen to challenge the assessment order before the First Appellate Authority at the first instance. The First Appellate Authority, on merits, dismissed the appeal. A further appeal is provided against the order before the Income Tax Appellate Tribunal. The appellant has rushed to court without exhausting the statutory appellate remedy.
The court comprising Dr Justice A K Jayasankaran Nambiar & Dr Justice Kauser Edappagath viewed that the appellant challenged orders mainly on factual grounds, which is in dispute. The disputed question of fact cannot be adjudicated in the writ petition. Further observed that the Single Judge rightly held that the remedy open to the appellant is to approach the Tribunal.
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