In a recent decision, a Division bench of the Kerala High Court held that, no proceedings under Section 148 of the Income Tax Act could be continued against the petitioner for deposits of amounts in the bank accounts of third parties.
The appeal filed by K. Abdul Majeed, represented by advocates K J Abraham Premjit Nagendran and Nikhil John, challenged orders passed under Section 148(A)(d) of the Income Tax Act for assessment years 2016-2017 and 2019-2020.
Section 148 grants an Assessing Officer the power to either assess or reassess any taxable income that may have gone under the radar, and has not been assessed as per the stipulated guidelines of the Income Tax Act, 1961.
The grounds of the appeal were centered on the appellant not being heard in person before the aforementioned orders (Exts.P6 and P7) were passed.
The single judge had previously quashed these orders and remanded the matter back to the respondent for a fresh hearing. However, in the appeal, it was argued that the orders were based on deposits in bank accounts of third parties, not directly linked to the appellant.
The Kerala High Court, upon reviewing the case, noted that the deposits in question were treated as unexplained investments of other individuals under Section 69 of the Income Tax Act. As such, the court found it unjustified to continue proceedings against the appellant based on these deposits.
Consequently, the Division Bench allowed the writ appeal and unconditionally quashed the impugned orders (Exts.P6 and P7) along with consequential orders (Exts.P8 and P9).
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