No Compliance of S. 148A required prior to Issuance of Reassessment Notices u/s 148 of Income Tax Act: Kerala HC [Read Order]

The Kerala High Court has ruled that the requirements outlined in Section 148A of the Income Tax Act, 1961, do not need to be fulfilled prior to issuing notices under Section 148 of the Income Tax Act, 1961.

The Single Bench of Justice Gopinath P bench noted that when an item or cash, such as in this instance, is presented before a Criminal Court, the Income Tax Department cannot issue a notice under Section 132A of the Income Tax Act, 1961, to that specific Court. Instead, if the item is part of a criminal case registered by the Police or another law enforcement agency and is brought before the Court, any application regarding its release or custody by the Income Tax Department must adhere to the provisions of the Code of Criminal Procedure, specifically Section 451 Cr.P.C.

The petitioner/assessee challenged the notices issued under Section 148 of the Income-tax Act, 1961, for the assessment years 2020–2021, 2023–2024, arguing that the procedure outlined in Section 148A was not followed.

Advocate Bejoy Joseph P.J. appeared for the petitioner whereas the Respondent was represented by Standing Counsel Navaneeth N. Nath.

The petitioner claimed that the references to Section 132A in the notices were merely attempts to bypass the formalities of Section 148A, which, according to the petitioner, were not applicable given the circumstances of the case.

The petitioner asserted that Section 148A mandates an inquiry and provides an opportunity to the assessee before issuing a notice, except in cases where a search is initiated under Section 132 or assets are requisitioned under Section 132A post-April 1, 2021.

The petitioner further contended that cash amounts seized from Muhammed Salih and Sabeer Ali were produced before the Judicial First Class Magistrate Court in connection with Crime No. 100 of 2022, registered by the police. The Income-tax Department applied under Section 451 Cr.P.C. for the release of the money, but the Court ruled in favor of releasing the money to the petitioners and others.

Therefore, the petitioner argued that since the money was never requisitioned as per Section 132A, any notice under Section 148 without following the procedure of Section 148A should be deemed illegal and unsustainable.

The Income Tax Department, however, argued that it had issued a requisition under Section 132A to the Station House Officer upon learning of the seized amounts. Upon discovering that the amounts were with the Court, the Income Tax Department filed an application under Section 451 Cr.P.C.

The Court noted that Section 132A cannot be applied to requisition items in the custody of a Court, as per a previous judgment. Consequently, the court held that the procedure under Section 148A need not be followed before issuing notices under Section 148 in this case.

To Read the full text of the Order CLICK HERE

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