The Madras High Court has directed the Income Tax department to grant the petitioner a fresh opportunity of hearing to respond to allegations of fraudulent transactions in which the bank account allegedly misused by the bank manager.
Santhana Narayanan Kiruthika, (petitioner) school teacher, assessed under PAN No. BZWPK7177A, alleged that her savings bank account with Indian Bank, Tirupur Branch, was misused by the bank manager. The petitioner alleges that the Bank manager made unauthorized cash deposits and transfers to third parties.
The Petitioner submitted that she filed a criminal complaint in 2021, registered as Crime No. 8 of 2021, which was later taken on file as C.C.No. 257 of 2021 by the Judicial Magistrate No. 2, Tirupur. The Petitioner submitted that despite this, the Income Tax Department initiated proceedings against her alleging unreported income from these transactions.
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The petitioner contended that she was unaware of the fraudulent transactions due to the bank manager’s actions and had sought details of the unauthorized credits through a Right to Information (RTI) request.
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The Petitioner requested a two-month extension to respond to a show-cause notice issued on 10th February 2025 under Section 142(1) of the Income Tax Act. The Assessment Unit passed the impugned assessment order on 4th March 2025, before the statutory deadline of 31st March 2025, without considering her request or detailed reply.
The revenue authorities argued that the petitioner was responsible for the transactions, citing a transfer of Rs. 50 lakhs to an entity named Itally as evidence of her involvement.
The bench comprising Justice Krishnan Ramasamy observed that the criminal complaint against the bank manager was lodged before the initiation of tax proceedings. The court observed that the petitioner was not given sufficient opportunity to present her case.
The court observed that petitioner had recently obtained relevant documents on 10th March 2025 through her RTI request. The court observed that the petitioner’s allegations of account misuse warranted further investigation.
The Court observed that a fresh hearing would allow the Income Tax Department to identify the recipients of the fraudulent transfers and ascertain the truth of the petitioner’s claims.
The court set aside the impugned order, subject to the petitioner paying a cost of Rs. 5,000 to the Adyar Cancer Institute, Chennai. The petitioner was directed to file a reply to the show-cause notice, following which the respondent must provide a personal hearing and pass a fresh order.
The writ petition was disposed of without examining the merits of the case, leaving all contentions open for adjudication.
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