The Allahabad High Court has quashed the notice issued under Section 131(1A) of the Income Tax Act after conclusion Of income tax search and seizure.
The bench of Justice Rajan Roy and Justice Om Prakash Shukla has observed that Adarsh Kumar who was Authorized Officer for exercising power under Section 132 (1) could not have issued the notice under sub-Section (1A) of Section 131 of the Act, 1961 post-search operations.
The two writ petitions were filed challenging the Warrant of Authorization under Section 132 of the Income Tax Act, 1961 and the validity of search proceedings conducted at the premise of the petitioners based thereon under Section 132 of the Income Tax Act, 1961 has been challenged.
Both the petitioners/assessees have been filing their income tax returns for the last more than eighteen years and it has never been the case that any notices were issued to which they did not respond or for that matter any summons for producing any document or information or for appearance may have been issued to the petitioners but they did not respond. They claim to be filing their returns regularly and disclosing their income.
The petitioners contended that in view of this retrospective amendment, the petitioners were liable to pay the tax on the transaction but on account of the search operation conducted by the opposite parties on 12.12.2024, in view of the second proviso to Section 139 (8A) of the Act, 1961, they were statutorily prohibited from doing so. The said proviso provides that a person shall not be eligible to furnish an updated return under the sub-Section where (a) a search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A in the case of such person. He also invited our attention to the consequences of initiation of search operations.
Adarsh Kumar who had issued the notice under Section 131(1A) dated 27.01.2025, he could not have done so as the action envisaged under clauses (i) to (v) of sub-Section (1) of Section 132 had already been taken prior to issuance of this notice and sub-Section (1A) of Section 131 prohibited any action by him after the stage of clauses (i) to (v) of sub-Section (1) of Section 132 had been crossed.
The petitioner contended that Sri Adarsh Kumar who was Authorized Officer under Section 132 was not the assessing officer of the petitioners nor had assessment proceedings started, therefore, he could not have issued such notice under Section 131 of the Act, 1961.
The department contended that the Authorized Officer also happened to the Deputy Director of investigation as under sub-Section (1A) and as Deputy Director (Investigation) he was competent to issue such notice under Section 131, therefore, there was no illegality.
The court refused to accept the explanation offered in by the department as it will render the conditions imposed upon the authorized officer under Section 131 (1A) otiose and also leave scope for circumvention of conditions and its misuse. Sri Adarsh Kumar being the Authorized Officer and he not being the assessing officer of the petitioners nor the assessment proceedings having started, he could have issued such notice only prior to action under clauses (i) to (v) of sub-Section (1) of Section 132 having been taken and not after that. The Revenue cannot be given the benefit of the fact that he also happened to be Deputy Director, therefore, he could have issued the notice.
The court quashed the notice issued under Section 131(1A) of the Income Tax Act.
Case Details
Case Title: Pramod Swarup Agarwal Versus Prin. Director Of Income Tax (Inv.) Lko.
Case No.: WRIT TAX No. – 30 of 2025
Date: 03.06.2025
Counsel For Petitioner: Anupam Mishra,Shalabh Singh
Counsel For Respondent: Neerav Chitravanshi, A.S.G.I., Dr. Ravi Kumar Mishra
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