KALLIYATH STEEL TRADERS V. DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION)

WP(C)/5400/2017

AI Insights

The case involves Kalliyath Steel Traders, represented by its partner Dirsha Kalliyath Mohammed, who filed a writ petition against various officials of the Income Tax Department and banks due to the freezing of their accounts. The freezing was ordered by the Authorised Officer under Section 132(3) of the Income Tax Act, 1961, following a search at the petitioners' premises. The petitioners argued that the freezing of their accounts severely impacted their day-to-day operations. The court, after hearing the submissions, decided not to interfere with the merits of the case but directed that the matter be considered expeditiously by the Authorised Officer.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 699715 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 20-02-2017
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: K M V PANDALAI; JOSE JOSEPH; M JITHESH MENON
• Assessee Lawyers: V V ASOKAN; R JAIKRISHNA
• Keywords: Authorized Officer; Freezing of Accounts; Income Tax investigation; Prohibitory order; Expeditious Consideration
• Section: 132(4); 132(2); 132(3)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 20TH DAY OF FEBRUARY 2017/1ST PHALGUNA, 1938 WP(C).No. 5400 of 2017 (Y) --------------------------- PETITIONER(S): ------------- KALLIYATH STEEL TRADERS, MAMANGALAM, ERNAKULAM, REPRESENTED BY ITS PARTNER - DIRSHA KALLIYATH MOHAMMED BY ADVS.SRI.V.V.ASOKAN (SR.) SRI.R.JAIKRISHNA RESPONDENT(S): -------------- 1. DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION), OFFICE OF THE JOINT DIRECTOR OF INCOME TAX (INVESTIGATION), 3RD FLOOR, ARYA BHANGAI PINNACLE BUILDING, SA ROAD, COCHIN - 682 020.' 2. JOINT DIRECTOR OF INCOME TAX (INVESTIGATION), 3RD FLOOR, ARYA BHANGAI PINNACLE BUILDING, SA ROAD, COCHIN - 682 020. 3. INCOME TAX OFFICER, CORPORATE CIRCLE 1(2), KOCHI, CENTRE REVENUE BUILDING, ERNAKULAM-682 018. 4. TAX RECOVERY OFFICER, OFFICE OF TAX RECOVERY OFFICER (CORPORATE), INCOME TAX DEPARTMENT, 3RD FLOOR, ARYA BHANGAI PINNACLE BUILDING, SA ROAD, COCHIN - 682 020. 5. FEDERAL BANK, BROADWAY BRANCH, ERNAKULAM - 682 031, REPRESENTED BY ITS BRANCH MANAGER. 6. STATE BANK OF INDIA, VYTTILA BRANCH, ERNAKULAM - 682 019, REPRESENTED BY ITS BRANCH MANAGER. 7. DEPUTY DIRECTOR OF INCOME TAX (INV), OFFICE OF THE DDIT (INV), KOZHIKODE, 8TH FLOOR, CR BUILDING, MANANCHIRA, KOZHIKODE - 673 001. R1-R4 & R7 BY SRI.K.M.V.PANDALAI, SC SRI.JOSE JOSEPH, SC R6 BY SRI.M.JITHESH MENON THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20-02-2017, ALONG WITH WPC. 5454/2017 AND CONNECTED CASES THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: msv/ WP(C).No. 5400 of 2017 (Y) ---------------------------- APPENDIX PETITIONER(S) EXHIBITS: ------------------------ EXT.P1 TRUE COPY OF THE PROHIBITORY ORDER ISSUED BY THE 1ST RESPONDENT TO THE 5TH RESPONDENT. EXT.P1(a): TRUE COPY OF THE PROHIBITORY ORDER ISSUED BY THE 1ST RESPONDENT TO THE 6TH RESPONDENT. EXT.P2 TRUE COPY OF THE LETTER GIVEN BY THE 5TH RESPONDENT TO THE MANAGING PARTNER, KALLIYATH STEEL TRADERS. EXT.P3 COPY OF THE LETTER ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT. EXT.P4 COPY OF THE LETTER ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT. EXT.P5 COPY OF THE REPRESENTATION FILED BEFORE THE 7TH RESPONDENT. EXT.P5(a) TRUE COPY OF THE REPRESENTATION FILED BEFORE THE 7TH RESPONDENT. RESPONDENT(S)' EXHIBITS ----------------------- NIL //TRUE COPY// P.S.TO JUDGE Msv/ K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) Nos.5400 of 2017 Y, 5454 of 2017 F, 5469 of 2017 G, 5511 of 2017 L & 5521 of 2017 M - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 20th day of February, 2017 J U D G M E N T After having heard the matter for a considerable time, this Court is of the opinion that it may not be proper for this Court to preempt the consideration by the Authorised Officer, who had conducted a search in the site of the petitioners and had passed orders freezing the accounts of the various Directors and concerns. 2. The petitioners are aggrieved by the fact that the accounts have been frozen and they are unable to carry on their day-to-day operations. Even the Cash Credit and Overdraft facilities have been frozen by the Authorised Officer under Section 132(3) of the Income Tax Act, 1961; WPC.No.5400/2017 & connected cases : 2 : is the submission. 3. This Court after hearing the parties are of the opinion that it may not be proper for this Court to make any observation on merits since it would affect the contentions of the petitioners and pre-empt the Authorised Officer. In such circumstances, considering the grievances of the petitioners with respect to the operations having come to a standstill, it is thought fit that this Court direct expeditious consideration of the issue by the Authorised Officer, to which all the parties are agreeable. 4. It is also submitted by the learned Standing Counsel appearing for the Department that since the petitioner in W.P(C) No.5511/2017 who is at the helm of the affairs of all the concerns was hospitalised and the son had to be allowed to accompany the father, to the hospital; WPC.No.5400/2017 & connected cases : 3 : no statement could be taken under Section 132(4) at the time of search. 5. The learned Senior Counsel appearing for the petitioner and the learned Counsel appearing for the other petitioners would undertake that they would present themselves on today if necessary, before the Authorised Officer. The petitioners shall appear before the Authorised Officer within three days. The petitioners authorised representative shall appear tomorrow before the Authorised Officer who shall be issued with notice, by the Authorised Officer, as to the date on which the appearance of the petitioners is to be made, within the three days. The Authorised Officer shall also get personal acknowledgment of such notice served on the authorised representative of the petitioners. Statement shall be taken WPC.No.5400/2017 & connected cases : 4 : under Section 132(2) and the petitioner shall also be permitted to produce documents and material to substantiate their contentions and the Authorised Officer shall consider the issue (release of the accounts) expeditiously, at least within a period of one week from the date of appearance. Writ petitions are disposed of. No costs. Sd/- (K. VINOD CHANDRAN, JUDGE) jma //true copy// P.A to Judge "