Andhra Pradesh High Court held Income Tax action based on Tax Evasion Petition valid, rejecting malice claims, noting summons under Section 131(1A) issued after due process, approvals, and material review by Investigation Wing authorities under Income Tax Act 1961.
ANDHRA PRADESH: The Andhra Pradesh High Court has ruled that when Income Tax authorities, acting under the statutory provisions of the Income Tax Act, take action based on material contained in a Tax Evasion Petition, such action cannot be regarded as malice in law or a colourable exercise of power.
The Court heard a writ petition challenging a summons issued under Section 131(1A) of the Income Tax Act, 1961, by the Investigation Wing.
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A Division Bench of Justice Ravi Nath Tilhari and Justice Balaji Medamalli observed:
“The authorities have acted on receipt of Tax Evasion Petition and as per the counter of respondent the procedure was followed i.e., allotting the Unique Identification Number and referring the matter to the competent authorities and the Income Tax Officer (Investigation) issued the summons after seeking approval of the competent authority. The authorities, when are acting under the Income Tax Act and based on the material in the form of Tax Evasion Petition received, there is no question of malice in law as well or of any colourable exercise of power by the Income Tax authorities”.
Background
The petitioner challenged a summons dated 14.11.2025 issued under Section 131(1A), which required production of documents including books of account, bank statements and asset details. The petitioner sought clarity on the reasons and scope of the probe and contended that the summons was vague, arbitrary and motivated by mala fide intent.
He alleged the summons was prompted by private parties involved in an ongoing civil dispute and that certain tax officials were acting in concert with those parties to exert pressure. The petitioner also disputed the Income Tax Officer’s jurisdiction to issue the summons.
The respondents maintained the summons followed receipt of an anonymous Tax Evasion Petition and that the Department complied with the Standard Operating Procedure including allotting a Unique Identification Number and obtaining approval from the competent authority.
Court’s findings
The Court first addressed the mala fide allegation, noting the heavy burden on the party asserting mala fide and emphasizing that it must be supported by clear, cogent material. The petition, the bench found, did not establish the necessary foundational facts.
The Court observed that neither the petitioner nor the respondents were parties to the civil suit cited by the petitioner, and the record did not support the alleged nexus between the tax proceedings and that civil dispute.
It further pointed out that the mala fide claim was raised for the first time in the writ petition and had not been taken in replies before the tax authorities, suggesting it was an afterthought. As the Court emphasized: “the burden of establishing mala fides is very heavy on the person who alleges it.”
Considering the nature of the proceedings, the Court found the summons had been issued as part of an investigation prompted by a Tax Evasion Petition and that the authorities followed the statutory procedure. It held that issuance of a summons under Section 131(1A) is a legitimate investigative step aimed at verifying potential tax evasion.
On malice in law, the bench held that exercising statutory power for a lawful purpose cannot be labelled mala fide based on conjecture or unsubstantiated allegations. The Court clarified the distinction between malice in fact and malice in law, noting that malice in law denotes an act done “without lawful excuse,” a circumstance not made out here. It further held that the mere presence of a civil dispute or a remote connection between parties cannot, without substantive material, give rise to an inference of mala fide.
Regarding jurisdiction, the Court observed that an Income Tax Officer (Investigation), when duly authorised and read with Section 132, is competent to issue a summons under Section 131(1A). The Court also noted that no specific plea on lack of jurisdiction had been pleaded in the writ and that raising such a contention for the first time in argument, without factual foundation, was impermissible. The bench warned that accepting the petitioner’s stance would enable unfounded allegations to stall statutory proceedings indefinitely.
Conclusion
The Court concluded that the summons issued under Section 131(1A) was valid and did not suffer from mala fide or jurisdictional infirmity. The writ petition was therefore dismissed.
K. S. Murthy, Senior Advocate, represented the petitioner; Challa Dhanunjay, Assistant Solicitor General, appeared for the respondents.
Case Title: Koduru Picheswara Rao v. Union of India & Ors.
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