Andhra Pradesh High Court – Amravati
Between vs And on 18 March, 2026
HIGH COURT OF ANDHRA PRADESH
****
WRIT PETITION No. 841 of 2026
Between:
Koduru Picheswara Rao
.....PETITIONER
AND
Union of India, Rep. by its Secretary,
Ministry of Finance, Department of Revenue,
North Block, New Delhi and 6 others
.....RESPONDENTS
DATE OF JUDGMENT RESERVED : 27.02.2026
DATE OF JUDGMENT PRONOUNCED : 18.03.2026
DATE OF JUDGMENT UPLOADED : 18.03.2026
SUBMITTED FOR APPROVAL:
THE HON'BLE SRI JUSTICE RAVI NATH TILHARI
&
THE HON'BLE SRI JUSTICE BALAJI MEDAMALLI
1. Whether Reporters of Local newspapers may Yes/No
be allowed to see the Judgments?
2. Whether the copies of judgment may be Yes/No
marked to Law Reporters/Journals
3. Whether Your Lordships wish to see the fair Yes/No
copy of the Judgment?
_______________________
RAVI NATH TILHARI, J
____________________
BALAJI MEDAMALLI, J
RNT, J & BM, J
2 WP No.841 of 2026
* THE HON'BLE SRI JUSTICE RAVI NATH TILHARI
&
THE HON'BLE SRI JUSTICE BALAJI MEDAMALLI
+ WRIT PETITION No. 841 of 2026
% 18.03.2026
Between:
Koduru Picheswara Rao
.....PETITIONER
AND
Union of India, Rep. by its Secretary,
Ministry of Finance, Department of Revenue,
North Block, New Delhi and 6 others
.....RESPONDENTS
! Counsel for the Petitioner : Sri K. S. Murthy, Senior Counsel,
Assisted by Sri K. Guru Raj
Counsel for the Respondents 1 to 5: Sri Challa Dhanunjay, Asst.Solicitor General
Sri Y. N. Vivekananda, Standing Counsel
Counsel for respondent No.6 : Sri Praveen Kumar Reddy, SC for Income Tax
Counsel for respondent No.7 : Sri Anup Koushik Karavadi, SC for Income Tax
< Gist :
> Head Note:
? Cases Referred:
1. 2023 SCC OnLine SC 1244
2. 1994 SCC (L&S) 31
3. 1983 SCC OnLine Bom 163
4. 2018 SCC OnLine Del 10212
5. 2024 SCC OnLine Gau 852
6. 2022 SCC OnLine SC 872
7. 2017 SCC OnLine SC 1251
8. (2005) 8 SCC 760
9. AIR 1964 SC 72
10. (1974) 4 SCC 3
11. (2007) 9 SCC 768
12. (2023) 20 SCC 747
RNT, J & BM, J
3 WP No.841 of 2026
THE HON'BLE SRI JUSTICE RAVI NATH TILHARI
&
THE HON'BLE SRI JUSTICE BALAJI MEDAMALLI
WRIT PETITION No. 841 of 2026
JUDGMENT:
(per Hon’ble Sri Justice Ravi Nath Tilhari)
Heard Sri K. S. Murthy, learned Senior Counsel, assisted by Sri K. Guru
Raj, learned counsel for the petitioner and Sri Challa Dhanunjay, learned
Assistant Solicitor General of India and Sri Y. N. Vivekananda, learned standing
counsel appearing for respondent Nos.1 to 5, Sri Praveen Kumar Reddy,
learned standing counsel for Income Tax, appearing for respondent No.6 and
Sri Anup Koushik Karavadi, learned standing counsel for Income Tax, appearing
for respondent No.7.
2. The present writ petition has been filed under Article 226 of the
Constitution of India, challenging the summons to the petitioner/assessee under
Section 131 (1A) of the Income Tax Act, 1961 (in short ‘IT Act‘), dated
14.11.2025 issued by the 5th respondent-the Income Tax Officer (Investigation),
Income Tax Department, Vijayawada.
3. By the said summons, the petitioner has been directed to give
evidence and / or to produce either personally or through an authorized
representative the books of account or other documents as specified in the said
summons, which are reproduced herein below, on 18.11.2025 and in case of
intentional omission to attend and give evidence or produce the books of
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4 WP No.841 of 2026
account or documents, to impose the penalty under Section 272 A (1) (c) of the
IT Act.
“a) Nature of activity and sources for income.
b) Books of accounts for the period from 01.04.2019 to till date.
c) Statement of all the bank accounts in your name for the period from
01.04.2019 to till date.
d) Details of movable & immovable properties in your name along with
sources for investments,
e) Details of the firms/companies wherein you are one of the
partners/directors along with PAN & Address of the entity.”
4. The petitioner submitted response dated 17.11.2025 requesting to
provide clarity on the point; (1) Reason for issuance of notice, and (2) Scope of
Investigation. Under the first head, the petitioner asked for the clarification for
identifying and furnishing the most relevant and pertinent information and
under the second head, the petitioner wanted to know the specific assessment
year or multiple years to which the summons / notice related, as also under the
specific income head, transaction or matter of concern. The petitioner also
requested for additionally 15 days time from the date of the said reply, followed
by another reply dated 27.11.2025 requesting further 15 days time. The
petitioner submitted the reply to the Income Tax Officer (Investigation), dated
27.11.2025 and as mentioned therein, submitting the copies of Income Tax
Returns for the period 01.04.2019 to 31.03.2025 (15 attachments). The
petitioner then received response from the Income Tax Officer (Investigation)
informing that the petitioner did not submit the requisite information, books of
account for the period from FY 2019-20, copy of all the bank accounts in the
RNT, J & BM, J
5 WP No.841 of 2026
petitioner’s name from 01.04.2019 to that date. On 02.12.2025 the petitioner
again requested the Income Tax Officer (Investigation) for clarification with
respect to the details i.e., the specific reasons for issuance of the summons; the
precise scope of investigation, including the assessment years and matters
under examination; whether any particular format, structure or classification of
information was mandated and the preferred mode of submission (physical /
digital / any portal-based upload), mentioning that those details were essential
to ensure that the information furnished by the petitioner was complete,
relevant and useful for the purpose of the investigation.
5. The Income Tax Officer (Investigation), in response, sent reply dated
16.12.2025, and clarified that the summons were issued by the Investigating
Officer in exercise of powers conferred under Section 131 (1A) of the IT Act for
the purpose of inquiry / investigation into the matters relating to possible tax
evasion and that the said provision conferred to statutory authority, upon the
investigation wing, to call for information and enforce attendance during the
course of investigation.
6. The Income Tax Officer (Investigation) further clarified that the details
of reasons, source of information, line of inquiry and scope of ongoing
investigation were confidential in nature and were not required to be disclosed
to the assessee or any other person while the investigation was in progress.
Even under the Right to Information Act, vide Section 8 (1) (h) the
Investigation Directorate of Income Tax was exempted to disclose any
information relating to ongoing investigation and the disclosure of any such
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6 WP No.841 of 2026
information at that stage would defeat the very purpose of investigation and
might prejudice the proceedings. It was further clarified that the scope,
methodology and source of investigation fell exclusively within the domain of
the investigation Directorate and were governed by internal procedures and
confidentiality norms. The assessee was legally bound to comply with the
summons by furnishing the information / documents and by attending as
directed. By the said reply dated 16.12.2025, the petitioner / assessee was
again requested to comply with the summons under Section 131 (1A) of the IT
Act and submit the requisite information either in physical form or through
electronic mode. It was reiterated that non-compliance should attract penal
consequences under the relevant provisions of the IT Act.
7. The 4th respondent-Deputy Commissioner of Income Tax has filed the
counter affidavit and has denied the allegations against him that he threatened
the petitioner’s statutory auditor to settle the disputes. He has submitted that
the 4th respondent has no role to play in issuance of summons. He has also
submitted that the 4th respondent is a jurisdictional assessing officer and is
nowhere linked to the investigation Directorate. The investigation being taken
up by the 5th respondent is independent and confidential and the 4th respondent
is not in a position either to have any knowledge of the petition or the line of
investigation being carried out. He has absolutely no role to play.
8. The 6th respondent, impleaded by name i.e., 3rd respondent by
designation, the Principal Chief Commissioner of Income Tax), has filed counter
affidavit. He has not disputed the relationship that the 1st defendant in the suit
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7 WP No.841 of 2026
O.S.No.608 of 2025 is the brother of his daughter’s father-in-law, but has
submitted that he is not aware of any civil litigation. He is also not aware about
the notices issued to the petitioner and has denied the other allegations made
against him by the petitioner. He has specified that he has no role to play in
the proceedings initiated against the petitioner and that the 6th respondent has
unnecessarily dragged him into the matter just to scuttle the process initiated
by the official respondents under the Income Tax Act.
9. The 5th respondent- Income Tax Officer (Investigation), also
impleaded by name, as 7th respondent, has filed his counter affidavits. Inter alia
it has been submitted that the pleadings of the writ petition do not disclose any
personal act, excess of jurisdiction, abuse of authority or conduct beyond the
scope of statutory powers that would justify the impleadment of his name. The
allegations against the 7th respondent cannot be sustained in the absence of
any foundational facts. He proceeded as per the standard operating procedure,
TEP was assigned to him by the competent authority and the summon was
issued to conduct the enquiries after obtaining the permission to issue
summons. He also deposed that the petitioner submitted copy of
acknowledgment of Income Tax Returns for FY 2019-20 to 2024-25 via e-mail
dated 27.11.2025 and the same were duly recorded. He submitted that request
of the investigating officer for submission of the documents is part of enquiry as
it pertains to the verification of declared income against the assets, within the
scope of Section 131 (1A) of IT Act and so, the allegation of misuse of statutory
powers, the arbitrariness in issuance of the summons is baseless. The 7th
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8 WP No.841 of 2026
respondent submitted that he was not aware of regarding any property dispute
between the petitioner and the defendants in the suit and any such dispute has
no relevance or connection for the issuance of summons which were issued as
per the procedure under the Income Tax Act.
10. The petitioner filed replies to the counters of the respondents 4, 5, 6
& 7, reiterating the contents of the writ petition.
11. The challenge to the summons / notice under Section 131 (1A) of
the Income Tax Act dated 14.11.2025 is mainly on the ground of mala fide.
12. Sri K. S. Murthy, learned senior counsel, advanced the arguments
before us that one O.S.No.608 of 2025 arising out of the dispute relating to the
property situated at Vijayawada is pending in the Court of the Principal Civil
Judge (Junior Division), Vijayawada and in the said suit in I.A.No.286 of 2025
filed under Order 39 Rules 1 & 2 CPC, the learned trial Court has granted ad
interim temporary injunction on 22.04.2025 restraining the defendants in the
suit, their men etc., from interfering with the peaceful possession and use of
the schedule premises i.e., the petition schedule property, except by due
process of law, while directing the plaintiffs therein to comply with the
provisions of Order 39 Rule 3A of CPC.
13. His further argument is that the defendants in O.S.No.608 of 2025,
namely, Atluri Venkata Satya Vara Prasad and Atluri Dyhan are close relatives of
the present 3rd respondent-the Principal Chief Commissioner of Income Tax,
Andhra Pradesh Telangana, Hyderabad, a Senior Officer in the Income Tax
Department. The relationship with the 1st defendant in the suit Satya Vara
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9 WP No.841 of 2026
Prasad, stated is that, the 1st defendant’s brother’s son is married to the
daughter of the 3rd respondent. The 3rd respondent is also impleaded in the
writ petition by name as 6th respondent.
14. The petitioner’s further case as also the argument of learned counsel
for the petitioner is that the 4th respondent, the Deputy Commissioner of
Income Tax (Circle-I), acting in concert with the private parties, contacted the
petitioner’s statutory auditor on multiple occasions to prevail upon the
petitioner to settle the civil dispute, and if the dispute was not settled, the
petitioner would be subjected to serious consequences through the Income Tax
Department. The petitioner’s auditor informed the petitioner the same. The
allegation is that the respondents misusing their official capacity are trying to
gain undue advantage over the petitioner by issuance of summons/notice under
Section 131 (1A) of the IT Act in view of O.S.No.608 of 2025 to settle the
matter.
15. Sri K. S. Murthy, learned Senior Counsel for the petitioner during
arguments also raised the point of lack of jurisdiction in the authority in issuing
the impugned summons. In this regard, he submitted that the Income Tax
Officer (Investigation) is not competent authority to issue the summons under
Section 131 (1A) of IT Act, as he is not the authorized officer.
16. On the aforesaid grounds, learned counsel for the petitioner
submitted that the summons deserved to be quashed and no proceedings
pursuant thereto could be carried forward any further. He submitted that the
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10 WP No.841 of 2026
issuance of the summons is vitiated for colorable exercise of power by the
statutory authorities.
17. Sri K. S. Murthy, learned senior counsel placed reliance in the
following judgments:
4) Skyview Consultants Pvt. Ltd. v. Income Tax Officer Ward
23(4), New Delhi4
18. Sri Challa Dhanunjay, learned Assistant Solicitor General submitted
that the respondents have filed counter affidavit and in paragraph – 4 of the
counter affidavit of the 5th respondent, it has clearly been mentioned that an
anonymous Tax Evasion Petition (TEP) against the petitnioer and his family
members was received in the office of the Principal Director of Income Tax
(Investigation), Hyderabad on 12.11.2025 and as per the Standard Operating
Procedure (SOP) in F.No.RNo.291/21/2013-Dir (Inv.IV)/1193 dated 23.09.2016,
a Unique Identification Number (UIN) was allotted by the Principal Director of
Income Tax (Investigation) for management of Tax Evasion Petitions under the
Income Tax Business Applications (ITBA) issued by the Central Board of Direct
1
2023 SCC OnLine SC 1244
2
1994 SCC (L&S) 31
3
1983 SCC OnLine Bom 163
4
2018 SCC OnLine Del 10212
5
2024 SCC OnLine Gau 852
RNT, J & BM, J
11 WP No.841 of 2026
Taxes, a Unique Identification Number was allotted to the TEP by uploading the
same into the pending online work list on ITBA (Income Tax Business
Application) module of Income Tax Department. Subsequently, the said TEP
was assigned online to the concerned jurisdictional Investigation Unit Head, i.e.,
the Joint Director of Income Tax (Investigation), Unit-IV, Vijayawada who in
turn had assigned the same to the Income Tax Officer (Investigation), Unit-IV,
Vijayawada online through ITBA module of the Department for conducting
necessary enquiries and for submission of report. He submitted that soon after
online allotment of the TEP in the pending work list of Income Tax Officer
(Investigation), Unit-IV, Vijayawada, the Investigating Officer (IO) after taking
necessary due diligence, obtained permission to issue summons under Section
131 (1A) of IT Act from the unit head on 14.11.2025 and accordingly issued
summons under Section 131 (1A), to all the concerned persons. He submitted
that the summons issued had clearly specified the requirement for production
of books of account, bank statements, and details of properties / investments
from 01.04.2019 onwards, proportionate to the scope of inquiry as verification
of escapement of income from AY 2020-21 to AY 2025-26 as per the provisions
of the Income Tax Act. He submitted that the disclosure of detailed reasons at
the summons stage was not mandated by law or by the procedure laid down by
the SOP.
19. Sri Challa Dhanunjay, learned Assistant Solicitor General, submitted
that so far as the objection with respect to the jurisdiction of the Income Tax
Officer (Investigation) is concerned, that he is not authorized officer to issue
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12 WP No.841 of 2026
summons under Section 131 (1A) of IT Act, any such objection was never taken
in the petitioner’s reply dated 17.11.2025, 27.11.2025 and 02.12.2025. He
further submitted that any such objection has also not been taken in the writ
petition. The challenge as per the contents in the writ petition is not on the
ground of alleged want of jurisdiction in the authority to issue the summons but
it has been orally argued that he is not authorized under Section 131 (1A) of IT
Act, for the first time during arguments, though the procedure was followed in
issuing the summons.
20. Sri Challa Dhanunjay, learned Assistant Solicitor General, further
submitted that the place of mala fide and colourable exercise of power if
unsustainable and is not established. The same is being raised without any
factual foundation and for the first time in the writ petition without making any
such averment in the petitioner’s reply submitted before the Income Tax
Authorities. The same is afterthought and only for the purposes of the present
writ petition.
21. Sri Y. N. Vivekananda and Sri Praveen Kumar Reddy, learned
standing counsels for the Income Tax have adopted the submissions advanced
by the learned Additional Solicitor General.
22. Learned counsel for the respondents placed reliance in the following
judgments:
1) Principal Director of Income Tax (Investigation) v. Laljibhai
Kanjibhai Mandalia6.
6
2022 SCC OnLine SC 872
RNT, J & BM, J
13 WP No.841 of 2026
2) N. K. Jewellers v. Commissioner of Income Tax, New Delhi7.
23. We have considered the aforesaid submissions and perused the
material on record and gone through the relevant provisions of the Income Tax
Act and the judgments cited from both the sides.
24. So far as the submission of mala fide is concerned, we are of the
view from the material on record, and there is no dispute on the factual aspect
that in O.S.No.608 of 2025, none of the present respondents are party in the
suit, neither by designation nor by name. Even the present petitioner is not a
party, which is said to have been filed by the son-in-law of the petitioner.
Further, any such averment of mala fide or with respect to the suit, was not
even taken in the responses filed by the petitioner to the notice/summons. The
said plea is being raised for the first time in the writ petition. Though the
learned counsel for the petitioner laid much emphasis on the statement of the
petitioner’s Chartered Accountant, annexed to the writ petition (Annexure
No.P8), but the said alleged statement/affidavit itself is dated 27.11.2025 i.e.,
much after the date of notice under Section 131 (1A). The affidavit of the
Chartered Accountant (P8) is a notarized affidavit and is not addressed to any
one. It is not evident from the pleadings of the writ petition, in what
proceedings the same was filed or before which authority. Learned Assistant
Solicitor General submitted that the person named in the said affidavit is not
the Income Tax Officer (Investigation), and that the contents thereof are only
after thought and had been created only for the purposes of the present writ
7
2017 SCC OnLine SC 1251
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14 WP No.841 of 2026
petition so as to challenge the summons/notice and in an effort to make out a
plea of mala fide. Learned Assistant Solicitor General submitted that Mr. Prem
Kumar as mentioned in the said affidavit is not a party in the writ petition nor in
the suit. Further, there is no mention of such affidavit or the alleged incident in
the petitioner’s reply filed before the income tax authorities. With respect to
the petitioner’s letter raising the grievance as per the affidavit of petitioner’s
Chartered Accountant against the Deputy Commissioner of Income Tax to the
Chairperson of Central Board of Direct Taxes, New Delhi, the material filed with
the writ petition shows that the said letter was sent through registered post on
01.12.2025 but in the reply submitted by the petitioner on 02.12.2025 before
the Income Tax Officer (Investigation) there is no mention of even the letter
sent to the Chairperson of Central Board of Direct Taxes. Further, the
summons / notice is dated 14.11.2025 and the TEP is dated 12.11.2025
whereas the ad interim temporary injunction was granted in the suit on
22.04.2025. So the notice has been issued after many months of the suit and
the interim order, which has neither any proximity nor any connection to the
suit proceedings. We are of the view that there is force in the submission of
the learned Assistant Solicitor General and the argument/plea of the learned
counsel for the petitioner of mala fide has no legs to stand, based on the
material annexed with the writ petition.
25. As per the counter affidavit of the respondents the action has been
taken as per the procedure on receipt of anonymous Tax Evasion Petition (TEP)
against the petitioner. It was received on 12.11.2025. At this stage, we may
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15 WP No.841 of 2026
mention that in the counter, the 5th respondent mentioned about TEP and the
SOP. But did not annex the copy thereof. The petitioner filed I.A.No.3 of 2026
to direct the respondent authorities to produce the documents i.e., anonymous
Tax Evasion Petition (TEP) and the Standard Operating Procedure (SOP). The
learned Assistant Solicitor General submitted that the matter may be heard and
during the course of arguments, if so required by the Court those documents
shall be placed before the Court, as he has got the record. During course of
arguments, the anonymous TEP was placed before us which is dated
12.11.2025 (with its English translation) for perusal. We satisfied ourselves
that there is a complaint against the petitioner, anonymous TEP, based upon
which the proceedings under Income Tax Act have been initiated, and though
the copy of the TEP has not been annexed with the counter affidavit, the
contents of the counter affidavit regarding the TEP are supported from the
record, so placed. The aforesaid fact was also recorded in the Order dated
27.02.2026 on which date the judgment was reserved in the present writ
petition.
26. In Union of India v. Ashok Kumar8 the Hon’ble Apex Court
observed and held that he who seeks to invalidate or nullify any act or order
must establish the charge of bad faith, an abuse or a misuse by the authority of
its powers. The indirect motive or purpose, or bad faith or personal ill will is
not to be held established except on clear proof thereof. The Hon’ble Apex
Court further observed that it is not the law that mala fides in the sense of
8
(2005) 8 SCC 760
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16 WP No.841 of 2026
improper motive should be established only by direct evidence. But it must be
discernible from the order impugned or must be shown from the established
surrounding factors which preceded the order. The Hon’ble Apex Court referred
to the judgment in the case of S. Pratap Singh v. State of Punjab9 to
reiterate that the burden of establishing mala fides is very heavy on the person
who alleges it. The allegations of mala fides are often more easily made than
proved, and the very seriousness of such allegations demands proof of a high
order of credibility. Again referring to its judgment in E.P. Royappa v. State
of T.N.10 the Hon’ble Apex Court observed that the courts would be slow to
draw dubious inferences from incomplete facts placed before them by a party,
particularly when the imputations are grave and they are made against the
holder of an office which has a high responsibility in the administration.
27. Paragraphs 21 and 22 of Ashok Kumar (supra) are reproduced as
under:
“21. Doubtless, he who seeks to invalidate or nullify any act or order must
establish the charge of bad faith, an abuse or a misuse by the authority of its
powers. While the indirect motive or purpose, or bad faith or personal ill will is
not to be held established except on clear proof thereof, it is obviously difficult
to establish the state of a man’s mind, for that is what the employee has to
establish in this case, though this may sometimes be done. The difficulty is not
lessened when one has to establish that a person apparently acting on the
legitimate exercise of power has, in fact, been acting mala fide in the sense of
pursuing an illegitimate aim. It is not the law that mala fides in the sense of
improper motive should be established only by direct evidence. But it must be
discernible from the order impugned or must be shown from the established9
AIR 1964 SC 72
10
(1974) 4 SCC 3
RNT, J & BM, J
17 WP No.841 of 2026surrounding factors which preceded the order. If bad faith would vitiate the
order, the same can, in our opinion, be deduced as a reasonable and inescapable
inference from proved facts. (S. Pratap Singh v. State of Punjab [(1964) 4 SCR
733 : AIR 1964 SC 72] .) It cannot be overlooked that the burden of
establishing mala fides is very heavy on the person who alleges it. The
allegations of mala fides are often more easily made than proved, and the
very seriousness of such allegations demands proof of a high order of
credibility. As noted by this Court in E.P. Royappa v. State of T.N. [(1974) 4
SCC 3 : 1974 SCC (L&S) 165 : AIR 1974 SC 555] courts would be slow to
draw dubious inferences from incomplete facts placed before them by a
party, particularly when the imputations are grave and they are made
against the holder of an office which has a high responsibility in the
administration. (See Indian Rly. Construction Co. Ltd. v. Ajay Kumar [(2003)
4 SCC 579 : 2003 SCC (L&S) 528] .)
22. As observed by this Court in Gulam Mustafa v. State of
Maharashtra [(1976) 1 SCC 800] mala fides is the last refuge of a losing
litigant.”
28. In HMT Ltd. and another v. Mudappa11 the question was whether
the action of the State authorities in initiating acquisition proceedings under a
valid law could be said to be illegal, unlawful or in mala fide exercise of power?
There the High Court had held that the course adopted by the authorities was
contrary to law. The Hon’ble Apex Court noted that it was reflected in the
approach of the High Court that “it was a case of exploitation of statutory
provisions in the name of public purpose to defeat just rights of an individual
who had obtained decree in his favour”. The Hon’ble Apex Court observed that
such an approach was neither legal nor permissible.
29. Paragraphs 18 and 19 of Mudappa (supra) read as under:
11
(2007) 9 SCC 768
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18 WP No.841 of 2026“18. The question, however, is whether the action of the State authorities in
initiating acquisition proceedings under a valid law could be said to be illegal,
unlawful or in mala fide exercise of power? So far as the High Court is
concerned, it held that the course adopted by the authorities was contrary to law.
It is reflected in the approach of the Court wherein the learned Single Judge
observed that it was a case of exploitation of statutory provisions in the name of
public purpose to defeat just rights of an individual who had obtained decree in
his favour.
19. In our considered view, however, this approach is neither legal nor
permissible. Passing of a decree by a competent court is one thing and
exercise of statutory power by the authority is altogether a different thing.
It is possible in a given case to come to a conclusion on the basis of evidence
produced and materials placed on record to conclude that the action has
been taken mala fide or for a collateral purpose or in colourable exercise of
power. But, in our opinion, issuance of preliminary notification after a
decree by a court of law would not ipso facto make it vulnerable and
exercise of power mala fide. To us, therefore, the authorities were right in
raising a preliminary objection that the petition was premature as by issuance of
notification under sub-section (1) of Section 28 of the Act, an intention was
declared by the State to acquire the land for public purpose i.e. for developing
industry.”
30. In Mudappa (supra), the Hon’ble Apex Court observed and held that
the High Court was not right in coming to the conclusion that since a decree
was passed by a competent court, no notification under the Act could have
been issued by the State. The power exercised by the State was statutory in
nature and irrespective of a decree in favour of the owners, such notification
could be issued. The Hon’ble Apex Court referring to its previous judgments
explained the concept of legal mala fide and observed that ‘legal malice’ or
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19 WP No.841 of 2026
‘malice in law’ means something done without lawful excuse. In the context on
facts of the said case where notification was issued by the State under the Land
Acquisition Act, after the decree in favour of the landowners, the Hon’ble Apex
Court observed that where malice was attributed to the State, it could not be a
case of malice in fact, or personal ill-will or spite on the part of the State. It
could only be malice in law, i.e. legal mala fide. The State, if it wishes to
acquire land, could exercise its power bona fide for statutory purpose and for
none other. It was only because of the decree passed in favour of the owner
that the proceedings for acquisition were necessary and hence, notification was
issued. Such an action could not be held mala fide.
31. Paragraphs 22 and 24 of Mudappa (supra) read as under:
“22. The High Court was also not right in coming to the conclusion that
since a decree was passed by a competent court, no notification under the Act
could have been issued by the State. The power exercised by the State was
statutory in nature and irrespective of a decree in favour of the owners, such
notification could be issued. A situation similar to one before us had arisen
in State of A.P. v. Goverdhanlal Pitti [(2003) 4 SCC 739] .
In Goverdhanlal [(2003) 4 SCC 739] , a school building belonging to G was in
the possession of the State as a tenant. An order of eviction was passed and the
State was directed to hand over possession of property to G within a particular
period. The State then took out proceedings under the Land Acquisition Act,
1894 for acquiring the property for public purpose, namely, for a
school. G challenged the proceedings as mala fide. The High Court upheld the
contention observing that there was “malice in law” inasmuch as the
proceedings were initiated to scuttle a valid decree passed by a competent court.
The State approached this Court.
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20 WP No.841 of 2026
24. The Court also explained the concept of legal mala fide. By referring
to Words and Phrases Legally Defined, 3rd Edn., London Butterworths, 1989
the Court stated: (Goverdhanlal case [(2003) 4 SCC 739] , SCC p. 744, para 12)
“12. The legal meaning of malice is ‘ill will or spite towards a party and any
indirect or improper motive in taking an action’. This is sometimes described as
‘malice in fact’. ‘Legal malice’ or ‘malice in law’ means ‘something done
without lawful excuse’. In other words, ‘it is an act done wrongfully and
wilfully without reasonable or probable cause, and not necessarily an act done
from ill feeling and spite. It is a deliberate act in disregard of the rights of
others.’ “
It was observed that where malice was attributed to the State, it could not
be a case of malice in fact, or personal ill-will or spite on the part of the
State. It could only be malice in law i.e. legal mala fide. The State, if it
wishes to acquire land, could exercise its power bona fide for statutory
purpose and for none other. It was observed that it was only because of the
decree passed in favour of the owner that the proceedings for acquisition were
necessary and hence, notification was issued. Such an action could not be
held mala fide.”
32. Recently, in State of Rajasthan v. Sharwan Kumar Kumawat12
on the point of legal malice the Hon’ble Apex Court held that the basis of a
judgment can be removed and that a decision of the Court cannot be treated
like a statute, particularly, when power is available to act and it is accordingly
exercised in public interest, and in view thereof, there was no legal malice in
the amendments made in the statute.
33. Paragraph No.21 of Sharwan Kumar Kumawat (supra) reads as
under:
12
(2023) 20 SCC 747
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21 WP No.841 of 2026” 21. Though it is contended by the learned advocates appearing for the
respondents that the impugned Rules have been brought forth only to nullify the
effect of the judgments, as discussed, we do not think so. The appellants have
duly complied with the orders passed. Even otherwise, law is quite settled that
basis of a judgment can be removed and a decision of the court cannot be
treated like a statute, particularly when power is available to act and it is
accordingly exercised in public interest. In such view of the matter, we do
not find any legal malice in the amendments. We wish to quote Kalabharati
Advertising v. Hemant Vimalnath Narichania [Kalabharati
Advertising v. Hemant Vimalnath Narichania, (2010) 9 SCC 437 : (2010) 3
SCC (Civ) 808] : (SCC pp. 448-49, para 25) …….
“Legal malice
25. The State is under obligation to act fairly without ill will or malice– in
fact or in law. “Legal malice” or “malice in law” means something done
without lawful excuse. It is an act done wrongfully and wilfully without
reasonable or probable cause, and not necessarily an act done from ill feeling
and spite. It is a deliberate act in disregard to the rights of others. Where malice
is attributed to the State, it can never be a case of personal ill will or spite on the
part of the State. It is an act which is taken with an oblique or indirect object. It
means exercise of statutory power for ‘purposes foreign to those for which it is
in law intended’. It means conscious violation of the law to the prejudice of
another, a depraved inclination on the part of the authority to disregard the
rights of others, which intent is manifested by its injurious acts. (Vide ADM,
Jabalpur v. Shivakant Shukla [ADM, Jabalpur v. Shivakant Shukla, (1976) 2
SCC 521] ; S.R. Venkataraman v. Union of India [S.R. Venkataraman v. Union
of India, (1979) 2 SCC 491 : 1979 SCC (L&S) 216] ; State of
A.P. v. Goverdhanlal Pitti [State of A.P. v. Goverdhanlal Pitti, (2003) 4 SCC
739] ; BPL Ltd. v. S.P. Gururaja [BPL Ltd. v. S.P. Gururaja, (2003) 8 SCC 567]
and W.B. SEB v. Dilip Kumar Ray [W.B. SEB v. Dilip Kumar Ray, (2007) 14
SCC 568 : (2009) 1 SCC (L&S) 860] .)”
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22 WP No.841 of 2026
The scheme of Section 28 is thus similar to the scheme of acquisition of land
under the Land Acquisition Act, 1894 under which such preliminary
notification is issued, opportunity of being heard is afforded to the persons
interested in the land and only thereafter final notification can be issued. At the
stage of raising objections against acquisition, it is open to the respondents
herein to raise all contentions. In spite of such objections, if final notification is
issued by the State, it is open to them to take appropriate proceedings or to
invoke jurisdiction of the High Court under Article 226 of the Constitution.
Unfortunately, however, the High Court entertained the petition and quashed
the preliminary notification overruling well-founded objection as to
maintainability of petition raised by the State and the appellants herein.”
34. In view of the aforesaid judgments and the principles settled on the
point of legal malice, mala fide we are of the view that the authority i.e.,
Income Tax Officer (Investigation) issued summons/notices in the exercise of
power under Section 131 (1A) of the Income Tax Act. Such exercise is
statutory. The facts as pleaded, for the reasons (supra), that the present
respondents impleaded by name as also by designation are not party in the suit
nor the petitioner is party in the suit, the interim injunction was passed in
March 2025, the Tax Evasion Petition was filed on 12.11.2025, on which the
statutory authorities preceded under the SOP and issued the notice on
14.11.2025, merely because the respondent No.3 – The Principal Chief
Commissioner of Income Tax, Hyderabad is remotely related to the defendants
1 and 2 in the suit and merely because such relationship has been admitted, it
does not follow that there was malice in fact, with respondents to initiate
proceedings under Section 13 (1A) of Income Tax Act against the petitioner.
The ‘malice in fact’ in our view, could not be established. The basis to plead the
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23 WP No.841 of 2026
malice especially was the affidavit of the Chartered Accountant (P8) which itself
has been introduced after the issuance of the notice/summons under Section
131 (1A) of the Income Tax Act and further that, the said fact of the pendency
of the suit and malice in fact, thereon was not taken in the reply filed by the
petitioner before the authorities pursuant to the summons/notice. The said
plea of malice is an afterthought being raised for the first time in the writ
petition and is unestablished. So, malice in fact is not proved.
35. The authorities have acted on receipt of Tax Evasion Petition and as
per the counter of respondent No.5 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.
36. Further, we are of the view that if such a plea is accepted, which is
not worth acceptance, then no proceeding can be drawn under the Income Tax
Act against the petitioner, as the suit is the first stage and the matter may go
on for years from the suit stage to further stages before the next higher Courts.
In the meantime the period of limitation prescribed for invoking the proceedings
under Income Tax Act may also come to an end. No assessee if liable under
the Income Tax Act can be permitted to escape the statutory provisions being
invoked on such unfounded plea of malice / mala fide.
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24 WP No.841 of 2026
37. Pankaj Bansal (supra) is on the point of colourable exercise of
power or mala fides or malice, laying down that when the power is conferred to
achieve a purpose that power must be exercised reasonably and in good faith
to effectuate the purpose and when the power is exercised for extraneous or
irrelevant considerations or reasons, the exercise of power is a colourable
exercise of power or fraud on power which vitiate the action.
38. There cannot be any dispute on the proposition of law as in Pankaj
Bansal (supra) that the action is bad where the true object is to reach an end
different from the one for which the power is entrusted, goaded by extraneous
considerations, good or bad. When the custodian of power is influenced in its
exercise by considerations outside those for promotion of which the power is
vested, it is called a colourable exercise of power. The fraud on power voids the
order if it is not exercised bona fide for the end designed, is also not a
proposition in dispute. But, in the present case, the question is of the
applicability of the principle. We have already observed in the earlier part of this
judgment that the power has been exercised under the statutory provisions of
the IT Act under Section 131 (1A) and the plea of malafide could not be
established. So the principles of law as in Pankaj Bansal (supra) cannot be
attracted to the present case to support the contention of the petitioner’s
counsel either of malice, fraud of power, or colourable exercise of power.
39. In Ishverlal J.Naik (supra) it was observed that when the reply
was cryptic and also vague it did not amount to any denial of the averments of
facts pleaded by the petitioner and it could be assumed that they were true and
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25 WP No.841 of 2026
it would not be wrong to proceed on that assumption. We observe that the
principle is well settled that if a factual aspect has been pleaded and has not
been denied specifically, and the reply is only cryptic and vague, it would not
amount to the denial, but, still it is in the exercise of judicial discretion to
proceed or not, based on such fact. The Court may still require the petitioner to
prove that fact. However, in the present case the contention of the petitioner
raised in the writ petition with respect to the malice, mala fide on the part of
some of the respondents has been specifically denied in the counter of the
respondents.
40. The next submission of the learned senior counsel for the petitioner
is on the lack of jurisdiction in the Income Tax Officer (Investigation) to issue
summons/notice submitting that he is not an authorized officer included under
Section 131 (1A) of the IT Act.
41. As per Section 131 (1A) of IT Act, the authorities mentioned
thereunder are the Principal Director General or Director General or Principal
Director or Director or Joint Director or Assistant Director or Deputy Director, or
the authorised officer referred to in sub-section (1) of section 132. As per
Section 132 (1) (A) the income tax officer is included therein on being
authorized by the Principal Director General or Director General or Principal
Director or Director or the Principal Chief Commissioner or Chief Commissioner
or Principal Commissioner or Commissioner and under clause (B), authorized by
Additional Director or Additional Commissioner or Joint Director or Joint
Commissioner. Reading both the provisions together it cannot be said that the
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26 WP No.841 of 2026
Income Tax Officer is not included under Section 131 (1A) for issuance of the
summons/notice under the said Section.
42. There is no pleading in the writ petition, taking any ground of
challenge of want of jurisdiction in the Income Tax Officer (Investigation) to
issue summons/notice. It has also not been pleaded that the Income Tax
Officer (Investigation) was not authorized under Section 131 (1A) r/w. Section
132 of the IT Act. A plea of want of jurisdiction certainly can be raised at any
stage but it has to be raised. Such a plea has not been raised in the writ
petition and at the time of arguments, the other side cannot be taken by
surprise, by raising an argument not born from the record/pleadings on factual
aspect. The ground No.2 in the writ petition is not ‘lack of jurisdiction’ but
relates to the exercise of jurisdiction emphasizing the ground of malice / mala
fide due to O.S.No.608 of 2025.
43. So far as the other judgment relied upon by the learned counsels for
both the sides is concerned, we consider as follows:
i. In Laljibhai Kanjibhai Mandalia (supra) on which the reliance
was placed by the learned counsel for the respondents, the
Hon’ble Apex Court reiterated the principles in exercising the writ
jurisdiction in the matter of search and seizure under Section 132
of the Income Tax Act. However in the present case, the stage of
search and seizure under Section 132 of the Act has yet not been
reached. The stage is issuance of summons/notice calling for
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27 WP No.841 of 2026investigation, relevant documents as under Section 131 (1A) of
the Act.
ii. In N.K.Jewellers (supra) it was held that the reason to believe
or reason to suspect, as the case may be, under Section 132 or
132A of IT Act, shall not be disclosed to any person or any
authority or the Appellate Tribunal.
iii. Naseem Bano (supra) is not on the point. It’s under service law,
i.e., qualifications for promotion of C.T. grade teacher to L.T.
grade teacher.
iv. Skyview Consultants Private Limited (supra) is a case of
reopening of the assessment for the particular assessment year
under Section 148 of the Act. The present is the stage only under
Section 131 (1A) asking for the documents for verification and at
this stage it cannot be said that the matter would or would not be
opened and it is not the petitioner’s case pleaded in Writ Petition
or in their reply submitted before authorities about no
authorization of Income Tax Officer (Investigation) under Section
131 (1A).
v. In Pawan Kumar Garg (supra) the challenge was to the search
and seizure made on 02.12.2020 under Section 132 of the IT Act
and the notice issued, after the search and seizure, under Section
131 (1A) of the Act. It was held by the Guwahati High Court that
the notices issued under Section 131 (1A) of the Act were after
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28 WP No.841 of 2026
the search and seizure operation under Section 132 of the Act
which went to show that there was neither any reason to suspect
nor material before the Authorizing Officer on the basis of which
search operation could have been conducted under Section 132 of
the Act. It was held that the notice under Section 131 (1A) of the
Act was a precondition for search and seizure operation under
Section 132 of the Act and in the absence of any such notice
under Section 131 (1A) of the Act, prior to the search and seizure,
the search and seizure made under Section 132 of the Act was
without any material and could not be sustained. The Guwahati
High Court thus held that the notice under Section 131 (1A) is a
precondition for proceeding under Section 132 of the Act.
vi. We observe that on the said aspect different High Courts have
taken a different view. We are not concerned with the said issue
in the present case, the reason being that present is only the
stage of Section 131 (1A). It is not a case of conducting the
search and seizure without making compliance of Section 131
(1A). It is not a case of issuing the summons/notice under Section
131 (1A), after the stage of Section 132. The aforesaid judgment
is no help to the petitioner.
44. No other argument was advanced.
45. We hold that the impugned notice/summons under Section 131 (1A)
of the Income Tax Act cannot be said to be illegal or suffering from any
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29 WP No.841 of 2026
infirmity, neither on the ground of malice nor on the ground of jurisdictional
error.
46. I.A.No.4 of 2026 has been filed by the petitioner for direction to the
respondents 1 and 2 to report on what action was taken on the representation
of the petitioner dated 01.12.2025, sent inter alia to respondents 1 and 2
through registered post. The prayer has been made contending that those
respondents have not filed any counter affidavit and that despite receiving the
same on 04.12.2025, any response or action has not been taken.
47. We do not find any force in the application I.A.No.4 of 2026, as
firstly, the said representation could not be shown to us to be statutory in
nature, and secondly, in the writ petition, there is no prayer made with respect
to the said representation. Any interim prayer beyond the scope of the main
petition is not permissible. Finally, we are of the view that it is not relevant to
ask what action has been taken on the petitioner’s representation, as the
proceedings of summons / notice under Section 131 (1A) of the IT Act,
impugned in the present writ petition are under the statute, and any action or
decision taken or not taken, on the petitioner’s representation outside the scope
of such provision of the Income Tax Act, is of no relevance for the decision of
this writ petition.
48. I.A.No.4 of 2026 therefore stands rejected.
49. In the result, for the aforesaid reasons, the writ petition lacks merit
and is dismissed.
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30 WP No.841 of 2026
Pending miscellaneous petitions, if any, including I.A.No.3 of 2026, shall
stand closed in consequence.
_______________________
RAVI NATH TILHARI, J
______________________
BALAJI MEDAMALLI, J
Date: 18.03.2026
Dsr/AG
Note:
LR copy to be marked
B/o
Dsr
