Kerala High Court quashes illegal income tax penalty proceedings

The Kerala High Court has quashed penalty and recovery proceedings initiated by the Income Tax Department against an assessee, Moly Jagatha, after finding the actions were based on a void assessment order.

The court noted that the original assessment order had previously been set aside by an appellate authority with instructions to conduct a fresh assessment. Because the original order was no longer in existence and a new assessment had not yet been finalized, the court ruled that issuing penalty and recovery notices based on the defunct order was illegal. The court directed authorities to complete the fresh assessment proceedings expeditiously while providing the petitioner an opportunity for a hearing.