The High Court of Andhra Pradesh has held that statutory summons issued under Section 131 (1A) of the Income Tax Act, 1961, cannot be invalidated based on unsubstantiated allegations of mala fide or colorable exercise of power. The Court ruled that the burden of proving bad faith is “very heavy” and cannot be established through dubious inferences from incomplete facts.
The Division Bench of the High Court of Andhra Pradesh, comprising Justice Ravi Nath Tilhari and Justice Balaji Medamalli, dismissed a writ petition filed by an assessee challenging summons issued by the Income Tax Department (Investigation Wing). The petitioner had alleged that the tax proceedings were a retaliatory measure linked to an ongoing civil property dispute involving relatives of a senior Income Tax official. The Court found no evidence of “malice in fact” or “malice in law,” noting that the department acted upon a specific Tax Evasion Petition (TEP).
Background of the Case
The petitioner, Koduru Picheswara Rao, was served with summons dated November 14, 2025, under Section 131 (1A) of the IT Act by the Income Tax Officer (Investigation), Vijayawada. The summons required the production of books of account, bank statements, and details of properties for the period starting April 1, 2019.
The petitioner contended that these summons were not bona fide. He highlighted a pending civil suit (O.S.No.608 of 2025) regarding a property in Vijayawada where he had obtained an interim injunction. He alleged that the defendants in that suit were close relatives of the Principal Chief Commissioner of Income Tax (Respondent No. 3) and that the department was being used to pressure him into a settlement.
Arguments of the Parties
Petitioner’s Contentions: Senior Counsel Sri K. S. Murthy, representing the petitioner, argued that the Deputy Commissioner of Income Tax (Respondent No. 4) had contacted the petitioner’s auditor to threaten “serious consequences” if the civil dispute was not settled. He submitted that the investigation was a “colorable exercise of power” intended to achieve an end foreign to the statute. Additionally, he raised a jurisdictional objection, claiming the Income Tax Officer was not an “authorized officer” under Section 131 (1A).
Respondents’ Contentions: Assistant Solicitor General Sri Challa Dhanunjay, for the Revenue, produced records showing that the investigation was triggered by an anonymous Tax Evasion Petition (TEP) received on November 12, 2025. He argued that the department followed the Standard Operating Procedure (SOP), including the assignment of a Unique Identification Number (UIN) via the Income Tax Business Applications (ITBA) module. The respondents denied any knowledge of the civil suit and asserted that the summons were issued for the legitimate purpose of verifying declared income against assets.
Court’s Analysis and Observations
The Court meticulously examined the timeline and the nature of the allegations. It noted that the interim injunction in the civil suit was granted in April 2025, while the tax proceedings commenced only in November 2025, following the receipt of the TEP.
On the Burden of Proving Mala Fide: Citing the Supreme Court’s decision in Union of India v. Ashok Kumar (2005), the Bench observed:
“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 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.”
The Court found that the petitioner’s claims were largely based on an affidavit from his accountant, which was created after the summons were issued and never presented to the tax authorities during the initial responses.
On Legal Malice and Statutory Duties: The Court emphasized that the existence of a civil decree or suit does not bar statutory authorities from performing their duties. Referring to HMT Ltd. v. Mudappa (2007), the Court noted:
“Passing of a decree by a competent court is one thing and exercise of statutory power by the authority is altogether a different thing… 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.”
On Jurisdiction: The Court rejected the challenge to the Income Tax Officer’s authority. It held that Section 131 (1A) read with Section 132 (1) of the IT Act explicitly includes Income Tax Officers when they are authorized by the competent higher authorities. Furthermore, the Court noted that this plea was not even raised in the writ petition’s grounds.
Decision
The High Court concluded that the petitioner failed to establish either “malice in fact” or “malice in law.” The Bench remarked that if such “unfounded pleas” were accepted, any assessee could stall legitimate tax investigations by simply initiating or citing a civil dispute.
The Court held:
“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.”
The writ petition was dismissed, and all pending miscellaneous petitions were closed.
Case Details
- Case Title: Koduru Picheswara Rao v. Union of India and Others
- Case No.: Writ Petition No. 841 of 2026
- Bench: Justice Ravi Nath Tilhari & Justice Balaji Medamalli
- Date: March 18, 2026
