On May 2, 2025, the Kerala High Court declined to interfere with the Income Tax Department’s action of seizing ₹1 crore from the bank account of the Communist Party of India (Marxist) [CPI(M)] Thrissur District Committee. The account in question was held at the Bank of India branch in Thrissur.
This action by the Income Tax Department came in the lead-up to the 2024 Lok Sabha elections. The Department had frozen the CPI(M) committee’s bank account, citing discrepancies in the annual returns filed by the party. The petition against this action was submitted by M.M. Varghese, the former Secretary of the Thrissur District Committee.
Read also: Kerala High Court: Set-Off Period Cannot Be Considered for Remission Calculation
The Court, after reviewing the case, found no reason to intervene.
“The pleadings and the materials placed for consideration do not indicate any malafides…..Hence, the satisfaction arrived at by the respondents to initiate the search and seizure under Section 132 of the Income Tax Act cannot be held to be perverse or legally untenable,”
– observed Justice Bechu Kurian Thomas.
The judgment clarified that the Income Tax Department’s decision to proceed under Section 132 of the Income Tax Act was valid and within legal bounds. The Court also acknowledged the limits of its own jurisdiction under Article 226 of the Constitution when dealing with such actions.
“Considering the scope of interference under 226 with a proceeding under 132 of the Act, this Court is of the view that the search and seizure proceedings initiated by the respondents do not warrant any interference at this juncture,”
– stated the Court.
The Court further observed that there was prima facie evidence suggesting that the bank account in question was not disclosed in the party's filed income returns. This gave the Income Tax authorities reasonable grounds to initiate the seizure.
While the Court has issued this observation, it also noted that a detailed order is awaited and may provide further clarity on the findings.
This ruling comes amid heightened scrutiny of financial activities during election periods, especially concerning political entities. The judgment highlights the Court’s reluctance to step in unless there is clear evidence of abuse of power or legal overreach.
Case Title: M. M. Varghese v Assistant Director of Income Tax
Case No: WP(C) 19152 of 2024
