2018 (9) TMI 1412 - HC - Income Tax

Petition Dismissed: Alleged undeclared income enquiry & corruption offense petition found politically motivated.

The court dismissed the petition seeking an enquiry into alleged undeclared income, registration of an offense under the Prevention of Corruption Act, and ... Public interest litigation - maintainability of PIL seeking criminal probe - locus standi in PIL - abuse of PIL / politically motivated litigation - exercise of revisional power under Section 263 - change of opinion - perverse or no evidence standardPublic interest litigation - maintainability of PIL seeking criminal probe - locus standi in PIL - abuse of PIL / politically motivated litigation - Petition seeking direction for criminal enquiry and registration of offences in public interest is not maintainable as a genuine PIL and is dismissed as politically motivated. - HELD THAT: - The Court observed that the matters complained of had already undergone judicial scrutiny and resulted in orders favourable to the assessee; the petitioner's political affiliation and the surrounding circumstances indicated an ulterior motive rather than bona fide public interest. Relying on established principles limiting PILs to genuine public interest grievances and warning against busybodies or petitions brought for political or private gain, the Court held the present petition to be frivolous and an abuse of the PIL process and therefore liable to be dismissed. The court considered authorities emphasising that only persons acting bona fide and with sufficient interest may maintain PILs and that courts should weed out petitions filed for oblique motives. [Paras 10, 11, 12]Petition dismissed as not a genuine public interest litigation; no costs.Exercise of revisional power under Section 263 - change of opinion - perverse or no evidence standard - Exercise of revisional jurisdiction by the Commissioner under Section 263 in the assessment concerned was unsustainable and set aside. - HELD THAT: - The Court accepted the Tribunal's conclusion that the Commissioner, in invoking Section 263, sought to substitute a different view on appreciation of evidence already examined by the Assessing Officer; where an assessing officer has reached a view reasonably open on the evidence, mere existence of an alternative view does not justify revision unless the original view is perverse or unsupported by any evidence. Applying this standard to the facts, the Court held the Commissioner's interference was unjustified and the Tribunal correctly quashed the Section 263 order. [Paras 11, 12]Power exercised by the Commissioner under Section 263 was unsustainable; the appeal against the Tribunal was dismissed.Final Conclusion: The writ petition alleging undisclosed income and seeking criminal probe is dismissed as not a bona fide public interest litigation; the Court upheld the Tribunal's view that the Commissioner's exercise of revisional power under Section 263 was unsustainable. Petition dismissed. No costs. Issues Involved:1. Direction for an enquiry by the Enforcement Directorate and the Central Bureau of Investigation regarding alleged undeclared income.2. Registration of an offence under the Prevention of Corruption Act against specific respondents.3. Validity of the assessment order and additions made by the Income Tax Department.4. Jurisdiction and exercise of powers under Section 263 of the Income Tax Act by the Commissioner.5. Distinction between 'unaccounted income' and 'unaccounted investment'.6. Legitimacy of the Public Interest Litigation (PIL).Detailed Analysis:1. Direction for an enquiry by the Enforcement Directorate and the Central Bureau of Investigation regarding alleged undeclared income:The petitioner, a practicing lawyer and social worker, sought an enquiry by the Enforcement Directorate and the Central Bureau of Investigation into an alleged undeclared income of Rs. 158,157,040 discovered by the Income Tax Department for the assessment year 2008. The genesis of this issue lies in the assessment order dated 30.12.2011, passed under Section 143(3) of the Income Tax Act, 1961, which added significant amounts to the income of the assessee based on various pieces of evidence.2. Registration of an offence under the Prevention of Corruption Act against specific respondents:The petitioner also sought directions for the registration of an offence under the Prevention of Corruption Act against respondents No. 6 to 9. However, the court noted that the income alleged to be 'unaccounted' had already been subjected to judicial review, with orders favoring the assessee. The court failed to appreciate the petitioner's contention of the income being earned through corrupt practices.3. Validity of the assessment order and additions made by the Income Tax Department:The assessment order dated 30.12.2011 included additions based on proceeds received from Nagarjuna Construction Company and Simplex Infrastructure Limited. These additions were initially set aside by the Commissioner of Income Tax (Appeal) on 12.12.2012. The Commissioner, however, exercised revisional powers under Section 263 of the Income Tax Act, holding the assessment order as erroneous and prejudicial to the interest of revenue, and directed a reassessment.4. Jurisdiction and exercise of powers under Section 263 of the Income Tax Act by the Commissioner:The Commissioner of Income Tax invoked Section 263, arguing that the assessment order failed to account for unaccounted illegal gratification received from Nagarjuna Construction Company Ltd. and Simplex Infrastructure Ltd. The Income Tax Appellate Tribunal (ITAT) later set aside this order, stating that the Commissioner’s suggestion constituted a change of opinion, which was beyond the purview of Section 263. The Tribunal upheld the Assessing Officer's approach as reasonable and practical.5. Distinction between 'unaccounted income' and 'unaccounted investment':The court examined whether there was a perceptible distinction between 'unaccounted income' and 'unaccounted investment'. The Tribunal concluded that the Assessing Officer had appropriately taxed the unaccounted income as unaccounted investment. The Division Bench upheld the Tribunal's verdict, stating that merely because different opinions could be formed, interference under Section 263 was not warranted unless the opinion was perverse or based on no evidence.6. Legitimacy of the Public Interest Litigation (PIL):The court scrutinized the legitimacy of the PIL filed by the petitioner. Citing precedents, the court emphasized that PILs should not be used for personal gain, private profit, or political motives. The court found the present PIL to be politically motivated and not a genuine public interest litigation. Consequently, the petition was dismissed, with the court refraining from imposing exemplary costs based on the petitioner's assurance of not indulging in frivolous litigation in the future.Conclusion:The court dismissed the petition, highlighting that the issues raised had already been adjudicated, and the PIL was deemed politically motivated rather than genuinely in the public interest. The exercise of power under Section 263 by the Commissioner was found unsustainable, and the Tribunal's decision was upheld.