2005 (5) TMI 15 - HC - Income Tax

High Court Upholds Decision on Income-tax Act Suit Maintainability

The High Court upheld the trial court's decision that the suit for recovery of financial loss under the Income-tax Act was not maintainable under section ... The present appeal is directed against the judgment and decree passed by the learned Additional District Judge, Delhi in Suit No.121/2003 whereby the said suit was dismissed as barred under the provisions of section 293 - The aforesaid suit was filed by the appellant herein for recovery of an amount of Rs. 5,62,000, stated to be a part of the financial loss which the appellant has allegedly suffered as loss of interest on the maturity value of the NSCs and UTI units - we agree with the findings recorded by the learned trial court that a civil suit of the nature, which is filed by the appellant herein, is not maintainable - held that the suits are clearly barred by the provisions of section 293 of the Act and the civil court has no jurisdiction to entertain the suit against proceedings for search and seizure, which are taken under section 132 of the Income-tax Act - no infirmity in the impugned judgment. There is no merit in this appeal and the same is dismissed Issues involved:- Suit filed for recovery of financial loss under Income-tax Act- Maintainability of the suit under section 293 of the Income-tax ActAnalysis:The judgment delivered by the High Court of Delhi pertains to an appeal against the dismissal of a suit seeking recovery of a financial loss under the Income-tax Act. The appellant, who was also an assessee, filed a suit for the recovery of an amount allegedly lost as interest on NSCs and UTI units. The suit was contested by the respondents, and one of the objections raised was regarding the maintainability of the suit under section 293 of the Income-tax Act. The trial court held that the suit was not maintainable under section 293 and dismissed it without costs. The appellant challenged this decision in the High Court.The main issue in question was whether the suit was barred under the provisions of section 293 of the Income-tax Act. The court observed that this issue should be heard as a preliminary issue as it goes to the root of the suit. The appellant argued that all issues should have been dealt with together and that being a third party unconnected with the search and seizure incident, the suit should have been held maintainable. However, the court disagreed, stating that the issue of maintainability under section 293 could be decided independently of other issues.Regarding the maintainability of the suit, the court examined the relevant provisions of the Income-tax Act, particularly sections 132 and 293. It was noted that the appellant could have claimed interest under section 132B(4) of the Act and sought relief through revision under section 264. The court found that a civil suit like the one filed by the appellant was not maintainable under section 293 of the Act. The court cited previous decisions, including a Full Bench decision of the Gujarat High Court, to support its conclusion that civil courts have no jurisdiction to entertain suits against proceedings under section 132 of the Income-tax Act.In conclusion, the High Court upheld the trial court's decision that the suit was not maintainable under section 293 of the Income-tax Act. The court found no merit in the appeal and dismissed it without costs. The judgment emphasizes the limitations on civil suits against orders made under the Income-tax Act and highlights the alternative remedies available to claim relief in such cases.