TaxTMI 
TaxTMI 
1997 (10) TMI 106
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....than and Shri Krishna Rao, Assessing Officer. Since these are connected appeals, they are being disposed off through this single order for the sake of convenience. FACTS 3. In terms of section 132 of the Act, separate warrants of authorisation under the said provision in statutory Form No. 45 were issued by the Director of Income-tax, Investigation, Madras, on 26-8-1995 for search of the below given premises: (a) No. 91, Venkatasamy Road (West), R.S. Puram, Coimbatore; (b) No. 86, Periasamy Road (West), R.S. Puram, Coimbatore; and (c) 601, Raja Street, Coimbatore in which the business is carried on by the firm of M/s. Kirtilal Kalidas & Co. Warrant of authorisation was also issued by the Dy. Director of Income-tax (Inv.), Coimbatore, dated 30-8-1995 to search Vispark Jewellery Manufacturers Pvt. Ltd., Mettupalayam Road, Coimbatore. 4. In the warrants of authorisation (search warrants) issued by the Director of Income-tax, Madras, it is mentioned that information has been laid before him and on the consideration thereof he had reason to believe that: "If a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922, or under sub-section (1)....
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....uments, money, bullion, jewellery or other valuable article or thing found as a result of such search and take possession thereof; (f) to make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing; (g) to convey such books of account, documents, money, bullion, jewellery or other valuable article or thing to the office of the Deputy Commissioner of Income-tax or any other authority not below the rank of the Income-tax Officer employed in the execution of the Income-tax Act, 1961; and (h) to exercise all other powers and perform all other functions under section 132 of the Income-tax Act, 1961 and the rules relating thereto." 5. Similarly the Dy. Director of Inspection (Investigation), Coimbatore, Sri V.S. Kothari, in the search warrant dated 30-8-1995 issued by him in statutory Form No. 45 has stated that information was laid before him and on the consideration thereof he had reason to believe that: "if a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 131 of the Income-tax Act, 1961, or a notice under sub-section (4) of section 22 of the Indian Income-tax Ac....
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.... the office of the Deputy Commissioner of Income-tax or any other authority not below the rank of the Income-tax Officer employed in the execution of the Income-tax Act, 1961; and (viii) to exercise all other powers and perform all other functions under section 132 of the Income-tax Act, 1961 and the rules relating thereto." 6. Pursuant to these search warrants/authorisations, search operations were earned out on 30-8-1995 and certain materials were seized duly recorded in the Panchnama drawn at the search place, copies of which were also given to the respective searched persons or their agents. Copies of four search warrants have been given by the Assessing Officer on 12-8-1997 along with the written submissions filed by him in these appeals. 7. On the basis of searches conducted on 30-8-1995 an appraisal report was prepared on 14-11-1995 by the Dy. Director of Income-tax (Inv), Coimbatore, which was forwarded to the Assessing Officer, who was possessed of the jurisdiction over these appellants by virtue of notification under section 120 of the Income-tax Act, 1961, from the Commissioner of Income-tax, Coimbatore, bearing No. 7/1988-89/CBE dated 15-6-1988, which was modif....
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....e mentioned appellants did not file their returns within the time given in the notices issued to them respectively under section 158BC of the Act because according to them there was no undisclosed income for the block period of 10 years and moreover the notices issued on them were wholly illegal and without jurisdiction. However, subsequently, the returns for the block period were filed by the above mentioned appellants, the details of which are as follows: ----------------------------------------------------------------- (a) M/s. Kirtilal Kalidas & Company (Appellant No. 1) Nil income (b) M/s. M.R. Agros Rs. 1,47,162 (Appellant No. 2) (as income from other sources  ....
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....nbsp; Total Income Rs. 145,24,800 ----------------------------------------------------------------- (ii) M.R.Agros: ----------------------------------------------------------------- Undisclosed income as admitted in the return Rs. 1,47,162 Unexplained investments in land and Building including Farm House and Swimming Pool made out of undisclosed income as per paras above (12,19,665 + 8,00,000) Rs. 20,19,665 -------------- &....
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....; --------------- Total Income Rs. 31,54,960 ----------------------------------------------------------------- 11. The Assessing Officer also levied and demanded tax at 60% of the undisclosed income computed by him in (he respective block period assessment orders in terms of section 113 read with section 158BA(2) of the Act. We also record the facts and the reasons for making the different additions by the Assessing Officer in their respective block period assessment orders. M/s. Kirtilal Kalidas & Co. (ITA No. 93/MDS/97) 12. The addition of Rs. 4,78,350 has been made on account of unexplained gold jewellery which has been dealt with by the Assessing Officer in the impugned order in this appellant's case in para. 4 of the impugned order from pages 2 to 5. According to the Assessing Officer the gold jewellery as per the assessee's books on 30-8-1995 was 160433.250 grams whereas as per the physical inventory made on that day, the quantity of go....
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.... 18,774.600 gms ----------------------------------------------------------------- This was valued by the Assessing Officer @ Rs. 459 per gram and by doing so the addition worked out to Rs. 86,17,816 and this was treated as undisclosed income of the appellant firm for the block period. 12.2 The addition of Rs. 49,23,408 towards the unexplained shortfall in respect of gold jewellery repairs has been discussed elaborately by the Assessing Officer in para 5.1 of the assessment order. The shortfall is worked as under: ----------------------------------------------------------------- Outstanding stock of gold jewellery under repairs as per seized document and Annexure-II 13,508.52 gms. Less: Physical inventory of gold jewellery under repairs &n....
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....bsp; Rs. 90,907 Sri Shyam Shir Sagar Rs. 2,20,406 ------------------------------------------------ The Assessing Officer did not believe the explanation and treated the sum of Rs. 5,05,227 as undisclosed income of the block period of this appellant firm. 13. Thus the total undisclosed income for the block period was computed in a sum of Rs. 1,45,24,800 as recorded by us above and tax at 60% of Rs. 8714880 was demanded. This has given rise to the present appeal (ITA No. 93/MDS/97) before this Tribunal. M/s. M.R. Agros (ITA No. 94/MDS/97) 14. The assessee trust filed a return declaring undisclosed income of Rs. 1,47,162 and paid tax thereof of Rs. 88,297, at 60% as provided in section 113 read with section 158BA of the Act. The Assessing Officer made a total addition of Rs. 20,19,665 as unexplained investment in land and building including farm house and swimming pool. According to the Assessing Officer this was from undisclosed income. The Assessing Officer, from a perusal of the seized documents relating to this appellant-assess....
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.... on the right-side of the farm house and according to him, the cost of construction/investment in the swimming pool will be approximately Rs. 1 lakh. The Assessing Officer estimated the cost of construction of the farm house/building at Rs. 300 per sq. ft. 15. For the reasons given by the Assessing Officer in paras 4 to 6, the total addition of Rs. 20,19,665 was made. This is challenged in this appeal before us on the ground that there has been no undisclosed income of the appellant-trust in a sum of Rs. 20,19,665 and whatever undisclosed income was there, has been disclosed in the return to the tune of Rs. 1,47,162. M/s. Vispark Jewellery Mfrs. P. Ltd. (ITA No. 95/MDS/97) 16. In this case, a sum of Rs. 2,10,43,312 is considered as undisclosed income of the assessee being unexplained investment in gold and undisclosed profits from unaccounted turnover. A sum of Rs. 9,42,706 is also treated as undisclosed income being wastage of gold. The total undisclosed income has been worked out in the assessment order in a sum of Rs. 2,19,86,020 and income-tax at 60% and surcharge at 1596 of the tax has been worked out and demanded aggregating to Rs. 1,51,70,353. The detailed working o....
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.... in para. 4.2 at page 3 of the assessment order. The assessee submitted that it had issued issues and receipts to third parties during the period May, 1994 to December, 1994 in respect of the following third parties, the details of which are as under: ----------------------------------------------------------------- Name of the party Issues Receipts Making charge ----------------------------------------------------------------- Rajesh Exports Ltd. 7168.600 7168.600 Rs. 148160 Sri Krishna Jewellers 2162.900 2162.900 Rs. 25421 Arihanth Jewellers 3619.020 3619.020 Rs. 10858 ---....
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....to him, the entire quantum of gold jewellery transaction denied by third parties was to the tune of 12,950.52 grams and the quantum of 22.923 Kgs. being the monthly-average of the unaccount turnover of 183466.062 grams made by the assessee allegedly through its employees was also treated as unexplained investment by the assessee in the gold for the balance period up to the date of search, viz, 30-8-1995. Thus the total unexplained investment in gold in terms of quantity was worked out by the Assessing Officer at 35.873 Kgs., the value of which was taken by him was @ Rs. 459 per gram and by doing so, the unexplained investment in gold was estimated at Rs. 1,64,65,707. Thus the total unexplained investment in gold and undisclosed profit on unaccounted turnover was worked out at Rs. 2,10,43,312 and this was brought to tax at 60%. 16.4 In para. 6, the Assessing Officer has stated that the assessee by letter dated 19-3-1997 submitted that the net excess of gold of 2053.826 grams, after reconciling the stock position as on 30-8-1995 represented wastage and the value of it was claimed as admitted in the current return as in last year. The Assessing Officer did not believe this version ....
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....p; orised in the name of Items course of search ---------------------------------- on 30-8-1995 Own Mother Total ----------------------------------------------------------------- 22 Ct. GJ 3168 gms 2065.700 3705.800 5771.500 14 Ct. GJ 781 gms - 359.100 359.100 Jattal (20% gold) ....
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....------------------------- It was further submitted that the difference between the quantity of gold found at the time of search and admitted for wealth-tax purposes by them was 2335 grams, and that her mother's jewellery was deposited with M/s. Kirtilal Kalidas & Co. totalling 1737.700 grams and in regard to the balance of gold jewellery which remained unexplained totalling 593.300 grams, the assessee submitted that the same has been regularly used by her mother on periodical visits. In regard to diamonds, it was submitted that on the day of search diamond to the extent of 101.22 Cts. were found and that in her and in her mother's wealth-tax returns 110.20 Cts. have been admitted leaving a difference of 9.02 Cts. which the assessee told to the Assessing Officer that her mother during her visits to Bombay might have left the diamonds with her brothers. In the course of hearing on 27-3-1997, the Assessing Officer informed the authorised representative of the appellant that the assessee in the course of her statement under section 132(4) had submitted that she purchased the gold jewellery weighing 902.800 grams from April to July 1995 for which the Income-tax Officer demand explana....
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....4.00 gms. Diamonds 80.72 Cts. ----------------------------------------------------------------- 17.4 The assessee submitted that the above gold jewellery belonged to her mother and her mother had declared the same in her Wealth-tax return also. But the Assessing Officer did not accept this in view of the sworn statement given on 30-8-1995 under section 132(4), in answer to question No. 6 she had stated that none of her jewellery or diamond is available in the house. The precise question and answer given by the assessee's mother is as under: "Q. No. 6 Approximately, how much gold/diamonds jewellery do you have in this house? Ans: I don't have any jewellery in this house but my daughter, Usha's jewellery is available in this house. She is not able to tell as to the quantity." 17.5 The assessee in the course of statement recorded under section 132(4) of the Income-tax Act on 30-8-1995 that she herself categorically submitted that she had purchased gold j....
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....sp; Name Nos. Gold Diamond content content 1 2 3 4 5 ----------------------------------------------------------------- 62 4 green stoned Diamond bangles 4 53 gms. 2.50 cts. 64. Red-stone diamond bangles &n....
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....p; 6 72.0 gms. 78. Gold Necklace 2 132.0 gms. 79. 12 rows, long chain 95.0 gms. 80. Canadian gold coins (4 bag & 1 small) 5 133.0 gms. 89. Diamond watch with gold chain 1 65.0 gms. 25.0 cts. Purchased in July-August, 1995 ------------ ----------- &nbs....
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....; @400 6,00,000 Jattar 754.000 gm. 7,000 Diamonds 80.72 cts. 2179,000 @ 27,000 per ct.  ....
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....ri Santhana Krishnan appearing for the assessees assisted by Shri Swaminathan, C.A. submitted as under: 18.1 According to him all the assessments made on 31-3-1997 are barred by limitation as provided in section 158BE(1) as there were search operations under section 132 of the Act on 30-8-1995 at the respective premises of all the appellants as is evident from the copies of search warrants dated 28-8-1995 and 30-8-1995 issued by the Director of Investigation, Madras and Dy. Director of Inspection, Coimbatore, given by the Assessing Officer along with his written submissions during the course of hearing of all these appeals. It is contended by the assessee's counsel that the Assessing Officer also issued notices to each of the assessees (appellants) on 11-3-1996 under section 158BC of the Act on the basis of the appraisal report of the D.D.I., Income-tax Department, Coimbatore, dated 14-11-1995 and drew our attention to the copies of those notices placed in the paper books of her respective appeals. It is the contention of Shri Santhana Krishnan that the assessments on all the appellants/assessees should have been completed on or before 30-8-1995- in terms of section 158BE(1) of ....
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....ons on 30-8-1995 scrutinising the seized materials recovered from the premises of the respective appellants in search operations on 30-8-1995. It was the case of the assessees counsel that assessment proceedings are judicial proceedings and, therefore, no directions or instructions are to be given to the Assessing Officer for framing the assessments and he has to make the assessment on his own without being guided, instructed or directed by any outsider or any authority how high-so-ever he may be. On this count, the assessees counsel pleaded for quashing of the assessments made on 31-3-1997 by the Assessing Officer of each of the respective appellants-assessees. 18.3 It was further argued by the assessees' counsel that as per the proviso to section 158BG of the Act, the assessments cannot be made except without the previous approval of the Commissioner and the Commissioner has given approval in all these cases excepting that of Shri T. Shantakumar on 31-3-1997 in a mechanical manner without giving any reasons for according approval to the Assessing Officer for framing the assessments in such a manner. According to the assessees counsel according of approval by the Commissioner w....
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.... of the enquiry for framing the assessment and then to apply his mind and give or refuse to give the approval under section 158BG to the Assessing Officer. But, in the instant case such an exercise has not been done at all because of all the assessments were made on 31-3-1997 and in the case of M/s. Vispark Jewellery Manufacturers (P.) Ltd. (appellant No. 3) the Assessing Officer has stated in the assessment order that he was making enquiries and recording the statements from 4 witnesses whose names are mentioned in the order. The assessment orders in all the present four appeals run into 51 pages and it is humanly impossible, submitted the assessees counsel, for the Assessing Officer to prepare draft assessment orders in the case of all the appellant assessees on 31-3-1997, place it before the Commissioner on 31-3-1997, the Commissioner to study all the assessment orders on 31-3-1997 with reference to the appraisal report of the DDI and seized material and then apply his mind and accord his final approval and the Assessing Officer thereafter to retype the same finally on 31-3-1997, prepared demand notices, challans, etc. According to Shri Santhanakrishnan, all these acts were not ....
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....d to several documents placed in the voluminous paper books of each of the appeals including the accompanying different inventories forming part of various panchanamas prepared on the search day by the search party. The assessee's counsel laboured hard to convince us that there has been no undisclosed income in any of these cases and therefore, the assessments should not be upheld or alternatively the additions made by the Assessing Officer, considering the same as undisclosed income, should be deleted. Closing the case of the appellants, the assessees counsel strongly pleaded that there was a good case for annulment of the impugned orders on the basis of the arguments advanced by him and on the basis of various authorities of the Apex Court as well as different High Courts. 19. The departmental representative, Shri Goraknathan assisted by Shri Krishna Rao, the Assessing Officer vehemently repelled all the arguments and submissions of the assessees counsel, Shri Santhanakrishnan. According to the departmental representative, the search operations were carried out only on Shri T. Santhakumar and the searches at the premises of other appellants-assessees were only consequential an....
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....al act and, therefore, the Commissioner was not obliged in terms of section 158BG of the Act to afford or give any hearing to any of the appellant-assessees and, therefore, the assessments were valid and were not vitiated requiring the cancellation as pleaded by the assessees counsel. It was further submitted by Shri Goraknathan and Shri Krishna Rao, Assessing Officer that the Commissioner was at Coimbatore and the Assessing Officer was also based at Coimbatore and it was, therefore, not difficult to prepare the draft assessment orders running into 51 pages., send it to the Commissioner on the very day and it was not difficult or humanely impossible task for the Commissioner also to study the draft assessment orders with reference to the seized material and other evidence collected by the Assessing Officer and then to give approval. The approval given by the Commissioner was neither an idle formality nor the approval was granted in a mechanical manner without application of mind as contended by the assessees counsel. Since the approval has been given by the Commissioner in accordance with law, after due application of mind, the impugned assessments are valid and legal and deserve t....
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.... representative both declined to give us a copy of the appraisal report dated 14-11-1995 of the DDI sent to the Assessing Officer consequent to search operations though we specifically gave directions for filing of a copy of the same because specific grounds have been raised and arguments advanced that the Assessing Officer did not act independently in framing the impugned assessments, but was guided, influenced and carried away by the contents and the directions given by the DDI in such an appraisal report. Upon our directions, the Departmental Representative, Shri Goraknathan, filed a written memorandum on 12-8-1997 declining to give the copy of the appraisal report for our perusal and consideration which was submitted by him in the Tapal section of the registry (Inward No. 1191). The said written memo of the learned departmental representative is placed in the file of Shri T. Santhakumar (ITA No. 1883/MDS/96). 21. After hearing the representatives appearing before us for both sides and after carefully studying the material brought on record and the case laws on the subject matter of appeals, we are of the considered, but firm opinion that all these appeals are required to be ....
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....th the authorising Income-tax authorities formed a reasonable belief, that too based on information placed before them, that unaccounted money, bullion, jewellery, etc., as mentioned therein will be found if search operations are conducted. At page 1 of the different search warrants, the authorising Income-tax authorities stated after forming reasonable belief based on information place before them that Shri T. Santhakumar will not produce any account books, documents, etc. etc. mentioned therein if summons or notices are issued to him either under the Income-tax Act, 1922 or under the Income-tax Act, 1961. But one thing is clear that both the authorising Income-tax authorities did also form reasonable belief as is evident from the contents at page 2 of their respective search warrants that certain buildings/premises mentioned therein had unaccounted money, bullion, jewellery, valuable article or thing, etc. It is very belief of the authorising Income-tax authorities that prompted them to act in accordance with the provisions of section 132 of the Act and authorised searches on the persons and the buildings where they were residing. Had there not been any search warrants or authori....
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....the Act and, therefore, the provisions of section 158BE(1) governed the limitation period. The impugned assessments in all these cases made on 31-3-1997 are thus barred by limitation being made beyond the period prescribed, namely within one year from the month in which the search warrants were issued. The search warrants were issued on 26-8-1995 and 30-8-1995 by the Director of Inspection (Investigation) and the Dy. Director of Inspection (Investigation) respectively. The assessments, therefore, ought to and should have been made by the Assessing Officer on or before 30-8-1996 and not any day later to that. The assessments made on 31-3-1997 on all the appellant-assessees are thus out of time and require annulment as per law. 23. According to the provisions of section 158BE(1) of the Act, the Assessing Officer was empowered to perform the act of passing the assessment orders on or before 30-8-1996 but the same was not performed in accordance therewith. The Assessing Officer, therefore, lost complete jurisdiction, power and authority to make or pass any order of assessment in terms of section 158BC read with section 143(3) of the Act. The provisions of section 158BE(1) and (2) ar....
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.... enquiries by the Assessing Officer for making the assessment of income are quasi-judicial proceedings and the act of framing the assessment is quasi-judicial act. It is a trite law that a judicial or quasi-judicial authority should act independently and that there shall not be any interference, nor any advice, opinion, instructions, directions can be given to any Income-tax authority in such proceedings, etc., by any stranger/ outsider even if such stranger/outsider is higher or highest authority in the hierarchy of the department. If an order is passed or a decision is rendered by an income-tax authority in such quasi-judicial proceeding at the behest of or upon the directions or instructions, of any superior officer or authority then such an order/decision is illegal and a nullity in law because it shall be deemed in law that such an order / decision is not of that quasi-judicial authority but of some other authority who directed or issued orders/instructions to the lower authority to act and thereafter pass an order/decision in a particular manner. Though there are several decided case laws on the subject we would only refer to and discuss few decisions in this regard as below:....
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....not administrative: it is quasi-judicial. The expression "may make such inquiry and pass such order thereon" does not confer any absolute discretion on the Commissioner. In exercise of the power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice: he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority. Section 13 of the Wealth-tax Act provides that all officers and other persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Board. These instructions may control the exercise of the power of the officers of the department in matters administrative but not quasi-judicial." 27. In the instant cases there is no denial that the DDI had given directions/instructions to the Assessing Officer in his appraisal report to make enquiries in a particular manner and frame the block period assessments. The case of the assessee's counsel is that had there been no directions instructions from the D.D.....
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....assessment orders of the Assessing Officer in all these cases without hearing the appellant-assessees and without giving or recording any reasons in the approval order, copy of which has been given, by the departmental representative, in these appeals. 29. The proviso to section 158BG put an embargo on the power of the Assessing Officer that no order of assessment for the block period shall be passed without the previous approval of the Commissioner. A careful reading of the phraseology 'with the previous approval' employed in section 158BG makes it abundantly clear that the granting of previous approval by the Commissioner is not an idle formality. The Legislature in its proper wisdom knew that making of an order of assessment for the block period under Chapter XIV-B will adversely affect and deprive the citizens of their properties and other rights guaranteed under the Constitution, and, therefore, mandated that the Assessing Officer shall not make any order of assessment of the block period until he obtained the previous approval of the Commissioner. From the scheme of Chapter XIV-B it is clear that the Assessing Officer does not afford any opportunity to the assessee to rais....
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....hat granting previous approval by the Commissioner to the proposed order of assessment of the block period is only an administrative act and neither a judicial nor a quasi-judicial act and, therefore, the question of affording any hearing to any person/assessee before granting approval to the proposed order of the Assessing Officer-does not arise and therefore not essential or necessary. It is also the contention of the departmental representative before us that granting or refusing approval is an internal matter between the Assessing Officer and the Commissioner to find out whether the proposed order of assessment of the block period framed by the Assessing Officer is proper and valid and in accordance with the provisions of the Act and, therefore, the grant of previous approval by the Commissioner is not even a proceeding requiring or giving of a hearing to any person/assessee. This approach of the Assessing Officer as well as the Senior Departmental Representative regarding the understanding of the provisions of section 158BG is wholly fallacious and erroneous. 31. It is patently obvious that in order to enable the Commissioner to grant his previous approval, the Assessing Of....
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.... one, the Customs Officer failed to give notice under section 124 to the person from whose possession the seizure was effected and he applied to the Collector to extend the time under the proviso to section 110(2). The Collector, without any hearing to the concerned person, gave his approval to the Customs Officer and extended the time for issue of notice under section 124. The Order of the Collector made under proviso to section 110(2) was challenged on the ground that the Collector had granted extension of time to the Officer, without any hearing to the concerned and affected person, while granting extension of time was to be based on sufficient cause being shown by the Officer for his failure to issue the notice under section 124 within the six-month period and further, after the causes were shown by the officer, the Collector had to apply his mind and use his discretion and arrive at a finding or decision whether the causes shown by the officer were sufficient or not and this could be only done by the Collector upon inquiry of facts, namely material on record and, therefore, such act was a quasi-judicial act or at least an act requiring quasi-judicial approach. 32.2 The Supr....
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....ion in the case of State of Orissa v. Dr. (Miss) Binapani Dei AIR 1967 SC 1269 and later on again in the year 1970 in the case of A.K. Kraipak as an essential part of any enquiry, function, act or process irrespective of its nature. This trend was further fortified by the Supreme Court in its landmark judgment in the year 1978 in the case of Smt. Maneka Gandhi and later in the case of Mohinder Singh Gill. 36. It is now a well established tenet laid down by the Supreme Court in the judgments rendered in the case of Swadeshi Cotton Mills v. Union of India AIR 1981 SC 818 and in the case of Liberty Oil Mills v. Union of India AIR 1984 SC 1271 following the decisions rendered in the cases of Dr. (Miss) Binapani Dei, A.K. Kraipak and Smt. Maneka Gandhi, that not only the principles of natural justice should be followed in all administrative and quasi-judicial processes and functions but 'breach' or 'violation' of the 'principles of natural justice' will render any decision or order void and a 'nullity'. 37. Very recently the Supreme Court in the case of Surinder Nath Kapoor v. Union of India [1988] 39 Taxman 374 had observed: "16. There can be no doubt that when an order is mad....
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....sed to a person due to the non-observance or violation of the principles of natural justice. 38. In Smt. Maneka Gandhi's case, the passport of the petitioner therein was impounded by the Government of India under section 10(3)(c) of the Passports Act, 1967. The petitioner under article 32 of the Constitution challenged the action of the Government as being null and void for denial of an opportunity of hearing. The Hon'ble Supreme Court ruled that although there were no positive words in the statute requiring that the party shall be heard, yet, the justice of common law would supply the omission of the Legislature. Their Lordships of the Supreme Court held that if the statute was silent with regard to the observance of the rules of natural justice, those principles shall be 'read' into the statute. Justice Bhagwati of the Hon'ble Supreme Court (as he then was) emphasised that audi alteram partem is a rule devised by Courts to ensure a reach just decision by the statutory authority and is calculated to act as a healthy check on the abuse or misuse of power and its reach and applicability cannot be allowed to be circumscribed. Thus, it is too late in the day to urge that since the ....
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....cumstances, we are very clear in our mind that the previous approval by the Commissioner under section 158BG is a quasi-judicial act requiring application of mind and judicial discretion and therefore, the observance of rules of natural justice or the cardinal rule of audi alteram partem should have been scrupulously observed by the Commissioner. 41. In these cases, the Commissioner has passed an order granting approval under section 158BG of the Act through a single order passed on 31-3-1997 without giving any reason whatsoever. As we have recorded elsewhere above, the draft assessment orders of the block period in all these cases were made on 31-3-1997 and on the very same day, i.e., on 31-3-1997 the Commissioner grants approval and that too without giving or recording any reasons whatsoever. The approval order does not disclose the points which were considered by the Commissioner and the reasons for accepting them. In our view, this is totally an unsatisfactory method of granting approval in exercise of judicial power vested in the Commissioner. 42. In Travancore Rayons Ltd. v. Union of India PAR. 1971 SC 862, the law regarding recording of reasons which lead to the passin....
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....or the decision since the decision may only be taken if the authority is satisfied that the grant of licence or allotment of imported goods will not be in the public interest. We must make it clear that 'without assigning reasons' only means that there is no obligation to formulate reasons and nothing more. Formal reasons may lead to complications when the matter is still under investigation. So the authority may not give formal reasons, but the skeletal allegations must be mentioned in order to provide an opportunity to the person affected to make his representation. Chapter and verse need not be quoted. Details may not be mentioned and an outline of the allegations should be sufficient." The recording of reasons and conveying the same, thus, is one of the norms of 'natural justice'. 44. In Mahabir Prasad Santosh Kumar v. State of U.P. AIR 1970 SC 1302, Shah, J., speaking for the Bench, opined that recording of reasons in support of a decision by a quasi-judicial authority is obligatory as it ensures that the decision is reached according to law and is not a result of caprice, whim or fancy or reached on ground of policy of expediency. A party to the dispute, observed Shah, ....
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.... decision rendered in non-observance or breach of the principles of natural justice shall be void and nullity, that is to say, that no such decision or order came into existence in the eye of law. Such orders are liable to be quashed as held by the Supreme Court in the case of Collector of Central Excise & Land Customs v. Sanawarmal Purohit 1979 ELT (J. 613) and also by the Calcutta High Court in the case of Himalayan Plywood Industries (P.) Ltd. v. Collector of Customs [1986] 9 ECC 72. 48. For these reasons also, we agree with the assessees counsel, Shri Santhana Krishnan, that the impugned orders of assessment of the block period in all these cases are nullity and cannot be upheld. 49. Since we are holding that all the impugned assessments are not sustainable in law and vacating it, there is no need for us to consider or give any decision in respect of the various additions made in each of the cases. But since the appellants have raised contention challenging the various additions made by the Assessing Officer as undisclosed income (UDI) in terms of Chapter XIV-B, we wish to deal with the same, but briefly. 50. The provisions of Chapter XIV-B have been brought on the sta....
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....e do not find any justification for the addition of Rs. 49,23,408 in the case of the first appellant (M/s. Kirtilal Kalidas & Co.) towards unexplained shortfall in respect of gold jewellery under repairs treating the value as undisclosed income. The addition of Rs. 5,05,227 in the case of the first appellant treating it as unexplained cash when the raiding party as well as the Assessing Officer was told that this represented monies belonging to the trust styled as M.R. Agros. The availability of cash in the case of the trust has been found recorded in its regular account books. How the cash came into the possession of the trustees of the said trust are found recorded in the account books. Such being the case, we find no justifiable reason for the Assessing Officer to consider the same as undisclosed income in the hands of the first appellant to the extent of Rs. 5,05,227 because the amount is found recorded in some documents which were found during the course of search operations in the business premises of the appellant M/s. Kirtilal Kalidas & Co. in which one of the partner, Shri Santhakumar is a trustee of the trust of M/s. M.R. Agros. 52. Similarly, we find no justification ....