TaxTMI 
TaxTMI 
2010 (3) TMI 657
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.... sales tax and Income Tax. All of a sudden, the officers of the respondent conducted a search in his shop on 23-10-2009. They did not recover any document or any other incriminating material. However, they forcibly took him to the office of the Enforcement Directorate at Shastri Bhavan. What happened at that place was described by him in his communication to the respondent sent by RPAD on 25-10-2009. The advocate of the petitioner was not permitted to meet him. Though, the petitioner requested the respondent to permit him to appear with a lawyer of his choice, a reply dated 27-10-2009 was sent by the respondent, rejecting his request. (ii) Section 37(3) of The Foreign Exchange Management Act, 1999 (FEMA) provides that the officers under FEMA shall exercise powers like the powers conferred on the Income tax authorities under the Income Tax Act, 1961, subject to the limitations contained there in. Section 131 of the Income Tax Act provides that the officers there on shall have the powers vested in a Court under the Code of Civil Procedure, 1908 for the purpose of enforcing attendance of any person for examining him on oath. Civil Procedure Code in turn requires to be noted to unde....
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....cate came to the office of the respondents and wanted to meet the petitioner as he was entitled to, but he was not permitted. Since, he was ill treated, a letter dated 25-10-2009 was addressed to the respondents requesting him to permit to appear before him with an advocate of his choice, if further summons are issued to him. By communication dated 4-11-2009, the respondent replied that such permission cannot be accorded. He was summoned to appear on 17-11-2009. A grave prejudice will be caused to him, if he is not permitted to be accompanied by an Advocate to be present at the time of interrogation. (iii) Thus, the contentions raised in this writ petition are similar to the contentions raised in the other writ petition which was extracted above. 4. Counter affidavit was filed on behalf of the respondent in W. P. No. 23110 of 2009 wherein the following facts have been set out : (i) The respondent issued summons under Section 37 of FEMA read with Section 131 of the IT Act, 1961 to the petitioner vide this Office letter dated 29-7-2009. After receipt of the above summon, the petitioner appeared before the Assistant Director of Enforcement Directorate at 2.00 P.M on 23-10-200....
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....ement given earlier has given intricate details and the investigation is still at the initial stage. The petitioner has been summoned for further enquiry in this regard and for completion of the investigation. 5. Counter affidavit was filed on behalf of the respondent in W.P. No. 23558 of 2009 wherein the following facts have been set out : (i) Specific intelligence was gathered by the officers of the enforcement that the petitioner has been receiving huge sums of money and making payments locally on a large scale under instructions of persons residing in Dubai and Malaysia and also transfer foreign exchange unauthorizedly abroad. He has received huge amount of Rs. 1.31 Crores and he was about to deliver the same to persons who would come from Mumbai to Chennai. Therefore the officers of the Enforcement Department kept surveillance on the activities of the petitioner. Based on the above specific intelligence and surveillance made, the business premises and the residential premises were searched by the officers of the respondent department. During the course of search, the officers have found a box containing Rs. 1.30 Crores in the denomination of 1000 and 500 rupee notes in t....
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....and examining him on oath." Thus, according to the learned Senior Counsel appearing for the petitioners, the officer who records the statement under Section 37 of FEMA is a Civil Court and hence the Advocates can appear before the authorities under FEMA. 7.2 On the other hand, it was contended by the learned Special Counsel appearing for the Enforcement Department that for collecting material and gathering facts, statement was obtained from the petitioners. Thus the officials of the respondent was collecting materials to investigate the matter further at this stage. Thereafter, if the officials of the respondent are not satisfied with the statement of the petitioners, before adjudication, show cause notice will be caused to the petitioners. Even at the preliminary stage, the petitioner cannot request for assistance of an Advocate. 7.3 Before adverting to the said contentions raised by the learned Senior Counsel appearing for the petitioners and the learned Special Counsel appearing for the Enforcement Department, it would be more appropriate to reproduce Section 37 of FEMA as well as Section 131(1) of the income Tax Act. Section 37 of FEMA "37. Power of search, seizure,....
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.... his choice to defend him. It has been further stated in the Counter Affidavit that the investigation is still at the initial stage and the petitioners have been summoned for further enquiry in that regard and for completion of the investigation. 7.6 The question that arises for consideration is whether at the stage of preliminary investigation, can the petitioners seek the assistance of a lawyer. 7.7 When collecting materials to take further action, the officers of FEMA does not act as a Court. Whether, the petitioners will be treated as accused of contravention of the provisions of FEMA or whether they would be treated as witness would be decided after preliminary enquiry or investigation by the authorities concerned. Even at the initial stage itself, before the adjudicating authorities comes to a conclusion to proceed further or not, there need be no assistance to the petitioners either by an Advocate or by a Chartered Accountant. The said view was taken by the Division Bench of this Court which is reported in (1984) 149 ITR 341 (MAD) - V. Dakshinamurthy v. Assistant Director of Inspection, Income Tax. The observations made by the Division Bench is usefully extracted here ....
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....r to gather information, material evidence, and the like. A specific power is conferred on him to summon witnesses, enforce their attendance, issue commissions and the like. In this respect, his powers are co-equal with those of courts of law under the Civil Procedure Code. He is held to be a tribunal within the meaning of section 135(2) of the Code of Civil Procedure, and witnesses who have to appear before him are protected from arrest. He is also a court for purposes of the Criminal Procedure Code. In these circumstances, the ITO, in his own sphere, is a tribunal of plenary jurisdiction subject to no other control and limitations save those which are enacted in the income-tax code. It stands to reason, therefore, that the investigations and inquiries launched by him are not subject to the jurisdiction of ordinary courts. Indeed, there is a specific provision in the I.T. Act which forbids courts of law from interfering with the ITO's jurisdiction to assess : vide Section 293." 7.8 Thus, considering the overall aspects of the judgment cited above, I am of the considered view that the petitioners have no right to take their counsels along with them at the time when their stateme....
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....e is nothing in that judgment to warrant a still wider interpretation of that definition. 34. Mr. Jethmalani referred to the provisions in the Indian Oaths Act, (x of 1873) and on the basis of his argument that the statements under Section 171-A(4) were made on oath contended that the proceeding became a judicial proceeding in the wider sense of the word. In our view the Oaths Act has no application here. The preamble to the Act shows that it was an Act to consolidate the law relating to judicial oaths, affirmations and declarations and was enacted because the Legislature though it "expedient to consolidate the law relating to judicial oaths, affirmations and declarations and to repeal the law relating to official oaths, affirmations and declarations." Section 4 of the Act provided that "The following Courts and persons are authorised to administer, by themselves or by an officer empowered by them in this behalf, oaths and affirmations in discharge of the duties or in exercise of the powers imposed or conferred upon them respectively by law : (a) all Courts and persons having by law or consent of parties authority to receive evidence." The relevant portion of the Sectio....
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....tled as of right to practise throughout the territories to which this Act extends- (i) in all Courts including the Supreme Court; (ii) before any tribunal or person legally authorised to take evidence; and (iii) before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practise." 9.2 The reading of the above provision makes it clear that "The Advocate is entitled to practice all Courts including Supreme Court, before the Tribunal or person legally authorised to take evidence or before any other authority or person. No doubt the said provision stipulates that the advocates is entitled to practice, including before the persons legally authorised to take evidence. Further, the respondent is not taking any evidence from the petitioners and hence the reliance placed on the Advocates Act, 1961 may not be of any relevance to the matter in issue in these writ petitions. But however, the Advocates Act, 1961 only speaks about the rights of the Advocates to practice in any Court or authorities and it does not speaks about the rights of the parties to engage a counsel before the Supreme Court or any other forum. ....
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.... illegal trade and evasion of taxes and duties are in a position to afford luxuries on lavish scale of which an honest ordinary citizen of this country cannot dream of and they are surrounded by persons similarly involved either directly or indirectly in such pursuits. But that cannot be a ground for holding that he has a constitutional right to claim similar luxuries and company of his choice. Mr. Salve was fair enough not to pursue his argument with reference to the comfort part, but continued to maintain that the appellant is entitled to the company of his choice during the questioning. The purpose of the enquiry under the customs Act and the other similar statutes will be completely frustrated if the whims of the persons in possession of useful information for the departments are allowed to prevail. For achieving the object of such an enquiry if the appropriate authorities be of the view that such persons should be disassociated from the atmosphere and the company of persons who provide encouragement to them in adopting a non-cooperative attitude to the machineries of law, there cannot be any legitimate objection in depriving them of such company. The relevant provisions of the....
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....ade in W.P. No. 2429 of 2009 dated 24-11-2009. The question that came for consideration before this Court was whether the summons issued by the respondent therein under Section 37 of the FEMA should be interdicted by this Court on the ground that there was no application of mind and the documents sought for would amount to a roving enquiry by the Directorate. Para 10 of the said judgment is usefully extracted here under : "10. The Act has deliberately chosen not to apply the concept of summons used either under the Code of Civil Procedure or under the Code of Criminal Procedure, but has chosen to apply analogous provisions found in the Income Tax Act. Therefore, while interpreting the scope and width of Section 37 of FEMA, one cannot apply the concept of summons as available to a civil court under the Code of civil Procedure, only because the power of a Civil Court was conferred on the authorities." 14. Yet another judgment relied on by the learned Special Counsel appearing for the Enforcement Directorate, is the judgment made in Crl. O.P. (MD) No. 7646 of 2007 dated 11-1-2008. Para 11 of the said judgment is usefully extracted here under : "11. The perusal of the eleven c....