AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 1367
X X X X Extracts X X X X
X X X X Extracts X X X X
....ving rise to the dispute in present petition are as under: 5. Petitioner Deepak Kumar Jain son of Late Giri Lal Jain is an individual and citizen of India residing at 108, Shyam Park, Sahibabad, Ghaziabad. He has three brothers namely Ashok Kumar Jain, Pradeep Kumar Jain, Vipin Kumar Jain and one sister Smt. Asha Rani. 6. On 04.10.2004, a search operation was carried out at the residential premises of petitioner and his brothers under Section 132 of Income Tax Act, 1961 (hereafter to be referred as 'Act, 1961'). The officers of Income Tax Department also searched lockers and seized cash etc. of total sum of Rs. 2,15,12,000/- from residence and lockers of petitioner, apart from cash seized from the residence and lockers of petitioner's brothers. 7. Proceedings for block assessment under Chapter XIV-B were initiated. Vide order dated 03.10.2005 Income Tax cases of petitioner were transferred to Central Circle, Meerut from Ghaziabad. Petitioner cooperated with the authorities and participated in block assessment proceedings. All the cases were completed and even refund was issued. However, a substantial amount, refundable to petitioner, was not refunded. When inqu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 10. The amount was appropriated through P.D. A/c cheques dated 18.01.2005. It is further said that Settlement Commission, New Delhi vide order dated 12.09.2000, in Misc. Application No. 11B/1/64/82-IT filed by M/s. Giri Lal Mam Chand & Co., Sahibabad, Ghaziabad, on 20.09.1982, has held that Amrish Kumar Jain is Benamidar of (Late) Giri Lal Jain, hence outstanding demand in the name of Amrish Kumar Jain has been appropriated in accordance with law from the seized funds of petitioner and his two brothers. In reference to another query made under RTI Act, 2005, CIT, Ghaziabad vide letter dated 20.08.2007 informed petitioner that outstanding demand against Amrish Kumar Jain was adjusted from the seized funds of petitioner and his brothers treating them legal heirs of (Late) Giri Lal Jain in accordance with Section 226 of Act, 1961. Assistant Commissioner, Income Tax, Circle-1, Ghaziabad (hereinafter to be referred as 'ACIT, Ghaziabad') vide letter dated 23.10.2007 further informed petitioner that demand of Sri Amrish Kumar Jain was created under Wealth Tax Act, 1957 (hereinafter to be referred as the 'Act, 1957'). 11. Petitioner further states that no appropri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oner made a further inquiry from respondents. Vide letter dated 04.11.2009 ACIT, Ghaziabad informed that there is no order wherein petitioner and his brothers including Pradeep Kumar Jain were shown as legal heirs of Amrish Kumar Jain. However, in the light of Settlement Commission's order dated 16.10.2000, petitioner and his brothers were found legal heirs of (Late) Giri Lal Jain though by mistake Pradeep Kumar Jain was shown as legal heir of Amrish Kumar Jain. 15. Letter dated 04.11.2009 said as under: "Actually, none of applicant and his brothers including Pradeep Kumar Jain are directly legal heirs of Shri Amrish Kumar Jain. They are and remain legal heirs of late Shri Girilal Jain, whose benamidar Shri Amrish Kumar Jain is." 16. Wealth Tax Assessments of Amrish Kumar Jain for the A.Y.s 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75 was completed on 24.03.1986 and Wealth Tax Officer (hereinafter to be referred as 'W.T.O.') in para 6 said as under: "I proceed to compute the assessee's wealth as under and in doing so the capital, secret capital and value of other assets as per the assessee's 15% share in the firm M/s. Giri Lal Mam Chand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tories Ltd., 4/4B Asaf Ali Road, Delhi; hence recovery could have been made from his property but in an illegal manner it has been appropriated from P.D. A/c of petitioner which is without any authority of law. It is also urged that observations made by CCIT are based on misreading of Settlement Commission's order and impugned order dated 17.08.2011 passed by CCIT is patently illegal. 19. Respondents have filed a counter affidavit as well as supplementary counter affidavit. In the counter affidavit it is said that there was a firm M/s. Mamchand Giri Lal, Bijnor constituted of (Late) Giri Lal Jain and S.D. Jain (father in law of Giri Lal Jain). The firm came into existence in 1951. It was reconstituted w.e.f. 01.05.1966 as M/s. Girilal Mamchand and Co., having following partners: I. Giri Lal Jain (Late) II. S.D. Jain (father in law of Giri Lal Jain) III. Smt. Moonga Devi Jain (sister of Giri Lal Jain) IV. Amrish Kumar Jain (minor grandson of Smt. Moonga Devi Jain) 20. Settlement Commission in the order dated 09.01.1996 held that right from beginning of firm, from 01.05.1966, Smt. Moonga Devi and Amrish Kumar Jain were benamidars of (Late....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct. 2. In continuation of my earlier letter dt. 03.01.2005 referred to above, I would request you to kindly get the cheques issued from CIT Office from P.D. A/c, in favour of the undersigned for a total sum of Rs. 2,18,57,171/- as per details given below: Name Demand under I.T. Act/ W.T. Act Amount Deepak Kumar Jain Income-tax Rs. 46,140/- --do-- Wealth-tax Rs. 72,69,250/- Pradeep Kumar Jain Income-tax Rs. 3,274/- --do-- Wealth-tax Rs. 72,69,250/- Ashok Kumar Jain Wealth-tax Rs. 72,69,248/- Total Rs. 2,18,57,171/- 3. After adjustment of above demand, from the remaining amount of seized cash deposited in P.D. A/c, may be allowed to adjust towards advance tax payable by the assessees as per their request - Name Advance-tax Amount Deepak Kumar Jain A.Y. 2005-06 Rs. 45,00,000/- Pradeep Kumar Jain --do-- Rs. 45,00,000/- Ashok Kumar Jain --do-- Rs. 45,00,000/- 23. Petitioner has filed rejoinder affidavit replying averments made in counter affidavit and has said that respondents have falsely stated that seized money kept in P.D. A/c. came from earning and investme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chronological and straight manner. 26. Firm M/s. Mamchand Girilal, Bijnor, was constituted in 1951. It had two partners namely (late) Girilal Jain (petitioner's father) and S.D. Jain (father-in-law of Girilal Jain) i.e. petitioner's maternal grand father (nana). This firm continued till assessment year 1966- 67 (financial year 1965-66). 27. Firm was reconstituted with effect from 01.05.1966 as M/s. Girilal Mamchand and Co. and this time besides (late) Girilal Jain and S.D. Jain, two more partners were introduced i.e. Smt. Moonga Devi Jain (sister of Girilal Jain) and Amrish Kumar Jain (minor) (grand son of Smt. Moonga Devi Jain). Firm was dealing in purchase and sale of Molasses. 28. Sri Amrish Kumar Jain attained majority in 1970 and became full-fledged partner through fresh partnership deed dated 03.04.1970. 29. On 04.04.1972, a search team of Income Tax Department conducted search of residence and business premises of partnership firm M/s. Girilal Mamchand and Co. and other connected establishments. It seized cash of Rs. 24,000/- and certain jewellery. 30. (Late) Girilal Jain died on 28.11.1973, Sri S.D. Jain died 12.05.1974 and Smt. Moonga Devi Jain di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... time, having only Amrish Kumar Jain alive. It also appears from order dated 24.03.1986 that same was passed with reference to the issues settled by Settlement Commission under Section 35 of Act, 1957 but no such order of Settlement Commission, relating to the wealth-tax dispute, has been placed on record and what has been stated therein has neither been brought to the notice of Court nor there is any averment that it was communicated to petitioner. Only order of Settlement Commission is on record and is dated 09.01.1996 which is in respect of income-tax. The demand notice placed on record along with supplementary counter affidavit dated 24.03.1986 and 11.01.1989 also relate to wealth-tax liability which has nothing to do with Settlement Commission's order dated 09.01.1996 which was in respect of income-tax liability. How and in what manner wealth-tax liability was created in 1986-89 and such demand could have been saddled upon petitioner could not be demonstrated by respondents at all. 35. With respect to the assessment years 1967-68 to 1974-75, 1976-77 to 1977-78, 1981-82 and 1982-83, application was filed before Income Tax Settlement Commission and it is quite obvious tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shown to be made party or given any opportunity of hearing. Against a dead person no liability can be created unless his legal heirs are there. If reconstituted firm after death of Girilal Jain is taken to be the legal representative then liability and recovery could have been made from the then partners/ proprietor and not from any person who has no relation, by any means with such reconstituted firm. 39. Facts are evident to show that reconstituted firm or assessment had no participation of petitioner or his brothers. The assessment or settlement, whatsoever may be, all was with the participation of only Amrish Kumar Jain, and quite obvious, as a proprietor of reconstituted firm. If that be so, imposing liability upon petitioner, without placing anything on record that petitioner inherited anything from his father, is patently illegal and without jurisdiction. Petitioner's money was seized in a fresh and separate search and seizure operation and that too conducted in 2004. The search and seizure has nothing to do with any assets of funds of (Late) Girilal Jain who had died some 30 years ago. Nothing could be shown to us, which may authorize respondents to appropriate funds....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd as a Hindu Undivided Family (hereinafter to be referred as 'HUF'). The matter was taken in appeal, where it was held that the amount was not income of HUF but merely represented inheritance or realisations of assets of Amarchand. Revenue did not pursue the matter further but sometime later Income Tax Officer, under Section 34 of Act, 1922, in respect of same income, started proceedings treating income in the hands of Amarchand N. Shroff by his heirs and legal representatives. The status of that entity was taken to be that of an individual and not of HUF. The amount was assessed in the hands of legal representatives under Section 34(1)(b) read with Section 24-B of the Act, 1922. The assessments were made for the A.Y.s 1950-51 to 1954-55. In appeal, Assistant Commissioner held that notice under Section 34 could validly be served only for A.Y. 1950-51 and for remaining it was invalid. Consequently, assessments for A.Y.s 1951-52 to 1954-55 were quashed. Revenue took appeal to Tribunal who held that assessment could not be made on Amarchand and Section 24-B had no application to the income received after death of Amarchand. The order of Assistant Commissioner was upheld. On a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the person deceased. Section 24-B does not extend to tax liability of estate of a deceased person beyond previous or account year in which that person dies. Court further said "By section 24-B the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction cannot be extended beyond the object for which it was enacted." 43. In First Additional Income Tax Officer Vs. Susheela Sadanandan & Anr 1965 (57) ITR 168 (SC) Court said that if a person dies executing a Will appointing more than one executor or dies intestate leaving behind him more than one heir, under Section 24-B of the Act, Income-tax Officer has to proceed to assess total income of deceased against all the executors or legal representatives, as the case may be. It also held that if there are more than one executor of a deceased person, all of them will be his legal representatives and for the purpose of section 24B(2) of the Act, all of them can jointly represent the estate. 44. In Income Tax Officer, Gudur and Another Vs. Maramreddy Sulochanamma 1971 (79) ITR (1) SC, Court held that assessment for the period subsequent to the death of assessee against legal heir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s husband who had died long back, claiming that the same can be appropriated against legal representatives by referring to Section 159 of Act, 1961. This Court, after referring to Section 132(5) and 132(B) held that in terms of section 132(B)(3) Revenue must have returned assets to the assessee as soon as demand under assessments made against the assessee, after search and seizure, is paid off, and section 159 could not have been relied therein. It also held that for recovery of dues of a deceased assessee from the alleged legal representatives, the Revenue is entitled to recover from the properties left by deceased and coming into the hands of legal representatives. Revenue therefore, has to make it clear as to what are assets left by deceased and came into hands of legal representatives and unless it is clarified, the question of appropriation from the assets of alleged legal representatives does not arise. 48. In view of above discussion, we are clearly of the view that recourse to Section 159 is thoroughly misconceived and illegal on the part of Revenue. Neither there existed any liability against deceased nor any liability was finalized after giving notice to the alleged le....