TaxTMI 
TaxTMI 
2020 (11) TMI 69
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....61 (hereinafter referred to as "the Act") from the AYs 2006-07 to 2008-09 through a Notification dated 19.04.2005 and from AYs 2009-10 on 25.06.2008. 2.2) On 02.07.2010, search and seizure operations under Section 132 of the Income Tax Act (hereinafter referred to as the 'Act') were carried out by the Income Tax Department in the offices and residential premises of various members of the Trust group and during the operations, cash amounting to Rs. 13,17,00,000/-and jewelery weighing 11339.160 grams, along with incriminating documents were seized. Subsequent to the search, the Trust was issued with notices under Sections 153A/153C/142(1) of the Act for the Assessment Years (AYs) 2005-06 to 2011-12. 2.3) In pursuance of the said not....
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....elatives of founder; v) Payment of salary in cash; vi) Bogus employment of doctors; vii) Application of accounted income of trust to benefit the relatives of founder; and viii) Violations of conditions of Sec.11/Sec.10(23C). 2.5) Based on the above materials, the Director General of Income Tax (Investigation) (hereinafter referred to as the DGIT) issued a show cause notice (SCN) to the Trust on 22.04.2013 proposing for withdrawal of the approval granted under Section 10(23C)(iv) of the Act, for the period Ays 2006-07 to 2011-12. While denying the averments in the SCN, the Authorised Representatives of the Trust questioned the jurisdiction of the DGIT to issue the notice, since the jurisdiction vests with the ITSC before which, the....
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.... c. The proposal for withdrawal of the approval in the SCN was for the period from AYs 2006-07 to 2011-12, whereas the impugned order is for retrospective withdrawal from 2006-07 onwards, which is beyond the scope of the SCN and therefore the order is bad in law. d. Retrospective withdrawal of approval is impermissible and contrary to law. e. The DGIT has no suo-motu powers to initiate proceedings without intimation to the prescribed Authorities under Section 143(3) of the Act and therefore lacks jurisdiction per se. f. The conditions referred to in the SCN and the impugned order are not the conditions prescribed under Section 10(23C)(iv) of the Act and therefore the DGIT exceeded his jurisdiction while passing the impugned order. Ev....
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....to the conclusion that the Trust had made a full and true disclosure of its income and also explained the manner in which the income has been derived. As such, the present impugned order, which places reliance on the findings of the ITSC, cannot be sustained. 9. Even otherwise, among the various grounds raised by the learned counsel for the Trust, two crucial grounds may have a direct bearing on the impugned order, with regard to its maintainability. These issues pertain to the jurisdiction of the DGIT to issue show cause notice (SCN), in view of the bar under Section 245F(2) of the Act and the powers of the DGIT to reopen the matters covered under the award of the ITSC, since such matters would become conclusive in view of Section 245-I ....
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....DGIT had issued the SCN on 22.04.2013 proposing for withdrawal of the approval granted under Section 10(23C)(iv) of the Act, for the period AYs 2006-07 to 2011- 12. By virtue of Section 245F(2), the DGIT was not empowered to steps into the shoes of the ITSC and issue the show cause notice. As a matter of fact, one of the issue which was pending before the ITSC at that point of time against the Trust, was for violation of the conditions of Section 11/Section 10 (23C). While that being so, when the DGIT was clearly without jurisdiction to issue the SCN, there is no justification on his part to proceed further on the SCN and pass the impugned order. When the foundation to the entire proceedings culminating to the impugned order itself is ille....
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....proval may not be permissible. However, since this Court had already found that the DGIT did not possess the jurisdiction to issue the SCN at the inception itself, the impugned order which emanated from the SCN, cannot be sustained and therefore, no useful purpose would be served by addressing these issues. When the SCN, which forms the foundation falls, the entire proceedings culminating to the impugned order, has to necessarily fall, since illegality strikes at the root of the order. This position is akin to the legal maxim 'sublato fundamento cadit opus', which implies that when the foundation is removed, the structure falls. 15. Thus, when the DGIT is wholly without jurisdiction to initiate proceedings for withdrawal of the app....