TaxTMI 
TaxTMI 
2022 (2) TMI 602
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll the Writ Appeals COMMON JUDGMENT R. MAHADEVAN, J. For the sake of convenience, the judgment is divided into the following heads: A. FACTS & NARRATION OF PLEADINGS PARAGRAPHS 1-8 B. ANALYSIS PARAGRAPHS 9-30 C. FINDINGS PARAGRAPHS 31-35 D. CONCLUSION PARAGRAPH 36 A. FACTS & NARRATION OF PLEADINGS 1. Questioning the correctness and legality of the order dated 09.04.2021 passed by the Learned Judge in WP.Nos.35256 of 2019 etc. batch, these intra-court appeals are filed by the appellants / Department. By the order impugned herein, the writ petitions filed by the respondents herein were allowed and thereby the orders dated 26.08.2019, 27.08.2019 and 28.08.2019 passed by the first appellant / Adjudicating Authority in terms of Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988 (hereinafter shortly referred to as 'the Act') were quashed. 2. To determine the issue involved in this batch of cases, it would be necessary to briefly narrate the facts, which are common in all the matters. For the easy reference, this court proposes to discuss the facts in WP.No.35256 of 2019 as done by the learned Judge, which w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 24(5) of the Act from the second appellant, the first appellant issued a show cause notice dated 14.08.2018 under Section 26 (1) of the Act. The first appellant, after affording sufficient opportunities to the respondent and considering the material evidence placed, passed an order dated 26.08.2019 in terms of Section 26 (3) of the Act, confirming the provisional order of attachment passed by the second appellant inter alia holding that the subject matter of the property is a benami property and the transaction is a benami transaction, in which the respondent is the benamidar of the beneficial owner M/s. Marg Limited. 3. Similar orders were passed by the first appellant confirming the attachment orders passed by the second appellant in the references registered in respect of the other properties belonging to the respective respondent companies, on the same day i.e., on 26.08.2019 and also on 27.08.2019 and 28.08.2019. Challenging the said orders passed by the first appellant, the respondents herein preferred 57 writ petitions before the Learned Judge. 4. Before the Learned Judge, it was mainly contended on behalf of the respondents that the orders dated 26.08.2019, 27.08.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere made ready on 04.09.2019 and 11.09.2019 and booked for despatch on 12.09.2019 and 13.09.2019, cannot be construed as the dates of passing of the orders under section 26(3) of the Act. Therefore, the orders dated 26/27/28.08.2019 were passed by the first appellant strictly in accordance with Section 26(7) of the Act and the same cannot be barred by limitation. 6. After hearing the submissions of the learned counsel for both sides, the Learned Judge allowed the writ petitions on the ground that the orders passed by the first appellant will take effect only from the date of communication of the same to the parties. It was also observed that on 17.07.2019, the orders were reserved, but only on 04.09.2019 and 11.09.2019, the copies of the same were certified by the Administrative Officer-cum- Registrar, which would suggest that the orders have not been passed within the time limit as prescribed under Section 26 (7) of the Act. In effect, the Learned Judge, on perusal of the registers maintained by the authorities, held that the orders passed by the first appellant, have not been passed on the dates indicated thereof and accordingly, allowed the writ petitions filed by the respond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....liance on the decision of the Honourable Supreme Court in CIT v. Chhabil Dass Agarwal [(2014) 1 SCC 603] and The Authorised Officer, State Bank of India vs. Mathew KC [(2018) 3 SCC 85] to drive home the point that when there is a statutorily in-built remedy, which is also an efficacious remedy, the aggrieved party has to only exhaust such remedy and the remedy of writ should be very sparingly invoked. 7.3 It is also contended by the learned Special Public Prosecutor that the writ petitions were filed by the respondents after the expiry of maximum time limit of 45 days as prescribed under Section 46 of the Act for filing statutory appeals. Admittedly, the certified copies of the orders of the Adjudicating Authority / first appellant were served on the respective respondents on 29.10.2019, however, without preferring any statutory appeals as prescribed under Section 46 of the Act, the respondents preferred the writ petitions before this Court from 17.12.2019 onwards and hence, the writ petitions filed after the expiry of 45 days of service of the copies of the orders, ought not to have been entertained by the Learned Judge. In this regard, the learned Special Public Prosecutor ref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y be presumed under S.114, Illustration (e) of the Evidence Act that such particular act was regularly performed. The observation of this Court in the above-referred judgment can usefully be quoted below: "The fact that an order for attachment has been passed is not sufficient to establish the factum of attachment. An attachment cannot be said to have been made unless and until the provisions of both the sub-rules of O.21 R.54 have been complied with. When several properties are sought to be attached in pursuance of an order for attachment, there must be proof of affixture on every one of the properties. The mere fact that in pursuance of an order for attachment in respect of a house and lands there was an affixture of the order on the house does not lead to any presumption that the order has been affixed on the lands also. No doubt, when the only evidence is that a particular judicial or official act has been performed and there is no other evidence on record, it may be presumed under S.114, Illustration (e) that that particular act was regularly performed. But when the dispute is whether that act was performed or not, there is nothing in law which enables a Court to pres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ression "the date on which the order was made" was construed in - '34 Mad 151 (D)' as the date on which it was communicated to the parties affected. In - 'AIR 1951 Mad 204 (B)' the learned Judges negatived the contention, that the provision in sub-section. (2) of Section 33- A of the Income Tax Act was not really a provision prescribing the time limit for the exercise of the right of the party aggrieved, but that it imposed only a limit for the exercise of revisional powers by the Commissioner. Sub-section (1) of S.33-A provided that the Commissioner could on his own motion exercise his revisional powers, provided the order had not been made more than one year previously. Sub-section (2) of S.33-A provided for the application by an assessee to the Commissioner the date of the order. The learned Judges explained in - 'AIR 1951 Mad 204 (B)' that the date of the order for purposes of sub-sec (2) of S.33-A." 7.8 The learned Special Public Prosecutor also referred to the decision of the Hon'ble Supreme Court in Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer and another [(1962) 1 SCR 676 : AIR 1961 SC 1500] wherein it was held that "date o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 33-A(2) does not mean that limitation can start to run against a party even before the party either knew or should have known about the said order. In our opinion, this conclusion is obviously right". 7.9 Further, the learned Special Public Prosecutor placed reliance on the decision in The Commissioner of Income Tax, Chennai v. Mohammed Meeran Shahul Hameed passed in Civil Appeal No. 6204 of 2021 dated 07.10.2021, in which, the Honourable Supreme Court set aside the order dated 03.07.2019 passed by the Division Bench of this Court in TCA No. 429 of 2019, holding that "it is not enough that the Authority should pass the order, but it should be communicated to the aggrieved individual in a manner known to law and acknowledgment card should be obtained". The relevant passage of the said judgment is profitably extracted below: "4.3 On a fair reading of sub-section (2) of Section 263, it can be seen that as mandated by sub-section (2) of Section 263 no order under Section 263 of the Act shall be "made" after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Therefore, the word used is 'made' and not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ously concluded that the first appellant has not passed the adjudication orders on the dates, when they were said to have been passed. With these submissions, the learned Special Public Prosecutor sought to allow these appeals by setting aside the order impugned herein. 8.1 Per contra, Mr. A.L. Somayaji, learned Senior counsel appearing for the respondents would contend that M/s.Marg Limited is a private limited company engaged in the business of real estate and infrastructure development. During the course of such business, a search was conducted in the premises of M/s.Marg Limited and its associated entities. The authorities engaged in such search, recorded the statements of the representative of the respondent companies, besides impounded several documents. Following the search, show cause notices dated 26.04.2018 were issued under Section 24 (1) of the Act by the second appellant alleging that the respondents are benamidars for M/s.Marg Limited, which beneficially owns the properties mentioned therein. It was also alleged in the show cause notices that at the time of purchase of the lands, loans were availed by the respondents from M/s.Great Meera Finlease Private Limited....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een passed on 26/27/28.08.2019. Thus, according to the learned senior counsel, the orders impugned in the writ petitions are beyond the time limit as prescribed under section 26(7) of the Act and suffer from procedural impropriety. In this context, the learned senior counsel placed reliance on the decision of the Honourable Supreme Court in Hindustan Petroleum Corporation Limited v. Darius Shapur Chenai and others [(2005) 7 SCC 627] wherein in paragraph 8, it was held that "when the decision making process itself is in question, the power of judicial review can be exercised by the Court in the event the order impugned suffers from well-known principles viz., illegality, irrationality and procedural impropriety". 8.3 The learned senior counsel appearing for the respondents also contended that the appellants have not arrived at a subjective satisfaction as regards the transactions alleged to have been benami transactions done by the respondents for and on behalf of the beneficiary namely M/s. Marg Limited; they failed to establish that there is a nexus between the assets held by the respondents and the income generated by M/s. Marg; and in the absence of establishing such nexus, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 2007 and the same was dispatched to the assessee. On our direction to produce the original records, the same are placed before us. We have noticed certain over writings in the order sheet as regards date of passing of the order by the Assessing Officer and moreover, a particular page of the order sheet is maintained on a rough sheet (in an unusual manner) different from other pages of the order sheet. Besides this flaw in the records, learned counsel for the Revenue is neither able to point out from the records that the assessment orders were dispatched on April 27, 2007 nor produced the dispatch register to establish that the orders are complete and effective i.e., it is issued, so as to be beyond the control of the authority concerned, within the period of limitation i.e., April 29, 2007. Admittedly, the assessment orders were served on the assessee on April 30, 2007. Hence, we are of the considered opinion that the assessment orders passed are barred by limitation. 10. An identical issue was before this Court in I.T.A. No. 832 of 2008 (dated October 14, 2014) in the case of Maharaja Shopping Complex v. Deputy CIT. This Court following the judgment of the Kerala High C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 11 followed by its filing under Section 12 (1) would not meet the requirements of justice before bringing the award into force. It thought that the communication of the award to the party concerned was also necessary, and so by the use of the mandatory words an obligation is placed on the collector to communicate the award immediately to the person concerned. It is significant that the section requires the Collector to give notice of the award immediately after making it. This provision lends support to the view which we have taken about the construction of the expression "from the date of the Collector's award" in the proviso to Section 18. It is because communication of the order is regarded by the legislature as necessary that Section 12 (2) has imposed an obligation on the collector and if the relevant clause in the proviso is read in the light of this statutory requirements it tends to show that the literal and mechanical construction of the said clause would be wholly inappropriate. It would indeed be a very curious result that the failure of the Collector to discharge his obligation under Section 12 (2) should directly tend to make ineffective the right of the party ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of 1981 decided on 7th June, 1982 - Kerala High Court) extracted earlier." 8.8 The learned senior counsel for the respondents also relied on the decision of the Division Bench of the Gujarat High Court in Kanubhai M. Patel (HUF) v. Hiren Bhatt or His Successors to office [(2011) 334 ITR 25 (Gujarat)] wherein it was held that "date of issuance of notice under Section 148 Income Tax Act has to be reckoned not from the date when it was issued, but on the date when it was actually delivered on the assessee" and in paragraphs 13 to 16, it was held thus: "13. On a plain reading of Section 149, it is apparent that under the said provision, the maximum time limit for issuance of notice under Section 148 is six years from the end of the relevant assessment year. In the present case, the relevant assessment year in each of the petitions is 2003-2004; the impugned notices are dated 31.03.2010; and the said notices were sent for booking to the Speed Post Centre, Ahmedabad, on 07.04.2010. On behalf of the petitioners, it has been contended that the notices which have been dispatched for service only on 07.04.2010, are clearly time barred inasmuch as the date of dispatch would be th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the meaning, to send out; to place in the hands of the proper officer for service. The expression "shall be issued" as used in section 149 would therefore have to be read in the aforesaid context. In the present case, the impugned notices have been signed on 31.03.2010, whereas the same were sent to the speed post centre for booking only on 07.04.2010. Considering the definition of the word issue, it is apparent that merely signing the notices on 31.03.2010, cannot be equated with issuance of notice as contemplated under Section 149 of the Act. The date of issue would be the date on which the same were handed over for service to the proper officer which in the facts of the present case would be the date on which the said notices were actually handed over to the post office for the purpose of booking for the purpose of effecting service on the petitioners. Till the point of time the envelopes are properly stamped with adequate value of postal stamps, it cannot be stated that the process of issue is complete. In the facts of the present case, the impugned notices having been sent for booking to the speed post centre only on 07.04.2010, the date of issue of the said notices would be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ues a show cause notice under section 26 (1). The said show cause notice has to be issued within a period of 30 days upon the reference being received. Thereafter 30 days time is given for filing of the reply and furnishing of the information and after affording an opportunity of being heard, the Adjudicating Authority has to pass appropriate orders under section 26(3) in accordance with section 26(7), in which, it has been specifically mentioned that 'No order under sub-section 3 shall be passed after the expiry of one year from the end of the month in which the reference under sub-section 5 of section 24 was received'. Thus, it is vivid that the enquiry and the adjudication are time-bound as per the statute. Once the adjudicating authority passes the order under section 26(3), an appeal remedy has been provided under section 46. A further remedy of appeal has also been provided before the High Court under section 49 on a substantial question of law. 12. In the order impugned herein, the Learned Judge has not explained as to why the writ petitions were entertained at the first instance, when the grounds of attack could have been canvassed in the statutory appeal itself. Only if....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad to be prepared in triplicate. The certified copies were made ready on 04.09.2019 and 11.09.2019, after getting notarisation from the Administrative officer-cum-Registrar and the same were booked with the postal department on 12.09.2019 and 13.09.2019 for despatching the same to the three parties, i.e., Initiating Officer, writ petitioners and the beneficial owner. It is further submitted that the said orders which were sent through Post to the respondents / writ petitioners, were returned with the remark 'unserved', as the addresses of the 69 subsidiary companies, who are the benamidars, are one and the same. Thereafter, the first appellant sent those orders to the office of the second appellant and directed them to serve the same on the respondents. Accordingly, the second appellant called the respondents on various times over phone and the respondents' authorised officers, after much persuasion, finally came and collected the orders in person and thus, the orders were served on the respondents on 29.10.2019. 15. It is evident from the order sheets register and file movement register maintained in the office of the authority that the adjudication orders were passed on 26/27/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9, orders were reserved. The orders thereafter came to be passed on 26/27/28.08.2019, which fact was duly recorded by the first appellant in the register as 'Order is passed accordingly'. Thus, the same would show that the adjudicating authority has exercised his jurisdiction in a manner as to comply with the timeline as prescribed under the Act. As such, the delay in the communication of the order copies to the respondents, which is essentially a delay of about two weeks from the date of passing of the orders on 26/27/28.08.2019 to the dates on which the Registry had booked the order copies for despatch on 12.09.2019 and 13.09.2019, can at best be deemed to be a procedural delay. In this connection, this Court would apply the doctrine of 'substantial compliance' to the facts and circumstances of the case. In the decision of the Hon'ble Supreme Court in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and others [(2011) 1 SCC 236], it was held as follows: "Doctrine of substantial compliance and "intended use" 32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... quite often, the critical question to be examined is whether the requirements relate to the "substance" or "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words a mere attempt at compliance may not be sufficient, but actual compliance with those factors which are considered as essential." 19. That apart, it could be seen from the order impugned herein that the fact that the appeal time of 45 days as mentioned under section 46 of the Act, has to be from the date of orders, whereas the orders were actually communicated/received by the respondents only on 29.10.2019, seems to have weighed in the mind of the Learned Judge to observe that "this fact will also have a bearing on the order being passed within the period of limitation as stated in section 26(7)". For a moment, a scenario may be visualized, where an order which is well within the period of limitation, is passed within 10 months of reference, but same is communicated/received by the party concerned after 45 days from the date of passing of the order, albeit within the period of the said one year statuto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce from the date the award was made known to the party. Paragraph 6 of the judgment which contains discussion on the issue of communication of award reads as under: There is yet another point which leads to the same conclusion. If the award is treated as an administrative decision taken by the Collector in the matter of the valuation of the property sought to be acquired it is clear that the said decision ultimately affects the rights of the owner of the property and in that sense, like all decisions which affect persons, it is essentially fair and just that the said decision should be communicated to the said party. The knowledge of the party affected by such a decision, either actual or constructive, is an essential element which must be satisfied before the decision can be brought into force. Thus considered the making of the award cannot consist merely in the physical act of writing the award or signing it or even filing it in the office of the Collector; it must involve the communication of the said award to the party concerned either actually or constructively. If the award is pronounced in the presence of the party whose rights are affected by it can be said to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nication under certain circumstances may be taken to be the date of the communication of the order or the date of the order but ordinarily and generally speaking, the order would be effective against the person affected by it only when it comes to his knowledge either directly or constructively, otherwise not. On the facts stated in the judgment of the High Court, it is clear that the respondent had no means to know about the order of the Taxation Officer rejecting his prayer until and unless he received his letter on October 29, 1964. Within the meaning of Section 15 of the U.P. Motor Vehicle Taxation Act that was the date of the order which gave the starting point for preferring an appeal within 30 days of that date." (emphasis supplied) 22. In Muthiah Chettiar v. I.T. Commissioner, Madras [AIR 1951 Mad 2004], a two-Judge Bench of Madras High Court considered the question whether the limitation of one year prescribed for filing revision under Section 33A(2) of the Income Tax Act, 1922 is to be computed from the date when the order was signed by the Income-tax Commissioner or the date on which the petitioner had an opportunity of coming to know of the order. It was arg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Central Excise and that such an appeal will have to be filed "within three months from the date of the communication to him of such decision or order". Sub-section (5) of Section 35A requires that on the disposal of the appeal, the Collector (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority and the Collector of Central Excise. Section 35B provides for a right of appeal to any person aggrieved by, among other orders, (1) an order passed by the Collector (Appeals) under Section 35A and (2) a decision or order passed by the Collector of Central Excise as an adjudicating authority. Such an appeal will have to be filed "within three months from the date on which the order sought to be appealed against is communicated to the Collector of Central Excise or as the case may be the other party preferring the appeal". The Appellate Tribunal also is required to send a copy of the order passed in the appeal to the Collector of Central Excise and the other party to the appeal.... 8. At this stage itself we may state that Sub-section (4) of the Act provides that the adjudicating authority shall file the application before the Tribunal in pur....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... date when the order was communicated to him. 11. The ratio of these judgments were applied in interpreting Section 33A(2) of the Indian Income Tax Act, 1922 in Muthia Chettiar v. CIT with reference to a right of revision provided to an aggrieved assessee. Section 33A(1) of the Act on the other hand authorised the Commissioner to suo moto call for the records of any proceedings under the Act in which an order has been passed by any authority subordinate to him and pass such order thereon as he thinks fit. The proviso, however, stated that the Commissioner shall not revise any order under that Sub-section "if the order (sought to be revised) has been made more than one year previously". Construing this provision the High Court in Muthia Chettiar case held that the power to call for the records and pass the order will cease with the lapse of one year from the date of the order by the subordinate authority and the ratio of date of the knowledge of the order applicable to an aggrieved party is not applicable for the purpose of exercising suo moto power. Similarly in another decision reported in Viswanathan Chettiar v. CIT construing the time-limit for completion of an assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eved party is concerned is not dependent on the provisions of the particular statute, but it is so under the general law. 18. Thus, if the intention or design of the statutory provision was to protect the interest of the person adversely affected, by providing a remedy against the order or decision any period of limitation prescribed with reference to invoking such remedy shall be read as commencing from the date of communication of the order. But if it is a limitation for a competent authority to make an order the date of exercise of that power and in the case of exercise of suo moto power over the subordinate authorities' orders, the date on which such power was exercised by making an order are the relevant dates for determining the limitation. The ratio of this distinction may also be founded on the principle that the government is bound by the proceedings of its officers but persons affected are not concluded by the decision." (emphasis supplied) 24.In Commissioner of Income Tax, Madurai and Others v. Saravana Spinning Mills (p) Ltd. [(2007) 7 SCC 298] it was held by the Hon'ble Supreme Court as under: "27.An order passed by a competent aut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom 'the date of receipt of the order'. The provisions of the statute cannot be construed in a manner as to infuse or import an absurd meaning to it. It is therefore clear that for the purposes of filing an appeal, the limitation would start running only from the date of receipt of the order. Inspiration may also be drawn from the provisions of section 12 (2) of the Limitation Act which specifically mentions that in computing the period of limitation for filing an appeal, the period of time requisite for obtaining the order to be appealed against, is excluded. 27. All the above-mentioned judgments are in the context of the period of limitation for filing an appeal and every judgment is an authority only in respect of the context, in which, it was made and in respect of the merits of each case. The principle that an order takes effect only on the date of communication of the order and not immediately on passing of the order, if there is any time lag between the date of passing of the order and the date of actual communication of the order, by itself cannot be understood to have a bearing on the very validity of the orders passed by the Adjudicating Authority under section 26 (3),....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... date of receipt of the order. However, the fact that an order takes effect only from the date of its communication, cannot be said to dilute the validity of an order, which is passed well within time as mandated by the statute. Viewing this aspect, it is seen that the period between 17.07.2019 on which the orders were reserved and 26/27/28.08.2019 on which dates, the orders were passed, which was duly recorded in the register as 'order is passed accordingly' and the same were made ready and notarized on 04.09.2019 and 11.09.2019 and booked for dispatch on 12.09.2019 and 13.09.2019, cannot be said to be either prolonged or unexplained delay, as held by the Learned Judge. 30. In the decisions relied upon, particularly, in Malayil Hills v. State of Kerala rendered in TRC Nos. 15 and 16 of 1981 dated 07.06.1982, the facts were quite different and the considerable delay of about six months in dispatching the orders was the context, in which, the Bench held that such an unusual delay means that the order will deemed to have been passed only when it has been effectively communicated to the party concerned. However, as already elaborated earlier, in the present case, the proxim....