TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 1134
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.... - 2(3), Chennai, in PAN No.AACPS3233K and has been regularly filing his return of income within the prescribed time. 2.2. While so, based on certain credible information, a search operation under section 132 of The Income Tax Act, 1961, (in short, "the Act") was conducted in the premises of M/s.Surana Corporation Limited and in his residence between 07.11.2017 and 11.11.2017 as per the instructions given by the Deputy Director of Income Tax (Investigation Wing). During the course of the same, several sworn statements were recorded, besides impounding documents at the time of inspection. According to the appellant, he is only a shareholder in M/s.Surana Corporation Limited and is not holding any position in the said company. 2.3. Subsequent to the search operation, the first respondent in WP.No.12848 of 2018 / respondent in other two writ petitions viz., Deputy Commissioner of Income Tax (Benami Prohibition) issued show cause notices dated 26.02.2018, which were served on the appellant on 01.03.2018, alleging that the appellant is the beneficial owner of the assets in the nature of wind mills acquired by M/s. Bell Tower Enterprises LLP. It was further stated in the said show caus....
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....ue a Writ of Mandamus directing the first respondent to provide the entire set of documents referred to by him in his letters dated 23.03.2018 and 21.05.2018. 2.7. When the aforesaid writ petition was taken up for hearing, this court granted an order of interim stay on 23.05.2018 and posted the matter for further hearing on 05.06.2018. 2.8. In the mean while, the respondent passed separate orders dated 23.05.2018 under Section 24(4) of the PBPT Act, in respect of two different properties. Stating that when an order of interim stay was in force, the respondent ought not to have passed the orders dated 23.05.2018, the appellant preferred two more writ petitions viz., WP Nos.13160 and 13161 of 2018 to quash the same. 3.1. Opposing the writ petitions, the first respondent in WP.No.12848/2018 / respondent in other two writ petitions viz., Deputy Commissioner of Income Tax (Benami Prohibition) filed a counter affidavit contending that based on the materials collected during the search under Section 132 of the Act, the show cause notices under Section 24(1) of the Act were issued to the appellant and sufficient opportunities were provided to him to make his submission. However, the app....
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....018 knowing fully well about the interim order of this court, is not correct. In fact, the order dated 23.05.2018 was communicated by the learned Senior Standing Counsel and it reached the office of the first respondent only on 25.05.2018. Hence, there is no wilful negligence on the part of the first respondent in passing the orders dated 23.05.2018 under Section 24 (4) of the PBPT Act. Even otherwise, the orders dated 23.05.2018 are provisional in nature. Therefore, according to the respondent, the relief sought in the writ petitions is pre-mature and the same will have to be dismissed. 4.By order dated 02.07.2018, the learned Judge disposed of the writ petition bearing no.12848 of 2018 and dismissed the other two writ petitions viz., WP.Nos.13160 and 13161 of 2018. The relevant passage of the said order is quoted below for ready reference: "4. In my considered view, the request for any other sworn statements taken during the survey proceedings on 09.03.2017 is absolutely vague. Apart from that, the proceedings were not conducted by the 1st respondent but by the 2nd respondent. Therefore, to seek any other sworn statements recorded by the 2nd respondent from the 1st respondent ....
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.... in these writ petitions are vacated. 9. The adjudicating authority under the Act has issued show cause notice and fixed the hearing on 02.08.2018. It is well open to the petitioner to raise all contentions before the adjudicating authority and the matter shall be proceeded in accordance with law." 5.1. Mr. P.S. Raman, learned Senior counsel appearing for the appellant in all the writ appeals would contend that as per Section 24(4)(a)(ii) of the PBPT Act, the respondent viz., Deputy Commissioner of Income Tax (Benami Prohibition) is empowered to revoke the provisional order with the approval of the approving authority, if the appellant is able to prove his case. Such power includes investigation, calling for information, conducting enquiry etc. and to pass an order under Section 24 (4) of the PBPT Act. In the present case, the respondent did not furnish the sworn statements sought by the appellant in his letters dated 23.03.2018 and 21.05.2018, thereby, failed to conduct a proper enquiry in terms of Section 24 (4) of the PBPT Act. While so, the learned Judge ought to have quashed the orders dated 23.05.2018, which were impugned in the writ petition nos.13160 and 13161 of 2018. C....
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.... remanded the matter to the respondent with a direction to provide the copies of the documents sought for by the appellant, whereas, he failed to do so. Thus, the learned senior counsel sought to allow these appeals by quashing the orders impugned herein as well as in the writ petitions. 6.Per contra, the learned Senior Standing Counsel appearing for the respondent(s) would submit that as mandated under the PBPT Act, the respondent issued the show cause notices dated 26.02.2018 under Section 24(1), and provided sufficient opportunities to the appellant to make his submissions. Considering the same, the learned Judge has stated that the party cannot be said to be aggrieved as the orders of the initiating officer are only provisional in nature and full opportunity of hearing is available before the adjudicating authority. Accordingly, the appellant can very well avail the opportunity available under the PBPT Act and submit himself to the hearing before the adjudicating authority, as and when the case is posted. Adding further, it is submitted that the orders passed under Section 24 (4) of the PBPT Act are only provisional in nature, attaching the properties standing in the name of a....
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....n then, the appellant filed a preliminary written submission on 09.04.2018. While so, at the fag end of completion of 90 days from the date of issuance of show cause notices, the respondent viz., Deputy Commissioner of Income Tax (Benami Prohibition) sent a letter dated 14.05.2018 stating that additional information was received from the Investigation Wing, with respect to the proceedings under the PBPT Act, and hence, calling upon the appellant to file his reply. Stating that without the complete set of documents, the appellant was unable to file his reply to the show cause notices, he preferred WP.No.12848 of 2018 and obtained an order of interim stay on 23.05.2018. On the same day, i.e., the respondent passed orders under section 24(4) of the PBPT Act. Aggrieved over the same, the appellant invoked the writ jurisdiction by filing WP.Nos.13160 and 13161 of 2018. However, the learned Judge disposed the first writ petition and dismissed the other two writ petitions subsequently filed by the appellant, by the order impugned in these appeals. 9.Before proceeding further, it is but necessary to look into the relevant provisions of law, viz., Section 24 of the PBPT Act, which deals wi....
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....ng which the proceeding is stayed by an order or injunction of any Court shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-section (4) available to the Initiating Officer for passing order of attachment is less than thirty days, such remaining period shall be deemed to be extended to thirty days: Provided further that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-section (5) available to the Initiating Officer to refer the order of attachment to Adjudicating Authority is less than seven days, such remaining period shall be deemed to be extended to seven days.] ........." A reading of the aforesaid provision would make it clear that as per section 24(1), when the Initiating Officer based on the materials in his possession, has reason to believe that any person is a benamidar in respect of a property, he may after recording reasons in writing, issue a notice to the person to show cause as to why the property should not be treated as benami property. Sub section (3) to section 24 states that the Initiating Officer, who is of the ....
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....gal and in violation of principles of natural justice. Without properly appreciating those aspects, the learned Judge erred in dismissing the writ petitions filed to quash the said orders. 11.Resisting the averments made by the appellant, the learned senior standing counsel appearing for the respondent(s) filed an affidavit of the Deputy Commissioner of Income Tax (Benami Prohibition) dated 21.06.2022, wherein it is inter alia stated as follows: ● The proceedings under section 24(1) commenced on 26.02.2018 along with a provisional attachment order under section 24(3) to prevent alienation of the property and a copy of the notice was also served to the appellant in terms of section 24(2) of the PBPT Act. ● All the materials and documents that were relied upon by the respondent, were provided to the appellant, but his sworn statement was not provided to him, as the same was not relied upon in the section 24 proceedings. ● In accordance with the provisions of the PBPT Act, section 24(4) draft order was put up before the Approving Authority on 22.05.2018 as mandated under section 24(4)(a)(i) for their approval to continue the provisional attachment order passed....
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....has rightly rejected the relief sought by the appellant seeking any other sworn statements recorded during the search on 09.03.2017, as the same is absolutely vague, besides the said proceedings were not conducted by the respondent viz., Deputy Commissioner of Income Tax (Benami Prohibition), but by the Investigation Wing. It is pertinent to mention herein that applicability of the principles of natural justice and fair play, depends on the facts and circumstances of each case and is subjected to statutory provisions. In this context, it is relevant to refer to the observation of the Hon'ble Supreme Court in K.L. Tripathi v. State Bank of India and Ors. [AIR 1984 SC 273], which reads as follows: "42. It is true that all actions against a party which involve penal or adverse consequences must be in accordance with the principles of natural justice but whether any particular principle of natural justice would be applicable to a particular situation or the question whether there has been any infraction of the application of that principle, has to be judged, in the light of facts and circumstances of each particular case. The basic requirement is that there must be fair play in a....
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....-examination Neither cross-examination nor the opportunity to lead evidence by the delinquent is an integral part of all quasi judicial adjudications." Therefore, it cannot be said that there is violative of principles of natural justice, as alleged by the appellant. 14.As regards the allegation levelled by the appellant that the orders under section 24(4) were passed in total disrespect to the interim order of this court dated 23.05.2018 in WP.No.12848 of 2018, it is to be noted that both the orders of the respondent and the interim order of this court were on the same day i.e., 23.05.2018. During the course of argument, the learned senior standing counsel appearing for the respondent drew the attention of this court to the documents enclosed in the additional typed set of papers dated 21.06.2022, which disclose that the Deputy Commissioner of Income Tax (Benami Prohibition) has placed the draft of section 24(4) orders before the Approving Authority for approval on 22.05.2018 and after obtaining approval from the approving authority, passed the orders dated 23.05.2018 under section 24(4) of the PBPT Act. In the mean while, the appellant filed WP.No.12848 of 2018 and obtained an ....
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....he appellants will rely upon the material before it qua which the appellants claim a right of cross-examination. All this can be known only when the Adjudicating Authority passes an order and qua which if the appellants are aggrieved, the appellants shall have their statutory remedy. Any interference by us at this stage in the proceedings of which the Adjudicating Authority is seized is thus uncalled for and would result in a situation which the Supreme Court has warned the High Courts to avoid. Reference may also be made to U nion of India v. Kunisetty S atyanarayana AIR 2007 SC 906 reiterating that the reason why ordinarily a writ petition should not be entertained against a mere show cause notice is that at that stage the writ petition may be held to be premature - a mere show cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so and it is quite possible that after considering the reply to the show cause notice or after holding an enquiry, the authority concerned may drop the proceedings. It was further held that a wri....