M/s Chiranji Lal Moti Lal and Surinder Kumar V. The Income Tax Officer, Ward-2, Sirsa and The Income Tax Officer, Ward-II, Sirsa

CWP/6283/1989

AI Insights

The case involves two writ petitions filed by M/s Chiranji Lal Moti Lal and Surinder Kumar against the Income Tax Officer, Ward-2, Sirsa, and another respondent, challenging the orders passed under Section 132(7) read with Section 132(5) of the Income Tax Act, 1961. The petitions were filed in 1989, seeking to quash the orders that allowed the income tax authorities to retain an amount of Rs.80,000. The background of the case involves the seizure of these amounts by the Railway Police Station, Delhi, followed by their custody by the Income Tax authorities. The main legal contention was the violation of the principles of natural justice, specifically the lack of an opportunity of hearing as mandated by Rule 112A of the Income Tax Rules, 1962.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 814346 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 01-03-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: TEJINDER JOSHI
• Assessee Lawyers: HARISH BHARDWAJ
• Keywords: Income Tax Authorities; Natural Justice; Seizure of money; Seizure of money; Quashing of orders
• Section: 132(5); 132(7)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 1. Civil Writ Petition No.6283 of 1989 (O&M) DATE OF DECISION: March 01, 2013 M/s Chiranji Lal Moti Lal …..Petitioner versus The Income Tax Officer, Ward-2, Sirsa and another .....Respondents 2. Civil Writ Petition No.6284 of 1989 (O&M) Surinder Kumar …..Petitioner versus The Income Tax Officer, Ward-II, Sirsa and another .....Respondents CORAM:- HON'BLE MR.JUSTICE A.K. SIKRI, CHIEF JUSTICE HON’BLE MR. JUSTICE RAKESH KUMAR JAIN, JUDGE Present: Mr.Harish Bhardwaj, Advocate for the petitioners Mr.Tejinder Joshi, Advocate for the respondents .. A.K. SIKRI, C.J.: 1. These writ petitions were filed way back in the year 1989 seeking quashing of orders passed by the income tax authorities under Section 132(7) read with Section 132(5) of the Income Tax Act, 1961. Since common question of law arises in both the writ petitions, the same are decided together. For facility of reference, facts are taken from CWP- 6283 of 1989 wherein an amount of Rs.80,000/- was allowed to be retained by the income tax authorities under Section 132(7) of the Act. 2. As per the averments made in the petition, the petitioner, who is in the business of commission agent, at Kalanwali, District Sirsa CWP Nos.6283 & 6284 of 1989 - 2 - had purchased 380 bags of wheat on account of M/s Jyoti Parshad Sham Lal, Delhi between 15.8.1988 and 19.8.1988. The petitioner had sent its partner Shri Bhushan Kumar to Delhi to collect the payment of Rs.80,000/- from M/s Jyoti Parshad Sham Lal against the aforesaid purchase. Shri Bhushan Kumar collected the said amount and also another amount of Rs.6,10,581/- from M/s Pawan Kumar Gian Chand, Delhi on behalf of Janta Trading Company on account of purchase of wheat. He kept the amounts of Rs.6,05,000/- and Rs.80,000/- in his briefcase. These amounts were seized by S.H.O., Railway Police Station, Delhi in the night of 22.8.1988. Thereafter, the Income Tax authorities took the amounts in their possession. Statement of Shri Bhushan Kumar was allegedly recorded on 23.8.1988, whereas, statement of the petitioner is stated to be recorded by respondent No.1. Immediately after seizure of amount, the Income Tax authorities made a survey at the premises of Pawan Kumar Gian Chand and Jyoti Parshad Sham Lal. The entries in their books of accounts and the statement of the proprietor of the firm corroborated the statement of Shri Bhushan Kumar that he has got the payment of the wheat from M/s Pawan Kumar Gian Chand and Jyoti Parshad Sham Lal. 3. Thereafter, order under Section 132(7) read with Section 132(5) of the Income Tax Act came to be passed, as mentioned above, by respondent No.1, retaining in his custody the entire amount of Rs.80,000/- stating that in his opinion that was sufficient to satisfy the aggregate amount of tax, interest and penalty leviable under the provisions of the Income Tax Act. 4. Short submission of the petitioner, on the basis of which present petition is filed, is that the aforesaid orders were passed without CWP Nos.6283 & 6284 of 1989 - 3 - giving any opportunity to the assessee as required under Rule 112A of the Income Tax Rules, 1962 and, therefore, the order is in violation of principles of natural justice. 5. Rule 112A(1) of the aforesaid rules reads as under: “112A(1) where any money, bullion, Jewellery or other valuable articles or officer shall, within fifteen days of the seizure and in case where the assets are handed over to him by the authorised officer under sub Section (9A) of Section 132, within fifteen days from the date on which such assets are handed over to him, issue to the person in respect of whom inquiry under Sub Section (5) of the Section 132 is to be made requiring him on the date to be specified therein (not being earlier than fifteen days from the date of service of such notice) either to attend at the office of the Income Tax Officer to explain or to produce or cause to be there produced evidence on which such person may rely for explaining the nature of the possession and the source of the acquisition of the assets.” 6. Though these writ petition were filed in the year 1989, as mentioned above, no written statement/reply has been filed till date. Since allegations are not controverted, one has to proceed on the premise that before passing the impugned orders, opportunity of hearing was not given even when that is mandatorily required under Rule 112A of the Income Tax Rules. To the same effect are the provisions of Section 132(5) of the Income Tax Act as well. On this ground alone, the writ petitions are allowed and the impugned orders are hereby quashed. However, it would be open to the respondents to proceed afresh after giving opportunity of hearing to the petitioners. ( A.K. SIKRI ) CHIEF JUSTICE March 01, 2013 (RAKESH KUMAR JAIN) pc JUDGE "