Petitioner not named in the document V. Department of Income Tax

WP/18375/1999

AI Insights

The case revolves around the petitioner, whose grandfather was subjected to searches in 1971 and 1982, leading to the seizure of numerous promissory notes, cash, and valuables. Despite the finality of the assessment proceedings, the petitioner sought a refund of the seized items and monetary compensations, which was denied by the authorities. Previous legal attempts, including a writ petition in 1994 and an appeal to the Ombudsman, did not resolve the issue satisfactorily. The court found that the 1st respondent had not adequately addressed the possibility of treating the seized items as business losses under the Income Tax Act, 1961, which could warrant a refund or compensation.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 796129 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 08-07-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S R ASHOK
• Assessee Lawyers: A V KAUNDINYA
• Keywords: Business losses; Income Tax; Promissory notes; Refund; Seizure
• Section: 143(3)

Judgement Text

" THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM Writ Petition No.18375 of 1999 ORDER: (Per the Hon’ble Sri Justice L.Narasimha Reddy) The effect of a search conducted against the grandfather of the petitioner, by name late Akram @ Gul Alam Khan of Vizianagaram, who was a moneylender by profession, is still haunting the writ petitioner. In the searches conducted in the years 1971 and 1982, as many as 800 promissory notes, covering a sum of Rs.5,86,920/-, were recovered, apart from cash of Rs.71,000/-; gold jewellery of Rs.5,110/- and silver ware valued at Rs.5,460/-. After the assessment proceedings assumed finality, the petitioner and his predecessors approached the Authorities of the Department, for refund of the promissory notes and certain amount. On an earlier occasion, the petitioner approached this Court by filing W.P.No.3699 of 1994. In compliance with the directions issued therein, the 1st respondent herein passed an order, dated 03.05.1995, taking the view that nothing is refundable to the petitioner. Hence, this writ petition. Heard Sri A.V.Krishna Kaundinya, learned counsel for the petitioner, and Sri S.R.Ashok, learned Senior Standing Counsel for the Department. It is rather unfortunate that for one reason or the other, the issue that arose out of the seizures effected about 40 years ago, did not reach finality. The record discloses that with a view to give a quietus to the issue, this Court directed the petitioner to approach the Ombudsman of the Department. He passed an order, on 02.01.2013. However, except making an observation to the effect that the petitioner can approach the Chief Commissioner and claim refund, the Ombudsman did not say anything further. We have carefully gone through the impugned order. The 1st respondent assigned certain reasons in support of his conclusion that nothing is refundable to the petitioner. The discussion mostly touched the number of promissory notes, their value and the stands taken by the parties at various points of time. However, he did not deal with the question of the refund to be made to the petitioner, on account of business losses, and other heads recognised under the Income Tax Act, 1961 (for short ‘the Act’). The law, as it stands today, is that even where an assessee is found to have undertaken illegal businesses, leading to seizes and confiscations, allowances are being made by treating the value of such confiscations as business losses. If that is the case, the petitioner cannot be left at lurch, in the context of making refund, or appropriate provision to accommodate the effect of the seizure, either by treating it as business loss, or under different head, provided for under the Act. We, therefore, allow the writ petition; set aside the impugned order and remand the matter to the 1st respondent to pass fresh orders, after giving opportunity to the petitioner. This exercise shall be completed within a period of two months from the date of receipt of a copy of this order. It is hoped that the matter would be addressed objectively, instead of standing on hyper-technicalities. There shall be no order as to costs. The miscellaneous petition filed in this writ petition shall also stand disposed of. ____________________ L.NARASIMHA REDDY, J. _____________________ CHALLA KODANDA RAM, J. Date:08.07.2014 GJ "