M/S.RAM BAHADUR THAKUR LTD V. COMMISSIONER OF INCOME TAX

WP(C)/9178/2017

AI Insights

The case involves M/S Ram Bahadur Thakur Ltd., represented by its director, Mr. Manish Mohan Sharma, who filed a writ petition challenging the rejection of an interim application in a first appeal concerning several assessment orders from 2008-09 to 2013-14. The assessments were based on alleged illegal mining operations in Odisha, as reported by the Justice M.B. Shah Commission. The petitioner contended that the orders were passed without a proper hearing and relied on a report that did not conclusively find them guilty of illegal mining. The respondents, including the Commissioner of Income Tax and the Assistant Commissioner of Income Tax, argued that the petitioner had consistently avoided tax payments and failed to file returns for the assessed years. The court considered the procedural aspects of the Commission's report and the petitioner's compliance with tax obligations before deciding on the conditions for reconsideration of the appellate order.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 755449 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 22-03-2017
• Assessment Year: misc
• Other Referred Cases: Goa Foundation v. Union of India [(2014) 6 SCC 590]
• Laws Referred To: Commissions of Inquiry Act, 1952, Mines and Mineral (Development and Regulation) Act, 1957
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: ADARSH KUMAR; K M ANEESH; K KUMAR; BIJU ABRAHAM; DILEEP CHANDRAN
• Keywords: Assessment Order; Commission of Inquiry; Illegal mining; Natural Justice; Tax demand
• Section: 30; 8(b); 8(c)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 22ND DAY OF MARCH 2017/1ST CHAITHRA, 1939 W.P(C).No.9178 of 2017 (V) --------------------------------- PETITIONER(S):- --------------- M/S.RAM BAHADUR THAKUR LTD., SIDHARTH BUILDING, MARAR ROAD WILLINGDON ISLAND, COCHIN-3, REPRESENTED BY ITS DIRECTOR, MR.MANISH MOHAN SHARMA, S/O. BIRENDRA MOHAN SHARMA. BY ADVS.SRI.ADARSH KUMAR SRI.K.M.ANEESH SRI.K.SANTHOSH KUMAR (KALIYANAM) SRI.BIJU VARGHESE ABRAHAM SRI.DILEEP CHANDRAN RESPONDENT(S):- --------------- 1. COMMISSIONER OF INCOME TAX, OFFICE OF COMMISSIONER OF INCOME TAX, C.R.BUILDING, I.S PRESS ROAD, COCHIN-682 018. 2. ASSISTANT COMMISSIONER OF INCOME TAX. CORPORATE CIRCLE 2(1), KOCHI-682018. 3. THE COMMISSIONER OF INCOME TAX (APPEALS). 1ST FLOOR, POORNIMA, NO.28/243, NEAR MANORAMA JUNCTION, PANAMPALLY NAGAR, KOCHI-36. R1 TO R3 BY STANDING COUNSEL FOR GOVT. OF INDIA (TAXES)SRI.JOSE JOSEPH. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.9178 of 2017 (V) --------------------------- APPENDIX PETITIONER(S)' EXHIBITS:- ------------------------ P1 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2008-09 P2 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2009-10 P3 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2010-11 P4 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2011-12 P5 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2012-13 P6 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2013-14 P6(A) TRUE COPY OF THE ORDER OF THE APPELLATE AUTHORITY DATED 7.3.2017 P7 TRUE COPY OF THE COMMUNICATION DATED 23.12.2016 P8 TRUE COPY OF THE COMMUNICATION DATED 27.10.2016 P9 TRUE COPY OF THE NOTICES DATED 13.12.2016 P9(A) THE EXTRACT OF THE ORDER OF THE HON'BLE HIGH COURT OF ORISSA IN WP(C).278/2017. P9(B) RELEVANT PAGES OF THE SHAH COMMISSION/MPSC REPORT P10 TRUE COPY OF THE COMMUNICATION OF THE TEA BOARD DATED 5.10.2007 P11 TRUE COPY OF THE ORDER DATED 18.8.2000 PASSED BY THE HON'BLE COMPANY LAW BOARD P12 TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF ORISSSA IN WP(C) NO.7998/2008. P13 TRUE COPY OF THE REPORT OF THE JOINT VERIFICATION DONE BY THE DEPUTY DIRECTOR MINES (JODA) , THE TEHSILDAR (BARBIL) AND FORESTER (GUALI) DATED 5.2.2009. P14 TRUE COPY OF THE INSPECTION REPORT DATED 28.7.2008. P15 TRUE COPY OF THE REPORT FILED BY THE VIGILANCE DEPARTMENT DATED 10.8.2009. P16 TRUE COPY OF THE ORDER OF THE HON'BLE HIGH COURT OF ORISSA IN BAIL APPLICATION NO.12425/2009. WP(C).No.9178 of 2017 (V) - 2 - P17 TRUE COPY OF THE ORDER OF THE REVISIONAL AUTHORITY DATED 26.9.2011. P18 TRUE COPY OF THE FIR OF THE FOREST DEPARTMENT, ORISSA DATED 28.1.2014. RESPONDENT(S)' EXHIBITS:- ------------------------- NIL. Vku/- [ true copy ] K. Vinod Chandran, J ---------------------------------------- W.P.(C).No.9178 of 2017-V ----------------------------------------- Dated this the 22 nd day of March, 2017 JUDGMENT The petitioner is aggrieved with the rejection of an interim application in a first appeal, as seen from Exhibit P6(a). The assessment orders are six in number, starting from 2008-09 and ending with 2013-14. The substantial demand is in the first two years, which comes to more than Rupees Fifty Two Crores. The said demand is also based on an alleged mining operation conducted by the petitioner in the State of Odisha, which is asserted to be illegal and undisclosed as per the Report of the Commission of Inquiry, headed by Justice M.B.Shah. 2. The contention against the impugned order is that it was passed without affording an opportunity for hearing. The petitioner contends that on the three days, the matter was posted for hearing, he was not present for valid reasons, as is seen from the adjournment applications at Exhibits P7, P8 and an application dated 09.01.2017 which is made mention of in the impugned order WP(C) No.9178 of 2017 - 2 - itself. The petitioner also submits that there was some confusion with respect to the issuance of two notices on the very same day [13.12.2016] under Exhibit P9(1) and P9(2), which notified the cases on two separate dates, on 27.12.2016 and the other on 11.01.2017. 3. The learned Standing Counsel for Government India (Taxes) submits that there can be no reliance placed on the inadvertent mistake committed in Exhibit P9(1) and P9(2). The petitioner also appeared on both of the said dates; but filed adjournment applications and only since the petitioner was consistently absent, the Commissioner took up the matter and decided it. The learned Standing Counsel would also take me through the entire order to submit that the petitioner has been avoiding payment of tax especially since it is seen that there are no returns filed for the six years for which assessments had been proposed and also from the assessment year 1998-99. The petitioner, hence, cannot be extended any equity is the specific argument raised. 4. The learned Counsel for the petitioner submits that the assessment itself has been sourced on the report of Justice Shah WP(C) No.9178 of 2017 - 3 - Commission; which, even according to the Hon'ble Supreme Court, is not conclusive since it was prepared without following the procedure under the Commission of Inquiry Act, 1952. It is also contended that there is no definite finding that the petitioner had been guilty of the illegal mining anywhere in the report. The difficulty in filing returns was only occasioned for reason of the order of the Company Law Board, produced as Exhibit P11; which interdicted the petitioner from finalising the accounts of the Company from 1995-96 onwards. Further, in a revision filed under Section 30 of the Mines and Mineral (Development and Regulation ) Act, 1957 (for brevity, “MMDR Act”) Exhibit P17 order was passed; which found that there was no evidence or allegation against the revisionist, being the petitioner Company, with reference to illegal mining. 5. The challenge to the report of the Justice Shah Commission is found in Goa Foundation v. Union of India [(2014) 6 SCC 590], of which paragraph 11 to 14 are extracted hereunder: “11. As we have already noticed, in the cases transferred from the Bombay High Court to this Court, the mining lessees have prayed for quashing the Report of the Justice Shah Commission. Mr K.K. Venugopal, learned WP(C) No.9178 of 2017 - 4 - Senior Counsel appearing for the mining lessees, submitted that the Justice Shah Commission did not issue any notice under Section 8-B of the Commissions of Inquiry Act, 1952 to the mining lessees giving a reasonable opportunity of being heard in the inquiry and to produce evidence in their defence. He further submitted that the Justice Shah Commission also did not permit the mining lessees to cross-examine the witnesses, to address the Commission and to be represented by legal practitioners before the Commission contrary to the provisions of Section 8-C of the Commissions of Inquiry Act, 1952. He submitted that even otherwise there is gross breach of the principles of natural justice and fair play by the Justice Shah Commission and, therefore, the Report of the Commission was violative of Article 14 of the Constitution. He submitted that the Report of the Justice Shah Commission should, therefore, be quashed. In support of this submission, he relied on the decisions of this Court in Kiran Bedi v. Committee of Inquiry [(1989( 1 SCC 494], State of Bihar v. Lal Krishna Advani [(2003) 8 SCC 361] and Union of India v. Tulsiram Patel (1985) 3 SCC 398]. 12. Mr Mohan Parasaran, learned Solicitor General for the Union of India, on the other hand, submitted that as the Notification dated 22-11-2010 of the Central Government appointing the Justice Shah Commission under Section 3 of the Commissions of Inquiry Act, 1952 would show, reports were received from various State Governments of WP(C) No.9178 of 2017 - 5 - widespread mining of iron ore and manganese ore in contravention of the MMDR Act, the Forest (Conservation) Act, 1980 and the Environment (Protection) Act, 1986 or other rules and licences issued thereunder and for this reason, the Central Government appointed the Justice Shah Commission for the purpose of making inquiry into these matters of public importance. He submitted that after the Justice Shah Commission submitted the Report pointing out various illegalities, the Union Government has kept the environment clearances in abeyance and it will take legal action on the basis of its own assessment of the facts and not on the basis of the facts as found in the Justice Shah Commission’s Report. 13. Similarly, Mr Atmaram N.S. Nadkarni, the Advocate General appearing for the State of Goa, submitted that after going through the Report of the Justice Shah Commission, the State Government has suspended all mining and transportation of ores and no legal action will be taken against the mining lessees on the basis of the findings in the Justice Shah Commission’s Report unless due opportunity is given to the mining lessees to place their defence against the findings of the Justice Shah Commission. 14. We find that Section 8-B of the Commissions of Inquiry Act, 1952 provides that if a person is likely to be prejudicially affected by the inquiry, the Commission shall WP(C) No.9178 of 2017 - 6 - give to that person a reasonable opportunity of being heard and to produce evidence in his defence and Section 8-C of the Commissions of Inquiry Act, 1952 provides that every such person will have a right to cross-examine and the right to be represented by a legal practitioner before the Commission. As the State Government of Goa has taken a stand before us that no action will be taken against the mining lessees only on the basis of the findings in the Report of the Justice Shah Commission without making its own assessment of facts and without first giving the mining lessees the opportunity of hearing and the opportunity to produce evidence in their defence, we are not inclined to quash the Report of the Justice Shah Commission on the ground that the provisions of Sections 8-B and 8-C of the Commissions of Inquiry Act, 1952 and the principles of natural justice have not been complied with. At the same time, we cannot also direct prosecution of the mining lessees on the basis of the findings in the Report of the Justice Shah Commission, if they have not been given the opportunity of being heard and to produce evidence in their defence and not allowed the right to cross-examine and the right to be represented by a legal practitioner before the Commission as provided in Sections 8-B and 8-C respectively of the Commissions of Inquiry Act, 1952. We will, however, examine the legal and environmental issues raised in the Report of the Justice Shah Commission and on the basis of our findings on these issues consider granting the reliefs prayed for in the WP(C) No.9178 of 2017 - 7 - writ petition filed by Goa Foundation and the reliefs prayed for in the writ petitions filed by the mining lessees, which have been transferred to this Court”. 6. It is seen from the above that the Supreme Court had not entertained the allegation of non-compliance with the provisions of the Commissions of Inquiry Act; only since the State Government had taken a stand before the learned Judges that no action will be taken on the basis of the Shah Commission Report. The procedural irregularities as pointed out by the various parties before the Hon'ble Supreme Court was accepted by the Hon'ble Supreme Court. 7. In the present case, the assessment, as is seen from the impugned order at paragraph 4(e), arise out of the Commission of Inquiry headed by Justice M.B.Shah. It cannot also be said that there is a definitive finding that the petitioner-Company has indulged in illegal mining in the Shah Commission Report, is the further submission made by the learned Counsel for the petitioner. The said contention was not looked into by the Appellate Authority. Exhibits P11 and P17 have also not been looked into by the Appellate WP(C) No.9178 of 2017 - 8 - Authority. There can be no fault found on the Appellate Authority since they were not put across at the day posted for hearing. 8. Considering the entire circumstances as seen above, this Court is of the opinion that the impugned order has not looked into the relevant materials; of course by reason of the default of the petitioner himself in not having appeared before the first appellate authority despite various opportunities having been given. In such circumstances, there cannot be any unconditional direction to consider afresh the issue of stay till the appeal is disposed of. The petitioner's contention is also that the demand, arising out of the assessment orders of the years 2008-09 and 2009-10, is objectionable since they are based on the report of the Shah Commission. In such circumstances, if the petitioner pays the demand of tax for the assessment years 2010-11, 2011-12, 2012-13 and 2013-14 in two installments; the first one on 30.03.2017 and the next on 30.04.2017, there shall be a re-consideration of Exhibit P6(A) on payment of the aforesaid amounts. The petitioner shall produce a copy of the writ petition as also substantiating documents, if any, before the Commissioner before 30.04.2017. The petitioner shall also WP(C) No.9178 of 2017 - 9 - deposit the amounts as directed herein before and appear before the first appellate authority on 02.05.2017. If the petitioner does not comply with either of these conditions of deposit or appearance, then Exhibit P6(A) shall be upheld. However, if the amounts as directed herein above are paid and the petitioner appears before the first appellate authority on 02.05.2017, then a hearing shall be conducted on that date, subject to the convenience of the first appellate authority, or on a near date with personal acknowledgment taken of the date of hearing. A reasoned order shall be passed, at any rate within a period of one month from the date of hearing. Recovery shall be kept in abeyance if the amounts directed herein above are paid and the further recovery shall depend upon the orders passed by the first appellate authority. The writ petition is disposed of as above. Sd/- K.Vinod Chandran Judge. vku/- [true copy] "