VIRENDRA RAMANLAL SONI V. DEPUTY COMMISSIONER OF INCOME TAX

SCA/9974/2019

AI Insights

The case involves Virendra Ramanlal Soni, who filed a petition under Article 226 of the Constitution of India against the Deputy Commissioner of Income Tax, seeking a direction to pass a speaking order on objections raised before finalizing an order under the Benami Act. The petitioner had previously received a summons and submitted replies and documents during the proceedings. The main contention was whether the objections raised by the petitioner should be addressed separately before passing the final order. The court examined the provisions of the Benami Act and relevant case law, particularly the Supreme Court's decision in GKN Driveshafts (India) Ltd. vs. Income-tax Officer, to determine the applicability of similar principles under the Benami Act.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 683399 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 11-06-2019
• Assessment Year: misc
• Other Referred Cases: GKN Driveshafts (India) Ltd. Vs. Income-tax Officer
• Laws Referred To: Prohibition of Benami Property Transactions Act, 1988, Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: DARSHAN PATEL
• Keywords: Benami transaction; Natural Justice; Provisional attachment; Show cause notice; Speaking order
• Section: 143(3); 26; 24(1); 24(2); 148(2); 147(1); 153(A); 24(3); 24(4); 24(5); 19(1)(b)

Judgement Text

"C/SCA/9974/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 9974 of 2019 ================================================================ VIRENDRA RAMANLAL SONI Versus DEPUTY COMMISSIONER OF INCOME TAX ================================================================ Appearance: DARSHAN R PATEL(8486) for the Petitioner(s) No. 1 for the Respondent(s) No. 1,2 ================================================================ CORAM: HONOURABLE MR.JUSTICE A.Y. KOGJE Date : 11/06/2019 ORAL ORDER 1. This petition is filed under Article 226 of the Constitution of India seeking direction to respondent No.1 – Deputy Commissioner of Income Tax to pass a speaking order disposing of the objections raised by the petitioner before passing final order under the provisions of the Prohibition of Benami Property Transactions Act, 1988 (“the Benami Act” for short). 2. Learned Advocate for the petitioner submitted that the petitioner was issued a summons on 03.12.2018 under Section 19(1)(b) of the Benami Act, to which the petitioner had submitted his reply. Thereafter, there were exchanges of communications by both sides seeking certain documents, which were replied. The provisional attachment order was passed under Section 24(3) of the Page 1 of 8 C/SCA/9974/2019 ORDER Benami Act on 20.03.2019 and show cause notice under Section 24(1) was issued to one Mr.Yogeshmumar More and copy was furnished to the petitioner according to the provisions of Section 24(2) of the Benami Act. The petitioner was asked to submit explanation. The petitioner sought adjournment for some period which was granted. The petitioner also requested for copies of certain statements recorded under Section 19 of the Benami Act. Ultimately, on 18.04.2019, the petitioner filed a detailed reply to show cause notice under Section 24(2) of the Benami Act and on 30.04.2019, wrote letter requesting respondent No.1 to dispose of the objections raised by the petitioner by a separate speaking order before passing final order. 2.1 Learned Advocate for the petitioner submitted that the petitioner had raised several relevant objections which would require decision before arriving at final conclusion and will affect the outcome in the final order and hence, decision is necessary on the objections raised before passing the final order. 2.2 It is submitted that Section 24(1) of the Benami Act is parimateria to Section 147(1) read with Section 148(2) of the Income Tax Act, 1961 and while considering these provisions, the Apex Court in the case of GKN Driveshafts (India) Ltd. Vs. Income-tax Officer, Page 2 of 8 C/SCA/9974/2019 ORDER reported in 259 ITR, 19, has held that noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. It is submitted that in the present case, though the petitioner has requested respondent No.1 to deal with the objections first, respondent No.1 is likely to proceed and pronounce the final order on or before 17.06.2019. 2.3 Learned Advocate has taken this Court through the contents of the reply to the show cause notice filed by the petitioner dated 18.04.2019 and communication dated 30.04.2019 for emphasizing that the objections raised by the petitioner are required to be dealt with before pronouncing the final order. 3. Having considered the submissions of the learned Advocate for the petitioner and having perused documents on record, it appears that the petitioner had filed return on 07.11.2017 declaring income of Rs.6,30,050/-. The assessment order under Section 143(3) read with Section 153-A of the Income Tax Act was passed on 31.12.2018, where the Assessing Officer was pleased to make addition of Rs.5,51,74,772/-. One particular transaction involving M/s.Raj Enterprise (Proprietor Yogesh More) was scrutinized and it was found that the transaction involved deposit of old high demonetized Page 3 of 8 C/SCA/9974/2019 ORDER notes. The Department had reason to believe that the transaction is not genuine and that against such transfer of money by RTGS, for deposit of high number of unaccounted cash in old high demonetized notes, there was no actual delivery of gold bars and hence, summons came to be issued on 03.12.2018 under Section 19(1)(b) of the Benami Act to the petitioner. The petitioner filed reply to the summons on 13.12.2018 and thereafter, there were exchanges of communications where the respondent had demanded certain documents and /or clarification, to which the petitioner responded. On 20.03.2019, respondent No.1 passed an order of provisional attachment, attaching the sundry debtors loans and advances and investments appearing in the balance sheet under Section 24(3) of the Benami Act and also attached provisionally the bank account of the petitioner. 4. On 20.03.2019, a show cause notice under Section 24(1) of the Benami Act came to be issued to one Yogesh More with a copy forwarded to the petitioner, calling upon the petitioner to submit an explanation in the matter on or before 29.03.2019. The show cause notice was issued that the Department had sufficient documentary evidence to conclude that the transaction falls within the purview of “Benami transaction” and therefore, noticee was called upon to show cause as to Page 4 of 8 C/SCA/9974/2019 ORDER why the property in question not be treated as “benami property” within the meaning of Section 2(9)(C) of the Benami Act. It appears that by communication dated 18.04.2019, the petitioner filed a detailed reply to the show cause notice. 5. The Court has perused the contents of the reply to the show cause notice where the petitioner has sought for statements of various persons, affidavits and evidences from other means. It can be gathered that under the communications entered previous to the reply, the petitioner was supplied certain documents in the form of statements and /or affidavits. However, in the reply to the show cause, the petitioner had specifically mentioned that the petitioner is not provided full copies of the statements of various persons, affidavits and evidences, which is in violation of principles of natural justice. The remaining part of the reply dated 18.04.2019 is narrating case of the petitioner on merits and raising his defences. To this Court, there does not appear to be any preliminary objection which the petitioner has raised in the reply to the show cause notice. The Court has also perused subsequent communication dated 30.04.2019, wherein for the first time, a request is made for passing a separate speaking order before passing the draft /final order by citing Page 5 of 8 C/SCA/9974/2019 ORDER Section 147 of the Income Tax Act and the judgment of the Apex Court in the case of GKN Driveshafts (India) Ltd. (supra). 6. Section 24 of the Benami Act pertains to 'notice and attachment of property involved in benami transaction'. Sub-section (4) of Section 24 provides for the Initiating Officer to make such inquiries and call for the reports or evidences and take into account all the relevant materials pertaining to the notice under Section 24(1). Sub-section (5) of Section 24 provides the Initiating Officer to draw statement of case and refer it to the adjudicating authority. Section 26 provides for 'adjudication of benami property'. In the entire scheme, there does not appear to be any provision for dealing separately with the preliminary objection and to pass any order before passing of the final order. Therefore, claim of the petitioner to pass a separate order dealing with the objections is not supported by any provision of law. 7. Insofar as submission of learned Advocate for petitioner referring to the judgment of the Apex in the case of GKN Driveshafts (India) Ltd. (supra), the case before the Apex Court was where the assessee had filed a writ petition challenging validity of notices issued under Sections 148 and 143(2) of the Income Tax Act and Page 6 of 8 C/SCA/9974/2019 ORDER it was held that when the notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing of notice. The Assessing Officer is then bound to furnish reasons and on receipt of such reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. This contention and reliance upon the judgment of the Apex Court is made by contending that Section 24(1) of the Benami Act and Section 147 of the Income Tax Act are adopting the same language and therefore, are parimateria. The Court is unable to accept such contention as the sphere and operation of Section 24 of the Benami Act and Section 147 of the Income Tax Act are completely different. Section 24 of the Benami Act and the subsequent provisions are for the purpose of coming to conclusion as to whether the property in question is to be treated as benami property whereas operation of Section 147 of the Income Tax Act and the subsequent provisions, viz. Sections 148 to 153 would be operating while the process for assessing or reassessing of the income is undertaken by the concerned officer. Therefore, contention of passing a separate speaking order to the objections raised cannot be accepted. Page 7 of 8 C/SCA/9974/2019 ORDER 8. Even otherwise, on merits, when the petitioner filed reply to the show cause notice on 18.04.2019, there is nothing in such reply which can be termed to be objection of preliminary nature which would be required to be dealt with before passing final order. The only objection that comes near to the contention raised by learned Advocate for the petitioner is non-supply of the documents. This, in the opinion of the Court, is also an objection on merits which can be and should be dealt with in the final order and therefore, subsequent communication dated 30.04.2019 appears to be an afterthought to prevent respondent No.1 from proceeding any further as per the provisions of the Benami Act and hence, the Court is not inclined to entertain this petition. 9. In view of the aforesaid, the petition deserves to be and is hereby dismissed. Sd/- (A.Y. KOGJE, J) SHITOLE Page 8 of 8 "