TMI Blog1989 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... erson within the meaning of section 2 of the SAFEM (FOP) Act, 1976. Notice under section 6(1) of the SAFEM(FOP) Act, 1976, was issued on December 23, 1987, and served on the appellant on January 8, 1988. After issue of a notice under section 6(1) of the said Act and giving an opportunity to the appellant of being heard, the Competent Authority passed the impugned order on August 25, 1988. Before the Competent Authority, in response to the notice under section 6(1), the appellant urged that the proposal to forfeit his property was vitiated by the inordinate delay between the date of the detention order or even the date of release order and the date of notice under section 6(1). This plea of the appellant was rejected by the Competent Authority though it was not specifically met by him in his order. Before us, the appellant, appearing through his learned representative, Shri N. C. Das, once again urged that the order of the Competent Authority be declared to have been made without jurisdiction as it was made after a lapse of more than ten years after the order of detention. We have carefully considered the submissions of the appellant's learned representative in regard to the aspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. More than seven years elapsed before the initiation of proceedings under the SAFEM (FOP) Act, 1976, by issuing a notice under section 6(1). In this interregnum of seven years, absolutely nothing was done by the Competent Authority. When this, was pointed out to Shri S. R. Chaudhuri, appearing for the Competent Authority, he argued that, in the absence of any time limit prescribed by the SAFEM (FOP) Act, 1976, for issuance of a notice under section 6(1), it has to be presumed that Parliament intended that there should be no time limit for issuance of the notice under section 6(1) and the proceedings could not be declared to have been initiated without jurisdiction or the order passed by the Competent Authority could not be regarded as invalid even if the delay for initiating the proceedings was unreasonable or without any jusdfication. This argument of Shri Chaudhuri, however, does not accord with the decisions of various High Courts and the Supreme Court which had occasion to consider the effect of delay in completion of proceedings for which completion there was no time limit prescribed in the relevant statute. These decisions were rendered in relation to the Income-tax Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be bad on the ground of want of jurisdiction. However, because of the absence of any limitation, penalty proceedings cannot be taken after any length of time. Delayed proceedings may amount to abuse of power. The questions which, therefore, will have to be decided when the penalty proceedings are challenged on the ground of inordinate delay are, firstly, whether the delay is inordinate, and, secondly, whether there is any explanation by the Revenue for the inordinate delay. Both these questions are essentially questions of fact to be determined by the authority, which is entitled to consider the relevant circumstances." (iii) The question of validity of a penalty order under the Kerala Agricultural Income-tax Act, 1950, on the ground of long delay came up for consideration of the Kerala High Court in Krishna Bhatta v. Agricultural Income-tax Officer [1981] 132 ITR 21 (Ker). The decision of the Kerala High Court with which the Bombay High Court concurred in Chimanram Motilal Pvt. Ltd.'s case [1983] 140 ITR 809, lays down some important propositions which are contained in the following observations of the High Court (headnote of 132 ITR 21) : "Proceedings enforceable against a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njab Sales Tax Acts which were sought to be made long after the Ming of the relevant quarterly, returns. Though the Supreme Court dismissed the writ petitions filed by the assessees, it made very significant observations on the qestion of limitation arising out of inordinate delay in completing the assessment proceedings. The observations of the court are : "Before we part with the case, we would like to indicate that assessment of tax should be completed with expedition. It involves the revenue to the State. In the case of a registered dealer who collects sales tax on behalf of the State, there is no justification for him to withhold the payment of tax so collected. If a timely assessment is completed, the dues of the State can be conveniently ascertained and collected. Delay in completion of assessment often creates problems. The assessee would be required to keep up all the evidence in support of his transactions. Where evidence is necessary, with the lapse of time, there is scope for its being lost. Oral evidence as and when required to be produced by the assessing authority may not be available if a long period intervenes between the transactions and the consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any taxable income. After getting a report from the Income-tax Officer, B-Ward, Dhubri, in 1980, the Competent Authority took more than seven years to record his reasons for forming the belief for issuing a notice under section 6(1). There was no explanation forthcoming for justifying the delay. The appellant not being obliged to keep any accounts was obviously placed in a difficult position in the matter of tendering evidence regarding the source of acquisition of the properties specified in the notice under section 6(1). We, therefore, hold that the delay in initiating the proceeding for forfeiture of property in this particular case was inordinately long and without any justification and we, accordinly, hold that the order of the Competent Authority made on August 25, 1988, in pursuance of the proceeding initiated on December 23, 1987, is not sustainable. The order is, accordingly, set aside. In view of our setting aside the order of the Competent Authority, we find it unnecessary to consider and decide on other grounds raised by the appellant. D. R. KHANNA (CHAIRMAN).--I am in respectful agreement with the order of my learned brother that the delay in initiating proceeding ..... 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