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2008 (12) TMI 2 - SC - Income TaxSecurity scam - Recovery of tax arrears - priority - bank dues - whether the Special Court constituted under the aforesaid Act was right in scaling down the priority tax demand by delving into the merits of the assessment orders and by deciding the matter as an appellate authority which directions according to the appellant are in violation of the decision of Supreme Court reported in (1998 - TMI - 40214 - SUPREME Court) - Held that: - There could be no disagreement with regard to the fact that if any amount is found due and payable by the banks towards amount advanced by it as loan to Mr. Harshad Mehta, in that event the right of the bank to the extent of the said amount, must be held to be the existing right of the bank on the property which is attached. - It also cannot be ignored that the said amount could not have been assessed in the hands of Harshad S. Mehta as his income, for the banks continued to have an existing right on the aforesaid amount which is required to be released in terms of the decrees which are obtained by the banks and the non-release of the said amount would amount to miscarriage of justice. - However, the fact that decrees have been obtained by the banks in respect of the certain dues of Harshad S. Mehta could not be disputed by the Income Tax Department. It also could not be disputed by the Income Tax Department that the amounts for which decrees have been obtained by the banks have become final and binding. Appellant (revenue) is justified while contending that if the banks have a right, title or interest in the attached property on the date of the notification under Section 3 of the Act for which decrees have been obtained and if the banks are claiming that the said amount has wrongly been included in the income of the notified party for the statutory period, then the banks are required to show the nexus between the said decreed amount and the amount which is included in the income of the notified party for the statutory period. Since this is a case of finding of facts and issues, matter remitted back to special court to decide the issues after giving an opportunity to the parties to place all the relevant documents so as to enable it to come to a proper and considered finding.
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