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2023 (5) TMI 583 - KARNATAKA HIGH COURTProceedings initiated u/s 10 of Black Money Act - additions by treating the petitioner as a beneficial owner of 'Romulus Assets Ltd., ('RAL') - ITAT has set-aside the additions holding inter alia that the Assessing Officer has not discharged the burden cast on him to prove that the petitioner is a beneficial owner of RAL - HELD THAT:- Before issuing notice u/s 10(1) of the BM Act, the Revenue has to determine that assessee is the beneficial owner of undisclosed assets located outside India. Findings recorded with regard to the resolution of RAL's Board meeting show that the authority under the BM Act has placed reliance on at least two distinct transactions, which were subject matter of appeal before the ITAT. This leads to an inference that the Income Tax Authorities had sent information with regard to transactions in respect of which ITAT did not agree with AO's stand. At least two transactions in respect of which assessee/petitioner has been called upon to show cause were subject matter of appeal before the ITAT. Unless the orders passed by the ITAT are reversed or modified in the manner known to law, they cannot be held against the petitioner assessee. It is settled that ordinarily, this Court shall not interfere with a show cause notice in writ proceedings under Article 226 of the Constitution of India except under rare circumstances where the notice is issued without jurisdiction or in such cases where, even if the facts stated in the notices are assumed to be correct, no case is made out against the noticee. Proceedings under BM Act entails serious civil and criminal consequences. The two transactions noted above, show that there is no proper application of mind both at the stage of sending the information by the Income Tax Department and by the Authorities under BM Act before issuing the notice under challenge. This court cannot examine all allegations/transactions in this proceeding. But the two transactions examined by us clearly show that Income-Tax Department has sent information without proper verification and the Authorities under the BM Act have acted mechanically and sent the impugned notice without application of mind. As relevant to note that the search was conducted in 2015. ITAT has decided the appeal on July 30, 2021 and the IT department has sent the information on August 06, 2021 and the impugned notice has been issued on August 11, 2021. These dates lead to an inference that Income-Tax Department sent the information hurriedly, immediately after disposal of appeal by the ITAT and the authority under BM Act has also acted hurridly. In our considered view that atleast a portion of the notice is based on the allegations set aside by the ITAT. Therefore, the impugned notice requires re-examination in the hands of authorities under the BM Act - WP allowed.
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