TMI Blog2010 (8) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... ent authority is expected to strictly adhere to the principles of natural justice also. In this case, in my considered opinion, the competent authority has given a go by to all the above basic principles resulting in injustice to the petitioner. First of all, a Chartered Accountant is not a competent person to practise as a counsel to represent the petitioner before the competent authority. In view of the above, the writ petition is allowed; the impugned orders are set aside; and the matter is remitted back to the 2nd respondent who shall hold a fresh enquiry as indicated above , afford sufficient opportunity to the petitioner to let in evidence, both oral and documentary, if any, and pass final order in accordance with law. - W.P. No. 16313 of 2001 - - - Dated:- 5-8-2010 - S. Nagamuthu, J. Shri Raghul Balaji, for M/s. Satish Parasaran, for the Petitioner. Shri M.L. Ramesh, for the Respondent. ORDER The petitioner is the brother of one Mr. V.P. Selvaraj. The said Mr. V.P. Selvaraj was convicted under the provisions of the Customs Act, 1962 for an offence relating to seizure of 100 bars of gold in November 1969. The said conviction has become final. Some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there has been nexus between the properties and the alleged illegal earnings of the convict. (vi) The properties in question were purchased during 1960 s which were duly accounted for. The petitioner was doing gold business and various other businesses. It is further stated that the income derived from such sources have been properly assessed to income-tax. Further, under Voluntary Disclosure Scheme, some more income was declared and the same was also assessed by the Income-tax Department. Therefore, it cannot be said that the improvements made on the said properties by the petitioner from out of the declared income under the Voluntary Disclosure Scheme would amount to illegal acquisition. The presumption that the properties are illegally acquired properties in terms of the Act also stands rebutted. On these grounds, the impugned order is liable to be quashed, it is contended. 3. The learned counsel appearing for the 2nd respondent would oppose the writ petition on the following grounds :- (i) There is no legal necessity under the Act to indicate in the notice itself the reasons for the belief of the competent authority that the properties are illegally acquired properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows :- 10........The condition precedent for issuing a notice by the competent authority under Section 6(1) is that he should have reason to believe that all or any of such properties are illegally acquired properties and the reasons for such belief have to be recorded in writing. The language of the Section does not show that there is any requirement of mentioning any link or nexus between the convict or detenu and the property ostensibly standing in the name of the person to whom the notice has been issued. Section 8 of the Act which deals with burden of proof is very important. It lays down that in any proceedings under the Act, the burden of proving that any property specified in the notice served under Section 6 is not illegally acquired property, shall be on the person affected. The combined effect of Section 6(1) and Section 8 is that the competent authority should have reason to believe (which reasons have to be recorded in writing) that properties ostensibly standing in the name of a person to whom the Act applies are illegally acquired properties, he can issue a notice to such a person. Thereafter, the burden of proving that such property is not illegally acquired prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been shown. The order further gives the details of the additions made between assessment years 1969-70 to 1972-73 as follows :- Sl. No. Assessment Year Nature of addition Amount 1. 1969-70 Value of understatement attributable to the cost of construction of building at 101 to 103, Big Street, Kumbakonam up to 31-3-1969 Rs. 11,000/- 2. 1970-71 Value of understatement attributable to the cost of construction of building at 101 to 103, Big street, Kumbakonam up to 31-3-1970 Rs. 22,000/- 3. 1971-72 Value of understatement attributable to the cost of construction of building at 101 to 103, Big Street, Kumbakonam up to 31-3-1971 Rs. 33,000/- 4. 1972-73 Value of understatement attributable to the cost of construction of building at 101 to 103, Big Street, Kumbakonam up to 31-3-1972 Rs. 44,000/- 9. The order further states that the petitioner made declaration under Section 3(1) of the Voluntary Disclosure Scheme, 1975 to the tune of Rs. 25,000/-. In the said disclosure, the petitioner had stated that the sources of the said amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l happens to be the relative of the convict. The very object of the Act is to deprive the persons engaged in smuggling activities and foreign exchanges manipulations of their illegally acquired properties so as to effectively prevent smuggling and other clandestine operations. Therefore, it is needless to say that there has to be nexus established between the illegal earnings of the convict and the properties held by a close relative. 13. Under Section 8 of the Act, however, there is a burden cast upon such a relative to prove the fact that the properties are his own legally acquired properties and they have got nothing to do with the illegal activities of the convict. This burden is to be discharged at the time of enquiry by the competent authority. While recording the reasons for such belief for issuing notice under Section 6(1) of the Act, the competent authority can take into account the presumption under section 8 of the Act also. Apart from that, the phrase reasons to believe does not mean clear proof of nexus between the properties in question and the convict. Such proof is required only for passing final order of forfeiture. For the purpose of Section 6(1) of the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. As a matter of fact, Fatima Mohd. Amin s case cited supra, has been distinguished on facts in P.P. Abdulla s case cited supra. In this case, as held in P.P. Abdulla s case the authority has furnished the recordings for perusal along with the counter. Thus, the competent authority has satisfied the said legal requirement. 17. The next contention of the learned counsel for the petitioner is that in the absence of any notice under Section 6(2) of the Act to the convict, issuance of notice and continuance of proceeding against a relative of the convict, is not sustainable. The learned counsel, for this proposition, relies on a judgment of a Division Bench of this Court in V. Mohan and others v. Income-Tax Officer, 2008 CRI.L.J. 2821 wherein the Division Bench in para 17 has held as follows :- 17. In the present case, since the basic requirement of service of notice under Section 6(0) on the convict had not been complied with, in our considered opinion, the competent authority had no further jurisdiction to proceed in the matter by merely serving a notice on the petitioner purporting to be under Section 6(2). As a matter of fact, Section 6(2) contemplates that upon service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not at all necessary that simultaneously a notice should also be served on the detenu/convict. In view of the above position, in the case on hand, I hold that though there was no notice served on the convict in respect of the properties in question, the notice served on the petitioner, who is a relative of the convict is sustainable and the same cannot be stated to be without jurisdiction. Thus, this ground of attack also fails. 21. At this juncture, the learned counsel for the 2nd respondent has brought to the notice of this Court an earlier order passed by this Court in W.P. No. 2110 of 1989 along with connected writ petitions by means of a common order dated 16-10-1990. In the said writ petitions, the petitioner herein had challenged the very same notice issued under Section 6(1) of the Act which culminated in the present impugned order. One of the grounds raised before this court earlier was that the notice did not contain the reasons for the belief on the part of the competent authority. This court in the said writ petition has held as follows :- I have also taken notice of the contents of the impugned notice. It cannot be called all that vague. It gives sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the satisfaction of the competent authority that these properties are not illegally acquired properties. In this regard, I may state that there are two kinds of nexuses which are required to be established viz., (1) the nexus between the convict and the individual; and (2) the nexus between the property and the illegal earnings of the convict. In the instant case, there is no dispute that the petitioner is the brother of the convict. Thus, the first nexus between the convict and the petitioner has been established. The second nexus is between the illegal earnings of the convict and the properties in question. In this regard, I may say that in view of Section 8 of the Act, if the first kind of nexus is established, a presumption may be drawn that the properties held by the petitioner are the illegally acquired properties from out of the illegal earnings of the convict. For this, the very fact that the sources of income were not disclosed by the petitioner to the Income-tax Department is yet another circumstance. From these circumstances, the competent authority had drawn the presumption that there is nexus between the illegal earnings of the convict and the properties in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above rival submissions, I perused the records and I am at loss to find any evidence on record from the petitioner to substantiate his contentions. A perusal of the records would go to show that one Chartered Accountant had appeared as an agent of the petitioner and a written statement had been produced on behalf of the petitioner explaining the acquisitions. Apart from that, some income tax returns and wealth tax returns and other accounts had also been produced by the Chartered Accountant. From the records, I am also able to find that the chartered accountant made his submissions by way of arguments as though he was appearing as a counsel for the petitioner. Based on such written statement submitted by the petitioner and the other records produced, the competent authority has come to the conclusion that the petitioner has failed to discharge his burden under Section 8 of the Act. In my considered opinion, the procedure adopted by the competent authority cannot be appreciated at all. The competent authority ought to have permitted the petitioner to let in oral as well as documentary evidences or to file at least affidavits. The competent authority, for a moment, should keep in m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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