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Vishwanath Khanna Versus Chief Commissioner of Income Tax-Delhi VIII & Another

2015 (11) TMI 25 - DELHI HIGH COURT

Entitlement for interest on the amount claimed along with future interest - Bar of suits in civil courts. - inetrest on what rate and from what date? - Whether the plaintiff is entitled for decree of the sum as prayed in suit against the defendants jointly and severally? - Jurisdiction of court - Held that:- It is not disputed on behalf of the plaintiff that when this Order was passed on 20.9.2005 (or even on 27.9.2004 as argued on behalf of the plaintiff), plaintiff was aware of the fact that t .....

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of the Order dated 20.9.2005 (or 27.9.2004) and all these were aspects with respect to the recovery from the plaintiff of the Income Tax dues payable by the plaintiff pursuant to the search and seizure operations in the premises of the plaintiff on 4.2.1995 and refund to the plaintiff on account of excess amount lying with the defendants.

The plaintiff thus ought to have raised but did not raise the claim of the amount which is the subject matter of the present suit before the Income .....

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accounts with the banks as the three bank drafts/pay orders were not encashed by the defendants, but counsel for the plaintiff could not answer this query of the Court one way or the other in spite of taking instructions from the plaintiff.

Therefore, looking at the matter from any angle, if this issue was raised and the claim was denied by the ITO or the issue was not raised at all, the claim of the plaintiff definitely stood merged in the Order dated 20.9.2005/27.9.2004 being the .....

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d which the plaintiff failed to do.

The ratio of the judgment of the Supreme Court in the case of Parmeshwari Devi Sultania (1998 (3) TMI 3 - SUPREME Court) clearly applies that with respect to any claim which is made in a civil suit against the Income Tax department which will result in modification of proceedings under the Income Tax Act, then the cognizance of such a civil suit cannot be taken by a civil court in view of the categorical bar contained in Section 293 of the Income T .....

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ment of the Supreme Court in the case of Parmeshwari Devi Sultania (supra).

In view of the above, since this Court has no inherent jurisdiction to try this suit in view of the bar contained in Section 293 of the Income Tax Act, the suit is therefore dismissed, leaving the parties to bear their own costs. - CS (OS) No. 713/2006 - Dated:- 20-10-2015 - Valmiki J. Mehta, J. For the Petitioner : Mr. C.S. Gupta, Advocate with Ms. Kritika, Advocate For the Respondent : Mr. Ashok Manchanda, A .....

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and seizure operation, total silver of 7003.859 kgs (222 bars) was seized from the plaintiff alongwith cash of ₹ 49,86,500/-. The seized silver was valued at ₹ 4,44,66,395/- at that time and since the value of silver which was seized by the Income Tax Department would fluctuate during the pendency of assessment proceedings to be taken, hence, plaintiff had filed a writ petition in this Court being CWP No. 4767/1998 for return of the silver bars, and in this writ petition by an Order .....

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0,50,000/- deposited by the plaintiff with the defendants on 05.04.2000 but which were not encashed by the defendants and hence the principal amount of ₹ 30,50,000/- remained dormant in the suspense accounts of the banks without interest accruing thereon. Details of the three pay orders in question are stated in para 6 of the plaint. 2. Plaintiff states that he remained under an impression that these pay orders were encashed by the defendants to cover the payment of silver but plaintiff wa .....

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intiff in June, 2004/August, 2004, and therefore, this suit is filed claiming interest on this amount of ₹ 30,50,000/- from the date of deposit of pay orders with the defendants on 05.04.2000 till the dates of their encashment in June, 2004/August, 2004. 3. The defendants appeared and contested the suit and the following issues were framed in this suit on 14.08.2008:- 1. Whether the plaintiff is entitled for interest on the amount claimed along with future interest and on what rate and fro .....

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t, however, since this issue goes to the root of the matter as to whether this Court has inherent jurisdiction to try the present suit, plaintiff was put to notice of this aspect on 17.8.2015. Attention of the plaintiff was also drawn to the judgment of the Supreme Court in the case of Commissioner of Income Tax, Bhubaneswar and Another Vs. Parmeshwari Devi Sultania and Others (1998) 3 SCC 481 which pronounces upon Section 293 of the Income Tax Act by observing that no civil suit lies against th .....

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ourts.-No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act, and no prosecution, suit or other proceeding shall lie against the Government or any officer of the Government for anything in good faith done or intended to be done under this Act. 6. In the case of Parmeshwari Devi Sultania (supra), considering this very provision, the Supreme Court has made relevant observations and laid down the following ratio:- 6. In view of the proc .....

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of the civil nature excepting suit of which their cognizance is either expressly or impliedly barred. xxxxx xxxxx 11. In Raleigh Investment Co., Ltd. v. Governor-General in Council: AIR 1947 PC 78, a suit was filed by Raleigh Investment Company Ltd. claiming repayment of ₹ 4,35,295, part of a larger sum paid by it under an assessment of Income-tax made upon it. The basis of this claim was that in the computation of assessable income, effect had been given to a provision of the Income-tax A .....

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eding shall lie against any officer of the Government for anything in good faith done or intended to be done under this Act." The Court held that though in form the relief claimed did not profess to modify or set aside the assessment, in substance the suit was directed exclusively to a modification of the assessment and was barred by Section 67 of the Indian Income-tax Act. In Kamala Mills Ltd. v. State of Bombay: AIR 1965 SC 1942, plaintiff, the appellant filed a suit claiming to recover c .....

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is provided in sections 21 and 22, no appeal or application for revision shall lie against any such assessment or order." 12. It was contended by the plaintiff that Section 20 had no application because the order of assessment which the plaintiff sought to challenge had been made by the relevant Sales Tax Authorities without jurisdiction. This Court repelled this argument and said that an assessment based on an erroneous finding about the character of the transaction was not an assessment .....

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lication must be considered in the light of the words used in the statutory provision on which the plea is rested, the scheme of the relevant provisions, their object and their purpose." xxxxx xxxxx 16. Principles of law are, therefore, well settled where a civil court will not assume jurisdiction. In Dulhabhai etc. v. State of M.P.: (1968) 3 SCR 662, this Court laid 7 principles for the courts to see if the suit was barred under Section 9 of the Code or not. It is not necessary to set out .....

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e of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case, it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said .....

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il suit filed by a third party. Section 293 is specific and does not admit filing of a suit which has the effect of even indirectly setting aside or modifying any proceeding taken under the Act or order made thereunder. In the present case, search and seizure were effected as per the provisions of the Act, assets and documents seized and statement of Babulal recorded under sub-section (4) of Section 132 of the Act wherein he admitted that the gold was acquired from his and his brother's undi .....

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s, therefore, not necessary for him to issue any notice under sub-section (7) of Section 132 of the Act to the plaintiff. In any case, the plaintiff was well aware of the proceedings before the Income-tax Officer and she could have also filed objection to the order made by the Income-tax Officer under Section 132(5) of the Act to the Chief Commissioner or Commissioner under Section (11) thereof which remedy she did not avail. Considering the whole gravamen of the plaintiff in the suit and the la .....

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as approached by the plaintiff for settlement of the disputes and determination of the entitlement of the defendants with respect to the amounts on account of tax pursuant to the search and seizure of the plaintiff s premises on 4.2.1995. Pursuant to the order of the Settlement Commission, the computation of income of the plaintiff was to be done and this computation of income was done by the Income Tax Officer under Section 245(D)(6) of the Income Tax Act vide Order dated 20.9.2005. It is this .....

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U/s 245 D(4) for the Asstt. Year 95-96 (S.A.No.2/9/98/1-IT) Tax on the above ₹ 17,22,608.00 Less : Tax paid U/s 143(1)(a) ₹ 5,85,506.00 Balance ₹ 11,37,102.00 Demand U/s 143(1)(a) ₹ 8,60,977.00 Demand for Asstt Year 1995-96 ₹ 19,98,079.00 Add : Demand Outstanding for the Previous Asstt. Years Avs DEMAND Interest u/s 220(2) 1990-91 10,876.00 ₹ 10,876.00 1991-92 1,474.00 ₹ 1,474.00 1999-2000 15,86,347.00 3,70,798.00 Rs.19,57,145.00 2000-2001 22,75,638.00 .....

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months ₹ 45,29,030.00 ₹ 18,52,785.00 ₹ 36,68,514.00 2. Rs.1,44,00,000 18.12.99 18.12.99 - 31.5.01 @ 1% p.m. for 18 months 1.6.01 - 31.5.02 @ 0.75% p.m. for 12 months 1.6.02 - 31.8.04 @ 2/3% p.m. for 27 months ₹ 25,92,000.00 ₹ 12,96,000.00 Rs.25,66,080.00 3. ₹ 37,08,667 29.01.2000 29.1.2000 - 31.5.01 @ 1% p.m. for 5 months 1.6.01 - 31.5.02 @ 0.75% p.m. for 12 months 1.6.02 - 31.8.04 @ 0.66% p.m. for 27 months ₹ 1,85,433.00 ₹ 3,33,780.00 Rs.6,66,884. .....

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), N. Delhi NAME & ADDRESS OF THE ASSESSEE Sh. Vishwa Nath Khanna Prop. Foto Traders, S-105, G.K. II, New Delhi. Asstt. Year 1995-96 PAN No. AAIPK2689M Date of Order 27.09.04 ORDER UNDER SECTION 245D(6) OF THE I.T. ACT In this case, a search and seizure operation was carried on the premises of the assessee on 4.2.95. During the search, cash amounting to ₹ 49,86,500.00 and silver bars numbering 222 were seized. The assessee got the silver bars released from the department, as per the di .....

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d/- (Sanjay Gosain) Income Tax Officer, Ward 23(2), N. Delhi Copy to : The Assessee. O/c Sd/- (Sanjay Gosain) Income Tax Officer, Ward 23(2), N. Delhi. 8. It is not disputed before me on behalf of the plaintiff that when this Order was passed on 20.9.2005 (or even on 27.9.2004 as argued on behalf of the plaintiff), plaintiff was aware of the fact that the three bank drafts totaling to ₹ 30,50,000/- were not encashed by the defendants and plaintiff had a right to claim interest on these ban .....

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all these were aspects with respect to the recovery from the plaintiff of the Income Tax dues payable by the plaintiff pursuant to the search and seizure operations in the premises of the plaintiff on 4.2.1995 and refund to the plaintiff on account of excess amount lying with the defendants. The plaintiff thus ought to have raised but did not raise the claim of the amount which is the subject matter of the present suit before the Income Tax Officer who passed the computation vide Order dated 20 .....

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were not encashed by the defendants, but counsel for the plaintiff could not answer this query of the Court one way or the other in spite of taking instructions from the plaintiff. Therefore, looking at the matter from any angle, if this issue was raised and the claim was denied by the ITO or the issue was not raised at all, the claim of the plaintiff definitely stood merged in the Order dated 20.9.2005/27.9.2004 being the claim of the plaintiff with respect to interest on the amount of ₹ .....

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