TMI Blog1998 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... short, the "Act"). Respondent No. 1, as the plaintiff, filed a suit for partition against 7 defendants, defendants Nos. 6 and 7 being respectively the Union of India through the Finance Secretary and the Commissioner of Income-tax, Orissa, now the appellant before us. Defendants Nos. 1 and 2 are step brothers and defendants Nos. 3 to 5 are step-sisters of the plaintiff. The plaintiff said that she was the daughter of Bansidhar Agarwal from his first wife, while defendants Nos. 1 to 5 were the children of Bansidhar Agarwal from his second wife. Defendant No. 1 is Babulal whose residential and business premises were subjected to search and seizure operations under section 132 of the Act and various assets including certain gold ornaments, the subject-matter of the suit filed by the plaintiff, were seized. In the suit, the plaintiff had prayed for partition of those very gold ornaments. The plaintiff said that her mother died in 1958 and that at that time she was possessed of 200 tolas of gold ornaments which was her stridhan. Her mother made a will bequeathing gold ornaments to the plaintiff and other children of Bansidhar from his second wife in proportion to the number of daughte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of Income-tax (Investigation), Hyderabad, under sub-section (1) of section 132, search and seizure operations were conducted in the residence-cum-business premises of Babulal and also at the business premises of a company of which he was the managing director. Two bank lockers in the name of Babulal and his brother, Girdharilal, in the Andhra Bank were also searched. These search operations were carried on from March 23, 1990, to March 26, 1990. Cash, jewellery, diamond ornaments, silver coins and ingots were found and seized. The statement of Babulal was recorded under sub-section (4) of section 132 of the Act. In respect of cash and jewellery, Babulal admitted having concealed income of Rs. 7,00,000 which according to him was the value of the gold ornaments found in excess of 515 tolas which had been disclosed by him and his family members in his wealth-tax return. He offered an additional income of Rs. 3,50,000 in his name and the same amount in the name of his brother on account of undisclosed investment in acquisition of gold ornaments. During the course of investigation, Babulal also gave written submissions. Regarding the gold ornaments, his stand now was that gold orname ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed--- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (5) Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous approval of the Chief Commissioner or Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. (6) The assets retained under sub-section (5) may be dealt with in accordance with the provisions of section 132B. (7) If the Income-tax Officer is satisfied that the seized assets or any part thereof were held by such person for or on behalf of any other person, the Income-tax Officer may proceed under sub-section (5) against such other person and all the provisions of this section shall apply accordingly. . . (11) If any person objects for any reason to an order made under sub-section (5), he may, within thirty days of the date of such order, make an application to the Chief Commissioner or Commissioner stating therein the reasons for such objection and requesting for appropriate relief in the matter. 132B. Application of retained assets.---(1) The assets retained under sub-section (5) of section 132 may be dealt with in the following manner, namely :--- (i) The amount of the existing liability referred to in clause (iii) of the said sub-section and the amount of the liability determined on completion of the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub-section (1) or, as the case may be, to the date of the last of such assessments or reassessments." In view of the proceedings conducted under section 132 of the Act and order having been passed under sub-section (5) of section 132 thereof and seized assets including the gold ornaments, the subject-matter of the suit ordered to be retained, the Revenue objected to the maintainability of the suit and said that it was clearly barred by section 293 of the Act and a civil court had no jurisdiction to try such a suit under section 9 of the Code of Civil Procedure. Section 9 of the Code of Civil Procedure imparts jurisdiction on a civil court to try suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. The subordinate judge framed and tried the preliminary issue on the maintainability of the suit. He observed that section 293 of the Act could not be a blanket bar for all types of civil suits brought for redress against infringement of a legal right for which no remedy was prescribed under the Act. According to him, the claim of the plaintiff as set out in the suit had not been adjudicated by defendant No. 7 and on that account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11) of section 132 would be able to grant the relief claimed by opposite party No. 1 that the seized gold ornaments are subject to partition, it being the stridhan property of her mother who bequeathed the same in a will. As the matter, I am of the view, neither the Income-tax Officer nor the named authority under sub-section (11) of section 132 would be able to grant the aforesaid relief. Opposite party No. 1 is not an assessee and she is a third party so far as the proceeding initiated against opposite party No. 2 under section 132 of the Act is concerned." The High Court also held that although section 132 provided for a remedy by way of challenge before the named authority under sub-section (11) of section 132 of the Act, the plaintiff could not redress her grievance because the relief of partition claimed by her in the suit could not be granted by the statutory machinery provided in the Act. We do not think that the High Court approached the question in its proper perspective. It failed to consider the effect of the decree if passed in the suit on the order under section 132(5) of the Act or other proceedings under section 132B of the Act. When section 293 originally sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other person, the Income-tax Officer may proceed under sub-section (5) against any such person; and (9) if any person objects for any reason to the order made under sub-section (5), he can approach the Chief Commissioner or Commissioner for redressal of his grievance." A perusal of the order passed under section 132(5) would show that the Income-tax Officer was not satisfied that the subject gold ornaments belonged to any other person and not to Babulal. It was, therefore, not necessary for him to proceed under sub-section (7) of section 132 of the Act. However, the plaintiff was well aware of the proceedings under section 132 and she did approach the Income-tax Officer, as aforesaid, who rejected her petition. In any case, she could have approached the Chief Commissioner or Commissioner under sub-section (11), if she had any objection for any reason to the order made under sub-section (5) of section 132 of the Act. We do not think sub-section (11) is confined to only that person who was subjected to search and seizure operations and against whom the order under section 132(5) was passed. The words "any person" appearing in sub-section (11) of section 132 of the Act are si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the Commissioner of Income-tax and the Union of India have been impleaded as defendants. On the pleadings of the parties, an issue will have to be framed on the validity of proceedings under section 132 of the Act which cannot be permitted in view of the bar contained in section 293 of the Act. In Raleigh Investment Co. Ltd. v. Governor-General in Council [1947] 15 ITR 332 (PC), a suit was filed by Raleigh Investment Company Ltd. claiming repayment of Rs. 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 Indian Income-tax Act, 1922 which in the submission of the plaintiff was ultra vires the Legislature and that the assessment was, therefore, wrong. One of the contentions raised was that the suit was barred by reason of section 67 of the Indian Income-tax Act, 1922. Section 67 contained a bar on suits in the civil court. Section 67 provided as under : "67. Bar of suits in civil court.---No suit shall be brought in any civil court to set aside or modify any assessment made under this Act, and no prosecution, suit or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged it had paid as advance tax on various dates, while submitting returns for a particular period. It also claimed interest. The State raised an objection that the suit was barred by sections 13 and 20 of the Bombay Sales Tax Act, 1946. This court held that as no assessment had been made under the Act and no assessment or order made under the Act was called in question in the suit section 20 of the Act did not bar the suit. This court also negatived the contention of the defendant that when a registered dealer filed a return and calculated and paid tax on the basis of the return, he, in fact, made an assessment and, therefore, brought himself within section 20 of the Act. The court said : "We are unable to read the word 'assessment' in section 20 to include a mere filing of return and payment by a registered dealer. In our opinion, the word 'assessment' has reference to assessments made under sections 11 and 11A of the Bombay Sales Tax Act, 1946. Therefore, we must overrule the contention of the learned Solicitor-General that section 20 expressly bars the present suit." It is not necessary for us to consider the scope of section 13 referred to above as that is not relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well settled where a civil court will not assume jurisdiction. In Dhulabhai v. State of Madhya Pradesh [1968] 3 SCR 662; AIR 1969 SC 78, this court laid down 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 all the 7 principles as we find that the present suit would be barred under the second principle laid down by this court which we reproduce as under : "Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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