TMI Blog2017 (11) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... der ought to have applied u/s 132(11) per Rakesh Kumar Aggarwal (2013 (9) TMI 1194 - DELHI HIGH COURT) is also not sustainable, per Section 132(11) stands omitted by the Finance Act of 2002 w.e.f. 01.06.2002 and hence decree holder could not have availed of such provision in any case. Lastly the plea of the Income Tax Department that it being a secured creditor, would not be of any benefit to the revenue in view of the fact the money seized to the extent of decree does not belong to assessee being obtained by fraud as discussed above. The assessee though was in possession of it but at best can said to have held it only in constructive trust. Application is thus dismissed for reasons aforesaid. - EX.P. 381/2012, EX.APPL.(OS) 66-67/2017 - - - Dated:- 13-11-2017 - MR. YOGESH KHANNA J. Decree Holder Through: Mr. Tanmaya Mehta, Mr. Piyush Singh, Ms. Nivedita Grover Advocates. Debtors Through: Mr. Sanjiv Rajpal, Adv. for Income Tax Dept. Ms. Kawaljit Kaur, Adv. for JD-1 2 Ms. Romila Joshi, Advocate for HDFC Bank. YOGESH KHANNA, J. EX.APPL.(OS) 290/2014 1. This application is moved by the Deputy Commissioner of Income Tax, Central Circle-3, New Delhi under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attachment orders qua the bank accounts of the judgment debtor already passed by the income tax department vide order dated 11.01.2013, direct it not to release any payment from the said account to any party without taking leave of this Court. 6. The block assessment of the Judgment Debtor pursuant to search operation and in terms of the post search enquiry has been completed on 06.11.2013 and in terms thereof the demand has been raised on them. The assessment orders of Judgment Debtor for the assessment years 2010-2011 and 2011-2012 alone determined its tax liability for these 2 years at ₹ 345,97,46,885/-.The copy of the demand notices issued u/s 156 (2) of the Income Tax Act, 1961 are attached. 7. It is averred the applicant has put the bank accounts of the Judgment Debtors under attachment u/s 226 of the I.T. Act, 1961 and one such bank account with HDFC Bank, Dwarka Branch, New Delhi has also been attached whose bank account No. is 02498630000147. The applicant has filed this application for recovery of the tax demand raised against the applicant and it has issued the attachment order u/s 221 of the Income Tax Act,1961 to secure the interest of the revenue being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants is that the learned Single Judge should not have entertained the suit since no ground to give the benefit of Section 14 of the Limitation Act, had been made out. 23. The issue presented before the Court is whether the present proceedings are barred by Section 293 of the Income Tax Act. The section reads: 293. Bar of suits in Civil Courts. 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. 24. The fact that the assessment conducted as against Rakesh Kumar Agrawal was closed, and proceedings under Section 132 along with the objections presented under Section 132 (10), which were considered and rejected under Section 123 (12) were carried out is clear in this case. The Section 132 proceedings and the deemed seizure of the seven pay orders (and the representative amount) as against Mr. Kumar s tax dues were conducted and finalized in accordance with the procedure under that provision, and to that action, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to belong to the Hindu Joint Family from the appellant assessee. The appellant had also filed a suit against the Income Tax authorities for recovery of a certain amount as for financial loss the plaintiff had suffered as a result of loss of interest on the maturity value of the financial assets seized. In that proceeding, the Single Judge Court dismissed the suit given the provisions of Section 293, and on appeal, the Court noted that where a specific remedy is available under Section 132 (in that case the remedy lay in the provisions on payment of interest under Section 132B), the jurisdiction of the Civil Court remains barred. In this case, M/s. Bansal Commodities clearly had recourse to Section 132(11), which they took advantage of, though ultimately their view was rejected by the Income Tax authorities in accordance with the statutory discretion vested in it. Thus, Section 293 clearly comes into operation in this case. xxx 28. Significantly, the order under Section 132 effecting a deemed seizure of the pay orders as against the tax dues of Rakesh Kumar Agrawal continues to operate till date, having never been set aside in any writ proceeding before this Court or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements on internet, and through periodically conducted seminars, so as to gain the trust of public-at-large. Plaintiff also discovered that the bank account of the defendants on which the post dated cheques were issued, had been seized by the police even before the issuance of aforesaid cheques. Plaintiff also met other individuals who had been cheated and duped by the defendants and came to know that the police had registered FIR bearing No.84/2011, against the defendants and that the case was thereafter transferred to the Economic Offences Wing, Malviya Nagar, New Delhi. On 16.06.2011, the plaintiff served a legal notice on the defendants, terminating the agreement on account of fraud committed by the defendants and called upon the defendants to pay to the plaintiff the assured monthly return and the principal sum invested. 12. The Court then in para 7 of its judgment returned the finding:- 7. In view of the aforesaid, the suit of the plaintiff is decreed in favour of the plaintiff and against the defendants Nos.1 and 2. The defendants are held jointly and severally liable to pay to the plaintiff a sum of ₹ 1,60,00,000/- (Rupees one crore and sixty lakhs only) along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; payments to Mr. Robb for his personal use and enjoyment, Mr. Robb and AGA held the payments by the lead claimants or their traceable proceeds on constructive trust for the lead claimants ( the fraud constructive trust ). The second is that, from the time when the lead claimants claimed the return of their payments, that is to say, at the latest, when they joined the present proceedings, their transactions were rescinded and their payments or their traceable proceeds were held on trust for them ( the rescission trust ). 41.The fraud constructive trust was described Lord Browne-Wilkinson in the following well-known passage in Westdeutsche at p. 716 I agree that [the] stolen moneys are traceable in equity. But the proprietary interest which equity is enforcing in such circumstances arises under a constructive, not a resulting, trust. Although it is difficult to find clear authority for the proposition, when property is obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity. Thus, an infant who has obtained property by fraud is bound in equity to restore it: Stocks v. Wilson [1913] 2 K.B. 235, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson in the court of a search under section 132 (or survey under Section 133A), it may, in any proceedings under this Act, 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; But admittedly, presumption as is envisaged in section 292C is a rebuttable one and in this case stood rebutted by the decree in favour of the decree holder which confirmed ₹ 1.6 crores was received by the judgment debtor by fraud. Now, here Rule 9 of the Second Schedule of the Income Tax Act would become relevant and it read: Schedule II Rule 9 General bar to jurisdiction of civil courts, save where fraud alleged. xxx xxx xxx Provided that a suit may be brought in a civil court in respect of any such question upon the ground of fraud. 19. Rule 9 confirms my view qua a leverage to be given to the plaintiff if he brings a suit on grounds of fraud. This exactly has been the case of the decree holder. 20. I may now refer to Section 226 of the Income Tax Act, 1961 which relate to other mod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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