TMI Blog2000 (8) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... man Leasing and Services Ltd. The name was changed to VLS Finance Ltd. on September 8, 1994. The petitioner, inter alia, carries on the business of leasing, hire purchase, providing loan and finance to other corporate entities including portfolio management, corporate consultancy and capital market operations. It also carries on the business of hire-purchase and leasing in respect of industrial and office equipment including boilers, cylinders, cinematographic films, vehicles, etc. Some of these items are eligible to normal as well as high rate of depreciation under the income-tax laws. In the normal course of its business it has also entered into sale-cum-lease-back transactions. Some of the lease pronotes relating to these transactions were at times discounted to assure availability of finance. On June 22, 1998, a search and seizure operation under section 132 of the Act was carried out in the petitioner's office as well as the residential premises of its directors. Simultaneously, survey operations in Mumbai, Madras and Kanpur offices were carried out. In the course of search various documents, books of account and cash of Rs. 8 lakhs was seized. Photocopies of various lease f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in the process of recovering its dues from Sunair Hotels Ltd. inasmuch as in terms of the settlement reached before the Company Law Board, Sunair Hotels Ltd. would pay Rs. 19 crores in two instalments. The request was also made for withdrawal in respect of the attachment relating to Television (Eighteen) India Ltd. and security deposit with Sunair Hotels Ltd. It was specifically urged that there was no chance of the petitioner running away leaving liabilities unadjusted. In any event its net worth was much more than the tax liability that can ever be fastened. Since the prayer to withdraw the order of attachment was not acceded to, the writ petition has been filed. Learned counsel appearing for the petitioner submitted that without application of mind the orders under section 281B have been passed. According to him, the authorities have not recorded any finding that the petitioner would avoid its liabilities. Applying the concept of attachment before judgment in terms of Order 38, rule 5 of the Civil Procedure Code, 1908 (in short "the CPC"), it was submitted that material to form an opinion about the chance of non-recovery did not exist. On the other hand, no reasonable pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (-) 25,89,79,850 1997-98 16,14,67,802 (-) 1,22,39,470 1998-99 4,99,79,161 (-) 17,45,606 It was also found that the group has been indulging in bogus and illegal claims of depreciation on assets, particularly those which are eligible for hundred per cent depreciation. It relates to bogus buy and lease back transactions in cinematograph films which were purchased at nominal rate and has been sold for a very high value as per the appraisal report. The Assessing Officer found that the claim of depreciation is not allowable. On scrutiny of seized papers and subsequent investigation made by the Investigation Wing concealment of income was revealed details of which have been given in the appraisal report. It was also observed that the addition on account of depreciation on cinematograph films would be in the neighbourhood of Rs. 96,32,66,864. Several other substantial additions were likely to be made. The details of investment were also mentioned in the proposal. This being the background, it was apprehended that the assessee may liquidate the assets making it impossible to recover tax. Therefore, an opinion was formed that the provisional attachment would be necessary. On such prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its operation two factors are necessary to be noted. Firstly, the existence of opinion of the Assessing Officer that for the purpose of protecting the interests of the Revenue, it is necessary to provisionally attach any property belonging to the assessee in the matter provided in the Second Schedule. Secondly, previous approval of the Chief Commissioner or the Commissioner, as the case may be, by an order in writing. Section 281B confers a power to be exercised during proceedings for assessment so that the assessee does not fritter away or secret his resources out of the reach of the Department when assessment is completed. Section 94(b) of the Civil Procedure Code, 1908, provides that in order to prevent the ends of justice from being defeated the court may, if it is so prescribed, direct the defendant to furnish security to produce any property belonging to him and to place the same at the disposal of the court or order the attachment of any property. Order 38, rules 5 and 6 of the Civil Procedure Code, 1908, prescribe that where, at any stage of a suit, the court is satisfied that the defendant, with intent to obstruct or delay the execution of any decree that may be passed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself from exercising a discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorised to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. These several principles can be conveniently grouped in two main categories : (i) failure to exercise a discretion ; and (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account and where an authority hands over its discretion to another body it acts ultra vires. The present trend of judicial opinion is to restrict the doctrine of immunity from judicial review to those classes of cases which relate to deployment of troops, entering into international treaties, etc. The distinctive features of some of these recent cases signify the willingn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple, including the prerogative relating to the civil service where national security is not involved. Another non justiciable power is the Attorney-General's prerogative to decide whether to institute legal proceedings on behalf of the public interest." Also see Padfield v. Minister of Agriculture, Fisheries and Food, L. A. [1968] 1 All ER 694 ; [1968] AC 997 and Council of Civil Service Unions v. Minister for the Civil Service [1984] 3 All ER 935 [1984] 3 WLR 1174 (HL). The court must while adjudicating the validity of an executive decision grant a certain measure of freedom of play in the joints to the executive. The problems of the Government are practical ones and may justify, if they do not require, rough accommodations. Illegal, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or commented upon. Mere errors of the Government are not subject to judicial review. It is only palpably arbitrary exercise which can be declared void. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Lord Greene in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, [1948] 1 KB 223, illuminatingly states the position in law. The same reads as follows : "It is true the discretion must be exercised reasonably. Now what does that mean ? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably'. Similarly there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority." Judged in the background, it cannot be said that impugned orders suffer from any infirmity to warrant judicial review. The other relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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