TMI Blog1998 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, before the AO after filing a nil return, on the same day. On the basis of the return and the application, a certificate annexure-B, dt. 21st Aug., 1998, was issued to the petitioner. Later, annexure-C was issued by the officer on 7th Sept., 1998, revoking the certificate without assigning any reasons. The said action of the authority is the subject-matter of challenge in this proceeding. The petitioner alleges that similar certificates had been issued earlier to the petitioner and that the same had not been revoked as in the instant case. He alleges that the action is vitiated by mala fides and the circumstances that the cancellation order annexure-C was communicated to the IDBI and SBI is cited as an instance to demonstrate the mala fide intention on the part of the respondent. 2. The facts are not in controversy. The defence contention, inter alia, is that the certificate issued is vitiated by mistake, that the respondent has inherent power to rectify the mistake, that under s. 21 of the General Clauses Act the respondent has power to revoke the certificate when it is noticed that there is an error vitiating the exercise of the power, that all relevant facts were not place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise." 5. The main ingredient of the section, shorn of the details, is that any transfer of the kind referred to therein effected by an assessee while a proceeding is pending under the Act or before issuance of r. 2 notice would be void as against the Department except in the two circumstances provided for in the provisos. One such exception, with reference to which we are concerned, is the circumstance when the alienation is effected with the prior permission of the AO. Therefore, by statutory operation, it declares that if an assessee deals with his property in any of the manners referred to in the section, it would be void as against the Department; but this eventuality can be warded off only if he secures prior permission from the Department. In other words, the section operates as a statutory injunction against the assessee restraining him from alienating any of his properties and in the absence of the conditions mentioned in the provisos existing, the alienation would not convey any title. The implication of s. 281 is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner he likes. Such information may also include the financial liquidity of the assessee to offset any subsisting or future demand of the Department. As such, all information needed and which would be relevant to facilitate the taking of decision by the AO are relevant materials to be disclosed by the applicant. Whether the disclosure of the search would have made any difference (in view of the allegation that the petitioner is in noway connected with the institution raided) is a different issue. If disclosed, that circumstance would be dealt with by the officer independently on the merits of the allegations. All that has to be noted is that a material fact was concealed by the petitioner from the notice of the AO. Mr. Naik submitted that as the details of all raids would be communicated to the AO, such information of the raid would be within the knowledge of the Department. But, learned counsel, is forgetting the basic fact that the information could have been thus conveyed only if the person raided is an assessee on the file of any particular officer and not otherwise. In this case, the petitioner was not an assessee at all on the date of the search even if it is assumed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of Property Act which is also a comparable section in regard to the object desired to be achieved. Sec. 53 of the Transfer of Property Act was also intended to achieve a similar end. But the cardinal distinction is that, therein the section merely declares that the infringing transaction would be only voidable at the instance of the creditor so defeated by the transfer. It means, the creditor can elect not to invalidate the transfer and if so desired, proceed against the other properties of the transferor. That brings in a sea of change in the consequence that befalls in each case. After the amendment of s. 63 of the Transfer of Property Act in 1929, as it now stands, the following para in s. 53 was deleted. "Where the effect of any transfer of immovable property is to defraud, defeat or delay any such person, and such transfer is made gratuitously or for a grossly inadequate consideration, the transfer may be presumed to have been made with such intent as aforesaid. " 10. The effect of the deletion is that the presumption that the transaction was intended to defraud the creditors is absent; it has become necessary now to the creditor to prove that such was the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le refusal is an exception. Hence, keeping the above parameters in mind the AO may deal with the application of the applicant who is entitled to a fair consideration of his application for permission under s. 281 of the Act. 11. The next question is regarding power of the respondent to cancel the certificate already granted. Any authority in whom a power is vested, who exercises the said power on insufficient information, has an inherent power to rectify the defect. To deny such power to the authority would be recognising the right of the grantee to take advantage of his own wrong. Nullus commodum capere potest de injuria sua propria (no man can take advantage of his own wrong). There is no need to refer to s. 21 of the General Clauses Act to trace the power, and as rightly contended by learned counsel for the petitioner, Mr. Naik, that section would not save the right of the respondent to cancel annexure-A as well. In this case, we may notice that, what is now being sought to be enforced by the petitioner is annexure-A; but that certificate was secured by the petitioner on furnishing insufficient information. If so, since no right of action can be founded on one's own wrong this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in that behalf declining the certificate, should be on ascertainable grounds and not by a cryptic one line order as in the instant case. The simple result of the refusal of the certificate is that the individual loses his civil right to deal with his own property and he cannot arrange his own affairs and he cannot convey any indefeasible title to his alienee. This is a very serious consequence that befalls any owner of any immovable property. As such, such property right of an individual cannot be lightly dealt with by the Department in a cavalier manner. 14. In this case, the statement of objection of the respondent shows that according to them, annexure-A is an ultra vires exercise of an intra vires power; but it is yet to be demonstrated as such, The respondent cannot supplement the reason for the revoking of the certificate for the first time in the statement of objections. Those reasons should find a place in the impugned order itself. Therefore, as the respondent has not heard the petitioner before issuing annexure-C order and the materials proposed to be relied on against the petitioner were not disclosed to them, there is an infraction of the rule of audi alteram parte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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