9911796707
TMI Blog2019 (4) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been initiated against the company. The Registered office and the premises of the company have been sealed. Director Mr.Hemant Bhatt has been taken in judicial custody. According to Petitioner, Mr.Ramesh Assar resigned from the position of the Director effective from 05/09/2018. Under such circumstances the point of dispute between the Petitioner and the Respondents is with respect to service of notices of assessment as well as for recovery of taxes through auction sale. The Petitioner contends that there was no proper service of notices on the company. One of the Directors being in judicial custody, the Department could not have relied upon either dispatch of notice to the address of the company, which admittedly had returned unserved or on affixation of the notices at the company's registered address. According to the Petitioner, service of notice on Mr.Assar would be of no avail, since he had already resigned from the Directorship of the company before the service of notice. According to the Petitioner, therefore, entire assessment proceedings were completed without a valid notice on the assessee. Similarly, the Petitioner contends that there was no valid notice of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further hearing by which time, the Respondents had filed a reply with advance copy to the Petitioner. Learned Counsel for the Petitioner argued the Petition extensively raising following contentions; (i) There was no valid service of notice of assessment. The orders of assessment therefore are invalid and nonest. In this context, Counsel for the Petitioner took us extensively to the provisions contained in Income Tax Act, 1961 (for short 'the Act'), Income Tax Rules, 1963 (for short 'the Rules') and the provisions of Civil Procedure Code (for short 'CPC'). On the basis of such provisions, the learned Counsel strenuously urged that the department had failed to demonstrate valid notice before completion of assessments. She argued that sole Director of the Petitioner-Company was in judicial custody. The department therefore had to either serve the notice of assessment on him, even if he was in judicial custody or ought to have followed the alternative procedure as envisaged in Order V of CPC. She further contended that Mr.Assar before tendering of the notice by the department had resigned as the Director of the company. He had conveyed the same to the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey Laundering Act, 2002 (for short 'PMLA') are pending before the competent Court. Permission of the said Court was obtained before carrying out the auction. In view of the pendency of the proceedings under the PMLA, the amount fetched through sale proceeds is kept in the escrow account to be adjusted upon completion of such proceedings. He submitted that the Petitioner has prima facie evidence to suggest that of paintings and artworks belong to the Petitioner. Except for a bare statement, the Petitioner has not produced any material to suggest that any of the paintings and artworks do not belong to the Petitioner. He submitted that the entire proceedings have been given wide publicity. From time to time, the public at large had opportunity to learn about the proposed auction. Till the time auction was conducted and even till date, no person has claimed ownership of the said properties. The Petitioner is therefore merely trying to delay the proceedings by taking up an invalid defence. 6. Before addressing rival contentions, we may peruse the material on record more minutely. In the Petition, the Petitioner's main averments are that premises of the company are sealed by the CBI and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e declared otiose. 5. The Saffronart online art catalogue lists 68 artworks due for auction; overlooking that only 19 works from out of the 68 artworks belong to the company. These are set forth below: S.No. Painting Lot No. SAFFRONART (INR) Estimate 1. 2 18,00,000/- 2. 18 6,00,000/- 3. 29 3,00,000/- 4. 30 6,00,000/- 5. 33 7,00,000/- 6. 34 60,00,000/- 7. 36 7,00,000/- 8. 40 25,00,000/- 9. 48 2,00,000/- 10. 49 6,50,000/- 11. 50 15,00,000/- 12. 52 8,00,000/- 13. 53 8,00,000/- 14. 54 1,00,00,000/- 15. 55 5,00,000/- 16. 57 3,00,000/- 17. 58 7,00,000/- 18. 59 3,00,000/- 19. 65 5,00,000/- 6. In the circumstances, the purported auction is unlawful, and liable to be cancelled forthwith. 7. You are hereby called upon to forthwith deliver the purported assessment orders culminating in alleged tax arrears of Rs. 95,91,82,589/per reply." 7. The Respondents have filed a detailed affidavit-in-reply, in which the main averments are that the Petitioner is a company in which Mr.Nirav Modi has 99.95% equity shares. The company was subjected to search action, during which it was found that paintings and artworks were stored at the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Directorate, in which he had stated that he had never attended any Board Meeting of the company and that he would sign the minutes as instructed. In the affidavit it is further stated that the notices were also sent to Mr.Assar on 06th and 07th September 2018. He conveyed under the letter dated 05/10/2018 that he had resigned as a Director of the company as on 05/09/2018 and that he does not have any access to the records of the company. According to Respondents this was contrary to the requirement of minimum two Directors of the company. The Respondents also collected information from the Registrar of the Companies on 28/03/2019, which suggested that Mr.Ramesh Assar had not ceased to be the Director of the company and that his name continues to be shown as a Director as certified by the letter of Registrar of Companies dated 28/03/2018. According to Respondents said Mr.Ramesh Assar has not provided any evidence of his resignation. It is further stated that the assessment orders and notices of demand were dispatched by speed post to the company on 26/12/2018, from where they were returned with the postal remark 'Left'. The assessment orders were therefore served by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not rest only on legal contentions. It would require a detail examination of facts, which must be done by the departmental authorities in statutory Appeals provided under the Act. It is well settled that when question of law and facts arises, the High Court in exercise of its writ jurisdiction would be slow in interfering with the orders passed by the competent authority. Availability of alternative efficacious remedy would be a ground to refuse to entertain the writ petition directly aimed at an order of assessment. When a taxing statute provides for statutory remedies, this Court would be slow in by passing such remedies and entertaining the writ petition directly aimed at the order of assessment. Reference in this respect can be made to the decision of the Supreme Court in the case of Commissioner of IncomeTax and others Vs. Chhabil Dass Agarwal [2013] 357 ITR 357 (SC). The Court after referring to the several judgments on the point observed as under; 19. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits. This would be in addition to the Petitioner's contention regarding invalid service of notices. Any challenge to the order of assessment on merits should be ordinarily allowed to be examined by the Commissioner Appeals in whom statutory appellate powers have been vested under the Act. Lastly, the Petitioner has not even formally challenged the assessment orders. The Petitioner has filed the Petition straight away contending that it did not have copies of assessment orders, neither the order dated 07/03/2019. Therefore it had asked the department to produce copies of such orders, which along with affidavit-in-reply, have been filed. The Petitioner has not sought any amendment to the Petition bringing formal challenge to such assessment orders. However, this is a purely technical ground and is mentioned only for the purpose of bringing the correct stage of the pleadings on record. Otherwise, this is not a prime ground on which we propose to relegate the Petitioner to appellate remedy. 11. This brings us to the Petitioner's later challenge to the auction proceedings. Our approach to the such challenge and ultimate conclusions must be based on facts of the case. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the remaining paintings. The Petitioner therefore in our opinion cannot take shelter under this ground. 13. It is true that the Petitioner has also raised ground of inadequate or incomplete service of attachment and auction proceedings. However, the entire case of the Petitioner to oppose the auction, as noted revolves around two elements; namely invalid assessment orders and questionable ownership of the paintings and artworks. We have dealt with both these aspects and therefore do not find it appropriate to either set aside or quash the auction proceedings on this ground. 14. We may also add that the Petitioner is in the business of buying and selling paintings and artworks. The Petitioner does not claim any particular attachment over any of the painting or artwork. As noted earlier, the Petitioner has not challenged the valuation of these articles. Under such circumstances, even if the Petitioner were to ultimately succeed in Appeal proceedings, the amount recovered by the tax department through auction sale, can always be returned to the Petitioner with interest. In other words, by not interfering at this stage, we have not put the Petitioner to any irreversible situation. ..... 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