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TMI Blog2020 (10) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1511785097 2. KOTAK MAHINDRA BANK LTD. 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1513858713 3. KOTAK MAHINDRA BANK LTD., 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1513969471 4. KOTAK MAHINDRA BANK LTD., 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1514001668 5. KOTAK MAHINDRA BANK LTD., 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. CC Account 510044001836 And that is how, debt may be allowed to be made from said accounts. (D) Pending admission, hearing and final disposal of the matter, Your Lordship may be pleased to grant an ex-parte ad interim order in favour of Petitioner herein in terms of prayer clause (c) hereinabove. (E) To award costs of any incidental to this application be paid by the Respondents. (F) Your Lordships may be pleased to grant such other further relief(s) that may be deemed fit and proper in the interest of justice in favour of the Petitioner." 2. It appears from the materials on record that the writ applicant seeks to challenge the order of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner of State Tax (designation), hereby provisionally attach the aforesaid account/property to the extent of available balance. No debit shall be allowed to be made from the said account or any other account operated by the aforesaid person on the same PAN without the prior permission of this department. Or The property mentioned above shall not be allowed to be disposed of without the prior permission of this department." 4. A bare perusal of the order of provisional attachment, referred to above, would indicate that the same is nothing but a result of mechanical exercise of power under Section 83 of the Act, 2017. Section 83 of the Act, 2017 reads as under: "SECTION 83. Provisional attachment to protect revenue in certain cases. - (1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the original file on the basis of which this Court may be in a position to ascertain the genuineness of the belief formed by the authority. The word "necessary" means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word "necessary" must be construed in the connection in which it is used. The formation of the opinion by the authority should reflect intense application of mind with reference to the material available on record that it had become necessary to order provisional attachment of the goods or the bank account or other articles which may be useful or relevant to any proceedings under the Act. [see: Bhikhubhai Vithlabhai Patel and others vs. State of Gujarat AIR 2008 SCC 1771]. 6. In J. Jayalalitha vs. U.O.I. [AIR 1999 SC 1912], the Supreme Court while construing the expression "as may be necessary" employed in Section 3 (1) of the Prevention of Corruption Act, 1988 which conferred the discretion upon the State Government to appoint as many Special Judges as may be necessary for such area or areas or for such case or group of cases to try the offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the formation of opinion by the Central Government is a purely subjective process. There can also be no doubt that since the legislature has provided for the opinion of the government and not of the court such an opinion is not subject to a challenge on the ground of propriety, reasonableness or sufficiency. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub-clauses (i), (ii) or (iii). If these circumstances were not to exist, can the government still say that in its opinion they exist or can the Government say the same thing where the circumstances relevant to the clause do not exist? The legislature no doubt has used the expression "circumstances suggesting". But that expression means that the circumstances need not be such as would conclusively establish an intent to defraud or a fraudulent or illegal purpose. The proof of such an intent or purpose is still to be adduced through an investigation. But the expression "circumstances suggesting" cannot support the construction that even the existence of circumstances is a matter of subjective opinion. That expression points out that there must exist circumstances fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reid called the restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative." 9. In the Income-tax Officer, Calcutta and Ors. vs. Lakhmani Mewal Das [AIR 1976 SC 1753], the Supreme Court construed the expression "reason to believe" employed in Section 147 of the Income-Tax Act, 1961 and observed: the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully or truly all material facts. It is not any or every material, howsoever vague and indefinite or distant which would warrant the formation of the belief relating to the escapement of the income of the assessee from assessment. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. 10. In Bhikhubhai Vithalabhai Patel (supra), the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed." 33. The Court is entitled to examine whether there has been any material available with the State Government and the reasons recorded, if any, in the formation of opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The Court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion is arbitrary, capricious or whimsical. It is always open to the court to examine the question whether reasons for formation of opinion have rational connection or relevant bearing to the formation of such opinion and are not extraneous to the purposes of the statute." 11. In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The reason for the formation of the belief must be held in good faith and should not be a mere pretence." 13. A Coordinate Bench of this Court, to which one of us J.B. Pardiwala, J. was a party, had the occasion to discuss Section 83 of the Act in the case of Valerius Industries vs. Union of India, Special Civil Application No.13132 of 2019, decided on 28th August, 2019, wherein this Court drew the following conclusion: "[1] The order of provisional attachment before the assessment order is made, may be justified if the assessing authority or any other authority empowered in law is of the opinion that it is necessary to protect the interest of revenue. However, the subjective satisfaction should be based on some credible materials or information and also should be supported by supervening factor. It is not any and every material, howsoever vague and indefinite or distant remote or far-fetching, which would warrant the formation of the belief. [2] The power conferred upon the authority under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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