TMI Blog2022 (7) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... ase that the appellant failed to submit his reply to the notice issued under section 24(1). As such, the first respondent, after making enquiry and calling for reports or evidence and taking into account all the relevant materials, has, with the prior approval of the Approving Authority, passed the order under section 24(4), continuing the provisional attachment of the property till the passing of the order by the Adjudicating Authority under section 26(3), which is purely provisional in nature. That apart, the provisions of law mandate the respondent authorities to furnish such documents, particulars or evidence and provide an opportunity of being heard to the appellant only at the stage of adjudication proceedings; and there is no provision under the Act to provide an opportunity to the appellant to cross examine the witnesses at the preliminary stage. As in the absence of any provision of law as well as the compelling circumstances warranting the respondent authorities to provide an opportunity of cross examination of witnesses, whose statements have been relied on by the respondent authorities to the appellant at the stage of section 24 proceedings, the plea raised by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 24(1) of the Act on 01.11.2019 from the office of the first respondent as if he is a binamidar for the identified beneficial owner viz., Mrs.V.K.Sasikala with respect to his share in the Spectrum Mall and he was called upon to reply on or before 20.11.2019 as to why the same should not be held to be a benami property. Upon receipt of the same, the appellant was not able to file his reply, as the first respondent did not supply any of the relied upon documents. In the mean while, the application filed under section 245D(1) of the Act, before the Income Tax Settlement Commission for the assessment years 2009-10 to 2018-19, was dismissed by order dated 31.12.2019 on the premise that there is non-disclosure of true and full income and the assessment proceedings for the said assessment years, are pending before the assessing officer. In such circumstances, the appellant was served with an order dated 23.01.2020 under section 24(4) of the Act, through which, the first respondent has ordered for continuance of the provisional attachment till the order of the Adjudicating Authority is passed under section 26(3) of the Act. Challenging the same, the appellant preferred WP.No.8540 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, if the appellant is able to satisfy that the transaction is not benami in nature. However, the first respondent has conducted the proceedings in an arbitrary manner, without following due process of law. The learned Judge also failed to take note of the same and erred in dismissing the writ petition filed by the appellant. Therefore, the learned counsel sought to allow this writ appeal by setting aside the order of the learned Judge. 7.On the contrary, the learned Special Public Prosecutor (Income-tax) appearing for the respondents, reiterating the contentions that were placed before the writ court, submitted that there are corroborative evidences in the form of printouts of photo images from the mobile phone of Smt.Krishnapriya, copy of loose sheet written in Tamil found in the residence of Shri Vivek Jayaraman and the copy of the sworn statements recorded from Advocate Shri S.Senthil, Shri S.Senthil Kumar, Managing Director of M/s.Ganga Foundations Pvt. Ltd, Shri C.Chittibabu, Chairman of the appellant company and the copies of the sale deeds pertaining to the appellant during the search on the beneficial owner. Further, in the sworn statement, the Chairman and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice to the person to show cause within such time as may be specified in the notice why the property should not be treated as benami property. (2)Where a notice under sub-section(1) specifies any property as being held by a benamidar referred to in that sub-section, a copy of the notice shall also be issued to the beneficial owner if his identity is known. (3)Where the Initiating Officer is of the opinion that the person in possession of the property held benami may alienate the property during the period specified in the notice, he may, with the previous approval of the Approving Authority, by order in writing, attach provisionally the property in the manner as may be prescribed, for a period not exceeding ninety days from the last day of the month in which the notice under subsection (1) is issued. (4)The Initiating Officer, after making such inquires and calling for such reports or evidence as he deems fit and taking into account all relevant materials, shall, within a period of ninety days from the last day of the month in which the notice under sub-section (1) is issued - (a)where the provisional attachment has been made under subsection (3)- (i)pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Initiating Officer, who is of the opinion that the person in possession of the property held behami, may alienate the property during the period specified in the notice, may, with the previous approval of the Approving Authority, by order in writing, attach the property provisionally, for a period of 90 days from the last day of the month in which the notice under section 24(1) is issued. According to section 24(4)(a)(i), the Initiating Officer, after conducting enquiry and calling for reports / evidence and taking into account all the relevant materials, shall pass an order continuing the provisional attachment of the property till the passing of the order by the Adjudicating Authority under sub section (3) of section 26. Under section 24(4)(a)(ii), the Initiating Officer may revoke the provisional attachment of the property with the prior approval of the Approving Authority. Section 24(5) requires the Initiating Officer, who passes an order continuing the provisional attachment of the property under section 24(4)(a)(i), to draw up a statement of the case and refer it to the Adjudicating Authority, within fifteen days from the date of the attachment. 9.As noticed earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rebuttable presumption and the effectiveness of the rebuttal will depend on the evidences furnished by the noticees to the authorities. 66.In my considered view, therefore, the enquiry contemplated at the stage of initial investigation is only preliminary, based upon prima facie reasons and conclusions. A detailed verification of the evidences as regards whether the transactions were benami or otherwise can, and must only be undertaken in the course of adjudication and not at the stage of preliminary enquiry. 67..... 68.The thrust of the petitioner's case is the alleged insufficiency of materials as well as the fact that the evidences gathered are unreliable. However, and at the risk of repetition, the enquiry conducted under section 24 is only a preliminary enquiry and the use of the phrase 'reason to believe' only indicates a prima facie satisfaction that all was not well as regards a particular transaction. In the present case, the trajectory of events as has been noticed by me in the preceding paragraphs of this order do not lead to the conclusion that the respondents had no reasons at all to justify the invocation of section 24. 69.Yet another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affored full opportunity to put forth all contentions before the adjudicating authority who shall take note of the same and pass speaking orders in accordance with law. ... 11.As already stated, the grievance of the appellant is that the first respondent did not furnish the entire documents relied on by them, nor provide any opportunity to the appellant to cross examine the persons whose statements have been referred to in the impugned proceedings and as such, the order passed under section 24(4) of the Act, which was impugned in the writ petition, is arbitrary, illegal and violative of the principles of natural justice. Whereas, it is the specific stand of the respondents that they have supplied the required documents to the appellant and that, there is no provision for providing an opportunity to cross examine the witnesses from whom they have collected the information regarding benami property, at the preliminary stage and therefore, the question of violation of the principles of natural justice does not arise herein. 12.Concededly, in the notice dated 01.11.2019 issued under section 24(1) of the Act, the first respondent has set out the reasons for forming an opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunities have been given to the Beneficial Owner and Benamidar to offer their objections on those evidences. In addition to the above, the current proceedings under the PBPT Act is time bound one. The peculiar situation is that the Beneficial Owner is in Central Prison, Bengaluru. 14.At this juncture, it will be useful to refer to the following decisions, in which, it was categorically held that the exercise of cross-examination commences only after the proceedings for adjudication have commenced ; and a writ petition should not be entertained against a mere show cause notice . (i) The Hon'ble Supreme Court in K.L. Tripathi v. State Bank of India and Ors. [AIR 1984 SC 273] , has observed as follows: 42. It is true that all actions against a party which involve penal or adverse consequences must be in accordance with the principles of natural justice but whether any particular principle of natural justice would be applicable to a particular situation or the question whether there has been any infraction of the application of that principle, has to be judged, in the light of facts and circumstances of each particular case. The basic requirement is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormal opportunity of cross-examination Neither cross-examination nor the opportunity to lead evidence by the delinquent is an integral part of all quasi judicial adjudications. (ii) In an order dated 29.11.2010 passed in Special Appeal No.741 of 2010 (MANU/UP/2113/2010) in the case of Commissioner of Central Excise v. Parmarth Iron Pvt Ltd , it was observed by the Allahabad High Court as follows: 15.The question, however, before us is, does the Respondent have a right to call upon the Appellants to make available the witnesses for cross-examination even before they being examined or their statements relied upon by the Department in proceedings in adjudication.... Is, therefore, an Assessee entitled to cross examine the witnesses at the stage of filing a reply to the show cause notice? A show cause notice is issued on the basis of uncontested material available before the Assessing Authority, who based thereon, has arrived at a prima facie finding whether a show cause notice ought to be issued or not. The material, thus, which has to be considered is, untested and uncorroborated. A party is called upon to reply to the said show cause notice in order to enable the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or substantively or in compliance with natural justice and fair play, to make available the witnesses whose statements were recorded for cross examination before the reply to the show cause notice is filed and before adjudication commences. The exercise of cross-examination commences only after the proceedings for adjudication have commenced. (iii) In Century NF Castings v. Union of India [2011 SCC Online P H 17614 : (2011) 269 ELT 221] , it was held by the Punjab and Haryana High Court as follows: 6.We are unable to accept the submission. No doubt cross-examination is a valuable right, the effect of not permitting the cross examination depends upon the facts and circumstances of each case. At this interim stage when decision on merits is yet to be taken, we do not find any ground to adjudicate upon the question whether absence of cross examination will affect the case of the petitioner. Question can be examined at appropriate stage by the concerned authorities and by this court, if necessary. (iv) In Arun Kumar Mishra v. Union of India [2014 SCC Online Del 493] , it was held by the Delhi High Court as follows: 13.We are unable to agree. The Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order is subject to judicial review before the adjudicating authority. The order passed by the adjudicating authority can be assailed before the appellate tribunal constituted under section 31 of the Act. The order of the appellate tribunal can also be called in question by preferring appeal to the High Court within a period of 60 days. A microscopic reading of provisions make it clear that principles of natural justice are reduced in writing in the shape of amendment in the said Act. The amended provisions contains a complete code in itself. 7.In this backdrop, it is to be seen whether at this stage any interference is warranted by this court. In C.B.Gautam the order of compulsory purchase under section 269-UD(1) of Income Tax Act was served on the petitioner without issuing any show cause notice and without giving any opportunity to him. The Apex Court in teh aforesaid factual back drop interfered in the matter. In the said case, neither show cause notice was given nor reasons were assigned in the impugned compulsory purchase order. In the present case show cause notice has been issued, opportunity has been given to the petitioner. The order impugned is provisional/t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
