TMI Blog2023 (5) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... ich assessee/petitioner has been called upon to show cause were subject matter of appeal before the ITAT. Unless the orders passed by the ITAT are reversed or modified in the manner known to law, they cannot be held against the petitioner assessee. It is settled that ordinarily, this Court shall not interfere with a show cause notice in writ proceedings under Article 226 of the Constitution of India except under rare circumstances where the notice is issued without jurisdiction or in such cases where, even if the facts stated in the notices are assumed to be correct, no case is made out against the noticee. Proceedings under BM Act entails serious civil and criminal consequences. The two transactions noted above, show that there is no proper application of mind both at the stage of sending the information by the Income Tax Department and by the Authorities under BM Act before issuing the notice under challenge. This court cannot examine all allegations/transactions in this proceeding. But the two transactions examined by us clearly show that Income-Tax Department has sent information without proper verification and the Authorities under the BM Act have acted mechanically a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders before ITAT (Income Tax Appellate Tribunal) and the ITAT has set-aside the additions vide order dated July 30, 2021, holding inter alia that the Assessing Officer has not discharged the burden cast on him to prove that the petitioner is a beneficial owner of RAL. 5. The JCIT, Central Circle, Central Range - I Bengaluru issued the impugned notice dated August 11, 2021 (Annexure-E) under Section 10 of the BM Act for the A.Y. 2022-23 and the same has been challenged in the instant writ petition. The Hon'ble Single Judge has dismissed the writ petition with liberty to the petitioner to take appropriate defence before the Assessing Officer. Hence, this appeal. 6. Shri. Shashikiran Shetty, learned Senior Advocate for the appellant/writ petitioner contended inter alia that: the notice issued by the JCIT under the BM Act, is without jurisdiction because the proceedings have been initiated without any information required under Section 10 of the BM Act; that ITAT is the ultimate fact finding authority even under the BM Act. The ITAT, Bengaluru in ITA Nos.1211-1217/Bang/2019 (decided on 30.07.2021) has held that the Assessing Officer had not discharged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents or evidence and make out a case that the assets in question are not undisclosed assets located outside India. The notice under challenge is an exhaustive notice and contains prima facie material/ information based on the search conducted under Section 132 of the IT Act. He relied upon Commissioner of Central Excise, Haldia Vs. Krishna Wax (P) Ltd (2020)113 taxmann.com 70 (SC) [paras 6 to 12] in support of his case. 9. We have carefully considered rival contentions and perused the records. 10. The sum and substance of Shri. Shashikiran Shetty's argument is, before issuing notice under Section 10(1) of the BM Act, the Revenue has to determine that assessee is the beneficial owner of undisclosed assets located outside India. To buttress this argument, Shri. Shetty sought to rely upon para 15 of the impugned order passed in the writ petition and urged that existence of 'jurisdictional facts' is a condition precedent. According to him, before issuing the notice, Revenue ought to have determined that assessee is the beneficial owner of undisclosed asset located outside India. 11. The preamble of BM Act (Act 22 of 2015) reads as follows: An Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned in the Board resolution defies logic and is totally perverse. It is also not known whether the amount mentioned in the Board Resolution has been spent for the purpose mentioned therein. (f) S.28(iv) of the Act is not applicable as the appellant is not carrying on any independent business. (g) S.69C of the Act is not applicable for the very simple reason that the appellant has not incurred the expenditure and the source for various payments is the funds of RAL. (h) No seized material to sustain the addition. (Emphasis Supplied) 15. Shri. Aravind is right in his submission that both Officers are of the same designation but, operate under different jurisdictions. The Officer who has issued the notices under Section 148 of the IT Act for A.Y. 2003-04 to A.Y. 2017-18 is one Shri. Sunil Goutam Tadimalli. His designation is, JCIT (OSD)-Central Circle 1(3), Bengaluru. The Officer who has issued the notice under Section 10(1) of the BM Act is one Shri. Nallusamy Balakrishnan, Central Circle, Central Range-1, Bangalore. Thus, the Officers are different and it is specifically mentioned in para 2 of the notice that a reference regarding Black Money Transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Kaileigh Limited 8. M/s Weisser Limited 21. It is recorded in para 4 of the impugned order that the Assessing Officer had concluded that petitioner is a benefical owner and that RAL's income and expenditures must be treated as petitioner's business income. It is further noticed that the ITAT has allowed the appeals. 22. In the backdrop of the above undisputed facts, the question that arises for consideration is whether the petitioner is entitled for relief sought in prayer clause (ii) in the writ petition namely, to quash the impugned notice under the BM Act dated August 11, 2021? 23. As recorded hereinabove, BM Act has been enacted to deal with the problem of black money i.e., undisclosed Foreign income and assets. Penalties defined in Chapter IV and the punishments described in Chapter V, entail serious consequences. It is settled that when a citizen is called upon to answer a statutory notice, such notice must be clear and unambiguous; describe the violation committed by the noticee, the material relied upon by the statutory authority, to enable the noticee to submit his defence. 24. It is not in dispute that a search under Section 132 of the IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made part of notice. The documents also include the minutes of the Board Meeting of 'Romulus Assets Ltd. One such document of RAL is minutes of the Board Meeting dated 12.08.2008 (at page 6 of notice). This is in respect of payment of SGD 100,000 to DBS Bank. This precise transaction was subject matter of assessment under Section 143A read with Section 143(3) of the IT Act for A.Y. 2009-10. The said entry is recorded at serial No.18 in the Tabular Column in para 9.1 of the Assessment Order. Similarly, another minutes of the Board Meeting of RAL dated 23.08.2011 in respect of payment of USD100,000 (USD 50,000 to Lina Virwani and USD 50,000/- to Lina Shmalts). This document is extracted in page 8 of the impugned notice. These payments were subject matter of the Assessment Order for A.Y. 2012-13. The relevant entries are at Sl. Nos. 19 20 in para 9.1 of the Assessment order. These very Assessment Orders were subject matter of appeal before CIT(A) and the ITAT. The ITAT, among other observations, has held that the Assessing Officer had not discharged his burden to prove that assessee was beneficial owner of RAL. After pronouncement of order by the ITAT on July 30, 2021, the JCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his was pointed out to you and clarification was sought, you stated that you were not related to RAL in any way, under oath in 2015, you gave a contradictory reply that you discovered that you were a beneficiary of RAL only during the statement recorded on 31.10.2016. (Emphasis supplied) 30. A careful perusal of para 4.4 of the notice clearly indicates that Authority under the BM Act has prejudged and formed an opinion that the petitioner is the beneficial owner of RAL. This contention of the Revenue has not been accepted by the ITAT by holding that the Assessing Officer had not discharged the burden to prove that petitioner is the beneficial owner of RAL. 31. We may profitably note that the Hon'ble Supreme Court of India in Hindustan Poles Corporation Vs. Commissioner of Central Excise, Calcutta [(2006)4 SCC 85 (para 42)] has held that Revenue must refrain from sending show cause notices without proper application of mind and such exercise is absolutely imperative to curb unnecessary and avoidable litigation in the Courts leading to unnecessary harassment and waste of time of all concerned, including the Tribunals and the Courts. 32. In Jayantilal Thakkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment has sent information without proper verification and the Authorities under the BM Act have acted mechanically and sent the impugned notice without application of mind. 35. It is also relevant to note that the search was conducted in 2015. ITAT has decided the appeal on July 30, 2021 and the IT department has sent the information on August 06, 2021 and the impugned notice has been issued on August 11, 2021. These dates lead to an inference that Income-Tax Department sent the information hurriedly, immediately after disposal of appeal by the ITAT and the authority under BM Act has also acted hurridly. 36. In view of the above discussion, in our considered view that atleast a portion of the notice is based on the allegations set aside by the ITAT. Therefore, the impugned notice requires re-examination in the hands of authorities under the BM Act. Hence, the following: ORDER (a) Writ appeal is allowed. (b) Order dated July 22, 2022 in W.P. No.17813/2021 is modified; (c) Notice dated August 11, 2021 issued by the first respondent is quashed reserving liberty to the respondents to issue fresh notice, if so advised, in accordance with law after reconsideration wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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