TMI Blog1980 (9) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of smuggled goods. Though the petitioner in the first instance contended that the money did not belong to him but to his uncle, Goverchand, later he claimed that he borrowed the money from M/s. Kewal Agencies for his father's business in Bombay, that while on his way to purchase a draft in the State Bank of India, Purasawalkam, he had stopped to talk to Samu Jaffar, a casual acquaintance of him, and it was at that time the customs officers seized the money from him. The seizure of the money was followed by searches of the premises of different persons by the customs authorities. In the course of the search 1, 125 gold bars of 10 tolas each with foreign markings and valued at Rs. 11,06,467.12 were also seized by the customs authorities. Show-cause notices were issued to several persons and adjudication proceedings were held by the first respondent. The first respondent passed an order of adjudication on March 1, 1973. So far as the petitioner was concerned, the first respondent directed that the Indian currency of Rs. 50,000 be released to the petitioner. We are not concerned with the order of adjudication in so far as it related to the other persons and to the confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the revenue, contended that the investigation conducted by the intelligence wing of the I.T. Dept. showed that one Bakshiram was involved in smuggling operations and that the sum of Rs. 50,000 constituted undisclosed income in the hands of Bakshiram. In the statement given before the customs authorities on March 11, 1972., the petitioner stated that one Goverchand gave him the money to deliver it to Samu Jaffar on the same day, while Bakshiram himself gave a statement that he gave the said sum of Rs. 50,000 as loan to Mangilal Jain. In view of the fact that the petitioner had himself in the first instance disowned his title to the sum of Rs. 50,000, though he later on resiled from the said statement, the I.T. authorities were convinced that the money belonged to Bakshiram. Accordingly, they gave notice to Bakshiram as the person concerned within the meaning of s. 132(5) of the I.T. Act and passed an order holding that the money constituted the undisclosed income in the hands of Bakshiram. The money was duly appropriated towards tax due on the undisclosed income and the arrears of tax due from Bakshiram. In the circumstances, Mr. Rangaswamy contended that the petitioner wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion might be justified. In so far as the question whether it represents the sale proceeds of smuggled gold is concerned, I shall deal with it when I examine the case against Samu Jaffar. Mangilal having satisfactorily explained and proved the source of the sum of Rs. 50,000 and not having admitted even in the initial statement that it represented the sale proceeds of smuggled gold, cannot be held to be guilty of any offence under the Customs Act. The same applied to Lakshmichand also; nor has any case been made out against Goverchand because in his statement he had denied having given Rs. 50,000 to Mangilal. In fact he has pleaded an alibi of absence from Madras at the material time. 1, therefore, hold that there is no evidence against Goverchand also under the Customs Act. " Ultimately, the first-respondent directed the sum of Rs. 50,000 being released to the petitioner, Mangilal Jain. The effect of the order of adjudication is that the sum of Rs. 50,000 was seized from the petitioner as alleged by him and that he had borrowed the money from Bakshiram. Therefore, when respondents Nos. 2 and 3 took over the money from the customs authorities it must be deemed that they had seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act, 1961, the Director of Inspection or the Commissioner, as the case may be, may authorise any Dy. Director of Inspection, IAC, Asst. Director of Inspection or the ITO to seize such money. Section 132(1A) provides that where any Commissioner, in consequence of information in his possession, has reason to suspect that any money, in respect of which an officer has been authorised by the Director of Inspection or any other Commissioner or any such Dy. Director of Inspection or IAC as may be empowered in this behalf by the Board to take action under cls. (i) to (v) of sub-s. (1), are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-s (1), such Commissioner may, notwithstanding anything contained in s. 121, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. Section 132(4) provides that the authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any money and any statement made by such person during such examination may thereafter be used in evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case. Section 131(6) provides that the assets retained under sub-s. (5) may be dealt with in accordance with the provisions of s. 132B. Section 132(7) provides that if the ITO is satisfied that the seized assets or any part thereof were held by such person for or on behalf of any other person, the ITO may proceed under sub-s. (5) against such person, and all the provisions of this section shall apply accordingly. Section 132(8), (9), (9A) and 10 deals with books of accounts or other documents seized. Section 132(11) provides that if any person objects for any reason to an order made under sub-s. (5), he may, within thirty days of the date of such order, make an application to such authority, as may be notified in this behalf by the Central Govt. in the Official Gazette stating therein the reasons for such objection and requesting for appropriate relief. Section 132(12) provides that on receipt of the application under sub-s. (10) the Board, or on receipt of the application under sub-s. (11) the notified authority, may after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. Section 132(13) provides that the provisions of the Code of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 50,000, seized from the customs authorities, represented the undisclosed income in the hands of Bakshiram and not the petitioner, no notice was necessary to be given to the petitioner. The learned counsel further argued that if the petitioner was aggrieved by the order passed by the ITO under s. 132(5) the remedy would be to file an application under s. 132(11) before the appropriate authority for release of the amounts. I am unable to agree. The money that was taken charge of from the customs authorities was the money that was physically seized from the petitioner as decided by the first respondent in his order of adjudication. Without affording a reasonable opportunity to the petitioner of being heard on the question whether he was entitled to the money or whether the money belonged to Bakshiram, the I.T. authorities could not say that the money belonged to Bakshiram and that they had dealt with the same under s. 132(5) as if the money was undisclosed income in the hands of Bakshiram. If, as contended by Mr. Rangaswamy, the authorities had reason to believe that the money was held by the petitioner for and on behalf of Bakshiram and it represented the undisclosed income in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the Gujarat High Court in Ramjibhai Kalidas v. I.G. Desai, ITO [1971] 80 ITR 721 (p. 602 of 98 ITR): " 'What is the true connotation of the expression " person concerned Mr. Pathak, on behalf of the petitioners, contended that the words " person concerned " referred only to the person from whose possession the undisclosed income or property was seized and they had no reference to the owner of the undisclosed income or property in cases where the person in possession was other than the owner. This contention does not appeal to us. The words used are " person concerned " and not " person from whose custody or possession the assets were seized ". We find that in sub-section (5) itself, the legislature has used two different expressions, namely, " person concerned " and " person from whose custody they were seized ". To equate one expression with the other would be to attribute looseness of language to the legislature. The ordinary canon of construction is that when the legislature has used two different expressions in the same section, the legislature must have intended to convey two different meanings. The words " person concerned " in the context in which they occur clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his income. The proceeding under sub-section (5) is essentially in the nature of summary assessment and the person concerned is the person whose undisclosed income and tax liability are estimated for retaining the assets. The person from whose custody the assets are seized will normally be presumed to be the owner thereof under sub-section (4A) and he would be the person concerned against whom proceedings against such other person. The person concerned under sub-section (5) would then be the person for and on whose behalf the assets were held by the person from whom they were seized. If only part of the assets were held by the person from whom they were seized on behalf of any other person and if the Income-tax Officer decides to proceed against both of them, then both of them would be the persons concerned under sub-section (5)." From the above decisions, it follows that ordinarily the person in possession is the owner and in the absence of any information to the contrary the ITO would presume him to be the owner. Therefore, he is the person who is entitled to be heard both under the provisions of the Act and on the principles of natural justice. No doubt, if after hearing him t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due if there is reasonable belief that it represented the undisclosed income of a person has not been disputed by Mrs. Ramani Natarajan. It is the definite case of the revenue that the money was seized from Samu Jaffar and that it represented the undisclosed income of one Bakshiram. The revenue is not bound by the order of adjudication passed by the first respondent stating that the money belonged to the petitioner. In the circumstances, it cannot be denied that respondents Nos. 2 and 3 were entitled to take the money from the customs authorities and pass an order under s. 132(5). However, in view of my finding that a notice was necessary to the petitioner before an order could be passed under s. 132(5), respondents Nos. 2 and 3 are bound to issue notice to the petitioner and hold a fresh enquiry. However, the learned counsel for the petitioner argued that I would have no jurisdiction to direct a fresh enquiry to be held as any such direction would be contrary to the provisions of s. 132(5). In other words, the submission of the learned counsel for the petitioner was that after the period of 90 days from the date of seizure, the ITO would not be competent to pass any order under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not accept the contention on behalf of the respondents that even such a fresh order should be passed within ninety days. It would make the sub-sections (11) and (12) of section 132 ridiculous and useless." In CIT v. National Taj Traders [1980] 121 ITR 535 (SC), the question arose whether the period of limitation of two years prescribed under section 33B(2)(b) of the Indian I.T. Act, 1922 would apply to orders passed pursuant to an order of remand. Sub-section (1) of s. 33B conferred power on the Commissioner to revise the ITO's orders. Sub-section (2)(b) prescribed a period of limitation by providing that no order shall be made under subs. (1) after the expiry of two years from the date of the order sought to be revised. In the particular case, the Commissioner exercised his powers under s. 33B and passed an ex parte order on 6th August, 1962. Against the order of the Commissioner the assessee filed an appeal to the Appellate Tribunal under s. 33B(3). The Appellate Tribunal vacated the Cornmissioner's order dated 6th August, 1962, on the ground that the order violated the principles of natural justice and remanded the matter to the Commissioner with a direction to dispose of it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the limitation prescribed under s. 132(5) will be applicable only to the initial order to be made by the ITO and not to an order that would be made by him pursuant to a direction from the Board or notified authority. The concerned provisions were read together and such construction was put on sub-s. (5) of s. 132 as made a consistent enactment of the whole statute." The next decision to be referred to is yet another decision of the Supreme Court in Grindlays Bank Ltd. v. ITO [1980] 122 ITR 55. During the assessment proceedings for the assessment year 1972-73, a notice under s. 142(1) of the I.T. Act, 1961, was issued to the assessee, Grindlays Bank, Ltd., for production of certain accounts and documents. Challenging that notice, the assessee filed a writ petition in the Calcutta High Court. single judge of the Calcutta High Court passed an order of injunction restraining the ITO from proceeding with the assessment and on March 25, 1975, made the order operative for the pendency of the petition. On August 31, 1976, the single judge disposed of the petition by his judgment including therein a direction to the assessee to comply with the notice and a direction to the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion arrived at by the Income-tax Officer was correct or dismissing the petition because otherwise the party would get an unfair advantage. The power to quash an order under article 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it. But, in the circumstances of a case, the court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circumstances, like failure to observe the principles of natural justice, the court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting forward its case. Otherwise, it would mean that where a court quashes an order because the principles of natural justice have not been complied with, it should not, while passing that order, permit the tribunal or the authority to deal with it again irrespective of the merits of the case. ' " The principles that emerge from the above d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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