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2012 DIGILAW 143 (JHR)

Ramjee Power Construction Ltd. v. Union of India

2012-01-25

APARESH KUMAR SINGH, PRAKASH TATIA

body2012
Judgment 1. Heard learned counsel for the parties. 2. The petitioner is aggrieved against the order of attachment of payment against outstanding bill with the Jharkhand State Electricity Board, Dhurwa, Ranchi, which has been attached in exercise of power under Section 281B of the Income Tax Act, 1961 (Annexure-5 dated 27th September, 2011). 3. We have taken note of the facts in details in our order dated 23rd January, 2012, which reveals that : “ petitioner is an old assessee of the Income Tax Department and for the year 2003-04 he declared his income to be Rs. 36,47,500/-against which income of the petitioner was assesssed to the tune of Rs.47,43,310 under section 143(3) of the Income Tax Act. In appeal, the said order of addition of income, was set aside and matter was remanded to the Assessing Officer who accepted the returned income submitted by the writ petitioner. For the year 2004-05, the assessee petitioner declared his income to be Rs. 64,53,070/-where as the Assessing Officer assessed the income to the tune of Rs.1,18,93,070/-under Section 143(3). However, petitioner's appeal against the said assessment order was allowed and that addition was set aside and the order of C.I.T.(Appeals) was confirmed by the I.T.A.T. For the year 2005-06 the petitioner-asesssee declared his income to be Rs.1,06,27,862/-whereas his income was assessed by the Assessing Officer to the tune of Rs.3,76,27,860/-under Section 143(3). However, C.I.T.(Apppeals), in the appeal preferred by the writ petitioner, only added Rs. 1,85,200/-to the declared income of the writ petitioner. For the year 2006-07, the declared income of the petitioner was Rs. 78,57,635/-which has been assessed by the Assessing Officer to the tune of Rs.3,09,55,402/-under Section 143(3) which is the subject matter in the appeal preferred by the writ petition before the C.I.T.(Appeals). 4. In this year, a writ petition was preferred by the writ petitioner i.e. W.P.(T) No. 1247 of 2009 wherein direction was issued to the C.I.T (appeals) by this Court on 26.11.2010 to decide the appeal expeditiously and till then no coercive action be taken against the writ petitioner. The said appeal has not yet been decided and accordingly to learned counsel for the parties, that appeal was not decided because the post of C.I.T.(Appeals) is lying vacant since long. However, learned counsel for the Revenue submitted that now the new officer has been appointed as C.I.T.(Appeals) but he has not taken charge as yet. 5. The said appeal has not yet been decided and accordingly to learned counsel for the parties, that appeal was not decided because the post of C.I.T.(Appeals) is lying vacant since long. However, learned counsel for the Revenue submitted that now the new officer has been appointed as C.I.T.(Appeals) but he has not taken charge as yet. 5. Be it as it may be, fact remains that for the assessment year 2006-07, no recovery is pending under regular assessment against the writ petitioner. For the assessment year 2007-08 the assessee declared income to the tune of Rs. 25,01,700/-which was accepted by the Assessing Officer. For the assessment year 2008-09 the declared income of the assessee was Rs.25,82,561 which too was accepted by the Assessing Officer and then for the year 2009-10 declared income of the assessee is Rs.4,80,42,336/-which too was accepted. However, these are the regular assessment of the assessee. 6. On 31st October, 2009, in the course of search and seizure under Section 132 of the Income Tax Act, the department claimed that some incriminating documents were found and, therefore, block assessment are to be made and said proceedings are going on since 31st October, 2009. According to learned counsel for the petitioner, in that situation, under Section 153 A, the proceedings should have been completed within the period of 21 months, however, that has not been completed but after about 17 months, first notice was served upon the writ petitioner which is dated 30th March, 2011 and thereafter an order of attachment of the petitioner's various fixed deposits, bank accounts, insurance policies and immovable properties, has been passed on 30th August / 1st September, 2011, copy of which has been placed on record as Annexure-4. Then second attachment order was passed on 22nd September, 2011 attaching all payments against the bills outstanding with the J.S.E.B. Of the writ petitioner”. 7. Learned counsel for the petitioner vehemently submitted that in fact it is a case of clear abuse of power under Section 281 B of the Income Tax Act and it is a colourable exercise of power by which the Revenue has proceeded to attach the petitioner's various deposits lying in the bank as well as the immovable property, for which the order was passed on 31st August, 2011 / 1st September, 2011. Not satisfied with above attachment, the respondent-Revenue further proceeded to attach virtually the working capital of the writ petitioner, whose payment against the bills outstanding with the J.S.E.B. are attached by exercising power under Section 281B of the Income Tax Act,1961 and in the order it is not mentioned how much of the amount of the petitioner has been attached by the subsequent attachment order dated 22nd September, 2011, which according to the writ petitioner is about Rs. 17 Crores. 8. Learned counsel for the petitioner vehemently submitted that the Department did not proceed to determine the liability of the petitioner, which should have been done only within 21 months from the date of getting the incriminating documents under the search and seizure operation in the financial year when the search was conducted under Section 132 of the Income Tax Act. Meaning thereby, that the search and seizure was conducted on 31st October, 2009 and the proceeding should have been completed within 21 months from 31st October, 2009. However, from the list of the events submitted by the Revenue in pursuance of this Court's order dated 23rd January, 2012 also it is clear that the Department did not take any steps to determine the liability of the petitioner and when the period of limitation was about to expire, they invoked the provision of Section 142(2A) of the Income Tax Act, 1961 by referring the matter to the special audit on 26/27 December, 2011 which was just 4 days before expiry of the limitation period for completion of the assessment. It is submitted that even the first notice was given to the writ petitioner only after 17 months from conducting the search and seizure of the petitioner's premises and that was done on 31st March, 2011 which was duly replied by the respondents on 18th April, 2011 and petitioner stated that the return, which he already submitted, may be treated to be return under the provision of the Ac t. In - spite of this, it has been alleged that one questionnaire was given to the petitioner by the Revenue. However, this questionnaire was given to the petitioner only on 8th September, 2011 and before that already the Revenue proceeded by sending a letter to the C.I.T. Central, Patna seeking approval for attachment under Section 281 B of the Income Tax Act in respect of the Bank account and immovable property of the writ petitioner. Therefore, the petitioner could not be blamed for delay in the proceeding in any manner rather say the Revenue itself arbitrarily decided to proceed for attaching the immovable properly before even giving questionnaire to the writ petitioner. Be that as it may, that questionnaire was duly answered by the writ petitioner on 25th October, 2011. Not only this, but it is further clear from the list of dates given by the Revenue Department-respondents that they did not even look into the computer hard disk of the writ petitioner to reach to the conclusion that the case involves more complex and complicated facts, which required to be examined by sending it for special audit because of the reason that even hard disk of the computer of the petitioner was opened on 2nd December, 2011, 7th December, 2011 and 12th December, 2011, much after the first and second orders of attachment were passed. 9. In view of the above facts, the Revenue could not have passed the order of attachment to the extent of valuation, which is not even known to the Revenue Department itself. Not only this, even in the counter affidavit the Revenue had admitted that they are not in a position to disclose the reason for attaching the property of the writ petitioner of crores of rupees. The petitioner is a regular assessee of the Revenue i.e., Income Tax Department and has admittedly submitted returns, which have been accepted and when there was addition in income of the writ petitioner by the Assessing Officer that has been set aside by the Appellate Authority and confirmed by the higher Appellate Authority and in one of the matters, where the addition was made by the Revenue, then appeal has been preferred in this Court and in the W.P.(T) No. 1247 of 2009 preferred by the writ petitioner, coercive action has been stayed vide order dated 26.11.2010. Therefore, not only this is a case where at present there is no liability pending against the writ petitioner of the Income Tax Department and according to the petitioner, the petitioner is seeking refund of Rs.69.00 lakhs from the department. Therefore, in that fact and situation, there was no question of petitioner's running away from the Department , who has duly co-operated in the matter all times and also when the computer hard disk was opened for downloading the accounts of the writ petitioner. The petitioner also submitted the answers to the questionnaire is an admitted fact. At one point of time the the Revenue decided to proceed to attach petitioner's properties and ignoring the earlier attachment, proceeded to further attach the petitioner's working capital so as to completely stop the petitioner's business, which may even be a hurdle in payment of the dues of the Revenue if found against the writ petitioner. 10. Learned counsel for the Revenue vehemently submitted that the power under Section 281 B of the Act, 1961 is very wide and the special provision has been made, where under the Assessing Officer after forming opinion has passed the attachment order of the properties of the assessee to safe guard the Revenue's interest. It is submitted that it is a very infamous case wherein, even the former Chief Minister of Jharkhand State, namely, Madhu Koda had direct links and there may be possibility of shifting out huge amount of crores of rupees and the liability of the petitioner, though cannot be assessed, may be of larger magnitude. It is submitted that Revenue even informed the writ petitioner to furnish bank guarantee for withdrawal of the attachment order but the writ petitioner did not submit the bank guarantee as demanded by the Revenue. It is submitted by learned counsel for the Revenue that now the interest of Revenue are required to protected against the personal interest and, therefore, the order was passed by the Revenue. 11. We have considered the submissions of the learned counsel for the parties and perused the facts of the case. At present the petitioner has challenged the order dated 27th September, 2011(Annexure-5) by which bills of the writ petitioner pending with the J.S.E.B., Dhurwa, Ranchi have been attached under Section 281 B of the Act, 1961. 11. We have considered the submissions of the learned counsel for the parties and perused the facts of the case. At present the petitioner has challenged the order dated 27th September, 2011(Annexure-5) by which bills of the writ petitioner pending with the J.S.E.B., Dhurwa, Ranchi have been attached under Section 281 B of the Act, 1961. However, the detail facts , which have already been referred above, indicate that search was conducted in the premises of the writ petitioner on 30th October, 2009 and thereafter, the Department decided to proceed with 6 blocks assessment. So far as these 6 blocks are concerned, we have already mentioned that how the petitioner has submitted the returns and what was the assessment made by the Appellate Authority and for these block years there was no liability of the writ petitioner in regular assessments. After this search and seizure operation on 31st October, 2009 the Department proceeded to deal with the matter departmentally and according to the learned counsel for the Revenue that was dealt with the speed because of the reason that the business of the writ petitioner was in various sectors and, therefore, all documents were required to be segregated and separated to club the mining operation activity and other activities for the purpose of deciding the liability. If this plea is accepted that documents were required to be separated then we are of the considered opinion that when material document itself were downloaded from the computer in the month of September, 2011 i.e. after almost 2 years from the search and seizure operation and next attachment order was passed even prior to it and time available to Revenue for completing of assessment was only 21 months. It is true that there may be complex and voluminous documentary evidence, which may have been obtained by the Revenue Department and though documents may be in haphazard manner, which may require skilled expert opinion, for which the special audit can be ordered and if the Department could have proceeded, it could have done so. Be that as it may, the delay in the proceeding cannot be said to be fatal in all cases because of the reason that any time the Revenue may form opinion that there is possibility of shifting of money by the assessee. 12. Be that as it may, the delay in the proceeding cannot be said to be fatal in all cases because of the reason that any time the Revenue may form opinion that there is possibility of shifting of money by the assessee. 12. We may now consider whether there was any justification in passing the second order of attachment of the property and that too, which is the amount of the money of the writ petitioner lying with the J.S.E.B, which amount, on the face of it, appears to be an amount of working capital of the writ petitioner under business contracts of the petitioner with the State Electricity Board and this amount, according to the writ petitioner, is at present Rs.17.00 Crores . Obviously this amount is an amount for which the petitioner must have purchased something or must have obtained some services of some contractors also and he may require to pay amount to other parties also and there is no reason to believe that Rs.17.00 Crores of amount is amount of profit of the writ petitioner. 13. At this juncture, it is worthwhile to consider the two judgments relied by the learned counsel for the petitioner delivered by the Bombay High Court in the case of Gandhi Tradings Vrs. Assistant Commissioner of Income Tax, reported in (2000)158 CTR (Bom) 512 and another judgment of the Allahabad High Court delivered in the case of Raghuram Grah(P) Ltd & another Vrs. Income Tax Officer & Others, reported in (2006)201CTR(All.) 268. In the above judgments, after noticing the wide power of the Assessing Officer under Section 281 B, it is observed that though the powers are wide but should be exercised by the Assessing Officer only if there is reasonable apprehension that the assessee may thwart the ultimate collection of the demand, i.e., likely to be raised on completion of the assessment. The power of attachment under this section is in the nature of attachment before judgment under the C.P.C. It is a drastic power. It should therefore, be exercised with extreme care and caution . It should not be exercised unless there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of the whole or any part of his property with a view to thwart the ultimate collection of the demand. 14. It should therefore, be exercised with extreme care and caution . It should not be exercised unless there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of the whole or any part of his property with a view to thwart the ultimate collection of the demand. 14. We are also of the considered opinion that the attachment of the property should be made to the extent it is required to achieve the object. Obviously it must have some co-relation, which cannot be exact amount of future liability, but this does not mean that power under section 281B is absolutely arbitrary power and therefore,it is not necessary to form opinion about liability to maximum of possible liability and also this power cannot be such arbitrary that the Assessing Officer need not to indicate or know that properties of asessese which is being attached is of what value? 15. In this case to judge the discretion of the Assessing Officer under Section 281 B of the Act, we found from the records produced by the Revenue that while recommending for attachment of the properties of the writ petitioner after obtaining the approval for attaching the property of the writ petitioner either in earlier occasion or subsequent occasion only, it has been stated by the Assessing Officer and evident from the Commissioner of Income Tax, Central Patna that “there is likelihood of raising of substantial demand in this case” but the extent of the liability to the tune of the property sought to be attached and apprehension is that the writ petitioner may dispose of the property is not there, any where. The same is the position in the communication sent to the Commissioner, Income Tax dated 29th August, 2011 and only it has been stated that “ there is likelihood of raising of substantial demand in this case”. In this communication also it is no where stated that there is any likelihood of shifting the amount of the writ petitioner so as to thwart the Revenue. In this communication also it is no where stated that there is any likelihood of shifting the amount of the writ petitioner so as to thwart the Revenue. At this juncture, it is observed that the order impugned does not disclose any reason for attachment and, therefore, we looked into the records and found that for forming opinion requiring attachment of the property of the writ petitioner and that too after attaching the petitioner's fixed deposit and immovable property, there was no reason for proceeding to attach the working capital property of the writ petitioner so as to justify and stop the business. 16. In view of the above reasons, the orders passed by the Revenue dated 31st August, 2011 and 27th September, 2011 attaching the property of the writ petitioner lying with the J.S.E.B cannot be sustained and liable to be set aside. Hence, the same is quashed and set aside. However, we are making it clear that in case of having a reasonable reason and apprehension subsequent to this date and after forming an opinion, the Department is free to proceed in accordance with law but will certainly take care of the observation made in the two above referred judgments and in this judgment and order. 17. Accordingly, this writ petition is allowed.