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Friday, August 31, 2012

The Assistant Commissioner of Labour, Parvathipuram-the respondent herein inspected the theatre in December, 1995 and passed an order dated 18.12.1995 holding that the theatre was due of an amount of Rs.38,200/- to its employees towards the difference of the actual wages and the prescribed minimum wages and a direction was issued for payment of that amount as well as penalty of equal amount within three months. 2. Complaining that the amount, as directed, was not paid, the respondent filed Crl.M.P.No.3258 of 1996 before the Additional Judicial Magistrate of I Class, Parvathipuram under Section 20(5)(b) of the Minimum Wages Act, 1948 (for short 'the Act'). = The approach of the Court is not correct. It must not be forgotten that the entire mechanism of the Act is provided only to ensure that the workmen are paid the wages, in accordance with law. Once a workman appears before the Court and states that he has received the wages that were determined by the authority, the proceedings must halt there. Carrying out the matter further, despite such a plea, brings about a situation where the order passed by the authority tends to become a decree in his favour. That was not at all in the contemplation of the Legislature, when it enacted the Act.


THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY        

WRIT PETITION No.7138 of 2001  

02.08.2012

Smt. Potta Bharati

&The Assistant Labour Officer, Parvathipuram, Vizianagaram District

!Council for the Petitioner: Sri O.Manohar Reddy

^Council for Respondent: G.P. for Labour

<Gist:

>Head Note:

?Cases referred:

THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY        

WRIT PETITION No.7138 of 2001  

ORDER:


The petitioner is owner of Veerabhadra Talkies, Parvathipuram.  It is stated
that the theatre was closed on several occasions due to local political issues,
and labour problems, and that the husband of the petitioner, who earlier worked
in the Engineering Department of Visakhapatnam Port Trust, resigned the job and
was maintaining the threatre.  The Assistant Commissioner of Labour,
Parvathipuram-the respondent herein inspected the theatre in December, 1995 and
passed an order dated 18.12.1995 holding that the theatre was due of an amount
of Rs.38,200/- to its employees towards the difference of the actual wages and
the prescribed minimum wages and a direction was issued for payment of that
amount as well as penalty of equal amount within three months.

2.      Complaining that the amount, as directed, was not paid, the respondent
filed Crl.M.P.No.3258 of 1996 before the Additional Judicial Magistrate of I
Class, Parvathipuram under Section 20(5)(b) of the Minimum Wages Act, 1948 (for
short 'the Act').  On receiving notice, the petitioner entered appearance.  It
was pleaded that the amount ordered by the respondent was paid to employees and
that nothing is due.  The employees were examined as R.Ws.1 to 14.  However the
trial Court allowed the Crl.M.P through order dated 12.04.1990 directing the
petitioner to deposit the amount.  It has taken the view that it has no
jurisdiction to decide whether the amount was paid to workmen or not.

3.      Aggrieved by the order of the trial Court, the petitioner filed Criminal
Revision Petition No.28 of 1999 before the Court of the Additional District
Judge, Vizianagaram.  The revision was dismissed through order dated 10.10.2000
holding that the revision is not maintainable.  Hence this writ petition.

4.      Heard learned counsel for the petitioner and the learned Government
Pleader for Labour.

5.      The respondent exercised his power under the provisions of the Act,
visited the theatre and passed an order dated 18.12.1995 holding that the
petitioner is liable to pay a sum of Rs.38,200/- as difference of wages and
penalty of equal sum.  Section 20(5)(b) of the Act provides for a mechanism for
implementation of orders passed by the authority under the Act.  For all
practical purposes, an application filed under the provision can be treated as
an execution petition, though presented before a criminal Court.  If the
authority under the Act passed an order determining the amount to be paid either
as difference of wages or penalty, there is no prohibition in law for the
employer to straight away comply with it by paying the amount to the workmen.
It is not necessary that the amount must be deposited into the Court or with the
authority itself.

6.      It is not as if the petitioner made a statement that she complied with the
orders passed by the respondent but as many as 14 workmen were examined as  
R.Ws.1 to 14 and all of them stated nothing is due to them.  Still the Court
proceeded to direct recovery of the amount by observing that it is no
jurisdiction to verify the plea as to compliance of the orders passed by the
authority.

7.      The approach of the Court is not correct.  It must not be forgotten that
the entire mechanism of the Act is provided only to ensure that the workmen are
paid the wages, in accordance with law.  Once a workman appears before the Court
and states that he has received the wages that were determined by the authority,
the proceedings must halt there.  Carrying out the matter further, despite such
a plea, brings about a situation where the order passed by the authority tends
to become a decree in his favour.  That was not at all in the contemplation of
the Legislature, when it enacted the Act.

8.      The Writ Petition is therefore allowed.  The impugned order is set aside.
Miscellaneous petition pending in this writ petition also stands disposed of.
There shall be no order as to costs.



________________________  
L.NARASIMHA REDDY, J    
02.08.2012

"So far as the comparison of the signatures or the thumb impression is concerned, such course has to be done sparingly. The Judge, who comes to an opinion after comparison, should also disclose his expertise and also give reasons for the conclusions. A mere statement that the Court is of the opinion that the thumb impressions or the signature appears to be similar is not proper since as an expert, whose evidence is to be assessed, the Judge, who is also giving his opinion, should mention the reasons".


THE HON'BLE SRI JUSTICE N.R.L.NAGESWARA RAO          

C.R.P.No.3642 OF 2012  

03-08-2012

T.Venkat Swamy  

Agiru Pullaiah

!Counsel for the Petitioner

^Counsel for the Respondent

<Gist

>Head Note

?Cases referred
1) 2008(3) ALD 112 (SC)
2) 2011(6) ALD 741

ORDER:-
        The revision is filed against the order in I.A.No.107 of 2012 in O.S.No.16
of 2010 on the file of the Junior Civil Judge at Kollapur.

2.      The revision petitioner is the defendant.  The suit was filed for recovery
of money on the basis of a promissory note.  The trial of the case was completed
and the matter is coming for arguments.  At that stage, the present application
is filed for sending the suit document to the expert.  The Court below has
dismissed the application finding that the Court itself can compare signature
under Section 73 of the Indian Evidence Act.

3.      Naturally, delay in filing an application for expert is a good ground for
rejection of the same.  So also the comparison of the signatures by the Court
itself is not generally warranted and unless there is expertise in comparison of
the signatures, it cannot be resorted to.  When such comparison is to be made,
generally it shall be with the assistance.  But, however, in this case, when
there is oral evidence available on record, the Court may not be justified in
intention to resort to comparison.

3.      In this connection, it is useful to refer to a decision of the Hon'ble
Supreme Court reported in Thiruvengadam Pillai Vs. Navaneethammal1, whereunder
it was held that:
        "16. While there is no doubt that Court can compare the disputed
handwriting/ signature/ finger impression with the admitted handwriting/
signature/ finger impression, such comparison by Court without the assistance of
any expert, has always been considered to be hazardous and risky.  When it is
said that there is no bar to a Court to compare the disputed finger impression
with the admitted finger impression, it goes without saying that it can record
an opinion or finding on such comparison, only after an analysis of the
characteristics of the admitted finger impression and after verifying whether
the same characteristics are found in the disputed finger impression.  The
comparison of the two thumb impressions cannot be casual or by a mere glance.
Further, a finding in the judgment that there appeared to be no marked
differences between the admitted thumb impression and disputed thumb impression,
without anything more, cannot be accepted as a valid finding that the disputed
signature is of the person who has put the admitted thumb impression.  Where the
Court finds that the disputed finger impression and admitted thumb impression
are clear and where the Court is in a position to identify the characteristics
of fingerprints, the Court may record a finding on comparison, even in the
absence of an expert's opinion.  But where the disputed thumb impression is
smudgy, vague or very light, the Court should not hazard a guess by a casual
perusal

17. The decision in Murari Lal4 and Lalit Popli5  should not be construed as
laying a proposition that the Court is bound to compare the disputed and
admitted finger impressions and record a finding thereon, irrespective of the
condition of the disputed finger impression.  When there is a positive denial by
the person who is said to have affixed his finger impression and where the
finger impression in the disputed document is vague or smudgy or not clear,
making it difficult for comparison, the Court should hesitate to venture a
decision based on its own comparison of the disputed and admitted finger
impressions.  Further even in cases where the Court is constrained to take up
such comparison, it should make a thorough study, if necessary with the
assistance of Counsel, to ascertain the characteristics, similarities and
dissimilarities.  Necessarily, the judgment should contain the reasons for any
conclusion based on comparison of the thumb impression, if it chooses to record
a finding thereon.  The Court should avoid reaching conclusions based on a mere
casual or routine glance or perusal".
 4.     Further, it is also useful to refer to the judgment reported in
Y.Jogulamma @ Jyothi v. Chukkakula Kondamma and others2, wherein this Court held  
in Para No.24 as under:-
        "So far as the comparison of the signatures or the thumb impression is
concerned, such course has to be done sparingly.  The Judge, who comes to an 
opinion after comparison, should also disclose his expertise and also give
reasons for the conclusions.  A mere statement that the Court is of the opinion
that the thumb impressions or the signature appears to be similar is not proper
since as an expert, whose evidence is to be assessed, the Judge, who is also
giving his opinion, should mention the reasons".
       
Therefore, in view of the above circumstances, I do not find any justifiable
grounds to interfere with the order of the Court below.
       
5.      Accordingly, the Civil Revision Petition is dismissed. No costs.
Miscellaneous petitions, if any, filed in this petition shall stand closed.

_______________________________    
JUSTICE N.R.L. NAGESWARA RAO      
Date:03.08.2012

Whereas in the case on hand, the petitioner/A.3 had left India for Saudi Arabia after commission of communal offences allegedly. In that back ground, the petitioner cannot be permitted to leave India, pending criminal proceedings. In the result, the Investigating Officer is directed to submit seized passport of the petitioner/A.3 to the Magistrate along with the charge sheet and the Investigating Officer will be at liberty to take steps for impounding the petitioner's passport under Section 10(3) or under Section 10-A of the Passports Act, 1967 through Court immediately thereafter. Subject to the same, the Criminal Petition is dismissed.


HON'BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU            

CRIMINAL PETITION No.5661 of 2012  

06.08.2012

Mohammed Arifuddin Rahman  

The State of A.P., rep by Public Prosecutor,High Court of A.P.,

Counsel for the Petitioners: Sri Prabhakar Sripada

Counsel  for the Respondents:  Additional Public Prosecutor

<Gist :

>Head Note:


? Cases referred:

1. (2008) 3 Supreme Court Cases 674
2. 2000 CRI.L.J.4325


O R D E R:


        The petitioner/A.3 questions order dated 10.04.2012 passed by the VII
Additional Metropolitan Sessions Judge, Hyderabad in Crl.M.P.No.1046 of 2012 in
Cr.No.268 of 2000 of Malakpet Police Station, Hyderabad.  The petitioner is
accused of offences punishable under Section 4 of the Explosive Substances Act,
1908 and Section 153-A IPC along with two others.  He was arrested on 07.09.2011
by the Investigating Officer and the lower Court granted bail to the petitioner
on 21.11.2011 under Section 167(2) Cr.P.C.  Though in the impugned order, the
lower Court stated that the passport was not seized in this case, the said
observation is not correct factually.  The remand case dairy dated 07.09.2011
reads that the Investigating Officer seized passport of the petitioner after his
arrest in this case.
        2.  Complaint of the petitioner's counsel is that though the offence was
detected on 02.11.2000, till today the police did not prefer to file charge
sheet.  This is a case where there was attempt to cause explosion by keeping a
time bomb near Sri Sai Book Stall which is very near to Hanuman Temple,
Dilsukhnagar Bus stop, Hyderabad with an intention to endanger lives of public
and property in order to develop enmity between religions to bring disharmony
and to disturb public tranquility.  Fortunately, location of the time bomb in a
bag was detected.  It is only after arrest of A.3 on 07.09.2011, it came to
light that A.1 to A.3 was responsible for placing time bomb.  According to the
prosecution, A.1 to A.3 are close associates of Darsgah-e-Jehad-o-Shahadat (DJS)
and that after demolition of Babri Masjid, they decided to take revenge against
the Hindus and that in pursuance of their plan, they prepared an IED bomb in a
thickly populated area near Hanuman Temple where Hindu population is dominated
and that on 01.11.2000, A.1 and A.2 prepared a bomb which works on timer device
and placed it in a bag and that A.1 and A.3 took the bomb on motor cycle of A.3
and placed it infront of a book stall near Hanuman Temple, but the bomb did not
explode.  A.3 was arrested on 18.08.2001 in another crime under Sections 143,
153, 153-A and 295-A IPC and was subsequently released on bail.  According to
the prosecution, subsequent to release from jail, A.3 had been to Dammam of KSA
and settled there while working in different institutions.  While so, A.1 and
A.2 died in exchange of fire (EOF) with the police on 23.11.2002 and 24.11.2002
at Uppal and Karimnagar respectively and that thinking that he may be arrested,
A.3 did not come to India upto the year 2009 and that in the year 2009, he came
to India once secretly and again on 26.08.2011 he came to Hyderabad to celebrate
Ramzan festival along with his family members, during which time he was arrested
on 07.09.2011.  It is stated by the Additional Public Prosecutor that
investigation of the case is completed and the Investigating Officer addressed
the Government of Andhra Pradesh for issuing of sanction for prosecution for the
offence under Section 153-A IPC and that the matter is pending with the
Government for grant of sanction and that as soon as sanction is obtained, the
Investigating Officer will file the charge sheet in this case.  Therefore, the
complaint of the petitioner's counsel about long delay from the year 2000 in
filing charge sheet in this crime is unwarranted.  The police could arrest A.3
only in the year 2009 as he left India to Saudi Arabia in order to evade his
arrest in this case and in other cases.
       
        3.  According to A.3, he is working as Salesman in a Steel Trading Company
in Saudi Arabia.  The petitioner's counsel stated that A.3's VISA to Saudi
Arabia will expire on 02.10.2012.  It is further contended that the petitioner
acquired certain movable properties in Saudi Arabia like a four wheeler and
others and that in case he did not go to Saudi Arabia within the above period,
then he would lose his job as well as his livelihood in Saudi Arabia along with
his movables.  Placing reliance on Suresh Nanda v Central Bureau of
Investigation1 of the Supreme Court, it is contended by the petitioner's counsel
that seizing passport by the Investigating Officer amounts to impounding of the
same and that the Police Officer has no authority to impound a passport under
Section 10(3) and Section 10A of the Passports Act, 1967 and that the Police
Officer after seizing the passport has to take steps before the Regional
Passport Authority for impounding the passport and that no such steps are taken
in this regard and that it would be unconstitutional if the petitioner is denied
permission to travel abroad for pursuing his livelihood.  Purport of the
impugned order passed by the lower Court is not legality of seizing the passport
and retaining the same with the police without taking steps before the Regional
Passport Authority for impounding the same under Sections 10(3) and 10A of the
Passports Act, 1967.  The petitioner had only prayed for return of the passport
and relax condition of bail permitting to go to Saudi Arabia.

        4.  It is contended by the Additional Public Prosecutor that in case, the
petitioner leaves India for Saudi Arabia, there is every likelihood of the
petitioner not returning to India in the near future in order to avoid pending
criminal cases against him.  In case, the petitioner goes to Saudi Arabia and
refuses to return to India within the time allowed, then there is no way to
secure his presence in India for facing trial in this case, as it is informed
that there is no extradition treaty for India with Saudi Arabia.  Therefore,
even if petitioner's passport is ordered to be released to the petitioner, he
may not be in a position to travel abroad to Saudi Arabia unless the Court
grants permission to leave India.  In view of the communal criminal back ground
of the petitioner and his previous conduct of evading from arrest from the year
2000 onwards till the year 2011 by going away to Saudi Arabia, I agree with the
lower Court that he may not be come back to India to face trial in this case, in
case he is granted permission to leave India to Saudi Arabia for his livelihood.
       
        5. In Suresh Nanda (supra) of the Supreme Court, the petitioner therein
settled in United Kingdom for the past 23 years since before registration of
F.I.R. in the year 2006 against the accused.  In Pawan Kumar v State of
Rajasthan2 of Rajasthan High Court, the person who was accused of the offences
under Sections 304-B and 498-A IPC was eking out his livelihood at Kuwait even
prior to commission of the offences therein.  Whereas in the case on hand, the
petitioner/A.3 had left India for Saudi Arabia after commission of communal
offences allegedly.  In that back ground, the petitioner cannot be permitted to
leave India, pending criminal proceedings.

        6.  In the result, the Investigating Officer is directed to submit seized
passport of the petitioner/A.3 to the Magistrate along with the charge sheet and
the Investigating Officer will be at liberty to take steps for impounding the
petitioner's passport under Section 10(3) or under Section 10-A of the Passports
Act, 1967 through Court immediately thereafter. Subject to the same, the
Criminal Petition is dismissed.
____________________________    
SAMUDRALA GOVINDARAJULU,J        
Dt. 6th August, 2012

On the basis of the decree obtained by him, the 3rd respondent filed an application before the Tahsildar, Serilingampally Mandal, the 2nd respondent herein, with a request to enter his name in the revenue records and to issue pattadar pass book and title deeds.


THE HON'BLE MR JUSTICE L.NARASIMHA REDDY          

Writ Petition No.2176 of 2012
       
07.08.2012

Dharma Teja and another

The Revenue Divisional Officer, Chevella Division, at Attapur, Ranga Reddy
District, and others

Counsel for petitioners: Sri P. Govind Reddy

Counsel for Respondents : G.P for Revenue Sri A. Pulla Reddy for R-3

< GIST:

> HEAD NOTE:  

? Cases referred

AIR 2008 A.P. 15 (F.B)

ORDER:
       
The petitioners purchased an extent of Ac.1.02 guntas of land in Sy.No.2/A of
Nanakramguda Village, through a sale deed dated 07-11-2002 executed by, as many  
as 33 individuals, who are said to be the legal descendants of the original
owner of the land.
The names of the petitioners were entered in the revenue records, and it is
stated that the petitioners are in possession and enjoyment of the property.

The vendors 1 and 2, by name, P. Ravi Singh and P. Rajesh Singh are said to have
entered into an agreement of sale with
one, Sri R. Jairam Singh, the 3rd respondent herein, for sale of the said
property on 13-06-2002.  On the basis of that agreement of sale, the 3rd
respondent filed O.S.No.2178 of 2007 in the Court of
I Additional Senior Civil Judge, Ranga Reddy District, at L.B. Nagar, for
specific performance of agreement of sale.  The suit was decreed ex-parte, on
31-12-2007.  Based on that, the 3rd respondent filed E.P.No.48 of 2008.  Since
the judgment-debtors did not come forward to execute the sale deed, the
Executing Court itself executed a sale deed in favour of the 3rd respondent
on 25-10-2008.
On the basis of the decree obtained by him, the
3rd respondent filed an application before the Tahsildar, Serilingampally
Mandal, the 2nd respondent herein, with a request to enter his name in the
revenue records and to issue pattadar pass book and title deeds.  On coming to
know that the 3rd respondent obtained decree, in respect of the land purchased
by them,
the petitioners filed E.A.No.203 of 2009, under Rules 97 and 99 of Order XXI
C.P.C.  The E.A was dismissed.  In W.P.No.18474 of 2009, this Court is said to
have directed maintenance of status quo, after noticing that the petitioners
filed O.S.No.2176 of 2009 in the Court of VIII Additional Senior Civil Judge,
Ranga Reddy, for the relief of cancellation of the sale deed dated 25-10-2008,
executed in favour of the 3rd respondent.

The 2nd respondent passed orders dated 18-07-2011, directing that the name of
the 3rd respondent be entered in the revenue record in respect of the said land.
Aggrieved by that order, the petitioners filed an appeal under Section 5(5) of
the A.P. Rights in Land and Pattadar Pass Books Act, 1971 (for short 'the Act'),
before the Special Grade Deputy Collecto and Revenue Divisional Officer,
Chevella Division, the 1st respondent herein.  Through order dated 17-12-2011,
the 1st respondent disposed of the appeal, by advising the parties to approach
the Civil Court for redressal of their grievance.  The petitioners feel
aggrieved by the said order.

The petitioners contend that there was absolutely no basis for the 2nd
respondent in entering the name of the 3rd respondent
on the strength of an ex parte decree.  They contend that though the 1st
respondent found that the 2nd respondent committed mistake in passing the order
dated 18-07-2011, without reference to the earlier record, he did not grant any
relief.  It is also stated that the 2nd respondent did not comply with the
provisions of law,
as regards service of notice.

The 1st respondent filed a counter-affidavit.  According to him, the 2nd
respondent committed mistake in passing the order dated 18-07-2011, since no
reference was made to the file, pertaining to the making of entries in favour of
the petitioners.

In his counter-affidavit, the 3rd respondent stated that the writ petition is
not maintainable, since the petitioners have already availed the remedy, by
filing a suit, as provided for under Section
8 of the Act.  He further submits that he approached this Court by filing a writ
petition, and has withdrawn the same, when it was pointed out that he has
already filed a suit, in O.S.No.2178 of 2007 in the Court of I Additional Senior
Civil Judge, Ranga Reddy District, at L.B. Nagar, for specific performance of
agreement of sale.

Heard Sri P. Govind Reddy, learned counsel for the petitioners, learned
Government Pleader for Revenue and
Sri A. Pulla Reddy, learned counsel for the 3rd respondent.

The petitioners challenge the orders dated 18-07-2011, passed by the 2nd
respondent, and the one, dated 17-12-2011, passed by the 1st respondent, in the
appeal. The principal grievance of the petitioners is that the 2nd respondent
did not follow the procedure prescribed by law.  Extensive reference is made to
sub-section (3) of Section 5 of the Act.  That provision deals with the manner
in which, notices are to be issued, whenever the recording authority proposes to
make alterations in the revenue records.  It is true that the provision mandates
that apart from issuing a general notice, the recoding authority must issue a
notice to the person, whom he considers to be adversely effected.  Since the
names of the petitioners were already existing on the record, they answer that
description, and were entitled to be issued a notice.

The petitioners can be said to have suffered any detriment,
if only they did not have any notice of the proceedings, before the 2nd
respondent initiated on the application, submitted by the
3rd respondent.  It is not in dispute that the petitioners became aware of the
proceedings on the basis of the general notice and have submitted their
objections, pointing out their grievance.
In addition to that, before the 2nd respondent has passed any orders, the
petitioners approached this Court by filing W.P.No.18474 of 2009 for a Writ of
Mandamus, to declare the action of the
2nd respondent in trying to dispossess them, by deleting their names
in revenue records, pertaining to the land in Sy.No.2/A, admeasuring 8 guntas,
and Sy.No.3, admeasuring 34 guntas, respectively, totalling to Ac.1.02 guntas,
situated in Nanakramguda Village, Ranga Reddy District.  The writ petition,
however, was dismissed as infructuous, on 13-06-2011, on the ground that the
petitioners have already instituted a suit, on the same subject-matter.  The
order reads,

"It is reported that in view of filing of a suit on the very same subject
matter, the writ petition has become infructuous.
Recording the same, the writ petition is dismissed as infructuous.  The interim
order, dated 02-09-2009, shall stand vacated.  No costs."

Taking note of the fact that the writ petition was dismissed as infructuous, the
2nd respondent proceeded to decide the matter
on the basis of the sale deed, executed in favour of the
3rd respondent, by the Executing Court.

The petitioners filed an appeal before the 1st respondent, against the orders
dated 18-07-2011, passed by the
2nd respondent; together with an application for suspension of the order under
appeal.  Alleging that the application was not taken up for hearing, they filed
W.P.No.26303 of 2011.  That writ petition was disposed of on 20-09-2011,
directing that the application filed for suspension of the order dated 18-07-
2011 be taken up for hearing within a period of 10 days.  The 1st respondent has
taken up the appeal itself and disposed of the same on 17-12-2011.

Being an appellate authority, the 1st respondent was required to be specific and
ought to have acted in terms of Section 5(5) of the Act.  Curiously enough, on
the one hand, he expressed his displeasure about the manner in which the 2nd
respondent has passed the orders dated 18-07-2011, and on the other hand, has
refused to interfere with the same.  He has chosen to direct the parties to
resolve their disputes in a Civil Court, obviously by keeping Section 8 of the
Act, in mind.  He failed to realise that much before the 2nd respondent passed
the orders, dated 18-07-2011, the petitioners have filed O.S.No.2176 of 2009 in
the Court of
VIII Additional Senior Civil Judge, Ranga Reddy District at L.B. Nagar for the
relief of cancellation of the decree, in O.S.No.2178 of 2007 passed by the Court
of I Additional Senior Civil Judge, Ranga Reddy, which constituted the root
cause for the proceedings.

The Act provides for the mechanism, for making or alteration in the revenue
records.  It is well-settled that the entries in the revenue records, by
themselves, do not either confer title or take away the one, that exist in an
individual.  They only reflect the existing state of affairs.  Obviously for
this reason, the Act mandates that in case there exists any dispute as to the
correctness or otherwise of the entries, touching upon the title, the parties
shall have to resolve the same by taking recourse to Civil Courts
(See Section 8 of the Act).

Learned counsel for the petitioners contend that the proceedings before the 2nd
respondent were vitiated.  He placed reliance upon the judgment rendered by a
Full Bench of this Court, in CHINNAM PANDURANGAM v. MANDAL REVENUE OFFICER,            
SERILINGAMPALLY MANDAL AND OTHERS1, in support of his contention, that an      
opportunity to be given in the proceedings under Section 5 of the Act must be
effective.  There is absolutely no quarrel with the said proposition.  The Full
Bench of this Court emphasized the importance of compliance with the principles
of natural justice, in judicial and quasi judicial proceedings, and held that
unless an effected party is given opportunity of being heard, the proceedings
would get vitiated.

The petitioners could have pressed this principle into service,
if only the 2nd respondent passed the order dated
18-07-2011, without issuing notice to them.  Not only the petitioners have
noticed the proceedings, but also have participated therein by filing their
objections.  It is no doubt true that Section 5(3) of the Act provides for
issuance of a general notice to public, and specific notice to effected persons.
However, a person, who is entitled to be issued a specific notice, cannot
complain of infraction of the provision, if he is aware of the general notice,
and has responded to the same.  There does not exist any qualitative difference
between explanations, that are required to be submitted, in reply to these two
kinds of notices.  The objective underlying both of them is to ensure that, the
effected party is informed of the on-going proceedings.  No differentiation is
made as to the plea, that can be raised by an individual, who receives general
notice, on the one hand, and the one, who receives a specific notice, on the
other hand.  The distinction in this regard is virtually without any difference.
At any rate, the petitioners have realised that the root cause for the
proceedings initiated by the
3rd respondent is the decree in O.S.No.2178 of 2007, and have filed a suit for
cancellation of the decree therein,
as rightly advised.  Even otherwise, they have an alternative remedy by way of a
revision, under Section 9 of the Act.  This writ petition cannot be entertained,
in this scenario.
The writ petition is accordingly dismissed.  It is left open to the petitioners
to work out their remedies, in accordance with law.
The miscellaneous petition filed in this writ petition also shall stand disposed
of.   There shall be no order as to costs.

________________________  
L. NARASIMHA REDDY, J.    
Dt.07-08-2012

On the facts of the present case, when the assessee filed a defective return, and did not rectify the defects which were pointed out by the I.T.O., the assessing officer was bound to treat the return of income as invalid and take further proceedings on the footing that the assessee had failed to furnish the return. The assessing authority could not have proceeded to make ex parte assessment under Section 144 without serving notice under Section 139 (2) or as the case may be under Section 148. In this view of the matter and in view of the law declared by the Supreme Court in the above decision, we are of the view that the decision of the I.T.A.T. confirming the decision of the Commissioner (Appeals) does not warrant any interference by this Court. Therefore, we hold that the substantial questions of law raised in this appeal have to be decided against the Revenue.


HONOURABLE SRI JUSTICE GODA RAGHURAM AND HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO                        

I.T.T.A.No.34 of 2000

21.08.2012

The Commissioner of Income Tax, Andhra Pradesh-I, Hyderabad.  

M/s.Bake Food Products (P) Ltd., Banjara Hills, Hyderabad.

<GIST:

>HEAD NOTE:  

Counsel for Appellant: Sri S.R.Ashok

Senior Standing Counsel for Respondent: Sri V.Srinivas

? Cases referred
[1] (2004) 3 S.C.C. 488

JUDGMENT (per Hon'ble Sri Justice M.S.Ramachandra Rao):  

              This appeal is filed under Section 260 A of the Income Tax Act,
1961 (hereinafter referred to as the "Act") by the Revenue challenging the order
dated 24-04-2000 in I.T.A.No.1699/Hyd/95 (Hyderabad 'A' Bench).
2. The facts giving rise in filing of this appeal are as under:
(a) The respondent/assessee filed its return of income for the assessment year
1986-1987 on 30-06-1986 admitting a loss of Rs.16,27,167/-.  Notice under
Section 143 (2) of the Act was issued fixing the date of hearing on 01-11-1988.
There was no response to this notice.  A detailed letter was issued by the
Assistant Commissioner of Income Tax, Central Circle-III, Hyderabad (the
assessing officer)  on 07-12-1988 to the assessee stating that the return was
not  accompanied by the audited balance sheet and profit and loss account and
sought an explanation from the assessee as to various discrepancies noticed in
the books of accounts by 14.12.1988.  This letter was served on the same date.
The assessee requested a month's time for furnishing the details.  The assessee
was granted time up to 27-12-1988.  Subsequently, the assessee filed another
letter on 27-12-1988 requesting time up to the end of February 1989.  The
assessee later filed another letter on 10-01-1989 requesting time up to 15-02-
1989 on which date it said it would submit the reply to the letter issued on 07-
12-1988.  On 06-02-1989, a representative of the assessee appeared and requested
time up to 13-02-1989, which was granted.  As the assessee had not furnished any
information even after giving of three months time  and as the assessing officer
felt that the assessment was getting barred by limitation by 31-03-1989   vide
order dated 20-03-1989, he completed the assessment based on the information
available on record to the best of his judgment under S.144 of the Act.  He made
various additions on account of the discrepancies as per the provisional account
and the figures shown in the earlier year. He assessed that the net taxable
income of the assessee as Rs.30,50,800/- and  directed the assessee to pay tax
,surcharge and interest  of Rs.27,62,879/-.
(b) The assessee filed an appeal to the Commissioner of Income Tax (Appeals-II),
Hyderabad against the order of assessment dated 20-03-1989 contending that the
assessment made was unjust, that the assessing officer erred in drawing adverse
inference on account of discrepancies, that the additions made to the income of
the assessee were unwarranted and prayed that the additions made be deleted.  It
contended that the audit for the year end of 30-06-1985 is still not completed
on account of closing down the activity group as a whole and that the unit was
seized by the APSFC. It also contended that the Company was dormant during the
year and depreciation was admissible even in the case of a dormant company and
that there was no production and certain minimum expenditure has to be incurred
to maintain the Company.
(c)  After considering the contentions to the parties, the C.I.T. (Appeals-II),
Hyderabad, by order dated 31-08-1995 held that the assessment completed under
Section 144 of the Act by the assessment officer is not in accordance with law
and deserves to be annulled. He relied on a circular No.281, dated 22-09-1980
issued by the C.B.D.T.  Para 27-4 (VI), sub-clause (VI) of which provided as
under:
"Where there is a default in rectifying the defect intimated by the ITO., the
return of income has to be treated as an invalid return and further proceedings
shall have to be taken on the footing that the assessee had failed to furnish
the return.  Thus in a case where the return is furnished voluntarily under
Section 139 (1), the ITO cannot proceed to make ex-parte assessment under
Section 144 without serving a notice under Section 139 (2) or as the case may
be, under Section 148.  Where, however, a defective return was filed in response
to a notice under Section 139 (2) or Section 148, the ITO, may straightaway
proceed to complete the assessment ex-parte under Section 144 or issue a notice
under Section 142 (1)."
 He noticed that the assessee had suo-moto filed a return under Section 139(1)
of the Act on 30.6.1986 claiming a loss of Rs.16,27,167/- , that the appropriate
authority by letter dated 07-12-1988 had informed the assessee that the return
of income so filed is not  accompanied by the audited balance sheet and profit
and loss account and sought an explanation from the assessee as to why the
return should not be treated as invalid return apart from pointing out other
discrepancies therein and asked the assessee to give information and explanation
by 14-12-1988 and that  the assessee did not reply to it and kept on seeking
extension of time. He therefore he held that the assessing authority should have
treated the return of income filed by the assessee as an invalid return as per
Section 139(9) of the Act and the provisions of the Act would then apply as if
the assessee had failed to furnish the return. He held that the assessing
authority ought to have served a notice under Section 139 (2) or as the case may
be under Section 148 as mandated by the above CBDT circular before proceeding
under s.144 of the Act.  He further held that as no notice under Section 139 (2)
or S.148 was issued to the assessee before the completion of the assessment
under Section 144 and the return of income filed by the assessee under Section
139 (1) was defective return, the completion of assessment under Section 144 was
bad in law and accordingly the assessment made had to be annulled. In view of
the  fact the assessment was being annulled, he did not go into the other
contentions of the assessee in regard to validity or otherwise of the different
additions made in the impugned assessment on account of various discrepancies as
it would not serve any useful purpose .
(d) Challenging the said order, the Revenue preferred I.T.A.No.1699/Hyd/95 to
the Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad.  It contended
that the order of the C.I.T. (Appeals) was erroneous and he ought not to have
annulled the assessment made under Section 144 of the Act.    However, the
I.T.A.T. rejected the said contention relying on the above circular No.281,
dated 22-09-1980 and held that the directions of the C.B.D.T. in the said
circular fully applied to the facts of the case and that the Commissioner
(Appeals) was justified in following the same and dismissed the appeal.
(e) Challenging the said order, the Revenue has filed this appeal.
3. Heard Sri S.R.Ashok, Senior Standing Counsel for the Revenue and Sri
V.Srinivas, learned counsel for the respondent/assessee.
4. Sri S.R.Ashok, learned Senior Standing Counsel for the Revenue, contended
that the C.I.T. (Appeals) and the I.T.A.T.  were wrong in annulling the
assessment made by the assessing officer.  He also contended that the above
circular might be binding on the assessing officer but it was not binding on the
C.I.T. (Appeals) or on the I.T.A.T.  He  also contended that the said circular
was contrary to the provisions of the Act and therefore the orders of the
I.T.A.T. confirming the order of the C.I.T. (Appeals) deserves to be set aside.
5. Per contra, Sri V.Srinivas, learned counsel for the respondent/assessee,
contended that the circular of C.B.D.T. is binding on the assessing officers and
as the said circular was not contrary to any provisions of the Act, the
assessing officer ought to have followed it and the C.I.T. (Appeals) and the
I.T.A.T. did not commit any error in relying on the said circular and in setting
aside the order of the assessing officer.
6. We have considered the submissions of the counsel for the appellant and the
respondent.
7. The assessment which is subject matter of this appeal is for the assessment
year 1986-87.  Section 139 (1) of the Act provides for filing of a return by an
assessee if his total income during the previous year exceeds the maximum amount
which is not chargeable to income tax.  At that relevant time (i.e in 1986-87),
there was  sub-section (2) in Section 139 which provided as follows:
"S.139(2) : In the case of any person who, in the Income Tax Officer's opinion
is assessable under this Act, whether on his own total income or on the total
income of any other person during the previous year, the Income Tax Officer may,
before the end of the relevant assessment year, serve a notice upon him
requiring him to furnish, within thirty days from the date of service of the
notice, a return of his income or the income of such other person during the
previous year, in the prescribed form and verified in the prescribed manner and
setting forth such other particulars as may be prescribed .."
This sub-section (2) in S.139  was omitted by the Direct Tax Laws (Amendment)
Act, 1987 with effect from 01-04-1989. But since the subject matter of the
present case is the assessment made on 20.3.1989 for assessment year 1986-87 ,
we have to consider the effect of sub-section (2) of S.139 and it cannot be
ignored.
8. Section 144 of the Act provides for best judgment assessment of tax by an
assessing officer. For the subject assessment year 1986-87 ,  Section 144 (1)
(a) provided for a best judgment assessment being made by the assessing officer
if an assessee failed to make the return required "by any notice given under sub
section (2) of Section 139"  and has not made a return or revised return under
sub section (4) of sub section (5) of Section 139.  By the Direct Tax Laws
(Amendment) Act,1987 ,w.e.f.1.4.1989,  the words "by any notice given under sub
section (2) of Section 139" in S.144 (1) (a) were substituted by the words "
under sub-section (1) of s.139" . But since this amendment came into force only
with effect from 01-04-1989, the pre-amended provision applied to the present
case (as the subject assessment year is 1986-87) . Therefore  best judgment
assessment can only be made under Section 144 (1) (a)  if an assessee fails to
make the return required by any notice given under sub section (2) of Section
139 and has not made  a return or revised return under sub section (4) or sub
section (5) of that Section.
9. Section 144 also provides for a best judgment assessment to be made under
clauses 1 (b) (which is not relevant for the present case) and under clause 1
(c) thereof.  Section 144 (1)(c) provided that a best judgment assessment can be
made by the assessing officer if the assessee having made a return, failed to
comply with all the terms of a notice issued under Section 143 (2) of the Act.
10. Sri S.R.Ashok, submits that in the present case, since a notice under
Section 143 (2) of the Act has been issued by the assessment officer, the
circular of the C.B.D.T. had no application and the best judgment assessment can
be made invoking S.144 (1) (c) of the Act.   We do not agree with this
submission.

11.    No doubt Section 144 (1) (c) provides for a situation where a best
judgment assessment can be made when the assessee having made a return fails to   
comply with all the terms of a notice issued under Section 143 (2).  But the
interplay between S.144(1) (a) and S.144 (1) (c) and the proper course of action
to be followed by an assessing officer before making a best judgment assessment
where a return filed is defective is set out by the above circular .
        Accepting the contention of the Revenue would mean that one has to ignore
s.139(9) (which states that where a return is filed and defects therein are
intimated to the assessee and  he does not rectify them, it is to be treated as
an "invalid return" and provisions of the Act would apply "as if the assessee
had filed to furnish the return"), S.139(2) (as it stood then) (which entitled
the assessing officer to issue notice to the assessee to file a return when he
is of the opinion that the assessee has taxable income) and S.144 (1) (a) (as it
then stood) of the Act. One has to interpret a statute by giving effect to every
provision thereof and in a manner which does not render any provision otiose.
Therefore, in our opinion, the said circular is not contrary to the provisions
of the Act and it correctly guides the assessing officer as to what is to be
done before proceeding to make best judgment assessment when a return filed
suomoto by the assessee is found defective. Moreover, the circular is beneficial
to the assessee as it provides him a further opportunity to give his correct
income details after his earlier return is found to be defective (as he can give
them atleast after receiving the notice U/S.139(2)).

12. It is settled law that said circulars which are issued under Section 119 by
the Central Board of Direct Taxes have to be followed and observed by the
authorities and other persons employed in the execution of the Act. The Supreme
Court in  Commissioner of Customs, Calcutta and others Vs. Indian Oil
Corporation Limited and another1 held as follows:
".......The circulars issued by the CBDT under the Income Tax Act, 1961 and CBEC
under Section 37-B of the Central Excise Act, 1944 have been held to be binding
primarily on the basis of the language of the statutory provisions buttressed by
the need of the adjudicating officers to maintain uniformity in the levy of
tax/duty through out the country."
13.   Having considered the same, we are of the view that the C.B.D.T. circular
is in the nature of a clarification to the assessing authorities that when there
is a default in rectifying a defect in the return as intimated by the I.T.O. by
the assessee, the return of income has to be treated as an invalid return and
further proceedings will have to be taken on the footing that the assessee had
failed to file the return.  The C.B.D.T. has rightly directed that in case where
the return is furnished voluntarily under Section 139 (1), the I.T.O. cannot
proceed to make ex parte  assessment under Section 144 without serving notice
under Section 139 (2) or as the case may be under Section 148.  This circular is
binding on the assessing officer.
14.   On the facts of the present case, when the assessee filed a defective
return, and did not rectify the defects which were pointed out by the I.T.O.,
the assessing officer was bound to treat the return of income as invalid and
take further proceedings on the footing that the assessee had failed to furnish
the return. The assessing authority could not have  proceeded to make ex parte
assessment under Section 144 without serving notice under Section 139 (2) or as
the case may be under Section 148. 
15.    In this view of the matter and in view of the law declared by the Supreme
Court in the above decision, we are of the view that the decision of the
I.T.A.T. confirming the decision of the Commissioner (Appeals) does not warrant
any interference by this Court.  Therefore, we hold that the substantial
questions of law raised in this appeal have to be decided against the Revenue.
16. The appeal fails and is dismissed.  No costs.

__________________________  
JUSTICE GODA RAGHURAM      


_________________________________    
JUSTICE M.S.RAMACHANDRA RAO        
Date: 21-08-2012

HONOURABLE SRI JUSTICE GODA RAGHURAM AND HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO                        

I.T.T.A.No.34 of 2000

21.08.2012

The Commissioner of Income Tax, Andhra Pradesh-I, Hyderabad.  

M/s.Bake Food Products (P) Ltd., Banjara Hills, Hyderabad.

<GIST:

>HEAD NOTE:  

Counsel for Appellant: Sri S.R.Ashok

Senior Standing Counsel for Respondent: Sri V.Srinivas

? Cases referred
[1] (2004) 3 S.C.C. 488

JUDGMENT (per Hon'ble Sri Justice M.S.Ramachandra Rao):  

              This appeal is filed under Section 260 A of the Income Tax Act,
1961 (hereinafter referred to as the "Act") by the Revenue challenging the order
dated 24-04-2000 in I.T.A.No.1699/Hyd/95 (Hyderabad 'A' Bench).
2. The facts giving rise in filing of this appeal are as under:
(a) The respondent/assessee filed its return of income for the assessment year
1986-1987 on 30-06-1986 admitting a loss of Rs.16,27,167/-.  Notice under
Section 143 (2) of the Act was issued fixing the date of hearing on 01-11-1988.
There was no response to this notice.  A detailed letter was issued by the
Assistant Commissioner of Income Tax, Central Circle-III, Hyderabad (the
assessing officer)  on 07-12-1988 to the assessee stating that the return was
not  accompanied by the audited balance sheet and profit and loss account and
sought an explanation from the assessee as to various discrepancies noticed in
the books of accounts by 14.12.1988.  This letter was served on the same date.
The assessee requested a month's time for furnishing the details.  The assessee
was granted time up to 27-12-1988.  Subsequently, the assessee filed another
letter on 27-12-1988 requesting time up to the end of February 1989.  The
assessee later filed another letter on 10-01-1989 requesting time up to 15-02-
1989 on which date it said it would submit the reply to the letter issued on 07-
12-1988.  On 06-02-1989, a representative of the assessee appeared and requested
time up to 13-02-1989, which was granted.  As the assessee had not furnished any
information even after giving of three months time  and as the assessing officer
felt that the assessment was getting barred by limitation by 31-03-1989   vide
order dated 20-03-1989, he completed the assessment based on the information
available on record to the best of his judgment under S.144 of the Act.  He made
various additions on account of the discrepancies as per the provisional account
and the figures shown in the earlier year. He assessed that the net taxable
income of the assessee as Rs.30,50,800/- and  directed the assessee to pay tax
,surcharge and interest  of Rs.27,62,879/-.
(b) The assessee filed an appeal to the Commissioner of Income Tax (Appeals-II),
Hyderabad against the order of assessment dated 20-03-1989 contending that the
assessment made was unjust, that the assessing officer erred in drawing adverse
inference on account of discrepancies, that the additions made to the income of
the assessee were unwarranted and prayed that the additions made be deleted.  It
contended that the audit for the year end of 30-06-1985 is still not completed
on account of closing down the activity group as a whole and that the unit was
seized by the APSFC. It also contended that the Company was dormant during the
year and depreciation was admissible even in the case of a dormant company and
that there was no production and certain minimum expenditure has to be incurred
to maintain the Company.
(c)  After considering the contentions to the parties, the C.I.T. (Appeals-II),
Hyderabad, by order dated 31-08-1995 held that the assessment completed under
Section 144 of the Act by the assessment officer is not in accordance with law
and deserves to be annulled. He relied on a circular No.281, dated 22-09-1980
issued by the C.B.D.T.  Para 27-4 (VI), sub-clause (VI) of which provided as
under:
"Where there is a default in rectifying the defect intimated by the ITO., the
return of income has to be treated as an invalid return and further proceedings
shall have to be taken on the footing that the assessee had failed to furnish
the return.  Thus in a case where the return is furnished voluntarily under
Section 139 (1), the ITO cannot proceed to make ex-parte assessment under
Section 144 without serving a notice under Section 139 (2) or as the case may
be, under Section 148.  Where, however, a defective return was filed in response
to a notice under Section 139 (2) or Section 148, the ITO, may straightaway
proceed to complete the assessment ex-parte under Section 144 or issue a notice
under Section 142 (1)."
 He noticed that the assessee had suo-moto filed a return under Section 139(1)
of the Act on 30.6.1986 claiming a loss of Rs.16,27,167/- , that the appropriate
authority by letter dated 07-12-1988 had informed the assessee that the return
of income so filed is not  accompanied by the audited balance sheet and profit
and loss account and sought an explanation from the assessee as to why the
return should not be treated as invalid return apart from pointing out other
discrepancies therein and asked the assessee to give information and explanation
by 14-12-1988 and that  the assessee did not reply to it and kept on seeking
extension of time. He therefore he held that the assessing authority should have
treated the return of income filed by the assessee as an invalid return as per
Section 139(9) of the Act and the provisions of the Act would then apply as if
the assessee had failed to furnish the return. He held that the assessing
authority ought to have served a notice under Section 139 (2) or as the case may
be under Section 148 as mandated by the above CBDT circular before proceeding
under s.144 of the Act.  He further held that as no notice under Section 139 (2)
or S.148 was issued to the assessee before the completion of the assessment
under Section 144 and the return of income filed by the assessee under Section
139 (1) was defective return, the completion of assessment under Section 144 was
bad in law and accordingly the assessment made had to be annulled. In view of
the  fact the assessment was being annulled, he did not go into the other
contentions of the assessee in regard to validity or otherwise of the different
additions made in the impugned assessment on account of various discrepancies as
it would not serve any useful purpose .
(d) Challenging the said order, the Revenue preferred I.T.A.No.1699/Hyd/95 to
the Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad.  It contended
that the order of the C.I.T. (Appeals) was erroneous and he ought not to have
annulled the assessment made under Section 144 of the Act.    However, the
I.T.A.T. rejected the said contention relying on the above circular No.281,
dated 22-09-1980 and held that the directions of the C.B.D.T. in the said
circular fully applied to the facts of the case and that the Commissioner
(Appeals) was justified in following the same and dismissed the appeal.
(e) Challenging the said order, the Revenue has filed this appeal.
3. Heard Sri S.R.Ashok, Senior Standing Counsel for the Revenue and Sri
V.Srinivas, learned counsel for the respondent/assessee.
4. Sri S.R.Ashok, learned Senior Standing Counsel for the Revenue, contended
that the C.I.T. (Appeals) and the I.T.A.T.  were wrong in annulling the
assessment made by the assessing officer.  He also contended that the above
circular might be binding on the assessing officer but it was not binding on the
C.I.T. (Appeals) or on the I.T.A.T.  He  also contended that the said circular
was contrary to the provisions of the Act and therefore the orders of the
I.T.A.T. confirming the order of the C.I.T. (Appeals) deserves to be set aside.
5. Per contra, Sri V.Srinivas, learned counsel for the respondent/assessee,
contended that the circular of C.B.D.T. is binding on the assessing officers and
as the said circular was not contrary to any provisions of the Act, the
assessing officer ought to have followed it and the C.I.T. (Appeals) and the
I.T.A.T. did not commit any error in relying on the said circular and in setting
aside the order of the assessing officer.
6. We have considered the submissions of the counsel for the appellant and the
respondent.
7. The assessment which is subject matter of this appeal is for the assessment
year 1986-87.  Section 139 (1) of the Act provides for filing of a return by an
assessee if his total income during the previous year exceeds the maximum amount
which is not chargeable to income tax.  At that relevant time (i.e in 1986-87),
there was  sub-section (2) in Section 139 which provided as follows:
"S.139(2) : In the case of any person who, in the Income Tax Officer's opinion
is assessable under this Act, whether on his own total income or on the total
income of any other person during the previous year, the Income Tax Officer may,
before the end of the relevant assessment year, serve a notice upon him
requiring him to furnish, within thirty days from the date of service of the
notice, a return of his income or the income of such other person during the
previous year, in the prescribed form and verified in the prescribed manner and
setting forth such other particulars as may be prescribed .."
This sub-section (2) in S.139  was omitted by the Direct Tax Laws (Amendment)
Act, 1987 with effect from 01-04-1989. But since the subject matter of the
present case is the assessment made on 20.3.1989 for assessment year 1986-87 ,
we have to consider the effect of sub-section (2) of S.139 and it cannot be
ignored.
8. Section 144 of the Act provides for best judgment assessment of tax by an
assessing officer. For the subject assessment year 1986-87 ,  Section 144 (1)
(a) provided for a best judgment assessment being made by the assessing officer
if an assessee failed to make the return required "by any notice given under sub
section (2) of Section 139"  and has not made a return or revised return under
sub section (4) of sub section (5) of Section 139.  By the Direct Tax Laws
(Amendment) Act,1987 ,w.e.f.1.4.1989,  the words "by any notice given under sub
section (2) of Section 139" in S.144 (1) (a) were substituted by the words "
under sub-section (1) of s.139" . But since this amendment came into force only
with effect from 01-04-1989, the pre-amended provision applied to the present
case (as the subject assessment year is 1986-87) . Therefore  best judgment
assessment can only be made under Section 144 (1) (a)  if an assessee fails to
make the return required by any notice given under sub section (2) of Section
139 and has not made  a return or revised return under sub section (4) or sub
section (5) of that Section.
9. Section 144 also provides for a best judgment assessment to be made under
clauses 1 (b) (which is not relevant for the present case) and under clause 1
(c) thereof.  Section 144 (1)(c) provided that a best judgment assessment can be
made by the assessing officer if the assessee having made a return, failed to
comply with all the terms of a notice issued under Section 143 (2) of the Act.
10. Sri S.R.Ashok, submits that in the present case, since a notice under
Section 143 (2) of the Act has been issued by the assessment officer, the
circular of the C.B.D.T. had no application and the best judgment assessment can
be made invoking S.144 (1) (c) of the Act.   We do not agree with this
submission.

11.    No doubt Section 144 (1) (c) provides for a situation where a best
judgment assessment can be made when the assessee having made a return fails to  
comply with all the terms of a notice issued under Section 143 (2).  But the
interplay between S.144(1) (a) and S.144 (1) (c) and the proper course of action
to be followed by an assessing officer before making a best judgment assessment
where a return filed is defective is set out by the above circular .
        Accepting the contention of the Revenue would mean that one has to ignore
s.139(9) (which states that where a return is filed and defects therein are
intimated to the assessee and  he does not rectify them, it is to be treated as
an "invalid return" and provisions of the Act would apply "as if the assessee
had filed to furnish the return"), S.139(2) (as it stood then) (which entitled
the assessing officer to issue notice to the assessee to file a return when he
is of the opinion that the assessee has taxable income) and S.144 (1) (a) (as it
then stood) of the Act. One has to interpret a statute by giving effect to every
provision thereof and in a manner which does not render any provision otiose.
Therefore, in our opinion, the said circular is not contrary to the provisions
of the Act and it correctly guides the assessing officer as to what is to be
done before proceeding to make best judgment assessment when a return filed
suomoto by the assessee is found defective. Moreover, the circular is beneficial
to the assessee as it provides him a further opportunity to give his correct
income details after his earlier return is found to be defective (as he can give
them atleast after receiving the notice U/S.139(2)).

12. It is settled law that said circulars which are issued under Section 119 by
the Central Board of Direct Taxes have to be followed and observed by the
authorities and other persons employed in the execution of the Act. The Supreme
Court in  Commissioner of Customs, Calcutta and others Vs. Indian Oil
Corporation Limited and another1 held as follows:
".......The circulars issued by the CBDT under the Income Tax Act, 1961 and CBEC
under Section 37-B of the Central Excise Act, 1944 have been held to be binding
primarily on the basis of the language of the statutory provisions buttressed by
the need of the adjudicating officers to maintain uniformity in the levy of
tax/duty through out the country."
13.   Having considered the same, we are of the view that the C.B.D.T. circular
is in the nature of a clarification to the assessing authorities that when there
is a default in rectifying a defect in the return as intimated by the I.T.O. by
the assessee, the return of income has to be treated as an invalid return and
further proceedings will have to be taken on the footing that the assessee had
failed to file the return.  The C.B.D.T. has rightly directed that in case where
the return is furnished voluntarily under Section 139 (1), the I.T.O. cannot
proceed to make ex parte  assessment under Section 144 without serving notice
under Section 139 (2) or as the case may be under Section 148.  This circular is
binding on the assessing officer.
14.   On the facts of the present case, when the assessee filed a defective
return, and did not rectify the defects which were pointed out by the I.T.O.,
the assessing officer was bound to treat the return of income as invalid and
take further proceedings on the footing that the assessee had failed to furnish
the return. The assessing authority could not have  proceeded to make ex parte
assessment under Section 144 without serving notice under Section 139 (2) or as
the case may be under Section 148.
15.    In this view of the matter and in view of the law declared by the Supreme
Court in the above decision, we are of the view that the decision of the
I.T.A.T. confirming the decision of the Commissioner (Appeals) does not warrant
any interference by this Court.  Therefore, we hold that the substantial
questions of law raised in this appeal have to be decided against the Revenue.
16. The appeal fails and is dismissed.  No costs.

__________________________  
JUSTICE GODA RAGHURAM      


_________________________________    
JUSTICE M.S.RAMACHANDRA RAO        
Date: 21-08-2012

"Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases (Wharton's Law Lexicon). Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. In our view, the court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e., at admission stage or after regular hearing, howsoever concise they may be. We would reiterate the principle that when reasons are announced and can be weighed, the public can have assurance that process of correction is in place and working. It is the requirement of law that correction process of judgments should not only appear to be implemented but also seem to have been properly implemented. Reasons for an order would ensure and enhance public confidence and would provide due satisfaction to the consumer of justice under our justice dispensation system. It may not be very correct in law to say, that there is a qualified duty imposed upon the courts to record reasons."


The Hon'ble Sri Justice C.V.Nagarjuna Reddy

Writ Petition No.21602 of 2012

18-7-2012

G.Prabhakar and 14 others.

Collector (Civil Supplies), Karimnagar District and 3 others.

<GIST:

>HEAD NOTE:  

Counsel for the petitioners:            Sri T.Mahender Rao

Counsel for the respondents:            AGP for Civil Supplies

?CASES REFERRED:    
1. AIR 1966 S.C. 671
2.  (2010) 2 SCC 497
3.  (2010) 3 SCC 732
4.  (2010) 4 SCC 785

Order:
This Writ Petition is filed for a Mandamus to set aside the orders in
proceedings No.F/809/2012 of respondent No.2.
The petitioners are fair price shop dealers of Sircilla Town, Karimnagar
District.  On certain allegations levelled against them regarding the improper
distribution of essential commodities, respondent No.1 directed respondent No.2
to initiate appropriate action against them.  Accordingly, respondent No.2
issued separate but identical show cause notices, dated 28-05-2012, to the
petitioners.  The sum and substance of the said showcause notices is that the
petitioners have distributed PDS rice to the persons, whose names were not in
existence in dynamic key register but were found in the manual key register, and
that they have not distributed PDS rice to the genuine card holders on the
ground that their names do not exist in the manual key register.
The petitioners filed separate explanations wherein they have denied these
allegations.  By the impugned orders in proceedings No.F/809/2012, which are
almost proto-type, respondent No.2 has cancelled the authorisations of the
petitioners.  The main ground on which these orders are questioned by the
petitioners is that they are shorn of any reasons.
A perusal of the impugned orders would show that respondent No.2 has stated
therein that on the abovementioned allegations, show cause notices were issued
and the dealers filed their explanations (in some cases within the stipulated
period and in some other cases beyond the stipulated period).  On noting the
above facts, respondent No.2 has stated as under:
"The explanation submitted by the dealer is not maintainable & convinced, as
such it is construed that, the dealer has involved in misappropriate of PDS Rice
that is diversion of PDS Rice and contravened the clause 17 (a) (b) (c) of
APSPDS (Control) Order, 2008."

I am in complete agreement with the learned Counsel for the petitioners that the
above-extracted part of the impugned orders hardly contains any reason for
visiting the petitioners with the extreme penalty of cancellation of their
authorisations.  The law is well settled that the duty to record reasons by any
authority dealing with the rights of a citizen constitutes an integral part of
principles of natural justice.
In Madhya Pradesh Industries Ltd. Vs. Union of India and others1, the Supreme
Court, while dealing with an order passed by the Central Government under Rule
55 of the A.P. Mineral Concession Rules 1960, emphasized on the need for giving
reasons in support of the order.  The Supreme Court inter alia held that the
condition to give reasons introduces clarity and excludes or at any rate
minimises arbitrariness; it gives satisfaction to the party against whom the
order is made; and it also enables an appellate or supervisory Court to keep the
Tribunals within bounds.
In G. Vallikumari Vs. Andhra Education Society and others2, the Supreme Court,
at para-19, held:
"...The requirement of recording reasons by every quasi-judicial or even an
administrative authority entrusted with the task of passing an order adversely
affecting an individual and communication thereof to the affected person is one
of the recognised facets of the rules of natural justice and violation thereof
has the effect of vitiating the order passed by the authority concerned."

        In Secretary and Curator, Victoria Memorial Hall Vs. Howrah Ganatantrik
Nagrik Samity and others3, the Supreme Court held at paras 40, 41 and 42, as
under:
"It is a settled legal proposition that not only an administrative but also a
judicial order must be supported by reasons, recorded in it.  Thus, while
deciding an issue, the court is bound to give reasons for its conclusion.  It is
the duty and obligation on the part of the court to record reasons while
disposing of the case.  The hallmark of an order and exercise of judicial power
by a judicial forum is to disclose its reasons by itself and giving of reasons
has always been insisted upon as one of the fundamentals of sound administration
of justice-delivery system, to make known that there had been proper and due
application of mind to the issue before the court and also as an essential
requisite of the principles of natural justice.  "The giving of reasons for a
decision is an essential attribute of judicial and judicious disposal of a
matter before courts, and which is the only indication to know about the manner
and quality of exercise undertaken, as also the fact that the court concerned
had really applied its mind." (Vide State of Orissa v. Dhaniram Luhar (2004) 5
SCC 568 and State of Rajasthan v. Sohan Lal (2004) 5 SCC 573)
        Reason is the heartbeat of every conclusion.  It introduces clarity in an
order and without the same, it becomes lifeless.  Reasons substitute
subjectivity by objectivity.  Absence of reasons renders the order
indefensible/unsustainable particularly when the order is subject to further
challenge before a higher forum. (Vide: Raj Kishore Jha v. State of Bihar (2003)
11 SCC 519, SCC p.527, para 19; Vishnu Dev Sharma v. State of U.P. (2008) 3 SCC
172; SAIL v. STO ((2008) 9 SCC 407, State of Uttaranchal v. Sunil Kumar Singh
Negi (2008) 11 SCC 205, U.P. SRTC v. Jagdish Prasad Gupta (2009) 12 SCC 609, Ram  
Phal v. State of Haryana (2009) 3 SCC 258, Mohd. Yusuf v. Faji Mohammad (2009) 3
SCC 513 and State of H.P. v. Sada Ram (2009) 4 SCC 422).
        Thus, it is evident that the recording of reasons is a principle of
natural justice and every judicial order must be supported by reasons recorded
in writing.  It ensures transparency and fairness in decision making.  The
person who is adversely affected may know, as to why his application has been
rejected."

        In Assistant Commissioner, Commercial Tax Department, Works Contract and  
Leasing, Kota Vs. Shukla and Brothers4, the Supreme Court has reiterated the
importance of giving reasons by a public authority.  It is apt to quote the
relevant part of the Judgment hereunder:
        "Reason is the very life of law.  When the reason of a law once ceases,
the law itself generally ceases (Wharton's Law Lexicon).  Such is the
significance of reasoning in any rule of law.  Giving reasons furthers the cause
of justice as well as avoids uncertainty.  As a matter of fact it helps in the
observance of law of precedent.  Absence of reasons on the contrary essentially
introduces an element of uncertainty, dissatisfaction and give entirely
different dimensions to the questions of law raised before the higher/appellate
courts.  In our view, the court should provide its own grounds and reasons for
rejecting claim/prayer of a party whether at the very threshold i.e., at
admission stage or after regular hearing, howsoever concise they may be.
        We would reiterate the principle that when reasons are announced and can
be weighed, the public can have assurance that process of correction is in place
and working.  It is the requirement of law that correction process of judgments
should not only appear to be implemented but also seem to have been properly
implemented.  Reasons for an order would ensure and enhance public confidence 
and would provide due satisfaction to the consumer of justice under our justice
dispensation system.  It may not be very correct in law to say, that there is a
qualified duty imposed upon the courts to record reasons."

        In the light of the well settled legal principles as discussed above, the
impugned orders cannot be sustained as they are shorn of any reasons whatsoever.
They are accordingly set-aside.  The matter is remitted to respondent No.2 for
considering the explanations of the petitioners by giving them an opportunity of
personal hearing and passing a detailed order.
The Writ Petition is, accordingly, allowed to the extent indicated above.
        As a sequel, WPMP.No.27693 of 2012, filed by the petitioners for interim
relief, is disposed of as infructuous.
_____________________  
C.V.Nagarjuna Reddy, J
18th July, 2012

The petitioner submits that it acquired Ac.9.33 guntas of land in Raipalli Tanda, and made applications to various authorities, seeking permission for establishment of a factory for manufacturing frozen buffalo and sheep meat with installed capacities of 36 and 6.5 metric tonnes per day, respectively. Permissions are said to have been accorded by various authorities, including the Andhra Pradesh Pollution Control Board and the Grampanchayat.


THE HON'BLE MR JUSTICE L.NARASIMHA REDDY          

Writ Petition No.25219 of 2012
       
06.08.2012

M/s Qureshi Internationl, rep. by its Managing Partner, Yousuf Mujahid.

The Director of Factories,A.P., Hyderabad, and others

Counsel for petitioner: Sri L.V. Uma Maheshwar Rao

Counsel for Respondents : G.P. for Industries, for RRs 1 to 3
                                      Sri P. Raghavender Reddy, for RRs 4 & 5
                                      G.P for Revenue for RRs 6 to 9
                                      G.P. for Home for RRs 10 & 11
                                      Sri O. Manohar Reddy, for R12
<GIST:

>HEAD NOTE:  

?Cases referred

ORDER:

The petitioner is partnership firm, involved in the activity of export and
import.  It feels aggrieved by the steps taken by the authorities of the Revenue
Department in demolishing the foundation laid for compound wall around Ac.9.33
guntas of land in Sy.No.25 of Raipalli Tanda, Parvatapur Village, Zaheerabad
Mandal, Medak District.

The petitioner submits that it acquired Ac.9.33 guntas of land in Raipalli
Tanda, and made applications to various authorities, seeking permission for
establishment of a factory for manufacturing frozen buffalo and sheep meat with
installed capacities of 36 and 6.5 metric tonnes per day, respectively.
Permissions are said to have been accorded by various authorities, including the
Andhra Pradesh Pollution Control Board and the Grampanchayat. It is stated that
the preliminary work was commenced, and at that stage, demolition is resorted
to, without issuing any notice.   Mention is made to certain proceedings issued
by the Commissioner of Industries and the District Collector, Medak District at
Sanga Reddy, the 6th respondent herein.

Heard Sri L.V. Uma Maheshwar Rao, learned counsel for the petitioner, learned
Government Pleaders for Industries, Revenue, Home, Sri P. Raghavender Reddy,
learned counsel for respondents 4 and 5, and Sri O. Manohar Reddy, learned
counsel for respondent No.12.

This writ petition, in fact, helps as an eye-opener for the Government, and the
public, at large, on highly sensitive and important issues, that have a bearing
upon the economy, environment, and some times, even the survival of the
livestock.
Be it on account of the indifference on the part of the Government on such
issues, or the desperate attempt of businessmen to earn money through whatever
means, Medak District, which derives its name as rice bowl (methukusema), has
become the bowl of beaf and slaughter capital of the State.  The existing modern
abettors have contributed to the rich profits for the owners thereof, but have
successfully made the livestock in Medak and surrounding districts, almost to
vanish.  Gone are the days, when proud possession of villages used to be
domestic animals, such as, cows, bullocks buffaloes, sheep, goats, domestic
birds etc.
The existing abettors can be kept functional only by killing hundreds of such
livestock, each hour, and thousands, each day.  Unfortunately, the growth of the
livestock is in negative figures.  The Government is very happy with the income
it is getting in the form of various taxes and duties on the beaf and meat, as
it is with the income from intoxicants.

The petitioner was basically a trader in skin and left over products of
buffaloes, got encouraged by the existing scenario, and made his efforts to
establish a modern abettor/slaughter house of his own. The proposed capacity of
his factory is 60 cattle, and 150 sheep per hour.  He submitted an application
before the concerned authority of the Central Government, which have simply
acknowledged it.  Applications were also made to the Commissioner of Industries,
A.P. Pollution Control Board, Director of Factories and the Grampanchayat,
Raipalli Tanda, Medak District.  The term of the Sarpanch of the Grampanchayat
expired recently, and no elections were held.  That became handy for the
petitioner, and he approached the Panchayat Secretary, the
4th respondent herein.  A letter dated 28-05-2012 was issued by the 4th
respondent, stating that the Grampanchayat has no objection for establishment of
"factory".

The A.P. Pollution Control Board accorded its approval through proceedings dated
08-05-2012.  The Director of Factories approved the plans, through proceedings
dated 21-02-2012.
It is important to note that the Directorate General of Foreign Trade, Ministry
of Commerce and Industry Department, New Delhi, addressed a letter dated 10-04-
2012 to the petitioner, stating that the petitioner has to take any steps for
sourcing of raw material.  The petitioner has also obtained a certificate of
conversion of land use from the Revenue Divisional Officer.  Thereafter, it
started steps for construction, initially a compound wall.

In the name of industrial development, the topography of Medak District was
changed to such an extent, that a major portion of it has become unfit for
inhabitation of human beings, and animals in any way, have been submitted to the
abettors.
The villagers realized the fraud played by the Panchayat Secretary and took the
matter to the District Collector, the
6th respondent.  It must be said to the credit of the 6th respondent that he
took immediate steps, called for a report from the Mandal Parishad Development
Officer and issued proceedings dated
24-07-2012, cancelling the permission accorded by the Special Administrative
Officer of the Grampanchayat, the
5th respondent.  Therefore, the very basis for the petitioner to start the
industry disappeared.  The proceedings issued by the
6th respondent were not challenged by the petitioner, yet.
The Commissioner of Industries, the 2nd respondent, who exhibited over
enthusiasm in helping the petitioner to secure all permissions, woke up in the
matter and addressed letter dated 27-07-2012, requiring the petitioner to
identify alternative location and a modified IEM from the Government of India.
Even this is not challenged.

In India, and particularly, in the State of Andhra Pradesh, it is difficult to
imagine life in a village, without the existence of animals, such as the
bullocks, cows, buffaloes, sheep, goats.  Rural  life is interdependent upon
such animals.  Unfortunately, on account of shortsighted policies of the State
and greed of the businessmen, serious threat has come to the very existence of
the livestock.  The situation has reached such serious proportions, that the
Ongole Breed, which was a pride of the State, is facing extinction in India,
even while it is grown as a best source of meat in other countries.  Cow, which
figures next after mother, and gives the milk, a source of energy for children
and adults alike, just by eating gross, is now looked upon as a raw material for
slaughter houses.
On account of phenomenal profits earned by the modern slaughter houses, they are
prepared to purchase such animals at higher cost.  Poor farmers are tempted to
sell them, driven by their indebtedness and worries.  Added to this, theft of
animals is on the rampage.  The cost of milk, naturally increased manifold.
Agriculture has almost becoming secondary even in villages.  A rural economy,
which flourished even during alien regimes, has slowly become paralyzed, after
the country became independent.

Successive Governments have proclaimed their policy to make villages, free of
huts.  Cattle sheds unfortunately are mostly in the huts.  Obviously not to
stand in the  way of the Government, which is determined to make villages, huts
free, the farmers have also chosen to forego the huts as well as animals.
Separate ministry is created for protection of environment by diversity, etc.
On the one hand, hundreds of crores are spent to protect handful tigers and
lions, and on the other hand, phenomenal income is earned in the form of taxes
and duties by giving licences liberally, for killing hundreds of cows and
buffaloes, each minute and export of the meat.  The results are not difficult to
imagine.  If a country feels that the income derived by it by selling meat would
add to its economy, one can safely conclude that it is drifting away from the
values of nature, ecology and economy, and it is a matter of time, that it would
perish.  This Courts feels that time has come where a serious re-look must be
had, to whatever has taken place so far.

The 4th respondent obviously under pressure from the villagers and officials,
has come forward with the plea that no permission was issued at all.  If he
happens to be the same person, who issued the permission earlier, proceedings
must be initiated against him,
so that officials like him do not make such misadventure.
A Panchayat Secretary should not have taken such a major decision, when there is
no elected body.  Further, the Commissioner of Industries must ensure that no
more abettors are constructed in Medak District and grant of permissions for
establishment of such abettors in other places must be dependent upon the
population of livestock in the concerned district.

Therefore, while dismissing the writ petition, this Court directs that,

a) no more permissions shall be accorded for establishment of abettors in Medak
District, having regard to the capacity of the existing ones;

b) Whenever an application is made for establishment of abettors in any other
district, the same shall be considered by the concerned authorities, and in
particular, the Grampanchayats, only when the population of the cows/buffaloes
exceeds 10% and that of sheep exceeds, 20% of the human population in the
district, as a unit; to be certified by the Head of the Animal Husbandry
Department of the District and countersigned by the District Collector.

c) The authorities shall also insist on establishment and maintenance of
breeding centres for production of the animals of the concerned category and the
abettors shall function only after adequate raw material/livestock is produced.



This arrangement shall be tentative, till the Government frames its own
guidelines, in this regard.  It shall be open to the petitioner to take
necessary steps, as indicated by the Commissioner of Industries, through his
letter dated 27-07-2012, subject to the above.

The miscellaneous petition filed in this writ petition also shall stand disposed
of.  There shall be no order as costs.


_______________________  
L. NARASIMHA REDDY, J.    
Dt.06-08-2012.

The assessee maintains a NRE account with South Indian Bank of Anna Nagar at Chennai. The correspondent banks of South Indian Bank remitted the brokerage and commission due to the assessee to the above said NRE account in Chennai by way of cheques/demand drafts/TTs. The assessee has not offered such remittances credited in Indian bank account for taxation on the ground that those income accrued outside India. The assessee does not have any other account in India.-The assessee is an individual. He is employed with M/s. Sayeed Mohammed Sons Traders in Singapore. The assessee is working for the last 20 years in Singapore. He is a permanent resident of that country. He mainly earns salary income which is taxed in Singapore under the Singapore's tax laws. The assessee also derives income by way of commission in import and export of agricultural produces like raw cashews. 4. The employment of the assessee is in Singapore and the salary is received and taxed under the Singapore's tax laws and therefore, the salary earned by the assessee was always Singapore income and not Indian income. - the Assessing Officer has not taken into account various explanations relating to gifts and sridhan received by those persons. Ultimately, the Commissioner of Income- tax(Appeals) also held that the differences in different individual hands, if not explained, has to be assessed only in their hands. While dealing with the brokerage and commission income of the assessee, we have already held that the assessee does not earn any income in Indian taxable territory. We have also held that he is a non resident. He is employed in Singapore. The import and export transactions out of which he earned additional income are again carried out outside Indian territory. The funds available to the assessee in India are withdrawn from his account with South Indian Bank at Chennai. Therefore, even if the assessee has spent some funds in gifting gold jewellery to his family members, those funds emanated from non taxable funds available in his bank account. It does not belong to any income liable for taxation in India. Therefore, even if the proposition of the Commissioner of Income-tax(Appeals) is accepted, there is no justification for making any addition in the hands of the assessee. The addition of ` 18,66,302/- is accordingly deleted.


Income Tax Appellate Tribunal - Chennai
V.Deenadayala Vel, Chennai vs Department Of Income Tax on 22 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, CHENNAI
BEFORE Dr. O.K.NARAYANAN, VICE-PRESIDENT
AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER
I.T.A. Nos. 532 to 537/Mds/2012
Assessment Years : 2004-05 to 2009-10
AND
C.O.No.58/Mds/2012 (in ITA No.537/Mds/2012)
The Joint Commissioner of Shri V. Deenadayalavel, Income-tax(OSD), No.6,S.M.Narayana Nagar, Central Circle-IV(3), Vs. Anna Nagar, West Extn. Chennai. Chennai - 600 101. (Appellant) PAN - AAIPD 2446 F (Respondent/Cross objector)
Appellant by : Ms. Anupama Shukla, IRS, CIT
Respondent by : Shri N. Devanathan, Advocate & Shri B.S.Purushottam, CA
Date of hearing : 14th June, 2012 Date of pronouncement : 22nd June, 2012 ORDER
PER Dr. O.K.NARAYANAN, VICE PRESIDENT
This is a bunch of six appeals and one cross objection. All the six appeals are filed by the Revenue for the six assessment :- 2 -: ITA 532 to 537 &
CO 58/Mds/12
years from 2004-05 to 2009-10. The cross objection is filed by the assessee for the assessment year 2009-10.
2. All these appeals and the cross objection are directed against the common order passed by the Commissioner of Income-tax(Appeals)-I at Chennai on 12.12.2011 and arise out of the assessments completed under sec.153A read with section 143(3) of the Income-tax Act, 1961.
3. The assessee is an individual. He is employed with M/s. Sayeed Mohammed Sons Traders in Singapore. The assessee is working for the last 20 years in Singapore. He is a permanent resident of that country. He mainly earns salary income which is taxed in Singapore under the Singapore's tax laws. The assessee also derives income by way of commission in import and export of agricultural produces like raw cashews.
4. The employment of the assessee is in Singapore and the salary is received and taxed under the Singapore's tax laws and therefore, the salary earned by the assessee was always Singapore income and not Indian income. The activities of the :- 3 -: ITA 532 to 537 &
CO 58/Mds/12
assessee as broker/agent in import and export of cashews are also carried out outside the territories of India. The import and export of raw cashews are not made into India or out of India. He is importing from African countries and exporting to other countries. He has no business connection with India. Therefore, the income by way of brokerage and commission earned by the assessee also partook the character of foreign income. The assessee is also a non-resident for the purpose of Indian Income- tax laws.
5. The assessee maintains a NRE account with South Indian Bank of Anna Nagar at Chennai. The correspondent banks of South Indian Bank remitted the brokerage and commission due to the assessee to the above said NRE account in Chennai by way of cheques/demand drafts/TTs. The assessee has not offered such remittances credited in Indian bank account for taxation on the ground that those income accrued outside India. The assessee does not have any other account in India.
6. Even though the assessee operates in the above background, the assessing authority initially proposed to tax all :- 4 -: ITA 532 to 537 &
CO 58/Mds/12
such remittances made in his Indian bank account. The assessing authority invoked sec.5 to bring the remittances as part of assessee's total income taxable in India. He held that by virtue of sec.5, the remittances credited in assessee's Indian bank account had to be treated as income received or deemed to be received or accrued or arose or deemed to be accrued or arose in India. He, therefore, held that even if the assessee is a non- resident, the remittances are liable for taxation in India.
7. The assessee filed detailed replies to the propositions mooted by the assessing authority. He argued before the Assessing Officer that he has no business connection in India; he does not carry on any business in India with any person; he does not have any place of business in India; he is a non-resident of India and therefore, in such circumstances the remittances cannot be treated as taxable income in the hands of the assessee only for the reason that brokerage and commission are remitted in assessee's Indian bank account. He argued that the brokerage and commission have already been received outside India and remittances to his Indian bank account are made thereafter and, :- 5 -: ITA 532 to 537 &
CO 58/Mds/12
therefore, there is no reason to hold that the remittances were in the nature of income accrued or arose or received or so deemed, in India. The assessee also relied on the judgment of the Hon'ble Supreme Court rendered in the case of CIT v. Ogale Glass works Ltd. (25 ITR 529). In the said decision, the Hon'ble Supreme Court has held that the payment is to be construed as having been made where cheques are posted. The assessee contended that the remittances are first collected by foreign banks in places like Europe, Germany, Canada, Zurich, Australia, Dubai etc. and, therefore, the payments should be treated as having been made in those countries and thereafter the transfer of funds to Indian bank account is only appropriation of that proceeds and could not be treated as the instrument of payment posted in India.
8. The Assessing Officer having found force in the above arguments, examined the case in detail, by analyzing all the credits reflected in Indian bank account of the assessee. The assessing authority bifurcated such remittances under two heads. The first head related to remittances made by way of demand drafts and cheques. The second head related to remittances :- 6 -: ITA 532 to 537 &
CO 58/Mds/12
made to Indian bank account by way of TTs. The Assessing Officer accepted the contention of the assessee that the remittances made to India by way of demand drafts and cheques would be treated as received outside India. Therefore, he held that the remittances made by the assessee to his Indian bank account by way of demand drafts and cheques are not taxable for these impugned assessment years.
9. But the Assessing Officer took a different view in the case of remittances transmitted through TTs. He held that by virtue of the instrument of transfer, i.e. TTs, the amounts have to be held received in India and therefore, such remittances covered by TTs are taxable in India. Accordingly, for the assessment years 2004- 05 to 2008-09, he brought to tax the remittances credited in assessee's Indian bank account through the medium of TTs.
10. As far as the assessment year 2009-10 is concerned, the Assessing Officer held that the assessee was a resident and, therefore, his entire income would be taxable in India for the assessment year 2009-10. The assessments were completed accordingly.
:- 7 -: ITA 532 to 537 &
CO 58/Mds/12
11. The assessments were taken in appeals before the Commissioner of Income-tax(Appeals).
12. One of the grounds raised by the assessee before the Commissioner of Income-tax(Appeals) was of jurisdiction. This ground was rejected by the Commissioner of Income- tax(Appeals). On the question of treating TTs remittances, the Commissioner of Income-tax(Appeals) held that TTs are also in the same category of demand drafts and cheques and, therefore, remittances covered by TTs cannot be treated differently and those remittances should also be treated as having been received by the assessee outside India. The TTs are first received by correspondent bank for South India Bank in New York. That bank is HSBC Bank. It is thereafter the correspondent bank which transfers the amounts in dollars to the assessee's account in India. He held that the argument of the assessee that TTs are also in the same category is correct. He accepted the contentions for all the assessment years from 2004-05 to 2008-09 and held that remittances covered by TTs are not taxable in India. :- 8 -: ITA 532 to 537 &
CO 58/Mds/12
13. In respect of assessment year 2009-10, the Commissioner of Income-tax(Appeals) had to examine the residential status of the assessee. The Assessing Officer has treated the assessee as non resident on the ground that the assessee stayed in India during the previous year relevant to the assessment year 2009-
10. The Commissioner of Income-tax(Appeals) accepted the contention of the assessee that even if the assessee was residing in India for the assessment year 2009-10, by virtue of his earlier non resident status for more than 15 years, the correct status of the assessee should be not ordinarily resident. The Commissioner of Income-tax(Appeals) held that the Assessing Officer has overlooked the provisions of sec.6(6) which distinguishes not ordinarily resident from resident. The Commissioner of Income-tax(Appeals) after having found that the status of the assessee for the assessment year 2009-10 was not ordinarily resident, he examined whether the remittances would be taxable in India or not. On the basis of his earlier decision, in the context for assessment years 2004-05 to 2008-09, the Commissioner of Income-tax(Appeals) held that the assessee did :- 9 -: ITA 532 to 537 &
CO 58/Mds/12
not generate any taxable income in India. He had no business income in India. The entire remittances credited in assessee's Indian bank account represented the income earned by the assessee outside the Indian territory and received outside India and thereafter remitted to the assessee's Indian bank account. Therefore, he held that for assessment year 2009-10 also, the remittances are not taxable in India. Non indian income of an assessee, who is not ordinarily resident, is not taxable in India as in the case of a non resident. Accordingly, the appeal of the assessee was allowed for assessment year 2009-10 as well.
14. It is against the above orders of the Commissioner of Income-tax(Appeals) that the Revenue has come in appeals before us.
15. We heard Smt. Anupama Shukla, the learned Commissioner of income-tax, appearing for the Revenue and Shri N. Devanathan, the learned counsel along with Shri :- 10 -: ITA 532 to 537 &
CO 58/Mds/12
B.S.Purushottam, Chartered Accountant appearing for the assessee.
16. On going through the facts of the case, we find that there are no disputes on the facts of the case except the true nature of remittances transmitted through the medium of telegraphic transfer. The assessee is living in Singapore. He is a non resident. He is a permanent resident of Singapore. He is employed there. His salary income is taxed as per Singapore's tax laws. He is also earning income by way of brokerage and commission. Brokerage and commission are earned out of import and export of agricultural produces like cashew nuts. All those imports and exports have nothing to do with India, as imports are made from African countries and exports are made to other countries and no activity is routed through Indian waters. Therefore, by virtue of the operations carried on by the assessee, his income cannot be treated as income received or accrued or arose or deemed so, in India.
17. The case of the Revenue is built up on the point where the assessee was paid his brokerage and commission. In the case of :- 11 -: ITA 532 to 537 &
CO 58/Mds/12
cheques and demand drafts, the Assessing Officer himself has accepted the contentions of the assessee that they were received outside India and on realization of those instruments, the proceeds were remitted to assessee's Indian bank account. These transactions were carried out by the correspondent bank of South Indian Bank with which the assessee has an account in India at Chennai. The correspondent bank of South Indian Bank in New York is HSBC Bank. In London, the correspondent bank is HSBC Bank. In Germany, the correspondent banks are Commerzbank AG and Standard Chartered Bank (Germany) GMBH. In Japan, the correspondent bank is Hongkong & Shanghai Banking Corp., CPO. In Canada, the correspondent bank is The Bank of Nova Scotia. In Zurich, the correspondent bank is UBS AGP. In Australia, the correspondent bank is again HSBC Bank and in Dubai, it is Bank of Baroda.
18. Now, the dispute is only with the remittances through TTs. The Commissioner of Income-tax(Appeals) has made a finding that the correspondent bank of South Indian Bank receives funds from the parties who are dealing with the assessee. It is after :- 12 -: ITA 532 to 537 &
CO 58/Mds/12
having received the brokerage and commission in the accounts of the foreign correspondent banks that those funds are transferred to assessee's Indian bank account in foreign currency; mainly US dollars. Therefore, it is apparent that as in the case of cheques and demand drafts, remittances through TTs also are first received in foreign countries by the correspondent banks of the South Indian Bank. It is after crediting the receipts of brokerage and commission first in the accounts of the foreign correspondent banks that the funds are transferred to assessee's Indian bank account by TTs in foreign exchange. The cheques and drafts are negotiable instruments facilitating the transfer of funds from one person to another. Telegraphic transfer is a transmission device which helps transactions of funds from one place to another with precision and safety. In the modern digital world at present, almost all transactions of funds all over the world are made by bank transfers. Therefore, that method of transaction of funds by itself does not decide whether the income was received by the assessee in India or not. We have to see the first point of landing of the brokerage and commission transmitted to India through :- 13 -: ITA 532 to 537 &
CO 58/Mds/12
TTs. They are first landed in the accounts of the foreign correspondent banks. They are landed in other countries. The Hon'ble Supreme Court in the case of CIT v. Ogale Glass Works Ltd. (25 ITR 529) has held in a case where the cheques were posted in Delhi, in law, it amounted to payment in Delhi. In the light of that decision, when the funds covered by TTs first landed in the accounts of foreign correspondent banks outside India, it is to be seen that the assessee received his brokerage and commission outside India. It is only after receiving those brokerage and commission outside India that the corresponding funds were transferred to the assessee's Indian bank account by TTs. Therefore, the Commissioner of Income-tax(Appeals) has rightly held that the amounts received by TTs are the income earned by the assessee outside India and, therefore, not exigible to Indian taxation.
19. In the course of argument, the learned Commissioner has placed reliance on the decision of the Authority of Advance Rulings rendered in the case of SKF Boilers & Driers (P) Ltd. reported in 68 DTR (AAR) 106. In that case, the Indian character :- 14 -: ITA 532 to 537 &
CO 58/Mds/12
of the income was determined by the authority on the basis of situs of the right to receive the income. The authority held that even though the agents have rendered services abroad and the commission has also remitted abroad, the income becomes Indian income on the ground that the right to receive the income arose in India. We are of the view that the above decision of the authority does not have any factual relation to the present case. In this case, the right to receive the brokerage and commission always remained outside India and what was received by the assessee in his Indian bank account is a subsequent remittance of funds from foreign accounts to Indian accounts. As far as the assessee is concerned, the right to receive the income did not arise in India. Therefore, we find that the above judgment relied on by the Revenue is not applicable to the present case.
20. Incidentally, it is also to be mentioned that the learned counsel appearing for the assessee, has relied on the Double Taxation Avoidance Agreement between India and Singapore stating that the DTAA overrides Indian Income-tax laws and therefore, in view of Article 7 of the DTAA, the profits of an :- 15 -: ITA 532 to 537 &
CO 58/Mds/12
enterprise of a contracting State shall be taxed only in that State except where the enterprise has a permanent establishment in other contracting States. The learned counsel submitted that in such situation, the profits attributable to the permanent establishment alone will be taxable in that State. As the money is received from out of Indian territory, they are out of Indian profits. The learned counsel has also placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. P.K.Noorjahan (237 ITR 570). It is seen that the assessee does not have any permanent establishment in India or any business connection and, therefore, there is no need to expand the scope of enquiry.
21. In the facts and circumstances of the case, we uphold the common order of the Commissioner of Income-tax(Appeals) on the issue of taxability of brokerage and commission.
22. Therefore, the appeals filed by the Revenue are liable to be dismissed.
:- 16 -: ITA 532 to 537 &
CO 58/Mds/12
23. Now, we may consider the cross objection filed by the assessee for the assessment year 2009-10.
24. The case of the assessee is that the Commissioner of Income-tax(Appeals) has erred in sustaining the addition of `18,66,032/- being 25% of the jewellery as unexplained in the hands of the assessee.
25. The question of unexplained jewellery is considered by the Commissioner of Income-tax(Appeals) in paragraphs 23 to 28 in pages 8 to 17 of his order. The Commissioner of Income- tax(Appeals) has accepted that the jewelleries were found and seized from different bed rooms, and prima facie, belonged to different individuals who files the returns in their individual capacity. It is on this ground that he has deleted major portion of the addition to the extent of 75%.
26. The balance 25% of the jewellery value has been confirmed by the Commissioner of Income-tax(Appeals) on the ground that :- 17 -: ITA 532 to 537 &
CO 58/Mds/12
the gifts of jewellery made by the assessee to those individuals, who are relatives, cannot be ruled out and to that extent, the assessee must answer for the acquisition of the jewellery. It is to cover up that proposition that the Commissioner of Income- tax(Appeals) has sustained the addition to the extent of 25%.
27. After discussing the issue of unexplained jewellery in a detailed manner, the Commissioner of Income-tax(Appeals) has clearly held that the Assessing Officer has not taken into account various explanations relating to gifts and sridhan received by those persons. Ultimately, the Commissioner of Income- tax(Appeals) also held that the differences in different individual hands, if not explained, has to be assessed only in their hands. It is after coming to such categorical findings, that the Commissioner of Income-tax(Appeals) makes a presumption that the assessee might have gifted some jewellery to those individuals and to that extent, assessee must be accountable for the funds utilized for the acquisition of jewellery. Even if such case is visualized, we are of the view that the addition cannot be :- 18 -: ITA 532 to 537 &
CO 58/Mds/12
made in the hands of the assessee. While dealing with the brokerage and commission income of the assessee, we have already held that the assessee does not earn any income in Indian taxable territory. We have also held that he is a non resident. He is employed in Singapore. The import and export transactions out of which he earned additional income are again carried out outside Indian territory. The funds available to the assessee in India are withdrawn from his account with South Indian Bank at Chennai. Therefore, even if the assessee has spent some funds in gifting gold jewellery to his family members, those funds emanated from non taxable funds available in his bank account. It does not belong to any income liable for taxation in India. Therefore, even if the proposition of the Commissioner of Income-tax(Appeals) is accepted, there is no justification for making any addition in the hands of the assessee. The addition of ` 18,66,302/- is accordingly deleted.
28. In result, the appeals filed by the Revenue are dismissed and the cross objection filed by the assessee is allowed. :- 19 -: ITA 532 to 537 &
CO 58/Mds/12
Order pronounced on Friday, the 22nd of June, 2012 at Chennai.
Sd/- Sd/-
(VIKAS AWASTHY) (Dr. O.K.NARAYANAN) Judicial Member Vice-President Chennai,
Dated the 22nd June, 2012
mpo*
Copy to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR