2013 (9) TMI 1194 - HC - Income Tax

Summary

Issues Involved:
1. Condonation of Delay
2. Ownership of Money Represented by Seven Pay Orders
3. Bar of Suits in Civil Courts under Section 293 of the Income Tax Act
4. Applicability of Section 14 of the Limitation Act

Summary:

1. Condonation of Delay:
The application for condonation of delay (C.M. Appl. 3608/2010) in filing the appeal was allowed for the reasons mentioned in the application.

2. Ownership of Money Represented by Seven Pay Orders:
The dispute involved the ownership of Rs. 50.40 lakhs represented by seven pay orders seized by the Income Tax Department during a search operation u/s 132 at the premises of Rakesh Kumar Agrawal. M/s. Bansal Commodities claimed ownership of the money, asserting it was paid to Agrawal for a business transaction that did not materialize. The Income Tax Settlement Commission (ITSC) and the civil court had conflicting findings on the ownership, with the ITSC initially ruling in favor of Bansal Commodities and later in favor of Agrawal.

3. Bar of Suits in Civil Courts under Section 293 of the Income Tax Act:
The primary issue was whether the civil court had jurisdiction to adjudicate the ownership of the seven pay orders, given the bar u/s 293 of the Income Tax Act, which prohibits suits to set aside or modify any proceeding or order made under the Act. The court concluded that the civil suit was barred by Section 293, as the relief sought would effectively set aside or modify the Income Tax authorities' order under Section 132. The court relied on the Supreme Court's interpretation in Parmeshwari Devi Sultania, which emphasized that Section 293 precludes civil courts from entertaining suits that would interfere with proceedings or orders under the Income Tax Act.

4. Applicability of Section 14 of the Limitation Act:
The court held that M/s. Bansal Commodities was entitled to the benefit of Section 14 of the Limitation Act, as they had been diligently pursuing their remedies under the Income Tax Act and had approached the civil court based on the High Court's direction. However, this did not override the jurisdictional bar imposed by Section 293 of the Income Tax Act.

Conclusion:
The appeals were allowed, and the civil court's decree in favor of M/s. Bansal Commodities was set aside due to the bar u/s 293 of the Income Tax Act. The court granted liberty to M/s. Bansal Commodities to seek revival of their previously disposed writ petition (W.P.(C) 3738/1994) before the High Court for an expeditious decision on the merits.