1989 (4) TMI 25 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the Competent Authority's order under sections 7(1) and 7(3) of the SAFEM (FOP) Act, 1976, due to inordinate delay in initiating action under section 6(1).
2. Jurisdiction of the Competent Authority to issue a notice after a long delay.
3. Justification for the delay in initiating proceedings.

Detailed Analysis:

1. Validity of the Competent Authority's Order:
The appellant questioned the validity of the order passed by the Competent Authority under sections 7(1) and 7(3) of the SAFEM (FOP) Act, 1976, dated August 25, 1988, on the grounds of inordinate delay in initiating action under section 6(1). The appellant argued that the delay between the date of the detention order and the date of notice under section 6(1) vitiated the proposal to forfeit his property. The Competent Authority rejected this plea without specifically addressing it in the order.

2. Jurisdiction of the Competent Authority:
The appellant contended that the order of the Competent Authority was made without jurisdiction due to the lapse of more than ten years after the order of detention. The court examined whether the long delay in passing the order rendered it without jurisdiction. The Supreme Court's decisions in Gurbaksh Singh (S. B.) v. Union of India and Bharat Steel Tubes Ltd. v. State of Haryana were cited to argue that, in the absence of a prescribed time limit, a long delay does not automatically render an order without jurisdiction.

3. Justification for the Delay:
The court inquired if there was any justification for the delay. The records showed that the reasons for the belief that the properties were illegally acquired were recorded only on December 23, 1987, despite a report from the Income-tax Officer in May 1980. The Competent Authority took more than seven years to initiate proceedings under the SAFEM (FOP) Act, 1976. The court found no explanation for this delay, and thus, it was deemed inordinate and unjustified.

Relevant Case Law:
Several cases were discussed to establish the principles regarding delays in legal proceedings:
- K. P. Narayanappa Setty and Co. v. CIT: The court held that unjustified delay in passing a penalty order, even without a prescribed time limit, rendered the penalty not exigible.
- Chimanram Motilal Pvt. Ltd. v. CIT: The Bombay High Court observed that delayed proceedings might amount to an abuse of power, and both the inordinate nature of the delay and the explanation for it must be considered.
- Krishna Bhatta v. Agricultural Income-tax Officer: The Kerala High Court emphasized that proceedings should not be enforceable indefinitely and that unreasonable delays without explanation render the proceedings invalid.
- CIT v. Harinagar Sugar Mills Ltd.: The Bombay High Court held that inordinate delay without proper explanation could lead to quashing of proceedings.
- Bharat Steel Tubes Ltd. v. State of Haryana: The Supreme Court noted that long delays in completing assessments are not in the interest of either the assessee or the State, though it did not categorically invalidate delayed assessments.

Conclusion:
The court held that the delay in initiating the proceeding for forfeiture of property was inordinately long and without justification. Consequently, the order of the Competent Authority made on August 25, 1988, was set aside. The court did not find it necessary to address other grounds raised by the appellant due to the setting aside of the order based on the delay.

Separate Judgments:
- D. R. Khanna (Chairman): Agreed with the decision, emphasizing that inordinate delays adversely affect the person proceeded against and reflect poorly on the Competent Authority's office. He noted similar observations in previous cases and highlighted the necessity of reasonable time limits for such proceedings.