2021 (3) TMI 168 - AT - Central Excise

Recovery of Central Excise dues - whether the flats belonging to the appellant which she purchased under Registered Sale deeds out of monies received as gifts from her mother-in-law and father-in-law can be proceeded against by the Excise department for recovery of Central Excise dues against two proprietory firms of her late husband? - HELD THAT - After remand by the Hon ble High Court the appellant before the Adjudicating Authority had placed Chartered Accountant s certificate dated 10.06.2011 giving full details of source of income from which the appellant has purchased the said four flats. It was submitted by the appellant that the entire money which was paid by her for purchase of four flats was received by her as gift from her Father-in-law Shri Satyanarayan Agarwal and Mother-in-law Mrs. Panna Devi. To substantiate this fact the appellant submitted income tax returns capital accounts bank statements and Income tax assessment orders of both the persons. On scrutiny of these documents it is absolutely clear that the appellant have received gift from her father-in-law and mother-in-law. Accordingly it is legally earned income by the appellant from which the entire payment of cost of flats was made. This fact has also not been disputed by the lower authorities. As admittedly no sale or purchase deed was registered between Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal with the builder. In this fact it is established that no sale purchase of four flats against the payment made by Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal was concluded. Therefore even though some transaction was made towards purchase of four flats by Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal with the builder but since the deal was cancelled there exists no sale purchase of four flats. Subsequently in the fresh deal the appellant has made payment from her own source which was received as gift from her mother-in-law and father-in-law and the sale deed for purchase of four flats with the builder was registered. Therefore the appellant is sole owner of four flats purchased by making payment from her own source of income. In the deal between the appellant and the builder the earlier inconclusive deal of Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal with builder has no relevance. Even if there is remote connection with Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal since the deal was not fructified that any transaction made by them is not relevant as regards the present ownership of the appellant of these four flats for a simple reason that the payment by the appellant made to the builder is not from Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal but entire payment was made by her from her own source of income. Since the four flats were purchased by the appellant from her own source of income question of inheritance from her late husband Shri Krishna Agarwal does not arise. The Hon ble High Court precisely directed the department to examine only two points whether the appellant has made payments for purchase of four flats by her own source of income and whether the property was possessed by the appellant as a result of inheritance from her late husband Shri Krishna Agarwal. From the detailed submissions along with the documentary evidence submitted by the appellant it is clearly established that appellant have purchased four flats and made payment from her own source of income and it is also fact that appellant has not inherited the property from her late husband Shri Krishna Agarwal. In this undisputed fact the lower authorities have travelled blindly ignoring the observations made by the Hon ble Gujarat High Court and without any basis held that the appellant has not purchased four flats from her own source of income which completely in defiance of the order passed the Hon ble High Court - taking into consideration the Hon ble High Court s order undisputed facts and documentary evidence presented by the appellant it is clear that the appellant is the sole owner of four flats purchased from her own source of income and not inherited from her late husband Shri Krishna Agarwal or even any member of the family. The impugned order is not sustainable - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the flats purchased by the appellant can be attached by the Excise department for recovery of Central Excise dues of her late husband's firms.
2. Whether the flats were purchased from the appellant's own source of income or inherited from her late husband.

Issue-wise Detailed Analysis:

1. Attachment of Flats for Recovery of Central Excise Dues:
The primary issue is whether the flats purchased by the appellant can be attached by the Excise department for recovering dues confirmed against the proprietary firms of her late husband. The Excise department issued a letter on 09.02.2011 to the Superintendent, City Survey, Vadodara, contemplating the attachment of the flats for realizing government dues. This led to the issuance of a notice prohibiting the transfer of the said flats.

2. Source of Income for Purchase of Flats:
The appellant challenged the notice of encumbrance, asserting that the flats were purchased from her own source of income, specifically gifts from her mother-in-law and father-in-law, and not inherited from her husband. The Hon’ble Gujarat High Court remanded the matter to the Commissioner to verify the source of income used for purchasing the flats. The appellant provided a Chartered Accountant’s Certificate and supporting documents, including income tax returns, capital accounts, and bank statements, to substantiate that the funds were gifts from her mother-in-law and father-in-law.

Findings and Judgment:

1. High Court's Directions:
The Hon’ble High Court directed the Commissioner to determine whether the flats were purchased from the appellant’s own source of income and to withdraw the encumbrance if so. The High Court emphasized that government dues could only be recovered from properties inherited from the appellant’s husband, not from her personal properties acquired independently.

2. Commissioner’s Decision:
Despite the appellant's submissions, the Commissioner upheld the encumbrance, asserting that the flats were purchased using funds from her late husband’s income. The Commissioner based this on the initial payments made by Zenith Chemicals Pvt. Limited and the appellant’s daughter, Shivangi Agarwal, which were later returned by the builder.

3. Tribunal’s Analysis:
The Tribunal found that the Commissioner exceeded the High Court’s directions by considering extraneous factors and unsubstantiated grounds. The Tribunal noted that the registered sale deeds and the appellant’s documented source of income (gifts from her in-laws) were sufficient to establish her ownership. The Tribunal emphasized that the initial payments by Zenith Chemicals Pvt. Limited and Shivangi Agarwal, which were returned, bore no relevance to the appellant’s subsequent purchase of the flats.

4. Legal Precedents:
The Tribunal referenced legal precedents, including the Supreme Court’s decision in Gapadibai vs. State of Madhya Pradesh and the Madras High Court’s decision in A.G. Krishnamoorthy vs. V. Kannammal, which upheld the sanctity of registered sale deeds as evidence of ownership.

Conclusion:
The Tribunal concluded that the appellant purchased the flats from her own source of income and not through inheritance from her late husband. The Commissioner’s order was found to be unsustainable, and the encumbrance on the flats was quashed. The appeal was allowed, and the impugned order was set aside.

Final Order:
The Tribunal set aside the order dated 09.02.2011 issued by the Assistant Commissioner of Central Excise, quashing the encumbrance on the four flats. The appeal was allowed, with the order pronounced in the open court on 04.03.2021.

← Previous Next →