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TMI Blog2007 (9) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... sued to Shiv Shankar. A copy of the notice was also enclosed to Smt. Shanti Devi. The notice proposed forfeiture of the following properties: i) Nos. 265, 272, 273, 274, 275., 276 and 279, Bara Bazar, Shahdra, Delhi in the name of Shanti Devi, Wife. ii) Deposit of ₹ 45,000 in Shiv Trading Co., 1167, Kucha Mahajani, Chandni Chowk, Delhi in the name of his wife Shanti Devi Along with interest payable. iii) Balance in National Bank of Lahore Ltd., (New State Bank of India) as on 29.01.1977. iv) House No. 291, Bara Thakur Dwara, Shahdara, Delhi. 3. Sh. Shiv Shankar, the predecessor-in-interest and the father of the present petitioner resisted the notice proposing forfeiture. He alleged that the grounds that the move to forfeit the properties were vague and did not disclose any factors or rationale justifying the proposal for action under Section 6(1) of the Act. He complained that the notice merely repeated the language of Section 3 without outlining any fact relevant to the case. He requested the competent authority to disclose the reasons. In addition to this objection it was mentioned that he had started business of Dalali (Commission Agent) 30 years ago in Chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs doing business of Bullion and gold and silver ornaments at Chandni Chowk, Delhi and I would like to produce some of those persons as may witnesses to verify the fact that I am doing dalali business. That the copy of the statements of accounts, capital account, balance sheet, assessment orders in the Income Tax are enclosed herewith for your recorded purposes. 6. By an order dated 23.3.1978, the competent authority directed forfeiture of the properties mentioned in the notice. This was on the basis of its reasoning that they constituted illegally acquired property within the meaning of Section 3 of the Act. The findings of the competent authority are reproduced below: 11. Regarding house bearing Nos. 265, 266, 272, 273, 274, 275, 276 and 279 Bara Bazar, Shahdara, Delhi Shiv Shankar stated that he has purchased the house in the name of his wife for ₹ 13,000 in May 1969. It was also explained that the house was a single unit though it had different municipal numbers. In addition, his wife Shanti Devi claims to have also purchased hous property No. 291, Bara Thakur Dwara, Shahdara, Delhi for ₹ 6,000/- from her onw funds. During the course of proceedings before me n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dalali business has not been proved. Accordingly, the House bearing Nos. 265, 266, 272, 273, 274, 275, 276 and 279, Bara Bazar, Shahdara Delhi constitute an illegally acquired property within the meaning of Section 3(1)(iii)/(iv) of the SAFEMA and as such stands forfeited to the Central Govoernment free from encumbrances. 14. Regarding House propeprty No. 291, Bara Thakur Dwara, Shahdara, Delhi, the only explanation given by Shanti Devi and her husband is that, this house was purchased for ₹ 6,000/- on 22.10.1974 by diposing of silver ornaments and coins for a sum of ₹ 6151.82/-. Through he filed copies of sale vouchers and Dharam Kanta receipts but the source of acquisition of the ornaments has not been proved. Accordingly, this house also constitute illegally acquired property under Section 3(1)(iii) of the SAFEMA and stand forfeited to the Central Government free from encumbrances. 15. Shiv Shankar became a partner in the firm Shiv Trading Co., 1167, Kucha Mahajni, Chandni Chowk, Delhi with effect from 01.07.1974. He deposited a sum of ₹ 45,000 in this frim in the name of his wife Shanit Devi. In his letter dated 11.3.1975 addressed to the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 45,000/- in Shiv Trading Co., 1167, Kucha Mahajani, Chandni Chowk, Delhi in the name of his wife Shanti Devi along with interest payable. iii) Balance in National Bank of Lahore Ltd., (Now State Bank of India) as on 29.01.1977. iv) House No. 291, Bara Thakur Dwara, Shahdara, Delhi. 20. A copy of this order will i8ssue to Shanti Devi. Given under my hand and seal this 23rd day of March 1978. 7. Shiv Shankar preferred an appeal under Section 12 of the Act to the Appellate Tribunal constituted under the Act. The grounds of appeal included a complaint of violation of principles of natural justice and alleged denial of fair hearing. It was specifically contended that apart from the notice, the materials constituting reasons to believe that Shivshankar had engaged in illegal activities were never disclosed to him. It was further submitted that reasons, were not based on rationale or had no relevant bearing and in any case were extraneous for the purposes of the Act. It was also, inter alia, contended that in order to meet with the serious charge of illegal activity, entailing forfeiture of the property, the concerned person must know the case he has to meet and shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that there was nothing relevant including the allegations by the co-accused, justifying, the implication of Shiv Shankar; the charges were therefore set aside. 10. The above events transpired during pendency of the appeal before Tribunal constituted under the Act. During the pendency of those proceedings Shri Shiv Shankar and Smt. Shanti Devi died, they were succeeded to by the present petitioner who had moved an application for substitution. The impugned order proceeded to consider the materials available on the file of the competent authority. It also analysed the findings. Apparently the statement of 'reasons to believe' existing on the file though not disclosed to the petitioner, were available with the appellate authority. They were made known during the course of the hearing. 11. After setting out the facts the appellate tribunal concurred with a view that Shiv Shankar and Smt. Shanti Devi had not sufficiently explained the legitimacy of the acquisition of the properties in question. In view of that finding, it affirmed the order of the competent authority. It was also held as follows: 8. It may also be pointed out that the appellant's counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded by the authorities as the rationale for forfeiture, were different. In these circumstances, the petitioner ought to have been shown such reasons before the order was issued. 13. Learned senior Counsel contended that the properties in question were acquired long back and without any justifiable reason to link such acquisition with any illegal activity, provisions of the Act could not have been invoked. In failing to see this aspect the competent authority as well as the tribunal committed an error of law. In support of this submission learned Counsel relied upon a judgment reported as Chatar Singh Nagra v. Competent Authority 186 (1990) ITR 83. 14. Learned senior Counsel contended that late Shiv Shankar had been detained under provisions of COFEPOSA in 1977, during the internal emergency declared at that time. That action triggered the entire move to forfeit his properties. All the authorities proceeded to blindly invoke provisions of Act without applying their minds as to whether there were any justifiable reasons to believe that they were illegally acquired properties under Section 3(c) of the Act. Learned Counsel contended that due to Section 21 findings under other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. These materials were placed before it as part of the paper book of the appeal. Learned Counsel relied upon on the same and submitted that the appellate tribunal misdirected itself in not even attracting much less dealing with them. 17. It is contended by Ms. Barkha Babbar, placing reliance on the counter affidavit and the materials on record that the petitioner Shiv Shankar did not discharge the burden placed under Section 8. Learned Counsel relied upon the opinion of the Competent Authority and submitted that the nature of the business carried on by him did not require any capital investment. It was submitted that in this background, the re-opening of assessment on the basis of information by the Customs Preventive staff, that he was involved in gold smuggling and that dalali was only a smoke screening, was relevant. It was contended that the undoubtedly Appellate Assistant Commissioner set aside the re-assessment on the basis of the opinion by the Central Board of Central Excise; yet these were independently evaluated by the respondent authorities who concluded that Shiv Shankar had not discharged the onus under Section 8 or proved that the two properties were acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under Section 6 and constitutued 'reasons' which led the competent authority to believe that he acquired the assets illegally. That document, dated 29.6.1977 was disclosed for the first time to the Appellate Authority. After reciting the Income Tax return by Shiv Shankar of that year and the order of detention dated 7.1.1976, the competent authority noted as follows: 5. In a statement before the Income tax Inspector on 21.3.1977, Shiv Shankar stated that he has an ancestral house properpty No. 482, Bara Thakur Dwara, Shahdara, Delhi. The property as referred to above namely Nos. 265, 266, 272, 273, 274, 275, 276 and 279 is purchased in the name of his wife for ₹ 13,000/- in May, 1969. In addition, he also stated that his wife Shanti Devi pruchased house propeprty No. 291, Bara Thakur Dwara, Shahdara, Delhi for ₹ 6,000/- from her own funds. Shiv Shankar was not in a position to explain the source of initial investement in dalali business, if any. Further, the income from dalali business is not capable of verification from his income-tax record. Similarly there is no documentary evidence to prove the source of acquisition of the properties purchased by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandni Chowk, Delhi in the name of Shanti Devi. (iii) Bank account? National Ba nk of Lahore Ltd., Shahdara, Delhi. (iv) Shara in Shiv Trading Co. (v) LIP No. 6326274. 10. A copy of notice under Section 6(1) should also go to Shanit Devi being the present holder of the property and deposit of ₹ 45,000 in Shiv Trading Co. 22. The determination of the competent authority that the premises being house No Nos. 265, 266, 272, 273, 274, 275, 276 and 279, Bara Bazar, Shahdara Delhi were illegally acquired property, was on the basis of rejection of the petitioner's explanation that he had ₹ 13,000/- in May 1969 and the same was declared in his income tax returns. It concluded that the source of money for the purchase of house was attributed to savings from dalali business, for supporting which he had filed some certificates from the Bullion Merchants Association, Delhi and also from Pt. Ram Niwas Devendar Pershad, Saraf, Chandni Chowk, Delhi. They were rejected that as they did not give specific information about his income from brokerage or the transactions on which he erarned such brokerage. Shiv Shankar's income tax assessments were completed on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the need to ensure strict interpretation of the enactment, where penalties or sanctions are provided, in the following terms: The more stringent the law, the less is the discretion of the Court. Stringent laws are made for the purpose of achieving those objectives. This being the intentment of the legislature, the duty of the Court is to see that the intention of the legislature is not frustrated. If there is any doubt or ambiguity, the rule of purposive construction should be taken to recourse to, to achieve the objectives. Investigation under Section 18, therefore should ordinarily precede the issuance of notice under Section 6(1). 24. The reasons to believe before the issue of notice under Section 6(1) of the SAFEMA were recorded in the present cases by the Competent Authority on 29-6-1977. It recorded that the appellants were assessed to income-tax; yet the source of income of Shiv Shankar could not be established properly. It discounted the findings and assessments accepted about 6 years before the notice. There is no whisper that any enquiry or investigation under Section 18 of the Act preceded the notice, or that the Income-tax Department had enquired as to whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictly complied with, otherwise the order becomes illegal. 9. In our opinion, the facts of the case are covered by the decision of this Court in Fatima Mohd. Amin v. Union of India. In the present case the contents of the notice, even if taken on face value, do not disclose any sufficient reason warranting the impugned action against the appellant as, in our opinion, the condition precedent for exercising the power under the Act did not exist. Hence, the impugned orders cannot be sustained. 10. In the present case, in the notice dated 15-3-1988 issued to the appellant under Section 6(1) of the Act (copy of which is annexed as Annexure P-1 to this appeal), it has not been alleged therein that there is any such link or nexus between the property sought to be forfeited and the alleged illegally acquired money of the appellant. 27. In the present case, the notice issued to Shiv Shankar and his wife were mechanical reproductions of the ingredients of Section 6(1); no effort was made to link or show the nexus nexus between the property sought to be forfeited and the alleged illegally acquired money of Shiv Shankar and his wife. 28. When a subjective satisfaction is sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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