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TMI Blog2013 (9) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant in RFA(OS) 17/2010 (hereafter called the CIT ), in the form of seven Pay Orders. 2. The dispute in this case arose from interaction of three parties: the Revenue authorities (CIT), M/s. Bansal Commodities, Sh. Puranmal Bansal and Sh. Suresh Bansal (the latter two being partners of M/s. Bansal Commodities, respondents in both sets of appeals as well as original plaintiffs in the suit, collectively referred to as Bansal Commodities ), and Rakesh Kumar Agrawal, the fourth respondent in the CIT's appeal, and Appellant in RFA(OS) 92/2009, a defendant in the original suit. 3. The facts are that on 27.04.1989, the Income Tax Department conducted a search and seizure operation under Section 132 of the Income Tax Act at the residential and business premises of Sh. Rakesh Kumar Agrawal. As a result of this operation, seven Pay Orders dated 25.04.1989 for a total amount of ₹ 50.40 lakhs debited to the account of one Sh. Surinder Kumar, issued to one M/s Hindustan Copper Ltd. were discovered. Under Section 132(1), the Income Tax authorities issued an order of deemed seizure of the seven Pay Orders as against Surinder Kumar, (presenting the Pay Orders to the Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission passed an order under Section 245D(4) and held that the money represented by the seven Pay Orders belonged to Rakesh Kumar Agrawal. As far as W.P.(C) 3738/1994 was concerned, this Court disposed off the petition. The Court left the matter for adjudication by the civil Court, waiving the limitation period. 6. The relevant portion of the order dated 20.05.2004 is as under: XXXXXX XXXXXX XXXXXX After hearing the matter at some length, the counsel for the petitioner as well as the Revenue has fairly stated that the Court need not express any opinion on the merits of the case and the parties be relegated to the Civil Court to sort out their disputes. A request was also made that the amount which is lying with the Income Tax Department may not be released for a period of eight weeks. On behalf of the original assessed, it was contended that the writ petition should be dismissed. Since we are not expressing any opinion and we are relegating the petitioner to the Civil Court, in the subject matter before us, we dispose of this petition with a direction to the Revenue not to disburse the amount for a period of eight weeks. It goes without saying that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault), which was admitted on 18.01.2010 and when, operation of the order of the Learned Single Judge was stayed. 10. Though the litigation history has been described above, it is also important - at this stage - to mention the factual background of the underlying dispute, i.e. to whom does the money represented by the seven pay orders belong. 11. M/s. Bansal Commodities is a registered partnership firm in which Mr. Puranmal Bansal and Mr. Suresh Bansal are partners. It was involved in the business of trading non-ferrous alloys, a business Rakesh Kumar Agrawal was also involved in through various concerns (M/s. Popular Industries, M/s. Prominent Enterprises, M/s. Manoj Metal Industries and M/s. Jasoria Industries). Laying their claim to the amount represented by the seven pay orders, M/s. Bansal Commodities, in the words of the Learned Single Judge claimed as follows: 1.... that in or about January, 1989 the plaintiffs desired to purchase 58 metric tonnes of copper alloy and negotiations ensued with the defendant No.1 who agreed to sell the same to the plaintiffs for a total price of ₹ 49.03 lacs; that the plaintiffs at the asking of the defendant No.1 got issued pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the defendant No.1 save for the aspect of limitation. This court while considering the application of the defendant No.1 for setting aside of the ex parte had also as aforesaid on September, 2008 examined the defendant No. 1. From the said examination also, the liability of the Defendant No. 1 for the money claimed is established. On the question of limitation, the Learned Single Judge - after a thorough examination of the history of the case and rulings of the Supreme Court - concluded that M/s. Bansal Commodities' claim to the money in question was not barred by time. Appellants' contentions 14. In the present proceedings, the CIT, as well as Rakesh Kumar Agrawal question the impugned Order on two grounds: that the suit is barred by Section 293 of the Income Tax Act and in the alternative, dispute Rakesh Kumar Agarwal's liability and the version of the facts presents by M/s. Bansal Commodities, on various grounds, i.e. unexplained relationship with Mr. Kumar, failure to present any documentary evidence of an agreement between M/s. Bansal Commodities and Rakesh Kumar Agrawal as to the sale of copper etc., allegations of collusion between the two parties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly dealt with by the revenue (income tax authorities) and adjusted against the liabilities of Rakesh Kumar Agrawal. In these circumstances, the Court's decree amounted to varying the order of the CIT, contrary to Section 293. Counsel for the appellants relied on the judgment of the Supreme Court reported as CIT v. Parmeshwari Devi Sultania [1998] 230 ITR 745 in support of the argument about the Court's lack of jurisdiction to deal with the subject matter. Contentions of the Respondent M/s. Bansal Commodities 18. It is argued by the plaintiff, M/s. Bansal Commodities that the appellants are estopped from objecting to the jurisdiction of the civil Court. Heavy reliance is placed on the order dated 20.05.2004 of this Court, in W.P.(C) 3738/1994, where the revenue (CIT's) consent to the trial of disputed facts, by the civil Court, was recorded. It was submitted that having acquiesced to the Civil Court's jurisdiction, there can be now no objection by the appellant in that regard. 19. The respondents argue that the unrebutted materials on the record of the suit, i.e. the testimony of witnesses of the plaintiffs who proved various documents, viz. (Ex- PW1/47, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that even if the jurisdiction of the civil court is excluded, where the provisions of the statute have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure, the civil courts have jurisdiction to examine those cases : Secretary of State for India v. Mask Company(1966 (1) SCR 64). Counsel for the respondents urged that the case of the respondents fall within that exception, since the Sales-tax Officer in imposing tax-liability acted in defiance of the mandatory provisions of the Act and in support of the argument he placed reliance upon r. 7 of the Rules framed under the Act and the definition of turnover under the Act. Under the Act sales-tax is charged for the year at the prescribed rates on the total turnover of the dealer.... Analysis and Findings 22. As noticed, the facts are that duly authorized Income Tax Officers carried out search and seizure operations at the residential and business premises of M/s. Bansal Commodities on 27th April, 1989. During these, seven Pay Orders for ₹ 50.40 lakhs, prepared from the accounts on 26th April, 1989 were found. The Income Tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Kumar Agrawal to M/s. Bansal Commodities - is barred. There can be no dispute that the question of liability itself, as a matter of a contractual agreement between the parties, is a matter properly reserved for the jurisdiction of the civil court. The question, here, however, does not concern the private remedies that lie between the two parties in this case, but whether, the ownership of the seven pay orders - seized by the income tax authorities under Section 132 - can be subject matter of the present suit. 25. This very question was considered by the Supreme Court in Parmeshwari Devi Sultania (supra). The issue which the Court was concerned with was partition of certain gold ornaments that had been the subject of search and seizure under Section 132. In deciding that the suit - in so far as it concerned the ownership of the gold ornaments - was barred, the Court noted at paragraph 9 as follows: 9.... It (the High Court) failed to consider the effect of the decree if passed in the suit on the order under Section 132(5) of the Act or other proceedings under Section 132B of the Act. When Section 293 originally stood, it (sic) provided that no suit shall be brought in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax authorities for recovery of a certain amount as for financial loss the plaintiff had suffered as a result of loss of interest on the maturity value of the financial assets seized. In that proceeding, the Single Judge Court dismissed the suit given the provisions of Section 293, and on appeal, the Court noted that where a specific remedy is available under Section 132 (in that case the remedy lay in the provisions on payment of interest under Section 132B), the jurisdiction of the Civil Court remains barred. In this case, M/s. Bansal Commodities clearly had recourse to Section 132(11), which they took advantage of, though ultimately their view was rejected by the Income Tax authorities in accordance with the statutory discretion vested in it. Thus, Section 293 clearly comes into operation in this case. This Court further notices that in Union of India v. Natwerlal M. Badiani [2001] 250 ITR 641 (Guj.), a Full Bench of the Gujarat High Court, in the context of the submission regarding a ban of suits in civil Courts under Section 293 of the Income-tax Act, 1961, held that:- 22. In the case at hand, Civil Suits have been filed and entertained against the public officers while t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against the tax dues of Mr. Kumar - cannot stand together. With proceedings under Section 132 having been initiated in 1989 and having attained finality in terms of the procedure within that provision being complied with, Section 293 mandates that the jurisdiction of the civil court with respect to the present suit is barred. 29. As far as the question of applicability of Section 14 of the Limitation Act is concerned, this Court is of opinion that the issue had to be decided in favour of M/s. Bansal Commodities, the plaintiff. There is sufficient material on the record disclosing that the said plaintiff had been pursuing its remedies under the Income Tax Act diligently, because its applications before the CIT were considered on the merit; it felt aggrieved, and had to approach this Court twice, under Article 226 of the Constitution of India. It was in those proceedings, that on 20.05.2004, that the Division Bench recorded that the proper forum to agitate disputed questions about the ownership of the seven pay orders would be the Civil Court. There has indeed been no lack of bona fides on the part of the respondent in filing the suit, after the said order. In these circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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