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TMI Blog1989 (5) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Indian Steamship Company. After attending the same, the petitioner, however, proceeded to the United Kingdom on home leave and in August 1973, the petitioner tendered resignation from the service of the Indian Steamship Company. On 21-9-1973 the petitioner's resignation was accepted by the Board of the Indian Steamship Company effective from 1-10-1973. Certain correspondence thereafter were exchanged between the petitioner and his banker in regard to the remittance of the retiral benefits. On 27-12-1974 the company sought the income-tax clearance for the petitioner from the Commissioner. On 26-3-1975 Indian Steamship Company made a written request to the RBI for permission to remit the petitioner's provident fund, gratuity and leave salary totalling ₹ 3,19,564.71 in full and final settlement of his dues from the company. All necessary forms were sent along with the letter was required under the law. But by reason of a prior intimation by the Enforcement Directorate in regard to a pending proceeding under the Foreign Exchange Regulation Act, the RBI on 11-4-1975 wrote to the company or certain information and documents including the up-to-date tax clearance certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permission to remit the retiral dues to the petitioner. 4. On 16-5-1977 the RBI by reason of the letter from the Indian Steamship Company wrote to the Enforcement Directorate as to whether application for transfer of retiral benefits can be granted in favour of the petitioner. Subsequently, however, by a letter dated 15-7-1977, the Enforcement Directorate recorded the 'No objection' as regards transfer of retiral benefits to the petitioner, if the petitioner was otherwise eligible. However, on 1-9-1977 Enforcement Directorate further informed the RBI to the effect that since certain other enquiries are still pending, clearance to transmit the retiral benefits to the petitioner ought not to be allowed and on 20-9-1977, the RBI informed the company, about its inability to consider the matter for the present, as further information was yet to be received from the Enforcement Directorate, reminder from the petitioner as well as the company has led to a letter dated 1-2-1978 from Enforcement Directorate to the RBI, wherein it has been stated the matter is receiving attention, correspondence proceeded thereafter from the petitioner to the Ministry of Finance, Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income. The Tribunal categorically held that it was not possible to conclude on the basis of the unsigned certificate that payments had been made to the petitioner. As a matter of fact, Indian Steamship Company has been completely exonerated. The Directorate of Enforcement, however, filed a petition on 29-9-1980 for review of the order dated 22-4-1977. The petition for review, however, was subsequently dismissed on 30-9-1982. On 8-1-1981 the CBDT informed that the Commissioner, West Bengal, has no objection for release of the petitioner's dues against a guarantee. Subsequently, however, the entire money was transmitted to the petitioner upon a bank guarantee being furnished by the petitioner for the entire sum and thereafter the writ petition was moved before this Court. 5. Mr. Ginwalla appearing for the petitioner based his submissions on three counts: (a)There exists collusion and conspiracy between the Enforcement Directorate, RBI and the Income-tax Authorities and the issuance of notice is wholly mala fide, arbitrary and contrary to all recognised principles of law; (b)The issuance of the notice under sections 147 and 148 of the Income-tax Act are wholl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier view that section 34(1) makes it incumbent upon the ITO to give a notice in writing to the assessee. This Court observed: A notice under section 34 cannot be issued mechanically or as a matter of routine, for it seeks, inter alia, to disturb the assessment already made and finalised. Hence it imposes upon the Income-tax Officer to apply his mind to the matter before seeking to unsettle the matter to the detriment of the assessee... The signature along with the seal below the notice, or may be without it, would be a guarantee beyond doubt that the Income-tax Officer had exercised his mind over the points mentioned in section 34(1). If the notice does not bear his signature, it may be that it was issued from his office by mistake or it may be that he had not applied his mind to the points involved under section 34. Therefore, in my opinion; on a consideration of the second part of section 63(1)read with Order5, rules 1 and 10, the signature on a notice is not only necessary but an integral part of the notice. ****** In the present case there was more than a mere irregularity or a clerical mistake for, in my view, a notice without the signature lacks an essential a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in 53 ITR 100 . As the Income-tax Officer had issued notice within limitations, the appeal is allowed and the order of the High Court is vacated. The Income-tax Officer shall now proceed to complete the assessment after complying with the requirements of law. Since there has been no appearance on behalf of the respondents, we make no orders for costs. (p. 1379) 9. Let us now, however, consider as to whether service of the notice was in fact affected on the factual backdrop as above. There is no dispute that a copy notice was sent to the employer and the original notice was sent to the petitioner as appears from the counter-affidavit of the Income-tax Department at his last known address at London, viz., 47, Park Street, 49, Kings Bridge, London WI but the same was returned 'unserved'. The address itself as stated in the counter-affidavit, however, seem to have been given in a fashion in which no communication can ever be served and with that address nothing better can be expected. The Indian Steamship Company, however, received the notice and did send a photostat copy thereof t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns and on the basis of which the petitioner was duly assessed. Certain proceedings were initiated both against the company as well as the petitioner - by the Enforcement Directorate under the Foreign Exchange Regulation Act for an alleged contravention of section 10(1)(b) show-cause notices were issued, a hearing was given to the parties and the final order, however, was passed on 11-1-1977 under which the proceedings were dropped against the company is also its directors and executive officers. 12. It is to be noted, however, that after about three and half years, the respondent filed an application for review of the order in September 1980 before the Foreign Exchange Regulation Appellate Board which, however, by an order dated 30-10-1982 dismissed the application for review and while dismissing the Chairman of the CBDT noted the following : I am satisfied that the order of the Adjudicating Officer does not suffer from any infirmity, legal or factual, so as to call for interference under section 54(4) of the 1973 Act. In the result, the application is dismissed. 13. At this juncture, however, two letters dated 25-10-1978, one from the Enforcement Directorate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct reasonably and fairly in dealing with the individuals. Fairness is no longer a mere conceptual idea but now a well settled principle of law and without which the action is to be declared invalid and void. The Supreme Court of New South Wales in the case of Asmand v. Public Service Board of New South Wales [1985] LR (Commonwealth) 1041, after noticing the American and English laws as also the development of the doctrine of Natural Justice in the other Commonwealth countries including India observed: There has been a growing body or precedents and other support for the desirability of and sometime the obligations upon the Public Administrative Tribunal at least to state reasons for their decisions affecting seriously the interest of the person seeking those reasons. Sometimes this is expressed to be based on the requirements of natural justice and fairness some time it is articulated in terms of inherent necessities of the proper operation of judicial process . 16. The general duty of fairness as regards the administrative actions as a guiding principle has also been recognised by Maggarry, J. in the case of Bates v. Lord Hailsham [1972] (1) All ER 1201. The observations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip Company. This income of the assessee was not declared in the income-tax return of the assessee for the year concerned and I have reason to believe that by reason of the commission of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year the income chargeable to tax has escaped assessment. 19. The above-noted reasons for escapement in effect, therefore, records that there was a clandestine payment by Indian Steamship Company to the petitioner. Incidentally it is to be noted that the same reasons were given for all the subsequent years. The findings of the Tribunal in the appeal of the Indian Steamship Company being Appeal Nos. 1779 and 1780 of 1979 (Assessment years 1970-71 and 1971 -72) reveal that the Indian Steamship Company has been totally exonerated from any clandestine payment to the petitioner or any other officer. Though the order of the Tribunal is subsequent to the issuance of the notice, but a fact which ought to be taken note of while dealing with the matter in issue. 20. The events, if we co-relate the same, are, therefore, appears to be as follows: Petitioner retired from services - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiation of further proceedings against the petitioner under the Act after the disposal of the proceedings by the Enforcement Directorate cannot be said to be in consonance with law, justice and equity. The factum of the Tribunal's finding in the matter of quashing the proceedings against the company also lend support to the view as above. The request of the ITO to the RBI to withhold sanction for remittance of the retiral benefit on the ground of various proceedings, being pending does not have any factual support. On the date of such a request admittedly there was no proceeding is it fair on the part of a governmental authority to issue such a notice on incorrect factual basis - the attempts seem to stop the remittance at any cost. This attitude does not seem in consonance with law, justice and equity. A governmental agency cannot take recourse to an incorrect factual support in passing an order. The formal order of attachment as envisaged in the letter of the ITO did not see the light of the day as yet obviously it could not see the light of the day because the letter of law does not authorise the issuance of an order of attachment without having a proceeding pending and sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n investigation and if the investigation results no culpability, the officer concerned has nothing else to do excepting recording its reasons and to pass such an order as would be fit and proper under the circumstances. But that does not clothe the officer to send an information to another agency so as to create further harassment. This information by itself negates fairness which is the basic requirement of the Foreign Exchange Regulation Act. No Court of law ought to cause any hindrance for any investigation which is reasonable and in consonance with the provisions of the statute. But the Courts of Law ought not to permit any harassive attitude in the garb of discharge of statutory function. In this case it has turned out to be nothing but harassive - as if there is a 'spite' or 'ill-will' against the petitioner more so by reason of the existence of a clearance certificate as also termination of proceedings against the company and its officers on the self-same set of facts. Officers empowered under the Act, in my view, ought not to act with such an attitude, but as the law enjoins be fair, reasonable and to act within the four corners of the statute on this score. ..... 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