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TMI Blog2019 (4) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... dies and entertaining the writ petition directly aimed at the order of assessment. Additionally, the Petitioner's challenge to the order of assessment would necessarily have the element of challenge on merits. This would be in addition to the Petitioner's contention regarding invalid service of notices. Any challenge to the order of assessment on merits should be ordinarily allowed to be examined by the Commissioner Appeals in whom statutory appellate powers have been vested under the Act. Lastly, the Petitioner has not even formally challenged the assessment orders. The Petitioner has filed the Petition straight away contending that it did not have copies of assessment orders, neither the order dated 07/03/2019. Therefore it had asked the department to produce copies of such orders, which along with affidavit-in-reply, have been filed. The Petitioner has not sought any amendment to the Petition bringing formal challenge to such assessment orders. This is a purely technical ground and is mentioned only for the purpose of bringing the correct stage of the pleadings on record. Otherwise, this is not a prime ground on which we propose to relegate the Petitioner to appellate rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by the Assessing Officer in December 2018 as also the Tax Recovery notices dated 05/02/2019 and 20/02/2019 seeking to recover the tax arising out of the orders of assessment through sale of certain properties of the Petitioner. 2. We may record the brief facts at the outset. Case of the Petitioner company is that, the company had two Directors namely one Mr.Hemant D. Bhatt and Mr.Ramesh M. Assar. Investigation has been initiated against the company. The Registered office and the premises of the company have been sealed. Director Mr.Hemant Bhatt has been taken in judicial custody. According to Petitioner, Mr.Ramesh Assar resigned from the position of the Director effective from 05/09/2018. Under such circumstances the point of dispute between the Petitioner and the Respondents is with respect to service of notices of assessment as well as for recovery of taxes through auction sale. The Petitioner contends that there was no proper service of notices on the company. One of the Directors being in judicial custody, the Department could not have relied upon either dispatch of notice to the address of the company, which admittedly had returned unserved or on affixation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before such date. 4. We are informed that the auction was conducted on 26/03/2019. Any further steps in furtherance of such auction proceedings, shall be subject to the outcome of this petition. The Respondents, in the reply, would clarify the position of the ownership of the paintings and drawings put to auction. The respondents shall also produce copies of the assessment orders. 4. Consequently, today the Petition was taken up for further hearing by which time, the Respondents had filed a reply with advance copy to the Petitioner. Learned Counsel for the Petitioner argued the Petition extensively raising following contentions; (i) There was no valid service of notice of assessment. The orders of assessment therefore are invalid and nonest. In this context, Counsel for the Petitioner took us extensively to the provisions contained in Income Tax Act, 1961 (for short 'the Act'), Income Tax Rules, 1963 (for short 'the Rules') and the provisions of Civil Procedure Code (for short 'CPC'). On the basis of such provisions, the learned Counsel strenuously urged that the department had failed to demonstrate valid notice before completion of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal, since no Appeal was filed, the department initiated recovery proceedings. Here again, after service of notice to the Petitioner for recovery, properties in question were attached and thereafter put to sale through auction. He stated that auction was completed on 26/03/2019 as scheduled, during which all the paintings and artworks were sold for a total consideration of ₹ 54,84,25,000/. He submitted that proceedings under the Prevention of Money Laundering Act, 2002 (for short PMLA ) are pending before the competent Court. Permission of the said Court was obtained before carrying out the auction. In view of the pendency of the proceedings under the PMLA, the amount fetched through sale proceeds is kept in the escrow account to be adjusted upon completion of such proceedings. He submitted that the Petitioner has prima facie evidence to suggest that of paintings and artworks belong to the Petitioner. Except for a bare statement, the Petitioner has not produced any material to suggest that any of the paintings and artworks do not belong to the Petitioner. He submitted that the entire proceedings have been given wide publicity. From time to time, the public at large had opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks, papers, records of the Company have been seized by statutory authorities, and the premises of the Company have been sealed. 4. In the circumstances, the purported tax assessment proceedings and/or tax recovery notice dated 5th February 2019, bearing no.TRO/C3/ Recovery/201819/ TRC No.443 to 450, purporting to quantify tax arrears of the Company in the sum of ₹ 95,91,82,589, or steps for sale of assets in aid of tax recovery, are prima facie invalid, and liable to be declared otiose. 5. The Saffronart online art catalogue lists 68 artworks due for auction; overlooking that only 19 works from out of the 68 artworks belong to the company. These are set forth below: S.No. Painting Lot No. SAFFRONART (INR) Estimate 1. 2 18,00,000/- 2. 18 6,00,000/- 3. 29 3,00,000/- 4. 30 6,00,000/- 5. 33 7,00,000/- 6. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of ownership of paintings. No body has done so till the filing of this affidavit. The petitioner has not filed any evidence in support of its claim. It was found during the search action that 173 paintings and artworks were stored at M/s. Fine Art Warehousing and Logistics P. Ltd., B203, Antop Hill Warehousing Complex, Wadala East, Mumbai 400037. As per documents available at the warehouse the paintings had been received from M/s. Camelot Enterprises P. Ltd. (ExhibitA1). Further, statement of the Director of the warehouse, Sh. Dadiba Pundole, was recorded on 05.03.2018 (ExhibitB1) who stated in response to Q.Nos.13, 14 and 15 that his company M/s. Fine Art Warehousing and Logistics P. Ltd. has billed only to M/s. Camelot Enterprises P. Ltd. for storage of artwork paintings and also stated that his company has never kept any other artwork and paintings of Shri Nirav Modi and his entities other than M/s. Camelot Enterprises P. Ltd. Copy of the bill for charges for storing paintings dated 26.10.2017 raised by the warehouse on M/s. Camelot Enterprises P. Ltd. (ExhibitB2). The aforementioned facts show that the Petitioner is the owner of all the paintings put up for au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 153A of the Act, one under section 153C and one under section 144 of the Act. The documents also include the statements recorded by the departmental authorities referred to in the earlier portion. The Respondents have also produced a letter dated 25/03/2019 written by the Tax Recovery Officer to India Law Alliance, representative of the Petitioner conveying that he had received a letter dated 23/03/2019 on 25/03/2019, since 23/03/2019 was not a working day. He stated that the letter was not accompanied by any authority from the assessee. Hence no cognizance of such letter had been taken. 8. The prayers of the Petitioner are in two parts. First is with respect to assessment orders which are challenged in this petition. Primary ground for challenge according to Petitioner, is invalid service of notices. The second part of the Petitioner's challenge is to the auction proceedings. This challenge rests on the ground of illegal assessment orders giving rise to tax demand, which is sought to be recovered and that the paintings and artworks, which are put for auction sale, did not belong to the Petitioner. This challenge also as an element of service of attachments and auction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery for the assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the Assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In Ram and Shyam Co. v. State of Haryana (1985) 3 SCC 267 this Court has noticed that if an appeal is from Caesar to Caesar's wife the existence of alternative remedy would be a mirage and an exercise in futility. In the instant case, neither has the Assesseewrit Petitioner described the available alternate remedy under the Act as ineffectual and nonefficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in the facts of instant case. 21. In light of the same, we are of the considered opinion that the Writ Court ought not to have entertained the Wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd artworks, the peculiar facts are that the department has prima facie material of the Petitioner's ownership. Department has produced documents showing that such paintings and artworks were stored by the Petitioner at the warehouse. The statements of representatives of the warehouse have been recorded suggesting that the paintings and artworks are stored by the Petitioner, that the Petitioner is paying the bills for the same. As against this, the Petitioner has not produced even prima facie evidence suggesting that its ownership is limited only to 19 of these paintings. Counsel for the Petitioner has stated that because of inadequate excess to records, the Petitioner was prevented from bringing any such material on record. In this context, we may refer to the communication dated 23/03/2019, in which Petitioner had conveyed through its legal representative details of 19 paintings and artworks, which according to the Petitioner belong to the Petitioner and that the rest do not. This list contains precise details of each painting. When the Petitioner was therefore able to supply such details with respect to 19 of these paintings, we wonder why the Petitioner could not provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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