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TMI Blog2022 (9) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... formality with no substantial relief. In the present case, neither have the Petitioners described the available alternate remedy under the Act of 2015 as ineffectual and non-efficacious while invoking the Writ jurisdiction of this Court nor have they ascribed cogent and satisfactory reasons before the Court so as to enable it to exercise jurisdiction under Article 226 of the Constitution in tune with the facts and circumstances of the case. All the contentions of the Petitioners, as raised in these Petitions, including the issue of jurisdiction, applicability or otherwise of the act, can very conveniently be dealt with by the Appellate Authority in tune with the mandate of Sections 15 and 17 of the Act of 2015. Reference, in this behalf, can be had to the law laid down by the Hon ble Apex Court in case titled Commissioner of Income Tax Ors. v. Chhabil Dass Agarwal reported as [ 2013 (8) TMI 458 - SUPREME COURT] , as cited by the learned Counsel representing the Respondent Nos. 2 and 3. We declare that these Writ Petitions are not maintainable before this Court in view of the efficacious and statutory remedy of appeal being available to the Petitioners in terms of the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of July, 2018 issued by the Respondents under Section 10 (1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (for short the Act of 2015 ) as also show cause notices dated 18th of March, 2021. Thereafter, by medium of Writ Petitions bearing WP (C) Nos. 802/2021; 803/2021 and 806/2021, the Petitioners have challenged the penalty notices dated 29th of March, 2021, assessment orders dated 31st of March, 2021 and demand notices dated 31st of March, 2021. iii. Genesis of the present litigation: 03. One Abdul Rashid Mir had three children, namely, Late Mujeeb Mir; Late Sabeha Mir; and Tabasum Mir. Late Mujeeb Mir is stated to have been a citizen of India who, however, primarily lived outside India since his childhood and his primary place of residence was at Bangkok, Thailand. The said Mujeeb Mir is claimed to be a Non-Resident Indian for the purpose of Income Tax Act, 1961 (hereinafter referred to as the Act of 1961 ) since 1990. On 22nd of March, 2002, without the knowledge to the Petitioners, the said Late Mujeeb Mir issued letter of instructions to M/s Trumax Nominees Limited for establishment of trust to be called the Mondale I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter of one of the Petitioners and referred to Master Circular No. 01/2009-10 which, inter alia, provided that a general permission has been granted to resident of India to hold foreign securities and to acquire shares by way of inheritance from a person resident out of India. On 28th of January, 2011, the balance lying with the foreign bank account (1/3rd share) was declared in the Wealth Tax Return for the Accounting Year (AY) 2010-11 and Accounting Year (AY) 2011-12 of the Petitioners. On 4th of July, 2011, Rs. 5,92,64,869/, being 1/3rd share of each of the Petitioner, was remitted from the bank account of Mondale SA to India. On 6th of July, 2011, the Jammu and Kashmir Bank Limited issued certificate of Foreign Inward Remittance specifying the remittance of money on account of the dissolution of the trust and 1/3rd of inheritance. In April, 2016, the Panama Paper Leaks Article was published in Indian Express newspaper giving names of various individuals reportedly having foreign assets. Thereafter, income tax proceedings under Section 131 (1-A) of the Act of 1961 initiated against the Petitioners seeking details of foreign assets. Information as called for was provided by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notices dated 18th of March, 2021. On 29th of March, 2021, this Court passed order directing the Respondents to go ahead with the assessment, but not to proceed with prosecution and penalty proceedings. On 29th of March, 2021, the Petitioners received three notices each dated 29th of March, 2021 under Section 46 read with Sections 41, 42 and 43 of the Act of 2015, respectively, for imposition for penalty. On 31st of March, 2021, vide the assessment Orders dated 31st of March, 2021, the Petitioners were assessed to tax under Section 10 of the Act of 2015 and the total value of undisclosed foreign assets was determined and total tax, accordingly, computed to be paid on account of said undisclosed foreign assets. On 31st of March, 2021, demand notice dated 31st of March, 2021 was issued directing the Petitioners to pay the tax determined within a period of 30 days. Thereafter, penalty notices dated 29th of March, 2021, the assessment orders dated 31st of March, 2021 and demand notices dated 31st of March, 2021 were challenged by the Petitioners through WP (C) Nos. 802/2021; 803/2021 and 806/2021. iv. Details of the Writ Petitions: 04. In WP (C) No. 594/2021, the Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued under Section 10 nor a notice under any other provisions of the Act and, as such, is without jurisdiction. The Petitioner cannot be prosecuted and saddled with penalties without there being the assessment order passed under Section 10. 06. In WP (C) No. 597/2021, the Petitioners, Abdul Rashid Mir Ors., contend that their predecessor-in-interest- Ms. Sabeha Mir, is a beneficiary of a Trust which was created and established abroad. The Petitioners brought benefit/money of their share in the country upon permission granted by the Reserve Bank of India. In the meantime, the Act of 2015 has been enforced with effect from 1st of April 2015 or 1st of July 2015. In view of the said Act, a notice under Section 10(1) and thereafter under Section 10(2) were issued requiring certain information from the predecessor-in-interest of the Petitioners. The said notice was duly replied by the Petitioners, but till date, no order of assessment as contemplated under Section 10 has been passed against the predecessor- in-interest of the Petitioners or the Petitioners. At the same time, a further show cause notice dated 18th of March 2021 has been issued requiring the Petitioners to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated, the shareholding of the trust was transferred equally in favour of the beneficiaries concerned, including the sister of the Petitioner. Thereafter, the sister of the Petitioner, namely, Sabeha Mir, brought the fact of creation of the Trust by her brother, Late Mujeeb Mir, into the notice of the Reserve Bank of India, thereby apprising it about the inheritance on account of demise of her brother and sought permission under Section 6(5) of the Foreign Exchange Management Act, 1999 to hold securities in a foreign company and consequent beneficial interest in a foreign bank account owned by the said foreign company. The Petitioner has proceeded to state that, thereafter, in the year 2015, the Parliament, promulgated the Act of 2015, which came into force on 1st of April, 2016. The said Act is claimed to have been enacted to address the mischief of such undisclosed assets and undisclosed foreign income and assets located outside India that were acquired using income that, even though chargeable to Tax under the Income Tax Act, was not so offered to tax in India, but was illegally routed out of India and was used in creation of said undisclosed assets. Besides, the Act is also stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of creation of the Trust by her brother, Late Mujeeb Mir, into the notice of the Reserve Bank of India, thereby apprising it about the inheritance on account of demise of her brother and sought permission under Section 6(5) of the Foreign Exchange Management Act, 1999 to hold securities in a foreign company and consequent beneficial interest in a foreign bank account owned by the said foreign company. The Petitioner has proceeded to state that, thereafter, in the year 2015, the Parliament, promulgated the Act of 2015, which came into force on 1st of April, 2016. The said Act is claimed to have been enacted to address the mischief of such undisclosed assets and undisclosed foreign income and assets located outside India that were acquired using income that, even though chargeable to Tax under the Income Tax Act, was not so offered to tax in India, but was illegally routed out of India and was used in creation of said undisclosed assets. Besides, the Act is also stated to have provided for penalty and prosecution in relation to the said undisclosed foreign assets and income and a window of opportunity to residents who held undisclosed foreign assets abroad to declare the same with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht permission under Section 6(5) of the Foreign Exchange Management Act, 1999 to hold securities in a foreign company and consequent beneficial interest in a foreign bank account owned by the said foreign company. The petitioner has proceeded to state that, thereafter, in the year 2015, the Parliament, promulgated the Act of 2015, which came into force on 1st of April, 2016. The said Act is claimed to have been enacted to address the mischief of such undisclosed assets and undisclosed foreign income and assets located outside India that were acquired using income that, even though chargeable to Tax under the Income Tax Act, was not so offered to tax in India, but was illegally routed out of India and was used in creation of said undisclosed assets. Besides, the Act is also stated to have provided for penalty and prosecution in relation to the said undisclosed foreign assets and income and a window of opportunity to residents who held undisclosed foreign assets abroad to declare the same with the authorities in India so as to prevent them from any penalties and prosecutions under the Act. In order to clarify the scope, application, mechanism and intendment of the Act, the Ministry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners became beneficiaries in year 2002 which fact was unknown to the Petitioners till the year 2007 and it is only in the year 2010 that the Petitioners became owner and, accordingly, they brought back the bank account to India on 6th of July, 2011, whereafter they included it in the wealth tax return for the relevant year, as such, the asset does not, in any way, come within the tentacles of the Act of 2015. 16. It is averred that the Statute cannot be applied in an absurd manner with respect to an inheritance when the same only applies to a foreign undisclosed asset and not on inheritance. The action of the Respondents is hit by Article 20 because the Respondents cannot impose penalty upon the Petitioners for something which was not the law on the said date. 17. It is submitted that there is no scope for the Respondent-assessing authority to issue the impugned order of assessment without taking into consideration the Objections so submitted before it by the Petitioners qua the issue of jurisdiction. 18. It is further submitted that there are no foreign assets existing out of which the income has been derived in India and not disclosed to the concerned authorities, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against the Petitioners. It is further submitted that although the Petitioners had full knowledge of being the beneficial owners of the assets of the Trust from the financial year 2006-07, but they did not disclose it in front of any income Tax authority. It is also submitted that the Petitioners have not even provided any details regarding the source of funds in the Mondale SA and the Trust. Mr Areeb further pleaded that the Petitioners, being the beneficiaries of the Trust and having received huge amount from the Trust, had not declared the same in their Income Tax Returns, as such, it was held in the assessment order that the case is fully covered under the Act of 2015 and that the Petitioners, having beneficial interest, was brought to tax under the provisions of the Act of 2015. It is also averred that it was only in pursuance of the directions passed by this Court in terms of Order dated 29th of March, 2021 in the earlier Writ Petition filed by the Petitioner bearing WP (C) No. 594 of 2021 that the answering Respondent completed the assessment proceedings and passed the assessment order on 31st of March, 2021. It is also the case of the Respondent Nos. 2 to 3 that during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the Petitioners did not comply with the mandate of Section 59 of the Act, so they cannot claim exemption under Section 72 of the Act of 2015. It is contended that as the Petitioners did not file the ITR with regard to the income subject matter of assessment, therefore, the Act of 2015 clearly applied to their case. 25. In rebuttal, Mr Chidambaram, the learned Senior Counsel, with great eloquence, argued that the basic facts pleaded in the Writ Petitions have not been denied by the Respondents. It is submitted that there is no allegation or finding in the impugned show cause notice or in the assessment order dated 31st of March, 2021 that the purported undisclosed foreign asset was acquired from income chargeable to tax under the Income Tax Act, 1961 and that there is no denial of the fact that Mr Mujeeb Mir was always a Non-Resident Indian and had income outside India not liable to tax under the Act of 1961 and had acquired the foreign asset out of such income. It is reiterated that as the foreign asset was acquired out of income not taxable in India, as such the Act of 2015 will not apply, thereby rendering the entire proceedings initiated against the Petitioners without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is manifestly absurd. It is also urged that the Petitioners have repeatedly explained the source of the money out of which the shares and the bank account were acquired by Mr Mujeeb Mir, namely, the income earned by the Non-Resident Mr Mujeeb Mir which was not taxable in India. Since, the Petitioners have no knowledge of the business of Mr Mujeeb Mir or the fact that he had acquired shares and a bank account, the Petitioners stated that the source of the alleged undisclosed foreign asset was the income earned by Mr Mujeeb Mir when he was a Non- Resident. However, at internal Page 33 of the impugned assessment order dated 31st of March, 2021, the Respondent No.3 has said that the Petitioners have not explained the source of the source. This is contrary to the settled law. When a person is called upon to explain the source of funds, he is not obliged to explain the source of the source of the funds. 26. We have heard the learned appearing Counsel for the parties, perused the pleadings on record and have considered the matter. vi. Discussion and Analysis: 27. Before going into the merits of the case, it shall be advantageous to have a glance at the genesis of the Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide for imposition of tax on any undisclosed foreign income and asset held outside India and for matters connected therewith or incidental thereto. This Act was enacted on 26th of May, 2015 and was ordained to come into force on the 1st day of July, 2015. 28. Having gone through the definition and the object of the Act of 2015, the first and foremost issue that is required to be considered by this Court relates to the preliminary objection raised by the Counsel for the Respondent Nos. 2 and 3 vis- -vis the maintainability of the instant Petitions before this Court in view of the alternate/ statutory remedy of appeal being available to the Petitioners before the Commissioner (Appeals) in terms of Section 15 of the Act of 2015 itself. 29. Learned Counsel for Respondent Nos. 2 and 3 has laid much emphasis on the fact that the Writ Petitions are not maintainable before this Court on the ground that the Petitioners were having the statutory remedy of appeal before the Commissioner (Appeals) in terms of Section 15 of the Act of 2015. In view of this preliminary objection with reference to the maintainability of these Writ Petitions against the proceedings initiated by the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 246. Appealable orders - (1) Subject to the provisions of sub-section (2), any assessee aggrieved by any of the following orders of an Assessing Officer other than the Joint Commissioner may appeal to the Deputy Commissioner (Appeals) before the 1st day of June, 2000 against such order (a) an order against the assessee, where the assessee denies his liability to be assessed under this Act, or an intimation under sub-section (1) or sub- section (IB) of section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, where the assesse objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed; (b) an order of assessment, reassessment or Re-computation under section 147 or section 150; (c) an order under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assesssee under either of the said sections; (d) an order made under section 163 treating the assessee as the agent of a non-resident; (e) an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed; (ab)an order of assessment or reassessment under section 115WG; (b) an order of assessment, reassessment or re-computation under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel or an order referred to in sub- section (12) of section 144BA or section 150; (ba) an order of assessment or reassessment under section 153A except an order passed in pursuance of directions of the Dispute Resolution Panel or an order referred to in sub-section (12) of section 144BA; (bb)an order of assessment or reassessment under subsection (3) of section 92CD; (c) an order made under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections except of an order referred to in sub- section (12) of section 144BA; (d) an order made under section 163 treating the assessee as the agent of a non-resident; (e) an order made under sub-section (2) or sub-section (3) of section 170; (f) an order made under section 171; (g) an order made under clause (b) of sub-section (1) or under sub-section (2) or sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsection for Deputy Commissioner and Deputy Director shall be substituted by Joint Commissioner and Joint Director respectively. 11. We may now consider kinds of orders or situations that are referred to in Section 246(1)(a) of the Act, which are: - (i) An order against the assessee, where the assessee denies his liability to be assessed under this Act, or (ii) An intimation under sub-section (1) or sub-section (1B) of Section 143 where the assessee objects to the making of adjustments, or (iii) Any order of assessment under sub-section (3) of Section 143 or Section 144, where the assessee objects:- to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed. The contingencies detailed in (ii) and (iii) hereinabove arise out of assessment proceedings under Section 143 or Section 144 of the Act but the first contingency is a standalone postulate and is not dependant purely on the assessment proceedings either under Section 143 or Section 144 of the Act. The expression denies his liability to be assessed as held by this Court in Kanpur Coal Syndicate1 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Article 226. 12. The Constitution Benches of this Court in K.S. Rashid and Son v. Income Tax Investigation Commission7, Sangram Singh v. Election Tribunal8, Union of India v. T.R. Varma9, State of U.P. v. Mohd. Nooh3 and K.S. Venkataraman and Co. (P) Ltd. v. State of Madras10 have held that though Article 226 confers very wide powers in the matter of issuing writs on the High Court, the remedy of writ is absolutely discretionary in character. If the High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of the principles of natural justice or the procedure required for decision has not been adopted. 15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Samiti and others, MANU/SC/7603/2008: (2008) 12 SCC 675, this Court dealt with an issue whether after admission, the Writ Petition could not be dismissed on the ground of alternate remedy. The submission was considered by this Court as under: 38. With respect to the learned Judge, it is neither the legal position nor such a proposition has been laid down in Suresh Chandra Tewari that once a petition is admitted, it cannot be dismissed on the ground of alternative remedy. It is no doubt correct that in the headnote of All India Reporter (p. 331), it is stated that petition cannot be rejected on the ground of availability of alternative remedy of filing appeal . But it has not been so held in the actual decision of the Court. The relevant para 2 of the decision reads thus: (Suresh Chandra Tewari case, AIR p. 331) 2. At the time of hearing of this petition a threshold question, as to its maintainability was raised on the ground that the impugned order was an appealable one and, therefore, before approaching this Court the petitioner should have approached the appellate authority. Though there is much substance in the above contention, we do not feel inclined to reject thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Article 226. 16. In the instant case, the Act provides complete machinery 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. vs. 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. 17. In the instant case, neither has the assessee-writ petitioner described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side India on 1st of April, 2016 nor such asset was held by the Petitioners on 1st of April, 2016. Reference, in support of these arguments, is made to the law laid down by Hon ble the Supreme Court in the following cases: i.) (1991) 4 SCC 699-Sub-Committee on Judicial Accountability v. Union of India Ors. -Paragraph No.121, which is reproduced hereinbelow: 121. On the first point there is and should be no difficulty. The interpretation of the law declared by this court that a motion under section 3(2) of the Judges (inquiry) Act, 1968, does not lapse upon the dissolution of the House is a binding declaration. No argument based on an assumption that the House would act in violation of the law need be entertained. If the law is that the motion does not lapse, it is erroneous to assume that the Houses of Parliament would act in violation of the law. The interpretation of the law is within the exclusive power of the courts. ii. (2013) 7 SCC 629-Manga alias Man Singh v. State of Uttarakhand -Paragraph Nos. 40, 41 and 42, which read thus: 40. With that we come to the main question as to the interpretation to be given to Section 141 third , read along with Section 149 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said provision is enacted the court should construe it in a harmonious way to make it meaningful. An attempt must always be made so to reconcile the relevant provisions as to advance the remedy intended by the statute. (See: Sirajul Haq Khan v. Sunni Central Board of Waqf.) 42. The principle statute in Maxwell s Interpretation of Statutes under the Chapter Exceptional Construction is also relevant, which was applied in one of the judgments of this Court reported in Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd, 2008 (4) SCC 755. The said principle has been extracted in para 53 of the said judgment, which reads as under:- 53. In the chapter on Exceptional Construction in his book on Interpretation of Statutes, Maxwell writes: WHERE the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an unusual me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable opportunity of being heard. 17. Powers of Commissioner (Appeals)- (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers, namely- a. In an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; b. In an appeal against an order imposing a penalty, he may confirm or cancel or vary such order either to enhance or reduce the penalty; c. In any other case, he may determine the issues arising in the appeal and pass such orders thereon, as he thinks fit. (2) The Commissioner (Appeals) may consider and decide any matter which was not considered by the Assessing Officer. (3) The Commissioner (Appeals) shall not enhance an assessment or a penalty unless the appellant has been given an opportunity of being heard. (4) In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before him by the appellant. Section 15 (1) (b) and (c) clearly stipulate that any person denying his liability to be assessed under the Act of 2015 or objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taken itself contains a mechanism for redressal of grievance still holds the field. In that context, when a statutory forum is created by law for redressal of grievances, a Writ Petition cannot be entertained ignoring the statutory dispensation. We are fortified in taking this view by the law laid down by Hon ble the Supreme Court in case reported as (2020) 268 TAXMAN 299 (SC) titled Genpact India Private Limited v. Deputy Commissioner of Income Tax and Ors. , as referred to and relied upon by the learned Counsel representing the Respondent Nos. 2 and 3. 33. Apart from the above perspective, the Act of 2015 provides complete machinery for the person aggrieved of any action taken by the Assessing Officer and the said person 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 the adequate remedy open to him by way of an appeal to the Commissioner of Appeals. The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In the present case, neither have the Petitioners described the available alternate remedy under the Act of 2015 as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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