9911796707
TMI Blog2025 (3) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting the petition under Section 119 of the Income Tax Act, 1961 to be bad in law in the given factual matrix of the case, the two questions of law framed as is enunciated stands answered accordingly:- a) So far as the question whether the respondents were justified in rejecting the application u/s 119(1) of the Income Tax Act is answered in the negative holding that the rejection of the said application was bad in law and also was not sustainable factually. b) So far as the relief which has been sought for whether can be granted invoking Article 226 of the Constitution of India, the same is answered in the affirmative in the view of the findings given by this Bench in the preceding paragraphs based on the judicial precedents. This Court is conscious of the fact that post re-assessment; there is a likelihood of inflated values emerging which could possibly show surplus tax having been paid potentially burdening the Revenue. However, the petitioner Company has voluntarily agreed not to make any claim for refund. The petitioner Company has filed a memo in this regard dated 15.02.2024 undertaking to waive any such surplus tax having been paid which may arise after assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns filed by the same assessee, the lead case being Writ Petition No.23255 of 2011 whereby the primary challenge is to the order dated 11.07.2011 passed by respondent No.1 rejecting the application seeking permission for assessment of real and actual income after condoning the delay under Section 119 of the Income Tax Act, 1961 and the relief sought for was consequential direction to the Income Tax Department. 4. Writ Petition No.17518 of 2011, Writ Petition No.17526 of 2011 and Writ Petition No.9667 of 2013 are Writ Petitions challenging the appointment of special auditor on terms which specifically included the verification of fictitious sales and income from the terms of reference for three assessment years i.e. Assessment Year 2002-03, Assessment Year 2007-08 and Assessment Year 2009-10. Writ Petition No.16722 of 2011 is a Writ Petition challenging the proceedings under Section 147 seeking to reopen the assessment of the petitioner for the Assessment Year 2002-03 and adopting the stand of reassessment proceedings were only to reexamine the claims of deduction under Section 10A while ignoring existence of fictitious sales included in the petitioner's assessed income for the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 31st March, 2009 prepared pursuant to the orders of the Company Law Board and thereafter conduct a proper assessment excluding the fictitious sales and fictitious interest income; (v) to declare the revised audited financial statements of the petitioner which have been approved by the shareholders for the year ended March, 31, 2009, wherein the irregularities in the past financial statements have been rectified as prior period adjustments, be the basis of conducting assessment proceedings and any other proceeding under the Income Tax Act, 1961 for the Assessment Year 2003-04 to Assessment Year 2008-09; (vi) to direct the respondents not to proceed with recovery of tax till the income is computed / recomputed pursuant to the reliefs sought in (ii), (iii) and (iv) above; (vii) to declare the Assessment Orders for the Assessment Year 2002-03 to Assessment Year 2006-07 as illegal, void, ab initio, and violative of Article 265 of the Constitution of India; (viii) to declare the Draft Assessment Order passed by the respondent No.3 for the Assessment Year 2002-03 dated 18.08.2011 as illegal, void, ab initio, and violative of Article 265 of the Constitution of India; (ix) to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.02.009, the CLB permitted the GOI to conduct a bidding process under the supervision of a former retired Chief Justice of India to induct strategic investors to run the company's operations. 12. With the intervention of the GOI, and the subsequent orders passed by the CLB, a retired Chief Justice of India, viz., Justice S.P. Bharucha oversaw the bidding process and M/s. Tech Mahindra was inducted into the petitioner Company as the successful bidder and major shareholder of the petitioner Company. On 16.04.2009, the CLB directed the successful bidder to infuse an amount of Rs.2,908 crores into the petitioner Company through share capital and loans. The CLB also extended the time to file returns / documents with various statutory authorities till 31.12.2009 and directed that no State or Central Government agencies should initiate any Civil, Criminal, Punitive or coercive actions against the petitioner Company. 13. Thereafter, M/s. Tech Mahindra participated in a competitive bidding process and offered to pay a share price of Rs.58/- which was approved by a retired Chief Justice of India and the CLB. The price paid by M/s. Tech Mahindra had no bearing on the subject matter of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court or the Supreme Court. 18. A Special Court was constituted pursuant to a direction issued on administrative side to hear the CBI charge-sheet. The Hon'ble Supreme Court directed that the learned Judge hearing the CBI case in the Satyam scam shall not be transferred till the trial is concluded and trial shall be conducted on day-to-day basis. 19. The CBI filed three reports before the Special Court and the gist of the report as per the CBI was : (i) the promoters dishonestly credited additional tax liabilities and made tax payments on fictitious income and further made the company, i.e., Satyam, suffer a loss to the tune of ₹.126 crores which went detrimental to the interest of the company; and (ii) the CBI also in its report held that the remaining members of the Board were not aware of the true financial condition of the company. 20. Based on the evidence that was brought before the Special Court hearing the CBI case after this six year long trial, the CBI Court found that : (i) the Company become a victim of fraud; (ii) the Board was not aware of the true financial status of the company; (iii) based on inflated and non-existent profits the Board was made to sign fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of fraud, was made to pay dividends when the petitioner Company "Satyam" was in fact incurring substantial loss, and this resulted in an extra tax burden of ₹.39.86 crores for the Financial Year 2007-08 alone; (ii) the petitioner Company was made to pay income tax on inflated and non-existent profit and also on fictitious income to the tune of ₹.126.57 crores; (iii) the benefits of illegal flow of funds went into the coffers of the Income Tax Department as a result of the illegal excess payment of tax based on fictitious and non-existent income; (iv) the Division Bench also went to the extent of holding that these excess payments of receipt of tax by the Income Tax Department should actually be treated as proceeds of crime as the accused promoters not only got enrolled themselves but also shared the gains with the Income Tax Department; (v) that for the period between 2002-03 to 2008-09, the petitioner Company was made to pay ₹.166.80 crores towards dividends whereas the division of dividends itself for the said period was totally illegal; and (vi) the Division Bench further observed that the payments made to the Income Tax Department indicated that the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time cannot be saddled upon or attributed upon to the petitioner-company. However, the order of the learned Single Judge in Writ Petition No.17525 of 2014, dated 22.12.2014, was subjected to challenge before the Hon'ble Supreme Court vide S.L.P.(Criminal) No.34143 of 2017. 27. The Hon'ble Supreme Court vide order dated 08.12.2017 dismissed the said S.L.P. validating the order passed by the learned Single Judge in Writ Petition No.17525 of 2014, dated 22.12.2014, insofar as quashing of the complaint lodged under Prevention of Money Laundering Act, 2002 is concerned. Meanwhile, the SFIO filed a criminal complaint before the Special Economic Offences, viz., C.C.Nos.394 and 400 of 2009 on the file of the learned Special Judge for Economic Offences, Hyderabad : C.C.No.394 of 2009 was registered for violation of provisions of Section 309 of the Companies Act, 1956 (for short 'the Act') i.e., failure of respondent No.1 Company to obtain the opinion of the Central Government before payment of remuneration to one of its Directors. C.C.No.400 of 2009 was registered for violation of provisions of Section 220(1) read with Section 162 of the Act, alleging violation of Section 309 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers contended that the stand of the Income Tax Department amounts to frustrating the concerted and extra-ordinary efforts made by the Government of India in the revival of the petitioner-company. It was also the contention of the learned counsel for the petitioners that there is a series of finding of fact of there being fictitious income reflected in the return submitted by M/s. Satyam Computers. Yet, the Income Tax Department inexplicably seeks to deny the stand taken by the learned counsel for the petitioners insofar that excess tax has been paid. The Income Tax Department also, in spite of all these admitted factual matrix of the case, was denying deduction that M/s. Satyam Computers was entitled to under Section 10(a) on its actual / real income. At the same time, the Income Tax Department also seeks to levy income tax on non-existent and fictitious income. 30. The Government of India (GOI) appointed Board of Satyam Computer Services Limited (the Company or SCSL), therefore sought the permission from the Company Law Board (CLB): i. An extension of the timeline from the CLB to prepare the financial statements for the Financial Year 2008-09, which will provide a true and fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these accounts should not be relied upon after the discovery of accounts fraud. i. The company adjusted each item of the profit & loss account and the balance sheet based on the report of the forensic accountants for each of the above financial years. ii. B K Khare & Co. checked the above procedure and issued reports for each of the years i.e. Financial Years 2001-02 to 2007-08. iii. By following the procedures described above, SCSL computed revised Profit & Loss and Balance Sheet for the Financial Year 2001-02 to 2007-08, mirroring the audited accounts if re-audit were possible. 35. The company has also obtained revised Form 56F certificates giving the correct quantification of deduction to be claimed under Section 10A/10AA of the Act. The certificates have been issued by BSR and Associates and BSR & Co., a reputed firm of Chartered Accountants. 36. All this would enable Income Tax Authorities to assess the correct income of SCSL - post adjustment of fictitious income, considering the revised deduction under Section 10A / Section 10AA basis certificate evidencing genuine exports and granting credit for genuine FTC. 37. The petitioner Company approached the CBDT to tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding before the AO. Therefore, the petitioner Company can agitate the issues before the AO; b) The power under Section 119 is not available to the petitioner; c) The relief under Section 119(2)(b) is also not available to the petitioner Company since it has not been proved by the Department or the CBI and ED that the petitioner Company has suffered genuine hardship; d) SFIO report cannot be relied upon; e) There is no conclusive evidence that can be drawn from the forensic investigation report; and f) The criminal prosecution is pending. Therefore, the CBI reports cannot be relied upon. 42. After rejection of the aforesaid petition under Section 119(1) of the Income Tax Act, the respondent authorities issued assessment orders for the year 2002-03 and assessment year 2007-08. It is these orders which were challenged in Writ Petitions vide Writ Petition No.1726 of 2011 for the assessment year 2002-03, Writ Petition No.17568 of 2011 for the assessment year 2007-08, Writ Petition No.19622 of 2011 against the order of reopening of assessment for the assessment year 2002-03 and Writ Petition No.3906 of 2011 against the order of attachment of assets for the assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner that from the decisions that have been taken by the High Court referred to in the earlier paragraphs, it stands undisputed so far as the existence of fraud which came to light on the letter issued by the former Chairman, Mr. Ramalinga Raju. It was also an undisputed fact that, on account of the inflated income the petitioner has suffered genuine hardship for the subsequent assessment years. The hardship grew because of denial of deductions on : (a) genuine export income; (b) foreign tax credit; and (c) genuine expenditure which the company had made and incurred during regular course of business during the said period of time when inflated incomes were shown in the books of account. 48. It was also the contention of the learned Senior Counsel for the petitioner that once when the aforesaid facts stood undisputed or goes un-denied, the petitioner Company becomes a victim of fraud. The entire assessment made during the said period stands vitiated by fraud, and deductions on fictitious income and deductions on genuine income and genuine expenditure stood disallowed. 49. Another contention which the learned Senior Counsel for the petitioner harped upon was that on the very same s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a considerable period till now on fictitious and non-existing income. According to the learned Senior Counsel appearing for the petitioner, it was on these set of facts that they have moved a petition before the respondent-Authorities for re- assessment of their income based upon the actual business transactions that have transpired during the relevant point of time. 51. According to the learned Senior Counsel appearing for the petitioner, it was only with an intention of putting the records straight in respect of the actual income tax expenditure of the company during the relevant assessment years rather than fictitious income, expenditure and the tax paid on the said fictitious income and expenditure. According to him, they are more concerned about the actual returns being rectified based on the actual business transactions and that they are not very particular about refund of any excess income tax that they have paid on the fictitious income and expenditure that stood reflected in the statement of accounts and on which the income tax was paid. 52. Per contra, the learned Additional Solicitor-General, appearing for the Income Tax Department, contended that when petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re particularly, when the applications and requests are made at an inordinately belated stage by which time the accounts submitted by the petitioner Company have attained finality by efflux of time. He, however, submitted that realizing the genuine hardship that the petitioner Company was put to; their claims for the Assessment Years 2009-10 and 2010-11 have been accepted. However, for the period for which there was no strong, cogent reasons available with them, the Income Tax Department could not have permitted the request so made. 55. The learned Additional Solicitor General contended that the claims raised by the petitioner of the assessment orders being vitiated by fraud is factually and illegally incorrect and is also in contravention to the material on record. According to the learned Additional Solicitor General, the term "fraud" has been distinctly defined under the provisions of the Indian Penal Code, 1860, and the ingredients required to make out a case of fraud is missing from the pleadings. According to the learned Additional Solicitor General, the case of the petitioner is only in respect of inflated figures of fictitious income as is reflected from the letter dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order by a Commissioner is permissible strictly in accordance with the provisions of Section 264 which is itself a self- contained provision and the CBDT as such does not have the power to issue any such direction for the Commissioner either of facts or on law. 60. Relying upon the entire submissions made, it was summed-up by the learned Additional Solicitor General that the entire claim of the petitioner under no stretch of imagination can be brought within the purview of a direction which could be issued for proper administration of the statute. Further, it was also contended that the prayers raised by the petitioner also is specifically barred or is prohibited to be issued considering the twin conditions as is reflected in the proviso to Section 119(1) of the Income Tax Act. 61. Thus, for all the aforesaid submissions, the learned Additional Solicitor General prayed for dismissal of these writ petitions. 62. Upon hearing the Counsel representing the petitioner Company in all these bunch of writ petitions and also considering the contentions put forth by the learned Additional Solicitor General on behalf of the respondents, the entire factual matrix as has been narrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;" 65. The Hon'ble Supreme Court in the recent past dealing with the powers vested upon the CBDT has laid down certain judicial precedents, which are as under, viz., 65.1 In the case of State of Kerala and Others vs. kurian Abraham (P) Ltd. and another (2008) Supreme Court Cases 582, the Hon'ble Supreme Court held in paragraph Nos.23 and 25 as under, viz., "23. Policy decisions have to be taken by the Government. However, the Government has to work through its senior officers in the matter of difficulties which the business may face, particularly in matters of tax administration. That is where the role of the Board of Revenue comes into play. The said Board takes administrative decisions, which includes the authority to grant administrative reliefs. This is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle of "unjust enrichment", excess tax realised must be refunded. The State, furthermore is bound to act reasonably having regard to the equality clause contained in Article 14 of the Constitution of India." 65.3 A similar view was also taken earlier in the case of Union of India and Another vs. Azadi Bachao Andolan and Another AIR 2004 SUPREME COURT 1107 where a circular was issued by CBDT under Section 119 of the Income Tax Act, 1961. It was challenged inter alia on the ground that it was ultra vires the provisions of Section 19(1). The argument was rejected by the Supreme Court holding that: "47. It was contended successfully before the High Court that the circular is ultra vires the provisions of Section 119. Sub-section (1) of Section 119 is deliberately worded in a general manner so that CBDT is enabled to issue appropriate orders, instructions or directions to the subordinate authorities 'as it may deem fit for the proper administration of this Act'. As long as the circular emanates from CBDT and contains orders, instructions or directions pertaining to proper administration of the Act, it is relatable to the source of power under Section 119 irrespective of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on account of technicalities." 65.6 In the case of Ex-Capt. Harish Uppal vs. Union of India and Another (2003) 2 Supreme Court Cases 45, the Hon'ble Supreme Court held in paragraph No.30 as under, viz., "30. No body or authority, statutory or not, vested with powers can abstain from exercising the powers when an occasion warranting such exercise arises. Every power vested in a public authority is coupled with a duty to exercise it, when a situation calls for such exercise. The authority cannot refuse to act at its will or pleasure. It must be remembered that if such omission continues, particularly when there is an apparent threat to the administration of justice and fundamental rights of citizens i.e. the litigating public, courts will always have authority to compel or enforce the exercise of the power by the statutory authority. The courts would then be compelled to issue directions as are necessary to compel the authority to do what it should have done on its own." 65.7 The High Court of Karnataka in the case of Dr. (Smt.) Sujatha Ramesh vs. Central Board of Direct Taxes, New Delhi [2017] 87 taxmann.com 228 Karnataka held at paragraph Nos.12 and 13 as under, viz., "12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od conscience of the Courts is pricked, even though such orders rejecting the claims on the bar of limitation may appear to be prima facie tenable, the Courts may exercise Date of Order 24-10-2017 W.P.No.54672/2015 Dr.(Smt.)Sujatha Ramesh Vs. Central Board of Direct Taxes and another. their jurisdiction to set aside such orders and allow the claims on merits, setting aside the bar of limitation." 66. Dealing with the relevancy of collecting tax on the real income and the actual expenses incurred on the raid not to be collected under any circumstances on inflated or unrealistic entries made in the books of accounts, the Hon'ble Supreme Court laying down certain precedents has held as under. 66.1 In the case of Deputy Commissioner of Income Tax vs. T. Jayachandran (2018) 6 Supreme Court Cases 189, the Hon'ble Supreme Court in paragraph Nos.16, 18 and 19 held as under, viz., "16. The conduct of the respondent in the transaction in question cannot be termed to be strictly within the normal course of business and the irregularities can be noticed from the manner in which the whole transactions were conducted. However, the same cannot be the basis for holding the respondent liable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which does not materialise." 14. This principle is applicable whether the accounts are maintained on cash system or under the mercantile system. If the accounts are maintained under the mercantile system what has to be seen is whether income can be said to have really accrued to the assessee company. In H.M. Kashiparekh & Co. Ltd. v. CIT [(1960) 39 ITR 706 (Bom)] the Bombay High Court had said: "... Even so, (the failure to produce account losses) we shall proceed on the footing that, the assessee company having followed the mercantile system of account, there must have been entries made in its books in the accounting year in respect of the amount to commission. In our judgment, we would not be justified in attaching any particular importance in this case to the fact that the company followed mercantile system of account. That would not have any particular bearing in applying the principle of real income in the facts of this case." 22. The question whether there was real accrual of income to the assessee company in respect of the enhanced charges for supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. A mere book-keeping entry cannot be income, unless income has actually resulted, and in the present case, by the change of the terms the income which accrued was received consisted of the lesser amounts and not the larger." 66.5 In the case of S.D.S. Mongia vs. Central Board of Direct Taxes (2007) 160 TAXMAN 101 (DELHI), the High Court of Delhi held in paragraph No.6 as under, viz., "6. Since the extraordinary jurisdiction of this Court has been invoked, the constraints that may have been felt by the Commissioner in deciding the assesse's revision application under section 264 would not impinge on the powers of the Court under article 226 of the Constitution to correct an injustice that has occurred albeit because of the petitioners/assessee himself. Article 265 of the Constitution mandates that no person shall be taxed without the authority of law. Since in the present case there is no authority to tax the annuities received by the petitioner, we consider it approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e difficulty. That per se would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied. 18. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, a person cannot take advantage of his own wrong, may also have to be borne in mind. The said principle, it is conceded, has not been applied by the courts below in this case, but we may take note of a few precedents operating in the field to highlight the aforementioned proposition of law. [See Priyanka Overseas (P) Ltd. v. Union of India [1991 Supp (1) SCC 102] (SCC at pp. 122-23, para 39); Union of India v. Major General Madan Lal Yadav (Retd.) [(1996) 4 SCC 127 : 1996 SCC (Cri) 592] (SCC at p. 142, paras 28-29); Ashok Kapil v. Sana Ullah [(1996) 6 SCC 342] (SCC at p. 345, para 7); Sushil Kumar v. Rakesh Kumar [(2003) 8 SCC 673] (SCC at p. 692, para 65, first sentence); Kusheshwar Prasad Singh v. State of Bihar [(2007) 11 SCC 447] (SCC at pp. 451-52, paras 13-14 and 16).]" 67.2 In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund." 67.3 The High Court of Kerala in the case of Pala Marketing Co-op. Socy. Ltd. vs. Union of India & Ors 2008 (1) KLJ 561 held in paragraph No.3 as under: "3. What is stated in Section 119(2)(b) is that if the Board considers desirable or expedient for avoiding genuine hardship to the assessee, it should condone the delay. In other words, what the Board should consider is hardship to the party if delay is not condoned. The Board should condone the delay if failure to condone the delay causes genuine hardship to the assessee, no matter whether the delay in filing return is meticulously explained or not. In other words, once the Board allows the application under Section 119(2)(b) of the Act, the matter goes to the Assessing Officer for considering assessee's claim for refund under Section 237. Section 237 makes it clear that the Assessing Officer while considering application for refund should consider the amount of tax chargeable on the claimant under the Act and refund arises only if -payment is in excess of the tax payable under the Act." 67.4 In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only restriction on the powers of the Board under Section 119 of the Act." 68. Again dealing with the topic of orders passed by fraud losing its judicial sanctity and holding that fraud vitiates everything, the Hon'ble Supreme Court has laid down quite a few judicial precedents, some of which are mentioned herein under: 68.1 The Hon'ble Supreme Court in the case of A.V. Papayya Sastry and Others vs. Govt. of A.P. and Others (2007) 4 Supreme Court Cases 221, held at paragraph Nos.21, 22, 25, 26, 30 and 33 as under, viz., "21. Now, it is well-settled principle of law that if any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Before three centuries, Chief Justice Edward Coke proclaimed: "Fraud avoids all judicial acts, ecclesiastical or temporal." 22. It is thus settled proposition of law that a judgment, decree or order obtained by playing fraud on the court, tribunal or authority is a nullity and non est in the eye of the law. Such a judgment, decree or order-by the first court or by the final court-has to be treated as nullity by every court, superior or inferior. It can be challenged in any court, at any time, in appeal, revisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the claimants when they were called upon to file objections to the applications for recalling of the awards. The claimants then confined their resistance to the plea that the application for recall is not legally maintainable. Therefore, we strongly feel that the claim must be allowed to be resisted, on the ground of fraud now alleged by the Insurance Company. If we fail to afford to the Insurance Company an opportunity to substantiate their contentions it might certainly lead to a serious miscarriage of justice." (emphasis supplied) 68.2 The Hon'ble Supreme Court in the case of United India Insurance Col. Ltd. vs. Rajendra Singh and Others (2000) 3 Supreme Court Cases 581, held in paragraph Nos.15 and 17 as under, viz., "15. It is unrealistic to expect the appellant Company to resist a claim at the first instance on the basis of the fraud because the appellant Company had at that stage no knowledge about the fraud allegedly played by the claimants. If the Insurance Company comes to know of any dubious concoction having been made with the sinister object of extracting a claim for compensation, and if by that time the award was already passed, it would not be possible for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) to recall their judgments or orders if they are obtained by fraud, and observed: "The judiciary in India also possesses inherent power, specially under Section 151 CPC, to recall its judgment or order if it is obtained by fraud on Court. In the case of fraud on a party to the suit or proceedings, the Court may direct the affected party to file a separate suit for setting aside the decree obtained by fraud. Inherent powers are powers which are resident in all Courts, especially of superior jurisdiction. These powers spring not from legislation but from the nature and the constitution of the Tribunals or Courts themselves so as to enable them to maintain their dignity, secure obedience to its process and rules, protect its officers from indignity and wrong and to punish unseemly behaviour. This power is necessary for the orderly administration of the Court's business. Since fraud affects the solemnity, regularity and orderliness of the proceedings of the Court and also amounts to an abuse of the process of Court, the Courts have been held to have inherent power to set aside an order obtained by fraud practised upon that Court. Similarly, where the Court is misled by a party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t petitions. 70. Reading of the facts in the said judgment passed by the Division Bench of the Bombay High Court, what is clearly reflected is that the officers of the Income Tax Department were in agreement with the petitioners to their request for condoning the delay and also going in for reassessment so as to compute the correct taxable income. However, the view of the Income Tax officials were negated by the CBDT and the CBDT advised the Income Tax Department to reject the condonation of delay application under Section 119 and also to reject the claim for reassessment. It is in this factual context that the Division Bench of the Bombay High Court relying upon a judgment of the Bombay High Court itself in the case of K.S. Bilawala vs. Principal Commissioner of Income Tax (2024) 158 taxman.com 658 (Bombay) while allowing the writ petition in the operative part in paragraph Nos.24 to 27 has held as under, viz., "24. In the circumstances, the Rule is made absolute in terms of prayer clauses - (a), (b) and (c) which read as under : a. this Hon'ble Court may be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed." 71. Given the fact that the Bombay High Court has in the recent past itself allowed two similar writ petitions and the facts in the instant batch of writ petitions also being almost same, coupled with the series of judicial precedents referred to in the preceding paragraphs dealing with the powers of CBDT and also the judgments of the Hon'ble Supreme Court dealing with the term 'genuine hardship' as is referred to under Section 119 of the Income Tax Act, we see no reason why Writ Petition No.23225 of 2011 be not allowed and it is ordered accordingly. 72. The order dated 11.07.2011 passed by respondent No.1 as a consequence is set aside / quashed being arbitrary, illegal and violative of Section 119 of the Income Tax Act. Further, it is ordered that the assessment orders for the Assessment Year 2003-04 to 2008- 09 are illegal and violative of Article 265 of the Constitution of India and also void ab initio. The respondent No.1 and respondent No.3 are hereby directed to re-quantify / re-compute the income of the petitioner Company by conducting a fresh and proper assessment for the Assessment Year 2003-04 to 2008-09 based upon the revised financial statements of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the expenditure of the petitioner Company for the relevant period is redone by way of reassessment. 75. This Court finds that the petitioner-Company through its Assistant Chief Corporate Counsel (Legal) and Authorized Signatory has unequivocally agreed to waive its rights to claim any refund that may arise after adjusting any tax liability arising from the de novo assessments for Assessment Years 2002-03 to 2008-09. This waiver is comprehensive and applies to any residual refunds that may arise after setting off aggregate demands across the relevant Assessment Years under Section 245 of the Income Tax Act, 1961. This Court finds that this decision of the Assistant Chief Corporate Counsel (Legal) has been duly authorized by the Managing Director of the petitioner Company supported by a valid Power of Attorney dated 22.11.2013. This waiver effectively ensures that there will be no additional financial burden on the Revenue following the completion of the reassessment process. 76. As a consequence of the lead case i.e. Writ Petition No.23255 of 2011 being allowed, all the other connected Writ Petitions heard analogously also stands allowed and disposed of leaving open the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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