Ram Naresh Survey International ... vs Asstt. Director Of Income Tax ...
2015 Latest Caselaw 212 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Court No. - 10
 

 
Case :- WRIT TAX No. - 1259 of 2011
 

 
Petitioner :- Ram Naresh Survey International Pvt. Ltd.
 
Respondent :- Asstt. Director Of Income Tax (Investigation) And Others
 
Counsel for Petitioner :- Dinesh Tiwari,R.B. Shukla,Rahul Misra
 
Counsel for Respondent :- C.S.C., Income Tax,Bharat Ji Agrawal,Govind Krishna
 

 
Hon'ble Arun Tandon,J.

Hon'ble Dr. Satish Chandra,J.

1. By means of this writ petition the petitioner has made the following prayers:-

"I. To issue a writ of mandamus ex debito justitiae to compel the respondent no.1 to withdraw the notices under section 131 (1A) of the Income Tax Act, 1961, issued by him to HDFC Bank, Dankinganj, Mirzapur, and other branches of this bank and all other banks given in para-20 of the petition illegally restraining the operation of bank accounts and covertly sealing the office premises on 21.8.2011.

II. To issue a writ of mandamus, order or direction to respondent no.1 to permit the banks to allow the operation of bank accounts to discharge liabilities of the petitioner to its customers who are suffering due to illegal action of the respondent no.1.

III. To issue any other writ, order or direction which this Hon'ble Court may deem appropriate in the facts and circumstances of the case to avoid inconvenience and hardship to the petitioner which has been made vulnerable to the interest u/s234A penalties u/s 271B & 271F and prosecution u/s 276CC of the Income-tax Act, 1961, if it is not able to get its accounts audited and fails to submit return of income along with audit report by 30.9.2011 for A.Y. 2011-12.

(iiia) a suitable writ in the nature of certiorari to quash the order of search by the Director of Income-tax date 20.8.2011 since he had no information in his possession to believe that the petitioner was in possess of undisclosed income or property as per section 132 (1)(c) and other clauses (a) and (b) of section 132(1) of the Income-tax Act were not applicable.

(iiib) a suitable writ or order in the nature of certiorari to quash the order of seizure of money from the banks by the authorized offices on 12.10.2011 under Section 132 (1)(c)(iii) of the Income-tax Act.

(iiic) a suitable writ or order in the nature of mandamus to the Income-tax Department to release the illegally seized money to the petitioner.

IV To award an exemplary cost to the petitioner for the impugned illegal action of the respondent no.1."

2. Sri V. B. Upadhyaya, learned senior counsel assisted by Sri R. B. Shukla, learned counsel for the petitioner-assessee submits that the petitioner's company was named as Ram Naresh Financial Consultancy Private Limited, on its inception on 12.2.2010. Its name was changed to Ram Naresh Survey International Private Limited on 24.2.2011, which change was duly registered with the Assistant Registrar of Companies as per Annexure-6 to the writ petition. The petitioner manages 'Ram Survey', which is an online market research centre to elicit the customers to shape and develop products and services, with the help of latest information and guideline to ensure better compliance by the industries and consumers.  It is a professionally managed market research company based at Mirzapur.

3. On information, the Assistant Director, Income Tax (Investigation) issued a notice on 30.6.2011 under Section 131(1A) of the Income Tax Act to the main Banker of the assessee i.e. Branch Manager, H.D.F.C. Bank, Dankinganj, Mirzapur for personal attendance alongwith documents and details of account of the petitioner.  Further, the Bank was directed that "No further operation from any of the accounts in the name of Ram Naresh Financial Consultancy Private Limited or in the name of Ram Naresh Survey International Private Limited should be allowed until the bank receive permission from the office of the undersigned."

4. Later, a search was conducted at the business premises of the assessee on 10.10.2011 and in respect of the Bank account on 12.10.2011. The bank balance was converted in the Demand Draft and deposited in the account of Commissioner of Income Tax, by treating the same as undisclosed income.

5. Challenging the action so taken by the department learned counsel for the assessee submits that Section 131(1A) of the Act only empowers an inquiry or investigation, if the officer has reasons to suspect that any income has been concealed or is likely to be concealed. He submits that no income is unaccounted nor there are any outstanding income tax dues against the company that can be recovered by the department. It is submitted that similar notices had also been issued to the other bankers of the assessee namely I.C.I.C.I. Bank, Mirzapur, AXIS Bank, Mirzapur; S.B.I., Mirzapur. The entered business of the petitioner had come to a halt. Its customers who are to be paid are lining up with complaint and pressure.

6. It is also the submission of the learned counsel that the petitioner-assessee wrote a letter to the Assistant Director, Income Tax (Investigation) with respect to the notice dated 30.6.2011, but no response was received by the petitioner or its Bankers.

7. By filing application, the learned counsel tired to prove that the petitioner had explained the source of credit of balance available in the current account of the Bank from the deposits of public investors in Ram Survey scheme.

8. According to learned counsel for the petitioner, all the accounts are subject to audit under Section 44AB of the Act. The entire money has been fully explained. So, he submits that issuance of notice to the bankers are illegal and all the notices to the effect have to be set aside. He further prays that search is also illegal as there was no material for issuing the search warrant.

9. Lastly, he relied upon the judgment in the case of Shyam Jewellers Vs. Chief Commissioner of Income Tax (Admn.) 196 ITR 244 All., where it has been held that when search and seizure is without jurisdiction then the impugned order of summary assessment is invalid specially during the pendency of writ proceedings. The remedy under Section 132(11) was not wide enough to cover all the pleas raised in the case particularly the sealing of premises. So, the writ petition is maintainable.

10. On the other hand, Sri Govind Krishna, learned counsel for the department justified the impugned action. He explained the modus operandi pertaining to the business of the assessee. According to him, the brochure annexed to the supplementary affidavit declares 'Ram Survey' as the India's largest survey company. It is a group of 'Ram Naresh Survey International Private Limited'. Ram Survey, as it is declared in the brochure, is an online market research Group, where consumers join hands to shape and develop products and services through online survey. The survey opinions, upon the customers, who have opinion matters for market survey are given an opportunity to mint the opinion of the customer every time he expresses it. A person can become a member of Ram Survey with joining fee of Rs. 3500/- (including service tax and registration fee of Rs. 1000/- and panel charges of Rs. 2500/-). On becoming the member, the company offers advance product coupon to be downloaded and printed which can be used for online shopping from ramdiscountbazaar.com. The scheme provides that on every Wednesday, a member will be asked to provide his opinion in the questionnaire or survey format, about product or services. The income will be generated from the reward point.

11. Learned counsel submits that the money of innocent people was taken under the various schemes/names, but the same was never refunded to then and these people have been duped. Notices were rightly issued to HDFC bank in respect of enquiries made. The Assistant Director of Income Tax, Allahabad vide his order dated 30.6.2011 while issuing notice to the petitioner, rightly directed the banks not to allow the petitioners to operate the bank account.

12. The notice refers to Ram Naresh Survey International Private Limited, Ashish Dwivedi, Ruchi Kesharvani, Chandra Prabha Kushwaha, Ratnesh Mishra, & Sushil Kushwaha.

13. It is also stated that a first information report was lodged against S. K. Kushwaha, Managing Director in Case Crime no. 298 of 2011. Bail has been granted to the accused on 15.6.2011.

14. This court had called for the material on the basis whereof authorization of the search made alongwith original authorization order. The records have been produced and have been perused by the Court.

15. From the records, it appears that the group claims to conduct online surveys on behalf of renowned companied and claims to act as the "online division of market research companies". For conducting these online surveys, the company ropes in individuals through the Internet and otherwise. These customers are called panelists. The joining fee chargeable to start conducting surveys is Rs.3500. The company promises to reward its panelists by giving them reward points for every survey conducted by them. These reward points can be redeemed either by cash/cheque, or by product reward point (by purchasing online through www.ramdiscountbazaar.com) or by service reward point (redemption can be done by purchasing services like Hotel Tickets, Tour Packages, E-Mobile Service, etc.). The detail business profile of the group is provided in the pamphlet and the power point presentation of the group placed on file as Annexure-A.

16. The record, disclose that A FIR was lodged against the company, with the Mirzapur Police under sections 419, 420, 467 and 471 of the Indian Penal Code for committing financial irregularities and for duping individual customers by usurping there hard earned money deposited as "joining fee". The directors of the company, Shri Susheel Kushwaha and Smt. Chandra Prabha Kushwaha, who were absconding after the FIR were arrested by the Mirzapur Police and have been released on bail.

17. In the meanwhile, a reference was received from the Financial Intelligence Unit-India, New Delhi, in the form of a Suspicious Transaction Report. The dissemination note (which incidentally had also been disseminated to Enforcement Directorate) reads as under:

"The said customer is suspected to be involved in multi level marketing. According to the customer's website http://www.ramsurvey.com/OurBanker.aspx they provide each of their members 'freedom to live the life they've dreamed'. Every members is required to participate in a survey and refer others to participate too. For every pair a member refers he earns one point. The customer promises different prizes for the members depending on the number of points earned. The prizes range from a PC for 40 points to a Mercedes Benz for 7000 points. The customer seems to be duping the general public with these tall promises. On studying the financial transactions of the main accounts credits are mainly by cash. The debits are mainly by clearing to various third parties and as cash paid to self. From 19.06-2011 to 28-12-2011, the total cash credits in the account equal Rs.58.55 lakhs approx. During the same period the amount withdrawn as cash paid to self is Rs.30.25 lakhs approx. This nature and pattern of transactions seen to devoid of any economic or rational purpose............ Based on the above mentioned facts, the account is being reported as suspicious.

18. Internet data base was checked and verified. Local enquiries were also conducted and it was found that the company was actually involved in financial bungling and fraud. Copy of some of the complaints are registered on the website www.scambook.com are annexed as Annexure-C.

19. Based on the above set of facts, independent enquiries were conducted and it came to light that the group has four bank accounts in the name of Ram Naresh Consultancy Private Limited, the details of which are as under:-

S.No.

Account No.

Bank

Branch

Credit Balance (in Rs.)

As on

Credit balance (in Rs.) as on 31.3.2011

31548151414

SBI

City Branch Mirzapur

61547298=00

12-05-2011

47910215=00

081805000389

ICICI

Katra Bajirao, Mirzapur

91362=05

23-04-2011

8269721=82

910020047515118

AXIS

Badli Katra, Mirzapur

7859670=00

30-06-2011

42339848=60

19128630000018

HDFC

Dankinganj, Mirzapur

10525878=56

28-06-2011

1298994=54

20. Summons were sent to the above banks, to the company (through its Directors) and to the directors individually on 30.06.2011 (the Inspector of Income Tax who was authorized to serve the summons could not do so as the individuals were absconding). Similar summons were once again sent on 4.07.2011 by registered post fixing the date of compliance as 11.07.2011. No one attended on 11.07.2011.

Another set of summons alongwith show cause to explain why penalty for non-compliance of summons may not be levied was issued on 12.07.2011 in F.No. ADIT(INV.)/ALLD/FIU-STR/2011-12/7025 was sent requiring the assessee to explain the nature and source of credit balance in the above four bank accounts. The assessee was further directed to prove that the transactions in the above mentioned bank accounts were reflected in the relevant books of accounts, which had been disclosed to the department. The date of compliance of this letter was 18.07.2011. No one responded to the said notice.

21. From the record, it appears that the assessee has not cooperating with the investigation. On 19.7.2011, the counsel for the assessee appeared, but no documents were produced, despite the fact that the same were asked for in the above mentioned letters. Again, on 22.7.2011, the counsel appeared, but nothing was produced to satisfy the requirement of the letters. Again On 26.7.2011, no documents were produced.

22. No one attended the proceedings on 18.07.2011, before the Assistant Director (Investigation) Income Tax.

23. From the above, it is crystal clear that the assessee has not cooperated at all with the department. Prima facie it appears that the petitioner-assessee and its Directors are in possession of unaccounted money and the same needs to be examined. We find no reason to interfere with the impugned notice/order, the same is hereby sustained alongwith the reasons mentioned therein.

24. Counsel for the department has informed the Court that the assessment under Section 153(A) has since been completed on 31st March, 2014 and the same is available in sealed envelop, as per the interim order of this Court. In view of the above, we vacate the interim order and direct the department to serve the assessment order on the assessee and proceed as per law.

25. In the result, the writ petition filed by the petitioner-assessee is hereby dismissed.

(Dr. Satish Chandra,J.) (Arun Tandon,J.)

Order Date :- 29.4.2015

Dev/-