Madras High Court
The Adjudicating Authority vs Current Address At on 4 February, 2022
WA Nos. 1682 of 2021 etc. batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.02.2022
CORAM :
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
Writ Appeal Nos. 1682, 1846, 1847, 1848, 1850, 1851, 1853,
1873, 1878, 1890, 1894, 1941, 1990, 1991, 2022, 2130, 2134,
2150, 2165, 2179, 2184, 2185, 2189, 2191, 2205, 2224, 2231,
2232, 2244, 2305, 2350, 2353, 2403, 2405, 2410, 2411, 2416,
2418, 2422, 2428, 2434, 2502, 2504, 2506, 2507, 2508, 2509,
2510, 2675, 2686, 2697, 2701, 2706, 2707, 2715, 2716
and 2717 of 2021
and
CMP.Nos.10696, 11685, 11694, 11700, 11710, 11712, 11722,
13456, 13518, 13566, 13668, 13765 and 13866 of 2021
---
WA No. 1682 of 2021
1. The Adjudicating Authority
under the Prohibition of Benami Property Transactions Act, 1988
Room No.26, 4th Floor
Jeevan Deep Building
Parliament Street
New Delhi - 110 001
2. Deputy Commissioner of Income Tax
(Benami Prohibition)
Room No.104, 1st Floor
Income Tax Investigation Wing Building
New No.46, M.G. Road
Nungambakkam
Chennai - 600 034 .. Appellants
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Versus
1/56
WA Nos. 1682 of 2021 etc. batch
M/s. Anuttam Academic Institutions
represented by its Director
Nawal Kishore
MARG Axis
4/318, Old Mahabalipuram Road
Kottivakkam, Chennai - 41
Current Address at
Sai Subhodaya Apartments
No.57/2B, East Coast Road
Thiruvanmiyur
Chennai - 600 041 .. Respondent
Writ Appeal No. 1682 of 2021:- Appeal filed under Clause 15 of The Letters
Patent against the Order dated 09.04.2021 passed by the learned Judge in
WP No. 2340 of 2021.
For Appellants : Mrs.M.Sheela,
Special Public Prosecutor (Income Tax)
assisted by Mr.H.Siddharth and Ms.M.Prathana
in all the writ appeals
For Respondent : Mr. AL. Somayaji, Senior Advocate
for Mr. R. Sivaraman in all the Writ Appeals
COMMON JUDGMENT
R. MAHADEVAN, J.
For the sake of convenience, the judgment is divided into the following heads:
A. FACTS & NARRATION OF PLEADINGS PARAGRAPHS 1-8
B. ANALYSIS PARAGRAPHS 9-30
C. FINDINGS PARAGRAPHS 31-35
D. CONCLUSION PARAGRAPH 36
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A. FACTS & NARRATION OF PLEADINGS
1. Questioning the correctness and legality of the order dated
09.04.2021 passed by the Learned Judge in WP.Nos.35256 of 2019 etc. batch,
these intra-court appeals are filed by the appellants / Department. By the order
impugned herein, the writ petitions filed by the respondents herein were
allowed and thereby the orders dated 26.08.2019, 27.08.2019 and 28.08.2019
passed by the first appellant / Adjudicating Authority in terms of Section
26(3) of the Prohibition of Benami Property Transactions Act, 1988
(hereinafter shortly referred to as 'the Act’) were quashed.
2. To determine the issue involved in this batch of cases, it would be
necessary to briefly narrate the facts, which are common in all the matters. For
the easy reference, this court proposes to discuss the facts in WP.No.35256 of
2019 as done by the learned Judge, which would run thus:
2.1 During the year 2017, a search was conducted in the premises of
Marg Group of companies and its related entities, which resulted in seizure of
various documents allegedly indicating the prohibited transactions as per
clause A of section 2(9) of the Act. Therefore, a show cause notice dated
26.04.2018 under section 24(1) of the Act was issued by the second appellant
to the respondent herein, calling upon them to show cause as to why they
should not be treated as benamidar of the parent company called M/s.Marg
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Limited, who is the beneficial owner of the land measuring about 17.702 acres
at Muttam Village, Nagore Vattam, having been purchased in the years 2009
and 2010 by availing loan from M/s.Great Meera Finlease Private Limited, a
Non-banking financial company incorporated solely for the purpose of routing
the funds of Marg group of companies and such fund was also flown from the
another shell company viz., M/s.Arohi Infrastructure Pvt.Ltd., which is
incorporated as subsidiary of M/s.Marg Limited.
2.2 On receipt of the show cause notice, the Managing Director of the
respondent company appeared before the second appellant and submitted that
the group companies are not the benamidars, as alleged. It was further
submitted that the land was purchased in the name of group companies
legitimately from and within their internal resource accrued / borrowings. The
property so purchased was also mortgaged with the lenders to raise funds to
complete the running projects. It was also submitted that several subsidiaries
and associate enterprises were formed only with the intention to procure land
for the purpose of overcoming the ceiling limit fixed under the Land Ceiling
Act, 1961; and the subsidiaries were duly registered with the Registrar of
Companies and complying with the filing of Income Tax Returns. Since the
funds are flowing from the legitimate group companies, it will not fall within
the purview of the Act. Therefore, according to the respondent company, it is
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not fictitious transaction, as portrayed by the Department and the same is
bona fide.
2.3 Notwithstanding the reply of the respondent, the second appellant
passed an order dated 20.07.2018 provisionally attaching the property of the
respondent company under Section 24(4)(b)(i) of the Act pending adjudication
by the first appellant.
2.4 Upon receiving the reference under section 24(5) of the Act from
the second appellant, the first appellant issued a show cause notice dated
14.08.2018 under Section 26 (1) of the Act. The first appellant, after affording
sufficient opportunities to the respondent and considering the material
evidence placed, passed an order dated 26.08.2019 in terms of Section 26 (3)
of the Act, confirming the provisional order of attachment passed by the
second appellant inter alia holding that the subject matter of the property is a
benami property and the transaction is a benami transaction, in which the
respondent is the benamidar of the beneficial owner M/s. Marg Limited.
3. Similar orders were passed by the first appellant confirming the
attachment orders passed by the second appellant in the references registered
in respect of the other properties belonging to the respective respondent
companies, on the same day i.e., on 26.08.2019 and also on 27.08.2019 and
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28.08.2019. Challenging the said orders passed by the first appellant, the
respondents herein preferred 57 writ petitions before the Learned Judge.
4. Before the Learned Judge, it was mainly contended on behalf of
the respondents that the orders dated 26.08.2019, 27.08.2019 and 28.08.2019
passed by the first appellant are barred by limitation. It was further canvassed
that according to section 26(7) of the Act, an order of adjudication has to be
passed within a period of one year from the end of the month, in which the
reference under section 24(5) is received by the Adjudicating Authority. In the
present case, the second appellant made references under Section 24 (5) of the
Act on 27.07.2018 and the same were taken on file by the first appellant on
01.08.2018. In such an event, as per Section 26(7) of the Act, an order of
adjudication ought to have been passed on or before 31.08.2019. On the other
hand, the first appellant though heard the matters finally on 17.07.2019, did
not pass orders prior to 31.08.2019 and that, only on 29.10.2019, the
respondents were informed through the second appellant to collect the
certified copies of the orders said to have been passed on 26/27/28.08.2019,
which were made ready on 04.09.2019 and 11.09.2019 and the same were
booked for despatch on 12.09.2019 and 13.09.2019. Thus, according to the
respondents, the orders passed on 26/27/28.08.2019, are absolutely beyond the
period of limitation as prescribed under section 26(7) of the Act.
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5. The appellants herein filed a common counter affidavit before the
Learned Judge opposing the relief sought in the writ petitions filed by the
respondents. According to them, the adjudication orders were passed within
the period of limitation and hence, the same do not call for any interference by
this court. It was further averred that as per section 24(5), references were sent
by the Initiating Officer / second appellant to the Adjudicating Authority / first
appellant on 27.07.2018 and the same were taken on file by the Adjudicating
Authority on 01.08.2018. As per Section 26 (7) of the Act, the orders under
Section 26 (3) are required to be passed within one year from the end of the
month in which the references are received by the Adjudicating Authority. In
consonance with the same, the orders were passed by the first appellant /
Adjudicating Authority on 26/27/28.08.2019 within the time limit as
prescribed under Section 26 (7) of the Act. It was also submitted that the first
appellant has passed elaborate orders running to more than 100 pages dealing
with all the contentions raised by the respondents herein. The dates on which
the certified copies were made ready on 04.09.2019 and 11.09.2019 and
booked for despatch on 12.09.2019 and 13.09.2019, cannot be construed as the
dates of passing of the orders under section 26(3) of the Act. Therefore, the
orders dated 26/27/28.08.2019 were passed by the first appellant strictly in
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accordance with Section 26(7) of the Act and the same cannot be barred by
limitation.
6. After hearing the submissions of the learned counsel for both
sides, the Learned Judge allowed the writ petitions on the ground that the
orders passed by the first appellant will take effect only from the date of
communication of the same to the parties. It was also observed that on
17.07.2019, the orders were reserved, but only on 04.09.2019 and 11.09.2019,
the copies of the same were certified by the Administrative Officer-cum-
Registrar, which would suggest that the orders have not been passed within the
time limit as prescribed under Section 26 (7) of the Act. In effect, the Learned
Judge, on perusal of the registers maintained by the authorities, held that the
orders passed by the first appellant, have not been passed on the dates
indicated thereof and accordingly, allowed the writ petitions filed by the
respondents herein and set aside the adjudication orders passed by the first
appellant. Therefore, the appellants are before this court with these intra court
appeals.
7.1 Mrs.M.Sheela, learned Special Public Prosecutor (Income Tax)
appearing for the appellants would vehemently contend that while passing the
orders of provisional attachment dated 20.07.2018, the second appellant made
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references to the first appellant within 15 days of passing such orders, as per
Section 24(5) of the Act. On receipt of the references from the second
appellant, the first appellant issued show cause notices dated 14.08.2018 to the
respondent companies. As per Section 26(7) of the Act, the first appellant is
bound to pass orders under Section 26(3) of the Act within a year from the end
of the month in which the references under Section 24 (5) of the Act are
received from the second appellant. It is in compliance with the mandate as
provided under Section 26 (7) of the Act, within a period of one year, the first
appellant passed the orders on 26.08.2019, 27.08.2019 and 28.08.2019.
However, the certified copies of the same were made ready and were attested
by the Administrative Officer-cum- Registrar on 04.09.2019 and 11.09.2019,
in view of the fact that the preparation of such copies in triplicate was time
consuming as each order contains more than 100 pages and the same has to be
despatched to 69 addressees. In any event, the dates on which the certified
copies of the orders were made ready or the dates on which the same were
booked for despatch, cannot be construed as the dates of passing of the orders
by the first appellant. Therefore, according to the learned counsel, when the
first appellant passed the orders dated 26/27/28.08.2019 within the time as
specified under Section 26 (7) of the Act, the order impugned herein deserves
to be set aside.
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7.2 The learned Special Public Prosecutor would also contend that if
the respondents are aggrieved by the orders passed by the Adjudicating
Authority, there is an alternative remedy of appeal as provided under Section
46 of The Act. However, they circumvented the statutory procedure and
invoked the writ jurisdiction under Article 226 of The Constitution of India.
The Learned Judge also grossly ignored this aspect, while allowing the writ
petitions. In order to buttress the said submission, the learned Special Public
Prosecutor placed reliance on the decision of the Honourable Supreme Court
in CIT v. Chhabil Dass Agarwal [(2014) 1 SCC 603] and The Authorised
Officer, State Bank of India vs. Mathew KC [(2018) 3 SCC 85] to drive
home the point that when there is a statutorily in-built remedy, which is also an
efficacious remedy, the aggrieved party has to only exhaust such remedy and
the remedy of writ should be very sparingly invoked.
7.3 It is also contended by the learned Special Public Prosecutor that
the writ petitions were filed by the respondents after the expiry of maximum
time limit of 45 days as prescribed under Section 46 of the Act for filing
statutory appeals. Admittedly, the certified copies of the orders of the
Adjudicating Authority / first appellant were served on the respective
respondents on 29.10.2019, however, without preferring any statutory appeals
as prescribed under Section 46 of the Act, the respondents preferred the writ
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petitions before this Court from 17.12.2019 onwards and hence, the writ
petitions filed after the expiry of 45 days of service of the copies of the orders,
ought not to have been entertained by the Learned Judge. In this regard, the
learned Special Public Prosecutor referred to the decision of the Honourable
Supreme Court in Assistant Commissioner (CT) LTU, Kakinada and others
v. Glaxo Smith Kline Consumer Health Care Limited [2020 SCC Online
SC 440] wherein it was held that “if the writ petitioner choses to approach the
High Court by filing a Writ Petition under Article 226 of The Constitution of
India, after the expiry of the maximum limitation period as prescribed for
preferring a statutory appeal, then, the High Court cannot disregard the
statutory period for redressal of the grievance and entertain the writ petition
of such a party as a matter of course”.
7.4 The learned Special Public Prosecutor further proceeded to
contend that during the pendency of the writ petitions as directed by this
Court, the first appellant produced the records pertaining to the adjudication
proceedings, which include the order sheets and other registers maintained by
them and substantiated that the orders challenged in the writ petitions, were
passed within the limitation period as specified under the Act. However, the
Learned Judge, without proper consideration of the materials placed, allowed
the writ petitions filed by the respondents herein.
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7.5 The learned Special Public Prosecutor also invited the attention of
this Court to Section 11 of the Act and contended that as per Section 11, the
Adjudicating Authority is empowered to regulate his own procedure and shall
not be bound by the procedure as laid down under the Code of Civil
Procedure, but shall be guided by the principles of natural justice. It is in
exercise of such power, the first appellant has passed the orders impugned in
the writ petitions. But, the Learned Judge set aside the said orders merely on
technicalities.
7.6 The learned Special Public Prosecutor placed reliance on the
decision of this Court in Murugappa Chettiar v. Thirumalai Nadar and
others [(1947) 2 MLJ 310] and contended that the first appellant had
discharged his quasi-judicial functions in passing the adjudication orders on
26/27/28.08.2019. However, the Learned Judge recorded a finding that the
orders of adjudication were not passed on 26/27/28.08.2019, but on some
other dates. According to the learned Special Public Prosecutor, when a
particular judicial or official act has been performed and there is no other
evidence on record to suggest that such act has not been performed, then, it
may reasonably be presumed under S.114, Illustration (e) of the Evidence Act
that such particular act was regularly performed. The observation of this Court
in the above-referred judgment can usefully be quoted below:
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"The fact that an order for attachment has been passed
is not sufficient to establish the factum of attachment. An
attachment cannot be said to have been made unless and until
the provisions of both the sub-rules of O.21 R.54 have been
complied with. When several properties are sought to be
attached in pursuance of an order for attachment, there must be
proof of affixture on every one of the properties. The mere
fact that in pursuance of an order for attachment in respect of a
house and lands there was an affixture of the order on the
house does not lead to any presumption that the order has been
affixed on the lands also. No doubt, when the only evidence is
that a particular judicial or official act has been performed and
there is no other evidence on record, it may be presumed under
S.114, Illustration (e) that that particular act was regularly
performed. But when the dispute is whether that act was
performed or not, there is nothing in law which enables a
Court to presume that that act was a matter of fact performed.
It may also be mentioned that it is not obligatory on the part of
the Court to draw a presumption under Section 114 always,
irrespective of what the facts of any particular case may be. A
Court may refuse to draw the presumption under S.114,
Illustration (e), to assist a plaintiff who comes to Court long
after the material evidence necessary to establish his case had
ceased to be available and then seeks to rest his case entirely
on presumptions”.
7.7 Reliance was also placed by the learned Special Public Prosecutor
upon the decision of the Division Bench of this Court in R.M.P.R.
Viswanathan Chettiar v. Commissioner of Income-tax, Madras [1953 SCC
Online Mad 285] wherein it was held thus:
"6. In - AIR 1951 Mad 204 (B) Rajamannar C.J.
explained the principle underlying - 34 Mad 151 (D) and - AIR
1930 Mad 490 (A)
“.......the rule laid down .... is based upon a
salutary and just principle, namely, that if a person is
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adverse order within a prescribed time, limitation
should not be computed from a date earlier than that
on which the party aggrieved actually knew of the
order or had an opportunity of knowing the order and
therefore must be presumed to have had knowledge
of the order."
7. That was the principle which the learned Judges
applied in - AIR 1951 Mad 204 (B) to construe the expression
"an order made" as it was used in sub-section (2) of Section
33-A of the Income Tax Act
8. .......
9. In - 34 Mad 151 (D) itself at p.154, the learned
Judges dealt with the contention based upon Section 24 of the
Madras Act 4 of 1897, which required that the decision should
be recorded in writing with its reasons and should also be
communicated to the parties. The learned Judges pointed out:
“Though, therefore, this provision supports
the Government Pleader to the extent that it
shows that the date of the order and the date of
communication may, in the contemplation of the
legislature, be different dates, still it does not
support the more important inference that the Act
contemplates the starting of limitation before the
communication of the order to the parties.”
10. As explained by Rajamannar C.J. in - AIR 1951
Mad 204 (B) it was for the limited purpose of computing the
period of limitation that the expression "the date on which the
order was made" was construed in - '34 Mad 151 (D)' as the
date on which it was communicated to the parties affected. In -
'AIR 1951 Mad 204 (B)' the learned Judges negatived the
contention, that the provision in sub-section. (2) of Section 33-
A of the Income Tax Act was not really a provision prescribing
the time limit for the exercise of the right of the party
aggrieved, but that it imposed only a limit for the exercise of
revisional powers by the Commissioner. Sub-section (1) of
S.33-A provided that the Commissioner could on his own
motion exercise his revisional powers, provided the order had
not been made more than one year previously. Sub-section (2)
of S.33-A provided for the application by an assessee to the
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Commissioner the date of the order. The learned Judges
explained in - 'AIR 1951 Mad 204 (B)' that the date of the order
for purposes of sub-sec (2) of S.33-A."
7.8 The learned Special Public Prosecutor also referred to the decision
of the Hon'ble Supreme Court in Raja Harish Chandra Raj Singh v. Deputy
Land Acquisition Officer and another [(1962) 1 SCR 676 : AIR 1961 SC
1500] wherein it was held that “date of service of the award has to be
reckoned as the date from which the period of limitation commence”. In
Paragraph 10, it was held as follows:
"10. It may, however, be pertinent to point out that the
Bombay High Court has taken a somewhat different view in
dealing with the effect of the provision as to limitation
prescribed by Section 33-A (2) of the Indian Income Tax Act.
This provision prescribes limitation for an application by an
assessee for the revision of the specified class of orders, and it
says that such an application should be made within one year
from the date of the order. it is significant that while providing
for a similar period of limitation Section 33 (1) specifically
lays down that the limitation of sixty days therein prescribed
is to be calculated from the date on which the order in
question is communicated to the assessee. In other words, in
prescribing limitation Section 33 (1) expressly provides for
the commencement of the period from the date of the
communication of the order, whereas Section 33-A(2) does
not refer to any such communication; and naturally the
argument was that communication was irrelevant under
Section 33-A(2) and limitation would commence as from the
making of the order without reference to its communication.
This argument was rejected by the Bombay High Court and it
was held that it would be a reasonable interpretation to hold
that the making of the order implies notice of the said order,
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would not be easy to reconcile this decision and particularly
the reasons given in its support with the decision of the same
High Court in the case of Jehangir Bomanji [AIR 1954 Bom
419]. The relevant clause under Section 33-A(2) of the Indian
Income Tax Act has also been similarly construed by the
Madras High Court in O.A.O.A.M. Muthia Chettiar vs. CIT
[ILR 1951 Mad 815]. “If a person is given a right to resort to
a remedy to get rid of an adverse order within a prescribed
time”, observed Rajamannar, C.J., “limitation should not be
computed from a date earlier than that on which the party
aggrieved actually knew of the order or had an opportunity of
knowing the order and therefore, must be presumed to have
the knowledge of the order”, In other words the Madras High
Court has taken the view that the omission to use the words
“from the date of communication” in section 33-A(2) does not
mean that limitation can start to run against a party even
before the party either knew or should have known about the
said order. In our opinion, this conclusion is obviously right”.
7.9 Further, the learned Special Public Prosecutor placed reliance on
the decision in The Commissioner of Income Tax, Chennai v. Mohammed
Meeran Shahul Hameed passed in Civil Appeal No. 6204 of 2021 dated
07.10.2021, in which, the Honourable Supreme Court set aside the order dated
03.07.2019 passed by the Division Bench of this Court in TCA No. 429 of
2019, holding that "it is not enough that the Authority should pass the order,
but it should be communicated to the aggrieved individual in a manner known
to law and acknowledgment card should be obtained". The relevant passage of
the said judgment is profitably extracted below:
"4.3 On a fair reading of sub-section (2) of Section
263, it can be seen that as mandated by sub-section (2) of
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Section 263 no order under Section 263 of the Act shall be
"made" after the expiry of two years from the end of the
financial year in which the order sought to be revised was
passed. Therefore, the word used is 'made' and not the order
'received' by the assessee. Even the word 'dispatch' is not
mentioned in Section 263 (2). Therefore, once it is established
that the order under Section 263 was made/passed within the
period of two years from the end of the financial year in which
the order sought to be revised was passed, such an order
cannot be said to be beyond the period of limitation prescribed
under Section 263 (2) of the Act. Receipt of the order passed
under Section 263 by the assessee has no relevance for the
purpose of counting the period of limitation provided under
Section 263 of the Income Tax Act. In the present case, the
order was made/passed by the learned Commissioner on
26.03.2012 and according to the department it was dispatched
on 28.03.2012. The relevant last date for the purpose of
passing the order under Section 263 considering the fact that
the assessment was for the financial year 2008-09 would be
31.03.2012 and the order might have been received as per the
case of the assessee - respondent herein on 29.11.2012.
However, as observed hereinabove, the date on which the
order under Section 263 has been received by the assessee is
not relevant for the purpose of calculating/considering the
period of limitation provided under Section 263 (2) of the
Act. Therefore, the High Court, as such has misconstrued and
has misinterpreted the provisions of Sub-section (2) of Section
263 of the Act. If the interpretation made by the High Court
and the learned ITAT is accepted in that case it will be
violating the provision of Section 263 (2) of the Act and to
add something which is not there in the section. As observed
hereinabove, the word used is 'made' and not the 'receipt of the
order'. As per the cardinal principle of law, the provision of
the statue/Act is to be read as it is and nothing is to be added
or taken away from the provision of the statue. Therefore, the
High Court has erred in holding that the order under Section
263 of the Act passed by the learned Commissioner was
barred by period of limitation, as provided under sub-section
(2) of Section 263 of the Act."
Therefore, according to the learned Special Public Prosecutor, the Learned
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Judge in paragraph 46 of the order impugned herein, referred to the Division
Bench decision of this Court in CIT v. Mohammed Meeran Shahul Hameed
[TCA No.429 of 2019 dated 03.07.2019] and erroneously concluded that the
first appellant has not passed the adjudication orders on the dates, when they
were said to have been passed.
With these submissions, the learned Special Public Prosecutor sought to
allow these appeals by setting aside the order impugned herein.
8.1 Per contra, Mr. A.L. Somayaji, learned Senior counsel appearing
for the respondents would contend that M/s.Marg Limited is a private limited
company engaged in the business of real estate and infrastructure
development. During the course of such business, a search was conducted in
the premises of M/s.Marg Limited and its associated entities. The authorities
engaged in such search, recorded the statements of the representative of the
respondent companies, besides impounded several documents. Following the
search, show cause notices dated 26.04.2018 were issued under Section 24 (1)
of the Act by the second appellant alleging that the respondents are
benamidars for M/s.Marg Limited, which beneficially owns the properties
mentioned therein. It was also alleged in the show cause notices that at the
time of purchase of the lands, loans were availed by the respondents from
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M/s.Great Meera Finlease Private Limited, a Non-banking finance company
(NBFC) incorporated solely for the purpose of routing of the funds of marg
group of companies and for the purchase of the assets. In effect, it was alleged
that the respondent companies are benamidars of the assets of M/s.Marg
Limited, which is the beneficial owner. On receipt of the show cause notices,
the respondents submitted their explanation denying the allegations and
contended that M/s.Marg Limited is involved in the business of development
of real estate and infrastructure projects. It was also stated in the explanation
that during 1961, the Urban Land (Ceiling and Regulation) Act, 1976 came
into effect limiting the maximum acreage of land that may be held by a
company to 30 standard acres, which was further reduced to 15 acres by the
2016 amendment to the Ceiling Act. Being in the business of real estate
development, M/s.Marg required extensive land resources and had thus, set up
several subsidiaries and associated entities to enable procurement and holding
of lands for its use. Admittedly, this attempt was only to get over the ceiling
imposed and it cannot be called as benami transaction. It was also further
explained that the purchase of the assets during the relevant point of time will
not come within the purview of the amended Act 2016, especially when the
applicability of the amended Act, whether it would operate prospectively or
retrospectively, is pending before the competent court for adjudication.
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However, the second appellant herein rejected the explanations offered by the
respondents / writ petitioners and passed the orders provisionally attaching the
properties under Section 24(4) of the Act. Thereafter, references were made to
the first appellant in accordance with Section 24(5) of the Act for
confirmation. On the basis of such references made by the second appellant,
the first appellant issued show cause notices and commenced the adjudication
in terms of Section 26 of the Act.
8.2 Adding further, the learned senior counsel would contend that the
representative of the respondent companies appeared before the first appellant,
the matters were heard elaborately and orders were reserved on 17.07.2019
and thereafter, the orders were said to have been passed on 26.08.2019,
27.08.2019 and 28.08.2019. However, only on 29.10.2019, the respondents
were informed to collect the copies of the orders said to have been passed on
26/27/28.08.2019. Thus, according to the learned senior counsel, the orders
impugned in the writ petitions are beyond the time limit as prescribed under
section 26(7) of the Act and suffer from procedural impropriety. In this
context, the learned senior counsel placed reliance on the decision of the
Honourable Supreme Court in Hindustan Petroleum Corporation Limited v.
Darius Shapur Chenai and others [(2005) 7 SCC 627] wherein in paragraph
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8, it was held that “when the decision making process itself is in question, the
power of judicial review can be exercised by the Court in the event the order
impugned suffers from well-known principles viz., illegality, irrationality and
procedural impropriety”.
8.3 The learned senior counsel appearing for the respondents also
contended that the appellants have not arrived at a subjective satisfaction as
regards the transactions alleged to have been benami transactions done by the
respondents for and on behalf of the beneficiary namely M/s. Marg Limited;
they failed to establish that there is a nexus between the assets held by the
respondents and the income generated by M/s. Marg; and in the absence of
establishing such nexus, the entire proceedings initiated under the Act by the
appellants stand vitiated. In this regard, the learned senior counsel placed
reliance on the decision of the Honourable Supreme Court in Aslam
Mohammad Merchant v. Competent Authority and others [(2008) 14 SCC
186 : (2009) 2 SCC (Cri) 793] wherein it was held that “the competent
authority has to satisfy himself that the property seized has been 'illegally
acquired property' within the meaning of Section 3(c) of the Smugglers and
Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976”. It was
further held that “the competent authority must satisfy that there exists a link
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between the so-called acquired property and the income or assets through
which such properties have been acquired”. Thereafter, the Honourable
Supreme Court set aside the show cause notice issued by the Competent
Authority as it did not disclose as to how the properties have been acquired
and the source for acquisition thereof.
8.4 The learned senior counsel for the respondents placed reliance on
the decision of the Division Bench of the Karnataka High Court in
Commissioner of Income Tax and another v. B.J.N. Hotels Limited [2016
SCC Online Kar 8485], wherein, in an identical situation, it was held that
“the assessment order passed by the Assessing Officer is time barred”. A
useful reference can be made to the observations of the Karnataka High Court
in paragraphs 8 to 11, which read as follows:
"8. Firstly, we are considering the substantial
question of law No.4, relating to limitation since it goes to the
root of the matter. The undisputed facts are that the
assessment orders were required to be issued on or before
March 26, 2007, the period prescribed under law considering
sixty days from January 27, 2007, due date for special auditor
report as specified under Section 142 (2C) of the Act. The
Assessment Orders are dated April 27, 2007. Taking the
second reference of the Commissioner of Income-Tax, dated
December 18, 2006 for special audit report, due date for
submission of special audit report being February 28, 2007,
the assessment orders would have been issued on or before
April 29, 2007. The copies of the assessment orders were
served on the assessee on April 30, 2007.
9. However, the learned counsel appearing for the
Revenue would contend that the Assessing Officer passed the
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orders on April 27, 2007 and the same was dispatched to the
assessee. On our direction to produce the original records, the
same are placed before us. We have noticed certain over
writings in the order sheet as regards date of passing of the
order by the Assessing Officer and moreover, a particular
page of the order sheet is maintained on a rough sheet (in an
unusual manner) different from other pages of the order sheet.
Besides this flaw in the records, learned counsel for the
Revenue is neither able to point out from the records that the
assessment orders were dispatched on April 27, 2007 nor
produced the dispatch register to establish that the orders are
complete and effective i.e., it is issued, so as to be beyond the
control of the authority concerned, within the period of
limitation i.e., April 29, 2007. Admittedly, the assessment
orders were served on the assessee on April 30, 2007. Hence,
we are of the considered opinion that the assessment orders
passed are barred by limitation.
10. An identical issue was before this Court in I.T.A.
No. 832 of 2008 (dated October 14, 2014) in the case of
Maharaja Shopping Complex v. Deputy CIT. This Court
following the judgment of the Kerala High Court in the case
of Government Wood Works v. State of Kerala, (1988) 69
STC 62 (Ker) has held that in the absence of dispatch date
made available to the Court from the records, to prove that the
order is issued within the prescribed period, order passed by
the Assessing Officer is barred by limitation. The said
judgment squarely applies to the facts of the present case. In
the result, substantial question of law No.4 is answered in
favour of the assessee and against the Revenue. In view of the
above, it is not necessary for us to examine the other
questions.
11. Accordingly, appeals are dismissed."
8.5 The learned senior counsel for the respondents would also
contend that the orders passed by the first appellant are beyond the period
prescribed under Section 26 (7) of the Act. For the purpose of challenging the
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said orders of the first appellant, the dates on which the copies of the same
were delivered to the respondents will be the criterion and not the date of
passing of the same. In support of the same, the learned Senior counsel
referred to the decision of the Division Bench of this Court in Kavanna,
Vana, Ena Swaminathan @ Chidambaram Pillai v. Lakshmanan Chettiar
and another [1930 Law Weekly Part 12 Page No.487] wherein, it was
observed that "since the plaint in this case was filed within 30 days after the
order of refusal by the Registrar was communicated to him, the suit under
Section 77 of The Registration Act, is not time-barred. For the same reasons, I
must hold that the application to the Registrar under Section 73 (1) of the Act
was also made in time and that the rejection of it by the Registrar as time-
barred, was wrong".
8.6 That apart, the learned senior counsel for the respondents placed
reliance on the decision of the Honourable Supreme Court in Raja Harish
Chandra Raj Singh v. Deputy Land Acquisition Officer and another
[(1962) 1 SCR 676 : AIR 1961 SC 1500] wherein it was held as follows:
"7. In this connection it is material to recall the fact that
under Section 12 (2) it is obligatory on the Collector to give
immediate notice of the award to the persons interested as are
not present personally or by their representatives when the
award is made. This requirement itself postulates the necessity
of the communication of the award to the party concerned. The
legislature recognised that the making of the award under
Section 11 followed by its filing under Section 12 (1) would not
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meet the requirements of justice before bringing the award into
force. It thought that the communication of the award to the
party concerned was also necessary, and so by the use of the
mandatory words an obligation is placed on the collector to
communicate the award immediately to the person concerned. It
is significant that the section requires the Collector to give
notice of the award immediately after making it. This provision
lends support to the view which we have taken about the
construction of the expression "from the date of the Collector's
award" in the proviso to Section 18. It is because
communication of the order is regarded by the legislature as
necessary that Section 12 (2) has imposed an obligation on the
collector and if the relevant clause in the proviso is read in the
light of this statutory requirements it tends to show that the
literal and mechanical construction of the said clause would be
wholly inappropriate. It would indeed be a very curious result
that the failure of the Collector to discharge his obligation under
Section 12 (2) should directly tend to make ineffective the right
of the party to make an application under Section 18, and this
result could not possibly have been intended by the legislature."
8.7 For the same proposition, as to when an order passed by an
authority will take effect, whether from the date of passing the order or the
date on which it was communicated, the learned senior counsel referred to the
decision of the Division Bench of the Kerala High Court in Government
Wood Works v. State of Kerala [1987 SCC Online Ker 697] wherein it was
held thus:
"13.The order of any authority cannot be said to be
passed unless it is in some way pronounced or published or the
party affected has the means of knowing it. It is not enough if
the order is made, signed, and kept in the file, because such
order may be liable to change at the hands of the authority who
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may modify it or even destroy it, before it is made known,
based on subsequent information, thinking or change of
opinion. To make the order complete and effective, it should be
issued, so as to be beyond the control of the authority
concerned, for any possible change or modification therein.
This should be done within the prescribed period, though the
actual service of the order may be beyond that period. This
aspect of the matter had not come up for consideration in the
cases of Viswanathan Chettiar, (1954) 25 ITR 79 (Mad) and
Laxmidas & Co., (1969) 72 ITR 88 (Bom) where the only
question dealt with was whether service of the order after the
prescribed period rendered it invalid. Unless, therefore, the
order of the Deputy Commissioner in this case had been so
issued from his office within the period prescribed, it has to be
held that the proceedings are barred by limitation. This
question has not been considered by the Tribunal. The
Tribunal, which passed the order, apparently did not have the
benefit of the decision in Malayil Mills Case (T.R.C. Nos. 15
and 16 of 1981 decided on 7th June, 1982 - Kerala High
Court) which, so far as we could see, remains unreported. The
matter has therefore to go back to the Tribunal for an
examination of the records to ascertain whether the order of the
Deputy Commissioner had been issued from his office within
the period of four years prescribed in Section 35 (2) of the
Act. The Tribunal will adjudicate the matter in the light of the
observations contained herein and in the judgment in the case
of Malayil Mills (T.R.C. Nos. 15 and 16 of 1981 decided on
7th June, 1982 - Kerala High Court) extracted earlier."
8.8 The learned senior counsel for the respondents also relied on the
decision of the Division Bench of the Gujarat High Court in Kanubhai M.
Patel (HUF) v. Hiren Bhatt or His Successors to office [(2011) 334 ITR 25
(Gujarat)] wherein it was held that “date of issuance of notice under Section
148 Income Tax Act has to be reckoned not from the date when it was issued,
but on the date when it was actually delivered on the assessee” and in
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paragraphs 13 to 16, it was held thus:
"13. On a plain reading of Section 149, it is apparent
that under the said provision, the maximum time limit for
issuance of notice under Section 148 is six years from the end
of the relevant assessment year. In the present case, the
relevant assessment year in each of the petitions is 2003-2004;
the impugned notices are dated 31.03.2010; and the said
notices were sent for booking to the Speed Post Centre,
Ahmedabad, on 07.04.2010. On behalf of the petitioners, it
has been contended that the notices which have been
dispatched for service only on 07.04.2010, are clearly time
barred inasmuch as the date of dispatch would be the date of
issue of the notices. Whereas, on behalf of the revenue, it has
been contended that the notices were actually signed on
31.03.2010, hence, the said date would be the date of issue and
as such, the impugned notices have been issued within the time
limit prescribed under Section 149 of the Act.
14. In the background of the aforesaid facts and
contentions, the core issue that arises for consideration is as to
when can the notice under Section 148 of the Act be said to
have been issued. In this context, it would be necessary to
examine the true import of the expression "shall be issued" as
employed in section 149 of the Act.
15. The expression 'issue' has been defined in Black's
Law Dictionary to mean "To send forth; to emit; to
promulgate; as, an officer issues orders, process issues from
court. To put into circulation; as, the treasury issues notes. To
send out, to send out officially; to deliver, for use, or
authoritatively; to go forth as authoritative or binding. When
used with reference to writs, process, and the like, the term is
ordinarily construed as importing delivery to the proper
persons, or to the proper officer for service etc,
15.1 In P. Ramanathan Aiyer's Law Lexicon the word
'issue' has been defined as follows:-
"Issue. As a noun, the act of sending or causing
to go forth; a moving out of any enclosed place; egress;
the act of passing out; exit, egress or passage out
(Worcester Dict.); the ultimate result or end.
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As a verb, "To issue" means to send out, to send
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out officially; to send forth; to put forth; to deliver, for
use, or unauthoritatively; to put into circulation; to emit;
to go out (Burrill); to go forth as a authoritative or
binding, to proceed or arise from; to proceed as from a
source (Century Dict.)
Issue or process: Going out of the hands of the
clerk, expressed or implied, to be delivered to the
Sheriff for service. A writ or notice is issued when it is
put in proper form and placed in an officer's hand for
service, at the time it becomes a perfected process.
Any process may be considered 'issued' if made
out and placed in the hands of a person authorised to
serve it, and with a bona fide intent to have it served"
16. Thus, the expression to issue in the context of
issuance of notices, writs and process, has been attributed the
meaning, to send out; to place in the hands of the proper
officer for service. The expression "shall be issued" as used in
section 149 would therefore have to be read in the aforesaid
context. In the present case, the impugned notices have been
signed on 31.03.2010, whereas the same were sent to the speed
post centre for booking only on 07.04.2010. Considering the
definition of the word issue, it is apparent that merely signing
the notices on 31.03.2010, cannot be equated with issuance of
notice as contemplated under Section 149 of the Act. The date
of issue would be the date on which the same were handed
over for service to the proper officer which in the facts of the
present case would be the date on which the said notices were
actually handed over to the post office for the purpose of
booking for the purpose of effecting service on the petitioners.
Till the point of time the envelopes are properly stamped with
adequate value of postal stamps, it cannot be stated that the
process of issue is complete. In the facts of the present case,
the impugned notices having been sent for booking to the
speed post centre only on 07.04.2010, the date of issue of the
said notices would be 07.04.2010 and not 31.03.2010, as
contended on behalf of the revenue. In the circumstances,
impugned the notices under Section 148 in relation to
assessment year 2003-04, having been issued on 07.04.2010,
which is clearly beyond the period of six years from the end of
the relevant assessment year, are clearly barred by limitation
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and as such, cannot be sustained."
Thus, the learned senior counsel for the respondents would ultimately, contend
that the Learned Judge, by referring to the various decisions on the field, has
categorically held that "the prohibition imposed by the provisions of Section
26(7) will apply squarely in this case and the impugned orders cannot be said
to have been passed within the period of limitation, as provided” and rightly
set aside the adjudication orders of the first appellant, which does not call for
any interference at the hands of this court.
B. ANALYSIS
9. This court carefully considered the submissions made by the
learned counsel on either side and meticulously perused the documents
available on record.
10. At the first instance, pertinently, it is to be pointed out that the
core issue involved in this batch of cases is relating to the aspect of limitation,
inasmuch as the learned Judge allowed the writ petitions filed by the
respondents challenging the adjudication orders passed by the first appellant
under section 26(3) of the Act, only on the ground that the same are barred by
limitation as per section 26(7) of the Act.
11. In order to appreciate the rival contentions of the parties on the
question for determination, it would be profitable to take note of the relevant
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provisions of the Prohibition of Benami Property Transactions Act, 1988,
which is a penal enactment with the object of prohibiting benami transactions
and to provide for the right of the Government to recover the property held as
benami. Section 5 provides for confiscation of any property which is the
subject matter of benami transaction by the Central Government. While an
Adjudicating Authority is appointed under section 7, the proceedings for
confiscation are initiated by the Initiating Officer under section 24. If the
Initiating Officer passes a provisional order of attachment of the property, he
draws up a statement of the case and refers it to the Adjudicating Authority
under section 24 (5) of the Act. The Adjudicating Authority then issues a show
cause notice under section 26 (1). The said show cause notice has to be issued
within a period of 30 days upon the reference being received. Thereafter 30
days time is given for filing of the reply and furnishing of the information and
after affording an opportunity of being heard, the Adjudicating Authority has
to pass appropriate orders under section 26(3) in accordance with section
26(7), in which, it has been specifically mentioned that ‘No order under
sub-section 3 shall be passed after the expiry of one year from the end of the
month in which the reference under sub-section 5 of section 24 was received’.
Thus, it is vivid that the enquiry and the adjudication are time-bound as per the
statute. Once the adjudicating authority passes the order under section 26(3),
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an appeal remedy has been provided under section 46. A further remedy of
appeal has also been provided before the High Court under section 49 on a
substantial question of law.
12. In the order impugned herein, the Learned Judge has not
explained as to why the writ petitions were entertained at the first instance,
when the grounds of attack could have been canvassed in the statutory appeal
itself. Only if the appeal was not entertained by the appellate authority on the
ground that it was after the limitation period, then, the issue would have been
arisen for consideration of this Court. Such a scenario never arose and the writ
petitions were filed on the basis of mere apprehension. Notwithstanding the
issue of maintainability of the writ petitions on the ground of an efficacious
appeal remedy available in the statute, this Court will traverse into the other
major plank of the case, i.e. the orders of the Adjudicating Authority have not
been passed within the period as specified under Section 26 (7) of the Act.
13. Admittedly, the second appellant made the references to the first
appellant on 27.07.2018, i.e., within 15 days from the date of the provisional
orders dated 20.07.2018 as mandated under section 24(5) of the Act. Upon
receiving the references from the second appellant, the first appellant took the
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same on file on 01.08.2018 and issued show cause notices dated 14.08.2018
and initiated proceedings under section 26(1) of the Act for adjudication. It is
apparent from the records that the hearings took place before the first appellant
on various dates; the orders were reserved on 17.07.2019; and the same were
pronounced in all the references on 26/27/28.08.2019. As per section 26(7) of
the Act, the first appellant, i.e. the Adjudicating Authority is mandated to pass
an order within one year from the end of the month on the receipt of the
reference under section 24(5) from the second appellant. This period of one
year commenced on 01.08.2018, when the references were taken on file and
expired on 31.08.2019.
14. A plain reading of the provision of law as well as the dates on
which the orders were passed by the Adjudicating Authority would reveal that
there has been a compliance of the statutory provisions by the appellants. The
further event of the original / certified copies of the orders dated
26/27/28.08.2019 being communicated to the respondents / writ petitioners
assumes significant, where the delay has been occasioned. It is the case of the
appellants that this was a batch of 69 cases in which the beneficial owner was
one and the same and the different benamidars are the subsidiary companies of
the beneficial owner; and that the preparation of the certified copies was a
time-consuming process as each order runs to more than hundred pages and
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had to be prepared in triplicate. The certified copies were made ready on
04.09.2019 and 11.09.2019, after getting notarisation from the Administrative
officer-cum-Registrar and the same were booked with the postal department on
12.09.2019 and 13.09.2019 for despatching the same to the three parties, i.e.,
Initiating Officer, writ petitioners and the beneficial owner. It is further
submitted that the said orders which were sent through Post to the respondents
/ writ petitioners, were returned with the remark ‘unserved’, as the addresses
of the 69 subsidiary companies, who are the benamidars, are one and the same.
Thereafter, the first appellant sent those orders to the office of the second
appellant and directed them to serve the same on the respondents.
Accordingly, the second appellant called the respondents on various times
over phone and the respondents’ authorised officers, after much persuasion,
finally came and collected the orders in person and thus, the orders were
served on the respondents on 29.10.2019.
15. It is evident from the order sheets register and file movement
register maintained in the office of the authority that the adjudication orders
were passed on 26/27/28.08.2019 by the first appellant under section 26(3) of
the Act. Since the documents of the public authorities are legally valid and are
trustworthy, the genuineness of the same cannot be doubted, in the absence of
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any conclusive proof to that effect. Therefore, the records produced by the
appellants in the form of registers could be taken into consideration for
ascertaining the correct state of affairs. In this connection, it may be relevant
to refer to Section 35 of the Evidence Act, which states that “an entry in any
public or other official book, register or stating a fact in issue or relevant fact
and made by a public servant in the discharge of his official duty, or by any
other person in performance of a duty specially enjoined by the law of the
country in which such book, register, is kept, is itself a relevant fact”.
Applying the same to the facts of the present case, wherein the orders
impugned in the writ petitions were passed on 26/27/28.08.2019, i.e., within
the limitation period as prescribed under section 26(7) of the Act and the
factum of passing of the orders was also duly recorded in the Register as 'order
is passed accordingly' and the movement register also disclosed the same, this
court has no hesitation to arrive at a decision that the first appellant complied
with the statutory mandate and passed the adjudication orders within the
period of one year from the end of the month in which the references were
received.
16. Then, the ancillary question that arises for consideration herein is,
as to whether the delay in the communication of the said orders to the
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respondents, can be said to be non-compliance of the provisions under section
26 (7) of the Act and thereby the same would adversely affect the validity of
the orders passed under section 26(3) by the adjudicating authority.
17. As a matter of fact, it is to be pointed out that the learned Judge
examined the issue of limitation, from the point of view of the respondents /
writ petitioners and not from the point of the authority being required to
exercise power within the prescribed time limit. There are different tests to be
applied for reckoning the limitation.
18. A perusal of the records would reveal that after the references
were taken on file by the first appellant on 01.08.2018, there were as many as
nine hearings and during the ninth hearing i.e., on 17.07.2019, orders were
reserved. The orders thereafter came to be passed on 26/27/28.08.2019, which
fact was duly recorded by the first appellant in the register as 'Order is passed
accordingly'. Thus, the same would show that the adjudicating authority has
exercised his jurisdiction in a manner as to comply with the timeline as
prescribed under the Act. As such, the delay in the communication of the order
copies to the respondents, which is essentially a delay of about two weeks
from the date of passing of the orders on 26/27/28.08.2019 to the dates on
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which the Registry had booked the order copies for despatch on 12.09.2019
and 13.09.2019, can at best be deemed to be a procedural delay. In this
connection, this Court would apply the doctrine of ‘substantial compliance’ to
the facts and circumstances of the case. In the decision of the Hon'ble Supreme
Court in Commissioner of Central Excise, New Delhi v. Hari Chand Shri
Gopal and others [(2011) 1 SCC 236], it was held as follows:
“Doctrine of substantial compliance and “intended use”
32. The doctrine of substantial compliance is a judicial
invention, equitable in nature, designed to avoid hardship in
cases where a party does all that can reasonably be expected of
it, but failed or faulted on some minor or in consequent aspects
which cannot be described as the “essence” or the “substance”
of the requirements. Like the concept of “reasonableness”, the
acceptance or otherwise of a plea of substantial compliance
depends upon the facts and circumstances of each case and the
purpose and object to be achieved in the context of the
prerequisites which are essential to achieve the object and
purpose of the rule or regulation. Such a defence cannot be
pleaded if a clear statutory prerequisite which effectuate the
object and the scope of the statute has not been met. Certainly,
it means that the court would determine whether the statute has
been followed sufficiently so as to carry out the intent for which
the statute was enacted and not a mirror image type of strict
compliance. Substantial compliance means “actual compliance
in respect to the substance essential to every reasonable object
of the statute” and the court should determine whether the
statute has been followed sufficiently so as to carry out the
intent of the statute and accomplish the reasonable objectives
for which it was passed.
33. A fiscal statute generally seeks to preserve the need to
comply strictly with regulatory requirements that are important,
especially when a party seeks the benefits of an exemption
clause that are important. Substantial compliance with an
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enactment is insisted, where mandatory and direct recruitment
requirements are lumped together, for in such a case, if
mandatory requirements are complied with, it will be proper to
say that the enactment has been substantially complied with
notwithstanding the non-compliance of directory requirements.
In cases where substantial compliance has been found, there has
been actual compliance with the statute, albeit procedurally
faulty. The doctrine of substantial compliance seeks to preserve
the need to comply strictly with the conditions or requirements
that are important to invoke a tax or duty exemption and forgive
non-compliance for either unimportant and tangential
requirements or requirements that are so confusingly or
incorrectly written that an earnest effort at compliance should
be accepted.
34. The test for determining the applicability of the substantial
compliance doctrine has been the subject of a myriad of cases
and quite often, the critical question to be examined is whether
the requirements relate to the “substance” or “essence” of the
thing to be done but are given with a view to the orderly
conduct of business, they may be fulfilled by substantial, if not
strict compliance. In other words a mere attempt at compliance
may not be sufficient, but actual compliance with those factors
which are considered as essential.”
19. That apart, it could be seen from the order impugned herein that
the fact that the appeal time of 45 days as mentioned under section 46 of the
Act, has to be from the date of orders, whereas the orders were actually
communicated/received by the respondents only on 29.10.2019, seems to have
weighed in the mind of the Learned Judge to observe that “this fact will also
have a bearing on the order being passed within the period of limitation as
stated in section 26(7)”. For a moment, a scenario may be visualized, where an
order which is well within the period of limitation, is passed within 10 months
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of reference, but same is communicated/received by the party concerned after
45 days from the date of passing of the order, albeit within the period of the
said one year statutory limit as imposed by the provisions of the Act. In such
an event, in order to give effect and meaning to the provision, it would only
have to be interpreted that the appeal period would start running only from
‘the date of receipt of the order’ and not from ‘the date of the order’. Except
the same, any other interpretation would result in incongruity and absurdity
and thus, the same ought to be avoided. This illustration would expose the
fallacy in the reasoning rendered by the Learned Judge and would sufficiently
clarify that in cases where ‘the date of the order’ and ‘the date of receipt of the
order’ are separated by considerable time, it is only the date of receipt of the
order, which would be material for the purpose of calculating the limitation for
appeal and this factor cannot have any bearing on the validity of the orders
impugned in the writ petitions.
20. There cannot be any disagreement over the proposition that the
limitation for filing an appeal would start running only from the date of
communication of the order to be appealed against. In Chhattisgarh State
Electricity Board v. Central Electricity Regulatory Commission & others
[(2010) 2 SCC 79], the Hon'ble Supreme Court, while considering the issue
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relating to date of passing and communication of orders in the background of
the law of limitation in filing appeals, held as follows:
“20.In Raja Harish Chandra Raj Singh v. Deputy Land
Acquisition Officer MANU/SC/0386/1961 : AIR 1961 SC
1500, this Court considered whether an award made under the
Land Acquisition Act, 1894 can be treated to have been
communicated on the date of its making. The application filed
by the respondent for making reference under Section 18 of the
Land Acquisition Act was rejected by the Collector on the
ground that the same had been made after more than six months
from the date of award i.e., 25.3.1951. The High Court
dismissed the writ petition filed by the appellant. This Court
noted that no notice of the award was given to the appellant as
per the requirements of Section 12(2) and it was only on or
about January, 1953 that he received the information about
making of the award. He then filed application on 24.2.1953
for reference. This Court considered the nature of the award
made by the Collector under Section 12(2) and held that the
period of six months prescribed for making application would
commence from the date the award was made known to the
party. Paragraph 6 of the judgment which contains discussion on
the issue of communication of award reads as under:
There is yet another point which leads to the
same conclusion. If the award is treated as an
administrative decision taken by the Collector in the
matter of the valuation of the property sought to be
acquired it is clear that the said decision ultimately
affects the rights of the owner of the property and in
that sense, like all decisions which affect persons, it
is essentially fair and just that the said decision
should be communicated to the said party. The
knowledge of the party affected by such a decision,
either actual or constructive, is an essential element
which must be satisfied before the decision can be
brought into force. Thus considered the making of
the award cannot consist merely in the physical act
of writing the award or signing it or even filing it in
the office of the Collector; it must involve the
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communication of the said award to the party
concerned either actually or constructively. If the
award is pronounced in the presence of the party
whose rights are affected by it can be said to be
made when pronounced. If the date for the
pronouncement of the award is communicated to the
party and it is accordingly pronounced on the date
previously announced the award is said to be
communicated to the said party even if the said party
is not actually present on the date of its
pronouncement. Similarly if without notice of the
date of its pronouncement, an award is pronounced
and a party is not present the award can be said to be
made when it is communicated to the party later.
The knowledge of the party affected by the award,
either actual or constructive, being an essential
requirement of fairplay and natural justice the
expression "the date of the award" used in the
proviso must mean the date when the award is either
communicated to the party or is known by him
either actually or constructively. In our opinion,
therefore, it would be unreasonable to construe the
words "from the date of the Collector's award" used
in the proviso to Section 18 in a literal or
mechanical way.
(emphasis supplied)
21. In Assistant Transport Commissioner, Lucknow v. Nand
Singh [MANU/SC/0380/1979 : (1979) 4 SCC 19], the Hon'ble Supreme Court
dealt with a similar question in the context of filling an appeal under
Section 15 of the U.P. Motor Vehicles Taxation Act, 1935. The Allahabad
High Court held that “the date of communication of the order will be the
starting point for limitation of filing an appeal”. While approving the view
taken by the High Court, it was observed as under:
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“In our opinion, the judgment of the High Court is right
and cannot be interfered with by this Court. Apart from the
reasons given by this Court in the earlier judgment to the effect
that the order must be made known either directly or
constructively to the party affected by the order in order to
enable him to prefer an appeal if he so likes, we may give one
more reason in our judgment and that is this: It is plain that
mere writing an order in the file kept in the office of
the Taxation Officer is no order in the eye of law in the sense of
affecting the rights of the parties for whom the order is
meant. The order must be communicated either directly or
constructively in the sense of making it known, which may
make it possible for the authority to say that the party affected
must be deemed to have known the order. In a given case, the
date of putting the order in communication under certain
circumstances may be taken to be the date of the
communication of the order or the date of the order but
ordinarily and generally speaking, the order would be effective
against the person affected by it only when it comes to his
knowledge either directly or constructively, otherwise not. On
the facts stated in the judgment of the High Court, it is clear
that the respondent had no means to know about the order of
the Taxation Officer rejecting his prayer until and unless he
received his letter on October 29, 1964. Within the meaning of
Section 15 of the U.P. Motor Vehicle Taxation Act that was the
date of the order which gave the starting point for preferring an
appeal within 30 days of that date.”
(emphasis supplied)
22. In Muthiah Chettiar v. I.T. Commissioner, Madras [AIR 1951
Mad 2004], a two-Judge Bench of Madras High Court considered
the question whether the limitation of one year prescribed for filing revision
under Section 33A(2) of the Income Tax Act, 1922 is to be computed from the
date when the order was signed by the Income-tax Commissioner or the date
on which the petitioner had an opportunity of coming to know of the order. It
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was argued on behalf of the department that other provisions of the Act have
been amended to provide for appeal within specified time to be counted from
the date of the receipt of the order sought to be appealed against, but no such
amendment was made in Section 33A and therefore, the period of limitation
will start from the date of order. While rejecting the argument, Rajamannar,
C.J., referred to earlier decisions in Secretary of State v. Gopisetti
Narayanasami 34 Mad 151 and Swaminatha v. Lakshmanan
[MANU/TN/0442/1929 : AIR 1930 Mad 490] and observed as under:
“...The only question that we have to decide is as to whether
there is anything in the reasoning of the learned Judges
in Secretary of State v. Gopisetti Narayanasami 34 Mad. 151 : 8
I.C. 398 & Swaminatha v. Lakshmanan 53 Mad. 491 : A.I.R.
1930 Mad. 490 which makes the application of the rule laid
down by them dependent on the provisions of a particular
statute. We think there is none. On the other hand, we consider
that the rule laid down by the learned Judges in the above two
decisions and we are taking the same view - is based upon a
salutary and just principle, namely that, if a person is given a
right to resort to the remedy to get rid of an adverse order within
a prescribed time, limitation should not be computed from a date
earlier than that on which the party aggrieved actually knew of
the order or had an opportunity of knowing the order &
therefore, must be presumed to have had knowledge of the
order”.
23. In Collector of Central Excise, Madras v. M.M. Rubber and Co.,
Tamil Nadu [MANU/SC/0550/1992 : (1992) Supp 1 SCC 471], a three-Judge
Bench highlighted a distinction between making of an order and
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communication thereof to the affected person in the context of
Section 35E(3) and (4) of the Central Excise Act, 1944. The Bench noted the
scheme of Section 35, distinction between Sub-sections (3) and (4) thereof and
held that “in case where the order is subject to appeal, the same is required to
be communicated to the affected person”. The relevant portions of that
judgment are extracted below:
“5. Before we discuss the arguments of the learned Counsel, it
is necessary to set out some relevant provisions in the Act.
Section 35 of the Act provides for an appeal by a person
aggrieved by any decision or order passed under the Act by a
Central Excise Officer lower than a Collector of Central Excise
and that such an appeal will have to be filed "within three
months from the date of the communication to him of such
decision or order". Sub-section (5) of Section 35A requires that
on the disposal of the appeal, the Collector (Appeals) shall
communicate the order passed by him to the appellant,
the adjudicating authority and the Collector of Central Excise.
Section 35B provides for a right of appeal to any person
aggrieved by, among other orders, (1) an order passed by
the Collector (Appeals) under Section 35A and (2) a decision or
order passed by the Collector of Central Excise as
an adjudicating authority. Such an appeal will have to be filed
"within three months from the date on which the order sought
to be appealed against is communicated to the Collector of
Central Excise or as the case may be the other party preferring
the appeal". The Appellate Tribunal also is required to send a
copy of the order passed in the appeal to the Collector of
Central Excise and the other party to the appeal....
8. At this stage itself we may state that Sub-section (4) of the
Act provides that the adjudicating authority shall file the
application before the Tribunal in pursuance of the order made
under Sub-section (1) or Sub-section (2) "within a period of
three months from the date of communication of the order
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under Sub-section (1) or Sub-section (2) to the adjudicating
authority".
9. The words "from the date of decision or order" used
with reference to the limitation for filing an appeal or revision
under certain statutory provisions had come up for
consideration in a number of cases. We may state that
the ratio of the decisions uniformly is that in the case of a
person aggrieved filing the appeal or revision, it shall mean the
date of communication of the decision or order appealed
against. However, we may note a few leading cases on this
aspect.
10. Under Section 25 of the Madras Boundary Act, 1860 the
starting point of limitation for appeal by way of suit allowed by
that section was the passing of the Survey Officer's decision
and in two of the earliest cases, namely, Annamalai Chetti v.
Col. J.G. Cloete and Seshama v. Sankara it was held that the
decision was passed when it was communicated to the parties.
In Secretary of State for India in Council v. Gopisetti
Narayanaswami Naidu Garu construing a similar provision in
the Survey and Boundary Act, 1897 the same High Court held
that a decision cannot properly be said to be passed until it is in
some way pronounced or published under such circumstances
the parties affected by it have a reasonable opportunity of
knowing what it contains. "Till then though it may be written
out, signed and dated, it is nothing but a decision which the
officer intends to pass. It is not passed so long it is open to him
to tear off what he has written and write something else." In
Raja Harish Chandra Raj Singh v. Deputy Land Acquisition
Officer construing the proviso to Section 18 of the Land
Acquisition Act which prescribed for applications
seeking reference to the court, a time-limit of six weeks of
the receipt of the notice from the Collector under
Section 12(2) or within six months from the date of the
Collector's award whichever first expires, this Court held that
the six months period will have to be calculated from the date
of communication of the award. In Asstt. Transport
Commissioner, Lucknow v. Nand Singh construing the
provision
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Vehicles Taxation Act, it was held that for an aggrieved party
the limitation will run from the date when the order was
communicated to him.
11. The ratio of these judgments were applied in interpreting
Section 33A(2) of the Indian Income Tax Act, 1922 in Muthia
Chettiar v. CIT with reference to a right of revision provided to
an aggrieved assessee. Section 33A(1) of the Act on the other
hand authorised the Commissioner to suo moto call for
the records of any proceedings under the Act in which an order
has been passed by any authority subordinate to him and pass
such order thereon as he thinks fit. The proviso, however,
stated that the Commissioner shall not revise any order under
that Sub-section "if the order (sought to be revised) has been
made more than one year previously". Construing this provision
the High Court in Muthia Chettiar case held that the power to
call for the records and pass the order will cease with the lapse
of one year from the date of the order by
the subordinate authority and the ratio of date of the knowledge
of the order applicable to an aggrieved party is not applicable
for the purpose of exercising suo moto power. Similarly in
another decision reported in Viswanathan Chettiar v. CIT
construing the time-limit for completion of an assessment under
Section 34(2) of the Income Tax Act, 1922, which provided
that it shall be made "within four years from the end of the year
in which the income, profit and gains were first assessable," it
was held that the time-limit of four years for exercise of the
power should be calculated with reference to the date on which
the assessment or reassessment was made and not the date on
which such assessment or reassessment order made under
Section 34(2) was served on the assessee.
12..... if an authority is authorised to exercise a power or do an act
affecting the rights of parties, he shall exercise that power within
the period prescribed therefor. The order or decision of such
authority come into force or becomes operative or becomes an
effective order or decision on and from the date when it is signed
by him. The date of such order or decision is the date on which
the order or decision was passed or made: that is to say when he
ceases to have any authority to tear it off and draft a different
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order and when he ceases to have any locus paetentiae. Normally
that happens when it can be said to have left his hand. The date of
communication of the order to the party whose rights are affected
is not the relevant date for purposes of determining whether the
power has been exercised within the prescribed time.
13. So far as the party who is affected by the order or decision
for seeking his remedies against the same, he should be made
aware of passing of such order. Therefore courts have
uniformly laid down as a rule of law that for seeking the
remedy the limitation starts from the date on which the order
was communicated to him or the date on which it was
pronounced or published under such circumstances that the
parties affected by it have a reasonable opportunity of knowing
of passing of the order and what it contains. The knowledge of
the party affected by such a decision, either actual or
constructive is thus an essential element which must be
satisfied before the decision can be said to have been concluded
and binding on him. Otherwise the party affected by it will have
no means of obeying the order or acting in conformity with it or
of appealing against it or otherwise having it set aside. This is
based upon, as observed by Rajmannar, C.J. in Muthia Chettiar
v. CIT "a salutary and just principle". The application of this
rule so far as the aggrieved party is concerned is not dependent
on the provisions of the particular statute, but it is so under the
general law.
18. Thus, if the intention or design of the statutory provision was
to protect the interest of the person adversely affected, by
providing a remedy against the order or decision any period of
limitation prescribed with reference to invoking such remedy
shall be read as commencing from the date of communication of
the order. But if it is a limitation for a competent authority to
make an order the date of exercise of that power and in the case of
exercise of suo moto power over the subordinate authorities'
orders, the date on which such power was exercised by making an
order are the relevant dates for determining the limitation. The
ratio of this distinction may also be founded on the principle that
the government is bound by the proceedings of its officers but
persons affected are not concluded by the decision.”
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24.In Commissioner of Income Tax, Madurai and Others v. Saravana
Spinning Mills (p) Ltd. [(2007) 7 SCC 298] it was held by the Hon'ble
Supreme Court as under:
“27.An order passed by a competent authority dismissing a
government servant from services requires communication thereof
as has been held in State of Punjab vs. Amar Singh Harika but an
order placing a government servant on suspension does not
require communication of that order. What is, therefore, necessary
to be borne in mind is the knowledge leading to the making of the
order. An order ordinarily would be presumed to have been made
when it is signed. Once it is signed and an entry in that regard is
made in the requisite register kept and maintained in terms of the
provisions of a statute, the same cannot be changed or altered. It,
subject to the other provisions contained in the Act, attains
finality. Where, however, communication of an order is a
necessary ingredient for bringing an end result to a status or to
provide a person an opportunity to take recourse to law if he is
aggrieved thereby, the order is required to be communicated.
25.In Ushaben Vs.Kishorbhai Chunilal Talpada and others, [2012 6
SCC 384], the Hon'ble Supreme Court held thus:
“38. From the above, it becomes evident that the order
dated 19.07.2011 would be binding on the Chairman-cum-
Managing Director for the purposes of working out the
limitation, but so far as the petitioner is concerned, the relevant
date would be the date when the order is communicated to the
petitioner. The order made by a statutory authority or an officer
exercising the powers of that authority comes into force so far as
the authority/officer is concerned, from the date it is made by the
authority/officer concerned. But so far as the affected party is
concerned, the order made by the appropriate authority would be
the date on which it is communicated. In my opinion, Section
3(2) of the Arbitration and Conciliation Act, 1996 is a mere
reiteration of the aforesaid general principal of law.”
26. Further, a reading of the provisions would show that the Act does
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not envisage an application by the parties for obtaining a certified copy of the
order passed by the Adjudicating Authority. This would automatically lead to
a presumption that the parties would have to wait for a receipt of the certified
copy of the order passed by the Adjudicating Authority and it is only then that
they will be in a position to file an appeal. This aspect would also show an
inference that the limitation period for filing the appeal would have to start
only from ‘the date of receipt of the order’. The provisions of the statute
cannot be construed in a manner as to infuse or import an absurd meaning to it.
It is therefore clear that for the purposes of filing an appeal, the limitation
would start running only from the date of receipt of the order. Inspiration may
also be drawn from the provisions of section 12 (2) of the Limitation Act
which specifically mentions that in computing the period of limitation for
filing an appeal, the period of time requisite for obtaining the order to be
appealed against, is excluded.
27. All the above-mentioned judgments are in the context of the
period of limitation for filing an appeal and every judgment is an authority
only in respect of the context, in which, it was made and in respect of the
merits of each case. The principle that an order takes effect only on the date of
communication of the order and not immediately on passing of the order, if
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there is any time lag between the date of passing of the order and the date of
actual communication of the order, by itself cannot be understood to have a
bearing on the very validity of the orders passed by the Adjudicating Authority
under section 26 (3), on the premise that the orders have been passed on
26/27/28.08.2019 within the period as mentioned under sub section 7 of
section 26, which was duly recorded in the Register maintained by the
authority as 'order is passed accordingly'. Therefore, the delay occurred for
preparation of certified copies of the order, after getting notarisation from the
Administrative Officer-cum-Registrar, on 04.09.2019 and 11.09.2019 and the
same were booked for despatch on 12.09.2019 and 13.09.2019 to the
respondents, is only procedural lapse and the same cannot be understood as
postponing the date of making the orders so validly passed by the first
appellant / Adjudicating Authority, so as to invalidate the same.
28. It is legally correct that if an order remains within the control of
an authority beyond the period of limitation stipulated, there is a possibility
that such an order might be modified or altered even beyond the stipulated
period, thus compromising the limitation prescribed. Whereas in the present
case, there was not a single case, but a batch of 69 cases with each order
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running to hundreds of pages as contended by the learned counsel for the
appellants, the period of 15 days from the date of passing of the orders to the
date of dispatch (which period was consumed for preparation of certified
copies in triplicate), would certainly appear to be a reasonable period. The
assumption that such period would create possibility for modification or
alteration of the substance of the orders, can at best be said to be rooted in
suspicion and conjecture without having any basis in reality, in the facts and
circumstances of the case.
29. That apart, it is an established principle of law that unless there is
any glaring discrepancy or any specific averment disputing the statement made
by an authority, as borne out by the records, to dispute the date of the order, it
may be presumed under Section 114 of the Evidence Act that the official acts
have been carried out in a proper manner. The Learned Judge may not have
been correct in undertaking such an exercise as there is no strong basis to
doubt the fact that the orders were passed on 26/27/28.08.2019. It is beyond
the pale of doubt that an order would take effect only on the actual
communication of the said order to the party concerned. It is in this context
that the appeal provision can be said to run from the date of receipt of the
order. However, the fact that an order takes effect only from the date of its
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communication, cannot be said to dilute the validity of an order, which is
passed well within time as mandated by the statute. Viewing this aspect, it is
seen that the period between 17.07.2019 on which the orders were reserved
and 26/27/28.08.2019 on which dates, the orders were passed, which was duly
recorded in the register as 'order is passed accordingly' and the same were
made ready and notarized on 04.09.2019 and 11.09.2019 and booked for
dispatch on 12.09.2019 and 13.09.2019, cannot be said to be either prolonged
or unexplained delay, as held by the Learned Judge.
30. In the decisions relied upon, particularly, in Malayil Hills v.
State of Kerala rendered in TRC Nos. 15 and 16 of 1981 dated 07.06.1982,
the facts were quite different and the considerable delay of about six months in
dispatching the orders was the context, in which, the Bench held that such an
unusual delay means that the order will deemed to have been passed only
when it has been effectively communicated to the party concerned. However,
as already elaborated earlier, in the present case, the proximity of the dates
from the date of passing of the orders till their dispatch, especially when the
same were in a batch of 69 cases, cannot be said to be an undue delay or that
cannot muster the test of legality. Moreover, the intent of the Act and the
objects show that it is a penal statute, where the offender cannot be given the
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opportunity to take unfair advantage of technicalities, when there has been
more than substantial compliance of the provisions of the Act. Otherwise, the
the purpose for which the Act was enacted, would be defeated.
C. FINDINGS
31. In view of the above analysis of the facts, in the light of the legal
principles as stated in the preceding paragraphs, this Court is of the opinion
that the Learned Judge was not correct in entertaining the writ petitions, when
there being an efficacious appeal remedy under Section 46 of the Act, where
all the contentions, including whether the order has been passed by the
Adjudicating Authority in accordance with Section 26 (7) of the Act, could
have been raised and decided. As already discussed and delved in detail above,
the words “date of the order” appearing in Section 46 can only be interpreted
and read to mean “date of receipt of the order” for the purpose of computing
the limitation for filing the appeal under Section 46 of the Act.
32. However, the Learned Judge without going into the question of
maintainability of the writ petitions, travelled into the case on the ground of
limitation raised by the respondents / writ petitioners, as prescribed under
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Section 26(7) of the Act and rendered a finding on the same. Therefore, this
Court has to necessarily test the said order under appeal in the light of the
provisions of the Act and the applicable legal principles. Accordingly, on such
application, this Court has reached the firm conclusion that the orders passed
by the first appellant do not suffer from infirmity on the ground of alleged
violation of Section 26 (7) of the Act. In other words, the orders impugned in
the writ petitions are well within the timeline as stated under Section 26 (7)
and is immune from attack on this ground.
33. Since the other aspects on the merits of the case are not the
subject matter of this batch of appeals and all these intra court appeals have
arisen from the order of the Learned Judge, where the only ground taken by
the respondents/ writ petitioners was on the limitation as per Section 26(7) of
the Act, this Court is not rendering any finding on the merits of the orders
passed by the first appellant / Adjudicating Authority under Section 26 (3) of
the Act.
34. In such view of the matter, it is therefore left open to the parties to
challenge the orders impugned in the writ petitions before the Appellate
Authority under Section 46 of the Act, which authority shall entertain the
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appeal, if it is filed within 45 days from the date of receipt of this judgment, so
as to exclude the time consumed in litigation, in the interest of parties, and in
consonance with the general principles of the law of limitation. Except the
issue decided by this Court with regard to the validity of the orders passed by
the first appellant in accordance with section 26(7) of the Act, all other issues
are left open to be decided by the Appellate Authority, in accordance with law.
35. At this juncture, it would also be more appropriate to observe that
the appellants should forthwith adopt the practice of uploading the orders
passed by the Adjudicating Authority as well as Appellate Authority online in
a dedicated website. Such practice of uploading the orders immediately after
passing of the same would obviate the situation, such as, the case on hand, and
the subsequent procedural delays, after passing of the orders till the
communication of the certified copies of the same to the parties, would not in
any way affect the validity of the orders of the Adjudicating Authority with
regard to the statutory timeline to be followed nor would there be any doubt
raised or cast on the actual date of passing of the orders.
D. CONCLUSION
36. Resultantly, the order of the learned Judge is set aside and all the
appeals are allowed with the aforesaid observations and directions. No costs.
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Consequently, connected miscellaneous petitions are closed.
(R.M.D., J.) (M.S.Q., J.)
04.02.2022
Index : Yes / No
Internet: Yes/No
rsh
To
1. The Adjudicating Authority
under the Prohibition of Benami Property Transactions Act, 1988
Room No.26, 4th Floor
Jeevan Deep Building
Parliament Street
New Delhi - 110 001
2. Deputy Commissioner of Income Tax
(Benami Prohibition)
Room No.104, 1st Floor
Income Tax Investigation Wing Building
New No.46, M.G. Road
Nungambakkam
Chennai - 600 034
R. MAHADEVAN, J
and
MOHAMMED SHAFFIQ, J
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WA Nos. 1682 of 2021 etc. batch
rsh
WA Nos. 1682 of 2021 etc. batch
04.02.2022
https://www.mhc.tn.gov.in/judis
