Commissioner Of Income Tax, Patiala v. Nachhattar Singh & Others

IN THE HIGH COURT OF PUNJAB & HARYANA ATCHANDIGARH Regular Second Appeal No.176 of 1988Date of Decision: 29.04.2015 Commissioner of Income Tax, Patiala .... Appellant Versus Nachhattar Singh & others |.... Respondents CORAMHON'BLE MR. JUSTICE RAJIVE BHALLA Present:Ms. Savita Saxena, Advocate for the appellant, Mr. N.S. Rapri, Advocate for the respondents.BERR RAJIVE BHALLA, J (ORAL) The Commissioner of Income’ Tax, Patialchallenges judgments and decrees, dated 03.10.1986 and17.10.1987, passed by the Subordinate Judge Ist Class,Fatehgarh Sahib and the Additional District Judge, Patiala. Nachhattar Singh, respondent No.1 filed a suit forrecovery alleging that he had deposited certain amounts withM/s Janta Janta Scheme (Regd.), Sirhind but the Income TaxDepartment has attached these amounts. The plaintiff alsopleaded that as M/s Janta Janta Scheme (Regd.) has inducedhim by fraud to deposit these amounts, the suit for recoverymay be decreed. The Income Tax Department, filed a_ writte statement controverting averments in the plaint and pleadedthat in view of Section 293 of the Income Tax Act, the suit, Isbarred. The Income Tax Department also pleaded that M/s Janta Janta Scheme (Regd.) was assessed to income tax butas It did not pay its dues, Its accounts were attacned andmoney in these accounts was appropriated towards arrears ofincome tax. M/s Janta Janta Scheme (Regd.) and Its partnersfiled a written statement denying averments in the plaint butadmitted the attachment of their property, by the Income TaxDepartment. They denied having received any amount tromthe plaintiff/resoondent No.1, After considering the pleadings, the trial Courtframed the following issues:- “l)Whether the plaintiff is entitled to thesuit amount? OPP.suit amount? OPP. II)Whether this court nas no jurisdiction totry the suit? OPD.try the suit? OPD. I)Whetner tne suit is not maintainable inthe present form? OPD.the present form? OPD. IV)Whnetner tne receipts are not aamissiblin evidence? OPD.in evidence? OPD. v)Whether the suit is under value? OPD.” After going through the pleadings and evidence,the trial Court held that the plaintiff/resoondent No.1 hadsucceeded in proving that he had deposited Rs.40,000/- withM/s Janta Janta Scheme (Regd.) and as he was induced by afraud to deposit these amounts, the jurisdiction of a CivilCourt Is not barred. The trial Court referred to Rule 9 of theIncome Tax Rules. The suit was decreed for recovery of Rs.40,000/- with interest. The first appellate Court, hasdismissed the appeal filed by the Income Tax Department, Counsel for the appellant submits that there is noquestion of the Income Tax Department playing any fraud orappropriating any property belonging to Nachhattar Singh.The Income Tax Department in order to recover arrears ofincome tax, attached money belonging to M/s Janta Jantaocheme (Regd.). The fact that Nachhattar Singh may or maynot have deposited money with M/s Janta Janta Scheme(Regd.) or may have been defrauded by M/s Janta Jantaocheme (Regd.) Is irrelevant and, therefore, cannot be thebasis of a claim against the Income Tax Department or conferjurisdiction upon Civil Courts to decree the suit. Section 293of the Income Tax Act is categoric in its intent that jurisdictionof a Civil Courts Is barred. Counsel for Nachhattar Singh submits that asproved Nachhattar Singh was induced by fradulent means todeposit money with M/s Janta Janta Scheme (Regd.). Theamount has been appropriated by the Income TaxDepartment. This money belongs to Nachhattar Singh and asit has been appropriated without any demand againstNachhattar Singh, the jurisdiction of Civil Courts is not barred. | have heard counsel for the parties and perusedthe impugned orders. The substantial question of law that arises foradjudication is “Whether in the facts and circumstances ofthe case, the civil suit filed by the plaintiff/resoondent was notbarred under Section 293 of the Income Tax Act?’ Counsel for Nachhattar Singh submits that asproved Nachhattar Singh was induced by fradulent means todeposit money with M/s Janta Janta Scheme (Regd.). Theamount has been appropriated by the Income TaxDepartment. This money belongs to Nachhattar Singh and asit has been appropriated without any demand againstNachhattar Singh, the jurisdiction of Civil Courts is not barred. | have heard counsel for the parties and perusedthe impugned orders. The substantial question of law that arises foradjudication is “Whether in the facts and circumstances ofthe case, the civil suit filed by the plaintiff/resoondent was notbarred under Section 293 of the Income Tax Act?’ A perusal of the facts reveals that M/s Janta Jantaocheme (Regd.) was a defaulter of the Income _ TaDepartment. |Ihe Income lax Department raided thepremises of M/s Janta Janta Scheme (Regd.) and attached Itsgoods and money to satisfy arrears of income. tax.Nachhattar Singh plaintiff/resoondent No.1 filed a civil suitalleging that his money deposited with M/s Janta Jantaocheme (Regd.) had been illegally appropriated, by theIncome Tax Department and should, therefore, be returned.Nachhattar Singh also pleaded that he had been fraudulentlyinduced by M/s Janta Janta Scheme (Regd.) to deposit theseamounts. The trial Court as well as the first appellate Courthave decreed the suit by holding that jurisdiction of CivilCourts is not barred as money was received by M/s JantaJanta Scheme (Regd.) by playing a fraud. | Section 293 of the Income Tax Act reads asfollows:- “293. No suit shall be brought in any civilcourt to set aside or modify any proceedingtaken or order made unaer tnis Act; and noprosecution, suit or other proceeaing shall lie against the Government or any officer of theGovernment for anything in good faith doneor intended to pe done under tnis Act. A perusal of Section 293 of the Income Tax Actreveals that no suit shall be brought in any Civil Court to setaside or modify any proceeding taken or order made underthe Income Tax Act thereby leaving no ambiguity that a CivilCourt is prohibited from entertaining a suit to set aside ormodify any order or proceedings initiated under the IncomeTax Act. An exception, would obviously be available wherethe order passed or proceedings initiated are vitiated by fraudand then also if the fraudulent act ts attributed to an officerexercising power under the Income Tax Act. Theplaintiff/resoondent No.1 does not allege any fraud by or atthe behest of the Income Tax Department. The courts belowhave held that the fraud was perpetuated by M/s Janta Jantaocheme (Regd.) but have not returned a finding of fraudagainst the department. | The plaintiff/resoondent No.1 was competent tolfile a suit for recovery against M/s Janta Janta Scheme(Regd.) but In absence of any allegation of fraud against thedepartment, could not maintain a suit against the Income TaxDepartment. The substantial question of law is consequentlyanswered in favour of the appellant by holding that in the factsand circumstances of the present case, the jurisdiction of Civil Regular second Appeal No.1/6 of 1988 Courts, to entertain the suit, against the Income TaxDepartment, was barred by Section 293 of the Income TaxAct. As a consequence of the answer of the substantialquestion of law in favour of the appellant, it is held that thesuit filed by plaintiff/resoondent No.1 Nachhattar Singh wasnot maintainable against the Income lax Department. Inejudgments and decrees passed by the Courts below, againstthe Income Tax Department are modified by dismissing thesuit against the Income Tax Department. No order as tocosts. Decree sheet be drawn up accordingly. 29.04.2015Vinay | RAJIVE BHALLA |JUDGE