Wp/18375/1999 Of Akbar Sha v. The Chief Commissioner Of Income Tax

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM Writ Petition No.18375 of 1999 ORDER:(Per the Hon’ble Sri Justice L.Narasimha Reddy) The effect of a search conducted against the grandfather ofthe petitioner, by name late Akram @ Gul Alam Khan ofVizianagaram, who was a moneylender by profession, is stillhaunting the writ petitioner. In the searches conducted in the years1971 and 1982, as many as 800 promissory notes, covering a sum ofRs.5,86,920/-, were recovered, apart from cash of Rs.71,000/-; goldjewellery of Rs.5,110/- and silver ware valued at Rs.5,460/-. Afterthe assessment proceedings assumed finality, the petitioner and hispredecessors approached the Authorities of the Department, forrefund of the promissory notes and certain amount. On an earlieroccasion, the petitioner approached this Court by filing W.P.No.3699of 1994. In compliance with the directions issued therein, the 1[st]respondent herein passed an order, dated 03.05.1995, taking theview that nothing is refundable to the petitioner. Hence, this writpetition. Heard Sri A.V.Krishna Kaundinya, learned counsel for thepetitioner, and Sri S.R.Ashok, learned Senior Standing Counsel forthe Department. It is rather unfortunate that for one reason or the other, theissue that arose out of the seizures effected about 40 years ago, didnot reach finality. The record discloses that with a view to give aquietus to the issue, this Court directed the petitioner to approach theOmbudsman of the Department. He passed an order, on 02.01.2013. However, except making an observation to the effectthat the petitioner can approach the Chief Commissioner and claimrefund, the Ombudsman did not say anything further. We have carefully gone through the impugned order. The 1[st] respondent assigned certain reasons in support of his conclusionthat nothing is refundable to the petitioner. The discussion mostlytouched the number of promissory notes, their value and the standstaken by the parties at various points of time. However, he did notdeal with the question of the refund to be made to the petitioner, onaccount of business losses, and other heads recognised under theIncome Tax Act, 1961 (for short ‘the Act’). The law, as it stands today, is that even where an assessee isfound to have undertaken illegal businesses, leading to seizes andconfiscations, allowances are being made by treating the value ofsuch confiscations as business losses. If that is the case, thepetitioner cannot be left at lurch, in the context of making refund, orappropriate provision to accommodate the effect of the seizure,either by treating it as business loss, or under different head,provided for under the Act. We, therefore, allow the writ petition; set aside the impugnedorder and remand the matter to the 1[st] respondent to pass freshorders, after giving opportunity to the petitioner. This exercise shallbe completed within a period of two months from the date of receiptof a copy of this order. It is hoped that the matter would beaddressed objectively, instead of standing on hyper-technicalities. There shall be no order as to costs. The miscellaneous petition filed in this writ petition shall alsostand disposed of. Date:08.07.2014 GJ ____________________ L.NARASIMHA REDDY, J. _____________________ CHALLA KODANDA RAM, J.