Wp/21094/2004 Of M/S. Preyanshu Industries Limited v. Additional Commissioner Of Income-Tax And

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY EIGHTH DAY OF JANUARYTWO THOUSAND AND FIVE PRESENT THE HON'BLE MR JUSTICE B. SUDERSHAN REDDY and THE HON'BLE MR JUSTICE T.CH.SURYA RAO WRIT PETITION NO : 21094 of 2004 Between: 1. M/s. Preyanshu Industries Limited, Rep by its Director Sri Sanjay Gupta, A Company registered under the Companies Act, 1956, and its Registered Office at 1-8-670, Azambad, Hyderabad - 500 020. 2. Sri Sanjay Gupta, S/o. Ramkishan, Resident of Plot No. 116/A, M.L.A. Colony, Road No.12, Banjara Hills, Hyderabad. 3. Sri Ramkishan Gupta, S/o. Late Maganlal, Resident of Plot No. 116/A, M.L.A. Colony, Road No.12, Banjara Hills, Hyderabad. ... PETITIONERS AND 1. Additional Commissioner of Income-Tax & Senior Departmental Representative, I.T.A.T. IInd Floor, D Block, Rajaji Bhavan, Besent Nagar, Chennai-600090. 2. Director Enforcement, Government of India, 6th Floor, Khan Market, Lok Nayak Bhavan, New Delhi - 110 003. 3. Reserve Bank of India, Rep by Deputy General Manager, Foreign Exchange Department, 6-1-56, Secretariat Road, Saifabad, Hyderabad - 500 004. 4. Union of India, rep of its Secretary, Ministry of Finance, North Block, New Delhi. Petition under Article 226 of the Constitution of India praying that in thecircumstances stated in the Affidavit filed herein the High Court may bepleased to issue a writ, order or a direction more particularly one in the natureof Writ of Certiorari by calling the records in pertaining to the impugnedproceedings dated 8th September, 2004 and quash the same as ex-facie,illegal, arbitrary without jurisdiction void and contrary to the provisions ofForeign Exchange Management Act, 1999 and violative of Article 14 and 19 (1)(g) of the constitution of India. Counsel for the Petitioners: MR.B.S.SHIVAJI Counsel for the Respondent Nos.1, 2 and 4: MR.ARAJASHEKAR REDDY(SC FOR CG) Counsel for the Respondent No.3 : MR.K.SRINIVASA MURTHY The Court made the following: O R D E R: (Per BRSR,J) The petitioners invoke the extraordinary jurisdiction of this Court under Article226 of the Constitution of India with a prayer to issue a Writ of Certiorari bycalling the records pertaining to the impugned proceedings, dated 08-09-2004,on the file of the first respondent-Additional Commissioner of Income Tax,Senior Departmental Representative and to quash the same as illegal andwithout jurisdiction. Learned counsel for the petitioners, without entering into any debate on themerits of the issues, interalia, contended that the impugned order, dated 08-09-2004, suffers from incurable legal infirmity, being in violation of principles ofnatural justice. We find substantial force in the submission made by the learned counsel for thepetitioners. The first respondent vide proceedings, dated 18-08-2004, required the petitioners to submit their explanation within a period of one month from thedate of receipt of the show-cause notice, dated 18-08-2004. The firstrespondent is stated to have been appointed as an Adjudicating Authority tohold an enquiry under Section 51 of the Foreign Exchange Regulation Act, 1973read with the Adjudication Proceedings and Appeal Rules, 1974. That evenbefore the petitioners could submit their explanation, the Adjudicating Authoritypassed the impugned order, dated 08.09.2004. In our considered opinion, sucha course was not open to the first respondent. The first respondent could nothave passed the impugned order even before the expiry of the time granted inthe show-cause notice requiring the petitioners to submit their reply. Even if itis to be construed that the notice, dated the petitioners to submit their explanation within a period of one month from thedate of receipt of the show-cause notice, dated 18-08-2004. The firstrespondent is stated to have been appointed as an Adjudicating Authority tohold an enquiry under Section 51 of the Foreign Exchange Regulation Act, 1973read with the Adjudication Proceedings and Appeal Rules, 1974. That evenbefore the petitioners could submit their explanation, the Adjudicating Authoritypassed the impugned order, dated 08.09.2004. In our considered opinion, sucha course was not open to the first respondent. The first respondent could nothave passed the impugned order even before the expiry of the time granted inthe show-cause notice requiring the petitioners to submit their reply. Even if itis to be construed that the notice, dated 18-08-2004, was immediately served upon the petitioners on the very next day,it was open to the petitioners to submit their explanation on or before 19-09-2004, whereas the impugned order has been passed on 08-09-2004. Theimpugned order is liable to be set aside only on this short ground and the sameis accordingly set aside. However, the petitioners are bound to submit their explanation to theshow-cause notice, dated 18-08-2004, which, admittedly, they have received. Having regard to the facts and circumstances of the case, we consider itappropriate to grant two weeks time in order to enable the petitioners to submittheir explanation to the show-cause notice, dated 18-08-2004, which shall bereceived by the first respondent for his consideration, in accordance with law.The first respondent shall not refuse to receive the explanation to be submittedby the petitioners within two weeks from today on the ground that the timestipulated in the show-cause notice, dated 18-08-2004, has expired. It shall beopen to the first respondent to pass an appropriate order in accordance withlaw. The Writ Petition is accordingly disposed of. No order as to costs. Date:28-01-2005 Note: Furnish copy of theOrder by 01-02-2005. (B/o)GS/GJ ___________________________ B. SUDERSHAN REDDY, J. ______________________ T.CH.SURYA RAO, J. 1. The Additional Commissioner of Income-Tax & Senior Departmental Representative, I.T.A.T. IInd Floor,Departmental Representative, I.T.A.T. IInd Floor, D Block, Rajaji Bhavan, Besent Nagar, Chennai-600090. 2. The Director, Enforcement, Government of India, 6th Floor, Khan Market, Lok Nayak Bhavan, New Delhi - 110 003.Khan Market, Lok Nayak Bhavan, New Delhi - 110 003. 3. The Deputy General Manager, Reserve Bank of India, Foreign Exchange Department, 6-1-56, Secretariat Road, Saifabad, Hyderabad - 500 004. 4. The Secretary, Union of India, Ministry of Finance, North Block, New Delhi. 5. Two C.D. Copies.