Wp/9937/2022 Of Sunil Kumar Sharma v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12 DAY OF AUGUST, 2022 BEFORE THE HON’BLE MR. JUSTICE E.S. INDIRESH -WRIT PETITION NO.9937 OF 2022 (TIT) C/W WRIT PETITION NOS.9938 OF 2022, 9939 OF 2022, 9945 OF 2022 AND 9946 OF 2022 IN WP NO.9937 OF 2022 BETWEEN: SUNIL KUMAR SHARMA SON OF SRI D P SHARMA AGED ABOUT 45 YEARS, No.328, TIPPU SULTAN PALACE ROAD KALASIPALYAM BENGALURU - 560002. ...PETITIONER common in Writ Petitions No.9938, 9939, 9945 of 2022 (BY SRI KIRAN S. JAVALI, SENIOR COUNSEL FOR SRI SHREEHARI KUTSA, ADVOCATE) AND: 1 . DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(4), CIRCLE 1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU - 560001. 2 . COMMISSIONER OF INCOME TAX (APPEALS)-11ROOM NO 322, 3 FLOOR, CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU 560001 ….RESPONDENTS (BY SRI BALBIR SINGH, ASG FOR SRI K.V. ARAVIND & SRI DILIP M., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE U/S 153C OF THE ACT FOR THE A.Y. 2015-16 DATED 21 AUGUST, 2019 BEARING DIN-ITBA/AST/S/153C/2019-20/1017492054(1) ENCLOSED AS ANNEXURE-A ISSUED BY RESPONDENT 1; AND ETC., IN WP NO.9938 OF 2022 1 . DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU - 560001 2 . COMMISSIONER OF INCOME TAX (APPEALS)-11ROOM NO.322, 3 FLOOR, CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU - 560001. ….RESPONDENTS (BY SRI BALBIR SINGH, ASG FOR SRI K.V. ARAVIND & SRI DILIP M., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE UNDER SECTION 153C OF THE ACT FOR THE ASSESSMENT YEAR (FOR SHORT, THE ‘ASSESSMENT YEAR’) 2016-17 DATED 21[st]AUGUST, 2019 BEARING DIN-ITBA/AST/S/153C/2019-20/1017492024(1) AND ENCLOSED AS ANNEXURE-A ISSUED BY RESPONDENT NO.1; AND ETC., IN WP NO.9939 OF 2022 1 . DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(4), CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU - 560001 2 . COMMISSIONER OF INCOME TAX (APPEALS)-11ROOM NO 322, 3 FLOOR, CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU – 560001 ….RESPONDENTS (BY SRI BALBIR SINGH, ASG FOR SRI K.V. ARAVIND & SRI DILIP M., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE UNDER SECTION 153C OF THE ACT FOR THE ASSESSMENT YEAR 2017-18 DATED 21[st] AUGUST, 2019 BEARING DIN-ITBA/AST/S/153C/2019-20/1017492039(1) ENCLOSED AS ANNEXURE-A ISSUED BY RESPONDENT 1; AND ETC., WP NO.9945 OF 2022 1 . THE COMMISSIONER OF INCOME TAX (APPEALS)-11 BENGALURU, OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11 ROOM No.322, 3 FLOOR CENTRAL REVENUE BUILDING QUEENS ROAD BENGALURU - 560001. 2 . THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4) C R BUILDING QUEENS ROAD, BENGALURU - 560001. 3 . THE JOINT /ADDITIONAL COMMISSIONER OF INCOME TAX CENTRAL RANGE -1 C R BUILDING QUEENS ROAD, BENGALURU - 560001. 4 . THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) C R BUILDING QUEENS ROAD BENGALURU - 560001 5 . THE DIRECTOR GENERAL OF INCOME TAX (INV.1) C R BUILDING, QUEENS ROAD BENGALURU – 560001 ….RESPONDENTS (BY SRI BALBIR SINGH, ASG FOR SRI K.V. ARAVIND & SRI DILIP M., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER OF ASSESSMENT UNDER SECTION R.W.S. 143(3) 153D OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFEREED AS THE ACT) FOR THE ASSESSMENT YEAR (FOR SHORT, THE A.Y) 2018-19 DATED 31 DECEMBER, 2019 bearing din-itba/ast/m/143(3)/2019-20/1023542098(1) AND ENCLOSED AS ANNEXURE-B1 AND ETC., IN WP NO.9946 OF 2022 BETWEEN SRI KANDASWAMY RAJENDRAN S/O LATE KANDASWAMY AGED ABOUT 76 YEARS RESIDING AT NO.8B, 1 FLOOR DDA MIH FLAT, SARAI JULENA SUKDHEV VIHAR NEW DELHI-110025. (BY SRI KIRAN S. JAVALI, SENIOR COUNSEL FOR SRI SHREEHARI KUTSA, ADVOCATE) ….RESPONDENTS (BY SRI BALBIR SINGH, ASG FOR SRI K.V. ARAVIND & SRI DILIP M., ADVOCATES) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER OF ASSESSMENT UNDER SECTION R.W.S. 143(3) 153D OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFEREED AS THE ACT) FOR THE ASSESSMENT YEAR (FOR SHORT, THE A.Y) 2018-19 DATED 31 DECEMBER, 2019 bearing din-itba/ast/m/143(3)/2019-20/1023542098(1) AND ENCLOSED AS ANNEXURE-B1 AND ETC., IN WP NO.9946 OF 2022 BETWEEN SRI KANDASWAMY RAJENDRAN S/O LATE KANDASWAMY AGED ABOUT 76 YEARS RESIDING AT NO.8B, 1 FLOOR DDA MIH FLAT, SARAI JULENA SUKDHEV VIHAR NEW DELHI-110025. (BY SRI KIRAN S. JAVALI, SENIOR COUNSEL FOR SRI SHREEHARI KUTSA, ADVOCATE) …PETITIONER AND 1 . THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(4), C R BUILDING ANNEX QUEEN’S ROAD BENGALURU - 560001. 2 . COMMISSIONER OF INCOME TAX (APPEALS)-11 KORAMANGALA KORAMANGALA BENGALURU - 560034 (BY SRI K.V. ARAVIND, ADVOCATE) ….RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICES UNDER SECTION 153C OF THE INCOME TAX ACT, 1961 BEARING NO.ITBA/AST/S/153C/2019-20/1017509414(1) FOR ASSESSMENT YEAR 2012-13, NO. ITBA/AST/S/153C/2019-20/1017509421(1) FOR ASSESSMENT YEAR 2013-14 NO. ITBA/AST/S/153C/2019-20/1017509426(1) FOR ASSESSMENT YEAR 2014-15 NO.ITBA/AST/S/153C/2019-20/1017509432(1) FOR ASSESSMENT YEAR 2015-16 NO.ITBA/AST/S/153C/2019-20/1017509438(1) FOR ASSESSMENT YEAR 2016-17 NO.ITBA/AST/S/153C/2019-20/1017509444(1) FOR ASSESSMENT YEAR 2017-18 ALL DATED 22 AUGUST, 2019 VIDE ANNEXURE- A RO A5 AS IT IS BEYOND JURISDICTION, ARBITRARY AND WITHOUT AUTHORITY OF LAW HENCE NULL AND VOID; AND ETC., IN THESE WRIT PETITIONS ARGUMENTS BEING HEARD, JUDGMENT RESERVED, COMING ON FOR "PRONOUNCEMENT OF ORDERS", THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Since question of law involved in these writ petitions are pertaining to challenge made to impugned notices issued under Section 153C of the Income Tax Act, 1961 and further action thereof, these writ petitions were clubbed together, heard and disposed of by this common order. 2. In writ petitions No.9937, 9938, 9939 and 9945 of 2022, Petitioner has questioned the Notice dated 21[st] August, 2019; Order of Assessment dated 31[st] December, 2019; and also sought for quashing the Notice of Demand dated 31[st] December, 2019 issued by respondent No.1. In writ petition No.9945 of 2022, the petitioner has also challenged the order dated 03[rd]May, 2022 passed in Appeal No.CIT(A)-11/ BNG/10701/2019-20, dismissing the appeal. In Writ Petition No.9946 of 2022, the petitioner is challenging the Notice issued under Section 153C of the Income Tax Act, 1961, for Assessment Years 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18 all dated 22[nd]August, 2019 as per Annexure-A to A5; and also sought for quashing Assessment orders dated 30[th] December, 2019 for Assessment Years 2015-16, 2016-17, 2017-18 and 2018-19 as per Annexure-B to B3 and further prayed for quashing demand notices dated 30[th] December, 2019 as per Annexure-C to C3 for the aforementioned Assessment Years. 3. Brief facts for adjudication of these writ petitions are that, the respondent-Revenue had conducted search action 3. Brief facts for adjudication of these writ petitions are that, the respondent-Revenue had conducted search action under Section 132 of the Income Tax Act, 1961 (for short hereinafter referred to as ‘the Act’) on 02[nd] August, 2017 at the premises of the petitioner and similar search also took place at premises of one Sri Rajendran at New Delhi. It is the case of the respondent-Revenue that, during the search at the premises of Sri Rajendran, certain diaries and entries relating to the affairs of the petitioner-Sunil Kumar were recovered and statements of both the petitioner and that of Sri Rajendran, came to be recorded. It is further stated in the writ petitions that the respondent No.1 claims that the case of the petitioner was centralised to the jurisdiction of respondent No.1 as per Order dated 07[th] March, 2018 under Section 127 of the Act. Petitioners further contended that the respondent No.1 has neither issued any notice nor informed regarding centralisation of their case to the jurisdiction of respondent No.1 and it is further contended in the writ petitions that respondent No.1 ought to have provided an opportunity to the petitioners as required under Section 127 of the Act. Petitioners, while urging the aforementioned aspects, questioned that the impugned notices, calling upon petitioners to submit his return of income for the Assessment Year 2015-2016 vide Annexure-A, is without jurisdiction. The main grievance of the petitioners is that impugned notices under Section 153C of the Act is to be issued on “other person” and the petitioners being “searched person”, the impugned notice under Section 153C of the Act is not maintainable. Hence, petitioners have presented these writ petitions challenging the action of the respondent-Revenue as non-est and contrary to law. 4. The respondent-Revenue entered appearance and filed objection, and it is contended that proceedings have been initiated against the petitioners under Section 153C of the Act, based on the material found and seized by the Enforcement Directorate. It is further stated that the writ petition is not maintainable as the impugned orders in the writ petition are appealable before the Commissioner of Income Tax-Appeals, and same is an efficacious remedy for the petitioners. It is further stated that petitioners have to avail the statutory remedy before the Commissioner of Income-tax–Appeals and accordingly, sought for dismissal of writ petitions as premature. It is also averred in the statement of objections that the writ petitions deserve to be dismissed on the ground of delay and laches. It is further contended that the officer authorised under Section 132 of the Act, is empowered to enter and search any building, place, vessel, vehicle or Aircraft where he has reasoned to suspect such books of account, other documents, money, etc. It is further pleaded that Section 132 of the Act, empowers seizure or books of account/document not only relatable to searched person, however, in relation to other person also. The Assessing Officer, after compliance of the pre-conditions of recording statement after satisfaction, issued notice under Section 153C of the Act, and therefore, sought for dismissal of Writ Petitions. It is further clarified that Section 132(1) of the Act, provides for “person specific and not premises specific” and therefore, the determinative factor is the person against whom the warrant of search is issued under Section 132 of the Act. It is further submitted that Section 34 of the Evidence Act, 1872 are applicable to the proceedings under Income Tax Act, as the Income tax Act, is itself a Code and accordingly, sought for dismissal of writ petitions. 5. I have heard Sri Kiran S. Javali, learned Senior Counsel appearing for Shreehari Kutsa and Sri A Mahesh Chowdhary, appearing for the petitioners; Shri Balbir Singh, learned Additional Solicitor General of India on behalf of Sri K V Aravind, learned standing Counsel appearing for the Respondent-Revenue. 5. I have heard Sri Kiran S. Javali, learned Senior Counsel appearing for Shreehari Kutsa and Sri A Mahesh Chowdhary, appearing for the petitioners; Shri Balbir Singh, learned Additional Solicitor General of India on behalf of Sri K V Aravind, learned standing Counsel appearing for the Respondent-Revenue. 6. Sri Kiran S. Javali, learned Senior Counsel invited the attention of the court to the impugned Order of Assessment and notice passed under Section 153C of the Act for the Assessment Year 2015-2016 and argued that the conclusion arrived at by the respondent-Revenue initiating action against the petitioners based on the diaries and loose sheets is contrary to law. He further contended that the petitioner, being a “searched person”, issuance of the notice under Section 153C of the Act is not maintainable. In this regard, learned Senior Counsel places reliance on the judgment of this court in Writ Petition No.36004 of 2018 connected with Writ Petition No.36005 of 2018 disposed of on 24[th] January, 2019. Emphasizing on these aspects, Sri Kiran S Javali, argued that the respondent No.1 fails to appreciate the law on the issue that, to invoke Section 153C of the Act, it is necessary to make out a case that material found in the case of “searched person” belongs to “other person” and as the search has been conducted on the residence of the petitioner at Bengaluru and material has been seized as per panchanama making him as the “searched person” and not “other person”, and as such, learned Senior Counsel appearing for the petitioner submits that the impugned notice issued under Section 153C of the Act is bad in law. 7. Sri Kiran S. Javali, learned Senior Counsel, further argued that the respondent No.1 failed to examine whether the papers or loose note sheets found during the course of search in the premises of Sri Rajendran are documents having evidentiary value to prove the fact of transaction. In this regard, he refers to Section 34 of Indian Evidence Act, 1872 and submitted that the search action did not lead to discovery of unaccounted money, bullion, jewellery or valuable article and no books of account reveals undisclosed transactions of the assessee and the entire impugned proceedings revolves around scribbling of loose sheets seized from premises of another person (Sri Rajendran) and therefore, learned Senior Counsel argued that the action taken by respondent No.1 is contrary to the law declared by the Apex Court in the case of CENTRAL BUREAU OF INVESTIGATION v. V.C. SHUKLA AND OTHERS, reported in (1998)3 SCC 410 and in the case of COMMON CAUSE AND OTHERS v. UNION OF INDIA, reported in (2017)11 SCC 731 and accordingly, sought for quashing of impugned notices. 8. Nextly, Sri Kiran S. Javali, learned Senior Counsel argued that satisfaction note is required under Section 153C of the Act for each Assessment Year and in the impugned proceedings consolidated satisfaction note has been recorded for different Assessment Years which vitiates entire assessment proceedings. In this regard, learned Senior Counsel appearing for the petitioners places reliance on the judgment of the Hon’ble Apex Court in the case of L K VERMA v. HMT AND ANOTHER, reported in (2006)2 SCC 269 and in the case of JEANS KNIT PVT LTD v. COMMISSIONER OF INCOME TAX, reported in (2017)390 ITR 10 (SC) and argued that this Court is having jurisdiction to interfere with the impugned notices issued by the respondent-Revenue as the same is without jurisdiction and as such, learned Senior Counsel sought for interference of this court in these writ petitions. interfere with the impugned notices issued by the respondent-Revenue as the same is without jurisdiction and as such, learned Senior Counsel sought for interference of this court in these writ petitions. 9. Insofar as Writ Petition No.9945 of 2022 is concerned, Sri Kiran S. Javali, learned Senior Counsel submitted that the petitioner herein has preferred appeal under Section 250 of the Act and the respondent No.1, by order dated 03[rd] May, 2022, dismissed the appeal without considering the factual aspects of the case in the right perspective. The learned Senior Counsel further contended that since the initiation of proceedings under Section 143 of the Act itself is without jurisdiction, the respondent No.1 herein ought to have allowed the appeal filed by the petitioner seeking setting aside the Order dated 22[nd]December, 2021 under Section 143(1) of the Act. In respect of alternative remedy and delay in filing the writ petitions, he contended that, since the impugned notices under Section 153C of the Act itself is contrary to judgment of the Apex Court therefore, this Court, while exercising writ jurisdiction, is empowered to quash those impugned notices. 10. Per Contra, Sri Balbir Singh, Additional Solicitor General of India appearing on behalf of Sri K.V. Aravind, learned Counsel appearing for the respondent-Revenue sought to justify the impugned Notices and Orders of Assessment passed by the respondent-Revenue. He invited the attention of the Court to Section 2(12A) of the Act which provides for definition of Books or Books of Account. Learned Additional Solicitor General also invited the attention of the Court to Section 132 of the Act and argued that the respondent-Revenue is empowered to make search and seizure, to unearth defaultees under the Act and such power be exercised by the respondent-Revenue, in consequence of information, having reason to believe/suspect about the transactions made by such defaultees. He particularly invited the attention of the Court to the Sections 132(4) and (4A) of the Act and argued that in view of the language employed in the aforementioned provisions, the respondent- Revenue are empowered to look into the books of account or any other articles, which is found in possession or control of any person in the course of the search and same is to be presumed in the custody of such defaultees. Nextly, learned Additional Solicitor General drew the attention of the Court to Section 278D of the Act which provides for presumption as to assets, books of account etc. in certain cases and further argued that, as the Respondent-Revenue found incriminating material at the time of search and seizure made at the residence at Delhi, whereby the involvement of the petitioner was forthcoming in the note sheet/diaries and therefore, learned Additional Solicitor General contended that the judgments referred to by the learned Senior Counsel appearing for the petitioner, viz. V.C. SHUKLA (supra) and in the case of COMMON CAUSE AND OTHERS (supra) are not applicable to the facts of the present case. Emphasising on these aspects, he referred to the judgment of the Apex Court in the case of V.C. SHUKLA (supra) and argued that the factual aspects in the said case is quite different from the present case and accordingly, it was argued that Section 34 of the Indian Evidence Act, 1872 is not applicable to the facts of the present case. 11. Nextly, Sri Balbir Singh, learned Additional Solicitor General, argued that Section 132 of the Act is a Code in itself which provides for search and seizure by the respondent-Revenue as the authorities, based on the incriminating material, have reason to believe in the custody of defaultee. In this regard, learned Additional Solicitor General refers to the judgment of the Hon'ble Apex Court in the case of P.R. METRANI v. COMMISSIONER OF INCOME TAX, BANGALORE reported in (2007)1 SCC 789 and particularly referred to paragraph 17 of the judgment. Further, the learned Additional Solicitor General argued that the constitutional validity of Section 132 of the Act has been upheld by the Hon'ble Apex Court in the case of POORAN MAL v. DIRECTOR OF INSPECTION reported in (1974)93 ITR 505 (SC). The learned ASG also placed reliance on the judgment of Hon'ble Supreme Court in the case of CHUHAMAL v. COMMISSIONER OF INCOME TAX reported in (1988)38 TAXMAN 190 (SC) and argued that presence of the unaccounted money found in the residence of the defaultee at the time of search and seizure, would pave way for initiating action against the petitioners herein and therefore, he sought for dismissal of petitions. Lastly, the learned Additional Solicitor General contended that writ petitions are not maintainable in law as this Court has no jurisdiction to interfere with the decision of the respondent-Revenue, except the decision making process, if it is contrary to law and as such, the learned Additional Solicitor General argued for dismissal of petitions. 12. Having heard the submission made by learned Counsel appearing for the parties, I have carefully examined the writ papers. In the light of the submissions advanced by both sides, the following points arise for determination in these petitions: 1)Whether the petitioners have made out the case for interference under Article 226 of the Constitution of India? for interference under Article 226 of the Constitution of India? 2)Whether the impugned notice under Section 153C and Order of Assessment Notice under Section 156 of the Act requires to be set aside? 153C and Order of Assessment Notice under Section 156 of the Act requires to be set aside? 3)What Order? 13. Perusal of the writ papers would indicate that the respondent-Revenue made a search at the premises of one Sri Rajendran at New Delhi and recovered certain diaries/loose sheets, which is purportedly consisting of certain entries relating to the affairs/transactions of the petitioner. Based on the statement of the said Sri Rajendran (Petitioner in Writ petition No.9946 of 2022) recorded during the investigation, respondent-Revenue initiated action against the petitioner-Sunil Kumar. In this regard, the respondent-Revenue, by exercising power under Section 127 of the Act, transferred the case to the respondent No.1. Section 127 of the Act provides for power to transfer cases. Relevant provision is Section 127(1) of the Act and same is extracted below: “Section 127(1): The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, may, after giving the assessee areasonable opportunity of being heard in the matter,wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.” (underlining supplied) “Section 127(1): The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, may, after giving the assessee areasonable opportunity of being heard in the matter,wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.” (underlining supplied) 14. The language employed under Section 127 of the Act connotes providing reasonable opportunity to the assessee and passing Assessment Order based on reasons. Perusal of the writ papers and the arguments of learned Counsel appearing for the respondent-Revenue do not satisfy the ingredients of “fair play” as embodied under Section 127(1) of the Act {see PUNJAB NATIONAL BANK LTD. v. ALL INDIA PUNJAB NATIONAL BANK EMPLOYEES FEDERATION (1960(1) SCR 806)}.I have also carefully noticed the observation made in impugned Order of Assessment and the impugned notices. Concluding part at paragraph 7.7 of Assessment Order dated 31[st] December, 2019 (Annexure-D1) passed under section 153C and Section 143(3) read with 153D of the Act, reads as under: “To summarise, the diaries and loose sheets thathas been seized from the premise of Mr. Rajendran contain entries with lower denomination rupee notes. The entries also contain details of names of persons with their mobile phone numbers. That the transactions have been carried out on the directions of Mr. Sunil Kumar Sharma is backed by the fact that Mr. Sunil Kumar Sharma has sent text messages to Mr. Rajendran which has been perused and analysed. Therefore, it is once again reiterated that the entries in the diaries seized from thepremise of Mr. Rajendran contain details of hawala transactions from the directions of Mr. Sunil Kumar Sharma. Therefore, quantification of unexplained to be taxed under Section 69A of the Act as per discussions above is Rs.40 lakh for AY-2015-16.” (emphasis supplied) 15. It is also relevant to deduce the celebrated decision of the Hon'ble Apex Court in the case of TATA CELLULAR v. UNION OF INDIA reported in (1994)6 SCC 651. Though the matter pertaining to the action of the Administrative Authority, however, the ratio laid down by the Hon'ble Apex Court in the said judgment is aptly applicable to the facts of the case on hand. At paragraphs 74 to 81 of the judgment, it is observed thus: “74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. 75. In Chief Constable of the North Wales Police v. Evans23 Lord Brightman said : "Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made. Judicial review is concerned, not with the decision, but with the decision-making process. Unless that restriction on the power of the court is observed, the court will in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power." In the same case Lord Hailsham commented on the purpose of the remedy by way of judicial review under RSC, Ord. 53 in the following terms : “74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. 75. In Chief Constable of the North Wales Police v. Evans23 Lord Brightman said : "Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made. Judicial review is concerned, not with the decision, but with the decision-making process. Unless that restriction on the power of the court is observed, the court will in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power." In the same case Lord Hailsham commented on the purpose of the remedy by way of judicial review under RSC, Ord. 53 in the following terms : "This remedy, vastly increased in extent, and rendered, over a long period in recent years, of infinitely more convenient access than that provided by the old prerogative writs and actions for a declaration, is intended to protect the individual against the abuse of power by a wide range of authorities, judicial, quasi-judicial, and, as would originally have been thought when I first practiced at the Bar, administrative. It is not intended to take away from those authorities the powers and 22 1986 AC 240, 251: (1986) 1 All ER 199 23 (1982) 3 All ER 141, 154 discretions properly vested in them by law and to substitute the courts as the bodies making the decisions. It is intended to see that the relevant authorities use their powers in a proper manner (p. 1160)." In R. v. Panel on Takeovers and Mergers, ex p Datafin plc24, Sir John Donaldson, M.R. commented: "An application for judicial review is not an appeal." In Lonrho plc v. Secretary of State for Trade and Industry25, Lord Keith said: "Judicial review is a protection and not a weapon." It is thus different from an appeal. When hearing an appeal the Court is concerned with the merits of the decision under appeal. In Amin, Re26, Lord Fraser observed that : "Judicial review is concerned not with the merits of a decision but with the manner in which the decision was made.... Judicial review is entirely different from an ordinary appeal. It is made effective by the court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer." 76. In R. v. Panel on Take-overs and Mergers, ex p in Guinness plc27, Lord Donaldson, M.R. referred to the judicial review jurisdiction as being supervisory or 'longstop' jurisdiction. Unless that restriction on the power of the court is observed, the court will, under the guise of preventing the abuse of power, be itself guilty of usurping power. 77. The duty of the court is to confine itself to the question of legality. Its concern should be : 1. Whether a decision-making authority exceeded its powers? its powers? 2. Committed an error of law, 3. Committed a breach of the rules of natural justice, justice, 4. Reached a decision which no reasonable tribunal would have reached or, would have reached or, 5. Abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality : This means the decision- maker must understand correctly the law that regulates his decision-making power and must give effect to it. must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesday unreasonableness. unreasonableness. (iii) Procedural impropriety. 5. Abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality : This means the decision- maker must understand correctly the law that regulates his decision-making power and must give effect to it. must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesday unreasonableness. unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R.V. SECRETARY OF STATE for the Home Department, ex Brind28, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which requires its intervention". 78. What is this charming principle of Wednesday unreasonableness? Is it a magical formula? In R. v. Askew29, Lord Mansfield considered the question whether mandamus should be granted against the College of Physicians. He expressed the relevant principles in two eloquent sentences. They gained greater value two centuries later : "It is true, that the judgment and discretion of determining upon this skill, ability, learning and sufficiency to exercise and practise this profession is trusted to the College of Physicians and this Court will not take it from them, nor interrupt them in the due and proper exercise of it. But their conduct in the exercise of this trust thus committed to them ought to be fair, candid and unprejudiced; not arbitrary, capricious, or biased; much less, warped by resentment, or personal dislike." 79. To quote again, Michael Supperstone and James Goudie; in their work Judicial Review (1992 Edn.) it is observed at pp. 119 to 121 as under : "The assertion of a claim to examine the reasonableness been done by a public authority inevitably led to differences of judicial opinion as to the circumstances in which the court should intervene. These differences of opinion were resolved in two landmark cases which confined the circumstances for intervention to narrow limits. In Kruse v. Johnson3O a specially constituted divisional court had to consider the validity of a bye- law made by a local authority. In the leading judgment of Lord Russell of Killowen, C.J., the approach to be adopted by the court was set out. Such bye-laws ought to be 'benevolently' interpreted, and credit ought to be given to those who have to administer them that they would be reasonably administered. They could be held invalid if unreasonable : Where for instance bye-laws were found to be partial and unequal in their operation as between different classes, if they were manifestly unjust, if they disclosed bad faith, or if they involved such oppressive or gratuitous interference with the rights of citizens as could find no justification in the minds of reasonable men. Lord Russell 28 (1991) 1 AC 696 29 (1768) 4 Burr 2186 : 98 ER 139 30 (1898) 2 QB 91: (1895-9) All ER Rep 105 emphasised that a bye-law is not unreasonable just because particular judges might think it went further than was prudent or necessary or convenient. In 1947 the Court of Appeal confirmed a similar approach for the review of executive discretion generally in Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. This case was concerned with a complaint by the owners of a cinema in Wednesbury that it was unreasonable of the local authority to licence performances on Sunday only subject to a condition that 'no children under the age of 15 years shall be admitted to any entertainment whether accompanied by an adult or not'. In an extempore judgment, Lord Greene, M.R. drew attention to the fact that the word 'unreasonable' had often been used in a sense which comprehended different grounds of review. (At p. 229, where it was said that the dismissal of a teacher for having red hair (cited by Warrington, L.J. in Short v. Poole Corpn.32, as an example of a 'frivolous and foolish reason') was, in another sense, taking into consideration extraneous matters, and might be so unreasonable that it could almost be described as being done in bad faith; see also R. v. Tower Hamlets London Borough Council, ex p Chetnik Developments Ltd.33 (Chapter 4, p. 73, supra). He summarised the principles as follows: "The Court is entitled to investigate the action of the local authority with a view to seeing whether or not they have taken into account matters which they ought not to have taken into account, or, conversely, have refused to take into account or neglected to take into account matter which they ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority had kept within the four comers of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority has contravened the law by acting in excess of the power which Parliament has confided in them.' This summary by Lord Greene has been applied in countless subsequent cases. "The modem statement of the principle is found in a passage in the speech of Lord Diplock in Council of Civil Service Unions v. Minister for Civil Service 'By "irrationality" I mean what can now be succinctly referred to as "Wednesbury unreasonableness". (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn.31) It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at.'" 80. At this stage, The Supreme Court Practice, 1993, Vol. 1, pp. 849850, may be quoted : "4. Wednesbury principle.- A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. 3 1, per Lord Greene, M.R.)" 81. Two other facets of irrationality may be mentioned. (1) It is open to the court to review the decision-maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment34, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident's bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the 81. Two other facets of irrationality may be mentioned. (1) It is open to the court to review the decision-maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment34, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident's bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. said that he could not see on what basis the Secretary of State had reached his conclusion. (2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Bernet London Borough Council, ex p Johnson the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down.” 16. In view of the aforementioned aspects, I have carefully examined the law declared by the Hon’ble Apex Court with regard to acceptance of diaries/loose sheets by the respondent-Revenue. In the case of VC SHUKLA (supra), wherein at paragraphs 16 to 18 of the judgment, it is observed thus: “16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under:- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability." 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomesadmissible as relevant evidence, still, the statement madetherein shall not alone be sufficient evidence, still, thestatement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. “Book” ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed:- " In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book…I think the term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S.34." We must observe that the aforesaid approach is in accord with good reasoning and we are in full agreement with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91).” (underlining by me) 17. The Hon'ble Supreme Court in the case of COMMON CAUSE (supra), at paragraphs 278 to 282 of the judgmnt, has observed thus: “278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain HawalaDiaries, note books and file containing loose sheets ofpapers not in the form of “books of accounts” and hasheld that such entries in loose papers/sheets areirrelevant and not admissible under Section 34 of theEvidence Act, and that only where the entries are made inthe books of accounts regularly kept, depending on thenature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla as to value of entries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborativeevidence. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423-27, paras 14 and 20) “14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423-27, paras 14 and 20) “14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: "70. ….an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made d