Wp(C)/9178/2017 Of M/S.ram Bahadur Thakur Ltd v. Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 22ND DAY OF MARCH 2017/1ST CHAITHRA, 1939 W.P(C).No.9178 of 2017 (V) --------------------------------- PETITIONER(S):- --------------- M/S.RAM BAHADUR THAKUR LTD., SIDHARTH BUILDING, MARAR ROAD WILLINGDON ISLAND, COCHIN-3, REPRESENTED BY ITS DIRECTOR, MR.MANISH MOHAN SHARMA, S/O. BIRENDRA MOHAN SHARMA. BY ADVS.SRI.ADARSH KUMAR SRI.K.M.ANEESH SRI.K.SANTHOSH KUMAR (KALIYANAM) SRI.BIJU VARGHESE ABRAHAM SRI.DILEEP CHANDRAN RESPONDENT(S):---------------- 1. COMMISSIONER OF INCOME TAX, OFFICE OF COMMISSIONER OF INCOME TAX, C.R.BUILDING, I.S PRESS ROAD, COCHIN-682 018. C.R.BUILDING, I.S PRESS ROAD, COCHIN-682 018. 2. ASSISTANT COMMISSIONER OF INCOME TAX. CORPORATE CIRCLE 2(1), KOCHI-682018. CORPORATE CIRCLE 2(1), KOCHI-682018. 3. THE COMMISSIONER OF INCOME TAX (APPEALS). 1ST FLOOR, POORNIMA, NO.28/243, NEAR MANORAMA JUNCTION, PANAMPALLY NAGAR, KOCHI-36. PANAMPALLY NAGAR, KOCHI-36. R1 TO R3 BY STANDING COUNSEL FOR GOVT. OF INDIA (TAXES)SRI.JOSE JOSEPH. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.9178 of 2017 (V) --------------------------- APPENDIX PETITIONER(S)' EXHIBITS:- ------------------------ P1 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2008-09 P2 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2009-10 P3 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2010-11 P4 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2011-12 P5 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2012-13 P6 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2013-14 P6(A) TRUE COPY OF THE ORDER OF THE APPELLATE AUTHORITY DATED 7.3.2017 DATED 7.3.2017 P7 TRUE COPY OF THE COMMUNICATION DATED 23.12.2016 P8 TRUE COPY OF THE COMMUNICATION DATED 27.10.2016 P9 TRUE COPY OF THE NOTICES DATED 13.12.2016 P9(A) THE EXTRACT OF THE ORDER OF THE HON'BLE HIGH COURT OF ORISSA IN WP(C).278/2017. IN WP(C).278/2017. P9(B) RELEVANT PAGES OF THE SHAH COMMISSION/MPSC REPORT P10 TRUE COPY OF THE COMMUNICATION OF THE TEA BOARD DATED 5.10.2007 P11 TRUE COPY OF THE ORDER DATED 18.8.2000 PASSED BY THE HON'BLE COMPANY LAW BOARD HON'BLE COMPANY LAW BOARD P12 TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF ORISSSA IN WP(C) NO.7998/2008. IN WP(C) NO.7998/2008. P13 TRUE COPY OF THE REPORT OF THE JOINT VERIFICATION DONE BY THE DEPUTY DIRECTOR MINES (JODA) , THE TEHSILDAR (BARBIL) AND FORESTER (GUALI) DATED 5.2.2009. DEPUTY DIRECTOR MINES (JODA) , THE TEHSILDAR (BARBIL) AND FORESTER (GUALI) DATED 5.2.2009. P14 TRUE COPY OF THE INSPECTION REPORT DATED 28.7.2008. P15 TRUE COPY OF THE REPORT FILED BY THE VIGILANCE DEPARTMENT DATED 10.8.2009. DATED 10.8.2009. P16 TRUE COPY OF THE ORDER OF THE HON'BLE HIGH COURT OF ORISSA \ IN BAIL APPLICATION NO.12425/2009. IN BAIL APPLICATION NO.12425/2009. WP(C).No.9178 of 2017 (V) - 2 - P17 TRUE COPY OF THE ORDER OF THE REVISIONAL AUTHORITY DATED 26.9.2011. P18 TRUE COPY OF THE FIR OF THE FOREST DEPARTMENT, ORISSA DATED 28.1.2014. RESPONDENT(S)' EXHIBITS:- ------------------------- NIL. Vku/-[ true copy ] K. Vinod Chandran, J ---------------------------------------- W.P.(C).No.9178 of 2017-V ----------------------------------------- Dated this the 22nd day of March, 2017 JUDGMENT P15 TRUE COPY OF THE REPORT FILED BY THE VIGILANCE DEPARTMENT DATED 10.8.2009. DATED 10.8.2009. P16 TRUE COPY OF THE ORDER OF THE HON'BLE HIGH COURT OF ORISSA \ IN BAIL APPLICATION NO.12425/2009. IN BAIL APPLICATION NO.12425/2009. WP(C).No.9178 of 2017 (V) - 2 - P17 TRUE COPY OF THE ORDER OF THE REVISIONAL AUTHORITY DATED 26.9.2011. P18 TRUE COPY OF THE FIR OF THE FOREST DEPARTMENT, ORISSA DATED 28.1.2014. RESPONDENT(S)' EXHIBITS:- ------------------------- NIL. Vku/-[ true copy ] K. Vinod Chandran, J ---------------------------------------- W.P.(C).No.9178 of 2017-V ----------------------------------------- Dated this the 22nd day of March, 2017 JUDGMENT The petitioner is aggrieved with the rejection of aninterim application in a first appeal, as seen from Exhibit P6(a). Theassessment orders are six in number, starting from 2008-09 andending with 2013-14. The substantial demand is in the first twoyears, which comes to more than Rupees Fifty Two Crores. The saiddemand is also based on an alleged mining operation conducted bythe petitioner in the State of Odisha, which is asserted to be illegaland undisclosed as per the Report of the Commission of Inquiry,headed by Justice M.B.Shah. 2. The contention against the impugned order is that it was passed without affording an opportunity for hearing. Thepetitioner contends that on the three days, the matter was posted forhearing, he was not present for valid reasons, as is seen from theadjournment applications at Exhibits P7, P8 and an applicationdated 09.01.2017 which is made mention of in the impugned order WP(C) No.9178 of 2017 itself. The petitioner also submits that there was some confusion withrespect to the issuance of two notices on the very same day[13.12.2016] under Exhibit P9(1) and P9(2), which notified the caseson two separate dates, on 27.12.2016 and the other on 11.01.2017. 3. The learned Standing Counsel for Government India(Taxes) submits that there can be no reliance placed on theinadvertent mistake committed in Exhibit P9(1) and P9(2). Thepetitioner also appeared on both of the said dates; but filedadjournment applications and only since the petitioner wasconsistently absent, the Commissioner took up the matter anddecided it. The learned Standing Counsel would also take methrough the entire order to submit that the petitioner has beenavoiding payment of tax especially since it is seen that there are noreturns filed for the six years for which assessments had beenproposed and also from the assessment year 1998-99. Thepetitioner, hence, cannot be extended any equity is the specificargument raised. 4. The learned Counsel for the petitioner submits that theassessment itself has been sourced on the report of Justice Shah WP(C) No.9178 of 2017 - 3 - Commission; which, even according to the Hon'ble Supreme Court, isnot conclusive since it was prepared without following the procedure under the Commission of Inquiry Act, 1952. It is also contended thatthere is no definite finding that the petitioner had been guilty of theillegal mining anywhere in the report. The difficulty in filing returnswas only occasioned for reason of the order of the Company LawBoard, produced as Exhibit P11; which interdicted the petitioner fromfinalising the accounts of the Company from 1995-96 onwards.Further, in a revision filed under Section 30 of the Mines and Mineral(Development and Regulation ) Act, 1957 (for brevity, “MMDR Act”)Exhibit P17 order was passed; which found that there was noevidence or allegation against the revisionist, being the petitionerCompany, with reference to illegal mining. 5. The challenge to the report of the Justice Shah Commission is found in Goa Foundation v. Union of India [(2014) 6 SCC 590], of which paragraph 11 to 14 are extracted hereunder: 5. The challenge to the report of the Justice Shah Commission is found in Goa Foundation v. Union of India [(2014) 6 SCC 590], of which paragraph 11 to 14 are extracted hereunder: “11. As we have already noticed, in the casestransferred from the Bombay High Court to this Court, themining lessees have prayed for quashing the Report of theJustice Shah Commission. Mr K.K. Venugopal, learned Senior Counsel appearing for the mining lessees, submittedthat the Justice Shah Commission did not issue any noticeunder Section 8-B of the Commissions of Inquiry Act, 1952 tothe mining lessees giving a reasonable opportunity of beingheard in the inquiry and to produce evidence in their defence.He further submitted that the Justice Shah Commission alsodid not permit the mining lessees to cross-examine thewitnesses, to address the Commission and to be representedby legal practitioners before the Commission contrary to theprovisions of Section 8-C of the Commissions of Inquiry Act,1952. He submitted that even otherwise there is gross breachof the principles of natural justice and fair play by the JusticeShah Commission and, therefore, the Report of theCommission was violative of Article 14 of the Constitution. Hesubmitted that the Report of the Justice Shah Commissionshould, therefore, be quashed. In support of this submission,he relied on the decisions of this Court in Kiran Bedi v.Committee of Inquiry [(1989( 1 SCC 494], State of Bihar v.Lal Krishna Advani [(2003) 8 SCC 361] and Union of India v.Tulsiram Patel (1985) 3 SCC 398]. 12. Mr Mohan Parasaran, learned Solicitor General forthe Union of India, on the other hand, submitted that as theNotification dated 22-11-2010 of the Central Governmentappointing the Justice Shah Commission under Section 3 ofthe Commissions of Inquiry Act, 1952 would show, reportswere received from various State Governments of widespread mining of iron ore and manganese ore incontravention of the MMDR Act, the Forest (Conservation)Act, 1980 and the Environment (Protection) Act, 1986 orother rules and licences issued thereunder and for thisreason, the Central Government appointed the Justice ShahCommission for the purpose of making inquiry into thesematters of public importance. He submitted that after theJustice Shah Commission submitted the Report pointing outvarious illegalities, the Union Government has kept theenvironment clearances in abeyance and it will take legalaction on the basis of its own assessment of the facts and noton the basis of the facts as found in the Justice ShahCommission’s Report. 13. Similarly, Mr Atmaram N.S. Nadkarni, the AdvocateGeneral appearing for the State of Goa, submitted that aftergoing through the Report of the Justice Shah Commission,the State Government has suspended all mining andtransportation of ores and no legal action will be takenagainst the mining lessees on the basis of the findings in theJustice Shah Commission’s Report unless due opportunity isgiven to the mining lessees to place their defence against thefindings of the Justice Shah Commission. 14. We find that Section 8-B of the Commissions ofInquiry Act, 1952 provides that if a person is likely to beprejudicially affected by the inquiry, the Commission shall 13. Similarly, Mr Atmaram N.S. Nadkarni, the AdvocateGeneral appearing for the State of Goa, submitted that aftergoing through the Report of the Justice Shah Commission,the State Government has suspended all mining andtransportation of ores and no legal action will be takenagainst the mining lessees on the basis of the findings in theJustice Shah Commission’s Report unless due opportunity isgiven to the mining lessees to place their defence against thefindings of the Justice Shah Commission. 14. We find that Section 8-B of the Commissions ofInquiry Act, 1952 provides that if a person is likely to beprejudicially affected by the inquiry, the Commission shall give to that person a reasonable opportunity of being heardand to produce evidence in his defence and Section 8-C ofthe Commissions of Inquiry Act, 1952 provides that everysuch person will have a right to cross-examine and the rightto be represented by a legal practitioner before theCommission. As the State Government of Goa has taken astand before us that no action will be taken against themining lessees only on the basis of the findings in the Reportof the Justice Shah Commission without making its ownassessment of facts and without first giving the mininglessees the opportunity of hearing and the opportunity toproduce evidence in their defence, we are not inclined toquash the Report of the Justice Shah Commission on theground that the provisions of Sections 8-B and 8-C of theCommissions of Inquiry Act, 1952 and the principles ofnatural justice have not been complied with. At the sametime, we cannot also direct prosecution of the mining lesseeson the basis of the findings in the Report of the Justice ShahCommission, if they have not been given the opportunity ofbeing heard and to produce evidence in their defence and notallowed the right to cross-examine and the right to berepresented by a legal practitioner before the Commission asprovided in Sections 8-B and 8-C respectively of theCommissions of Inquiry Act, 1952. We will, however, examinethe legal and environmental issues raised in the Report of theJustice Shah Commission and on the basis of our findings onthese issues consider granting the reliefs prayed for in the writ petition filed by Goa Foundation and the reliefs prayed forin the writ petitions filed by the mining lessees, which havebeen transferred to this Court”. 6. It is seen from the above that the Supreme Court had not entertained the allegation of non-compliance with the provisionsof the Commissions of Inquiry Act; only since the State Governmenthad taken a stand before the learned Judges that no action will betaken on the basis of the Shah Commission Report. The proceduralirregularities as pointed out by the various parties before theHon'ble Supreme Court was accepted by the Hon'ble SupremeCourt. 7. In the present case, the assessment, as is seen from the impugned order at paragraph 4(e), arise out of the Commissionof Inquiry headed by Justice M.B.Shah. It cannot also be said thatthere is a definitive finding that the petitioner-Company has indulgedin illegal mining in the Shah Commission Report, is the furthersubmission made by the learned Counsel for the petitioner. The saidcontention was not looked into by the Appellate Authority. ExhibitsP11 and P17 have also not been looked into by the Appellate WP(C) No.9178 of 2017 Authority. There can be no fault found on the Appellate Authoritysince they were not put across at the day posted for hearing. 7. In the present case, the assessment, as is seen from the impugned order at paragraph 4(e), arise out of the Commissionof Inquiry headed by Justice M.B.Shah. It cannot also be said thatthere is a definitive finding that the petitioner-Company has indulgedin illegal mining in the Shah Commission Report, is the furthersubmission made by the learned Counsel for the petitioner. The saidcontention was not looked into by the Appellate Authority. ExhibitsP11 and P17 have also not been looked into by the Appellate WP(C) No.9178 of 2017 Authority. There can be no fault found on the Appellate Authoritysince they were not put across at the day posted for hearing. 8. Considering the entire circumstances as seen above,this Court is of the opinion that the impugned order has not lookedinto the relevant materials; of course by reason of the default of thepetitioner himself in not having appeared before the first appellateauthority despite various opportunities having been given. In suchcircumstances, there cannot be any unconditional direction toconsider afresh the issue of stay till the appeal is disposed of. Thepetitioner's contention is also that the demand, arising out of theassessment orders of the years 2008-09 and 2009-10, isobjectionable since they are based on the report of the ShahCommission. In such circumstances, if the petitioner pays thedemand of tax for the assessment years 2010-11, 2011-12, 2012-13and 2013-14 in two installments; the first one on 30.03.2017 and thenext on 30.04.2017, there shall be a re-consideration of Exhibit P6(A)on payment of the aforesaid amounts. The petitioner shall produce acopy of the writ petition as also substantiating documents, if any,before the Commissioner before 30.04.2017. The petitioner shall also WP(C) No.9178 of 2017 deposit the amounts as directed herein before and appear before thefirst appellate authority on 02.05.2017. If the petitioner does notcomply with either of these conditions of deposit or appearance, thenExhibit P6(A) shall be upheld. However, if the amounts as directedherein above are paid and the petitioner appears before the firstappellate authority on 02.05.2017, then a hearing shall be conductedon that date, subject to the convenience of the first appellateauthority, or on a near date with personal acknowledgment taken ofthe date of hearing. A reasoned order shall be passed, at any ratewithin a period of one month from the date of hearing. Recovery shallbe kept in abeyance if the amounts directed herein above are paidand the further recovery shall depend upon the orders passed by thefirst appellate authority. The writ petition is disposed of as above. vku/- [true copy] Sd/-K.Vinod ChandranJudge.