Wtax/606/2017 Of Pradeep Kumar Jain And Another v. Chief Commissioner Of Income Tax And 2 Others

Case :- WRIT TAX No. - 606 of 2017 Petitioner :- Pradeep Kumar Jain And AnotherRespondent :- Chief Commissioner Of Income Tax And 2 OthersCounsel for Petitioner :- Sarveshwar SinghCounsel for Respondent :- S.S.C.,Manu Ghildyal Hon'ble Mrs. Sunita Agarwal,J.Hon'ble Vipin Chandra Dixit,J. Heard Sri Sarveshwar Singh learned counsel for the petitionersand Sri Manu Ghildyal learned counsel for the respondentrevenue. The petitioners herein are sons and grandson of Late Giri LalJain. There were four sons and one daughter of Late Giri LalJain namely Ashok Kumar Jain (since deceased), PradeepKumar Jain, Deepak Kumar Jain, Vipin Kumar Jain and Smt.Asha Jain. The petitioner no.2 is the son of Late Ashok KumarJain and grandson of Late Giri Lal Jain. In a search and seizure operation under Section 132 of theIncome Tax Act carried out at the premises of the petitionersand his brothers/uncles on 04.10.2004 and subsequently duringsearch of locker, the officers of the Income Tax Department hadseized cash amount of Rs.1,90,12,500/- belonging to petitionerno.1 and Rs.2,12,12,500/- belonging to Sri Ashok Kumar Jain,father of the petitioner no.2, Rs.2,15,12,000/- belonging to SriDeepak Kumar Jain and Rs.2,07,12,500/- of Sri Vipin KumarJain were seized. The proceedings for block assessment wereinitiated against all four brothers and they had participated inthe same. It is stated in the writ petition that all the cases relevant to thesearch and seizure were completed and refunds short byRs.72,72,524/- was granted to petitioner no.1 andRs.72,69,248/- were granted to the petitioner no.2. Sri DeepakKumar Jain had also received refunds short by Rs.72,72,524/-. It is stated that on an application under RTI Act filed by thepetitioners, CIT Ghaziabad in response to the same vide orderdated 20.03.2007 informed that a demand of Rs.2,18,07,748/-was outstanding against one Amrish Kumar Jain and the saiddues were appropriated from P.D. account on 18.01.2005 fromthe legal heirs of deceased Sri Giri Lal Jain. It stated that there is no legal basis to realise outstanding againstSri Amrish Kumar Jain from the P.D. account of the legal heirsof the deceased Sri Giri Lal Jain. It is stated that the petitionershave no business relations with Sri Amrish Kumar Jain at anypoint of time and moreover, the demand against Sri AmrishKumar Jain had been realised by the department suo motuwithout any notice or opportunity to the petitioners. The contention is that the petitioners and his brother DeepakKumar Jain had approached the department on variousoccasions but no response had been received to their request.The writ petition no.84 of 2011 was filed by Sri Deepak KumarJain, one of the brothers of the petitioners, wherein videjudgment and order dated 19.01.2011, CCIT Ghaziabad wasdirected to decide the representation dated 20.08.2009. It is stated that the petitioner no.1 had been requesting forrefund of wrongly adjusted amount of Rs.72,69,250/- from hisP.D account. The CCIT, Ghaziabad by the order dated 17.08.2011 hadrejected the representation of Deepak Kumar Jain holding thatthe entire outstanding amount against Amrish Kumar Jain wasliable to be appropriated from the legal heirs of the deceasedGiri Lal Jain. Being aggrieved against the said order, Deepak Kumar Jain hadfiled Writ Petition (Tax) no.1748 of 2011. After exchange ofcounter and rejoinder affidavits, the said writ petition wasfinally decided vide judgment and order dated 11.08.2016. The contention is that the order passed by the CCIT, Ghaziabaddated 17.08.2011 related to all four brothers, upholding theappropriation of the entire amount of outstanding against SriAmrish Kumar Jain from three sons of late Giri Lal Jain namelyPradeep Kumar Jain, Ashok Kumar Jain and Deepak KumarJain. The said order having been set aside by this Court videjudgment and order dated 11.08.2016, the petitioners herein arealso entitled for the refund as directed therein in the matter ofDeepak Kumar Jain. Being aggrieved against the said order, Deepak Kumar Jain hadfiled Writ Petition (Tax) no.1748 of 2011. After exchange ofcounter and rejoinder affidavits, the said writ petition wasfinally decided vide judgment and order dated 11.08.2016. The contention is that the order passed by the CCIT, Ghaziabaddated 17.08.2011 related to all four brothers, upholding theappropriation of the entire amount of outstanding against SriAmrish Kumar Jain from three sons of late Giri Lal Jain namelyPradeep Kumar Jain, Ashok Kumar Jain and Deepak KumarJain. The said order having been set aside by this Court videjudgment and order dated 11.08.2016, the petitioners herein arealso entitled for the refund as directed therein in the matter ofDeepak Kumar Jain. To this submission of the learned counsel for the petitioners, noplausible objection could be taken by the learned counsel forthe revenue. It is, however, stated by him that the prayer no.(i)of the writ petition seeking for quashing of the order dated17.08.2011 which was passed on the representation of SriDeepak Kumar Jain is misconceived. The said order is not in existence with the passing of the judgment and order dated11.08.2016 and hence, the prayer for its quashing ismisconceived. On the said submission learned counsel for the petitioners statesthat the petitioners may be allowed to withdraw the prayer no.(i) of the writ petition and they are pressing the prayer no.(ii)with the claim that they are entitled for the mandamuscommanding the respondents to consider the claim of thepetitioners in light of the judgment and order dated 11.08.2016passed in Writ Tax no.1748 of 2011 filed by Deepak KumarJain, one of the brothers of the petitioner no.1 and uncle of thepetitioner no.2. The counsels for the parties agreed to the extent that thejudgment and order dated 11.08.2016 has not been varied,altered or set aside by a higher Court of law. Considering the submissions of the learned counsels for theparties and perused the record, we may note that whileadjudicating the claim of Deepak Kumar Jain for refund, thisCourt had framed the following question for consideration:- "24. The short question up for consideration in this writ petition is"whether liability of tax of Amrish Kumar Jain has rightly beenappropriated from the funds seized from petitioner and kept in P.D. A/c byRevenue." However, while answering the said question, this Court hadrecorded the events which occurred after the death of Late GiriLal Jain on 28.11.1973. It was noted that the firm M/s Giri LalMamchand and Company was constituted in 1951. It had twopartners namely Late Giri Lal Jain and S.D Jain. The firmcontinued till assessment year, 1966-67 (financial year 1965-66). The firm was reconstituted w.e.f 01.05.1966 as M/s GirilalMam Chand and Company. At that time, two more partnerswere introduced besides two earlier partners i.e Giri Lal Jainand S.D. Jain. The new partners were Smt. Moonga Devi Jainand Amrish Kumar Jain. Sri Amrish Kumar Jain had attained majority in 1970 andbecame full-fledged partner through the partnership deeds dated03.04.1970. On 04.04.1972, a search team of Income TaxDepartment conducted searches of residence and businesspremises of the partnership firm, M/s Girilal MamchandCompany and other connected establishments and seized cashand certain jewellery. Giri Lal Jain had died on 28.11.1973, Sri S.D.Jain on12.05.1974 and Smt. Moonga Devi died on 30.10.1978. Wealth Tax assessment for the assessment years 1970-71 to 1974-75were finalized by the Wealth Tax Officer, Central Circle,Ghaziabad on 24.03.1986. At that time neither Giri Lal Jain wasalive nor any legal heirs of Giri Lal Jain were given anyopportunity to participate in the proceedings as none of themwere put to notice. It was noted by this Court that on behalf ofthe firm, an application was filed before the Income TaxSettlement Commission on 20.09.1982. Giri Lal Jain had died on 28.11.1973, Sri S.D.Jain on12.05.1974 and Smt. Moonga Devi died on 30.10.1978. Wealth Tax assessment for the assessment years 1970-71 to 1974-75were finalized by the Wealth Tax Officer, Central Circle,Ghaziabad on 24.03.1986. At that time neither Giri Lal Jain wasalive nor any legal heirs of Giri Lal Jain were given anyopportunity to participate in the proceedings as none of themwere put to notice. It was noted by this Court that on behalf ofthe firm, an application was filed before the Income TaxSettlement Commission on 20.09.1982. Looking to the position that all three previous partners of thefirm had died uptil the year 1978, it was noted by the Court thatthe existing firm M/s Girilal Mamchand and Company had beendissolved and it may have at the best became an proprietorshipfirm with the only partner being alive who was Amrish KumarJain. Relevant paragraphs '33' & '34' of the judgment and order dated11.08.2016 are required to be reproduced as under:- "33. Wealth-tax assessments for the assessment years 1970-71 to 1974-75were finalized by Wealth Tax Officer, Central Circle, Ghaziabad on24.03.1986. At that time also, admittedly, neither Girilal Jain was alive soas to have any participation in the said proceedings nor any legal heir ofGirilal Jain had any opportunity since none was put on notice. 34. M/s. Girilal Mamchand & Co., which may have been heard by WealthTax Officer, when made assessment order dated 24.03.1986, could havebeen a proprietorship firm at that time, having only Amrish Kumar Jainalive. It also appears from order dated 24.03.1986 that same was passedwith reference to the issues settled by Settlement Commission underSection 35 of Act, 1957 but no such order of Settlement Commission,relating to the wealth-tax dispute, has been placed on record and what hasbeen stated therein has neither been brought to the notice of Court northere is any averment that it was communicated to petitioner. Only orderof Settlement Commission is on record and is dated 09.01.1996 which is inrespect of income-tax. The demand notice placed on record along withsupplementary counter affidavit dated 24.03.1986 and 11.01.1989 alsorelate to wealth-tax liability which has nothing to do with SettlementCommission's order dated 09.01.1996 which was in respect of income-taxliability. How and in what manner wealth-tax liability was created in1986-89 and such demand could have been saddled upon petitioner couldnot be demonstrated by respondents at all. " It was also noted that the respondents at no point of time laidtheir claim that the petitioner namely Deepak Kumar Jaintherein or any of his brothers (the petitioners herein) were partybefore the Settlement Commission, when application dated20.09.1982 was filed. It, thus, became an admitted fact that nonotice or opportunity was given to the heirs and legalrepresentatives of Giri Lal Jain at the time of assessment videorder dated 24.03.1986. It was further noted that with respect toassessment years 1967-68 to 1974-75, 1976-77 to 1977-78, 1981-82 and 1982-83, application was filed before the IncomeTax Settlement Commission, which obviously would have beenfiled by Amrish Kumar Jain, the sole proprietors at that time. Ittherefore could not be established as to how the proceedingswould be binding upon the petitioner (Deepak Kumar Jain). Thefinal assessment order was passed on 23.02.1996 determiningliability for the assessment year 1969-70 and onwards. Relevant paragraphs'35', '38' and '39' are reproduced as under:- 1981-82 and 1982-83, application was filed before the IncomeTax Settlement Commission, which obviously would have beenfiled by Amrish Kumar Jain, the sole proprietors at that time. Ittherefore could not be established as to how the proceedingswould be binding upon the petitioner (Deepak Kumar Jain). Thefinal assessment order was passed on 23.02.1996 determiningliability for the assessment year 1969-70 and onwards. Relevant paragraphs'35', '38' and '39' are reproduced as under:- "35. With respect to the assessment years 1967-68 to 1974-75, 1976-77 to1977-78, 1981-82 and 1982-83, application was filed before Income TaxSettlement Commission and it is quite obvious that such application wouldhave been filed by Amrish Kumar Jain, being sole proprietor at that timebut application was filed i.e. 20.09.1982 on behalf of M/s. GirilalMamchand & Co. How these proceedings could have been held bindingupon the petitioner, we actually fail to understand. Thereupon final orderwas passed on 23.02.1996 determining liability for A.Y. 1969-70 andonwards. In respect of the A.Y.s 1967-68 and 1968-69, SettlementCommission accepted income of Rs. 61660/- and 1,09,182/-. SettlementCommission also granted immunity from all penalties imposed under Act,1961 for assessment years 1969-70 and onwards to which settlementrelates. Copy of said order dated 09.01.1996 passed by SettlementCommission is on record as Annexure No. 11 to writ petition. The entireorder no where shows that petitioner or any of his brothers, in anymanner, were party in proceedings before Settlement Commission or hadany opportunity of hearing. 38. The period of assessment of income-tax or wealth-tax, as the case maybe, to some extent relates to when (Late) Girilal Jain was alive. But allproceedings have been conducted and finalized long after his death. Innone of such proceedings, petitioner or his brothers have been shown tobe made party or given any opportunity of hearing. Against a dead personno liability can be created unless his legal heirs are there. If reconstitutedfirm after death of Girilal Jain is taken to be the legal representative thenliability and recovery could have been made from the then partners/proprietor and not from any person who has no relation, by any meanswith such reconstituted firm. 39. Facts are evident to show that reconstituted firm or assessment had noparticipation of petitioner or his brothers. The assessment or settlement,whatsoever may be, all was with the participation of only Amrish KumarJain, and quite obvious, as a proprietor of reconstituted firm. If that be so,imposing liability upon petitioner, without placing anything on record thatpetitioner inherited anything from his father, is patently illegal andwithout jurisdiction. Petitioner's money was seized in a fresh and separatesearch and seizure operation and that too conducted in 2004. The searchand seizure has nothing to do with any assets of funds of (Late) GirilalJain who had died some 30 years ago. Nothing could be shown to us,which may authorize respondents to appropriate funds belong topetitioner, which is not shown to have been inherited from ancestors.There is no material placed on record to show that petitioner held or holdsmoney for and on account of assessee. Mere fact that (Late) Girilal Jainhappened to be father of petitioner, would not entitle respondents torecover any tax dues, not belong to petitioner, from petitioner unless it is shown that petitioner has inherited a Estate from his father and recoveryis being made from such inherited estate." shown that petitioner has inherited a Estate from his father and recoveryis being made from such inherited estate." It was, thus, concluded that the petitioner (Deepak Kumar Jain),the brother of the petitioners herein had no participation in thestage of assessment. The participation of anyone, if was, quiteobvious, he was Amrish Kumar Jain, the proprietor of thereconstituted firm. It was, thus, concluded that imposingliability upon the petitioner (Deepak Kumar Jain) withoutplacing anything on record that the petitioner (Deepak KumarJain) was inherited nothing from his father is patently illegaland without jurisdiction. Further, it was held in para '40' and '41' that Section 159 of theAct, 1961 while making legal representative responsible forassessment proceedings or tax liability of a deceased, confinesit to the extent to which estate is capable to meet liability.Meaning thereby, legal representative's liability is confine to theextent, as estate has been succeeded by him and not beyondthat. This provision further makes it clear that the proceedingsshall be initiated against legal representative in the samemanner as it could not have been against deceased-assessee butthat, if so, like deceased assessee, legal representatives wereentitled to be heard before finalisation of liability, after thedeath of the deceased assessee. It was, thus, finally concludedin paragraphs-'48' and '49' as under:- "48. In view of above discussion, we are clearly of the view that recourseto Section 159 is thoroughly misconceived and illegal on the part ofRevenue. Neither there existed any liability against deceased nor anyliability was finalized after giving notice to the alleged legal heirs nor theamount which was seized in search and seizure operation under Section132, otherwise could have been appropriated against the alleged dues ofdeceased Girilal Jain by referring to Section 159 as discussed above.9 Inthe present case, it is not the case of respondents that an assessment wasmade against (Late) Girilal Jain and from the assets of deceased whichwas received by his legal representatives, the demand has been satisfied.At no point of time any notice or opportunity was given to the petitioner orany of his brothers before finalizing the alleged liability of deceased afterhis death. In fact highhandedness on the part of respondents is writ largefrom the fact that they did not keep on informing petitioner or his legalbrothers but petitioner has to collect correct information by approachingrespondents under RTI Act and not otherwise. This clearly shows a hideand seek approach, patently erroneous and malicious in law, on the partof respondents in appropriating assets of petitioner in respect of certaindues which were not shown to be adjustable there against. 49. In our view here is a clear case of patent illegality, unauthorizedappropriation, and unfair and unjust treatment made by the respondents tothe petitioner in depriving him his huge amount which in law wasrefundable to him. The action on the part of respondents also comeswithin the ambit of patent abuse of process of law. " The relief granted to Sri Deepak Kumar Jain, one of the sons of Late Giri Lal Jain therein is as under:- "In the result, writ petition is allowed. The entire amount ofpetitioner which was appropriated by respondent is directed tobe refunded with interest at the rate of 12% per annum from thedate the amount was seized till repayment to petitioner. Theorder dated 17.08.2011 passed by CCIT upholdingappropriation of Rs. 72,72,524/- is hereby set aside. " Having gone through the abovenoted decision of this Courtdated 11.08.2016, we find that the controversy as to whether thelegal representatives of deceased Giri Lal Jain were liable byvirtue of Section 159 of Act, 1961 for the Wealth Tax as per thefinal assessment the order dated 23.02.1996 has been set at rest,in so far as the heirs and legal representatives of late Giri LalJain were concerned. "In the result, writ petition is allowed. The entire amount ofpetitioner which was appropriated by respondent is directed tobe refunded with interest at the rate of 12% per annum from thedate the amount was seized till repayment to petitioner. Theorder dated 17.08.2011 passed by CCIT upholdingappropriation of Rs. 72,72,524/- is hereby set aside. " Having gone through the abovenoted decision of this Courtdated 11.08.2016, we find that the controversy as to whether thelegal representatives of deceased Giri Lal Jain were liable byvirtue of Section 159 of Act, 1961 for the Wealth Tax as per thefinal assessment the order dated 23.02.1996 has been set at rest,in so far as the heirs and legal representatives of late Giri LalJain were concerned. The claim of the petitioners herein is that they are at the samefooting as that of Sri Deepak Kumar Jain, (one of the sons oflate Giri Lal Jain). And as determined in the judgment and orderdated 11.08.2016, the petitioners herein are also entitled for thesame relief. We find substance in the said submission and holdthat nothing remains to be adjudicated on the controversy inquestion. The claim of the petitioners herein is covered by thejudgment and order dated 11.08.2016 and the petitioners areentitled to the benefit of the said decision. We, therefore, dispose of the present petition with theobservation that the competent authority shall consider theclaim of the petitioners strictly in light of the judgment andorder dated 11.08.2016 passed in Writ Tax no.1748 of 2011(Deepak vs Chief Commissioner of Income Tax and others) anddetermine the amount to be refunded to both the petitionersherein along with interest as provided therein. The saiddetermination shall be made within a period of four weeks fromthe date of reciept of copy of this order. It is further clarified that the petitioners herein shall be entitledfor the same relief as has been granted to Sri Deepak KumarJain in the judgment and order dated 11.08.2016, noted above. Order Date :- 15.9.2022Harshita