1993 Supreme(AP) 154

Andhra Pradesh High Court
Judges : S.V.MARUTHI, V.SIVARAMAN NAIR
Lan Eseda Steels Ltd. - Appellant
Versus
Assistant Commissioner of Income Tax - Respondent
Decided On : 03-22-93

The corporate personality of the petitioner-company has no significance in view of the fact that such personality was duly represented in the proceedings under section 132(1), 132(3) and 132(5) by its "authorised signatory".

Headnote:

INCOME TAX - Search and seizure - Section 132 - Authorised signatory of the company - Whether the monies of the petitioners in bank accounts (current account and F.D.R. accounts) are within the purview of "any money or other valuable article" referred to in section 132(1)(c) of the Act? - Whether the corporate personality of the petitioner-company disentitles the respondent from proceeding against its assets on the assumption that such assets do not belong to the company, but are the undisclosed income of Sri Shyam Bhatia? - Whether the petitioner is entitled to assail the proceedings under sections 132(3), 132(1) and 132(5) of the Income-tax Act, after the authorised signatory had requested in his statement dated 27/08/1992, and in his letters dated 30/10/1992, and 18/12/1992, to adjust the seized amounts, towards arrears of Income-tax, penalty, etc., due from him?

Fact of the Case:

The Income-tax Department had started an investigation into the allegations of concealed income of Mr. Shyam Bhatia. It conducted search operations and organised raids in aid thereof, of various premises of Mr. Shyam Bhatia, his associates and companies allegedly under his control. Those operations were initiated under section 132 of the Income-tax Act. The operations were conducted on 27/08/1992. The residential premises of Sri Shyam Bhatia at 89, Worli - c Phase, Bombay, were searched. The Department found some incriminating material and recorded the statement of Mr. Bhatia. The registered office of the first petitioner was also searched on the same day. At the time of search, the petitioner-company had a balance of Rs. 77,73,803 in its current account and Rs. 5,07,56,164.40 in a fixed deposit receipt under an account with the State Bank of India, Bombay. It had a credit balance of Rs. 82,542.34 in its current account in the Citibank, N.A. Nariman Point, Bombay.

Finding of the Court:

The court held that the petitioner-company is not entitled to maintain this action under article 226 of the Constitution of India. We, therefor, dismiss the writ petition without prejudice to its rights to urge all the contentions before the appellate authority under section 132(11) of the Income-tax Act.

Issues: 1. Whether it is open to the petitioners to maintain this action under article 226 of the Constitution of India, simultaneously with the proceedings initiated by Sri Bhatia under section 132(11) of the Act before the appellate authority? 2. Whether the monies of the petitioners in bank accounts (current account and F.D.R. accounts) are within the purview of "any money or other valuable article" referred to in section 132(1)(c) of the Act? 3. Whether the conduct of Sri Shyam Bhatia, the assessee who is none other than the authorised signatory of the petitioner-company, disentitles the company from obtaining any discretionary relief in proceedings under article 226 of the Constitution of India? 4. Whether the corporate personality of the petitioner-company disentitles the respondent from proceeding against its assets on the assumption that such assets do not belong to the company, but are the undisclosed income of Sri Shyam Bhatia? 5. Assuming that such proceedings could be taken against the assets of the company, whether it should have been done with notice only to Sri Shyam Bhatia and without notice to the company or its director or employee? 6. Whether the petitioner is entitled to assail the proceedings under sections 132(3), 132(1) and 132(5) of the Income-tax Act, after the authorised signatory had requested in his statement dated 27/08/1992, and in his letters dated 30/10/1992, and 18/12/1992, to adjust the seized amounts, towards arrears of Income-tax, penalty, etc., due from him?

Ratio Decidendi: 1. The court held that the petitioner-company is not entitled to maintain this action under article 226 of the Constitution of India as parallel proceedings to those initiated by Sri Shyam Bhatia, under section 132(11) of the Income-tax Act. 2. The court held that the amounts in the bank accounts of the petitioner (current account and fixed deposit receipts account) were "valuable thing" and, therefore, "assets" referred to in section 132 or documents covered by sections 132(1a) and section 132(8) of the Act. 3. The court held that the conduct of the company acting through its authorised signatory disentitled itself from seeking or obtaining any discretionary relief in these proceedings. 4. The court held that the corporate personality of the petitioner-company has no significance in view of the fact that such personality was duly represented in the proceedings under section 132(1), 132(3) and 132(5) by its "authorised signatory". 5. The court held that the petitioner had sufficient notice through its authorised signatory even otherwise, and, therefore, there is no infirmity in the proceedings for non-issue of notice. 6. The court held that in view of the submission of counsel for the Revenue that any claim of the petitioner will be considered in the appeal filed by Sri Shyam Bhatia under section 132(11) of the Income-tax Act, it is not necessary for us to pronounce on this aspect.

Final Decision: Writ petition dismissed.