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2006 Supreme(Del) 12
High Court Of Delhi
S.P.GOYAL - Appellant
Versus
DIRECTOR OF INCOME TAX (INVESTIGATION) GOVERNMENT OF INDIA - Respondent
Decided On : 01/02/2006
The question of good faith is a matter of evidence and has to be decided as a question of fact, and therefore, the stage for coming to a decision on the maintainability of this suit under section 293 of the Income-tax Act has not been reached.
Headnote:
JURISDICTION - Income Tax Suit - Section 293 of the Income-tax Act - 132, 132B, 264 - The court decided that the suit was not barred by the provisions of Section 293 of the Income-tax Act, 1961 as the search included properties in Delhi and part of the cause of action for filing the suit arose in Delhi. The court also held that the question of good faith is a matter of evidence and has to be decided as a question of fact, and therefore, the stage for coming to a decision on the maintainability of this suit under section 293 of the Income-tax Act has not been reached.
Fact of the Case:
The plaintiff filed a suit for damages of Rs. 36 lakh on account of alleged losses suffered due to the alleged abuse and misuse of power by the defendants and their subordinates. The suit was originally filed in the High Court of Madras but was ordered to be returned for presentation before the appropriate Court. The plaintiff alleged that the income-tax raids conducted at the residential and business premises were illegal and without jurisdiction, and the defendant No. 2 sent a letter supplying false information to the Customs Department.
Finding of the Court:
The court held that the suit was not barred by the provisions of Section 293 of the Income-tax Act, 1961 as the search included properties in Delhi and part of the cause of action for filing the suit arose in Delhi. The court also held that the question of good faith is a matter of evidence and has to be decided as a question of fact, and therefore, the stage for coming to a decision on the maintainability of this suit under section 293 of the Income-tax Act has not been reached.
Issues: The issues were whether the suit is barred by the provisions of Section 293 of the Income-tax Act and whether the Court has territorial jurisdiction.
Ratio Decidendi: The court decided that the suit was not barred by the provisions of Section 293 of the Income-tax Act, 1961 as the search included properties in Delhi and part of the cause of action for filing the suit arose in Delhi. The court also held that the question of good faith is a matter of evidence and has to be decided as a question of fact, and therefore, the stage for coming to a decision on the maintainability of this suit under section 293 of the Income-tax Act has not been reached.
Final Decision: The court decided that the suit was not barred by the provisions of Section 293 of the Income-tax Act, 1961 as the search included properties in Delhi and part of the cause of action for filing the suit arose in Delhi. The court also held that the question of good faith is a matter of evidence and has to be decided as a question of fact, and therefore, the stage for coming to a decision on the maintainability of this suit under section 293 of the Income-tax Act has not been reached.
( 1 ) BY an order dated 17. 1. 2003, the following issues were framed for being decided at the outset: (1) Whether the suit is barred by the provisions of Section 293 of the income-tax Act? (2) Whether this Court has territorial Jurisdiction? (3) Whether the action of the Director of Income Tax (Chandigarh) under Section 132 of the Income Tax Act on the plaintiff was illegal and without jurisdiction and hence bad in law?" thereafter, by an order dated 22. 9. 2005, this Court observed that it would be appropriate if issue Nos. 1 and 2 are set down for hearing in the first instance before the question of recording of further evidence can be considered. Accordingly, on 23. 11. 2005, arguments were heard on the preliminary issues 1 and 2. This order shall dispose of the said issues. Issue No 1-What is the plaintiff s case?
( 2 ) BEFORE the issues are considered, it would be necessary to point out that the plaintiff has filed this suit for damages to the tune of Rs. 36 lakh on account of alleged losses suffered by the plaintiff by reason of the alleged abuse and misuse of the power and authority by the defendants and their subordinates. This suit was originally filed in the High Court of Madras but the plaint was ordered to be returned for presentation before the appropriate Court by an orderof the High Court at Madras dated 20. 1. 1998. It is thereafter that the present suit came to be filed before this Court on 17. 3. 1998.
( 3 ) FROM the averments contained in the plaint, it appears that the plaintiff and his brother, Shri H. L. Goel were earlier conducting business together but that had fallen out. There are several averments contained in the plaint alleging misdeeds on the part of the said Shri H. L. Goel. Paragraph 3 of the plaint refers to the allegation that the said Shri H. L. Goel, out of ill will and ulterior motive, instigated the Income-tax authorities to conduct raids at the plaintiff s business premises as well as his residence and those of his close relatives excluding, of course, his own (viz. , H. L. Goel s) premises. Paragraph 4 of the plaint discloses that on 14. 10. 1993 income-tax raids were conducted at the residential premises as well as the business premises of the plaintiff and it is alleged that such raids/search and seizure conducted by the Income-tax authorities were illegal and without jurisdiction. It is alleged that the concerned officials acted with ulterior motives which led to enblock sealing, locking of the business premises and seizure of documents and other materials both in cash and kind. It is also alleged that the details prepared under the panchnama were incorrect and were deliberately falsified. It is alleged that the plaintiff made various representations but to no avail. Paragraph 6 of the plaint discloses that the plaintiff sent a letter dated 1. 4. 1994 to the Chairman, Board of direct Taxes, New Delhi complaining about the acts of omission and commission on the part of the Income-tax officials and in particular the Defendant No. 3. The alleged irregularities and illegalities purported to have been committed by the income-tax authorities as set out in paragraph 6 of the plaint are as under:" (i) Misplacement of valuable Solitaire by the Search Party on 14. 10. 1993; (ii) Shortfall of Rs. 2 lakh cash in the lockers at Bombay; (iii) Unreasonable sealing of factory premises at focal point for more than three months where there was only half an hour work to carry out the inventory of the stocks; (iv) Jewellery worth of Rs. 3,25,000/- shown as seized in the Notice under Rule 112-A, but no Panchnama or Valuer s Report is furnished; (v) Rs. 80,000/-Cash seized at Ludhiana on 14. 10. 1993, but there was no notice under Rule 112-A, furnished; (vi) The Fixed Deposit Receipt in the name of Shri Jagat Ram Memorial trust which is renewed from time to time for the last 10 years seized which was worth of Rs. 1,93,644/- but there was no notice under rule 112-A furnished: (vii) Je
