(129.5 KiB, 483 DLs)

Terror Tactics of Dept upsets High Court

Where despite the goods having been cleared on payment of customs duty as assessed under Heading 85.44 (which was supported by the order of the Commissioner (Appeals) the DRI searched the premises of the assessee and threatened that unless the differential duty payable under Heading 90.01 was paid, the directors and employees of the assessee would be arrested and the consignments confiscated HELD passing severe strictures that:

“We are clearly of the opinion that in the present case, the conduct of the D.R.I. officers is not only high handed but it is in gross abuse of the powers vested in them under the Customs Act. It is apparent that the D.R.I. officers in utter disregard to the order passed by the Commissioner of Customs (A), Mumbai have forced the petitioners to pay the amount by threat and coercion which is not permissible in law. Thus, the conduct of the D.R.I. officers in the present case in collecting the amount from the petitioners towards the alleged differential duty is wholly arbitrary, illegal and contrary to law. Having terrorised the petitioners with the threat of arrest, it is not open to the D.R.I. officers to contend that the amount has been paid by the petitioners voluntarily. We strongly condemn the high handed action of the D.R.I. officers in totally flouting the norms laid down under the Customs Act in relation to reassessment proceedings and purporting to collect the amount even before reassessment. We hope that such incidents do not occur in the future.”

See Also: Mahindra & Mahindra (judicial conscience shocked by shocking and sad state of affairs of the Dept) and Legrand (Dept’s actions calculated to undermine the dignity and majesty and impair the constitutional authority of High Court).

(199.6 KiB, 682 DLs)

Even confessed undisclosed income cannot be assessed

Where during a survey, the assessee surrendered an amount of Rs. 29 lakhs towards “any other discrepancy” but later retracted from the same and the question arose whether the assessee could be assessed despite the said retraction, HELD:

(a) While conducting a survey u/s 133A the department has no power to examine any person on oath. Consequently, such a statement has no evidentiary value and no addition can be made solely on the basis of such statement;

(b) The CBDT is not oblivious of the practice of obtaining forced confessions and accordingly Circular dated 10.3.2003 makes it clear that no attempt should be made to obtain confessions of undisclosed income;

(c) On facts, as there was no other material to show undisclosed income nor were there any ‘discrepancies’ the addition could not be sustained.

See Also: Vinod Solanki vs. UOI (Supreme Court) (law on retraction of confessions) and Bhuvanendra 303 ITR 235 (Mad.)

Even non-owner can be “owner” under the Act

Though it is the settled position under the common law that the term “owner” means a person who has valid title legally conveyed to him after complying with the requirements of law such as Transfer of Property Act, Registration Act, etc, a different view has to be taken in the context of S. 22 of the Act having regard to the ground realities and the object of the Act, namely, “to tax the income”. Accordingly, the term “owner” means a person who is entitled to receive income from the property in his own right.” There is no requirement that there has to be a registered Deed of conveyance for a person to be treated as an owner for purposes of S. 22.

S. 50C not applicable to dealers in land and building

Though s. 50C has been introduced by the Legislature to check the modus operandi of understating the sale consideration in the activity of civil construction and provides that the value determined or assessed by the stamp duty authorities shall be deemed to be the “full value of consideration”, its scope is confined to property held as a “capital asset”. It has no application to property held as “stock-in-trade”. Accordingly, additions on account of s. 50C cannot be made in the case of dealers in real estate.