COMMISSIONER OF INCOME TAX, BHUBANESHWAR AND ANR. vs. PARMESHWARI DEVI SULTANIA AND ORS.

CIVIL APPEAL No. 142/1997Supreme Court[1998] 2 S.C.R. 25306 March 1998Bench: 2 JudgesAuthor: SUJATA V. MANOHAR, D.P. WADHWA OF19 pages
AI SummaryDismissed

What were the facts?

The Income Tax Officer conducted a search and seizure at the premises of 'B'. Gold ornaments were seized. 'B' stated the ornaments belonged to his deceased step-mother, who bequeathed them to his sister (Respondent No. 1) and other children. The Income Tax Officer disbelieved this and passed an order under Section 132(5) of the Income Tax Act, 1961, retaining the seized assets. Respondent No. 1's petition for the return of ornaments was rejected. She then filed a partition suit claiming a share in the ornaments. The Revenue objected to the suit's maintainability under Section 293 of the Act. The Subordinate Court rejected this objection, as did the High Court on revision, holding that Section 132(5) did not grant finality and there was no adequate remedy under the Act for Respondent No. 1. The Revenue appealed.

What did the Supreme Court hold?

The Supreme Court held that both the High Court and the Subordinate Court were not justified in holding that the suit was not barred under Section 293 of the Income Tax Act, 1961. The Court reasoned that Section 293, with its widened scope, bars any suit that has the effect of indirectly setting aside or modifying any proceeding taken or order made under the Act. The partition suit, if successful, would directly impact the order passed under Section 132(5) by taking the gold ornaments out of its purview and affecting proceedings under Section 132B. The Court noted that the claimant had an alternative remedy under Section 132(11) of the Act, where any person could file an objection with the Chief Commissioner or Commissioner, which she failed to avail. Therefore, the suit was dismissed as not maintainable.

What were the issues?

1. Whether a partition suit filed by a third party claiming ownership of assets seized under Section 132 of the Income Tax Act, 1961, is maintainable, given the bar under Section 293 of the Act? Assessee's Contention (implied from the lower courts' decisions and the plaintiff's actions): The suit is maintainable because Section 132(5) of the Act does not provide finality to the order, and there is no adequate remedy available to the claimant under the Income Tax Act for redressal of her grievance regarding the seized gold ornaments. The suit is necessary to establish her ownership and claim her share. Revenue's Contention: The suit is not maintainable as it is barred by Section 293 of the Income Tax Act, 1961, which prohibits civil suits to set aside or modify any assessment or order made under the Act. The suit, if decreed, would indirectly set aside or modify the order passed under Section 132(5) and affect proceedings under Section 132B.

Which sections of the Income-tax Act were involved?

Section 293,Section 132(B),Section 132(4),Section 132(5),Section 132(7),Section 132(11),Section 9,Section 67

AI-generated summary — verify with the full judgment below

COMMISSIONER OF INCOME TAX, BHUBANESHWAR AND ANR. A v. _4 PARMESHWARI DEVI SULTANIA AND ORS. MARCH 6, 1998 [MRS. SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] B . ....

Income Tax Act, 1961: Sections 293,132 (B), 132 (4),(5),(7) and (11)- Bar of civil suit to set aside or modify assessment order- Search and seizure -Certain assets including gold ornaments seized and retained by c Income Tax Department--Partition suit by a sister of assessee claiming her share in the seized gold ornaments-Maintainability of-Held, not maintainable as the claim in the suit would effect the order passed under section 132(5) of the Income Tax Act-Claimant could have instead resorted • to the remedy provided under the Act by filing objection under section 132(11)-Civil Procedure Code, 1908-Section 9. D Words and Phrases : 'Any person '-Meaning and scope of-Income Tax Act, 1961 : Section 132(11).

Income-Tax Officer conducted search and seizure under section 132 E of the Income Tax Act, 1961 at a residential and business premises of 'B'.

Various assets including gold ornaments were seized in the raid. On interrogation 'B' gave a statement that the gold ornaments belonged to deceased 'M' f

The order continues below.

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