INCOME TAX OFFICER Vs. V.MOHAN

JUDGEMENT

(1.) The conundrum in these appeals is: when the Competent Authority claims that the subject property (to be forfeited) is that of the convict (V.P. Selvarajan) and ostensibly held by the relatives of the convict (respondents herein), whether it is mandatory to serve a primary notice under Section 6(1) of the 1976 Act upon such convict with copy thereof to his relatives under Section 6(2) of the under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short, "1976 Act")1976[1] Act, and non-service of such primary notice upon the convict would vitiate the entire proceedings initiated only against his relatives?

(2.) The High Court of Judicature at Madras[2] vide impugned judgment[3] held that Section 6 of the 1976 Act leaves no room for doubt that the primary notice must be served on the convict, wherein the convict is required to indicate the sources of his income, earnings or assets, out of which or by means of which he had acquired the properties sought to be forfeited; and non-service of such notice upon the convict would vitiate the action initiated against his relatives, even if the forfeited properties are ostensibly held by or in the name of the relatives. The High Court rejected the argument of the appellants herein (Competent Authority) that only the person in whose name the property is held is required to be called upon to offer explanation regarding the sources of his income, earnings or assets, out of which or by means of which he had acquired such property including the evidence on which he would rely and other relevant information and particulars. If the property in question is ostensibly held by the relatives in his name or through any other person on his behalf, the convict or detenu is not expected to nor can offer any explanation in that regard. The High Court also rejected the argument of the appellants herein that no prejudice is likely to be caused to the noticees (respondents herein) being the relatives of the convict, who had held the forfeited properties in their name. The High Court opined that the action against the respondents initiated by the Competent Authority was vitiated for lack of notice to the convict and it was, thus, pleased to set aside the entire action initiated against the respondents by the Competent Authority.

(3.) A contra view has been taken by at least two other High Courts. The first is of the High Court of Kerala in Sajitha and Ors. vs. Competent Authority and Ors, 2005 SCC OnLine Ker 101; wherein after analysing the relevant provisions, it held as follows: