RAKESH KUMAR AGARWAL Vs. BANSAL COMMODITIES

JUDGEMENT

(1.) These two are appeals by the Commissioner of Income Tax (CIT) and Rakesh Agrawal (hereafter called by his name) against the ex parte decree of a Learned Single Judge in CS (OS) No. 1128/2004. The suit claimed a money decree for Rs. 50.40 lakhs, with interest at 18% per annum from 28th April, 1989 till the date of payment. The money is currently in the possession of the Appellant in RFA(OS) 17/2010 (hereafter called "the CIT"), in the form of seven Pay Orders.

(2.) The dispute in this case arose from interaction of three parties: the Revenue authorities (CIT), M/s. Bansal Commodities, Sh. Puranmal Bansal and Sh. Suresh Bansal (the latter two being partners of M/s. Bansal Commodities, respondents in both sets of appeals as well as original plaintiffs in the suit, collectively referred to as "Bansal Commodities"), and Rakesh Kumar Agrawal, the fourth respondent in the CIT's appeal, and Appellant in RFA(OS) 92/2009, a defendant in the original suit.

(3.) The facts are that on 27.04.1989, the Income Tax Department conducted a search and seizure operation under Section 132 of the Income Tax Act at the residential and business premises of Sh. Rakesh Kumar Agrawal. As a result of this operation, seven Pay Orders dated 25.04.1989 for a total amount of Rs. 50.40 lakhs debited to the account of one Sh. Surinder Kumar, issued to one M/s Hindustan Copper Ltd. were discovered. Under Section 132(1), the Income Tax authorities issued an order of deemed seizure of the seven Pay Orders as against Surinder Kumar, (presenting the Pay Orders to the Manager, Punjab National Bank) and under Section 132(5), the Asst. Commissioner of Income Tax (ACIT) passed an order recording the seizure as against the tax dues of Surinder Kumar. The pay orders remained in the possession of the Bansal Commodities, who did not present them for payment, but instead, approached the Income Tax authorities.