I.J. Kapani vs Union of India

Sapre, J.

Petitioner claiming to be an industrial consultant by profession and resident of Indore has filed this petition under articles 226 and 227 of the Constitution of India, as Public Interest Litigation (PIL) essentially against the Income Tax Department and also against one individual (who too was added by way of amendment as respondent No. 4 in the writ) - Mr. Gangadhar Verma. By this petition, the grievance of the petitioner is that several persons/ firms /associations /companies, who are engaged in the business of sale, purchase of land and construction of buildings (known as builders in common parlance) in city of Indore, are indulging in tax evasion to the tune of crores of rupees by resorting to several illegal means while carrying on their business activities. It is complained that the modus operandi resorted to by these builders has put the exchequer in loss to a great extent. To support the complaint, the petitioner has impleaded one of the builders as respondent No. 4. It is essentially on these allegations that the petitioner who claims to be one of the honest taxpayer, has prayed for directions against the Income Tax Department to proceed against such builders and take action under the Act.

Heard petitioner in person and Shri Patankar, learned counsel for respondents.

In a petition of this nature, this court cannot embark upon any inquiry much less investigative type of inquiry and convert this court into all investigating court. It is neither the function of this court, nor it is contemplated in our extraordinary jurisdiction conferred under articles 226 and 227 of the Constitution of India, while dealing with PIL. An inquiry of this nature involves entirely different type of exercise. Indeed, the Income Tax Act, 1961 has already taken care of this eventuality and has conferred sufficient powers on several authorities to initiate the action against such person, Chapter XIII and in particular clause C of this Chapter, which deals with search and seizure operation has invested extensive as also adequate powers on certain specified authorities to make investigation, search the premises, seize the assets, and recover the tax, provided a case to that effect as required under the applicable sections is made out against a particular person. It is in the discretion of an authority to take appropriate action against a particular person depending upon the material collected against any such defaulting taxpayer. Such discretion of an authority is subject to ultimate authorization by the Commissioner of the concerned area.

The aforementioned powers which are conferred on authorities under the Act cannot be exercised by the High Court in PIL, filed by any individual, else it will amount to overstepping the powers by this court.

Perusal of petition indicates that the petitioner has sought general direction against all the builders of Indore city, without even naming them. Such a relief is not permissible in law for want of details. The departmental authorities cannot be even blamed for not initiating an action against such builders, because no such specific details are forthcoming from the petitioner. It seems to us that petitioner has only tried to make certain allegations against respondent No. 4, who according to petitioner, has evaded payment of Income Tax.

Since this court had issued notices to respondents, we while disposing of this writ finally direct the respondent Nos. 2 and 3 to make necessary investigations in relation to the case of respondent No. 4, as per the provisions of the Income Tax Act and if any case of evasion of tax for any of the assessment years is noticed, then action as contemplated under the Income Tax Act depending upon the nature of concealment be taken, keeping in view the relevant provisions of the Income Tax Act and the rules framed thereunder. Let this be done within six months. Needless to observe that any observations made by us while disposing of this writ may not be construed to mean deciding of any issue in favour of or against any of the parties to this writ and the authorities concerned will make investigations uninfluenced by such observations.

With these observations, this petition is finally disposed of. Security amount if deposited be refunded to petitioner.