V. K. SACHDEVA (Member).-This appeal under section 12(4)
of the Smugglers And Foreign Exchange Manipulators (Forfeiture of Property) Act,
1976 (hereinafter the "Act"), has been moved by Shri Lallubhai
Durlabhbhai against the order of the Competent Authority, Ahmedabad, dated
January 11, 1991, forfeiting the house property bearing No. 12/309, Bora Jivani
Sheri, Nani Daman, belonging to the appellant. The appellant is the father of
Shri Rameshbhai Lallubhai Tandel who was convicted under section 135 of the
Customs Act, 1962, for transporting and possessing contraband smuggled goods
worth Rs. 54,80,000. The appellant thus falls under the category of
"relatives" as defined under section 2(2)(c) of the Act and his
illegally acquired property is liable to be forfeited to the Central Government
under the provisions of the said Act.
The proceedings against the appellant were started by the
Competent Authority, Ahmedabad, after recording reasons under section 6(1) of
the aforesaid Act. After carrying out due investigations into the sources of
investment in the aforesaid property, a final order forfeiting the same was
passed under section 7 ( 1 ) of the Act on January 11, 1991.
The appellant has taken seven grounds of appeal before us
which are enclosed with the memorandum of appeal filed before the Appellate
Tribunal for Forfeited Property on February 20, 1991. The sum and substance of
the grounds taken by the appellant is that the Competent Authority erred in
coming to the conclusion that the property referred to in the order under appeal
was illegally acquired within the meaning of section 3(1)(c)(iii) of the Act,
that the appellant was not provided adequate opportunity for explaining and
elaborating his case, and the evidence produced for acquisition of property was
not properly appreciated. The appellant has further contended that since the
source of income was duly considered by the income-tax authorities, it was not
open to the Competent Authority to go into the same question again and challenge
its validity. In view of the foregoing, he has submitted that the order of the
Competent Authority deserved to be quashed by the Tribunal.
We have considered the facts of the case which have been
discussed at length by the Competent Authority in his order under appeal and we
find that there is no force in the appellant's contention that he was not
provided adequate opportunity for explaining and elaborating his case or that
the evidence placed before the Competent Authority has not been duly considered
and appreciated. Para 3 of the order of the Competent Authority describes in
detail the various notices and letters issued by him from time to time. The
show-cause notice and the notice' under section 7 were finally served personally
by the Inspector attached to the office of the Competent Authority on October 8,
1990, on the appellant. In this show-cause notice, the Competent Authority
pointed out the failure of the appellant to respond to the notice under section
6(1) as well as the earlier notices under section 7 of the Act. He was
specifically asked to furnish the following information :
"(i) Yearly income as a seaman since the beginning of
his service career with various shipping companies. The salary certificates were
also required to be produced ;
(ii) The details of family members, dependants and
household expenses were required to be filed ;
(iii) He was requested to prove the source of investment
in the house property in respect of which notice under section 6 was
issued."
Thereafter, on the request of the appellant, the details
of the property declared as illegally acquired were also supplied to him, vide
letter dated October 29, 1990, issued by the Competent Authority. The appellant
was asked to show cause as to why the property should not be forfeited to the
Central Government. On the appointed date of hearing, that is, November 28,
1990, Shri V. V. Bhagat, Advocate, duly appeared on behalf of the appellant and
argued the case. He also filed a written reply signed by the appellant, stating
as under :
"(i) The house property bearing No. 12 /309 located
in Bora Jivani Sheri, Nani Daman, was constructed during the year 1969-70 for a
sum of Rs. 40,000.
(ii) He is an illiterate person and was engaged in fishing
activities;
(iii) He voluntarily came forward on the advice of some
friends and filed a settlement petition before the Commissioner of Income-tax,
Gujarat-11, on March 27, 1969. The learned Commissioner of Income-tax, accepted
his petition, vide his order dated March 11, 1971, and accepted the income from
business. In support of this, he filed a copy of the settlement petition, a copy
of the order of the learned Commissioner of Incometax, for the assessment years
1965-66 to 1969-70. It is contended that the property was valued by an approved
valuer on March 18, 1970. It is contended that it is out of the income declared
before the income-tax authorities that house property was constructed."
The reply of the appellant was duly considered and the
reasons for not accepting the same have been elaborately discussed in paras 4 to
9 of the Competent Authority's order. Shri V. V. Bhagat, learned counsel
appearing before us on behalf of the appellant, has not pressed the grounds
relating to lack of adequate opportunity nor has he sought further opportunity
to adduce fresh evidence to prove the sources of investment in the impugned
property. The only argument reiterated by him before us is that since the
sources of income of the appellant were duly considered by the income-tax
authorities, it was not open to the Competent Authority to go into the same
question again and challenge its validity. In other words, learned counsel for
the appellant wanted the Tribunal to treat the findings of the income-tax
authorities as conclusive evidence for purposes of the Smugglers and Foreign
Exchange Manipulators (Forfeiture of Property) Act, 1976.
The issue regarding the evidentiary value of the findings
given by the income-tax authorities has been settled by this Tribunal in its
various judgments. In the case of Fatima Mohamed Amin v. Competent Authority,
reported in 1988 ] 169 ITR 737 (ATFP), the Tribunal observed as under
(headnote):
"That, although the Competent Authority was entitled
to look independently into the genuineness of any investment or asset and was
not bound by any finality that might be attached to the acceptance of a
settlement petition under section 271(4A) of the Income-tax Act, 1961, yet,
decision by the Commissioner remained relevant for the forfeiture proceedings
under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property)
Act, and could not be lightly ignored."
The Tribunal again considered this issue in the case of
Ramnath Prasad Banka v. Competent Authority, reported in [1990] 185 ITR 605
(ATFP) wherein the following observations were made (headnote) :
" Although section 21 of the Act categorically states
that no finding of any officer or authority under any other law shall be
conclusive and hence not binding on the Competent Authority, that does not mean
that findings of other public authorities like the Income-tax Officer-, have no
evidentiary value whatsoever. The Competent Authority was not justified in
brushing aside a plea supported by the finding of an Income-tax Officer
particularly in the absence of any positive evidence to the contrary, on the
basis of section 21 of the Act alone."
Thus, there is no merit in the argument of the appellant's
counsel that the findings of the income-tax authorities should be treated as
conclusive. In the present case, the Competent Authority has not ignored or
lightly brushed aside the findings of the Income-tax Commissioner. On the other
hand, he has collected positive evidence to the contrary on the basis of which
the findings of the income-tax authorities have not been followed. He has gone
beyond the evidence furnished before the income-tax authorities and had come to
the conclusion that some vital facts had either been wrongly stated or had been
kept back from them. For instance, the claim of the appellant that he was doing
fishing business for the last eight years and that a sum of Rs. 76,000 was saved
out of the said fishing business has been refuted by collecting positive
evidence that Shri Lallubhai worked as crew member/seaman on various ships from
March, 1958, to August, 1966. The appellant being in full-time service, there
was no basis for accepting his claim that he was carrying on fishing business.
The Competent Authority also tried to ascertain from the appellant the
information regarding the total amount of salary received by him as a seaman up
to 1966, perhaps with a view to give him the benefit of possible savings out of
salary income. However, no information regarding the extent of emoluments was
furnished by the appellant.
The Competent Authority has also stated in his order that
the explanation furnished by the appellant before the Commissioner of Income-tax
claiming saving of Rs. 40,000 up to 1962 (before the promulgation of the
Income-tax Act in Daman) and further savings of Rs., 36,000 for the period of
seven assessment years after 1962, was not accepted by the Commissioner of
Income-tax, Gujarat II. On the other hand, the Commissioner of Incometax
substituted his own estimate of income for five assessment years from 1965-66 to
1969-70. He adopted a figure of Rs. 1 lakh as estimated income which was spread
over five years and five assessments at Rs. 20,000 each were completed for the
assessment years 1965-66 to 1969-70.
While conveying his decision to the appellant, the
Commissioner of Income-tax further observed as follows :
"The question of cost of construction of the house
will be considered in the assessment year 1970 - 71. "
In other words, there was no positive finding by the
income-tax authorities regarding the cost of construction of the house property
or the source thereof which was to be considered in the assessment year 1970-71
relevant to the accounting year 1969-70 during which the bulk of the investment
on the property was made. Since no income-tax return was filed by the appellant
for the assessment year 1970-71 or for subsequent years, the question of cost of
construction of house property was never considered and accepted by the
Income-tax Department.
The Competent Authority has also given a finding that the
property in question was not constructed in 1969 but was actually constructed in
the year 1975 when house tax was levied for the first time by Daman Municipal
Council. The appellant's counsel has pointed out that there was no basis for the
Competent Authority to come to this conclusion since a valuation report dated
July 18, 1970, prepared by one Shri K. H. Parikh, an approved valuer, had been
furnished by the appellant before him. This report estimates the total
investment in the property at Rs. 44,800 which includes the cost of plot which
was purchased for Rs. 2,000 in 1967. It is argued that sinc
