The subject matter of the present appeal relates to the security scam of Harshad S. Mehta and the period relevant to the said scam relates to Page 3 of 34 assessment years 1992 1993 and 1993 1994.
Page 2 of 34 As this Court in an order in an interim application recorded the directions of the companymittee of the Union of India regarding the State Bank of India number requesting for any interim payment, the aforesaid orders and directions were made subject to the companydition of the Custodian seeking clarification from this Court and releasing such payment in favour of the companycerned parties, only if, permitted by this Court.
1998 5 SCC 1.
1743 crores by the Income Tax Department.
1, the State Bank of India and directed the appellant to deposit an amount of Rs.
The issue which is particularly sought to be raised by the appellant, Income Tax Department by filing the present appeal is whether the Special Court companystituted under the aforesaid Act was right in scaling down the priority tax demand by delving into the merits of the assessment orders and by deciding the matter as an appellate authority which directions according to the appellant are in violation of the decision of this Court in the case of Harshad S. Mehta v. Custodian Ors.
The assessment orders were challenged before CIT Appeals by the assessee and were largely companyfirmed.
686.22 crores to the Department pursuant to various orders passed by the Special Court which were companyfirmed by this Court.
The said interim release of funds of Rs.
In terms of the aforesaid provisions and at the request of the Income Tax Department, the Custodian had earlier released a sum of Rs.
In terms of the provisions of Section 11 2 a of the Act the Income Tax Department has first right on appropriation of the assets of Harshad S. Mehta lying in the custody of the Custodian against his tax demand for the assessment year 1992 1993 and assessment year 1993 1994 as tax Page 4 of 34 companyponent.
546.22 crores with the Custodian alongwith interest at 9 per annum.
In the impugned judgment and order a further direction was issued that numberuseful purpose would be served by keeping the amount lying deposited with the Custodian and, therefore, a direction was also issued to the Custodian to pay to the banks, namely, the State Bank of India and the Standard Chartered Bank against their decrees the principal amount, from the amounts in deposit with the Custodian as also from the amount that was likely to be companying back from the Income Tax Department.
As the said amount was inadequate to fully satisfy the claims of the Banks with respect to the principal amount it was further held that the same would be disbursed by the Custodian on pro rata basis and after receiving an undertaking from the banks to the Court that they would bring back the amount, if so required, on such terms and companyditions as may be directed by the Court.
2014 crores and for the assessment year 1993 1994 at Rs.
Cross appeals have been filed by the Revenue as also by the assessee for the assessment year 1992 1993, which are pending with the Income Tax Appellate Tribunal, whereas for assessment year 1993 1994 appeal filed by the assessee is pending for admission.
686.22 crores to the Department was subject to filing of an affidavit undertaking by Secretary Revenue , Government of India that the amount would be brought back to the Court Custodian alongwith interest within a period of four weeks, if so directed by the Special Court.
140 crores approximately, subject to further orders that the Court might pass at a later stage.
Therefore the Income Tax Department is required to be paid in priority over the liabilities payable to the banks, financial institutions and other creditors particularly for the aforesaid relevant two years which were companysidered as statutory period.
The orders of assessment largely companyfirmed by CIT Appeals resulted in raising a tax demand of Rs.
1396 crores.
The Assessing Officer companypleted the assessment proceedings for both the aforesaid years in respect of Harshad S. Mehta after gathering information from many sources and after giving an opportunity to the assessee to furnish details explanations on the same.
By the impugned judgment and order the Special Court allowed the application filed by the respondent No.
Dr. MUKUNDAKAM SHARMA, J. The present appeals were filed against the judgment and order of the Special Court companystituted under the Special Court Trial of Offences Relating to Transactions in Securities Act, 1992 hereinafter referred to as Act for companyducting trial of offences related to transactions in securities.
The Income Tax Officer passed an assessment order assessing the income for the assessment year 1992 1993 at Rs.
