Ramachandran Nair, J.
The appellants in the Writ Appeals and the petitioners in the writ petitions are representing the same cause. As far as the writ appeals are concerned, the appellants challenged the impugned orders imposing penalty and the learned Single Judge dismissed the writ petitions, which resulted in filing the Writ Appeals.
2. We heard the learned Senior Counsel for the appellants in the writ appeals as well as for the writ petitioners and the learned Special Government Pleader for Taxes.
3. It is submitted that during the pendency of the writ appeals, the appellants have availed the benefit of amnesty scheme, but subject to the orders to be passed in the writ appeals.
W.P.(C)No.19561 of 2014 & con.cases 2
4. As far as the writ petitions are concerned, they are respectively challenging the notices issued proposing assessment. The learned Senior Counsel for the appellants submitted that in the light of the decision of the Apex court in 'Girdhari Lal Nannelal v. The Sales Tax Commissioner, M.P.' [(1977) 39 STC 30] as well as 'M/s. P.C. Itty Mathew & Sons v. Deputy Commissioner of Sales Tax (Law)' [(2000) 8 KTR 303 (SC)], which have been followed by a Division Bench of this Court in S.T.R No.117/2012, the appellants and writ petitioners are entitled to succeed.
5. This is a case where the premises of the appellants (writ petitioners) were searched and initially, this court after quashing the orders passed against them directed re- assessment after furnishing the details and materials collected during the search (Ext.P1 produced in W.P.(C) No.19561/2014). It is thereafter the penalty proceedings were finalised by relying upon the proceedings issued by the concerned Income Tax Authorities and those materials have been relied upon to pass the impugned proceedings in the writ petitions which are subject matter of the writ appeals. As far W.P.(C)No.19561 of 2014 & con.cases 3 as the notices impugned in the writ petitions also, the same stand is taken by the department.
6. Our attention is invited to the judgment of the Apex Court in 'M/s. P.C. Itty Mathew & Sons v. Deputy Commissioner of Sales Tax (Law) [(2000) 8 KTR 303 (SC)] , wherein the Apex Court affirmed the order passed by the Tribunal, which relied upon the decision of the Apex Court in 'Girdhari Lal Nannelal v. The Sales Tax Commissioner, M.P.' [(1977) 39 STC 30], where the law declared was that it was for the Sales Tax authorities to show the existence of materials to indicate that the acquisition of money by assessee had come from the transactions liable to sales tax and not from other sources. The view taken by this court was not accepted by the Apex Court.
7. The same is the legal position declared in the decision of a Division Bench of this court in S.T.R No.117/2012.
8. The learned Senior Counsel for the appellant submitted that as far as the amounts remitted by availing the amnesty scheme is concerned, the appellants will not seek a re-fund and the appeals can be closed.
W.P.(C)No.19561 of 2014 & con.cases 4
9. The learned Special Government Pleader for Taxes submitted that when the assessees appeared before the authorities concerned, except the details available in the orders of the income tax authorities no other explanations were offered, which resulted in issuing the impugned proceedings in the writ appeals. Even then, according to us, in the light of the legal position declared by the Apex Court, in finalising the proceedings, the materials which were disclosed or unearthed in the search will have to be furnished to the assessee and the proceedings of the Income Tax authorities alone may not have impact in finalising the assessment. We are of the view that in the light of the legal position declared by the Apex Court in the matter, there cannot be any doubt that the proceedings of the Income Tax authority cannot ipso facto lead to assessment or imposition of penalty. In that view of the matter, the writ petitions are allowed and the impugned notices are quashed.
10. As far as writ appeals are concerned, we are of the view that since the appellants are not seeking a re-fund, the writ appeals are accordingly closed. But since the writ petitions are allowed, quashing the impugned notices, in the W.P.(C)No.19561 of 2014 & con.cases 5 light of the judgment of this court, which is produced as Ext.P1 in the writ petitions, the appropriate authorities will proceed from that state after furnishing the materials and all opportunity will be given to the petitioners to defend the action also. All the other legal issues are left open. We make it clear that in the light of the view we have taken, the penalty orders will not survive but as far as the question of re-fund is concerned, these amounts need not be refunded in the light of the submission made by the learned Senior Counsel for the appellant.
Sd/-
T.R.RAMACHANDRAN NAIR JUDGE Sd/- P.V.ASHA JUDGE //true copy// St/ P.S. To Judge