Unexplained investments—Income from undisclosed sources�
MISS KINJAL A SHAH vs.INCOME TAX OFFICER BOMBAY TRIBUNAL
Unexplained investments—Income from undisclosed sources—Pursuant to search and seizure operations in the hands of 'M' group of companies statement was recorded carrying admission that 'M' group of companies were engaged in giving accommodation bills to various persons for purchase and sale of shares, which would result in generation of bogus capital gains—Since assesses name was found in search of 'M' group of companies, assessment was reopened by AO—AO had assessed the capital gains as undisclosed investments u/s 69—CIT(A) had also confirmed the same—Held, an identical issue was considered by the division bench of the Mumbai Tribunal in the case of Sheetal Pritam Bhatija wherein it was held that merely on the basis that computer of third party indicated issue of accommodation entry in the name of assessee, the amount cannot be added in the hands of the assessee, unless AO brings on the record cogent evidence to show that amount was actually received by assessee or credited in her bank account—It was noticed that the AO had made the impugned additions solely on the basis of information received from the DDI (Inv) and no step was taken to ascertain the details of cheques, the manner of encashment of the same, the bank accounts through which the alleged cheques were encashed etc., in order to ascertain the trail of movement of cheques in order to find out as to whether these assessees have been benefited or not—Assesses claim of non-receiving of cheques have not been disproved by the AO—In the absence of any other corroborative material to show that these assessees have received the cheques from third party no addition cold be made—CIT(A) was not justified in confirming the additions made by AO—Impugned additions are liable to be deleted—Assessees appeal allowed.
Unexplained investments—Income from undisclosed sources—Pursuant to search and seizure operations in the hands of 'M' group of companies statement was recorded carrying admission that 'M' group of companies were engaged in giving accommodation bills to various persons for purchase and sale of shares, which would result in generation of bogus capital gains—Since assesses name was found in search of 'M' group of companies, assessment was reopened by AO—AO had assessed the capital gains as undisclosed investments u/s 69—CIT(A) had also confirmed the same—Held, an identical issue was considered by the division bench of the Mumbai Tribunal in the case of Sheetal Pritam Bhatija wherein it was held that merely on the basis that computer of third party indicated issue of accommodation entry in the name of assessee, the amount cannot be added in the hands of the assessee, unless AO brings on the record cogent evidence to show that amount was actually received by assessee or credited in her bank account—It was noticed that the AO had made the impugned additions solely on the basis of information received from the DDI (Inv) and no step was taken to ascertain the details of cheques, the manner of encashment of the same, the bank accounts through which the alleged cheques were encashed etc., in order to ascertain the trail of movement of cheques in order to find out as to whether these assessees have been benefited or not—Assesses claim of non-receiving of cheques have not been disproved by the AO—In the absence of any other corroborative material to show that these assessees have received the cheques from third party no addition cold be made—CIT(A) was not justified in confirming the additions made by AO—Impugned additions are liable to be deleted—Assessees appeal allowed.
COMMISSIONER OF INCOME TAX vs.TUBE INVESTMENTS OF INDIA LTD.
HIGH COURT OF MADRAS
Penalty u/s 271(1)(c)—Deletion of Penalty—Validity—Assessee had filed its return of income declaring a total income and a profit u/s 115J—Original assessment was completed but Subsequently, a reassessment u/s 143(3) read with 147 was completed and certain additions in 6 items were made—CIT had confirmed only three additions and deleting three additions—ITAT had dismissed assesees appeal—AO had levied penalty u/s 271(1)(c) on the basis of a reassessment order passed on the basis of a survey u/s 133A conducted by the revenue in assessee' s business premises—Held, For the deletion of the penalty in entirety in respect of one item of addition, the CIT(A) had given cogent and convincing reasons in his order holding that since assessment and penalty proceedings are separate, the no levy of penalty was warranted—When the Commissioner of Income Tax (Appeals) were satisfied, on the basis of clear and cogent reasoning given in his order, not to levy penalty and when the Tribunal finds such satisfaction on the part of the Commissioner of Income Tax (Appeals) to have been correctly arrived at, the orders do not suffer from any error of law—CIT(A) and the Tribunal were right in ordering deletion of penalty in respect of one item of addition, on the ground that the assessee' s explanation was not only bona fide but also substantiated in terms of Explanation (1)(B) of Section 271(1)(iii)—Revenue's appeal dismissed
HIGH COURT OF MADRAS
Penalty u/s 271(1)(c)—Deletion of Penalty—Validity—Assessee had filed its return of income declaring a total income and a profit u/s 115J—Original assessment was completed but Subsequently, a reassessment u/s 143(3) read with 147 was completed and certain additions in 6 items were made—CIT had confirmed only three additions and deleting three additions—ITAT had dismissed assesees appeal—AO had levied penalty u/s 271(1)(c) on the basis of a reassessment order passed on the basis of a survey u/s 133A conducted by the revenue in assessee' s business premises—Held, For the deletion of the penalty in entirety in respect of one item of addition, the CIT(A) had given cogent and convincing reasons in his order holding that since assessment and penalty proceedings are separate, the no levy of penalty was warranted—When the Commissioner of Income Tax (Appeals) were satisfied, on the basis of clear and cogent reasoning given in his order, not to levy penalty and when the Tribunal finds such satisfaction on the part of the Commissioner of Income Tax (Appeals) to have been correctly arrived at, the orders do not suffer from any error of law—CIT(A) and the Tribunal were right in ordering deletion of penalty in respect of one item of addition, on the ground that the assessee' s explanation was not only bona fide but also substantiated in terms of Explanation (1)(B) of Section 271(1)(iii)—Revenue's appeal dismissed
NILESWAR RANGE KALLU CHETHU VYAVASAYA THOZHILALI SAHAKARANA SANGHAM vs.COMMISSIONER OF INCOME TAX
HIGH COURT OF KERALA
Deductions—Deduction in respect of income of co-operative societies—Assessees was co-operative societies registered under the Kerala Co-operative Societies Act, 1969—In the returns filed assessee claimed the benefit of deduction u/s 80P(2)(a)(vi)—Denying that claim, the AO completed assessments—CIT(A) upheld the claim of the societies for the deduction in question and set aside the orders of the AO—Tribunal, by its common order allowed revenue's appeals and restored the orders of the AO—Issue was whether Tribunal was right in holding that the appellant societies cannot be considered as co-operative societies engaged in the collective disposal of labour of its members as contemplated u/s 80P(2)(a)(vi) of the Act and therefore, were ineligible for deduction u/s 80P(1)—Held, Reading of s 80P shows that in the case of a co-operative society, the gross total income includes any income generated out of the collective disposal of the labour of its members—That such income shall be deducted in accordance with and subject to the condition in the proviso to the section in computing the total income of the society— Bye-laws of the society showed that the activity of the society was purchase of toddy from its members and non-members on payment of the agreed remuneration and its sale through the toddy shops established by the society itself—That collective disposal of the labour of the members of the society was not resulting in the generation of any income to the society—Assessee society did not dispute the correctness of the factual finding that toddy was collected from non-members also—Thus Tribunal was fully justified in holding that the assessee societies were not eligible for the benefit of s 80P(2)(a)(vi)—No illegality was fond in the view taken by the Tribunal—Question of law framed against the assessees and in favour of the Revenue—Assesse's appeal was dismissed
HIGH COURT OF KERALA
Deductions—Deduction in respect of income of co-operative societies—Assessees was co-operative societies registered under the Kerala Co-operative Societies Act, 1969—In the returns filed assessee claimed the benefit of deduction u/s 80P(2)(a)(vi)—Denying that claim, the AO completed assessments—CIT(A) upheld the claim of the societies for the deduction in question and set aside the orders of the AO—Tribunal, by its common order allowed revenue's appeals and restored the orders of the AO—Issue was whether Tribunal was right in holding that the appellant societies cannot be considered as co-operative societies engaged in the collective disposal of labour of its members as contemplated u/s 80P(2)(a)(vi) of the Act and therefore, were ineligible for deduction u/s 80P(1)—Held, Reading of s 80P shows that in the case of a co-operative society, the gross total income includes any income generated out of the collective disposal of the labour of its members—That such income shall be deducted in accordance with and subject to the condition in the proviso to the section in computing the total income of the society— Bye-laws of the society showed that the activity of the society was purchase of toddy from its members and non-members on payment of the agreed remuneration and its sale through the toddy shops established by the society itself—That collective disposal of the labour of the members of the society was not resulting in the generation of any income to the society—Assessee society did not dispute the correctness of the factual finding that toddy was collected from non-members also—Thus Tribunal was fully justified in holding that the assessee societies were not eligible for the benefit of s 80P(2)(a)(vi)—No illegality was fond in the view taken by the Tribunal—Question of law framed against the assessees and in favour of the Revenue—Assesse's appeal was dismissed
ASSISTANT COMMISSIONER OF INCOME TAX vs.RASIK GOPALDAS PATEL
AHMEDABAD TRIBUNAL
Search and seizure—Addition—Validity of Deletion—During course of search of assessee's premises total jewellery weighing 4444.25 gms was found—AO treated 2000 gms of the gold ornament i.e. 400 gms per married lady to be explained and treated remaining 2444.25 gms as unexplained—Consequently, addition of Rs.30,55,132 was made—CIT(A) deleted the addition—Held, CIT(A) had treated gold ornament as explained considering the CBDT Instruction No. 1916 dated 11th May, 1994—CIT(A) had also referred to various decisions of ITAT wherein a view had been taken that such circular is to be considered even during the assessment proceedings—CIT(A) allowed the relief only as per the instruction of CBDT and thus the order was justified—Revenue's appeal dismissed
AHMEDABAD TRIBUNAL
Search and seizure—Addition—Validity of Deletion—During course of search of assessee's premises total jewellery weighing 4444.25 gms was found—AO treated 2000 gms of the gold ornament i.e. 400 gms per married lady to be explained and treated remaining 2444.25 gms as unexplained—Consequently, addition of Rs.30,55,132 was made—CIT(A) deleted the addition—Held, CIT(A) had treated gold ornament as explained considering the CBDT Instruction No. 1916 dated 11th May, 1994—CIT(A) had also referred to various decisions of ITAT wherein a view had been taken that such circular is to be considered even during the assessment proceedings—CIT(A) allowed the relief only as per the instruction of CBDT and thus the order was justified—Revenue's appeal dismissed
9/9/2015 Introduction of Gold Monetization Schemes
http://pib.nic.in/newsite/PrintRelease.aspx 1/2
09-September-2015 14:46 IST
Press Information Bureau
Government of India
Cabinet
Introduction of Gold Monetization Schemes
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for introduction of Gold
Monetization Schemes (GMS), as announced in the Union Budget 2015-16.
The objective of introducing the modifications in the schemes is to make the existing schemes more effective and to broaden
the ambit of the existing schemes from merely mobilizing gold held by households and institutions in the country to putting this gold
into productive use. The long-term objective which is sought through this arrangement is to reduce the country's reliance on the import of gold to meet domestic demand.
GMS would benefit the Indian gems and jewellery sector which is a major contributor to India's exports. In fiscal year 2014-
15, gems and jewellery constituted 12 per cent of India's total exports and the value of gold items alone was more than $13 billion
(provisionalfigures).
The mobilized gold will also supplement RBI's gold reserves and will help in reducing the government's borrowing cost.
The revamped Gold Deposit Scheme (GDS) and the Gold Metal Loan (GML) Scheme involves changes in the scheme
guidelines only. The risk of gold price changes will be borne by the Gold Reserve Fund that is being created. The benefit to the
Government is in terms of reduction in the cost of borrowing, which will be transferred to the Gold Reserve Fund.
The scheme will help in mobilizing the large amount of gold lying as an idle asset with households, trusts and various
institutions in India and will provide a fillip to the gems and jewellery sector. Over the course of time this is also expected to reduce
the country's dependence on the import of gold. The new scheme consists of the revamped GDS and a revamped GML Scheme.
Revamped Gold Deposit Scheme
Collection, Purity Verification and Deposit of Gold under the revamped GDS:
Out of the 331 Assaying and Hallmarking Centres spread across various parts of the country, those which will meet criteria
as specified by Bureau of Indian Standards (BIS) will be allowed to act as Collection and Purity Testing 1 Centres for purity of gold
for the purpose of this scheme. The minimum quantity of gold that a customer can bring is proposed to be set at 30 grains. Gold can be in any form (bullion or jewellery). The number of these centres is expected to increase with time.
Gold Savings Account:
In the revamped scheme, a Gold Savings Account will be opened by customers at any time, with KYC norms, as applicable.
This account would be denominated in grams of gold.
Transfer of Gold to Refiners:
Collection and purity testing centres will send the gold to the refiners. The refiners will keep the gold in their ware-houses,
unless banks prefer to hold it themselves. For the services provided by the refiners, they will be paid a fee by the banks, as decided by them, mutually. The customer will not be charged.
The banks will enter into a tripartite Legal Agreement with refiners and Collection and Purity Testing Centres that are selected
by them to be their partners in the scheme.
Tenure:
The deposits under the revamped scheme can be made for a short-term period of 1-3 years (with a roll out in multiples of
one year); a medium-term period of 5-7 years and a long-term period, of 12-15 years (as decided from time to time). Like a fixed
deposit, breaking of lock-in period will be allowed in either of the options and there would be a penalty on premature redemption
(including part withdrawal).
Interest rate:
The amount of interest rate payable for deposits made for the short-term period would be decided by banks on basis of
prevailing international lease rates, other costs, market conditions etc. and will be denominated in grams of gold. For the medium and 9/9/2015 Introduction of Gold Monetization Schemes
http://pib.nic.in/newsite/PrintRelease.aspx 2/2
prevailing international lease rates, other costs, market conditions etc. and will be denominated in grams of gold. For the medium and
long-term deposits, the rate of interest (and fees to be paid to the bank for their services) will be decided by the government, in
consultation with the RBI from time to time. The interest rate for the medium and long-term deposits will be denominated and payable
in rupees, based on the value of gold deposited.
Redemption:
For short-term deposits, the customer will have the option of redemption, for the principal deposit and interest earned, either
in cash (in equivalent rupees of the weight of deposited gold at the prices prevailing at the time of redemption) or in gold (of the same weight of gold as deposited), which will have to be exercised at the time of making the deposit. In case the customer will like to change the option, it will be allowed at the bank's discretion. Redemption of fractional quantity (for which a standard gold bar/coin is not available) would be paid in cash. For medium and long-term deposits, redemption will be only in cash, in equivalent rupees of the weight of the deposited gold at the prices prevailing at the time of redemption. The interest earned will however be based on the value of gold at the deposit on the interest rate as decided.
Utilization:
The deposited gold will be utilized in the following ways:
· Under medium and long-term deposit
• Auctioning
• Replenishment of RBIs Gold Reserves
• Coins
• Lending to jewelers
· Under short-term deposit
• Coins
• Lending to jewelers
· Tax Exemption: Tax exemptions, same as those available under GDS would be made available to customers, in the
revamped GDS, as applicable.
· Gold Reserve Fund: The difference between the current borrowing cost for the Government and the interest rate paid by
the Government under the medium/long term deposit will be credited to the Gold Reserve Fund.
· Revamped Gold Metal Loan Scheme
· Gold Metal Loan Account: A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for
jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan,
on the basis of the terms and conditions set-out by banks, under the guidance of RBI.
· Delivery of gold to jewelers: When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from
refiners. The banks will, in turn, make the requisite entry in the jewelers' Gold Loan Account. Interest received by banks: The
interest rate charged on the GML will be decided by banks, with guidance from the RBI.
Tenor: The tenor of the GML at present is 180 days. Given that the minimum lock-in period for gold deposits will be one year,
based on experience gained, this tenor of GML may be re-examined in future and appropriate modifications made, if required.
http://pib.nic.in/newsite/PrintRelease.aspx 1/2
09-September-2015 14:46 IST
Press Information Bureau
Government of India
Cabinet
Introduction of Gold Monetization Schemes
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for introduction of Gold
Monetization Schemes (GMS), as announced in the Union Budget 2015-16.
The objective of introducing the modifications in the schemes is to make the existing schemes more effective and to broaden
the ambit of the existing schemes from merely mobilizing gold held by households and institutions in the country to putting this gold
into productive use. The long-term objective which is sought through this arrangement is to reduce the country's reliance on the import of gold to meet domestic demand.
GMS would benefit the Indian gems and jewellery sector which is a major contributor to India's exports. In fiscal year 2014-
15, gems and jewellery constituted 12 per cent of India's total exports and the value of gold items alone was more than $13 billion
(provisionalfigures).
The mobilized gold will also supplement RBI's gold reserves and will help in reducing the government's borrowing cost.
The revamped Gold Deposit Scheme (GDS) and the Gold Metal Loan (GML) Scheme involves changes in the scheme
guidelines only. The risk of gold price changes will be borne by the Gold Reserve Fund that is being created. The benefit to the
Government is in terms of reduction in the cost of borrowing, which will be transferred to the Gold Reserve Fund.
The scheme will help in mobilizing the large amount of gold lying as an idle asset with households, trusts and various
institutions in India and will provide a fillip to the gems and jewellery sector. Over the course of time this is also expected to reduce
the country's dependence on the import of gold. The new scheme consists of the revamped GDS and a revamped GML Scheme.
Revamped Gold Deposit Scheme
Collection, Purity Verification and Deposit of Gold under the revamped GDS:
Out of the 331 Assaying and Hallmarking Centres spread across various parts of the country, those which will meet criteria
as specified by Bureau of Indian Standards (BIS) will be allowed to act as Collection and Purity Testing 1 Centres for purity of gold
for the purpose of this scheme. The minimum quantity of gold that a customer can bring is proposed to be set at 30 grains. Gold can be in any form (bullion or jewellery). The number of these centres is expected to increase with time.
Gold Savings Account:
In the revamped scheme, a Gold Savings Account will be opened by customers at any time, with KYC norms, as applicable.
This account would be denominated in grams of gold.
Transfer of Gold to Refiners:
Collection and purity testing centres will send the gold to the refiners. The refiners will keep the gold in their ware-houses,
unless banks prefer to hold it themselves. For the services provided by the refiners, they will be paid a fee by the banks, as decided by them, mutually. The customer will not be charged.
The banks will enter into a tripartite Legal Agreement with refiners and Collection and Purity Testing Centres that are selected
by them to be their partners in the scheme.
Tenure:
The deposits under the revamped scheme can be made for a short-term period of 1-3 years (with a roll out in multiples of
one year); a medium-term period of 5-7 years and a long-term period, of 12-15 years (as decided from time to time). Like a fixed
deposit, breaking of lock-in period will be allowed in either of the options and there would be a penalty on premature redemption
(including part withdrawal).
Interest rate:
The amount of interest rate payable for deposits made for the short-term period would be decided by banks on basis of
prevailing international lease rates, other costs, market conditions etc. and will be denominated in grams of gold. For the medium and 9/9/2015 Introduction of Gold Monetization Schemes
http://pib.nic.in/newsite/PrintRelease.aspx 2/2
prevailing international lease rates, other costs, market conditions etc. and will be denominated in grams of gold. For the medium and
long-term deposits, the rate of interest (and fees to be paid to the bank for their services) will be decided by the government, in
consultation with the RBI from time to time. The interest rate for the medium and long-term deposits will be denominated and payable
in rupees, based on the value of gold deposited.
Redemption:
For short-term deposits, the customer will have the option of redemption, for the principal deposit and interest earned, either
in cash (in equivalent rupees of the weight of deposited gold at the prices prevailing at the time of redemption) or in gold (of the same weight of gold as deposited), which will have to be exercised at the time of making the deposit. In case the customer will like to change the option, it will be allowed at the bank's discretion. Redemption of fractional quantity (for which a standard gold bar/coin is not available) would be paid in cash. For medium and long-term deposits, redemption will be only in cash, in equivalent rupees of the weight of the deposited gold at the prices prevailing at the time of redemption. The interest earned will however be based on the value of gold at the deposit on the interest rate as decided.
Utilization:
The deposited gold will be utilized in the following ways:
· Under medium and long-term deposit
• Auctioning
• Replenishment of RBIs Gold Reserves
• Coins
• Lending to jewelers
· Under short-term deposit
• Coins
• Lending to jewelers
· Tax Exemption: Tax exemptions, same as those available under GDS would be made available to customers, in the
revamped GDS, as applicable.
· Gold Reserve Fund: The difference between the current borrowing cost for the Government and the interest rate paid by
the Government under the medium/long term deposit will be credited to the Gold Reserve Fund.
· Revamped Gold Metal Loan Scheme
· Gold Metal Loan Account: A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for
jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan,
on the basis of the terms and conditions set-out by banks, under the guidance of RBI.
· Delivery of gold to jewelers: When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from
refiners. The banks will, in turn, make the requisite entry in the jewelers' Gold Loan Account. Interest received by banks: The
interest rate charged on the GML will be decided by banks, with guidance from the RBI.
Tenor: The tenor of the GML at present is 180 days. Given that the minimum lock-in period for gold deposits will be one year,
based on experience gained, this tenor of GML may be re-examined in future and appropriate modifications made, if required.
MRTP : Where MRTP Commission came to conclusion that appellant, automobile company was engaged in unfair trade practice by asking for booking amount of newly introduced Tata Indica Cars above basic price which included excise duty, sales tax etc., such conclusion of Commission was based only upon subjective considerations of fairness and did not pass objective test of law as per precise definitions under section 36A of MRTP Act and, therefore, no case of unfair trade practice was made out against appellant
[2015] 61 taxmann.com 116 (SC)
SUPREME COURT OF INDIA
Tata Engineering and Locomotive Company Ltd.
v.
Director (Research)
[2015] 61 taxmann.com 116 (SC)
SUPREME COURT OF INDIA
Tata Engineering and Locomotive Company Ltd.
v.
Director (Research)
MCA issued a notification dated 4th September, 2013 whereby it has made changes (additional disclosures required for dues payable to micro enterprises and small enterprises) in the Schedule III of the Companies Act, 2013. Schedule III of the Companies Act, 2013 provides "General Instructions for preparation of balance sheet and statement of profit and loss of a company" .
Following are changes provided in the notification: -
I. Change in Balance sheet
S.No. Before changes After changes Changes EQUITY AND LIABILITIES EQUITY AND LIABILITIES (1) Shareholders&# 39; funds Shareholders&# 39; funds - (2) Share application money pending allotment Share application money pending allotment - (3) Non-current liabilities Non-current liabilities - (4) Current liabilities Current liabilities - (a) Short-term borrowings Short-term borrowings - (b) Trade payables Trade payables - Total outstanding dues of micro enterprises and small enterprises, and Additional disclosure required - Total outstanding dues of creditors other than micro enterprises and small enterprises Additional disclosure required …….. …….. II. Notes – Trade payable
The notification requires following additional disclosures under the heading "Notes: General Instructions for preparation of Balance Sheet", in para 6, after sub-para F
The following details relating to Micro, Small and Medium Enterprises shall be disclosed in the notes:-
(a) The principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the end of each accounting year;
(b) The amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, along with the amount of the payment made to the supplier beyond the appointed day during each accounting year;
(c) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006
(d) The amount of interest accrued and remaining unpaid at the end of each accounting year; and
(e) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
Explanation – The terms 'appointed day', 'buyer&# 39;, 'enterprise&# 39;, 'micro enterprise&# 39;, 'small enterprise&# 39; and 'supplier&# 39;, shall have the same meaning assigned to those under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006".
The petitioner has to be paid all the increments and quarterly allowances which he would have been entitled if he was not under suspension from the date of his suspension in addition to the amount already paid to him by the clause has been correctly interpreted by the other nationalised banks who are paying a suspended employee increments and quarterly allowances payable to an employee which the employee would have got if he was not put under suspension.
Bank is directed to pay the petitioner all the accrued increments and quarterly allowances from the date of his suspension which he would have been entitled to draw if he was not put under suspension
Posted on 10 September 2015 by VcnCourt
Madhya Pradesh High Court
Brief
The petitioner has to be paid all the increments and quarterly allowances which he would have been entitled if he was not under suspension from the date of his suspension in addition to the amount already paid to him by the clause has been correctly interpreted by the other nationalised banks who are paying a suspended employee increments and quarterly allowances payable to an employee which the employee would have got if he was not put under suspension.
Citation
Madhav Anant Rao Gore vs State Bank Of India And Ors. on 17 July, 1985
Judgement
Madhya Pradesh High Court
Madhav Anant Rao Gore
vs
State Bank Of India And Ors. on 17 July, 1985
Equivalent citations: (1986) IILLJ 394 MP
Author: C Sen
Bench: C Sen, S Awasthy
Equivalent citations: (1986) IILLJ 394 MP
Author: C Sen
Bench: C Sen, S Awasthy
ORDER C.P. Sen, J.
1. In this petition under Article 226 of the Constitution the petitioner is praying for striking down
Annexure B.26 about the promotion policy of the State Bank as being ultra-vires and void, for
consideration of his case for promotion and giving him seniority to the promoted post from 1980 in the Junior Management Grade Scale I, his order of suspension dated 25th July, 1978 be quashed and he be given suspension allowance after taking into account annual increments and the allowances which he would have drawn from the date of suspension.
Annexure B.26 about the promotion policy of the State Bank as being ultra-vires and void, for
consideration of his case for promotion and giving him seniority to the promoted post from 1980 in the Junior Management Grade Scale I, his order of suspension dated 25th July, 1978 be quashed and he be given suspension allowance after taking into account annual increments and the allowances which he would have drawn from the date of suspension.
2. The petitioner was appointed as a Clerk in the State Bank of India on 9th May, 1973 and he was confirmed in the post after six months. He was posted in the local head-office at Bhopal, then in the Central Office at Bombay and lastly at T.T. Nagar Branch of the Bank at Bhopal. On 20th January, 1978 Draft No. 196506 in favour of Dr. K. B. Singh for Rs 5000/- drawn on the Satna Branch was taken from the T.T. Nagar Branch of the Bank. It appears that the draft was not taken delivery" of and somebody got the repayment by cancellation on 1st August, 1978. Subsequently it was detected that there has been fraudulent encashment of the draft and the matter was enquired into. On 25th July, 1978 the petitioner gave a written confession that he committed the fraud on 1st March, 1978 by cancelling the draft for Rs. 5000/- as he found that the said draft was lying unattended in the undelivered drafts. He was tempted because he needed Rs. 2000/- very badly. He put a revenue stamp on the back of the draft; wrote Recieved payment by cancellation and signed 'Singh'., then he sent a messenger for vouchers fortunately for him that day the vouchers could not be found. He, therefore, pressed his Accountant Joshi to pass it. He refused but the petitioner gave introduction and said that he knew the person, please do it. Keeping full faith in his staff, the Accountant passed it and sent it for payment. He went and received the payment from Agarwal. His confession was forwarded by the Branch Manager to the Regional Manager of the Bank on the same day and on instructions from him, the Branch Manager immediately suspended the petitioner. It appears mat the petitioner deposited the amount in the bank and submitted his resignation on 21st August, 1978. The Branch Manager forwarded his resignation with a recommendation for acceptance keeping in view the services of the petitioner's father who was a retired officer, Grade I, of the Bank and since no monetary loss was involved but immediately thereafter the petitioner resiled from his confession and submitted that it was taken from him under coercion and pressure and he has not committed any fraud. The Bank, therefore, charge-sheeted the petitioner on 30th December, 1978 which was served on him on 12th January, 1979 that on 1st March, 1978 he committed a fraud by encashing the draft of Rs. 5000/- by forging the signature of the drawer. Since then the departmental proceedings against the petitioner is pending. The petitioner was paid suspension allowance 1/3rd of his last pay for the first 3 months, thereafter half the pay and after one year full pay. In the meantime, the petitioner had been writing to the bank that he should be permitted to appear in the written examination for promotion to the post of Junior Management Grade Scale I for which he has become qualified since 1980 and his batchmates have already been promoted. The bank wrote back saying that since he is put under suspension and disciplinary proceedings are pending against him, he is not eligible for promotion. So he has not been permitted to appear in the qualifying examination. The petitioner has also not been paid increments and quarterly allowances payable from time to time but he is being paid the salary which he was drawing when he was put under suspension. It is submitted by the respondents that the disciplinary proceedings are nearing completion and it could not be completed because of the unhelpful attitude of the petitioner, It is not disputed that the petitioner is governed by Sastry Award of 1953 & Desai Award of 1962.
3. The petitioner's contentions are that-
(i) the promotion policy of the bank that an employee shall not be eligible for any promotion during the period of his suspension irrespective of the period involved is arbitrary and unreasonable and violative of petitioner's right under Articles 14 and 16 of the Constitution. Not only in the State Bank, but in other nationalised banks also an employee against whom disciplinary action is pending is considered for promotion and the recommendations are kept in sealed cover and withheld pending completion of the disciplinary proceedings but there has been hostile discrimination, so far as the petitioner is concerned and he is not being permitted to appear in the written examination and in the event of his being exonerated from the charges, he would suffer great irreparable injury because it may not be possible to give him promotion from 1980 when it became due.
(ii) Pending disciplinary enquiry against an employee, he can be suspended but the suspension order can only be passed after the employee is charge-sheeted. In the case of the petitioner he was charge-sheeted on 12th January, 1979 but he has been put under suspension from 25th July, 1978. Besides, the order of suspension was passed by the Branch Manager and not by the Regional Manager who was the diciplinary authority. Therefore, the order of suspension is illegal and without jurisdiction,
(iii) Though he is being paid suspension allowance but he is not being paid increments and quarterly allowances which are payable to him from time to time under the awards. In calculating the quantum of subsistence allowance, pay and allowances which he would have got but for suspension, should have been taken into account.
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