1997 (10) TMI 7 - HC - Income Tax

Summary

Issues Involved:
1. Fabrication of First Information Report (FIR)
2. Cause of Action for Search and Seizure
3. Violation of Petitioner's Rights u/s 21 of the Constitution
4. Legality of Seizure u/s 132A of the Income-tax Act

Summary:

1. Fabrication of First Information Report (FIR):
The petitioner alleged that the FIR was fabricated to show that the search and seizure were conducted on February 5, 1996, instead of February 4, 1996. The court-appointed Additional Director-General of Police, CID, confirmed that the police raided the petitioner's house on February 4, 1996, and manipulated records to show the date as February 5, 1996. The court found overwhelming evidence supporting the petitioner's claim, including newspaper reports and a letter from the Commissioner of Police to the Chief Minister's office.

2. Cause of Action for Search and Seizure:
The search and seizure were allegedly provoked by a complaint from the ex-Nizam's general power of attorney holder. The police claimed they acted on credible information regarding stolen antiques being sold at a hotel. However, the court found that the actual cause of the raid was linked to the complaint by the ex-Nizam and not the hotel incident. The Additional Director-General's report supported this conclusion.

3. Violation of Petitioner's Rights u/s 21 of the Constitution:
The court concluded that the petitioner's rights under Article 21 were violated due to the illegal search and seizure. The police actions were deemed reckless and wanton, causing significant mental and physical distress to the petitioner. The court emphasized that the Government and its officers must act within the bounds of law and protect citizens' rights.

4. Legality of Seizure u/s 132A of the Income-tax Act:
The court found that the Income-tax authorities acted unlawfully by taking possession of the seized assets from the police without a court order. Section 132A does not authorize the Income-tax Department to bypass the court, which alone has the authority to decide on the custody of seized properties. The court noted that the exaggerated value of the seized properties led to the wrongful intervention by the Income-tax authorities.

Conclusion and Orders:
The court ordered the immediate return of all properties seized from the petitioner's house, except for two items found to be interpolated. The Government was directed to pay Rs. 5 lakhs in compensation to the petitioners, with the right to recover this amount from the responsible police officers. All proceedings in Cr. No. 26 of 1996 were quashed. The court also withdrew the security provided to the petitioners at their residence, with the option to reapply if needed.