1995 (5) TMI 4 - HC - Income Tax

Issues Involved:
1. Seizure of 23 books of account by the Income-tax Department.
2. Non-availability of seized books for inspection by the petitioner.
3. Allegations of missing books and possible collusion.
4. Responsibility and negligence of the Income-tax officers.
5. Legal consequences and remedies for the petitioner.

Detailed Analysis:

1. Seizure of 23 Books of Account by the Income-tax Department:
The primary issue in the writ petition concerns the seizure of 23 books of account by the authorized officer of the Income-tax Department on September 20, 1989. A panchnama (annexure "A-1") was prepared and signed by the authorized officer, witnesses, and the petitioner. The inventory list attached to the panchnama indicated the periods the books pertained to, ranging from April 1, 1981, to December 31, 1986. The books varied in size, containing between 9 to 193 pages.

2. Non-availability of Seized Books for Inspection by the Petitioner:
The petitioner claimed that the seized books, for which a panchnama was prepared on September 20, 1989, were not made available for inspection. This non-availability hindered the petitioner from explaining various entries for which notices had been issued. The file of the Income-tax Department revealed a panchnama dated September 14, 1989, listing 11 books of account for the period from November 18, 1982, to November 12, 1985. However, the panchnama for the 23 books dated September 14, 1989, was missing, although the inventory list was dated September 14, 1989, and the panchnama was prepared on September 20, 1989.

3. Allegations of Missing Books and Possible Collusion:
The respondents alleged that the petitioner might have removed the books in collusion with a member of the raiding party. The books mentioned in annexure "A-1" were reported missing, and the Assessing Officer at Alwar reported on December 19, 1989, that the seized material was not handed over to him. The matter was subjected to a thorough vigilance inquiry by the Directorate of Income-tax (Investigation) and Directorate of Income-tax (Vigilance).

4. Responsibility and Negligence of the Income-tax Officers:
The court observed that the inspector of the Department noted on December 8, 1989, that the account books as per annexure "A-1" were not received. This was corroborated by the order under section 132(5) of the Income-tax Act, dated January 17, 1990. The court highlighted that the authorized officer is responsible for the safe custody of seized records and that the protection under section 293 of the Income-tax Act is not available for actions not done in good faith. The court outlined possible scenarios for the removal of the books, including negligence or collusion by the officers.

5. Legal Consequences and Remedies for the Petitioner:
The court emphasized that the act of search and seizure must be conducted with proper care and that the seizure of the books indicated their relevance. The court criticized the lack of effective steps taken by the Directorate of Income-tax (I & G) and Directorate of Income-tax (Vigilance) even after five years. The court stated that the officers responsible could face disciplinary action and prosecution. The petitioner could also claim damages for the loss of books, but the determination of such loss or compensation is not within the scope of proceedings under article 226 of the Constitution. The petitioner was advised to file a suit for damages.

Conclusion:
The writ petition was disposed of with directions for the Central Board of Direct Taxes to take immediate action against the responsible officers and submit a compliance report within four months.

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