1989 (10) TMI 4 - HC - Income Tax

Summary

Issues Involved:
1. Legality of sealing the petitioner's shop.
2. Validity of the search and seizure under section 132 of the Income-tax Act.
3. Maintainability of the writ petition in the presence of an alternative remedy.
4. Examination of procedural compliance and allegations of mala fide action by the Income-tax Department.

Summary:

1. Legality of Sealing the Petitioner's Shop:
The petitioners contested the sealing of their shop and the subsequent notice pasted on it. They argued that the sealing was illegal and without jurisdiction. The court found that "there is no provision for sealing of the business premises either u/s 133A or u/s 132 or any other section of the Income-tax Act." The sealing was deemed a malicious act in violation of the petitioners' fundamental rights under Article 19(1)(g) and Article 300A of the Constitution of India.

2. Validity of the Search and Seizure u/s 132:
The petitioners challenged the search and seizure conducted by the Income-tax Department. The court scrutinized the authorisation order and found it to be vague and general, lacking specific information about the petitioner's shop. The court noted, "The authorisation order was not an authorisation order in the eyes of law and no proceedings on the basis of such an order could have taken place." Consequently, the search and seizure were declared illegal and void.

3. Maintainability of the Writ Petition:
The respondents argued that the writ petition should be dismissed due to the availability of an alternative remedy under section 132(11) of the Income-tax Act. However, the court observed that "Non-entertainability of the writ petition on the ground of alternative remedy is a self-imposed restriction." Given the gross violations of law and the fundamental rights involved, the court held that the writ petition was maintainable despite the alternative remedy.

4. Examination of Procedural Compliance and Allegations of Mala Fide Action:
The petitioners alleged that the Income-tax Department acted with mala fide intentions and violated procedural norms. The court found that the "proceedings for search and seizure themselves being illegal and void, the same could not have been made the foundation of any order u/s 132(5) of the Act." The court also noted discrepancies in the reports and authorisation orders, further supporting the petitioners' claims of procedural violations and mala fide actions by the department.

Conclusion:
The court dismissed Writ Petition No. 6218 of 1987 as infructuous and allowed Writ Petition No. 22 of 1988, quashing the order u/s 132(5) of the Income-tax Act. The court emphasized that the Income-tax authorities could still proceed in accordance with the law but condemned the unlawful actions taken in this case. "There will be no order as to costs."