2012 (12) TMI 843 - HC - Income Tax

Seeking return of documents seized as per Exts.P1 to P3 mahazars - search under Section 132 - Held that - Books of account or other documents that may be seized under an authorisation issued u/s 132(1) can be retained by the authorised officer or the concerned ITO for a period of 180 days from the date of seizure, whereafter the person from whose custody such books or documents have been seized or the person to whom such books or documents belong becomes entitled to the return of the same unless the reasons for any extended retention are recorded in writing by the authorized officer/the concerned ITO and approval of the Commissioner for such retention is obtained. Sub-section (10) of 132 confers upon the person legally entitled to the return of the seized books and documents a right to object to the approval given by the Commissioner under sub-section (8) by making an application to the Central Board stating therein the reasons for such objection and under sub-section (12) it is provided that the Central Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. Thus the scheme of sub-sections (8), (10) and (12) of Section 132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner s approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communication any further retention of the seized books or documents would become invalid and unlawful. In this case even the respondents have no case that Exts.R1(a) or (b) were communicated to the assessee. If that be so, the requirement of Section 132(8) is not satisfied and in which event, the retention of the documents beyond 30 days period of completion of the assessment was illegal. For that reason, the petitioner is entitled to succeed - writ petition disposed of directing the respondents to return the documents seized from the petitioner under Exts.P1 to P3 mahazars within four weeks of receipt of a copy of this judgment.

Summary

Issues:
1. Seizure of documents during a search under Section 132 of the Income Tax Act.
2. Petition seeking the return of seized documents as per Ext.P1 to P3 mahazars.
3. Interpretation of Section 132(8) of the Income Tax Act regarding the retention of seized documents.
4. Obligation of authorities to communicate reasons and approvals for document retention to the assessee within the specified period.
5. Comparison of the legal provisions pre and post amendment in relation to document retention.
6. Decision on the entitlement of the petitioner for the return of seized documents.

Analysis:
1. The petitioner, an assessee under the Income Tax Act, had documents seized during a search conducted in his premises. Subsequently, assessment was completed for specific years, and assessment orders were issued. The petitioner sought the return of seized documents through a writ petition.

2. The petitioner filed an application seeking the return of documents seized as per Ext.P1 to P3 mahazars. The respondents had obtained approval for continued retention of the documents based on pending appeal and penalty proceedings. The petitioner relied on Section 132(8) of the Income Tax Act to request the return of the seized documents.

3. The interpretation of Section 132(8) was crucial in determining the entitlement of the petitioner for the return of documents. The section specifies the conditions for retaining seized documents beyond thirty days from the date of the assessment order, including recording reasons and obtaining approval from designated authorities.

4. The petitioner argued that the authorities not only needed to record reasons and obtain approval for document retention but also had an obligation to communicate these reasons and approvals to the petitioner within the specified period. Reference was made to a Supreme Court judgment emphasizing the importance of communication in such cases.

5. A comparison was made between the legal provisions pre and post amendment to highlight the continuity in the obligation to record reasons, obtain approval, and communicate the same to the concerned party. The court noted that failure to communicate approvals and reasons rendered the retention of documents beyond the specified period illegal.

6. The court ruled in favor of the petitioner, directing the respondents to return the seized documents within four weeks of the judgment. The judgment clarified that the return of documents should not prevent the authorities from retaining copies for their records, ensuring compliance with the legal requirements.

Conclusion:
The judgment addressed the issues related to document seizure, retention, and return under the Income Tax Act, emphasizing the importance of communication in the process. It highlighted the statutory obligations of authorities and upheld the petitioner's entitlement to the return of seized documents based on non-compliance with communication requirements specified in Section 132(8).