1987 (3) TMI 80 - HC - Income Tax

Summary

Issues involved: Violation of communication of reasons for extended retention of seized documents u/s 132 of the Income-tax Act, 1961.

Judgment Summary:

The High Court of Delhi, in the case where a search was conducted u/s 132 of the Income-tax Act and documents were seized, found that the reasons for extended retention of the seized documents were not communicated to the petitioner as required by law. The Central Board of Direct Taxes had dismissed the appeal stating that it is not mandatory to communicate such reasons. However, referencing the Supreme Court decision in CIT v. Oriental Rubber Works [1984] 145 IT 477, the High Court emphasized the statutory obligation to communicate the reasons for extended retention. The Supreme Court had outlined that failure to communicate such reasons renders the retention of documents unlawful. Therefore, the High Court directed the respondents to return the seized documents and books of account within a week.

Furthermore, due to the seizure of documents, the petitioner was unable to file the necessary returns as per the Income-tax Act. Hence, the High Court granted the petitioner one year's time from the date of return of documents to file the requisite returns. Lastly, considering the settled law post the authorities' orders, each party was directed to bear their own costs.