1986 (1) TMI 43 - HC - Income Tax

Summary

Issues:
1. Challenge to order under section 132(5) of the Income-tax Act, 1961
2. Ownership and possession of seized amount of Rs. 1,50,000
3. Legal validity of exhibit P-20 order dated October 15, 1985
4. Interpretation of section 132(5) of the Income-tax Act, 1961
5. Availability of alternate remedy under sections 132(11) and 132(12) of the Act

Analysis:
The petitioner filed a writ petition challenging the order under section 132(5) of the Income-tax Act, 1961, seeking to quash the exhibit P-20 order dated October 15, 1985. The dispute revolved around the ownership and possession of Rs. 1,50,000 seized from the third respondent and his friend. The Income-tax Officer found that the money formed part of the undisclosed income of the third respondent, based on various statements and explanations provided by the parties involved. The petitioner contended that the seized amount belonged to him, as it was part of a loan repayment by a business entity. However, the court held that the Income-tax Officer's decision was based on an analysis of facts and circumstances and was not open to challenge under article 226 of the Constitution of India at that stage.

The court examined the provisions of section 132(5) of the Act, which empower the Income-tax Officer to estimate undisclosed income in a summary manner. It was noted that the procedure followed by the Income-tax Officer, including affording opportunities to the concerned parties and recording statements, was in accordance with the law. The court emphasized that the order under section 132(5) was a summary one and subject to review in regular assessment based on proper materials. Therefore, the court found no grounds to challenge the exhibit P-20 order on legal or procedural grounds.

Additionally, the court highlighted the availability of an alternate remedy under sections 132(11) and 132(12) of the Income-tax Act, which allow a person to object to an order under section 132(5) by making an application to the Commissioner of Income-tax. The petitioner's argument that he was not a party to the exhibit P-20 proceedings was dismissed, as any person objecting to such an order could invoke the provisions of section 132(11). The court held that the remedy provided under section 132(11) was equally efficacious and that there was no basis to exercise discretionary jurisdiction under article 226 of the Constitution of India. Consequently, the original petition was dismissed in limine for lack of merit.