1984 (11) TMI 31 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the search and seizure conducted by the Income-tax Department.
2. Allegations of mala fide conduct and ulterior motives behind the search.
3. Compliance with statutory provisions u/s 132 of the Income-tax Act.
4. Validity of the search warrants and their execution.
5. Retention and return of seized documents and items.

Summary:

Legality of the Search and Seizure:
The petitioners contended that the search and seizure conducted on June 29, 1983, at premises No. 4/1, Roy Bahadur A. C. Roy Road, were illegal and arbitrary. They argued that the search was conducted without proper authorisation, including the properties of Smt. Nilanjana Roy and Smt. Sudharani Banerjee, and without observing accepted norms. The search party comprised more than seventy persons and continued from 9-00 a.m. to 7-30 p.m. The petitioners claimed that the search was conducted without any valid reason, and the premises searched included trust property of A. N. Roy Trust without a warrant.

Allegations of Mala Fide Conduct:
The petitioners alleged that the search was conducted mala fide and for collateral purposes, specifically to harass them due to personal vendetta by Deputy Director Aroop Ratan Chatterjee. They claimed that the search and seizure were motivated by personal grudges related to family disputes and were executed to humiliate and harass the petitioners and their family members.

Compliance with Statutory Provisions u/s 132:
The respondents argued that the search was based on specific information regarding tax evasion, verified through secret enquiries. The warrants of authorisation were issued after due enquiries and reconnaissance, and the search was conducted in an orderly fashion. The respondents maintained that the search was conducted in compliance with the provisions of section 132 of the Income-tax Act, which allows search and seizure based on information leading to a reasonable belief of undisclosed income or property.

Validity of the Search Warrants and Execution:
The court found that the Director of Inspection had the necessary information and reason to believe that the search was justified. The search warrants were issued after careful examination of the information, and the search was conducted in the presence of independent witnesses. The court held that the presence of police personnel and the size of the search party were justified given the enormity of the premises.

Retention and Return of Seized Documents and Items:
The court noted that the seized documents were handed over to the concerned Income-tax Officer within fifteen days as required u/s 132(1)(a). The court also addressed the issue of retention of seized documents, stating that the documents should not be retained beyond the statutory period unless reasons for extended retention are recorded and approved by the Commissioner. The court allowed the petitioners to apply for the return of personal items necessary for the winter season.

Conclusion:
The court concluded that the search and seizure were conducted in compliance with the statutory provisions and were based on a reasonable belief of tax evasion. The allegations of mala fide conduct were not substantiated with sufficient material particulars. The rule was discharged, and all interim orders were vacated. The court granted a stay for a fortnight on the petitioners' request.