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Issues:
- Seizure of books of account and documents under the Income Tax Act, 1961. - Requirement of approval from the Commissioner for retention beyond 180 days. - Validity of retention of seized items without timely approval. - Interpretation of Sections 132(8) and 132(10) of the Income Tax Act. - Legal implications of delayed approval on the retention of seized items. - Availability of alternative remedies for the petitioner. Analysis: The judgment pertains to a partnership firm being an assessee under the Income Tax Act, 1961, whose business and residential premises were searched under section 132 of the Act, resulting in the seizure of books of account and documents. The petitioner filed a petition seeking the return of the seized items, contending that no approval was obtained from the Commissioner within 180 days of seizure, as mandated by section 132(8) of the Act. The court examined the timeline of communications between the Income Tax Officer and the Commissioner regarding approval for retention. It was noted that the Commissioner's approval was granted after a significant delay, well beyond the 180-day limit from the date of seizure. The court emphasized the importance of strict compliance with the provisions of section 132(8) of the Act, which requires the authorized officer to record reasons for retention and obtain the Commissioner's approval within 180 days of seizure. The judgment highlighted that the subsequent approval by the Commissioner, granted after the expiration of the 180-day period, cannot retroactively validate the retention of seized items. The court rejected the argument that delayed approval could cure the initial invalidity of retention, citing the need for a strict interpretation of search and seizure provisions due to their intrusive nature on taxpayer rights. Reference was made to the ruling of the Delhi High Court in Metal Fittings Pvt. Ltd. v. Union of India to support the view that delayed approval does not rectify the invalidity of retention. While acknowledging a conflicting decision by the Allahabad High Court, the court maintained its stance on the issue. Additionally, the judgment highlighted the requirement for the approval to be communicated to the person from whom the items were seized, enabling them to raise objections and request the return of the seized items under section 132(10) of the Act. The court dismissed the argument that the petitioner should have approached the Board under section 132(10), emphasizing that in the absence of Commissioner's approval at the time of filing the petition, there was no alternative remedy available to the petitioner. Consequently, the court allowed the petition, directing the respondents to return the seized books of account and documents to the petitioner, while also awarding costs to the petitioner.
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