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Issues Involved:
1. Legality of the prohibitory orders issued under Section 132(3) of the Income-tax Act, 1961. 2. Interpretation and application of Section 132 of the Income-tax Act, 1961. 3. Relationship between banker and customer in the context of deposited money. Detailed Analysis: Issue 1: Legality of the Prohibitory Orders Issued Under Section 132(3) of the Income-tax Act, 1961 The primary contention by the petitioners was that Section 132(3) does not confer any power on the authorized officer to issue a prohibitory order like exhibit P-1. The petitioners argued that the proceedings under Section 132(3) must relate to undisclosed money, etc., which is not practicable to seize. The money in a running bank account cannot be equated with physically concealed money. The court examined the scope and ambit of Section 132 and concluded that the authorized officer cannot pass an order under Section 132(3) regarding money deposited in a bank account as it has already become the bank's property. Issue 2: Interpretation and Application of Section 132 of the Income-tax Act, 1961 The court delved into the interpretation of Section 132, which deals with search and seizure. The Supreme Court's principles in the case of Income-tax Officer, Special Investigation Circle "B", Meerut v. Seth Brothers were referenced. Key points included: - The power must be exercised strictly in accordance with the law. - The Commissioner must have reason to believe, based on information, that a person possesses undisclosed income or property. - The authorized officer can only issue a prohibitory order under Section 132(3) if it is not practicable to seize the money or valuable article. - The court emphasized that money deposited in a bank, which becomes the bank's property, cannot be subjected to a prohibitory order under Section 132(3). Issue 3: Relationship Between Banker and Customer in the Context of Deposited Money The court elaborated on the legal relationship between a banker and a customer. It cited various legal texts and precedents to establish that once money is deposited in a bank, it becomes the bank's property. The bank assumes the role of a debtor to the customer, who has a right to demand repayment. The court referenced: - Tannan's "Banking Law and Practice in India" which states that deposited money becomes the bank's property. - American Jurisprudence, which aligns with the principle that a general deposit in a bank creates a debtor-creditor relationship. - Joachimson v. Swiss Bank Corporation, which summarized that the bank borrows the proceeds and undertakes to repay them. The court concluded that since the money in a bank account is the bank's property, an order under Section 132(3) cannot be legally issued concerning such money. Conclusion: The court found the prohibitory orders issued under Section 132(3) to be illegal as they pertain to money deposited in a bank, which becomes the bank's property. The orders were set aside, and the original petitions were allowed. The court also noted that while the Act provides remedies for aggrieved persons, it can intervene under Article 226 when an authority acts without or in excess of jurisdiction, causing unnecessary harassment.
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