1975 (7) TMI 49 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the authorisation issued by the Director of Inspection for search and seizure.
2. Whether the acts of the authorised officers constituted a seizure under section 132(1) of the Income-tax Act.
3. Legality of the search and seizure acts due to alleged extraneous considerations.
4. Legality of the search of the portion of the premises occupied by Shri Prithvi Raj Jindal.

Issue-wise Detailed Analysis:

1. Legality of the authorisation issued by the Director of Inspection for search and seizure:
The petitioners contended that the Director of Inspection had no credible information to believe that Shri Om Parkash Jindal possessed undisclosed jewellery or ornaments. The court examined the record and found that the information available to the Director was sufficient for any reasonable person to believe that action under section 132 of the Income-tax Act was warranted. The Director had duly recorded reasons for issuing the warrant of authorisation, and there was no evidence of extraneous or political influence. Thus, the court overruled the contention that the authorisation was illegal.

2. Whether the acts of the authorised officers constituted a seizure under section 132(1) of the Income-tax Act:
The authorised officers placed the ornaments and jewellery in sealed boxes and locked them in a Godrej almirah, then later in a wooden almirah, taking away the keys. The court found that these acts, while disabling the petitioners from dealing with the items, did not amount to a "seizure" as contemplated by section 132(1). The officers did not follow the post-seizure procedure prescribed by rule 112 of the Income-tax Rules, indicating that they did not seize the items under section 132(1). The court concluded that the officers acted under section 132(3) to ensure compliance but did not seize the items, thus the provisions of section 132(5) were not applicable.

3. Legality of the search and seizure acts due to alleged extraneous considerations:
The petitioners alleged that the actions of the authorised officers were influenced by extraneous and unlawful considerations. The court found no material evidence to support this contention. The officers acted under an honest, though erroneous, belief that it was not desirable to seize the items until verification of the petitioner's statement. The court held that the officers' actions were not countenanced by section 132(3) but were committed in error of judgment, not due to extraneous considerations.

4. Legality of the search of the portion of the premises occupied by Shri Prithvi Raj Jindal:
The petitioners argued that the search of Shri Prithvi Raj Jindal's portion of the premises was illegal as his name was not mentioned in the warrant of authorisation. The court found that the warrant authorised a search of the entire Jindal House, which included the portion occupied by Shri Prithvi Raj Jindal. Therefore, the search of this portion was not illegal, and the recovery of the four ornaments from there was warranted.

Conclusion:
The court directed the authorised officers to remove the seals and locks from the wooden almirah and restore the ornaments, jewellery, etc., to Shri Om Parkash Jindal within 10 days. The officers were given the liberty to collect material and decide within those 10 days whether they had reason to believe the items were undisclosed property. If they found so, they could proceed according to law. The writ petition was allowed to the extent of directing the restoration of the items, with no order as to costs.