1983 (11) TMI 1 - SC - Income Tax

Whether the Revenue is under a statutory obligation to communicate to the person (from whose custody books of account & documents have been seized u/s132(1)), the approval obtained from the CIT for the retention of the seized books by the Department for a period exceeding 180 days from the date of seizure - orders passed by the High Court directing the return of the seized books of account and documents to the respondents in each of the appeals are confirmed - appeal of revenue dismissed

Summary

Issues:
- Statutory obligation to communicate approval and reasons for retention of seized documents
- Legality of extended retention of seized documents
- Communication of Commissioner's approval and recorded reasons
- Right to object to Commissioner's approval

Analysis:
The Supreme Court judgment involved multiple appeals questioning the statutory obligation of the Revenue to communicate the approval and recorded reasons for the retention of seized documents under section 132(8) of the Income Tax Act, 1961. The main issue revolved around whether the extended retention of seized documents beyond 180 days without communicating the Commissioner's approval and reasons was lawful. The court examined the provisions of sections 132(8), (10), and (12) of the Act to determine the legality of the retention of seized documents. It was established that two conditions must be met for extended retention: recording reasons in writing and obtaining the Commissioner's approval. The court held that failure to communicate the approval and reasons to the concerned person renders the retention unlawful, emphasizing the statutory obligation on the Revenue to provide such information promptly.

Furthermore, the judgment highlighted the right of the person legally entitled to the seized documents to object to the Commissioner's approval under section 132(10) by making an application to the Central Board. The court emphasized the importance of communication in enabling effective objection and decision-making by the concerned person. It was clarified that without knowledge of the Commissioner's approval and reasons, making objections before the Board would be impractical. The court concluded that the scheme of sections 132(8), (10), and (12) imposes a statutory duty on the Revenue to communicate the approval and reasons promptly to the concerned person to ensure the validity of the retention of seized documents.

In the final decision, the Supreme Court confirmed the High Court's orders directing the return of seized documents in each appeal, emphasizing the importance of communication for lawful retention. The appeals were dismissed, with the assessment orders subject to any appeals already filed against them. The judgment underscored the significance of adherence to statutory obligations in communicating approvals and reasons for the retention of seized documents to uphold the legality of such actions.