1964 (12) TMI 1 - HC - Income Tax

Income-tax Officer duly authorised by the Commissioner of Income-tax made a search of the premises - no any illegality was committed when action was taken in these cases under section 132 - search and seizure are valid

Summary

Issues:
Challenge of legality of search and seizure of documents under Income-tax Act
Constitutional validity of sections 131 and 132 of the Income-tax Act, 1961

Analysis:
The judgment by the High Court of PUNJAB addressed the challenge to the legality of a search and seizure of documents conducted by an Income-tax Officer under the Income-tax Act. The search was made at the premises of two companies and an individual, resulting in the seizure of certain documents believed to be relevant to ongoing proceedings under the Act. Three writ petitions were filed under article 226 of the Constitution, alleging high-handed and arbitrary conduct during the search. However, it was found that the searches were conducted in an orderly manner with a complete inventory of seized documents prepared in the presence of representatives and local witnesses, dispelling the grievance of high-handedness. Additionally, it was noted that the current books of the firms were not seized, further supporting the legality of the search and seizure process.

The main legal argument in the petitions focused on the constitutional validity of sections 131 and 132 of the Income-tax Act, 1961. Section 131 empowers an Income-tax Officer with certain civil court powers for discovery and inspection of documents, while section 132 allows for entry, search, and seizure of relevant documents. The crux of the argument was that both sections apply to the same class of persons, yet section 132 provides a more drastic and less favorable procedure, potentially leading to unconstitutional discrimination under article 14 of the Constitution. However, the court disagreed with this contention, emphasizing that the powers under sections 131 and 132 serve distinct purposes and are meant to be applied in different circumstances. The court highlighted that the power to compel document production under section 131 differs from the authority to conduct a search and seizure under section 132, with the latter being essential for certain investigations. The judgment referenced previous court decisions supporting the constitutionality of similar provisions, ultimately upholding the legality of the actions taken under section 132 in this case.

In conclusion, the court dismissed the petitions, finding no substantial grounds for interference with the actions of the income-tax authorities. The grievances raised were deemed unfounded, and no illegality was found in the application of section 132 of the Income-tax Act, 1961. The judges unanimously agreed on the dismissal of the petitions, with no costs imposed on the petitioners.