1968 (3) TMI 19 - HC - Income Tax

Summary

Issues Involved:
1. Constitutionality of the power of search and seizure under section 132 of the Income-tax Act.
2. Compliance with the mandatory provisions of section 132 and rule 112.
3. Allegations of mala fide actions and abuse of power by Income-tax Officers.
4. Validity and specificity of the warrant of authorisation.
5. Relevance and usefulness of the seized materials.
6. Allegations of excessive and arbitrary seizure.

Issue-wise Detailed Analysis:

1. Constitutionality of the Power of Search and Seizure:
The petitioners contended that the power of search and seizure under section 132 of the Income-tax Act is ultra vires the Constitution, violating articles 14 and 19. The court noted that the Supreme Court in M. P. Sharma v. Satish Chandra had upheld the constitutionality of search and seizure as a necessary state power for social security. The court emphasized that the Commissioner of Income-tax, who issued the warrant, is a highly placed official and exercises quasi-judicial functions, thus negating the argument that only judicial officers can issue such warrants.

2. Compliance with Mandatory Provisions:
The petitioners argued that the Commissioner of Income-tax did not have sufficient reason to believe that the petitioners would not produce the required documents and that the search and seizure were conducted in disregard of section 132 and rule 112. The court found that the Commissioner had credible information and had duly recorded his reasons for issuing the warrant. The search was conducted in accordance with the law, and the officers acted within their powers.

3. Allegations of Mala Fide Actions and Abuse of Power:
The petitioners alleged that the search and seizure were conducted at the behest of a disgruntled ex-manager, N. S. Mani, and that the officers acted high-handedly and arbitrarily. The court found no evidence to support these allegations. The counter-affidavit by the Income-tax Officer stated that the search was conducted with due regard for the law, and the materials seized were believed to be relevant and useful for the assessment proceedings.

4. Validity and Specificity of the Warrant of Authorisation:
The petitioners contended that the warrant did not specify the documents to be seized and was thus invalid. The court referred to the Supreme Court's decision in Durga Prasad v. Superintendent (Prevention), Central Excise, which upheld the validity of general search warrants under similar circumstances. The court concluded that the warrant issued by the Commissioner did not suffer from any legal infirmity.

5. Relevance and Usefulness of the Seized Materials:
The petitioners argued that the officers seized documents indiscriminately without regard to their relevance. The court found that the officers meticulously examined and marked the seized documents, acting honestly and reasonably. The court emphasized that conclusive proof of relevance at the time of seizure is not required; it is sufficient that the officers believed the materials to be relevant or useful.

6. Allegations of Excessive and Arbitrary Seizure:
The petitioners claimed that the seizure was "enormous" and constituted an abuse of power. The court noted that the quantity of seized materials alone does not render the search excessive or arbitrary. Each case must be judged on its facts, and in this instance, the court found that the seizure was conducted within the bounds of the law and was not excessive or high-handed.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioners' arguments. The search and seizure were conducted in compliance with the law, and the actions of the Income-tax Officers were neither arbitrary nor excessive. The petitioners were ordered to pay costs of Rs. 150.