1970 (1) TMI 8 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the retention of books, documents, and papers seized by the income-tax authorities beyond 180 days.
2. Requirement of communication of reasons for retention and approval by the Commissioner under Section 132(8) of the Income-tax Act, 1961.
3. Interpretation of the provisions of Section 132(8), 132(10), and 132(12) of the Income-tax Act, 1961.
4. Validity of the retention order without communication to the petitioner.

Issue-wise Detailed Analysis:

1. Legality of the retention of books, documents, and papers seized by the income-tax authorities beyond 180 days:

On August 30, 1965, income-tax officers conducted searches at the petitioner's office, chamber, and residence, seizing numerous books, documents, and papers. Some of these were returned in February 1966, but many remained with the authorities. The petitioner challenged the retention of these items, arguing that they were still being held despite repeated requests for their return.

2. Requirement of communication of reasons for retention and approval by the Commissioner under Section 132(8) of the Income-tax Act, 1961:

The petitioner's counsel, Mr. Banerjee, focused on Section 132(8) of the Act, which mandates that seized books and documents should not be retained beyond 180 days unless reasons for retention are recorded in writing and approved by the Commissioner. The petitioner claimed that no such reasons or approvals were communicated to him, which was essential for him to exercise his rights under Section 132(10) to object to the retention.

3. Interpretation of the provisions of Section 132(8), 132(10), and 132(12) of the Income-tax Act, 1961:

Mr. Banerjee argued that the scheme of Section 132(8) read with Sections 132(10) and 132(12) necessitated the communication of the reasons for retention and the Commissioner's approval to the affected person. This interpretation was supported by the Supreme Court's decision in Bachhittar Singh v. State of Punjab, which held that an order affecting a person's rights must be communicated to be effective. Additionally, the Calcutta High Court's decision in Nripendra Nath Mazumdar v. N. M. Bardhan reinforced the need for communication of orders affecting rights.

4. Validity of the retention order without communication to the petitioner:

The revenue's counsel, Mr. Dipak Sen, conceded that neither the reasons for retention nor the Commissioner's approval had been communicated to the petitioner. He argued that the approval of the Commissioner could be prior to the recording of reasons and did not require specific reasons. However, the court held that the valuable right to object under Section 132(10) necessitated communication of the Commissioner's approval. Without such communication, the retention order was not valid or effective.

The court concluded that the retention of the books and documents beyond 180 days was not validly made under Section 132(8) due to the lack of communication of the Commissioner's approval. Consequently, the petitioner's application succeeded, and the court issued a writ of mandamus directing the respondents to return all seized items to the petitioner. The respondents were allowed to proceed according to law, but no order as to costs was made.