1971 (11) TMI 44 - HC - Income Tax

Retention of seized documents for more than 180 days - petition under articles 226 and 227 of the Constitution of India for the issuance of a writ in the nature of mandamus requiring the respondents to return the books seized - respondents is directed to return the account books and documents seized from the premises of the petitioners between the dates 7th June, 1963, to 11th June, 1963, within two months from today - Petition allowed

Issues Involved:
1. Retrospective application of sub-section (8) of section 132 of the Income-tax (Amendment) Act, 1965.
2. Legality of the retention of seized account books beyond 180 days without recording reasons and obtaining approval.
3. Validity of an alleged agreement precluding the petitioners from filing the writ petition.

Issue-wise Detailed Analysis:

1. Retrospective Application of Sub-section (8) of Section 132 of the Income-tax (Amendment) Act, 1965:
The primary issue was whether the provisions of sub-section (8) of section 132 of the Income-tax (Amendment) Act, 1965, were retrospective in effect. The petitioners contended that these provisions were indeed retrospective, necessitating the recording of reasons in writing and obtaining the approval of the Commissioner for retaining seized books beyond 180 days. The court analyzed section 6 of the Income-tax (Amendment) Act, 1965, which states that any search made under section 132(1) of the principal Act before the commencement of the Amendment Act shall be deemed to have been made in accordance with the amended provisions. The court emphasized that the language of section 6 is clear and unambiguous, indicating that searches made under the principal Act are to be treated as if they were made under the amended Act. The court concluded that the provisions of sub-section (8) of section 132 are applicable to searches carried out under the principal Act, supporting the petitioners' contention.

2. Legality of the Retention of Seized Account Books Beyond 180 Days Without Recording Reasons and Obtaining Approval:
The court examined the legality of retaining the seized account books beyond the prescribed period of 180 days without recording reasons and obtaining the Commissioner's approval. Initially, under section 132(1) of the principal Act, there was no time limit for retaining seized documents. However, the Finance Act, 1964, introduced sub-section (2) to section 132, imposing a 180-day limit for retaining seized documents unless reasons were recorded and approval was obtained. This provision was further detailed in the Income-tax (Amendment) Act, 1965. The court noted that the Income-tax Officer could not retain the books without complying with these requirements. The court found that the respondents failed to adhere to these statutory obligations, rendering their actions illegal.

3. Validity of an Alleged Agreement Precluding the Petitioners from Filing the Writ Petition:
The respondents argued that the petitioners were barred from filing the writ petition due to an alleged agreement to withdraw all pending writ petitions before various High Courts by 30th March, 1965, and not to file fresh petitions. The court rejected this contention, noting that the respondents did not provide any material evidence to substantiate the existence or terms of such an agreement. Furthermore, the court held that any agreement precluding a party from asserting their legal rights would be ineffective. The court emphasized that income-tax authorities are expected to act in accordance with the law and should not rely on such pleas to justify illegal actions.

Conclusion:
The court allowed the petition, directing the respondents to return the account books and documents seized from the petitioners' premises between 7th June, 1963, and 11th June, 1963, within two months. The court made no order as to costs, emphasizing the illegality of the respondents' actions and the retrospective application of the relevant statutory provisions.

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