1973 (11) TMI 3 - HC - Income Tax

By this petition under articles 226 and 227 of the Constitution of India, petitioner No. 1, and Shri Gopal Das, claiming to be a partner of petitioner No. 1 firm, challenge the validity of the proceedings under sub-sections (3) and (5) of section 132, and the order of the Income-tax Officer, under section 132(5) and pray for the issue of a writ of mandamus directing the respondents to restore to the petitioners the 114 silver bars retained by the Income-tax Officer by his said order dated June 5, 1972 - Whether the provisions that stipulate prior approval of Commissioner before the summary order under section 132(5) is passed are ultra vires

Issues Involved:
1. Validity of proceedings under sub-sections (3) and (5) of section 132 of the Income-tax Act, 1961.
2. Jurisdiction of the Income-tax Officer to pass the impugned order beyond the prescribed period.
3. Ownership of the 114 silver bars.
4. Alternative remedy under section 132(11) of the Income-tax Act.
5. Preliminary objections regarding maintainability of the writ petition.
6. Locus standi of the petitioners.

Detailed Analysis:

1. Validity of Proceedings under Sub-sections (3) and (5) of Section 132 of the Income-tax Act, 1961:
The petitioners challenged the validity of the proceedings and the order of the Income-tax Officer dated June 5, 1972, under section 132(5) of the Act. The court found that the provisions of section 132(5) were not ultra vires. The court stated that the requirement to obtain the previous approval of the Commissioner is meant as a safeguard against arbitrary orders and does not interfere with the judicial functions of the Income-tax Officer.

2. Jurisdiction of the Income-tax Officer to Pass the Impugned Order Beyond the Prescribed Period:
The court held that the Income-tax Officer did not have jurisdiction to pass the impugned order dated June 5, 1972, beyond the 90-day period prescribed under sub-section (5) of section 132 of the Act. The court noted that the order dated April 6, 1972, did not extend the period prescribed under sub-section (5) and could not confer jurisdiction upon the Income-tax Officer beyond the prescribed period. Therefore, the order was set aside on this ground alone.

3. Ownership of the 114 Silver Bars:
The petitioners claimed that the 114 silver bars were the property of the petitioner-firm and not of Shri Pooran Mal, the individual. The Income-tax Officer, however, held that the silver bars belonged to Shri Pooran Mal. The court refrained from expressing any opinion on the merits of the evidence regarding the ownership of the silver bars, as it could prejudicially affect either party in any future proceedings.

4. Alternative Remedy under Section 132(11) of the Income-tax Act:
The court acknowledged that the existence of an alternative remedy is not a bar to the exercise of powers under article 226 of the Constitution. The petitioners raised contentions that could not be decided by the income-tax authorities under the Act, such as the vires of sub-section (5) of section 132 and the jurisdiction to pass the impugned order beyond the prescribed period. Therefore, the writ petition was not dismissed on the ground of an alternative remedy.

5. Preliminary Objections Regarding Maintainability of the Writ Petition:
The respondents raised preliminary objections, including the existence of an effective alternative remedy, disputed questions of fact, and non-joinder of necessary parties. The court held that the writ petition could not be dismissed on these grounds. The court noted that the petitioners had raised legal questions that could not be decided by the income-tax authorities and that the writ petition was filed on behalf of all partners, including Shri Pooran Mal.

6. Locus Standi of the Petitioners:
The respondents contended that the petitioners had no locus standi to file the writ petition as they were no longer the owners of the silver bars on the date of the seizure. The court held that if the petitioners were found to be the owners of the silver bars, they would have locus standi to file the writ petition. Therefore, this objection was not treated as a preliminary objection.

Conclusion:
The court allowed the petition and quashed the order of the Income-tax Officer dated June 5, 1972. The 114 silver bars seized and retained by the respondents were ordered to be returned to the petitioners, subject to their retention under any other proceedings that the respondents may be competent to institute under the law. The court refrained from expressing any opinion on the merits of the evidence regarding the ownership of the silver bars. The petition was allowed without any order as to costs.

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