1974 (1) TMI 2 - HC - Income Tax

Contention of the petitioner that the sealing of the contents of the lockers and the issuance of the restraint order under section 132(3) on the bank by the authorised officer amounted to seizure of the contents of the lockers for reasons aforesaid being not sustainable this writ petition fails and is dismissed

Issues Involved:
1. Legality of the seizure of assets from the petitioner's lockers.
2. Compliance with the procedural requirements under Section 132 of the Income-tax Act, 1961.
3. Entitlement of the petitioner to the release of the assets due to non-compliance with the prescribed period for making an order under Section 132(5).

Detailed Analysis:

1. Legality of the Seizure of Assets from the Petitioner's Lockers
The petitioner contended that the contents of the two lockers were seized by the authorized officer, but the Income-tax Officer failed to make an order within the prescribed period of ninety days, thereby entitling her to a writ of mandamus for the release of the assets. The respondents argued that the contents of the lockers were not seized but merely sealed under Section 132(3) for ensuring safe custody pending enquiry. The court held that the actions taken by the authorized officer, such as sealing the lockers and issuing restraint orders, did not amount to seizure. The court emphasized that seizure under Section 132(1)(iii) involves the dispossession of the person from whom the seizure is made and its assumption by the authorized officer, which did not occur in this case.

2. Compliance with the Procedural Requirements under Section 132 of the Income-tax Act, 1961
The petitioner argued that the authorized officer took over the keys of the lockers, opened them, and prepared inventories of their contents, which amounted to seizure. However, the court clarified that the mere taking over of the keys and the preparation of inventories did not constitute dispossession or seizure. The court referred to the provisions of Section 132 and the Income-tax Rules, 1962, which indicate that seizure is effected when the authorized officer takes possession of the seized articles to enable the revenue to appropriate them towards the payment of dues. The court also cited judicial interpretations of the term "seizure," emphasizing that it involves a forcible taking possession or legal possession, which was not the case here.

3. Entitlement of the Petitioner to the Release of the Assets Due to Non-Compliance with the Prescribed Period for Making an Order under Section 132(5)
The petitioner claimed entitlement to the release of the assets because the Income-tax Officer did not make an order within ninety days of the alleged seizure. The court rejected this contention, stating that since there was no seizure but only a restraint order under Section 132(3), the limitation of ninety days prescribed under Section 132(5) did not apply. The court noted that the actions of the authorized officer were covered by Section 132(3), which allows for steps necessary to ensure compliance with the sub-section, and did not amount to a seizure.

Additional Observations and Directions:
The court observed that the petitioner had not challenged the legality of the actions taken by the authorized officer or attributed any mala fides to him. The court also noted that the authorized officer does not have an unfettered discretion to indefinitely keep goods under seal. Given that the petitioner's daughter had returned to India and been examined by the department, and an affidavit from Shri Dua had been filed, the court directed that steps be taken within two weeks to decide if the contents of the lockers should be seized and to proceed according to law if necessary.

Conclusion:
The court dismissed the writ petition, holding that the sealing of the lockers and the issuance of restraint orders did not amount to seizure, and therefore, the petitioner was not entitled to the release of the assets based on the ninety-day limitation. The court directed the authorities to decide on the seizure of the locker contents within two weeks and proceed according to law. The parties were directed to bear their own costs.

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