Procedure for retention of seized books of accounts beyond 180 days. - Income Tax - 1554/CBDT

INSTRUCTION NO. 1554/CBDT Dated: February 20, 1984 The Board had issued instructions on the subject of approval of the Commissioner of Income Tax for the continued retention of books of accounts beyond 180 days from time to time. The question came up before their lordships of the Supreme Court in the case of Commissioner of Income Tax vs. Oriental Rubber Works and the judgement dated 15.11.1983 has been reported in (1983) 15 Taxman 51 (SC). Their lordships held that though section 132(8) of the Income Tax Act, 1961 does not in terms provide that the Commissioner's approval or the recorded reasons on which it might be based should be communicated to the concerned person, since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him if kept ignorant about the factum of fulfilment of both the conditions, it is obligatory upon the revenue to communicate the Commissioner's approval and also the reasons recorded by the Commissioner to the person concerned. Though the court did not fix any time limit for such communication it observed that communication must be as expeditious as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communication, according to the court, any further retention of the seized books or documents would become invalid and unlawful. 2. In the circumstances, it is necessary that the scrutiny of the seized accounts and documents by the assessing officer must be completed as early as possible so that there is no need to keep the books and documents which are not necessary for the purposes of assessments/prosecutions. For every approval of the Commissioner, the procedure laid down by the Supreme Court will have to be followed. Where it is necessary to keep certain books/documents the officer seeking approval for further retention should record cogent and convincing reasons in good time and ahead of the expiry of the previously approved period of retention. The Commissioner of Income Tax has also to apply his mind and record detailed and convincing reasons while approving the continued retention. The approval granted should be communicated to the authorised officer/Income tax Officer before the expiry of the period of 180 days or the previously approved retention period as the case may be. In turn the authorised officer/Income-Tax Officer concerned should communicate the factum of approval as well as the reasons recorded by the Commissioner of Income Tax to the assessee without any loss of time and in any case not later than 30 days after the expiry of the said period of 180 days or the previously approved retention period. 3. In cases where the approval has already been granted for retention of the documents, the above procedure should be followed for communicating the reasons etc. to the assessees immediately. These instructions may be brought to the notice of all the officers working in your charge.