9911796707
TMI Blog2015 (7) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 by the respondents and for release of seized documents. 2. Counsel appearing for the petitioner submitted that the grossest illegality has been committed by the respondents in carrying out search and seizure under Section 132 of the Act, 1961 and also in issuing summons under Section 131(1A). It is submitted by the counsel for the petitioner that the notice given under Section 131(1A) is subsequent to the search and seizure carried out under Section 132 of the Act, 1961. This is not permissible in the eye of law. Moreover, the satisfaction which ought to be arrived at under Section 131(1A) and under Section 132(1) is not reduced in writing nor looking to the counter affidavit it appears that the respondents had any material on record which has supplied the Income Tax Authorities a reason to believe to carry out search and seizure. In absence of any such material on record, the Income Tax Authorities was not having a reason to believe to give any command to carry out search and seizure and therefore, search and seizure carried out by the respondents from 31st October, 2009 to 4th November, 2009 is absolutely illegal and in contravention of Section 132 of the Act, 1961. 3. Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Income Tax (Investigation) that there is a reason to believe for search and seizure to be carried out. This paragraph no. 19 has not been denied in the rejoinder affidavit filed by the petitioner even otherwise also, it is submitted by the counsel for the respondents that this procedure Income Tax Authorities is following for every search and seizure and therefore, there is no illegality committed by the respondents in carrying out search and seizure of the premises of the petitioner during the period 31st October, 2009 to 4th November, 2009. 5. It is further submitted by the counsel for the respondents that the writ petition has been preferred on 25th June, 2012 i.e. after several months from the date on which the raid was carried out. Thus, this writ petition is nothing, but, an afterthought and with some ulterior motive this writ petition has been preferred which may not be entertained by this Court and may be dismissed with a heavy cost. 6. Counsel for the respondents further submitted that this petitioner has approached the Settlement Commissioner also on 16th July, 2012 and has declared huge income. Such declaration made by the petitioner before the Settlement Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to believe to carry out search and seizure and hence, this writ petition may not be entertained by this Court. Reasons: 9. Having heard counsels for both the sides and looking to the facts and circumstances of the case, we see no reason to entertain this writ petition mainly for the following facts and reasons: (i) This petitioner has close connection with Ex. Chief Minister of the State. These facts have been stated in para9 of the counter affidavit filed by the respondent nos. 1 to 4. (ii) There was ample materials with the Income Tax Authorities that this petitioner has not disclosed huge income. On the basis of information with the Income Tax Authorities they found need of carrying out search and seizure at the premises of the petitioner. Before issuance of warrant of authorization by the Director of Income Tax to carry out search and seizure under Section 132 of the Act, in detail the procedure prescribed under Section 132 of the Act has been followed. Paragraph 19 of the counter affidavit filed by the Additional Director of Income Tax (Investigation) on behalf of the respondent nos. 1 to 4 reads as under: "19. That it is stated that in the instant case the competent ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in clause (a) of subsection( 15) of section 144C shall, for the purpose of this Act, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions. (1-A) If the Director General or Director or Joint Director or Assistant Director or Deputy Director, or the authorised officer referred to in Subsection (1) of Section 132 before he takes action under clauses (i) to (v) of that subsection, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons within his jurisdiction, then, for the purposes of making any inquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under subsection (1) on the Income-tax authorities referred to in that subsection, notwithstanding that no proceedings with respect to such person or class of persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property [which has not been, or would not be, disclosed for the purposes of the Indian Income-Tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then- (A) the Director General or Director or the Chief Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interests of the revenue: Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business. Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so. (1A) Where any Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of any person under this subsection may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document, stamped, executed or attested, that it was duly stamped and executed or attested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. [* * *] [* * *] [* * *] (13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under subsection (1) or subsection (1A). (14) The Board may make rules in relation to any search or seizure under this section in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer- (i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.-For the purposes of subsection (9A), "execution of an authorisation for search"shall have the same meaning as assigned to it in Explanation 2 to Section 158BE. Explanation 2.-In this sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Authorities, perhaps, this Court will consume lots of time to understand the purpose of carrying out search and seizure and the very purpose of raid will be frustrated. This Court has no expertise knowledge of Cost Accountant and Charter Accountant or of Economist. There are varieties of methods of concealment of Income Tax. The Income Tax Department has to find out, evasion of income tax, if need arises, by carrying out raids at the premises of tax evader, on the basis of the documents on record, after formulating necessary opinion which is known in the eye of law either "satisfaction"or "reason to believe". This Court cannot check the weightage of those documents which have been relied upon by the Income Tax Authorities, before carrying out, search and seizure and therefore, the arguments canvassed by the counsel for the petitioner that this Court must look at the materials and should find out that whether the materials are sufficient or not to formulate an opinion to carry out search and seizure, this absurd proposition therefore, is not acceptable by this Court. (v) It has been argued out by the counsel for the petitioner that summons issued under sub Section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax authority." (c) The sub section was amended most notably by the Finance Act, 1988 w.e.f 01061988 to include other officers/class of officers. Section 131(1A) as it stands today specifies six different I.T. Authorities who can exercise action under Section 131. Five of these authorities namely the Director General of Income Tax (DGIT), the Director of Income Tax (DIT), the Joint Director of Income Tax (JDIT), the Additional Director of Income Tax (ADIT) and the Deputy Director of Income Tax (DDIT) are officers in varying hierarchy of the Investigation Wing. The other class of officer is the"Authorised Officer" under Section 132(1) of the Act. The powers under Section 131(1A) can be exercised by any officer whose name is mentioned in the warrant of authorisation before action under Section 132 is taken. It is due to this power that the preliminary statement under Section 131 is recorded during the course of search. The clause "before he takes action under clauses (i) to (v) of section 132(1)"has a very limited application. (d) Circular 551 dated 23011990 explains the introduction of this particular clause in sub section (1A) of section 131 which is as follows: "........ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first and the second commas (,) of section 131(1A). This interpretation has been judicially affirmed by the High Court of Madhya Pradesh in Classic Builders & Developers v. Union of India [2001] 251 ITR 492 (MP). (g) Section 132(4) authorises the "Authorised Officer"to examine on oath any person who is found to be in possession or control of any books of account, documents or any valuable articles. It did not empower the recording of the statement of a person who had not yet been found to be in possession of documents or valuable articles. The preliminary statements of the occupants of the premises or of any person, before the commencement of search, could not be recorded under Section 132(4) of the Act. It was to get over this handicap that the "Authorised Officers"were empowered to issue summons prior to the commencement of search and seizure action by the Finance Act, 1988, which has been explained by Circular-551 dated 23-01-1990. (h) Form-45 of the Income-tax Rules, 1962 which specifies the format of warrant, is of particular relevance. The form mentions the instances of the issue of summons. The summons is required to be issued by three classes of Assessing Officers vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified authorities are not hindered by the conduct of search. It can be invoked both before and after the conduct of the search. (k) The above view has been taken by Hon'ble the Gujarat High Court in the case of Arti Gases Vs Director of Income-tax [2001] 248 ITR 55[Guj]. The Court in this case has examined the Circular No551 dated 23011990 at para16 of the judgment and has concluded that the issue of notice under Section 131(1A) of the Act prior to or subsequent to the search is perfectly legal. This view has been further affirmed by a subsequent judgment of the Gujarat High Court in the case ofNeesa Leisure Limited & ANR v Union of India (2011) 245 CTR (Guj) 634. (l) In Mamchand & Co. Vs CIT [1968] 69 ITR 631 [Cal], the High Court has held that section 132 is a comprehensive code in itself. The operative part of the judgment is reproduced as under: "The next contention of the learned Advocate General was that it was argued on behalf of the petitioners that fulfillment of the conditions in section 131 of the Act was a condition precedent to the issue of a warrant of authorisation under section 132 of the Act. In other words, the learned Advocate General submitted, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the search and seizure is carried out. (n) In the facts of the present case also the search and seizure was carried out during 31st October, 2009 to 4th November, 2009. Lot of documents were seized. Analysis whereof took some time due to paucity of staff. Like other departments, Income Tax Department has lot of vacancies. After some time, summon was issued by the Assistant Director of Income Tax under sub Section (1) of Section 131 dated 4th May, 2010. This provides an opportunity to explain source of income or to go before the Settlement Commission under Section 245C. In view of the aforesaid reasons, the summons issued by the Assistant Director of Income Tax dated 04.05.2010 (Annexure3 to the memo of this writ petition) is absolutely legal and it can also be issued even after the search and seizure is carried out. The aforesaid summons issued by the Assistant Director of Income Tax (Investigation), Ranchi is for enforcing the attendance which is permissible under Section 131 (1)(b) of the Act, 1961. (vi) Moreover, this writ petitioner has also preferred application before the Settlement Commission on 16th July, 2012 under Section 245C of the Act, 1961. Thereafter, the Settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the learned advocates. We have also perused Circular No.551, dated January 23, 1990, referred to by the learned advocate, Shri Puj. Upon considering the rival submissions, we are of the view that the notices under Section 131(1A) can also be issued after completion of the search undertaken under the provisions of Section 132 of the Act. In our opinion, it would be absolutely logical to call for information so as to have better particulars or to have a complete idea about the material seized during the search. If some material is. seized at the time of the search and the authorised officer wants to have some details so as to understand the nature of the documents, he may issue notice under Section 131(1A) of the Act. In our opinion, in a given case such a notice cannot only help the Department but can also help the assessee. If the assessee is in a position to give more explanation so as to satisfy the authorised officer that the documents seized by him do not reveal any undisclosed income, but the income or transactions referred to in the documents had been duly shown by him in his books of account or if the assessee gives any information to the effect that the first i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue by the decision of this High Court in the case of Arti Gases v. Director of IT (Inv.) (supra), wherein the Court has held thus: "In our opinion, it would be absolutely logical to call for information so as to have better particulars or to have a complete idea about the material seized during the search. If some material is seized at the time of the search and the authorised officer wants to have some details so as to understand the nature of the documents, he may issue notice under s. 131(1A) of the Act. In our opinion, in a given case such a notice cannot only help the Department but can also help the assessee. If the assessee is in a position to give more explanation so as to satisfy the authorised officer that the documents seized by him do not reveal any undisclosed income, but the income or transactions referred to in the documents had been duly shown by him in his books of account or if the assessee gives any information to the effect that the first impression of the authorised officer with regard to the nature of the documents was not correct, we are sure that such a notice would help the assessee himself. If the assessee is called upon to give some information or t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
