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TMI Blog1986 (7) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Department dated May 10, 1972, passed under section 132 of the Income-tax Act, 1961 (hereinafter called the Act ), and rule 112(11) of the Income-tax Rules, 1962 (hereinafter called the Rules ) was challenged. The Division Bench, by the impugned judgment, allowed the petition, quashed the search and seizure warrants and directed the Income-tax Department to return the moneys to the Customs authorities and gave certain consequential directions. In order to appreciate the points involved, it is necessary to refer to certain facts as found by the High Court. On August 23, 1970, the petitioner before the High Court, who is the respondent here, was travelling by car, alleged to belong to his brother from Ambala to Batala. He was intercepted near the Beas river by the Customs Officer and was forcibly taken along with the driver, Gurnam Singh, to the Customs House at Amritsar. The said petitioner in that application was searched along with his driver and the Customs authorities took into possession ₹ 93,500 in Indian currency, 10 gold sovereigns and the car. On August 24, 1970, the petitioner was produced before a Duty Magistrate at Amritsar and was granted ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notes and account books from the police officer who is duty bound to proceed with the case property in accordance with the provisions of the Code of Criminal Procedure. The High Court held that where the amount was seized by the Customs authorities and the seizure was held illegal by the court, the Customs authorities were bound to return the money to the person entitled to it under the relevant provisions of section 110 of the Customs Act, 1962. The Income-tax authorities could not seize such an amount from the Customs authorities under section 132 of the Act. Moreover, the authorisation was illegal if issued in the name of the person who did not have possession of the article, in respect of which it was issued. The High Court further held that in the facts and circumstances of the case, the order under section 132 of the Act was not justified. Therefore, the High Court held that the search and seizure warrants were liable to be quashed and the money returned to the Customs Department. The judgment of the High Court is reported as Tarsem Kumar v. CIT [1974] 94 ITR 567. The validity of the judgment is impugned in this appeal. It is necessary in order to appreciate the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luable article or thing are kept ; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (ii-a) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search ; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom ; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing; The only other sub-section to which reference need be made is subsection (3) which is as follows : The authorised officer may, where it is not practicable to seize any such books of account, other document, money, bullion, jewellery or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, of the Income-tax Act, 1961. In this connection, reference may be made to Burrows' Words Phrases judicial Dictionary, 4th edn., page 306. All these aspects were discussed by the Calcutta High Court (by one of us, Sabyasachi Mukharji J. singly) in Laxmipat Choraria v. K. K. Ganguli [1971] 82 ITR 306 (Cal). This decision was affirmed on appeal and the Bench decision of the said court is reported in [1974] 93 ITR 489. This aspect of the matter has been clearly dealt with by judgment of the Division Bench of the Allahabad High Court in Motilal v. Preventive Intelligence Officer, Central Excise and Customs [1971] 80 ITR 418, where the judgment was delivered by one of us (R. S. Pathak J.). There the court held that the power conferred under section 132(1) of the Act was contemplated in relation to those cases where the precise location of the article or thing was not known to the Income-tax Department and, therefore, a search was necessary for it, and where it would not be ordinarily yielded over by the person having possession of it. The view that section 132(3) of the Act would include a case where the location of the article or thing was known and where ordinarily the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 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 disclosed for the purposes of the Act or the Income-tax Act of 1922. It is the character of money or assets as undisclosed income or property and their possession that gives jurisdiction to issue the authorisation. Merely because some authority has seized that money or property, its character which is believed to be that of undisclosed income or property does not change. The seizure of the cash amount of ₹ 3,05,530 by the Central Excise Authorities in the instant case no doubt transferred physical possession of that amount from the petitioner to the Central Excise Department, but the legal ownership of that money still continued to be with the petitioner. As long as that amount was not confiscated or did not become the property of the Central Excise Department by virtue of an order passed under the relevant provision of law, if at all any order could be so passed, the property or the money did not cease to be that of the petitioner. Though the Collector of Central Excise and Customs was in possession of the money, since it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 ITR 480, where the Division Bench of the Madhya Pradesh High Court was of the view that an order under section 132(3) could only be passed after an authorisation for search and seizure had been made under section 132(1) of the Act. The thing in respect of which the order is made must be one regarding which the conditions mentioned in clauses (a), (b) and (c) of section 132 are satisfied. Bat there was nothing in the requirements of section 132 to support the view that if the Commissioner has definite knowledge that the books of account, documents, money, bullion, etc., sought to be searched and seized are in the possession of a particular person, he cannot issue an authorisation for search and seizure of the same. In our opinion, it may be mentioned that if the location was certain, then there was nothing to search or look for. The Madhya Pradesh High Court, however, observed that the expression has reason to believe signified that the Commissioner has reason to be satisfied that the things to be searched are in the possession of a particular person. The object of section 132 was, according to the High Court, not merely to get information of the undisclosed income but also to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited period. It could be held that the currency notes were held by the Collector for and on behalf of the firm and the order passed under section 132 was valid. For the reasons mentioned hereinbefore, we are unable to sustain that view of the High Court. As mentioned before, though legal title might have been with the person whose income was sought to be taxed, the physical possession was with the Customs authorities. Our attention was drawn to a Bench decision of the Madras High Court where similar view was taken in Gulab and Co. v. Superintendent of Central Excise (Preventive) [1975] 98 ITR 581. For the reasons we have indicated hereinbefore, we are also unable to sustain this view. The Kerala High Court in the case of Assainar v. ITO [1975] 101 ITR 854 has also accepted this view. We are, for the aforesaid reasons, unable to sustain this view with respect. The High Court observed that the word search has varied meanings and it should be given the general meanings to look for or seek which are also well known. But, in the context, the expression seizure and in the context, the expression search where the location of the property was known to the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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