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TMI Blog1964 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 1960-61, 1961-62 and 1962-63 are pending before the Income-tax Officer, D-Ward, Meerut. The Commissioner of Income-tax, U.P., Lucknow, received reports to the effect that the firm has been evading payment of income-tax. He, therefore, decided to get the premises of the firm searched for obtaining documents which would be useful for assessment of income-tax. On May 29, 1963, letters of authorization were issued in favour of the Income-tax Officer, D-Ward, Meerut. Under that authority, the two Income-tax officers searched the premises of M/s. Seth Brothers (Shanti Niketan, Civil Lines, Meerut) on the 7th and the 8th of June, 1963. The two officers seized a large number of documents from these premises. The documents so recovered included documents belonging to M/s. Seth Brothers and also documents belonging to three other associated business concerns. Since then, these documents have been in the custody of the income-tax authorities. These connected writ petitions are directed against those proceedings dated the 7th and the 8th of June, 1963. According to the petitioners, the documents were unlawfully seized from their possession. Civil Miscellaneous Writ No. 3302 of 1963 is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified therein, where he has reason to believe that books of accounts or other documents which, in his opinion, will be relevant to or useful for any proceedings under the Act may be found. Such order may authorise the Income-tax Officer to do all or any of the following acts, namely : (a) to enter the said building or place with such assistance of police officers as may be required ; (b) to search the same and to place identification marks on such books of account or other documents found therein as, in his opinion, will be relevant to or useful for any proceedings under the Act and to make a list of such books or documents with particulars of the identification marks thereon ; (c) to examine such books or documents and to make, or cause to be made, copies of or extracts from such books or documents ; (d) to take possession of or seize any such books or documents ; (e) to make a note or an inventory of any articles or things found in the course of such search which, in his opinion, will be useful for or relevant to any proceedings under the Act ; (f) to convey such books or documents to the office of the Income-tax Officer or any other authority not below the rank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration thereof I have been led to believe...... " In this sentence the pronoun " I " clearly refers to the Commissioner. It, therefore, appears that the pronoun " he " in the phrase " where he has reason to believe " in the fourth line of sub-rule (2) of rule 112 has also reference to the Commissioner. The second sentence in sub-rule (2) of rule 112 is : " Such order may authorise the Income-tax Officer to do all or any of the following acts, namely : (a) ....... ; (b) to search the same and to place identification marks on such books of account or other documents found therein as, in his opinion, will be relevant to or useful for any proceedings under the Act and to make a list of such books......... " The expression " in his opinion " appearing in clause (b) has reference to the Income-tax Officer. The plan of section 132, rule 112 and Form No. 45 appears to be this. Initially, the Commissioner receives certain information which makes it expedient to organize a search. When the Commissioner has reason to believe that relevant documents can be recovered by arranging a raid, he authorises an Income-tax Officer to make a search. When he is so authorised, the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexures " D-1 " and " D-2 " to the writ petition are copies of letters of authorization issued by the Commissioner of Income-tax. In those letters it was stated that the two Income-tax Officers could seize documents which would be useful in the proceedings in the case of Seth Brothers. But the documents seized by respondents Nos. 3 and 4 not only cover documents belonging to Seth Brothers, but also documents belonging to three other business concerns which are the petitioners in the other three cases. For justifying the seizure of documents belonging to those other concerns, it was contended for the respondent that all the four business concerns are closely associated with one another. There are three brothers, Prithwinath, Vishwanath and Baikunth Nath. Prithwinath's son is Man Mohan Nath. These four persons or most of them figure as partners, shareholders or directors in all the four business concerns, It, therefore, became necessary to seize documents belonging to the other three business concerns also. It is true that the four business concerns are closely associated to one another. But the four concerns are being treated as four separate entities for income-tax purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raph 56 of the petition it is stated : " That it appears that the Deputy Director of Inspection... ordered a raid for search and seizure of all the account books and papers which could be found. " A number of counter-affidavits have been filed by the respondents. There is one counter-affidavit by Sri A. L. Jha, who was then the Commissioner of Income-tax. His counter-affidavit contains no reference to paragraph 56 of the writ petition. Another counter-affidavit has been filed by Sri Agarwal, respondent No. 4. This counter-affidavit is much more detailed. In paragraph 19 of this counter-affidavit it is stated that the deponent has no knowledge of the averments contained in paragraph 56 of the writ petition. Another counter-affidavit has been filed by Sri Mitra, who is the Income-tax Officer in charge of Special Investigation, Circle B, Meerut. This counter-affidavit contains no reference to paragraph 56 of the writ petition. A counter-affidavit has been filed by Sri Ramaswamy, who is the Deputy Director of Inspection (Investigation), New Delhi. In paragraph 6 of this counter-affidavit it is merely stated that paragraph 56 of the writ petition is vague. The deponent denied havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax gives details of the documents that were to be seized. All that was stated in these orders was that documents useful for proceedings under the Act in the case of Seth Brothers could be seized. According to sub-section (2) of section 132 of the Act, the provisions of the Code of Criminal Procedure, 1898, relating to searches shall apply, so far as may be, to searches under this section. It will, therefore, be useful to examine the provisions of the Code of Criminal Procedure (hereinafter referred to as the Code) relating to searches. Chapter VII of the Code deals with searches and allied matters. Under section 94, Criminal Procedure Code, a court may summon a document or thing. Section 96, Criminal Procedure Code, provides for the issue of a search warrant. Section 96, Criminal Procedure Code, states : " (1) Where any court has reason to believe that a person to whom a summons or order under section 94 ... has been or might be addressed will not or would not produce the document or thing ... it may issue a search warrant... " Section 98 Criminal Procedure Code, provides for search of a house. Section 98, Criminal Procedure Code, states : " If a District Magistrate . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 131 of the Act (or the corresponding provision under the old Act). Police officers accompained the Income-tax Officers during the raid. According to the counter-affidavit of Satyapal Tyagi, Sub-Inspector, the police party consisted of a Sub-Inspector, two head constables and nine constables. None of them belonged to armed police. They did not carry fire-arms during the search. Two constables were sent away after an hour. The other members of the police party withdrew at 5 p.m. on 7th June, 1963. No policeman was present during the search on 8th June, 1963. It will be seen that the police party accompanying the Income-tax Officers consisted of 12 officials in all. It may be that the strength of the police party was fixed by the Superintendent of Police, Meerut. But he must have consulted the Income-tax Officers in this matter. There is no indication that the partners of the firm were likely to resort to violence, or that any member was a previous convict. The strength of the police party appears excessive. The property examined by the Income-tax Officers included several ornaments. Inventories of these ornaments were prepared. It is true that the ornaments were not taken aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the department to be present to open the books for the purpose of scrutiny on 13th August, 1963, on which date it was proposed to open and arrange the books. " On this point, it is stated in paragraph 64 of the rejoinder affidavit No. 1 : " ....It is not correct to say that the petitioners put their seals on books or documents. The request for opening the books was made as late as in the middle of August only. " It may be that some of the documents seized by the respondents were sealed up by the petitioner. But the respondents have not suggested that all the documents were thus sealed up by the petitioner. Admittedly, several documents were available for inspection and scrutiny. It was not till 13th August, 1963, that the petitioner was called upon to open up the books. The documents seized from the petitioner included several current books of account. Detention of these books of account for over two months must have seriously prejudiced the various petitioners in their business activities. A similar case came up before a Full Bench of the Assam High Court in Senairam Doongarmal Agency (P.) Ltd. v. K. E. Johnson. The court unanimously held that the search was mala fide. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Besides documents belonging to Seth Brothers (G. I. R. No. 137-S), the Income-tax Officers seized documents belonging to another firm and two companies. (e) Marks of identification were not put on several documents. (f) The documents seized on 7th and 8th of June, 1963, were detained by the respondents for more than two months before the writ petitions were filed in this court. (g) The police force employed during the raid was excessive. In view of all these circumstances, the search does not appear to be bona fide. It is true that there was no illwill between the four petitioners on one side and respondents Nos. 1, 3 and 4 on the other side. But the extent of the seizure was far beyond the limits of section 132 of the Act. The action was mala fide in the sense that there was abuse of power conferred on the Income-tax Officers by section 132 of the Act. The Act being mala fide, the proceedings should be quashed by this court by issuing a writ of mandamus. The letters of authorization dated 29th May, 1963, were issued by Sri A.L. Jha, who was then the Commissioner of Income-tax, U. P. He died in December last. It will be open to the new Income-tax Commissioner to init ..... X X X X Extracts X X X X X X X X Extracts X X X X
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