9911796707
TMI Blog1969 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 days. On September 21, 1964, a number of Income-tax Officers raided the petitioner's residence and premises where the various industries are carried on. These officers searched for documents and goods kept at these places. The search was continued on September 22, 1964. The Income-tax Officers carried away with them documents found by them at these places. These officers also prepared inventories of ornaments and other goods kept at these places. The documents seized in September, 1964, remained with the income-tax authorities till May, 1966, when the writ petition was filed. According to the petitioner, the search and seizure are illegal. He has, therefore, requested that these proceedings be quashed, and the opposite parties be directed to return to the petitioner the books and registers seized. Search and seizure are admitted by the opposite parties. They conceded that they carried away a large number of documents from the petitioner's house and business premises. It is maintained that the search and seizure are legal. The main contention of Mr. S. C. Khare appearing for the petitioner is that the search and seizure were indiscriminate, and are not warranted by the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Assistant Director of Inspection or Income-fax Officer (hereinafter referred to as the authorised officer) to- (i) enter and search any building or place where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable 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 ; (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. (2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) and it shall be the duty of every such officer to comply with such requisition. (3) The authorised o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized : Provided further that where a person has paid or made satisfactory arrangements for payment of all the amount referred to in clauses (ii) and (iii) or any part thereof, the Income-tax Officer may, with the previous approval of the Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. (6) The assets retained under sub-section (5) may be dealt with in accordance with the provisions of section 132A. (7) If the Income-tax Officer is satisfied that the seized assets or any part thereof were held by such person for or on behalf of any other person, the Income-tax Officer may proceed under sub-section (5) against such other person and all the provisions of this section shall apply accordingly. (8) The books of account or other documents seized under sub-section (1) shall not be retained by the authorised officer for a period exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or place 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.--In computing the period of ninety days for the purposes of sub-section (5), any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. Explanation 2.--In this section, the word 'proceeding' means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may have commenced after such date in respect of any year." It will be seen that section 132 of the Act refers back to section 131 of the Act. It is, therefore, necessary to examine the provision of section 131 of the Act. Section 131 deals with power regarding discovery, production of evidence, etc. Sub-section (1) of section 131 states : " The Income-tax Officer....shall, for the purposes of this Act, have the same powers as are vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such documents as, in his opinion, would be useful for any proceedings under the Act. At different stages in the proceedings the Commissioner and the Income-tax Officer have to apply their mind to the question of relevancy of documents for purposes of proceedings under the Act. Sri K. P. Bhatnagar was the Income-tax Officer, A-Ward, Lucknow, in September, 1964. He has filed a counter-affidavit. In paragraph 18 of the counter-affidavit he explained why it was considered expedient to organise a search and seizure : ".......the deponent during the course of the assessment of the petitioner discovered that the petitioner had shown a large accumulation of capital which was apparently disproportionate to his disclosed income. The deponent, in order to verify the correctness of the figures given by him, asked the petitioner to produce his books of account maintained during the lifetime of his father the existence of which he denied. The deponent was of the opinion that his denial was incorrect and that the books were being intentionally withheld by him. The deponent accordingly submitted a report to the Commissioner of Income-tax and the Commissioner of Income-tax having been satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessments have not been properly made for the past years and it would not be possible to make a correct assessment for the assessment year 1964-65 also on the basis of evidence on records, specially because the assessee has not produced the old books and complete records in the past. I.T.O. has already made certain enquiries which indicate that the real books of accounts and undisclosed cash and valuable articles which are wholly disproportionate to his known sources of income are kept by the assessee at his residence and business premises and lockers of his proprietary concerns and firms of which he is a partner. I, therefore, consider that in order to get the records and information about cash and valuable articles, for making correct assessments, it is necessary to carry out a search of the assessee's residential house and business premises referred to above and seize books of accounts. Issue authorisation letters to the I.T.O.s as per forms placed below." Rule 112 of the Income-tax Rules, 1962, deals with search and seizure. Sub-rule (2) of rule 112 states : " The Director of Inspection or the Commissioner may, for reasons recorded, issue a written order under his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed on May 3, 1966. The opposite parties retained the documents seized by them for a period of 19 months before the writ petition was filed. Retention of documents for a long time has no direct bearing on the legality of the search. But the fact that the opposite parties found it necessary to retain the documents for 19 months suggests that the opposite parties were dealing with a mixture of documents, some of which were relevant for assessment proceedings and others were irrelevant. Mr. Gopal Behari, appearing for the department, informed us that as a result of the raid of September, 1964, the opposite parties seized 349 books or registers. The authorities also seized a trunk containing thousands of promissory notes. We were told that several promissory notes were undated and blank except that they bore the debtors' signature or thumb-impression. In paragraph 30 of the writ petition it is stated : " That the very fact that all and every document or paper was indiscriminately seized, bundled up and taken away clearly established that at no time was any consideration made as to the relevance of the documents." On this point Sri Bhatnagar stated in paragraph 22 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tika file containing plaint. One of the documents mentioned in annexure 11 is attendance register for three months in 1964. Item No. 4 of annexure 11E is correspondence with Post Master regarding delivery of letter. Item No. 16 of annexure 12C is insurance policy for Fiat motor car. Item No. 19 of annexure 13B is dak despatch register. Item No. 26 of the same annexure is a pending file relating to water for injection. Item No. 27 of the same annexure is the file of approved hospital rates. It is difficult to see how these documents were relevant for assessment purposes. Item No. 6 of annexure 11B is a file of income-tax clearance certificates. Annexure 11C mentions the recovery of appellate order of the Assistant Commissioner (Judicial). There are also two more documents described as appellate orders. Item No. 1 of annexure A is a notice of demand under section 135 of the District Boards Act. Item No. 34 of annexure 12A is a letter of probate from the civil judge, Mobanlal Ganj at Lucknow. These are all public documents. Income-tax Officers could easily obtain copies of these public documents from the authorities concerned. The petitioner was not likely to refuse to produce these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch was not bona fide. In the present case the petitioner has established the following points : (1) Sri Bhatnagar was apparently interested in investigating transactions prior to 1953. On September 14, 1964, the petitioner was directed to furnish statements relating to four years ending on March 31, 1960. Yet, the Commissioner of Income-tax issued letters of authorisation permitting Income-tax Officers to seize documents relevant to nine assessment years. (2) By the notice dated September 14, 1964, the petitioner was required to furnish certain statements up to September 24, 1964. The raid was ordered and organised before the expiry of the period of the notice. (3) More than 300 books and registers were seized during the raid. Opposite parties also carried away thousands of promissory notes. Several promissory notes were practically blank. Some of the documents seized appear to be irrelevant for assessment purposes. Some of the papers were public documents. (4) There is reason to believe that all or almost all the documents found on the premises were seized and carried away by the opposite parties. (5) Marks of identification were not placed on the documents in spite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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