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TMI Blog2005 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... n the search warrant and notice, the name of the petitioner was not there. One Sashi Kumar Modi and K.R. International Pvt. Ltd., were the noticees and/or the persons concerned in the search warrant. After completion of the search and seizure of documents and the books of accounts, the writ petition was filed. The petitioner meanwhile also explained and further objected to this action of search and seizure, as there was no search warrant in the name of the petitioner, but in the name of the company in which he was a director. It was explained that the petitioner ceased to be a director of the aforesaid private limited company and further by a family arrangement the premises in question were allotted to the petitioner as owner thereof and the same no longer belonged to either Sashi Kumar Modi or the said private limited company. In spite of this objection, the books of account and other documents were retained and, in fact, extension of such retention period was granted, purporting to be with the approval of the appropriate officials. Such retention of the books of account beyond the statutory period is without any authority of law as no notice of extension was given to the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear distinction in the intent and purport between the aforesaid two sections. The proceedings under section 158BC are intended to be proceeded with against the person or persons who have been searched or whose building or residence have been searched meaning thereby the noticee in the notice of warrant, whereas section 158BD is contemplated against the person other than the person mentioned in the aforesaid section 158BC, meaning thereby section 158BD can be proceeded against the person who has not been searched nor has been intended to be searched. According to him, therefore, when the Revenue started proceedings against the petitioner initially under section 158BC and further decided to drop then without any reservation for any reason, it must be presumed that the petitioner was intended to be proceeded against under section 158BC treating him to be the noticee of the search warrant. Subsequent notice under section 158BD relates to the same search and seizure exercise and the same is absolutely invalid and illegal and this must be set aside and quashed. On the question of retention of the books of account, he contends drawing my attention to section 132(8) and (9A) of the said A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its further that in view of the interim order passed by this court the proceedings could not be completed. Therefore, the books of account were necessitated to be retained by the Department and this authorisation has been granted by the Commissioner till December 31, 2002, as it will appear from the annexure to the interlocutory application. His next contention is that even if search and seizure is assessed to be illegal and bad, the matter or the evidence collected therefrom can be utilised for any proceedings under the law. Therefore, this evidence and materials arising out of the search and seizure can be utilised or may be made useful in the proceedings under section 158BD. In support of his submission he has relied on the decisions of the Supreme Court, reported in Pooran Mal v. Director of Inspection (Investigation) [1974] 93 ITR 505 and Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166. He submits that when it was detected that the initial notice under section 158BC was issued against Sanjay Kumar Modi wrongly and erroneously, subsequent notice was issued immediately after withdrawal of the first notice. He submits this confusion arose because of the abbreviat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue under section 158BD against the petitioner is relatable to the original action, which is under challenge in the writ petition. It has now become an elementary principle of law that the subsequent development having nexus to the original cause of action can be brought in the parent proceeding to cut short the litigation and for the ends of justice. The basic object of the justice delivery system is to put an end to the controversy between the parties as early as possible and comprehensively, even taking note of the subsequent development, particularly when the subsequent development has nexus or having origin to the fundamental controversy involved in the petition. Upon a plain reading of Chapter XIV-B of the said Act it will appear that the procedure for block assessment started with search and seizure initially claimed to be valid by the Revenue and it is the basis to initiate proceedings under the aforesaid Chapter under sections 158BC and 158BD. By necessary implication it appears from said section that valid and lawful search and seizure is a condition precedent for holding a proceeding under section 158BD of the said Act also. As such I hold that the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book is always amenable for the inspection of the members of the public. Therefore, I hold that in the absence of any registered document the transaction, inter se, of members of the joint family property is neither binding nor can be recognised by a third party. The Revenue perhaps having found in the records of the Municipal records that the said property still belonged to the members of the joint family including the writ petitioner, has issued the search warrant and executed panchanama. It is an admitted position that the order of authorisation of the search of the said building was not in the name of Sanjay Modi being the writ petitioner herein, it was done in the name of Sashi Modi being the brother of the writ petitioner, K.R. Modi, and the family private limited company, namely, K.R. International Pvt. Ltd. On the date of the search and seizure K.R. Modi was dead obviously the search cannot be carried out against a dead person but search in the name of Sashi Modi was valid and lawful. Sashi has not come forward to challenge the search and seizure, nor has the company, K.R. International Private Limited challenged it. In his representation the writ petitioner did not raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Income-tax Officer." It appears from the affidavit that while making search and seizure in the said premises the books of account belonging the writ petitioner could be identified and these books of document were handed over to the Assessing Officer who is having jurisdiction to make assessment of the petitioner. Therefore, it is perfectly within the legitimate authority of the Revenue to seize the seizure of the petitioner's books of account, documents, articles in the said search and seizure exercise though there was no authorisation in his name. Mr. Murarka, on behalf of the writ petitioner, contends that the proceedings under section 158BC against the writ petitioner in connection with the said search and seizure are invalid and illegal, is now become academic, since it is dropped. It appears the writ petitioner on receipt of the said notice under section 158BC, made representations that such proceeding is invalid and illegal in view of the fact that no search and seizure was made in the name of the writ petitioner. The position of law is very clear to uphold the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s will be again clear from section 158BD of the said Act, which is as also quoted hereunder: "158BD.- Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly." Therefore, the difference between the two sections is clearly discernable. Section 158BD can be resorted to against any person when the Assessing Officer is satisfied that undisclosed income belongs to that person against whom no search and seizure was made under section 132. The procedure is that books of account or other documents or assets seized shall be handed over to the Assessing Officer having jurisdiction over such person and that Assessing Officer shall proceed under section 158BC against such other person. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of the writ petitioner. It appears from the records on May 25, 2000, there was a proposal for authorisation for retention of the books of account in relation to the Lerica Group till December 31, 2000, from June 14, 2000. But no such approval has been granted by the Commissioner of Income-tax nor the same was communicated to the petitioner. Therefore, on expiry of June 15, 2002, the seizure of the petitioner's books of account and documents were accordingly illegal and invalid. I accept the argument of Mr. Murarka also that the subsequent retention order is also illegal. But the writ petitioner did not take any step for returns of the documents and books of account and materials and this present writ petition was filed on August 21, 2001. By that time a valid order of retention was passed by the appropriate authority. As such I am unable to pass any order, directing the books of account and other materials be handed over immediately to the petitioner, since it appears a subsequent order of retention has been passed till June 30, 2003, and the same could not be communicated to the petitioner, in view of the interim order passed by this court. Under those circumstances I disp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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