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TMI Blog2001 (5) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... eal question is not whether he was biased. It is difficult to prove the state of mind of a person. Therefore, what we have to see is whetherthere is reasonable ground for believing that he was likely to be biased-a mere suspicion of bias is not sufficient. There must be a reasonable likelihood of bias." Therefore, one can revert to the facts. Vipan Kumar lain and Chander Deep Jain are two brothers (petitioner No. 1 an petitioner No. 2). Mrs. Sneh Rani Jain, petitioner No. 3, is the wife of Vipan Kumar Jain while Mrs. Dolly Jain, petitioner No. 4, is the wife of Chander Deep Jain. Besides, S. K. and Company and Classic Cutlery (India), petitioners Nos. 5 and 6, respectively, are two partnership concerns of the abovesaid petitioners. By virtue of the present writ petition, the petitioners have invoked articles 226/227 of the Constitution of India for declaring the search dated September 30, 1998, effected on the premises of the petitioners illegal, arbitrary, mala fide and without jurisdiction and also declaring the panchnamas dated September 30, 1998, prepared by Dr. Navaljit Kapoor, respondent No. 4, and Sh. Harinder Kumar, respondent No. 5, to be false and fabricated. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned to their houses. It was at the direction of respondent No. 5, that the panchnama was pre pared and it is asserted that in the panchnama prepared by Dr. Navaljit Kapoor, respondent No. 4, it was recited that he entered the premises at 7.45 a.m. on September 30, 1998, and called two panchas. Vipan Kumar Jain and his wife were present and even the statement of Vipan Kumar Jain was recorded under oath. Though they were not present in their house, it was not correctly recorded that they were present. In fact, it is asserted that even warrants of authorisation was not shown. Respondent No. 6 had conducted the search at the premises of S. K. and Company, a partnership concern, and even there in the panchnama it is stated that warrants of authorisation had been shown to Vipan Kumar Jain and Budhi Bahadur. It did not depict the true picture. In fact, there was no warrant of authorisation to search the premises of the partnership. The plea of the petitioners further is that during the course of investigation, petitioners Nos. 1 to 4 were time and again reminded and threatened by the officers that in case they did not hand over Rs. 1 crore concealed money, they would face dire conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der clause (a), (b) or (c) of section 132(1) of the Act. The reasons had to be tangible in law. There is no reasonable nexus between the information and reason. Furthermore, it is claimed that there were no search warrants against Classic Cutlery (India) and S. K. and Co., still the search was conducted and appraisal reports were prepared. Even it is alleged that the facts were not correctly recorded because Dr. Navaljit Kapoor, who had recorded the statement of petitioner No. 1, appended a note that petitioner No. 1 was on his way to Delhi. Thus, the panchnama in which the presence of petitioners Nos. 1 and 2 was recorded must be stated to be forged and fabricated. Even respondent No. 5 is stated to have satisfied himself regarding Rs. 3,51,600 in the house of petitioner No. 2. The abovesaid reliefs are further claimed on the ground that the notices issued were invalid and above all alleged that the practice of appointing the investigating officer as an Assessing Officer is violative of article 14 of the Constitution of India. An Investigating Officer cannot become the judge to decide whether the investigation carried out by him is correct or not. In the written statement filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that petitioner No. 2 was, admittedly, shown the search warrants and also to petitioner No. 4. It was admitted that there was no search warrant with respect to two partnership concerns and thereupon it has been detailed that petitioner No. 1 had promised to examine the seized goods in the presence of the chartered accountant but he never turned up. Petitioners Nos. 1 and 2 had promised that they would bring the photocopier machine to get the photocopies of the seized documents but they did not do so despite repeated opportunities granted. It is denied that the assessment proceedings are invalid or that the notices were also invalid. The contention raised that the officer who was involved in the search cannot be the Assessing Officer was also controverted. Respondents Nos. 4 to 6 had even filed short separate written state ments denying the assertions qua them. The first and the foremost question agitated has been that there was no tangible information before respondent No. 2 before he issued the war rants of authorisation. No such reasonable person could arrive at such a conclusion on such an information and, therefore, the same is liable to be quashed. Sub-section (1) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen 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 ; (iia) 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 thingfound 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 : . . ." It clearly shows that the Commissioner of Income-tax before issuing the search and seizure warrants must have some information. The information should be relevant to the requisite belief of the Income-tax Commissioner and this information should be entertained for a statutory purpose mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied the proceeding is liable to be quashed ..." The same question was again considered by a Division Bench of this court in the case of H. L. Sibal v. CIT [1975] 101 ITR 112. The house of Shri H. L. Sibal, advocate, was searched at 7.30 a.m. while he was in his office. It was held that the burden lies on the Commissioner who issued the warrants to satisfy the court that he had taken action on proper and relevant material. The facts of that case need not be looked into for the purposes of the present petition because they were little different but this court certainly added that there has to be reasonable information and if search warrants had been issued not in conformity with section 132 of the Act, they were liable to be quashed. The precise findings of the court were as under : "The word 'information' has been defined in the Shorter Oxford Dictionary as 'that of which one is apprised or told'. The word 'reason' has been defined as 'a statement of fact employed as an argument to justify or condemn some act'. On the other hand, the word 'conclusion' is defined as la judgment arrived at by reasoning ; an inference ; deduction, etc.'. In other words, when the information receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out giving to the person concerned, a notice to produce the account books or other documents needed." The Calcutta High Court in the case of Dwarka Prosad Agarwalla v. Director of Inspection [1982] 137 ITR 456, also rendered a similar decision that there has to be reason to believe that factors mentioned in section 132(1) of the Income-tax Act were satisfied. Reason to believe must be in consequence of information in possession of the said officer. When there was no mention as to what the specific information was, the court had quashed the said order. The said court held as under : "It is, however, necessary to consider the other contentions of the petitioner on this aspect. It was contended on behalf of the petitioner that three conditions must be satisfied before the Director of Inspection could take action under section 132(1), and the conditions were as follows : (i) There must be a proceeding pending or completed concerning the assessee under the Act, (ii) there must be information in the possession of the Director of Inspection and in consequence of such information he had reason to believe that the assessee was in possession of money, jewellery, valuable thing, etc., whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 132 is called for for any of the reasons mentioned in clauses (a), (b) or (c). When the action of issuance of an authorisation under section 132 is challenged in a court, it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under section 132 was called for. The opinion which has to be formed is subjective and, therefore, the jurisdiction of the court to interfere is very limited. A court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under section 132 is called for. But the court would be acting within its jurisdiction in seeing whether the act of issuance of an authorisation under section 132 is arbitrary or mala fide or whether the satisfaction which is recorded is such which shows lack of application of mind of the appropriate authority. The reason to believe must be tangible in law and if the information or the reason has no nexus with the belief or there is no material or tangible information for the formation of the belief, then, in such a case, action taken under section 132 would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, considered this controversy and held that if the income tax authority or officer was acting without jurisdiction, the existence of alternative remedy is not always a sufficient reason for refusing a party quick relief by a writ petition or prohibiting the authority acting without jurisdiction from continuing such action. The same question came up for consideration in the same year before the Supreme Court in the case of A. V. Venkateswaran, Collector of Customs v. Ramchand Sobhra Wadhwani, AIR 1961 SC 1506. The question for consideration was identical with that with which we are presently faced. It was emphatically concluded by the Supreme Court that the general rule is that the party who applies for the issue of a high prerogative writ should, before he approaches the court, exhaust other legal remedies but it does not bar the jurisdiction of the High Court to entertain the petition in the peculiar facts of the case. In paragraph 8 of the judgment, the Supreme Court concluded the principle of law as under : "The only point, therefore, requiring to be considered is whether the High Court should have rejected the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate (1) that the two exceptions which the learned Solicitor-General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the court, and that in a matter which is thus pre-eminently one of discretion, 'it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the court." More recently, in the decision rendered by the Supreme Court in the case of Whirlpool Corporation v. Registrar of Trade Marks, AIR 1999 SC 22 ; [1998] 7 JT 243, the question as to when alternative remedy would bar the court from exercising the extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e search parties, therefore, he could not be a judge of his own cause and in that process act as Assessing Officer also. On the strength of these facts, it was contended that it causes a prejudice and a reasonable apprehension in the minds of the petitioners. The said contention was controverted arguing that the Income-tax Officer is the Investigating as well as the Assessing Officer and, therefore, this plea must fail. In addition to that, the respondents contended that the petitioners had submitted to the jurisdiction of respondent No. 5 and, therefore, they cannot raise such a plea. It was also urged that there is inordinate delay in filing of the writ petition and this contention, therefore, cannot be permitted to be raised. Before travelling into the plea of judicial bias in the minds of the petitioners, necessarily the first contention, which being preliminary in nature, raised by the respondents must be looked into. Indeed, if a person submits to the jurisdiction of an authority, he cannot, in normal circumstances, be allowed to retrace the steps and challenge the said jurisdiction of the authority. Whether the petitioners had submitted to the jurisdiction of responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and had also recorded statements of several persons. Ultimately, notices were issued under sections 142(1) and 158BC of the Act. The writ petition was filed on February 11, 2000. It was in that backdrop, it was held that the writ petition was belated. The facts of the present case are a little different. As noted above, so far as authorisation with respect to search is concerned, the same is valid. The other aspects regarding the return of the documents, etc., this court is not 'going into the controversy. The petitioners challenged the right of respondent No. 5 to pass an order of assessment, As referred to above, the effective hearing with this regard started in the later part of the year 2000. Therefore, when the writ petition was filed simultaneously, it cannot be termed that there is inordinate delay to permit this court in refusing to exercise the extraordinary jurisdiction. With this backdrop, we can conveniently revert back to the main question which was agitated as to whether respondent No. 5 could be the Assessing Officer despite heading the party which conducted the search. On behalf of the petitioners, as referred to above, it was highlighted that he could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as under : "But where pecuniary interest is not attributed but instead a bias is suggested, it often becomes necessary to consider whether there is a reasonable ground for assuming the possibility of a bias and whether it is likely to produce in the minds of the litigant or the public at large a reasonable doubt about the fairness of the administration of justice. It would always be a question of fact to be decided in each case." As years rolled, a landmark judgment was delivered in A. K. Kraipak v. Union of India, AIR 1970 SC 150. The Supreme Court in the first instance gave a call for new problems and new solutions. In paragraph 14 of the judgment, it was held as -under : "To prevent the abuse of that power and to see that it does not become a new despotism, courts are gradually evolving the principles to be observed while exercising such powers. In matters like these public good is not advanced by a rigid adherence to precedents. New problems call for new solutions. It is neither possible nor desirable to fix the limits . . ." Thereafter, the principles of natural justice were enunciated and it was reiterated that no one shall be a judge of his own cause and fairness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers of superior body. The superior body has to take the decision after considering the report of the subordinate body. The Supreme Court held that the members constituting the subordinate body were disqualified from participating in the deliberations of the superior body. It was reiterated that the test is not whether in fact a bias has affected the judgment but the test is whether a litigant could reasonably apprehend that bias attributable to a member might operate against him. In paragraph 25 of the judgment, the Supreme Court concluded as under "We must remember that the President and the Vice-President of the Council. and three members of the Council compose the Disciplinary Committee. The President and the Vice-President do certainly hold significant status in the meetings of the Council. A member whose conduct has been the subject of enquiry by the Disciplinary Committee ending in conclusions adverse to him can legitimately entertain an apprehension that the President and the Vice-President of the council and the other members of the Disciplinary Committee would maintain the opinion expressed by them in their report and would press for the acceptance of the report by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsion in the minds of the others was considered and in paragraph 25 of the judgment it was concluded as under : "Bias may be defined as a preconceived opinion or a predisposition or predetermination to decide a case or an issue in a particular manner, so much so that such predisposition does not leave the mind open to conviction. It is, in fact, a condition of mind, which sways judgments and renders the judge unable to exercise impartiality in a particular case." In fact, a Division Bench of this court in the case of Punjab Salt Peter Refineries Ltd. v. B. M. Bhargav [1995] 2 P H Taxes 511 in a short judgment held as under : "After hearing counsel for the parties and perusing the record, we find that there is merit in this petition. Admittedly, Sh. B. M. Bhargav, Excise and Taxation Officer-cum-Assessing Authority, Ambala City, respondent, had been a member of the raiding party on the premises of the petitioner. He has also framed the assessments in the case of the petitioner for the relevant period, vide his orders, annexures P-2 and P-3. This is not permissible in law. We allow the writ petition, quash the impugned orders, annexures P-2 and P-3, and the notice, annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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