9911796707
TMI Blog1999 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... (seventy two lakhs sixty thousand only) in a joint venture along with others with the Madhya Pradesh Matsya Vikas Nigam Limited (hereinafter referred to as "the Nigam") in connection with a bid for fishing rights for Sagar Gandhi Dam. It is stated that due to paucity of time the petitioner could not channelise funds through its bank for which he had to obtain loans from various persons. Loans were advanced by them by way of bank drafts drawn in favour of the "Nigam". Initially, the tender was awarded in favour of the petitioner it being the highest bidder but afterwards the same was withdrawn by the Department of Fisheries and the earnest money deposited was refunded by draft No. 007387 dated December 14, 1996, payable at Union Bank of India, Main Branch, Jabalpur. The petitioner deposited the said draft in its current account at Central Bank of India, Malviya Chowk, Jabalpur. The draft was forwarded by the banker of the petitioner for clearing and it was sent to the Union Bank of India, Main Branch, Jabalpur, through the clearing house. At that juncture, respondent No. 2 on recommendation of respondent No. 1 issued a warrant of authorisation for requisitioning the bank draft. As p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally illegal and without jurisdiction. It is put forth that both the authorities have transgressed their jurisdiction conferred on them under section 132A of the Act as the authorisation was possible only if some other authority acting under any other law in force had taken into custody the assets and such assets were either wholly or partly believed to be undisclosed income of the petitioner. On the basis of the aforesaid averments a prayer has been made for quashment of authorisation issued under section 132A of the Act as illegal and further for issue of a direction to release the balance amount in favour of the petitioner and not to initiate any proceeding under section 148 of the Act and make good the loss caused to the petitioner. A counter affidavit has been filed by the answering respondents contending, inter alia, that the provisions of section 132A cover the situation of the present nature. It is pleaded in the present case the Departmental authorities had reasons to believe that the draft was prepared from the undisclosed source of the income of the petitioner which was duly exposed in the course of investigation undertaken by the officer of the investigation cell of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his bank account. It is put forth that such information cannot be relied upon for recording satisfaction as contemplated under section 132A of the Act. It is stated that the material collected during and after action taken under section 132A cannot be taken into consideration. The only material which was available before the authority at the time of making the order has to be taken into consideration to record satisfaction and that alone can be put forth in a court of law to justify the action. The stand of the Department that the petitioner is not co-operating in the investigation has been disputed in the rejoinder affidavit. Mr. G. N. Purohit, learned counsel appearing for the petitioner, has contended that the provisions enshrined under section 132A(1)(c) of the Act do not cover a situation of the present nature. It is his further submission that. the language of the aforesaid provision being clear and unambiguous it is to be given a strict interpretation and the words "taken into custody" have to be interpreted as they are understood in law and there is no justification for broadening the horizon. Learned counsel for the petitioner has canvassed that there is no need to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered in the proper perspective. It is urged that the words "taken into custody" should be read as "is/are in the custody" of the some officer and such a reading would further the purpose of the statute. It is also canvassed by him that if a restricted meaning to the provision is given the public purpose would be atrophied and the interpretation instead of being purposive or pragmatic, would be atomistic. Mr. Sapre has also contended that in the instant case all the conditions precedent have been satisfied and, therefore, the issue of warrant of authorisation for requisition of the asset cannot be found fault with. Before I proceed to deal with the rival submissions raised at the Bar it is necessary to refer to the background under which section 132A came to be legislated. The aforesaid provision was inserted by the Taxation Laws (Amendment) Act, 1975 (41 of 1975). The purpose of the aforesaid legislation was to fill up the lacuna which had existed prior to the amendment. Before the aforesaid provision came into force, the Income-tax Department had no authority to requisition the books of account or other documents or any asset in the custody of any officer/authority. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind the legislation has to be given due poundage/significance and effort should be made by a court of law to see that tax evasion is curbed. Needless to emphasize that the constitutional validity of a provision is in a different arena and the applicability of a provision to a fact situation operates in quite a different sphere. Thus, I am under obligation to scan and scrutinise the provision to find out whether the same is applicable to the obtaining factual matrix. To understand the import, impact and effect of the provision it is essential to refer to section 132A of the Act which reads as under : "132A. Power to requisition books of account, etc.---(1) Where the Director-General or Director or the Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to believe that--- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred! to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words 'the authorised officer' occurring in any of the aforesaid sub-sections (4A) to (14), the words 'the requisitioning officer' were substituted." It is submitted by Mr. Sapre that while interpreting the aforesaid provision the object of the section and the purpose intended to achieve have to be given due importance. Learned counsel has contended that this provision, in fact, has been incorporated by way of amendment to prevent tax evasion and the words used are of comprehensive import. In this regard he has dawn my attention to the decision rendered in the case of C. A. Abraham v. ITO [1961] 41 ITR 425, wherein the apex court has laid down as follows : "In interpreting a fiscal statute the court cannot proceed to make good deficiencies if there be any ; the court must interpret the statute as it stands and in case of doubt in a manner favourable to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyed, there is no scope for the court to innovate or take upon itself the task of amending or altering the statutory provisions. In such situation the judges should not proclaim that they are playing the role of a law-maker merely for an exhibition of judicial valour. They have to remember that there is a line, though thin, which separates adjudication from legislation. That line should not be crossed. This can be vouchsafed by 'an alert recognition of the necessity not to cross it and instinctive, as well as trained reluctance to do so'. What is to be borne in mind is as to what has been said in the statute as also what has not been said. A construction which requires, for its support, addition, or substitution of words or which results in rejection of words, has to be avoided, unless it is covered by the rule of exception, including that of necessity, which is not the case here." I may, in this context, refer to the decisions rendered in the case of Jitender Tyagi v. Delhi Administration, AIR 1990 SC 487 ; Nelson Motis v. Union of India, AIR 1992 SC 1981 ; Oswal Agro Mills Limited v. Collector of Central Excise, AIR 1993 SC 2288 ; Council of Homoeopathic System of Medicine v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words are ambiguous or obscure, a construction should be placed on them that is least restrictive of the individual's rights. But a judge should not be over zealous in searching for ambiguities or obscurities in words which are plain simply because he is out of sympathy with the policy to which the Act appears to give effect." In the decision rendered in the case of C.W.S. (India) Limited v. CIT [1994] 208 ITR 649 (SC), it has been ruled thus : "... where a literal interpretation leads to an absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity." In this context, I may refer to the decision rendered in the case of Directorate of Enforcement v. Deepak Mahajan [1995] 82 Comp Cas 103 ; AIR 1994 SC 1775, 1785, wherein it has been expressed thus (page 117 of 82 Comp Cas) : "True, normally courts should be slow to pronounce the Legislature to have been mistaken in its constantly manifested opinion upon a matter resting wholly within its will and should take its plain ordinary grammatical meaning of the words of the enactment as affording the best guide, but to winch up the legislative intent, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it simple manner as they have been used in the section so that the law as it stands is given effect to. It is to be kept in mind that the aforesaid provision was brought into the statute book as some doubts were expressed in various judgments of the number of High Courts with regard to the power of seizure under section 132(1) in respect of the assets in the custody of other authorities. To remove the said lacuna this provision was introduced. Before taking recourse to the provision under the aforesaid section 132A(1)(c) certain conditions precedent are to be satisfied. When the competent authority has some reason to believe any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purpose of the Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then only the competent authority may authorise any other authority mentioned in the section to require the officer or the authority to deliver such assets. Thus, on a fair reading of the provision it is clear as noon day that the provision is plain an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to be 'in custody' for purposes of habeas corpus proceedings." In the same dictionary "custody of the law" has been explained in the following terms : "Custody of the law.---Property is in the custody of the law when it has been lawfully taken by authority of legal process, and remains in the possession of a public officer (as a sheriff) or an officer of a court (as a receiver) empowered by law to hold it." The words "custody of law" has been described in the Law Lexicon by P. Ramanatha Aiyar as under : "That custody which an officer has the right to assume over property by virtue of legal process." In this context, it is worthwile to refer to the word "attachment" as has been given in Law Lexicon by P. Ramanatha Aiyar which reads as under : "The word attachment has been defined as taking into the custody of the law the person or property of one-already before the court, or of one whom it is sought to bring before it ; a writ issued at the institution or during the progress of an action, commanding the sheriff or other proper officer to attach the property, rights credits, or effects of the defendant to satisfy the demands of the plaintiff." The purpose of referri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny. It is to be borne in mind that when the books of account are produced before the sales tax authority for the purpose of assessment it cannot be taken back by the assessee at his sweet will. That apart, the said authority has the jurisdiction to seize the books of account under certain conditions. Similarly under the Passport Act, 1920, there can be variations, impounding and revocation of passports. Hence, the examples given by Mr. Sapre relate to a different field. The words "taken into custody" have to be understood differently than the term "in custody". The word custody has been interpreted in different contexts by various courts. While dealing with the concept when a person is in custody within the meaning of section 439 of the Criminal Procedure Code, the apex court in the case of Niranjan Singh v. Prabhakar Rajaram Kharote, AIR 1980 SC 785, held as under : "When he is in duress either because he is held by the investigating agency or other police or allied authority or is under the control of the court having been remanded by judicial order, or having offered himself to the court's jurisdiction and submitted to its orders by physical presence. No lexical dexterity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were, therefore, considered as amounting to 'custody' within the meaning of section 439(1) of the Code." This court in the case of Vinod Kumar v. State of M. P. [1998] 2 MPLJ 689, while interpreting the term "custody" in relation to an accused who is under the protective order of a superior court under section 438 of the Code of Criminal Procedure, has held as follows : "While an accused remaining under the protective umbrella of anticipatory bail order under section 438 of the Criminal Procedure Code appears before the competent court and moves for regular bail it would be deemed that he is in custody and his bail application can be considered on merits." In view of the aforesaid premises, the words "taken into custody" some sort of control, surrendering to the authority by the person concerned and many other ancillary factors are intrinsically inhered. On the contrary these basic features are absent in custody. The term "custody" has been described in Corpus Juris Secundum, volume 25, in the following manner : "Custody.---The word 'custody' is defined generally as meaning a keeping ; guardianship ; the state of being held in keeping or under guard ; restraint of libert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d definition and the scheme of the provision of the Banking Regulation Act, I am afraid the emphasis is absolutely misplaced. The banker cannot take into custody a draft from the possession or control of a person. It is the owner or the title holder or the person in possession who voluntarily parts with it for carrying out some transaction with the bank. It is presented before the bank for definite purposes. At any point of time the person who has presented the draft can withdraw or bring it back. The bank has no power to retain it under any provision of law unless the person concerned gives his consent. It is well known that in the case of a fixed deposit it cannot be adjusted in respect of a loan unless there is an agreement to that effect as they form two different transactions. Thus, the banker has no control or authority over the draft. It only accepts the instrument for a limited purpose. When it is in the custody of the banker the banker retains it on behalf of the customer. The banker cannot utilise the draft for any purpose other than what has been desired by the customer. Thus, the reliance on the Banking Regulation Act is of no assistance to learned counsel for the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to the banker, the banker has no right or control over the instrument. In view of the preceding analysis, I am of the considered opinion that the bank draft when presented for clearing by the customer to the bank cannot be said to have been taken into custody by the bank to attract the applicability of the provision enshrined under section 132A of the Income-tax Act. Resultantly, the warrant of authorisation requisitioning the same by the competent authority is totally without jurisdiction. Before I proceed to deal with the second limb of argument advanced by Mr. G. N. Purohit at the cost of repetition, I am inclined to state, the words employed in the section 132A are absolutely clear and susceptible to only one meaning. I am reminded of the observation of the learned Chief justice, Sir Lawrence Jenkins in the case of Barindra Kumar Ghose v. Emperor [1909] ILR 37 Cal 467, which reads as under : "As Jimutavahana with his shrewd common sense observes---'a fact cannot be altered by 100 texts' and as his commentator quaintly remarks : 'If a Brahmana be slain, the precept "Slay not a Brahmana" does not annul the murder'." In view of the clarity of language in the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not withstand the test of reason, which is an integral part of it, then it falls through and the court is empowered to strike it down. Belief may be subjective but reason is objective." Learned counsel for the Revenue has placed reliance on the decision rendered in the case of Prabhubhai Vastabhai Patel v. R. P. Meena [1997] 226 ITR 781 (Guj). In the case of Prabhubhai Vastabhai Patel's case [1997] 226 ITR 781 (Guj), the conditions precedent under section 132 have been considered. The language used under sections 132 and 132A as far as reasons to believe are concerned are almost same. After referring to a catena of decisions, their Lordships have culled out the following principles : "The courts have, thus, time and again examined the purpose and scope of powers conferred upon the authorized officer under section 132 of the Act as well as the constitutionality of the provisions contained therein. The courts have held that the exercise of power of search and seizure infringes upon the privacy of a citizen and causes social stigma. It is, therefore, mandatory that the condition precedent must be satisfied. The condition precedent is the possession of information and the reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, has produced the original record to show that the conditions precedent as far as formation of opinion is concerned are satisfied. The said satisfaction reads as under : "Satisfaction note for obtaining authorisation under section 132A of the Income-tax Act. Please see the report of the Inspector of Income-tax regarding unexplained investments by some persons of Jabalpur in purchasing demand drafts worth Rs. 72.60 lakhs. A reading of this note will reveal that the following persons purchased demand drafts detailed as under from different banks of Jabalpur. ----------------------------------------------------------------------------------------------------------------------------------------------------Sl. Name of the person D.D. No. Amount Bank No. (Rs.) ------------------------------------------------------------------------------------------------------------------------------------------------------ 1. Agrawal Agencies 002085 and 6,00,000 each Union Bank of India 002086 2. Samta Construction 606276 6,00,000 State Bank of India 3. Anil Bhatia 724146 6,00,000 Bank of Baroda 4. Reliable Construction 724145 and 9,00,000 + -do.- 724147 6,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d officers to requisition and obtain D.D. No. 007387/000026000, dated December 14, 1996. Out of abundant caution we have already served letters to the Managers of Union Bank of India, Malviya Nagar, Bhopal, and Main Branch, Jabalpur, for not allowing the encashment of the said demand draft. Submitted for perusal, consideration and necessary action. (P. K. Sharma), Deputy Director of Income-tax (Investigation), JBP. I have carefully considered the facts contained in the note of DDI (Investigation), I am fully satisfied that this is the fit case for action under section 132A of the Income-tax Act, 1961. Put up warrant of authorisation." Mr. Purohit, learned counsel, has contended that it is obligatory on the part of the competent authority to express the belief that the asset in question has not been or would not have been disclosed. In the case at hand, the competent authority has perused the note and recorded his satisfaction. It cannot be said that the absence of expression in exact statutory terms would vitiate the recording of satisfaction. Hence, I am of the considered view, the proposition propounded by Mr. Purohit is devoid of substance. The reasons recorded meet th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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