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TMI Blog1986 (2) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition. The petitioner has challenged an order passed under section 131 of the Income-tax Act, 1961, on September 23, 1982. The operative part of the order is that certain documents are retained in exercise of powers under section 131. The documents are as follows: " Journal Vouchers File No. Period 1. 1-10-1970 to 31-5-1981 2. 1-6-1981 to 30-9-1981 Bank Vouchers File No. Period 1. 1-10-1980 to 31-1-1981 2. 1-2-1981 to 30-3-1981 3. 1-5-1981 to 31-7-1981 4. 1-8-1981 to 30-9-1981." The order was passed over three years ago. The point for decision is whether these documents can indefinitely be retained or whether there is a time limit. It is also claimed that the documents could have been retained only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay from the criminal court or for being used in the penalty case. One other point was taken, namely, that it was not necessary to record any reasons for retaining the documents or communicate the same to the petitioner. This would frustrate the very object of retaining the documents. Now, turning to the points involved in this case, we think we need not go into the question that the documents are required by the Income-tax Authority but have to confine ourselves to the interpretation of section 131 of the Income-tax Act. This section can be reproduced for convenience here: " 131. (1) The Income-tax Officer, Appellate Assistant Commissioner (Inspecting Assistant Commissioner) Commissioner (Appeals) and Commissioner shall, for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter XVII-D. (3) Subject to any rules made in this behalf, any authority referred to in sub-section (1) or sub-section (1A) may impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceeding under this Act: Provided that an Income-tax Officer (or an Assistant Director of Inspection) shall not (a) impound any books of account or other documents without recording his reasons for so doing, or (b) retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Commissioner therefor." It will be seen that the first sub-section gives to the Income-tax Officer and other au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to see whether the order under section 131 is in accordance with law. The opening words of the order can now be reproduced. They are as follows: The following documents produced before me in connection with the assessment proceedings for the assessment year 1982-83 by Sarvashri K. L. Seth, C. A. and P. K. Shungloo, accountant of the company are retained in exercise of my power under section 131 of the Income-tax Act, 196I." Below this follows the list of documents which have been reproduced earlier. It is impossible to hold that these are reasons. There is a total absence of reasons. The proviso to section 131 is in very definite terms which is reproduced again: Provided that an Income-tax Officer (or an Assistant Director of Inspecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This defeats the section altogether. This is no compliance of the section if reasons are not recorded and not communicated. Similarly, the approval of the Commissioner for retention beyond 15 days has also to be communicated. Learned counsel for the Department has relied on a judgment of a single judge of the Punjab High Court in Ramji Dass Om Parkash v. ITO [1970] 77 ITR 1010. According to this judgment, it is only necessary for the Income-tax Officer to record the reasons but he need not disclose the same to the assessee. In that case the operative part was (p. 1011) : " I hereby impound and retain in my custody the following books of accounts which have been produced before me during the course of assessment proceedings." It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as we can see, is exactly the same as section 131(3) of the Income-tax Act, 1961. The Allahabad High Court held that a valid exercise of power under section 131 involves compliance with the conditions mentioned in the proviso to the section. It was, therefore, necessary that the Income-tax Officer had to record the reasons in writing for impounding the books and had also to get the permission of the Commissioner for retention for a period beyond 15 days. It was held in that case that retention was illegal and the petitioner was entitled to have the books returned. We concur with the judgment of the Allahabad High Court. We also hold that (a) there is no order for impounding the documents, and (b) the Income-tax Officer appears to have m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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