9911796707
TMI Blog2009 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Auditors and Accountants against the Department of Income Tax entreating the issuance of an appropriate writ to prevent the Respondents from forcibly gaining or securing access to the data contained in two laptops belonging to them. The brief facts adumbrated before us are that while conducting an audit of EMAAR on 11.9.2007, the laptops of two employees of the Petitioner were seized by the Deputy Director, Income Tax (DDIT) in the course of conducting a Search and Seizure operation against EMAAR. Subsequently on 17.9.2007, the DDIT issued summons under Section 131 of the Income Tax Act, 1961 (the Act for the sake of brevity) on 17.9.2007 to Ms.Sandhya Sama and Shri Sanjay K. Jain, the employees of the Petitioner firm and their statements were recorded on 18.9.2007. It is further stated by the Petitioner that on the request of the DDIT these employees provided him with the electronic data relating to three companies of the EMAAR Group together with the print copies of the data. Nevertheless, the DDIT insisted on securing total and unrestricted access to the laptops obviously in order to gain information and data of all the other clients of the Petitioner. This request was refuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired under clause (iib) of sub-section(1) of section 132, fails to afford such facility to the authorized office, he shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine. It has not been pleaded nor have we been informed as to whether or not notice required by Section 132 has been served upon the Petitioner. We have no alternative but to presume against the issuance of the notice. That being so, resort to Section 275 B becomes otiose. As will be seen sundry safeguards have been put into place by the Legislature before such an inquisition can be commenced. It is important to clarify that so far as this provision is concerned it contemplates only access to and not seizure of the books or material since seizure is dealt with in Section 132(1)(iii). A Notice dated 17.9.2007 is Annexure P-2 to the Petition. It does not refer to any provision of the Act, but the Written Submissions appear to indicate that it is predicated on Section 131 of the Act. 5. The argument on behalf of the Petitioner is that the data relating to EMAAR Group of Companies has already been provided to the Respondents and the Petitioners are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any other person. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or 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 each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. 7. However, we cannot, in the present case, persuade ourselves to agree with the argument of the learned Senior Counsel for the Respondent that the above stated provision would entitle and empower the DDIT to seize any or all the articles, valuables or documents found during the course of the Search regardless of whether they are relevant for the purpose of assessment of the Assessee on whom a Search and Seizure is conducted. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Seizure are very wide and thus the legislature has provided a safeguard that the Assessing Officer should have reasons to believe that a person against whom proceedings under Section 132 are to be initiated is in possession of assets which have not been or would not be disclosed. Secondly, the authorized officer is also required to apply his mind as to whether the assets found in the Search have been disclosed or not, and if no undisclosed asset is found no action can be taken under Section 132(1)(iii) or (3). An arbitrary seizure cannot be maintainable even where the authority has seized documents with ulterior motives. 10. As regards the extent of power of the Authorised Officer acting under the authority of Section 132, their Lordships in ITO vs. Seth Bros., (1969) 2 SCC 324 have enunciated the law in these words: 7. The Commissioner or the Director of Inspection may after recording reasons order a search of premises, if he has reason to believe that one or more of the conditions in Section 132(1) exist. The order is in the form of an authorisation in favour of a subordinate departmental officer authorising him to enter and search any building or place specified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned must satisfy the Court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the Court. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed. But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the Officers will not vitiate the exercise of the power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the officer has in executing the authorisation acted bona fide. 9. The Act and Rules do not req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty obtains even in the case of money, bullion jewellery etc. that has not been declared; (d) specific particulars of the place where the above items are believed to be available must be indicated. All these rigorous formalities are indicative of the intention of Parliament that the extremely harrowing experience of Search or Seizure made available under the Act must be particular to the named person and be confined to the mentioned place. If this is applicable to all and sundry it would infract and nullify the fundamental rights of the citizen (third or unconnected party) concerned. 11. In Manish Maheshwari vs. Assistant CIT, (2007) 3 SCC 794 one of the provisions which was at the fulcrum of discussion was Section 158-BD of the Act in the context of the legitimacy of ordering a Block-Assessment. This provision has also been relied upon before us in order to vindicate the stance of the Revenue that information that can be gleaned from the seized computers belonging or relating to other clients of the Petitioner, even those who have had no dealings whatsoever with the assesses against whom the search and seizure operations are directed, can legitimately be demanded and acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court had concluded that the authorization for the search of the house-guest was prepared after the planned search of Shri Sibal. The warrants were quashed partly for this reason. 13. An indiscriminate seizure deracinates the personal liberty and privacy of the citizen and is anathematic to law. It can be proscribed under Article 226 of the Constitution. The question of "indiscriminate search" has to be answered by the Court by looking into the evidence and the facts of each case. Taking note of the observations in Seth Bros their Lordships have further enunciated the law in the case of CIT vs. Jawahar Lal Rastogi, (1970) 2 SCC 225 in these words: 6. It must, however, be stated that the findings that the action of the Commissioner of Income Tax and the Income Tax Officer amounted to "indiscriminate search" and was beyond the "legitimate scope of Section 132" depends upon the evidence in each case and no general rule can be laid down in that behalf. 14. Coming back to the contention of the Petitioner, it has argued that the laptops that have been seized by the Respondent have confidential information relating to the accounts of 46 other clients, having no relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch and Seizure operation is directed. The offer in this regard has been spurned by the Revenue, as is manifest from the previous Order dated 18.11.2008 already extracted above. 16. Mr. Vikas Singh, learned Senior Counsel for the Revenue has also referred to Section 153C of the Act, which essentially prescribes the period within which the action envisaged in that Act is to be completed, and the method by which it is to be computed. Section 153 prescribes the period within which assessments or reassessments must be completed, viz. in the normal course within two years from the end of the Assessment Year in which the income was assessable. If income appears to have escaped taxation and Sections 147 to 149 are pressed into service, Section 153(2) mandates broadly that the assessment must be completed within one year. Sections 153A, 153B and 153C were introduced by the Finance Act, 2003 with effect from 1.6.2003. In essence, Section 153A has in focus the 'case of a person where a Search is initiated or any assets are requisitioned' and envisages the furnishing of a Return of income for six years. The succeeding Section 153B sets a limit of two years for the making of an order of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector to inspect registers, books, papers, documents and proceedings and to take notes and extracts as may be deemed necessary. Chief Justice Lahoti considered not only several precedents delivered by Courts panning the globe, but also the Article 12 of the Universal Declaration of Human Rights, Article 17 of the International Covenant of Civil and Political Rights, the European Convention on Human Rights; and the Canadian Charter of Rights and Freedoms which emblazons that "Everyone has the right to be secure against unreasonable search and seizure"; and the New Zealand Bill of Rights which additionally qualifies that the said rights encompass the person, property or correspondence; and the Fourth Amendment of the US Constitution. Their Lordships emphasized upon Govind vs. State of MP, AIR 1975 SC 1378, [1975] 2 SCC 148 in which the need to guard against the pernicious possibility of a "police-raj" was forcefully articulated. The triple tests distilled by the 7 Judge Bench in Maneka Gandhi vs. Union of India, (1978) 1 SCC 248: AIR 1978 SC 597 were reiterated viz. that a law interfering with personal liberty must (a) be consonant with a prescribed procedure which shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al collected during Survey under Section 133 does not constitute "such evidence" based on which assessment under Section 158 BB can be framed. In the case of CIT -vs- Ravi Kumar the Court held that loose slips found during a Search cannot constitute substantial evidence to invoke Section 69A of the Act. Similar views have been endorsed by a Division Bench of this Court in CIT vs. Ravi Kant Jain: [2001] 250 ITR 141, where the Court emphasized on the fact that Block Assessment under Chapter XIV-B cannot be a substitute for regular assessment and thus the change of opinion of Revenue on audited accounts seized during search cannot form the basis for a special assessment. If apparently reliable material cannot be directly used against an assessee solely because it was not collected during a Search of that assessee, a fortiori, material palpably concerning a third party with no connection with the raided party must be ignored. It is also illogical that the rigours which apply to the Search of a particular notified person can be flagrantly ignored so far as an unconnected person is concerned. It is argued that under Section 153C the Department acts as a post-office, viz. it sends the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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