9911796707
TMI Blog1974 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... documents has, omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax Officer (hereinafter referred to as the authorised officer) to-- (i) enter and search any building or place where he has reason to suspect that such books of account, other doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty) in a summary manner to the best of his judgment on the basis of such materials as are available with him ; (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act ; (iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized : Provided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as may be notified in this behalf by the Central Government in the Official Gazette (hereinafter in this section referred to as the notified authority), stating therein the reasons for such objection and requesting for appropriate relief in the matter. (12) On receipt of the application under sub-section (10) the Board, or on receipt of the application under sub-section (11) the notified authority, may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. (13) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1). (14) The Board may make rules in relation to any search and seizure under this section ; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer-- (i) for obtaining ingress into such building or place to be searched were free ingress there to is not available ; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.--In computing the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds of the challenge later after stating the facts which led up to the petition, O. P. No. 2884 of 1972, for the grounds taken in the two petitions are the same. Now, turning to the facts in O.P. No. 2884 of 1972 they are very similar to the case that we have already stated excepting that the seizure took place pursuant to the provisions in the Foreign Exchange Regulation Act, 1947. The amount that was seized in that case was Rs. 50,010.15. A penalty of Rs. 25,000 was imposed under the Foreign Exchange Regulation Act, 1947. The balance amount available with the Enforcement Directorate was the sum of Rs. 25,010.15. At that time the Income-tax Officer intervened and issued a notice similar to exhibit P-1, in O. P. No. 2226 of 1972 which is exhibit P-2, in this case and having obtained the custody of the sum of Rs. 25,010.15, proceeded to determine the liability of the petitioner in the O. P. by exhibit P-3 order and fixed it at Rs. 52,097. The entire sum of Rs. 25,010.15 was adjusted towards the liability and demand has been made on the petitioner for the balance amount due to the income-tax department. The whole procedure adopted in these two cases has been challenged as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passage in the decision in Smt. Godavari Shamrao Parulekar v.State of Maharashtra. The passage runs thus : " The State Government, however, decided to revoke the order of November 7, 1962, and instead decided to pass an order under the Rules on the same day, namely, November 10, 1962. In these circumstances if would be in our opinion an empty formality to allow the appellants to go out of jail on the revocation of the order of November 7 and to serve them with the order dated November 10, 1962, as soon as they were out of jail." The Madras High Court in the decision in Mohammed Kunhi v. Mohammed Koya has taken the view that the sub-clauses (i) and (ii) of clause(c) of sub-section (1) of section 132 of the Act are merely enabling provisions and the fact that it was unnecessary to resort to those clauses will not take away the power given by clause (c) of subsection (1) of section 132 which the court found was in substance and in effect a power of seizure. The learned judge expressed himself in somewhat strong terms and it is useful to read a passage from that judgment : " The argument is that as the discovery of money in court deposit is not claimed to be the result of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it means 'look for ' or ' seek out '. What the Income-tax Officer has done in this case is to enter the building of the court of the Second Presidency Magistrate and to look for or seek out the amount kept in court custody and ask that it may be paid over to him, because it represents wholly or partly undisclosed income of Mohammed Koya. Be it noted that the section does not say that the Income-tax Officer can enter and search only the building of the person who had failed to disclose his income for the purposes of the Income- tax Act. What the section says is that where any person is in possession of any money which represents wholly or partly undisclosed income, the Income-tax Officer can enter and search any building or place where he has reason to suspect that such money is kept. This means that seizure can be effected even from the custody of a person other than the person who has failed to disclose his income and from a building belonging to any parson other than the defaulter. Patting even the narrowest construction upon clause (iii) of sub-section (1) of section 132 of the Act, I hold that the Income-tax Officer has found the money in court deposit only as a result of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een issued. Again, any irregularity in the course of entry, search and seizure committed by an 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." Counsel for the petitioner contended that the section must be strictly construed as it contains a drastic provision permitting the invading of the privacy of an individual and deprivation of his property by seizure and merely for the purpose of imposing income-tax for which other elaborate machinery is provided under the Act ; the proceeding has been characterised as summary and it has been emphasised that the decision is almost final subject only to an appeal to the Board as provided by sub-section (11) of section 132 of the Act. The normal remedy under the Act when tax is imposed which is claimed as unjustifiable is to file appeals, two of them and then seek a reference to the High Court with a further appeal to the Supreme Court if the High Court was satisfied that an appeal should be permitted as envisaged by section 261 of the Act. Therefore, it was submitted that we must construe the section so as to limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch " has varied meanings and we think it should be given the general meanings to look for " or " seek " which are well-known meanings attributable to the word. Section 132 itself specifically envisages that a seizure can be had from a person other than the owner of the assets seized. A reading of sub-section (7) of section 132 of the Act would make this clear : " 132. (7) If the Income-tax Officer is satisfied that the seized assets or any part thereof were held by such person for or on behalf of any other person, the Income-tax Officer may proceed under sub-section (5) against such other person and all the provisions of this section shall apply accordingly." We have already expressed the view that since,the investigations were complete the customs authorities who held the money with which we are concerned in O.P. No. 2226 of 1972 and the authority under the Foreign Exchange Regulation Act who held the sum of Rs. 25,010.15 which was the subject-matter of O.P. No. 2884 of 1972 were holding it only on behalf of the persons from whom those amounts were seized by those authorities. By virtue of sub-section (7) of section 132 there could be a lawful seizure of those amounts from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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