CHIRANJI LAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ON 13th March, 1974, the present writ petition was filed under Arts. 226 and 227 of the Constitution of India to challenge the legality and validity of searches and seizures effected under s. 132 of the INCOME TAX ACT, 1961, at premises belonging to the petitioners who are father and son. According to the petition as originally filed, two warrants of authorisation were issued by the CIT/Director of Inspection to carry out simultaneous searches at the office and residential premises of the petitioners. These warrants were shown to the petitioners at their place of residence at 57, Jor Bagh, New Delhi. Searches and seizures were effected at Akash Deep Building, Ansal Bhawan, 16, Kasturba Gandhi Marg and Uphar Cinema at Green Park Market. In searches at 57, Jor Bagh, on 18th Dec., 1973, which continued up to 10.00 p.m. currency notes valued at more than Rs. 1,00,000, silver utensils worth Rs. 2,800 and jewellery of more than Rs. 42,000 belonging to Shrimati Suraj Kumari, wife of the first petitioner and jewellery worth over Rs. 24,000 belonging to Shrimati Kusum Ansal, wife of the second petitioner, and documents, account books, share certificates and other documents were seized and inventories prepared. Some of these articles were later returned. According to the petitioners, they had given full information regarding all these items and none of them represented concealed income. It is claimed that the searches were ultra vires and infringed S. 132(1) of the INCOME TAX ACT, 1961. Various notices were served on the petitioners being Annexure "IV" dt. 31st Dec., 1973, and Annexure "VI" dt. 2nd March, 1974, and it was claimed that these notices were ultra vires as a summary order had to be passed latest by the 90th day after the search which fell on 19th March, 1974. In any event, a summary order was passed, so the petition was amended only a few days after it was filed. The said order is dt. 17th March, 1974, and the same has also been challenged by the amendment.

(2.) NO return was filed to the writ petition in spite of the same having been pending in this Court since 1974. When this matter came up for hearing before us on 9th April, 1980, we directed that a return must be filed and consequent to this order, the affidavit of Shri S. K. Sharma, ITO, Central Circle, has been filed. At the same time, the Department has placed before us the original satisfaction file for verifying certain facts which are necessary for issuing an order under S. 132 of the Act. We have examined the said file, particularly as in this case due to the passage of time the CIT who had authorised the searches and seizures is no longer holding the said office and we have not had the advantage of examining his affidavit. In all other reported cases of a similar type where the warrant of authorisation has been impugned, the relevant affidavit has come from the concerned official. Nevertheless, in spite of the affidavit being by an ITO who was not concerned with the actual searches and seizures, we have examined the correct position in order to determine the validity of the searches and seizures.

(3.) THIS provision shows that in three different cases when the CIT or other authority acting under the section has reason to believe that conditions exist, then he can issue the authorisation for carrying out the search. It is the case of the petitioners that none of these conditions existed and reference has been made to the case -law which has developed under this section. It has also been contended that the subjective satisfaction of the CIT is subject to the scrutiny of the Court. From the file, we find that there was some material on the record suggesting that there was concealed income. It also appears that after the information had been documented the CIT wanted certain further information and it was only then that the CIT made a noting that this was a fit case for issuing a search and seizure warrant for unearthing secret valuables and documents. It is not necessary to place the information in the file as part of the case, but only to see that the CIT has acted in accordance with law, and it is for this reason that we have examined the file. In Commissioner of Commercial Taxes vs. Ramkishan Shrikishan Jhaver (1967) 66 ITR 664 (SC) : TC60R.298, the Supreme Court examined the constitutional validity of search made under the Madras General Sales Tax Act, 1959, and found that there were certain safeguards under the Act. Those safeguards were that the empowered official must have reasonable grounds for believing that a search was necessary; he must believe that the required object cannot otherwise be obtained without undue delay; he must record reasons in writing; he must specify the object for which the search is made. It was also held that the search had to be made in accordance with the CrPC and hence the provision was intra vires. In this case, the opinion of the CIT satisfies these tests. The information is not set out in the order of the CIT, but is in a note form. The CIT merely states that he has studied the noting that it is a fit case for search and the search is for locating secreted valuables and documents. The seized articles, such as account books, documents, cash, jewellery, etc., were seized as being valuable things, but some of them have been returned whereas the cash has been retained. In N.K. Textile Mills Ltd. vs. CIT (1966) 62 ITR 58 (P&H) : TC61R.73, the Punjab High Court held the search and seizure to be invalid. This was so, because the affidavit of the CIT was found to be defective. It was also held that there was an indiscriminate seizure which went beyond the scope of the authorisation which rendered the seizure invalid. It was also doubted that there was any information that could reasonably lead to the inference that a search was necessary. These circumstances do not exist in the present case. In H. L. Sibal vs. CIT (1975) 101 ITR 112 (P&H) : TC60R.413, the search and seizure was held to be mala fide in the circumstances of the case. It was held to be a random search. Moreover, the said search was based on some policy decision. There were some special circumstances in this case which suggested that the name of Shri Gurdial Singh Mann had been introduced into the official record in somewhat extraordinary circumstances. The Court inferred that the record leading to the search was prepared after the search had actually been conducted, therefore, the warrant was bad. Learned counsel also referred to R. vs. IRC : Ex parte Rossminster Ltd. (1979) 3 All ER 385; (1980) 1 WLR 1 (CA), wherein a search under the equivalent English statute was struck down on the ground that there was no way of finding out whether the property and document had been validly or legally seized.