K C SAIGAL Vs. R P SEHGAL

JUDGEMENT

(1.) SRI K.C. Saigal (the petitioner in CW No. 127 of 1976) is the proprietor of business, carried on in the name and style of Interocean Shipping Co., as charterers and shipping brokers for the chartering committee of the Ministry of Shipping and Transport of the Government of India, a number of Indian shipping companies and others. He was also a partner of a firm known as Eastern Bulk Services carrying on a like business (which has been since dessolved), the other partners being J.M. Saigal and Mrs. Sawitri Malhotra. This firm and its partners are the petitioners in CW No. 128 of 1976. The two business had their office at 98, Tolstoy Marg, New Delhi. On the basis of the warrant of authorisation issued by the CIT on 11th Sept., 1975, certain searches were conducted in the business premises of the concerns, the residences of the three persons mentioned above and also those of some of their relatives on the 17th Sept., 1975. These searches were conducted under the provisions of s. 132 of the IT Act, 1961 ('the Act'). The details of these searches and the proceedings that followed are not relevant for our present purposes. Eventually, on 15th Dec., 1975, the ITO dealing with the assessments of the two concerns passed an order under s. 132(5) in each of the cases. In the case of K.C. Saigal, he held that a sum of Rs. 15,85,914 derived as commission on freight and pertaining to the ten assessment years from 1966-67 to 1975-76 had been concealed by the assessee and that the assessee had also concealed income of Rs. 1,000 derived by way of commission on demurrage in each of these years. In case of the other firm, he held that there was concealed income of Rs. 23,72,529 by way of commission on freight and Rs. 37,500 by way of commission on demurrage which pertained to the seven assessment years from 1969-70 to 1975-76. Under the scheme of the Act, this was only a tentative order, subject to the outcome of normal proceedings or reassessment proceedings initiated or to be initiated under the Act. Such reassessment proceedings were initiated by the ITO concerned by the issue of notices under s. 148 of the Act seeking to reopen the assessments that had been made earlier on the two assessees. These notices were issued on 6th Dec., 1975 for the asst. yrs. 1967-68 to 1972-73 in the case of .C. Saigal and the asst. yrs. 1969-70 to 1974-75 in the case of Eastern Bulk Carriers. In the former case, the reassessment proceedings were initiated only in respect of six out of the ten assessment years earlier referred to, perhaps because action under s. 148 for the asst. yrs. 1973-74 to 1975-76 were still pending. The assessees thereupon filed CW Nos. 127 and 128 of 1976 seeking the issue of writs of certiorari quashing the two orders passed under s. 132(5). There was also a prayer in the writ petition that the notices under s. 148 had been issued without jurisdiction and should be quashed. On 9th Feb., 1976, this Court directed the issue of notices to the respondents to show cause why the writ petitions should not be admitted and also ordered interim stay of further proceedings in pursuance of the notices under s. 148. On 9th Aug., 1976 the writ petitions were admitted and the interim stay was made absolute.

(2.) THE two writ petitions came on for hearing some time in 1980. By this time, there had been certain developments. THE assessees had presented application under s. 132(1) to the CBDT against the orders under s. 132(5). In these applications it had be emphasised, inter alia, that