BANDEL TRADERS PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Petitioner is a company incorporated under the Companies Act with its registered office in Calcutta. In July, 2000, petitioner-company is alleged to have taken a premises bearing No.C-1/1, Rajouri Garden, New Delhi on rent from S/Shri Nandlal Kothari and Shri Shyam Sunder Kothari who were the owners of the said building, for starting the business of import and export, sale and purchase of Marble, Granite, Stones, Marble-chips and Marble-stone in Delhi; that the lease dated 26th June, 2000 was, accordingly executed between Shri Nandlal Kothari and Shri Shyam Sunder Kothari on the one hand and petitioner-company on the other, leasing a portion of the aforesaid property to the petitioner-company at a rent of Rs.6,000/- per month. On 7th September, 2000, the premises of the petitioner was searched by the officials of the Income-tax department under Section 132(1) (i) to (v) of the Income-tax Act (in short referred to as the Act) to carry on search and seizure of M/s. Kothari Marbles and M/s. Kothari Exports and the business concerns of Kothari Group. The officers of the petitioner were stated to have initially raised objections to the search of the petitioner's premises pursuant to the warrants issued against M/s.Kothari Marble and M/s. Kothari Exports, however, later on they willingly allowed the search of its premises and seizure of books of accounts etc. by the Income Tax Department. After searching the premises, the officers had stated to have seized certain books of accounts and documents and prepared inventory of the books of accounts belonging to the petitioner. On 25.9.2000, the petitioner is stated to have received a letter from its bankers informing it that the operation of its accounts with the bank had been stopped because of an order received by the bank from the Deputy Director of Income-tax, Ludhiana. It was on receipt of this order that the petitioner filed the present writ petition for declaring that the search and seizure carried out by the respondents at its premises bearing No.C-1/1, Rajouri Garden, New Delhi on 7.9.2000 was illegal and without any lawful authority and for quashing the order dated 24.9.2000 passed by the respondent stopping the operation of the bank accounts by the petitioner. The petitioners have also prayed for return of all the documents seized by the income-tax authorities during the search and seizure of their premises.

(2.) The contention of learned counsel for the petitioner is that under Section 132(1)(c) the authorised officers had the power to seize only those documents/books/money which relate to the income-tax, which has not been disclosed or would not be disclosed to the income-tax department. It is submitted that since it was the first year of the operation of the petitioner-company and the time for filing the return had not yet come, no return of income was filed by the petitioner and it was, therefore, pre-mature to apprehend that the petitioner would not disclose its correct income to the department and there was no question of the petitioner having not disclosed such income as the return of income was yet to be filed by the petitioner-company and as such the provisions of Section 132(1)(c) of the Act were not applicable and consequently the premises of the petitioner could not be searched. It is also submitted that the bank account having been disclosed by the petitioner in its book of accounts, operation of the same could not be stopped by the respondent. It is also the contention of learned counsel for the petitioner that the petitioner-company had no connection whatsoever either with Shri Nandlal Kothari or with any of the two companies viz. M/s. Kothari Marbles and M/s. Kothari Exports and the premises of the petitioner, therefore, could not be searched and the documents could not be seized pursuant to the search warrants having been issued for search of the premises of M/s. Kothari Marbles and M/s. Kothari Exports belonging to Shri Nandlal Kothari.

(3.) It is not denied that the property bearing No.C-1/1, Rajouri Garden, New Delhi was also shown to be the registered office of the M/s. Kothari Marbles and M/s. Kothari Exports. It is also not denied that this address was disclosed by both M/s. Kothari Marbles and M/s. Kothari Exports to be one of their office addresses with the income-tax department.. The stand of the department of income-tax in its counter affidavit is that while conducting search at the premises of M/s. Kothari Marbles and M/s. Kothari Exports, the persons who were present at site did not inform that the petitioner was a company different and distinct from the company belonging to Shri Nandlal Kothari or that the petitioner company was only a tenant in the premises and it had nothing to do with either M/s. Kothari Marbles or M/s. Kothari Exports. It is also the case of the respondents that during the search of the premises, they found a document relating to the activities of different companies of Kothari Group of Companies and the petitioner was mentioned to be a finance company of the Group recently acquired by the Kothari Group. It is submitted that during the course of the search, the statement of Shri Nandlal Kothari was recorded and in his reply to a question it was stated that the petitioner-company was his valued customers and they had financed M/s. Dee Pearls India Pvt. Ltd., another company of the Kothari Group of Companies and petitioner had paid Rs.3 crores in advance for supply of marbles to them. It was also stated by Shri Nandlal Kothari while replying to another question that to the best of his memory no share of the petitioner company was owned by him or by his family members. It is submitted that according to the documents recovered by the department during search, Shri Nandlal Kothari and his relatives were holding majority shares of the petitioner-company. The photocopies of some of the cheques issued by the Kothari family to the petitioner-company were also recovered and it was written that those cheques were issued for purchase of shares of the petitioner-company. It was also stated in the counter affidavit by the respondents that Mr.Deepak Baheti who was shown to be a Director of the petitioner-company was merely an employee of Shri Nandlal Kothari and that he was instrumental in transferring crores of rupees from the accounts of the petitioner-company favouring other concerns of the Kothari Group of Companies as signatory of the bank account of the petitioner-company. Mr.Deepak Baheti avoided to make any representation nor did he appear before the Income-tax authorities despite summons having been issued to him. It was also stated that Mr.Deepak Baheti was signing the bills of not only the petitioner-company but also of M/s. Dee Pearls India Pvt. Ltd. at the same time even though both the concerns were having two independent premises as their offices. It is submitted that if Mr.Deepak Baheti was the Managing Director of the petitioner-company, there was no question of his signing and issuing bills of M/s. Dee Pearls India Pvt. Ltd. which had its office at D-14, Rajouri Garden, New Delhi. Mr.Deepak Baheti had also stated to have sent FAX messages on behalf of M/s. Dee Pearls India Pvt. Ltd. and Shri Nandlal Kothari. It is submitted that the lease deed was a fictitious document prepared only to show the existence of two different parties and it did not reflect the true state of affairs.