ASSAINAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE same question arises for determination in these two petitions and the answer to the question depends on the interpretation to be placed on Section 132 of the Income-tax Act, 1961, for short the Act. To start with we shall read the section.

(2.) THE facts which led up to the petition, O. P. No. 2226 of 1972, are the following. A sum of Rs. 50,000 was seized from the petitioner by the Central Excise Department on May 14,1971, at 11 p.m. when the petitioner, one Sri Assainar, was travelling from Payyannoor to Kottayam in a stage carriage. THE seizure was made because it was suspected that the said amount represented the value of contraband gold. THE seizure was made under Section 110(1) of the Customs Act, but it was found on investigation that the money seized was not liable to confiscation. In fact no notice as contemplated by Section 110(2) of the Customs Act, 1962, was issued. So the money seized was liable to be returned as provided by Sub-section (2) of Section 110 of the Customs Act, 1962. At that stage the Income-tax Officer who was empowered by the Commissioner as envisaged by Sub-section (1) of Section 132 of the Act intervened and issued a notice purporting to be under Rule 112A of the Income-tax Rules, 1962, to the petitioner requiring him to explain the source of the above-said sum of Rs. 50,000. Counsel for the revenue made available to us what is called Panchanama which from the terms thereof indicated that there has been a search of the office of the Customs Authorities and that the amount was seized. THE notice under Rule 112A of the Income-tax Rules, 1962, is exhibit P-l, and the order under Sub-section (5) of Section 132 of the Act has been produced as exhibit P-2. By the order, exhibit P-2, the amount payable by way of tax on the sum of Rs. 50,000 which was taken to be the total income of the petitioner for the year in question was fixed at Rs. 19,550 and the balance amount has been returned to the petitioner. THE order, exhibit P-2, is challenged in this petition. We shall state 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'I5. At that time the Income-tax Officer intervened and issued a notice similar to exhibit P-l, 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.

(3.) REFERENCE was made to the decision of this court to which we have already adverted in K. Choyi, Income-tax Officer, Assessment-IV, Calicut v. Syed Abdulla Bafakki Thangal, as well as to a decision of the Orissa High Court in Union of India v. Hadibandhu Das. But the learned judge differed from the view taken in these two decisions. The view taken by the Madras High Court has also been taken by the Madhya Pradesh High Court in the decision in Pannalal v. Income-tax Officer, 1974 93 ITR 480 MP: This exhausts the rulings on the subject that have been brought to our notice excepting the decision of the Supreme Court dealing with the ambit and scope of Section 132 in Income-tax Officer, Special Investigation Circle "B", Meerut v. Seth Brothers, 1969 74 ITR 836 (SC). The dictum in that decision is the following :