R RAMACHANDRA NAIDU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a petition under article 226 of the Constitution praying for the issue of a writ of certiorari calling for the records of Income-tax Officer, Circle I, Kancheepuram, the second respondent herein, and quashing the order dated January 28, 1972, made by him under section 132(5) of the Income-tax Act, 1961 Armed with a warrant under section 132(1), the second respondent searched the premises of the petitioner at No. 36, Kumarichetty Street, Kancheepuram, and seized out of a cash of Rs. 20, 654, a sum of Rs. 15, 000 and certain sale deeds and promissory notes. A notice under section 139(2) for the assessment year 1971-72 and also a notice under section 132(5) read with rule 112A were served on the petitioner on November 10, 1971, for the hearing of the case on November 30, 1971. At the request of the petitioner, the hearing was adjourned to December, 1971, and later to January 20, 1972. On that date, the petitioner was represented by a chartered accountant and he produced statements of accounts showing the investments made during the period from 1957-58 onwards up to 31st October, 1971. The petitioner also produced certain other records, namely, certificates and affidavits regarding his income during the years between 1957-58 and 1971-72.

(2.) THE value of the total investments as on October 31, 1971, was found to be Rs. 1, 58, 200. Taking into account the approximate expenditure of the assessee for the maintenance of his family at Rs. 6, 000 per annum, he estimated the total "outlay" at Rs. 2, 20, 000. THE Income-tax Officer was also of the view that the lands of the petitioner would not have yielded much income and he estimated the net agricultural income from his lands at Rs. 60, 000 or Rs. 70, 000. Regarding the balance of Rs. 1, 50, 000 out of the total of Rs. 2, 20, 000 estimated by him, the Income-tax Officer considered that it was not possible for him, on the materials available, to ascertain to which particular previous year or years such income or any part thereof related, and, accordingly, invoking the first proviso to section 132(5), held that the entire income of Rs. 1, 50, 000 related to the financial year, corresponding to the assessment year 1971-72, in which the assets were seized, and proceeded to determine the tax that would be payable on the income so estimated and arrived at a sum of Rs. 1, 05, 800 as the tax payable. As the tax payable on the estimated income was much more than the sum of Rs. 15, 000 seized, he made the order of retention of the entire sum of Rs. 15, 000In this writ petition Mr. M. S. Venkatarama Iyer, the learned counsel for the petitioner, strenuously contended that the investment of Rs. 1, 58, 200 evidenced by the document did not relate to any particular year and it was spread over a number of years, and, therefore, the estimation of the entire income as if it was derived in the financial year relevant to the assessment year 1971-72 alone is illegal and unjustifiable.