VENKATESWARA LODGE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) On the 5th January, 1966, the premises of Sri Venkateswara Lodge, Lakdi-ka-pool, Hyderabad, were searched by four Income-tax Officers and their staff, and, during the search, which went on from 9-30 a.m. up to 7-30 p.m. that day, a large number of account books, documents and slips were seized. The Income-tax Officer were armed with a warrant of authorisation issued by the Commissioner of Income-tax Hyderabad, under section 132 of the Income-tax Act, 1961, authorising the Income-tax Officers to enter the said premises and seize books of account, other documents, money, bullion, jewellery or other valuable article or thing, which may be found necessary or useful for the purpose of income-tax assessment proceedings till then pending or in respect of future assessment affecting Sri Venkataswara Lodge. In pursuance of that warrant of authorisation, the Income-tax Officer seized large number of account books, documents and slips after observing the formalities prescribed by rule 112 of the Income-tax Rules, 1962, as amended by the Rules of 1965. This writ petition has been filed by A. Ramaswamy and K. Ramamurty in their capacity as partners of Sri Venkateswara Lodge, challenging the legality and regularity of the entire proceedings pertaining to the search and seizure and seeking a writ of prohibition with the following prayers :

(2.) It may be mentioned that the three respondents to this petition are respectively the Commissioner of Income-tax, Hyderabad, the Income-tax Officer, A-1, A Ward, Hyderabad, and the Income-tax Officer, Income-tax-cum-wealth-tax Circle II, Hyderabad.

(3.) However, to my great dismay and distress, the Income-tax Officer, A-1(A) Ward, the 2nd respondent herein on January 5, 1966, at about 9-30 a.m. with nearly twenty officers, inspectors and peons without any prior notice entered my business premises, Sri Venkataswara Lodge, at Lakdi-ka-pool, and Sri Venkateswaa Lunch Home near Secretariat and also the residential house at Erramanzil and searched all my belongings including the closed places wherein women live. During the course of these searches at all the three places, the officers did not find any cash, bullion, jewellery or other valuable articles except a cash of Rs. 222 and little jewellery belonging to the women. All this was done at the instance of one Mr. N. S. Mani, who was ex-manage of our business. He worked for about six years and when we questioned his behaviour regarding the business dealing and also his omission to make proper representation before the income-tax authorities in these assessment proceedings he grew inimical towards us and obstained from duty since March, 1965, and began to blackmail us for money and with other motives. When the Income-tax Office and his assistants came to my business premises at Lakdi-ka-pool, the said Mr. N. S. Mani brought two gunny bags containing loose sheets and small books and with the aid of the income-tax official he brought those bags inside the business premises and the search party had made an inventory of some of the papers therein and also seized them stating that they relate to our business. When the search party came, I was not at my business premises and on receiving information I came to that place at about 11 a.m. and I immediately protested that the two gunny bags load of books of accounts and loose sheets do not belong to our business and it was foisted on us by Sri Mani who bore illwill against us and who waited outside the premises of Ventakateswara Lodge from 7-30 a.m. with bags and brought into the premises just at the time when the search began. It is obvious he is hand-in-glove with the officers in search as a pre-planned affair. I was forced and pressed to pay rickshaw charges of Rs. 2 and under protest I paid the same and I was even forced and pressed to sign some of the documents so illegally seized against my will. I requested the officers to record statements from Sri N. S. Mani regarding the custody of these documents and how he could get them without our knowledge, but he slipped away even during the process of search. However, the officer was prepared to note in my statement that they were brought from Sri. N. S. Manis house (appendix D ). Accordingly they took a statement from me and, even without verifying the nature of documents contained in these bags, prepared an inventory for some of them, and they did not have the necessary patience to prepare a full inventory and so bundled up the documents after nothing them as bundle of papers. After some time they could not do even that but simply collected all those loose papers in those gunny bags. The officer did not give a receipt for the gunny bags but the Inspector who accompanied the Income-tax Officer gave a receipt (appendix C ) stating that two gunny bags containing loose papers, etc., relating to M/s. Venkateswara Lodge, Lakdi-ka-pool, Hyderabad, were received. The documents relating to other business concerns, namely, Srinivasa Lodge, belonging to Sri Krishnamurthy, and Srinivasa Lunch Home, now defunct, were also seized. Thus, it is clear the seizure is enormous and not in proper exercise of the powers and is clearly mala fide in the sense that there was an abuse of power conferred on the Income-tax Officer under section 132 of the Act (43 of 1961), as it stood unamended and after the Amendment Act (I of 1965).