AMAR AGRAWAL Vs. DIRECTOR OF INCOME TAX INVESTIGATION

JUDGEMENT

(1.) THIS writ petition has been filed by the petitioners to quash the authorization dt. 24th Jan. , 2003, issued by the Director of IT (Inv.) under Section 132a of IT Act (hereinafter referred to as IT Act) and the action of requisitioning the cash from the custody of respondent No. 3/police Station, Talaiya, Bhopal. Further prayer made is for quashing the notice (P--1) issued by respondent No. 2 under Section 131 (3) of the IT Act on 24th Jan. , 2003, impounding the bank slips found on the cash of the petitioner No. 2. Prayer has also been made to quash the notice (P2) issued under Section 131 (1a) on 24th Jan. , 2003. In addition, writ is sought to quash notice (P-3) dt. 30th Jan. , 2003, issued under Section 131 (3) of IT Act impounding the books of account of the petitioner No. 1, mandamus is sought to return the cash and restrain the respondent Nos. 1, 2 and 4 from taking any further action pursuant to the impugned orders (P-1), (P-2) and (P-3 ).

(2.) IT is averred in the petition that petitioner No. 1 is a resident of Sendhwa, Distt. Barwani, M. P. , and petitioner No. 2 is also resident of Sendhwa and is the uncle of the petitioner No. 1. Both the petitioners are assessed to income-tax by ITO, Khargone. The petitioner No. 1 on Ms way to Bhopal in his car was checked by the respondent No. 3/police Station, Talaiya, Bhopal, on 24th Jan. , 2003, at Retghat, Bhopal. The petitioner No. 1 was carrying cash Rs. 29,80,000 belonging to petitioner No. 2 in a bag. The petitioner No. 2 is the proprietor of the firm. M/s Om Cotton Corporation. The petitioner No. 2 for his business requirements wanted to deposit cash in his bank account at Indore for which he had withdrawn an amount of Rs. 28,00,000 in cash from his bank account with State Bank of Indore, branch Sendhwa, at Sendhwa. The said amount was withdrawn on two consecutive days. Rs. 13,00,000 was withdrawn on 22nd Jan. , 2003 and Rs. 15,00,000 was withdrawn on 23rd Jan. , 2003. The petitioner No. 2 had cash balance Rs. 2,83,498 with him as cash in hand in his regular books of account. The withdrawal is evidenced by bank certificate (P-4) for which cash book entry (P-5) was made. Petitioner No. 2 had handed over the cash amount of Rs. 30,00,000 to the petitioner No. 1 on 23rd Jan. , 2003, who was going to Bhopal from Sendhwa via Indore to meet his sister, with the instruction to deposit the said amount in the bank account of the petitioner No. 2's firm at Indore after obtaining specific confirmation from petitioner No. 2 in this regard after reaching Indore. Petitioner No. 1 reached Indore on 23rd Jan. , 2003, in his car with the above cash in night. After reaching Indore, the petitioner No. 1 tried to contact petitioner No. 2 on phone. However, petitioner No. 2 had to suddenly leave for Maharashtra for settlement of his daughter's marriage and as such petitioner No. 1 was not able to contact petitioner No. 2. He then proceeded to Bhopal with the cash of petitioner No. 2 as per his schedule to meet his sister. On his way to Bhopal, petitioner No. 1's car was inspected by P. S. Talaiya, Bhopal, he was carrying sum of Rs. 29,80,000 in a bag and the remaining Rs. 20,000 was carried in his pocket. Petitioner No. 1 was required to explain the possession of the said cash amount. Petitioner No. 1 explained respondent No. 3 about the source of the cash and also immediately arranged its proof, i. e. , the certificate of the bank (P-4) and letter (P-6) dt. 23rd Jan. , 2003, of petitioner No. 2 faxed to respondent No. 3.

(3.) IT is further averred that respondent No. 3 seized the car and cash in the bag amounting to Rs. 29,80,000 from the petitioner No. 1. Case under Section 102 of Crpc was registered. Police informed the respondent No. 1 as to the seizure of the cash without producing the seized property before learned Magistrate. The respondent No. 3 immediately issued authorization under Section 132a of the IT Act on 24th Jan. , 2003, authorizing the respondent No. 2 who in turn required respondent No. 3 to hand over the possession of the seized cash Rs. 29,80,000 to respondent No. 2. Statement (P-7) of petitioner No. 1 was recorded by Dy. Director, IT (Inv. ). Respondent No. 2 had no power or authority to record statement. Cash was handed over to the IT Department. Car was produced before the Magistrate, and was released by the Magistrate. Director of IT (Inv.) under Section 131 (3) of the IT Act by order (P-2) dt. 24th Jan. , 2003, got the said cash deposited in State Bank of India, Udyachal branch, Bhopal, for issuing draft for Rs. 29,80,000 in favour of CIT's P. D. account and impounded the slips attached with the cash. Thereafter, the respondent No. 2 issued notice under Section 131 (,1a) of IT Act dt. 24th Jan. , 2003, to the petitioner No. 1 directing him to personally appear and to produce his books of account on 27th Jan,, 2003. The petitioner No. 1 appeared before the respondent No. 2 with his books of account on 27th Jan. , 2003. On this day, the matter was adjourned to 30th Jan. , 2003. On 30th Jan. , 2003, the respondent No. 2 impounded the books of account produced by the petitioner No. 1 by order (P-3) dt. 30th Jan. , 2003, under Section 131 (3) of IT Act. On the instructions of ITO, Khargone, conducted a survey at the business premises of petitioners on 24th Jan. , 2003, in the evening and verified the availability of cash in the books of account of the petitioner No. 2. This fact was also informed by the ITO to respondent No. 3 on telephone on 24th Jan. , 2003 itself. ITO also recorded the statements (P-8) of the manager and the accountant of the firm of petitioner No. 2. The statements of petitioner No. 2 could not be recorded as he was at Aurangabad (Maharashtra), The ITO thus, after conducting the survey issued summons (P-9) dt. 24th Jan. , 2003, under Section 131 of the IT Act for appearance of the petitioner No. 2 along with the books of account on 27th Jan. , 2003. Petitioner No. 2 appeared before the ITO on 27th Jan. , 2003. Then statement (P-10) of petitioner No. 2 was recorded. It is further submitted that as per Section 132a of the IT Act, the authority authorizing requisitioning officer to requisition any asset should have a reason to believe based on information in his possession that the asset is not disclosed or is not likely to be disclosed. Then only the authority can take action under Section 132a of the Act. A mere information by the police that the petitioner No. 1 was found carrying cash of Rs. 29,80,000 could not be said to be an information on the basis of which the respondent No. 1 could have had any reason to believe that the seized sum was not disclosed or would not have been disclosed, for the purposes of the Act. Under Sections 131 (1), 131 (1a) and 131 (3) of IT Act, the AO can call for discovery and inspection, etc. as provided, from any person within his jurisdiction. The respondent No. 2 had no authority either to issue summons under Section 131 (1a) for examining the petitioner No. 1 on oath, enforcing the attendance and production of books of account of petitioner No. 1 at her office to impound the books of account, hence writ petition has been preferred.