LAXMIPAT CHORARIA Vs. K K GANGULI

JUDGEMENT

(1.) One Laxmipat Choraria was apprehended by the customs officials at the Palam Airport at Delhi, coming by an internal flight on the 13th January, 1967, with Rs. 3,60,000. Thereafter, the residence and the office premises of the Chorarias were searched by the Bombay customs authorities the same evening. As result of the search Indian currency notes amounting to Rs. 8,700 were recovered from the residence of Laxmipat Choraria and currency notes amounting to Rs. 34,074 were recovered from the office premises at Bombay. The searches were in pursuance of Section 105 of the Customs Act, 1962. The said search was conducted by the customs authorities under the reasonable belief that the moneys in the hands of the Chorarias represented the sales proceeds of smuggled goods. During the search it appears that the officers of the income-tax department were also present. On the 14th February, 1967, the income-tax authorities in Bombay served a warrant of authorisation under Section 132 of the Income-tax Act, 1961, issued, by the Commissioner of Income-tax, Calcutta. As a result of the said authorisation issued by the Commissioner of Income-tax, Calcutta, the said sum, of Rs. 42,774 was taken away by the income-tax authorities from the customs authorities. Thereafter, on the 22nd February, 1967, a notice was issued, asking Laxmipat Choraria to submit an explanation in writing as to the nature of possession and the sources of acquisition of the money recovered from the customs authorities in Bombay, by the income-tax authorities. This notice, was issued under Section 132(5) of the Income-tax Act, 1961 Laxmipat Choraria by a letter written by his authorised representative stated that the said section had no application. Thereupon, on the 12th May, 1967, an order was passed under Section 132(5) of the Income-tax Act, 1961, whereby it was held by the Income-tax Officer, "B" Ward, Hundi Circle, Calcutta, that Rs. 32,274 represented undisclosed income of the assessee and in the absence of any evidence as to which previous year or years the income belonged it was assessed at the rate prevalent in the relevant assessment year, namely, 1966-67. The notice dated 22nd February, 1967, which is annexure "C" to the petition, and the order dated 12th May, 1967, which is annexure "D" to the petition, are the subject-matters of this rule in the application under Article 226 of the Constitution made by Laxmipat Choraria, the petitioner herein.

(2.) In support of this application Mr. Ginwala, learned counsel for the petitioner, mainly urged two points before me. He contended, firstly, that Section 132 of the Income-tax Act, 1961, cannot have any application in the facts and circumstances of this case because in order to be a proper search and seizure as contemplated by Section 132 of the Income-tax Act, 1961, the documents or the moneys must be in possession of the person from whom seizure is directed. In this case when the authorisation under Section 132 of the Income-tax Act, 1961, was issued the documents and/or the moneys and/or the goods were in the possession of the customs authorities. In those circumstances it was contended by Mr. Ginwala that there could not have been any valid authorisation or proper authorisation under Section 132 of the Income-tax Act, 1961. It was, secondly, contended that the time for disclosure of income for the assessment year 1966-67 had not yet come when the purported seizure took place. Therefore, it was incorrect and improper and without jurisdiction to say that the amount of moneys recovered from the customs authorities represented the undisclosed income of the assessment year 1966-67. It could not be disclosed because time for disclosure had not yet come. On that ground Mr. Ginwala contended that the order passed under Section 132(5) by the Income-tax Officer was wholly without jurisdiction. Inasmuch as six months had already elapsed after the search by the customs authorities, the customs authorities were not entitled to retain the goods and the books and/or the moneys seized and they would not have been able to retain them but for the illegal seizure by the income-tax authorities, according to Mr. Ginwala.

(3.) The first point therefore that has to be considered in this case is whether there could have been an order under Section 132 for seizing the goods of the petitioner from the custody of the customs. It is therefore necessary to set out the relevant portion of Section 132 of the Income-tax Act, 1961.