UNION OF INDIA Vs. STATE

JUDGEMENT

(1.) THIS revisional application is directed against an order of the Chief Presidency Magistrate, Calcutta, revising an order passed by his predecessor in office allowing an application under O. XIII, r. 10, of the CPC for sending certain documents to the ITO (Central) Circle No. VII, and directing the ITO in question to indicate specifically what documents he wants for the purpose of income-tax assessment, so that the question of relevency thereof for the purpose of an assessment may be examined in the presence of all the interested parties.

(2.) THE facts of the case are briefly as follows : On 15th Sept., 1959, certain books of account, documents and correspondence were seized from the firm of opposite party No. 2, Sohan Lal Sethia, on the authority of a search warrant issued by the Chief Presidency Magistrate, Calcutta, under s. 19(3) of the Foreign Exchange Regulation Act, 1947. THEre was, however, no case in Court started under the provisions of the Foreign Exchange Regulation Act against Sohan Lal Sethia or against Sohanlal Sethia and Sons (P) Ltd. by the Enforcement Officer attached to the Ministry of Finance, Department of Economic Affairs, Government of India, but an adjudication proceding was started and as a result of the adjudicantion the claims of the Government of India against Sohan Lal Sethia and his company were settled. On 6th May, 1960, the ITO (Central) Circle No. VII, Calcutta, made an application to the Chief Presidency Magistrate, Calcutta, for getting custody of all the documents seized in execution of the search warrant issued by the Chief Presidency Magistrate on 15th Sept., 1959, stating that the documents were required for reference in an assessment proceeding pending before the ITO against Sohan Lal Sethia and his company. A letter of request under O. XIII, r. 10 of the CPC containing a list of the documents was annexed to the application. On 11th May, 1960, the then Chief Presidency Magistrate passed an order that the investigating officer should make over the seized documents to the ITO; but the Foreign Exchange Enforcement Directorate then moved the Chief Presidency Magistrate for being permitted to retain the documents until the completion of the adjudication processdings against Sohan Lal Sethia and his company and the learned Chief Presidency Magistrate then passed a revised order that the ITO would get the documents after the adjudication proceedings were concluded. THE adjudication proceedings were concluded by 9th March, 1961, and then the ITO (Central) Circle No. VII, Calcutta, renewed his prayer for the documents in accordance with the letter of request under O. XIII, r. 10, of the CPC already sent to the Chief Presidency Magistrate. On 18th March, 1961, the learned Chief Presidency Magistrate directed that the application be put up on 3rd June, 1961. In the meantime, on 15th April, 1961, opposite party No. 2, Sohan Lal Sethia, filed an application before the Chief Presidency Magistrate for the return of all the documents seized on 15th Sept., 1959, at the instance of the Foreign Exchange Enforcement Directorate. THE learned Chief Presidency Magistrate after hearing both parties passed the impugned order on 26th Apri, 1961. He observed that the IT Department could not as of right claim to have the custody of all the seized documents without mentioning the particulars of the documents which they wanted to have and without showing that they were entitled to get these documents in view of the provisions of s. 22 r/w s. 2(11) of the IT Act. Accordingly, the ITO was directed to inspect the documents which were directed to be produced by the Enforcement Directorate on 3rd May, 1961, and then to inform the Court which documents in particular the ITO wanted for the purpose of income-tax assessment.

(3.) MR. Dutta has next urged that a settlement had been made regarding the assessment of the various concerns of Sohan Lal Sethia, between him and the CIT on 27th Jan., 1959, under which Sohan Lal Sethia on behalf of the concerns agreed to assessment on a previously undisclosed income of fifty lakhs of rupees made by the concerns during the asst. yrs. 1940-41 to 1958-59; and that in view of this settlement it is not open to the IT Department to reopen the assessment of the years 1940-41 to 1958- 59 on the basis of the old documents which were seized by the Foreign Exchange Enforcement Directorate. MR. Dutta has also referred to s. 22(4), proviso, of the IT Act, which provides that the ITO shall not require the production of any accounts relating to a period more than three years prior to the previous year as defined in the IT Act. MR. Dutta has urged that the ITO could not circumvent that statutory provision by purporting to act under O. XIII, r. 10, of the CPC and get hold of the account papers of a much earlier period.