RAMESH CHANDER Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) SHRI Ramesh Chander, petitioner, is a partner of Messrs. Shiv Iron Traders, Tanda Road, Jullundur City, and Messrs. Katak Ram Ramji Dass, Tanda Road, Jullundur City. These firms carry on the business of purchase and resale of iron and steel on wholesale basis. Another common partner of the two firms is Shri Diwan Chand Aggarwal, father of Ramesh Chander, petitioner. The third partner in Messrs. Shiv Iron Traders is Roshan Lal, brother of Shri Ramesh Chander, while the third partner in Messrs. Katak Ram Ramji Dass is Shri Krishan Dass, son of Shri Ram Parkash. All the three petitioners and the partners of the two firms, petitioners Nos. 2 and 3, are assessees of the income-tax department. Neither the petitioner-firms nor their partners submitted returns of their income for the assessment years 1970-71 and 1971-72. On August 6, 1971, Ramesh Chander, petitioner, was travelling in an Ambassador car which was stopped by Balwant Singh, Traffic Inspector of Police, near Kartarpur at about 11 a. m. Balwant Singh recovered two bags from the car one of which contained currency notes of the value of Rs. 1,61,000 and the other contained a ledger book and some other documents. He took the occupants of the car along with the car and the recovered bags to the police station, Kartarpur, and got into touch with the Income-tax Officers at Jullundur and the Commissioner of Income-tax at Patiala on phone. The Commissioner of Income-tax issued warrants of authorization empowering Sarvshri Nathu Ram, P. R. Gupta and Kuldip Raj Chopra, Income-tax Officers of Jullundur, to search and seize money, bullion, jewellery or other valuable articles or things and sent them through Shri J. S. Cheema, Income-tax Officer, Special Investigation Branch, in the staff car from Patiala to Jullundur. Shri J. S. Cheema, on arrival at Jullundur at about 5-30 p. m. , was told by Shri Gujjar Mal and Shri G. S. Sandhu, Income-tax Officers, that Shri Nathu Ram, Income-tax Officer, had gone to the business premises of the petitioner-firms while Shri P. R. Gupta had gone to the police station, Kartarpur. Shri J. S. Cheema took Shri Gujjar Mal with him to the business premises of the petitioner-firms where he found Shri Nathu Ram, to whom he handed over the warrant of authorization meant for him and himself proceeded to police station, Kartarpur, to hand over the warrant of authorisation to Shri P. R. Gupta which was in his name. After the receipt of the warrant of authorization, Shri P. R. Gupta seized the bags containing the money, the ledger book and other documents and prepared panchnama. He also recovered a sum of Rs. 411 from the person of Shri Ramesh Chander. The seized articles were brought to the income-tax office, Jullundur, and were deposited in the safe, the keys of which were with Shri P. R. Gupta. Thereafter, Shri Nathu Ram, Income-tax Officer, started proceedings under Section 132 (5) of the Income-tax Act, 1961 (hereafter called " the Act "), for making a summary assessment. The petitioners asked for inspection of the ledger and other documents seized from the police station, Kartarpur, and books and documents seized from their business premises and residential quarters. The Income-tax Officer refused to allow them inspection of the ledger and the documents seized from police station, Kartarpur, but allowed inspection of the books of account and other documents seized from the business premises and residential quarters of the petitioners on 6th and 8th of September, 1971. The petitioners then filed the present petition on October 19, 1971, challenging the search and seizure made by the Income-tax Officers in pursuance of the warrants of authorisation and the proceedings for making the summary assessment and prayed for the return of the money and the books of account and other documents seized from them. This petition was admitted on October 20, 1971, with the following order : " Notice.--Further proceedings will go on and proceed to assessment but no recovery will be made in pursuance thereof till this petition is disposed of. The Income-tax Officer will allow inspection of the documents seized from the petitioners and, if required, give copies thereof. "

(2.) THE Income-tax Officer, Shri Nathu Ram, made the assessment order on October 22, 1971, which necessitated amendment of the petition. The petition was allowed to be amended and in the amended petition, besides other reliefs already claimed, the petitioners have prayed for the quashing of the assessment order passed on October 22, 1971. Written statements have been filed on behalf of the respondents justifying the search, the seizure and the assessment order passed on October 22, 1971.

(3.) THE learned counsel for the petitioners has vehemently argued that the issuance of warrants of authorisation for search and seizure of the money, books of account and other documents was contrary to the provisions of Section 132 of the Act, the relevant provisions of which are as under :