JAI BHAGWAN OM PARKASH Vs. DIRECTOR OF INSPECTION

JUDGEMENT

(1.) WARRANT of authorisation issued under S. 132 of the IT Act, 1961 and r. 112(1) of the IT Rules, 1962 (hereinafter to be referred as the Act of 1961 and the Rules of 1962 respectively), by CIT on 7th July, 1987, the search and seizure sequel to aforesaid warrant of authorisation resulting into recovery of 4 kgs. of gold ornaments, 119 kgs. of silver ornaments, cash to the tune of Rs. 1,25,000, preparation of Panchnama (Annexure P3), list/inventory of jewellery and other items, as also inventory of cash found seized, list/inventory of account books seized, and the notice under r. 112A of the Rules of 1962, have been challenged by Jai Bhagwan Om Parkash, a partnership concern consisting of Om Parkash, Som Parkash Avinash Chander and Viney Kumar. The warrants of authorisation and the proceedings initiated on the force of the said warrants have been styled by the petitioner to be wholly illegal and without jurisdiction, it is stated that there was no warrant of authorisation for searching the premises of the petitioner inasmuch as the said authorisation was against Om Parkash som Parkash which was an HUF assessee. It is further stated that the jewellery and cash which was found and seized, stands mentioned in the regular accounts books maintained by the assessee, supported by the entries in the Gold Control Register, and also that there was a complete confusion in the mind of the raiding party as to the premises which were to be searched in pursuance of warrant of authorisation against Om Parkash Som Parkash. The petitioner Jai Bhagwan Om Parkash is stated to be a registered firm under S. 185 of the IT Act, and, hence, warrants of authorisation which were issued against Om Parkash Som Parkash could not be utilised for the purpose of searching the premises of the petitioner, is the clamour of the petitioner. Before, however, the matter is dealt in light of the relevant provisions of the IT Act and the rules framed thereunder, it shall be useful, to gloss through the facts that have necessitated the petitioner to take up the aforesaid issued by filling the present petition under Arts. 226/227 of the Constitution of India.

(2.) JAI Bhagwan Om Parkash is a registered firm consisting of the partners stated above. This firm is duly registered under S. 185 of the IT Act and also under the Partnership Act. The petitioner firm had been assessed upto the asst. year 1986 87 by the ITO, B ward, Karnal. On 7th July, 1987, warrants of authorisation under S. 132 of the Act of 1961 were issued in favour of the authorised officers, namely, Sarvshri S.P. Mahajan, ITO, Hissar, and S.C. Sabharwal, ITO, Rewari, to search the premises of Om Parkash Som Parkash. The case of the petitioner firm is that instead of carrying out the search operation of Om Parkash Som Parkash, the premises of which firm were only to be searched as per the warrants of authorisation, the operation was carried in the premises of the petitioner Jai Bhagwan Om Parkash. Insofar as firm Om Parkash Som Parkash is concerned, the same is only an HUF and does not carry on any business except that it is assessed under the WT Act in the status of HUF. A copy of the assessment order under the WT Act, passed with respect to the asst. year 1986 87, pertaining to the aforesaid HUF, has been placed on the record of this petition, and is annexed as P1. A Panchnama was prepared, wherein the name of Om Parkash Som Parkash in respect of the business under the name and style of Jai Bhagwan Som Parkash, Sarafa Bazar, Karnal, was mentioned. As per the case of the petitioner, there was no indication of warrants of authorisation with respect to the business of Jai Bhagwan Om Parkash. A list/inventory of jewellery was prepared, which mentions the name of Om Parkash Som Parkash in respect of the business styled as Jai Bhagwan Om Parkash. The items which were taken into possession, and of which a list was prepared, as per the case of the petitioner, find mention in the stock register of the petitioner, as also in the Gold Control Register, which is maintained in the regular course of business by the petitioner. The main business of the petitioner is to advance money against pawning of gold and silver jewellery, besides the manufacture and sale of gold and bullion ornaments, either studied with stones or otherwise. Another inventory of cash found and seized was prepared, in which the name of Om Parkash Som Parkash is mentioned, as carrying on the business of Bhagwan Das Som Parkash. In the manner aforesaid, there is, thus, a difference in the Panchnama as also in the inventory of cash copy. 4 kgs. of gold ornaments and 119 kgs. of silver ornaments were seized and out of the total cash found in the premises, i.e., Rs. 1,32,173, a sum of Rs. 1,25,000 was seized. The books of accounts were also seized, of which another inventory was prepared. On 30th July, 1987, a notice under r. 112A of the Rules of 1962 were issued in the name of Om Parkash Som Parkash, Jorian Kuan, Karnal, by the ITO, A Ward, Karnal. A reply to the aforesaid notice was sent by the petitioner on 31st July, 1987 by mentioning therein that Om Parkash Som Parkash does not carry on any business at Jorian Kuan, Karnal, nor it maintains any shop, and that no operation under S. 132 of the Act of 1961 was conducted on any of the premises of Om Parkash Som Parkash. Immediately on receipt of the reply aforesaid, a new notice was issued by the ITO, B Ward, Karnal, under r. 112A of the Rules of 1962, to produce or cause to be produced the account books to explain the assets and jewellery which were found and seized .A reply was sent to this notice as well on 6th Aug., 1987, wherein it was mentioned that there were no warrants in the name of Jai Bhagwan Om Parkash and that the entire search which was conducted in the petitioner's premises, was illegal and that from the different notices, one issued by the ITO, A Ward, Karnal, on 30th July, 1987, and the other sent by the ITO, B Ward, Karnal, on receipt of the reply to the notice, it was evident that there was no justification for conducting the search in the premises of the petitioner. With a view to get clarification, a copy of the warrants of authorisation was demanded. On 16th Aug., 1987, the petitioner addressed a letter to the CIT, Rohtak, drawing his attention to the provisions of S. 132 of the Act of 1961, and appraising him the facts under which the search and seized as per the case of the petitioner, was illegal. A demand of the return of all the articles, which were seized at the relevant time, was made by the petitioner. It is also mentioned in the letter aforesaid that no such warrants had been issued in the name of the petitioner firm, and that being so, there was no justification for the IT authorities to have either seized the goods or refused to return them. In spite of the reminders that were given later, when the grievance of the petitioner was not redressed by the IT authorities, the present writ petition was filed in this Court.

(3.) FROM the facts that have been narrated above, Mr. B.S. Gupta, learned counsel for the petitioner, vehemently contends that there was no warrant of authorisation for searching the premises of the petitioner, i.e., Jai Bhagwan Om Parkash and inasmuch as the warrants of authorisation were against Om Parkash Som Parkash, which was an HUF assessee, the proceedings from inception were wholly unauthorised and illegal. He further contends that in any case, there was a confusion in the mind of the raiding party as to the premises which should have been searched in pursuance of the warrants of authorisation issued to them to search the premises of Om Parkash Som Parkash. He further contends that there was neither any information before the competent authorities nor there was an application of mind and the warrants of authorisation Items Weight Amount . . (Rs.) Silver ornaments 1 Qtl. 98 Kgs. 880 gms. 5,50,000 Gold ornaments 6 Kgs. 821 Gms. 16,00,000 Diamond jewellery . 20,000 issued in the absence of information and on account of non application of mind would vitiate the very order of warrant of authorisation as also subsequent proceedings that have been taken later. In alternate, the learned counsel also contends that even if there was information available with the competent authorities and there was an application of mind, then also all the facts and circumstances that necessitated the passing of an order with regard to issuance of warrants for search and seizure, as also the basis on which the proceedings came in offing, were required to be made known to the petitioner, so that the case of the Department could be properly met with and inasmuch as nothing at all has been disclosed in the written statement it shall be presumed that the very essentials of conducting search and seizure, as envisaged under S. 132 of the Act of 1961 were lacking.