BAJRANG LAL Vs. UNION OF INDIA

JUDGEMENT

(1.) ON 29. 7. 1987 the Customs authorities raided the residence of the petitioner and took the search of his house. Ornaments i. e. Silver weighing 61. 775 kgs. and gold ornaments weighing 2150 gms. were seized vide panchnama Annex. l. The above said ornaments were seized on the ground that the petitioner had violated Sections 16 and 71 of the Gold (Control) Act, 1968. It is said in the petition that till date no action has been taken by the respondents nor any case has been made out after investigation and these articles are lying with the respondents.

(2.) THE petitioner has averred that these ornaments are duly entered in the regularly maintained books with the slips of the owners and these are pledged with the petitioner and his son and the property belongs to the debtors. On 3. 2. 1988 a notice was served by the petitioner for the release of the property. This is Annex. 2. It is further stated that on 8. 9. 1987, respondent No. 4 who is the Commissioner of Income-tax issued a notice which is Annex. 3. the petitioner prays that the seizure of the ornaments by invoking the power under Section 66 of the above said Act is illegal and without jurisdiction and there is no violation on the part of the petitioner of any provisions particularly Sections 16 and 71 of the Act. THE petitioner says that the seized articles do not belong to him and are only pledged by certain persons as security and thus not liable for confiscation or seizure. No notice as required under Section 79 of the Act was given and no proceedings are stated to be pending. THE detention of these articles for over six months was illegal. No further action under any provisions of the Act including Section 79 has been taken against the petitioner by the respondents. THE order passed by the respondent No. 4 was bad in law inasmuch as the seized goods already stood disclosed and were with the Customs authorities, therefore, under Section 132-A of the Income-tax Act, the respondent No. 4 had no authority or jurisdiction to issue notice Annex. 3. THE Customs authorities were not supposed to hand-over the seized articles to the Income- tax authorities.

(3.) ON a perusal of Annex. 3 I find that the same is issued under the authority and signatures of respondent No. 4 and is addressed to the Deputy Director of Inspection Shri S. N. Soni and Assistant Director of Inspection and some other names are given against the column underlined Assistant Director of Inspection and Income Tax Officer. ON the next page it says that the asset taken into custody by Shri Kishan Singh, Dy. Collector (AS) Customs and Central Excise Collector and then there is another name which is not legible but there is authorisation to the Deputy Director of Inspection/ Inspecting Assistant Commissioner of Income-tax/ Assistant Director of Inspection/ Income-tax Officer requiring the said officer or authority to deliver to you the books of account and other documents or assets as aforesaid. This document is in the shape of a cyclostyied proforma and against blank columns the names of the officers and designations incorporated. It would be quite useful to reproduce hereunder these two sections in order to appreciate the matter in controversy. Section 132 of the Income-tax Act, 1961 reads as under : "132. Search and Seizure - (1) Where the Director General or Director or the Chief Commissioner or Commissioner or any such Deputy Director or Deputy Commissioner as may be empowered in this behalf by the Board, in consequence of information in his possession has reason to believe that- (a) amy person to whom a summons under sub-section (1) of section 37 of the Indian Income- tax Act 1922 (11 of 1922), or under sob-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce,or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, Such books of account or other documents as required by such summons or notice or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not , or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion , jewellary or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been , or would not be , disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,- (A) the Director General or Director or the Chief Commissioner or Commissioner, as the case may be , may authorise any Deputy Director, Deputy Commissioner, Assistant Director, Assistant Commissioner or Income-tax Officer, or (B) such Deputy Director or Deputy Commissioner, as the case may be, may authorise any Assistant Director, Assistant Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept ; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available ; (ii-a) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable thing or article found as a result of such search; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money,bullion, jewellery or other valuable article or thing: Provided that where any building, place, vehicle, vessel or aircraft referred to in clause (i) is within the area of jurisdiction of any Chief Commissioner or Commissioner, but such Chief Commissioner or Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under this sub- section in all cases where he has reason to believe that any delay in getting the authorisation from the Chief Commissioner or Commissioner having jurisdiction over such person may be prejudicial to the interests of the revenue : Provided further that where it is not possible or practicable to take physical possession of any valuable article of thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that the shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii ). (1a) Where any Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other document, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Director General or Director or any other Chief Commissioner or Commissioner or any such Deputy Director or Deputy Commissioner as may be empowered in this behalf by the Board to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel vehicle or aircraft not mentioned in the authorisation under sub- section (1), such Chief Commissioner or Commissioner may, notwithstanding anything contained in section 120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. (2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1a) and it shall be the duty of every such officer to comply with such requisition. (3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub-section (1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation.- For the removal of doubts, it is hereby declared that serving of any order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1 ). The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.- for the removal of doubt, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income Tax Act, 1922 (11 or 1922), or under this Act. (4a) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed - (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom- it purports to have been so executed or attested. (5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132a and 132b referred to as the assets) is seized under sub-section (1) or sub-section (1a), the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such inquiry as may be prescribed, shall, within one hundred and twenty days of the seizure, make an order, with the previous approval of the Deputy Commissioner,- (i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him : (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act; (ii-a) determiningg the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act,' as if the order had been the order of regular assessment; (iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230a in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (ii-a) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized; Provided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the. assets were seized and may also determine the interest or penalty, if any, payable or impossable accordingly; Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in clauses (ii), (ii-a) and (iii) or any part thereof, the Income-tax Officer may, with the previous approval of the Chief Commissioner or Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. (6) The assets retained under sub-section (5) may be dealt with in accordance with the provisions of section 132b. (7) If the Income-tax Officer is satisfied that the seized assets or any part thereof were held by such person, for or on behalf of any other person, the Income-tax Officer may proceed under sub- section (5) against such other person and all the provisions of this section shall apply accordingly. (8) The books of account or other documents seized under sub- section (1) or sub-section (1a) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Chief Commissioner or Commissioner for such retention is obtained; Provided that the Chief Commissioner or Commisioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. (8a) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order, except where the anthemed officer, for reasons to be recorded by him in writing, extends the period of operation of the order beyond sixty days, after obtainig the approval of the Commissioner for such extension : Provided that the Commissioner shall not approve the extension of the period for any period beyond the expiry of thirty days after the completion of all the proceedings under this Act in respect of the years for which the books of account, other documents, money, bullion, jewellery or other valuable articles or things are relevant. (9) The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1a) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (9a) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1) the books of account or other documents or assets seized under that sub-section shall be handed over by the authorised officer to the Income-tax Officer having jurisdiction over such person within a period of fifteen days of such seizure and thereupon the powers exercisable by the authorised officer under subsection (8) or sub-section (9) shall be exercisable by such Income-tax Officer. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1a) objects for any reason to the approval given by the Chief Commissioner or Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents. (11) If any person objects for any reason to an order made under sub-section (5), he may, within thirty days of the date of such order, make an application to the Chief Commissioner or Commissioner, stating therein the reasons for such objection and requesting for appropriate relief in the matter. (11a) Every application referred to in sub-section (11) which is pending immediately before the 1st day of October, 1984, before an authority notified under that sub-section as it stood immediately before that day shall stand transferred on that day to the Chief Commissioner or Commissioner and the Chief Commissioner or Commissioner may proceed with such application from the stage at which it was on that day : Provided that the applicant may demand that before-proceeding further with the application, he be reheard. (12) ON receipt of the application under sub-section (10) the Board, or on receipt of the application under sub-section (11) the Chief Commissioner or Commissioner, may, after giving the applicant an opportunity of being heard, pass such orders as it or he thinks fit. (13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1a ). (14) The Board may make rules in relation to any search or seizure under this section : in particular, and without prejudice to the generally of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer - (i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available : (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.- In computing the period referred to in sub- section (5) for the purposes of that sub-section, any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. Explanation 2.- In this section, the word "proceeding" means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year. "