Judgment

SABYASACHI MUKHARJI, J. :- This appeal is by special leave from a judgment and order of Punjab and Haryana High Court in an application under Art. 226 of the Constitution. The judgment in question is reported in 94 ITR 567 : (1974 Tax LR 741). By a petition under Arts. 226 and 227 of the Constitution the order of the Income-tax Department dated 10th May, 1972, was passed under S. 132 of the Income-tax Act 1961 (hereinafter called the Act) and Rule 112(II) of the Income-tax Rules, 1962 (hereinafter called the Rules) was challenged The Division Bench by the impugned judgment allowed the petition, quashed the search and seizure warrants and directed the Income-tax Department to return the moneys to the Customs authorities and gave certain consequential directions. In order to appreciate the points involved, it is necessary to refer to certain facts as found by the High Court. On 23rd Aug. 1970 the petitioner before the High Court, who is the respondent here, was travelling by car, alleged to be belonging to his brother from Ambala to Batala. He was intercepted near the Beas river by the Customs Officer and was forcibly taken along with the driver, Gurnam Singh, to the Customs House at Amritsar. The said petitioner in that application was searched along with his driver and the. Customs authorities took. into possession Rs. 93,500 in Indian currency, 10 gold sovereign and the car. On the 24th Aug, 1970, the petitioner. was produced before a Duty Magistrate at Amritsar and was granted bail In the meantime, the Customs department took proceedings under S. 110(2) of the Customs Act, 1962 and extended the period of issuing of the show cause notice under S. 125 of the Customs Act, 1962. These proceedings were challenged in the High Court by Writ Petition and the order of the Customs authority under S. 110(2) was quashed by an order of the learned single Judge of the High Court on 24th April, 1972. The appeal against that decision was dismissed by the Division Bench along with this petition by the High Court. After the said judgment of the learned single Judge, the respondent had approached the Customs authorities for the return of the money and the car. The gold sovereigns were not demanded because according to the said petitioner, these did not belong to him. He had been directed to come on the following day to get back the currency notes and the car. In the meantime on 12th May, 1972 the Income-tax Officer, had served the warrant of authorisation dated 10th May, 1972 issued under S. 132 of the Act and R. 112(II) of the Rules on the respondent as well as on the Customs department, with the result that only the cash was taken possession of by the income-tax authorities. Thereafter, the respondent filed the petition under Arts. 226 and 227 of the Constitution before the High Court in respect of which the judgment impugned here was rendered.

2. It was submitted that the authorisation warrant was illegal, because the, money was not in his possession but was in the possession of the Customs authorities. It was secondly urged that the action taken by the Income-tax authorities under S. 132 of the Act militated the provisions of S. 110(2) of the Customs Act. The High Court felt that so far as the first contention was concerned, it was concluded by the decision of the said High Court in Commr. of Income-tax v. Ramesh Chander, 93 ITR 450. The High Court relied on the following observations at pages 478-479 (of ITR), of the report :-

"I have come to the conclusion that the search and seizure warrants issued under subs. (1) of S. 132 of the Income-tax Act were illegal, firstly, because the search and seizure warrants were issued in the name of Ramesh Chander and he was in fact not in possession of either the currency notes or account books, and, secondly, the income- tax authorities could not seize the currency notes and account books from the police officer who is duty bound to proceed with the case property in accordance with the provisio