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Karnataka High Court
Judges : A.Narayana Pai,Ahmed Ali Khan
C.VENKATA REDDY - Appellant
Versus
INCOME-TAX OFFICER, (CENTRAL)-I - Respondent
Writ Petn. 2310 Of 1966
Decided On : 01/03/1967
The impugned Section 132 of the Income-tax Act, 1961, is neither incompetent nor invalid as infringing any of the fundamental rights guaranteed under articles 14, 19, 21 and 31 of the Constitution.
Fact of the Case:
The petitioners, a firm of four partners, challenged the constitutional validity of Section 132 of the Income-tax Act, 1961, which empowers the Income-tax authorities to conduct searches and seizures in certain circumstances. The petitioners argued that the section was violative of their fundamental rights under Articles 14, 19(1)(d), (f) and (g), and 21 of the Constitution.
Finding of the Court:
The court held that Section 132 of the Income-tax Act, 1961, is not violative of the fundamental rights guaranteed under Articles 14, 19, 21 and 31 of the Constitution.
Issues: 1. Whether Section 132 of the Income-tax Act, 1961, is violative of the fundamental rights guaranteed under Articles 14, 19(1)(d), (f) and (g), and 21 of the Constitution? 2. Whether the searches and seizures conducted by the Income-tax authorities were carried out in a high-handed manner and without regard for the provisions of Section 132 of the Income-tax Act, 1961?
Ratio Decidendi: 1. The court held that Section 132 of the Income-tax Act, 1961, is not violative of the fundamental rights guaranteed under Articles 14, 19, 21 and 31 of the Constitution because: a) The section is a valid law enacted by a competent legislature and is not violative of any of the fundamental rights guaranteed under Articles 14, 19(1)(d), (f) and (g), and 21 of the Constitution. b) The section is a reasonable restriction on the fundamental rights guaranteed under Articles 19(1)(d), (f) and (g) and is in the interests of the general public. c) The section does not violate the fundamental right of personal liberty under Article 21 because any deprivation of personal liberty is in accordance with a valid law. 2. The court held that the searches and seizures conducted by the Income-tax authorities were not carried out in a high-handed manner and without regard for the provisions of Section 132 of the Income-tax Act, 1961, because: a) The Commissioner of Income-tax had reasonable belief that the circumstances mentioned in clauses (b) and (c) of the first sub-section of Section 132 existed. b) The searching officers applied their mind to the question of usefulness or relevancy of the documents seized and acted with restraint.
Final Decision: The court dismissed the writ petition and held that the impugned Section 132 of the Income-tax Act, 1961, is neither incompetent nor invalid as infringing any of the fundamental rights guaranteed under articles 14, 19, 21 and 31 of the Constitution.
( 1 ) THE 2nd petitioner, the Madras Bangalore Transport Company, is a firm of four partners P. V. S. Mani, C. Munireddy, C. Venkatareddy and J. Ramakrishniah. Of these, C. Venkatareddy is the 1st petitioner.
( 2 ) THE firm has its principal place of business at Nos. 36-37, Second Line Beach, Madras City, and is an assessee to Income-tax within the jurisdiction of the Income-tax Officer, Central Circle viii, Madras. The Firm carries on extensive business as a road transport operator and common carrier with over 200 offices situated in various parts of the country including the Mysore State, one of its branch offices is at No. 34, Infantry Road, Bangalore, and another at No. 14, Second main Road, Taragupet, Bangalore. Two out of the partners are residents of Bangalore. C. Munireddy resides on Nanjappa Road Santinagar; Vekatareddy, the 1st petitioner resides at No. 20 (1), Sir M. N. Krishna Rao Road, Basavangudi, Bangalore. The Partners also are assessees to income-tax in their individual capacity.
( 3 ) SO far as the firm is concerned, the assessments for four years 1962-63, 1963-64, 1964-65 and 1965-66 are pending, that is to say, the returns having been filed they are awaiting scrutiny by the Department. It is not clear from the affidavits filed whether the firm has filed its return of the current assessment year 1966-67. The accounting year of the firm is the year commencing from 1st July and ending with the 30th of the immediately succeeding month of June.
( 4 ) ON 11-10-1966, searches were conducted at various offices of the firm and residences of its partners by the officers of the Income-tax Department pursuant to authorisations by the commissioner of Income-tax (Central), Madras, the 3rd respondent in the petition, issued under section 132 of the Income-tax Act, 1961. The residence of the 1st petitioner Venkatareddy at no. 20 (1), Sir M. N. Krishna Rao Road, Basavangudi, Bangalore, was searched by C. R. Sundararajan, Income-tax Officer, Central Circle I, Bangalore, the 1st respondent in the petition. The search of the business premises of the firm at No. 14 Second main Road, Taragupet, was conducted by M. M. Kurup, Income-tax Officer, Central Circle II, Bangalore, the 2nd respondent in the petition. The search at the residence of Munireddy on Nanjappa Road, Shantinagar, bangalore, was conducted by G. Sarangan, Income-tax Officer, Company Circle, Bangalore, and the search at the branch office of the firm at No. 34, Infantry Road, Bangalore, was conducted by s. P. Narayanappa, III Income-tax officer, City Circle II, Bangalore; these two officers are not impleaded as respondents in the petition.
( 5 ) THEREAFTER, this writ petition was presented to this court on 7th November 1966, the principal prayers in which are to quash by the issue of appropriate writ the warrants or authorisations said to have been issued by the 3rd respondent, the Commissioner of Income-tax, under Section 132 of the Income-tax Act and to direct the return of all books and documents taken possession of at the searches conducted as stated above. The preliminary orders were passed on the writ petition on 10th November 1966 admitting the petition and directing the respondents to deposit into this court all books and papers seized from the Bangalore premises of the petitioners, with the further direction that neither side should have access to the books and papers or inspection thereof without an order of this Court. A further direction was also made requiring the production of authorisation issued by the 3rd respondent.
( 6 ) IMMEDIATELY on service of the copies of the order, the respondents appeared by counsel. On 17-11-1966, having obeyed the directions of this court in the aforesaid preliminary order, the respondents filed. I. A No. III praying for the return of books and papers put into Court with an undertaking to produce them whenever called upon by this Court. The application was supported by the affidavit of C. R. Sundarar
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