1968 Supreme(Cal) 208

HIGH COURT OF CALCUTTA
D. N. SINHA, A. K. MUKHERJI
MAMCHAND AND CO. - Appellant
Versus
COMMISSIONER OF INCOME-TAX, WEST BENGAL II - Respondent
Matter 293  Of  1967
Decided On : SEPTEMBER 19, 1968

Headnote:

Whether the Commissioner of Income Tax has the authority to authorize search and seizure of books of account, documents, money, bullion, jewellery or other valuable articles or things under Section 132 of the Income Tax Act, 1961.

Fact of the Case:

The Commissioner of Income Tax, West Bengal, issued two warrants of authorization under Section 132 of the Income Tax Act, 1961, authorizing the search of the premises of Messrs. Mamchand and Company, a partnership firm, and the residences of its partners, Mamchand Agarwalla and Murarilal Agarwalla. The warrants were issued on the basis of information received by the Commissioner that the assessee would not produce or cause to be produced the books of account or other documents which would be useful for, or relevant to, any proceeding under the Income Tax Act, and that the assessee was in possession of money, bullion, jewellery or other valuable articles or things which represented either wholly or partly income or property which had not been disclosed for the purposes of the Income Tax Act. The assessee challenged the validity of the warrants and the search and seizure conducted thereunder, contending that the Commissioner did not have the authority to authorize the search and seizure, and that the search and seizure was excessive and arbitrary.

Finding of the Court:

The Court held that the Commissioner of Income Tax had the authority to authorize the search and seizure under Section 132 of the Income Tax Act, 1961. The Court found that the Commissioner had received information that the assessee would not produce or cause to be produced the books of account or other documents which would be useful for, or relevant to, any proceeding under the Income Tax Act, and that the assessee was in possession of money, bullion, jewellery or other valuable articles or things which represented either wholly or partly income or property which had not been disclosed for the purposes of the Income Tax Act. The Court held that this information was sufficient to give the Commissioner reason to believe that the assessee would not produce or cause to be produced the books of account or other documents which would be useful for, or relevant to, any proceeding under the Income Tax Act, and that the assessee was in possession of money, bullion, jewellery or other valuable articles or things which represented either wholly or partly income or property which had not been disclosed for the purposes of the Income Tax Act. The Court also held that the search and seizure was not excessive or arbitrary, and that the Commissioner had acted in accordance with the provisions of Section 132 of the Income Tax Act, 1961.

Issues: 1. Whether the Commissioner of Income Tax had the authority to authorize the search and seizure under Section 132 of the Income Tax Act, 1961? 2. Whether the search and seizure was excessive or arbitrary?

Ratio Decidendi: 1. The Commissioner of Income Tax has the authority to authorize the search and seizure under Section 132 of the Income Tax Act, 1961, if the Commissioner has reason to believe that: (a) any person to whom a summons under Sub-section (1) of Section 37 of the Indian Income-tax Act 1922 (11 of 1922) or under Sub-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, (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, (c) any person is in possession of any 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 disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in the section referred to as the undisclosed income or property). 2. The search and seizure is not excessive or arbitrary if the Commissioner has acted in accordance with the provisions of Section 132 of the Income Tax Act, 1961.

Final Decision: The appeal was dismissed with costs.