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1987 Supreme(Cal) 193
High Court Of Calcutta
Dipak Kumar Sen, Shyamal Kumar Sen
SHANTI HORA - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
Matter 899 Of 1987
Decided On : 06/15/1987
The Income-tax Officer having jurisdiction over the assessee is the one who should enforce the bank guarantee furnished by the assessee for release of seized assets.
Headnote:
INCOME TAX - SEARCH AND SEIZURE - JURISDICTION - JURISDICTION OF INCOME TAX OFFICER TO ENFORCE BANK GUARANTEE FURNISHED BY ASSESSEE FOR RELEASE OF SEIZED ASSETS - SECTION 132 OF THE INCOME TAX ACT, 1961 - COURT HELD THAT THE INCOME TAX OFFICER HAVING JURISDICTION OVER THE ASSESSEE IS THE ONE WHO SHOULD ENFORCE THE BANK GUARANTEE AND NOT THE INCOME TAX OFFICER WHO CONDUCTED THE SEARCH AND SEIZURE.
Fact of the Case:
The appellant, an assessee under the Income-tax Act, 1961, was subjected to a search and seizure operation by the Income-tax Department at her son's premises in Agra. The appellant claimed ownership of the seized items, which included "purchies" and post-dated cheques, and furnished a bank guarantee for their release. Subsequently, the appellant filed an application before the Commissioner of Income-tax, requesting an assessment based on the seized documents. However, the Commissioner did not take any action on the application. The appellant then filed a writ petition in the High Court, challenging the search and seizure and the demand for encashment of the bank guarantee. The first court dismissed the writ petition on the ground of jurisdiction.
Finding of the Court:
The High Court held that the Income-tax Officer having jurisdiction over the assessee is the one who should enforce the bank guarantee and not the Income-tax Officer who conducted the search and seizure. The court noted that respondent No. 6, the Income-tax Officer having jurisdiction over the appellant, had requested respondent No. 3, the Commissioner of Income-tax who conducted the search and seizure, to extend the period of the bank guarantee to allow for the completion of the assessment. The court further noted that no assessment had been made on the appellant based on the seized documents.
Issues: 1. Whether the Income-tax Officer who conducted the search and seizure has jurisdiction to enforce the bank guarantee furnished by the assessee for release of seized assets? 2. Whether the Income-tax Officer having jurisdiction over the assessee is the one who should enforce the bank guarantee?
Ratio Decidendi: The court relied on the provisions of Section 132 of the Income-tax Act, 1961, which empowers the Income-tax Officer to retain seized assets or parts thereof to satisfy any existing liability under the Act. The court also relied on Section 132(9a), which provides that where the officer authorized to search and seize has no jurisdiction over the person who is in possession of the seized items, the items must be handed over to the Income-tax Officer having jurisdiction over such person. The court held that, in the present case, respondent No. 3, the Commissioner of Income-tax who conducted the search and seizure, had no jurisdiction over the appellant and was therefore required to hand over the seized items or the bank guarantee furnished in lieu thereof to respondent No. 6, the Income-tax Officer having jurisdiction over the appellant.
Final Decision: The High Court set aside the order of the first court and issued a rule nisi on the writ petition. The court also granted an interim stay on the encashment of the bank guarantee, subject to certain conditions. The court directed respondent No. 6 to proceed with the assessment of the appellant and allowed respondent No. 3 to invoke the bank guarantee and encash it to the extent of any demand raised on the appellant's assessment. The court also directed respondent No. 3 to extend the period of the bank guarantee in consultation with respondent No. 6.
( 1 ) THE case of Smt. Shanti Hora, the appellant, is that she carries on business of discounting of "purchies" and postdated cheques. The appellant, an assessee under the Income-tax Act, 1961, is regularly assessed to income-tax by the Income-tax Officer, "g" Ward, Dist. SSC-VIII, Calcutta, respondent No. 6 herein.
( 2 ) ON November 7, 1985, the officers of the. Income-tax Department raided premises No. 52, Surya Nagar, Agra, in the State of U. P. , under a search authorisation issued by the Commissioner of Income-tax, Agra, respondent No. 3 herein, and conducted a search under Section 132 (1) of the Income-tax Act, 1961. The said premises No. 52, Surya Nagar, Agra, is owned by Ashok Kumar Hora, a son of the appellant.
( 3 ) AT the time of the search, the appellant was residing in the ground floor of the said premises. The officers of the Income-tax Department after the search seized "purchies" valued at Rs. 8,30,877 and post-dated cheques for Rs. 1,53,254 as recorded in a seizure list from the ground floor of the said premises where the appellant was staying.
( 4 ) DURING the course of the search, the appellant was examined on oath and she gave a statement in writing before the officers concerned under Section 132 (4) of the said Act on November 8, 1985. The appellant claimed to be the owner of the said "purchies" and post-dated cheques.
( 5 ) ON or about January 23, 1986, the appellant made an application before respondent No. 3 for release of the said "purchies" and postdated cheques. Ultimately, the "purchies" seized were released to the appellant upon the latter furnishing a bank guarantee in favour of respondent No. 3 for Rs. 8 lakhs, through the Punjab and Sind Bank, Lindsay Street Branch, Calcutta, respondent No. 5. The said guarantee was dated February 19, 1986, and was effective from that date for a period of one year and subject to further renewal at the instance of respondent No. 3.
( 6 ) THE Income-tax Officer, "c"-Ward II (2), Calcutta, respondent No. 4, has assessed Ashok Kumar Hora, the said son of the appellant, for the accounting period Pending on March 31, 1986. It has been found and recorded in the assessment order that as the said Ashok Kumar Hora was out of Calcutta for most of the period before, during and after the said search, it could be held that Ashok Kumar Hora did not have any direct or indirect connection with the business relating to the said "purchies" and post-dated cheques. It has also been found that there was no evidence that the appellant had made any remittance to the said Ashok Kumar Hora.
( 7 ) SUBSEQUENTLY, on April 4, 1986, the appellant submitted an application to the Commissioner of Income-tax, West Bengal XIII, Calcutta, respondent No. 1, calling upon him to make an assessment in respect of the said seizure and contended that her business in respect of the said "purchies" and post-dated cheques had been disclosed in the income-tax records of the appellant.
( 8 ) NO action was taken by respondent No. 1 on the said application.
( 9 ) ON February 9, 1987, respondent No. 6 wrote to respondent No. 3 that the assessment of the appellant and the records thereof were being dealt with by respondent No. 6 and requested respondent No. 3 to have the bank guarantee furnished by the appellant extended up to September 30, 987, within which time he expected that the assessment of the appellant for the assessment year 1986-87 on the basis of the search documents would be finalised. A copy of the said letter was endorsed to the appellant.
( 10 ) ON February 16, 1987, the appellant submitted an application before respondent No. 3 stating, inter alia, that the appellant had filed her return of income for the assessment year 1986-87 with, respondent No. 6 which was pending and that no income-tax demand had been raised on the appellant uptil then. It was submitted further that respondent No. 6 had requested respondent No. 3 to have the bank guarantee extended till Septembe
