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HIGH COURT OF CALCUTTA
B.C. MITRA, J.
Mamchand And Co - Appellant
Versus
Commissioner Of Income-Tax W B –Ii – Respondent
Decided On : Nov 09, 1967
Writ petition challenging the legality of search and seizure of books and documents under Section 132 of the Income Tax Act, 1961. Petitioners contended that the search and seizure was excessive, arbitrary and indiscriminate, and that the Commissioner of Income Tax did not have a reason to believe that the petitioners would not produce the books and documents if called upon to do so. The Court held that the search and seizure was justified as the Commissioner had reason to believe that the petitioners would not produce the books and documents, and that the search and seizure was not excessive, arbitrary or indiscriminate.
Fact of the Case:
The petitioners, a registered firm and its partners, were subjected to a search and seizure of their office and residence premises under Section 132 of the Income Tax Act, 1961. The search was conducted based on the belief that the petitioners would not produce books and documents if called upon to do so, and that such books and documents were relevant for proceedings under the Act. The petitioners challenged the legality of the search and seizure, arguing that it was excessive, arbitrary and indiscriminate, and that the Commissioner of Income Tax did not have a reason to believe that they would not produce the books and documents.
Finding of the Court:
The Court held that the search and seizure was justified as the Commissioner had reason to believe that the petitioners would not produce the books and documents, and that the search and seizure was not excessive, arbitrary or indiscriminate. The Court noted that the petitioners had failed to produce books and documents on previous occasions, and that there was evidence of falsification of entries and fabrication of documents to evade taxes. The Court also found that the search and seizure was conducted in a reasonable manner, with instructions given to the Income Tax Officers to examine the books and documents and seize only those that were relevant and material for further proceedings.
Issues: 1. Whether the search and seizure was excessive, arbitrary and indiscriminate. 2. Whether the Commissioner of Income Tax had a reason to believe that the petitioners would not produce the books and documents if called upon to do so.
Ratio Decidendi: 1. The search and seizure was not excessive, arbitrary or indiscriminate as it was conducted in a reasonable manner, with instructions given to the Income Tax Officers to examine the books and documents and seize only those that were relevant and material for further proceedings. 2. The Commissioner of Income Tax had reason to believe that the petitioners would not produce the books and documents if called upon to do so, based on the petitioners' history of non-compliance with requests for production of books and documents, and evidence of falsification of entries and fabrication of documents to evade taxes.
Final Decision: The Court dismissed the writ petition, holding that the search and seizure was justified and that the Commissioner of Income Tax had reason to believe that the petitioners would not produce the books and documents if called upon to do so.
1. This is an application for appropriate writs and orders for setting aside, quashing or cancelling several warrants of authorisation mentioned in the subparagraphs under paragraph 8 of the petition, whereby several Income-tax officers were directed to enter, search and seize various books of account, documents, money, jewellery or other valuable articles which might be found as a result of the search, and to take possession thereof.
2. The petitioners Nos. 2, 3 and 4 are partners of the petitioner No. 1. The petitioner No. 1 was registered under the Income-tax Act, 1922 as a registered firm. The assessment of the petitioners to income tax had been completed upto the assessment year 1963-64. The returns for the assessment year 1964-65 and 1965-66 have been filed, but the assessments in respect of these two years have not yet been completed. The petitioners' contention is that on no occasion since the registration of the petitioner No. 1 in 1941, the petitioners failed to produce books of account, documents and vouchers when called upon to do so by the income tax authorities. They claimed to have paid all dues for income tax and never to have failed to comply with any summons under s. 37 (1) of the Income Tax act, 1922, or under Section 131 (1) of the Income-tax Act, 1961, or of any notice under Section 22 (4) of the income-tax Act, 1922 on under Section 142 (1) of the Income Tax Act, 1961.
On January 31, 1967, a number of Income-tax Officers came to the petitioners' officer at 21a, Canning Street and also to the residence of the petitioners nos. 2, 3 and 4 at 22, Mandaville gardens, with warrants of authorisation: issued under Section 132 of the Income-tax act, 1961, and Rule 112 (1) of the income-tax rules, 1962. The warrants of authorisation were issued by the respondent No. 1 for searching premises no. 21 A, Canning Street and No. 22, mandaville Gardens. There was a third warrect for searching premises No. 21a, canning Street in connection with the firm of Ramswaroop Mamchand of which the petitioners Nos. 2 and 3 are partners. A search at the premises No. 21a. Canning Street, Calcutta, was made on January 31, 1967, and a search at premises No. 22, Mandaville Gardens was also made on the same date. After the search, officers of the department seized books of account, papers and documents of the current year as also of several past years at No. 21a, Canning street, Calcutta. It is also alleged that the searching officers did not care to look into the books, documents and papers which were seized. Similarly all books of account, papers and documents at No. 22, Mandaville Gardens were also seized. The petitioners' contention is that there was a general raid, a general search and a general seizure of all books, documents and papers relating to the business of the petitioners extending over several past years. The raid, search and seizure, it is alleged, were conducted indiscriminately, arbitraraily and without regard to the usefulness of the documents seized, for the purpose of any proceedings under the income-tax law. After the search at mandaville Gardens on the 2nd day namely February 1, 1967 the authorised officers wanted to make an inventory of the documents, but one of the petitioners, namely, Muralilal Agarwalla requested the authorised officers to put the documents, books and papers found on the 2nd day of the search, in steel trunks and in gunny bags, and to seal them and to make the inventory at a later date at the office of the department. An inventory was subsequently prepared at the office of the department between February 10 and February 15, 1967. It is further alleged that besides seizure of the books and documents, the officers seized all the ornaments which were in the possession of the ladies at No. 22, Mandaville Gardens. An inventory was also made of the seized jewellery. Nearly 1300 documents are alleged to have been seized and most of these documents, it is alleged, were in respect of periods for
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