Retention of seized documents beyond statutory limits requires proper communication of reasons; failure to do so renders retention unlawful.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Ms. Shrunjal Shah for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.

2. By this petition, under Article 226 of the Constitution of India, the petitioner has challenged the recovery proceedings as well as the retention of the books of accounts and other documents seized during the course of search by the respondent-authority.

3. Brief facts of the case are that a search under section 132 of the Income Tax Act, 1961 [for short ‘the Act’] was conducted in case of the Popular Group on 08.10.2020 in which the premises of the petitioner were also covered. During the course of search, various documents including the original title deeds of the properties of the petitioner were seized under section 132(1) of the Act by order dated 10.10.2020. Thereafter, the respondent-authorities provisionally attached 17 properties of the petitioner under section 132(9B) of the Act by order dated 17.11.2020. Three assessment orders were passed for the Assessment Years 2017-18 to 2020-21 in the month of March 2022. Being aggrieved, the petitioner preferred Appeal before the CIT(A). The Principal Commissioner of Income Tax - respondent No. 3 by order dated 23.11.2022 granted conditional stay to the petitioner directing the petitioner to pay total amount of Rs. 7,73,52,000/- as against the demand of more than Rs. 100 Crore raised by the Assessing Officer.

4. It is the case of the petitioner that the petitioner deposited part of the said amount belatedly and as the petitioner wanted to make further payment, a request was made to return the original seized documents so as to enable the petitioner to sale the property and make the payment of the outstanding demand.

5. The petitioner also made an application under the Right to Information Act, 2005 for the reasons recorded for retention of the Books and other documents by the respondents which was replied by reply dated 04.03.2024 and copy of the decision/ approval of extending retention of the document under section 132(8) of the Act was provided.

6. It appears that the petitioner thereafter preferred the present petition for return of books of accounts and documents seized during the course of search as well as setting aside the recovery proceedings thereafter.

7. During the pendency of this petition CIT(A) passed an order reducing the demand by granting substantial relief to the petitioner. The respondents have already passed an order giving effect to the order of the CIT(A) for the three assessment year as under:

8. According to the aforesaid details, there is still outstanding amount of Rs. 4,27,17,403/- payable by the petitioner.

9. Learned advocate Ms. Shrunjal Shah for the petitioner submitted that the respondent-authorities are required to return the books of accounts and other documents which are original title deeds of the property of the petitioner in terms of the provision of section 132(8) of the Act which provides that such documents shall not be retained by the Assessing Officer for a period exceeding 30 days from the date of the order of assessment or reassessment or re-computation under the provisions of the Act unless the reasons are recorded in writing for retaining the same and approval of the Principal Joint Commissioner or Chief Commissioner for such retention is obtained.

10. It was submitted that the petitioner was never provided with the reasons recorded aft