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IN THE HIGH COURT OF KERALA
Antony Dominic, J.
Joshi P. Mathew - Petitioner
Versus
The Deputy Commissioner of Income Tax Central & Ors. - Respondents
WP(C). No. 620 of 2012 (B)
Decided On : 05-12-2012
Income Tax Act - Retention of Seized Documents - Section 132(8)
Fact of the Case:
The petitioner, an assessee under the Income Tax Act, sought the return of documents seized during a search conducted under Section 132 of the Act. The petitioner argued that the respondents failed to communicate the reasons for retaining the documents and the approval to the petitioner within the specified period, as required by Section 132(8) of the Act.
Finding of the Court:
The court found that the respondents did not communicate the reasons and approval for retaining the documents to the petitioner within the specified period, as mandated by Section 132(8) of the Act. Therefore, the retention of the documents beyond the 30-day period of completion of the assessment was deemed illegal, and the petitioner was entitled to the return of the seized documents.
Issues: The main issue was whether the respondents complied with the communication requirement of Section 132(8) of the Income Tax Act in retaining the seized documents.
Ratio Decidendi: The court held that under Section 132(8) of the Act, the reasons for retaining seized documents and the approval for such retention must be communicated to the assessee within the specified period. Failure to do so renders the retention of documents beyond the specified period unlawful.
Final Decision: The court directed the respondents to return the documents seized from the petitioner, emphasizing that the return should be done expeditiously, within four weeks of the judgment, while allowing the respondents to retain copies of the documents.
Antony Dominic, J.
The petitioner is an assessee under the Income Tax Act. A search under Section 132 of the Act was conducted in his business and residential premises on 10.01.2008 and 11.01.2008. During the search, certain documents were seized as per Exts.P1 to P3 mahazars. Subsequently, assessment was completed under Section 153A of the Act for the years 2002-2003 to 2007-2008 and Exts.P4 to P9 assessment orders were issued on 28.12.2009. The petitioner is prosecuting his grievances regarding the assessment orders before the statutory forums.
2. Seeking to return documents seized as per Exts.P1 to P3 mahazars, the petitioner submitted Ext.P14 application dated 26.12.2011. Immediately thereafter, he received Ext.P15 letter dated 28.12.2011 from the first respondent enclosing Ext.P16, by which, on account of the pendency of appeal and penalty proceedings, approval was granted by the third respondent for the continued retention of the documents upto 31.03.2012 or for period of 30 days after all the proceedings under the Act are completed, whichever is earlier. On receipt of Exts.P15 and P16, this writ petition was filed relying on Section 132 (8) of the Income Tax Act and seeking an order requiring the respondents to return the documents seized as per Exts.P1 to P3 Mahazars.
3. A statement has been filed on behalf of the respondents. Along with the statement, they have produced as Ext.R1(a), the request made by the first respondent seeking approval of the third respondent under Section 132(8) of the Act for the continued retention of the documents seized. This document is dated 18.01.2010. They have also produced Ext.R1(b), the proceedings of the third respondent dated 22.01.2010 whereby the approval has been granted as sought for in Ext.R1(a) till 31.03.2011 or for a period not exceeding 30 days after the termination proceedings under the Income Tax Act, whichever is earlier.
4. Relying on Exts.R1(a) and R1(b), it is contended that the first respondent having recorded the reasons for the continued retention of the documents and obtained approval of the third respondent, the petitioner is not entitled to have the documents returned to him. It is also stated that on the expiry of the period mentioned in Ext.R1((b), by Ext.P16 and later by Ext.R1(d) approval for retaining the documents till 31.03.2013 or for a period not exceeding 30 days after the termination of the proceedings under the Income Tax Act, whichever is earlier, have been granted by the third respondent.
5. The entitlement of the petitioner for return of the documents will have to be decided in the light of Section 132(8) of the Act which reads thus:
"The books of account or other documents seized under sub-section(1) shall not be retained by the authorised officer for a period exceeding (thirty days from the date of the order of assessment(under Section 153A or clause(c) of section 158BC)) unless the reasons for retaining the same are recorded by him in writing and the approval of the (Chief Commissioner, Commissioner, Director General or Director) for such retention is obtained:
Provided that the (Chief Commissioner, Commissioner, Director General or Director) shall not authorise the retention of the books or account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income Tax Act, 1922(11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed."
6. As per this provision, the books of account seized under sub-section (1) shall not be retained by the Authorised Officer for a period exceeding thirty days from the date of order of assessment passed under Section 153A. However, this Section enables retention of the seized documents beyond the aforesaid period, if the Authorised Officer records in writing his reasons for the same and the approval of the Chief Commissioner, Director General or Director, as the case may be, for such retention is obtained
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