1972 Supreme(P&H) 152

PUNJAB & HARYANA HIGH COURT
Bal Raj Tuli, J.
Ramesh Chander
Versus
Commissioner Of Income-tax
Civil Writ No. 4106 of 1971,
Decided On : MAY 25, 1972

The Commissioner of Income-tax has no jurisdiction to issue a warrant of authorization for search and seizure of money or documents which are known to be at a place in the custody of another department of the Government.

Headnote:

SEARCH AND SEIZURE - INCOME TAX - SECTION 132 - WARRANT OF AUTHORIZATION - ISSUANCE - CONDITIONS PRECEDENT - BELIEF OF COMMISSIONER OF INCOME TAX - SCOPE AND EXTENT - JURISDICTION OF COURT - ASSESSMENT ORDER - QUASHING.

Fact of the Case:

The Commissioner of Income Tax issued warrants of authorization for search and seizure of money, bullion, jewellery or other valuable articles or things and sent them through Shri J. S. Cheema, Income-tax Officer, Special Investigation Branch, in the staff car from Patiala to Jullundur. Shri J. S. Cheema, on arrival at Jullundur at about 5-30 p.m., was told by Shri Gujjar Mal and Shri G. S. Sandhu, Income-tax Officers, that Shri Nathu Ram, Income-tax Officer, had gone to the business premises of the petitioner-firms while Shri P. R. Gupta had gone to the police station, Kartarpur. Shri J. S. Cheema took Shri Gujjar Mal with him to the business premises of the petitioner-firms where he found Shri Nathu Ram, to whom he handed over the warrant of authorization meant for him and himself proceeded to police station, Kartarpur, to hand over the warrant of authorisation to Shri P. R. Gupta which was in his name. After the receipt of the warrant of authorization, Shri P. R. Gupta seized the bags containing the money, the ledger book and other documents and prepared panchnama. He also recovered a sum of Rs. 411 from the person of Shri Ramesh Chander. The seized articles were brought to the income-tax office, Jullundur, and were deposited in the safe, the keys of which were with Shri P. R. Gupta. Thereafter, Shri Nathu Ram, Income-tax Officer, started proceedings under Section 132(5) of the Income-tax Act, 1961 (hereafter called "the Act "), for making a summary assessment.

Finding of the Court:

The Commissioner of Income-tax had no jurisdiction to issue the warrant of authorisation for search and seizure of the money and the documents which had been recovered from Ramesh Chander, petitioner, by Balwant Singh, Traffic Inspector, and which were lying in the office room of the Station House Officer, Kartarpur. The proceedings for search and seizure were wholly illegal and void as the sole object of issuing the warrants of authorisation was to somehow obtain possession of the sum of Rs. 1,61,000 and the documents already recovered from Ramesh Chander by Balwant Singh without there being any basis for the belief that he had evaded the payment of tax under the Indian Income-tax Act, 1922, or the Income-tax Act, 1961, or any other allied Act. The assessment order under Section 132(5) passed against petitioner No. 1 cannot be sustained, particularly because the material contained in the ledger book allegedly seized from him at Kartarpur was made the basis of that order. It is also worthy of note that although only a sum of Rs. 1,61,411 was seized from Ramesh Chander, assessment has been made against him in respect of an undisclosed income of Rs. 8,53,190 and the amount of income-tax determined is Rs. 7,55,932. The assessee-petitioner has, therefore, been greatly prejudiced in presenting his case to respondent No. 3.

Issues: Whether the Commissioner of Income Tax had jurisdiction to issue the warrant of authorization for search and seizure of the money and the documents which had been recovered from Ramesh Chander, petitioner, by Balwant Singh, Traffic Inspector, and which were lying in the office room of the Station House Officer, Kartarpur.

Ratio Decidendi: The Commissioner of Income-tax had to record reasons before issuing the warrant of authorisation which he purported to do. All that he stated was that Balwant Singh had informed him that a sum of Rs. 1,61,000 had been recovered from Ramesh Chander. No other reason has been stated and words of Sub-section (3) of Section 132 have been reproduced. No decision has been brought to my notice contrary to the decisions of the Allahabad and Calcutta High Courts referred to above, to the effect that if the money or the documents are known to be at a place in the custody of another department of the Government, the warrant for search and seizure can be issued.

Final Decision: The petition is allowed with costs and the order of assessment made by Shri Nathu Ram, Income-tax Officer, respondent No. 3, on October 22, 1971, is quashed. The respondents are directed to return the amount of Rs. 1,61,411 to Shri Ramesh Chander along with the ledger book and other documents allowed to have been seized from him at Kartarpur. The other books of account and documents seized from the business premises and residences of the partners of the petitioner-firms may be returned to them in accordance with the provisions of the Act if not already returned.