Full Judgment Text
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PETITIONER:
BHUPENDRA RATILA THAKKAR AND ANR.
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX, GUJARAT & ORS
DATE OF JUDGMENT05/12/1975
BENCH:
SHINGAL, P.N.
BENCH:
SHINGAL, P.N.
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SARKARIA, RANJIT SINGH
CITATION:
1976 AIR 636 1976 SCR (2) 891
1976 SCC (1) 381
ACT:
Income Tax Act Sec. 132, 132A-Income Tax Rules 1962,
rules 112, 112A, 112B,112C-Constitutional validity of -
Constitution of India, Articles 14, 19(1)(f) & (g) and
31(1).
HEADNOTE:
The petitioners carry on business as Shroffs and
Bankers. The Income-tax Department searched various premises
of the petitioners and seized a sum of Rs. 12 lakhs in cash
from the petitioners, under section 132 and 132A of the
Income-tax Act. The petitioners contended that the said
amount represented the stock-in-trade of the petitioners.
The petitioners also contended that the provisions of
section 132 and 132A of the Income-tax Act, 1961, as well as
rules 112, 112A, 112B and 112C of the Income-Tax Rules,
1962, were unconstitutional as violative of Article 14,
19(1)(f) and (g) and 31(1) of the Constitutional. Section
132 and 132A were further challenged on the ground of
conferring naked, abitrary, unguided, discriminatory and
uncanalised power on the executive authority.
Dismissing the petition,
^
HELD: (1) This Court has already upheld in Pooran Mal’s
case the validity of section 132 and 132A as well as rules
112 and 112A. [893 A & C]
(2) Rules 112B and 112C relate to the release of the
articles seized and are therefore beneficial rules and as
such cannot be challenged. [893D]
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition No. 96 of 1972.
Under Article 32 of the Constitution of India.
I. N. Shroff for the appellant/petitioner.
B. B. Ahuja and S. P. Nayar for respondents.
The Judgment of the Court was delivered by
SHINGHAL J. This is a petition under article 32 of the
Constitution. Bhupendra Ratilal Thakkar, petitioner No. 1,
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is the managing partner of the other petitioner M/s
Rajnikant Nareshchandra Shroff, which is a partnership firm
carrying on the business of "shroffs and bankers". Its
principal place of business is said to be at Mehmadabad,
with branches at Surat and Bombay. The petitioners applied
for registration of the firm on April 7, 1971, and had time
to file their return of income upto June 30, 1972. It has
been claimed that the firm had large sums of money in cash
as well as ’hundis’ and other bills of exchange which formed
its stock-in-trade and that there was no justification for
thinking that it would not do what was required to be done
under the law relating to income-tax. The firm had a sum of
Rs. 12,00,000/- as cash on January 10, 1972, which is said
to have been duly entered in its books of account in the
Bombay branch office. The grievance of the petitioners is
that some of the
892
respondents entered these premises on January 10, 1972, "in
purported exercise of the powers conferred by section 132",
and seized the sum of Rs. 12,00,000/- along with the books
of account and other documents. Searches are also said to
have been carried out in Mehmedabad office and the branch
office at Surat, and some more books of account, papers and
documents are said to have been seized there.
The petitioners have stated that as the sum of Rs.
12,00,000/- was the stock-in-trade of the firm, and it had
not been secreted, there was no justification for the
seizure of the money or the books and the other documents.
They have accordingly stated that the seizure was an abuse
of the authority conferred by ss. 132 and 132-A of the
Income-tax Act, 1961, hereinafter referred to as the Act,
and rules 112, 112-A, 112-B, 112-C and 112-D of the Income-
tax Rules, 1962, hereinafter referred to as the Rules. The
petitioners have contended that ss. 132 and 132-A of the Act
are unconstitutional because they are violative of articles
14, 19(1)(f) and (g) and 31(1) of the Constitution. It has
also been urged that the aforesaid rules are illegal as they
are not backed by any legal authority. The aforesaid
provisions have also been challenged on the ground that they
are violative of article 14. In regard to ss. 132 and 132-A
of the Act, the petitioners have further stated that they
should be struck down as they confer naked, arbitrary,
unguided, discriminatory and uncanalised power on the
executive authority. The petitioners have also prayed for
the restoration of the property which has been seized by the
income-tax authorities. It has been pointed out in the
petition that three similar writ petitions were pending in
this Court, including writ petition No. 446 of 1971. Pooran
Mal vs. Director of Inspection Investigation.
The respondents have admitted the search and the
seizure of the property, but have stated that this was done
because the Commissioner of Income-tax, Gujarat-I,
respondent No. 1, had reasons to believe that the
petitioners would not produce their books of account etc.
even though they would be useful to the department for
taking proceedings under the Act. It has also been stated
that there was enough material before the Commissioner for
exercising the power under s. 132(1) of the Act. The
respondents have made specific averments in this connection
including the averment that books of account were
unreliable, and that the claim that the sum of Rs.
12,00,000/- was shown as balance in the books of account was
incorrect. They have also denied the allegation that any
search was carried on in the Mehmedabad head office of the
petitioner firm or that the sum of Rs. 12,00,000/ was kept
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as the firm’s stock-in-trade or that the firm was left with
no other money whatsoever. The petitioners’ contention
against the legality of ss. 132 and 132-A of the Act and the
Rules has also been controverted.
It will be recalled that in their writ petition the
petitioners have made a specific reference to Pooran Mal’s
writ petition No. 446 of 1971. That case has been heard and
decided by this Court on December 14, 1973 and the decision
has been reported in Pooran Mal
893
etc. vs. Director of Inspection (Investigation) of Income
Tax, New A Delhi and others Mr. Shroff has frankly conceded
that the points which have been raised in this petition have
been considered in that case, and that he has nothing to say
in regard to the validity of ss. 132 and 132-A of the Act
and rules 112 and 112-A of the Rules or the averments in the
petition in that connection. In fact it has been held by
this Court in Pooran Mal’s case that "it was impossible to
hold that the impugned provisions were violative of articles
14, 19 or 31." All that Mr. Shroff has argued is that the
validity of rules 112-B and 112-C of the Rules was not the
subject matter of examination in Pooran Mal’s case and that
it would be necessary for this Court to examine that part of
the controversy, as and when it is permissible to do so,
with reference to the provisions of article 14 of the
Constitution.
We have gone through rules 112-B and 112-C of the
Rules. Rule 112-B relates to the release of the articles
seized under s. 132(5) of the Act, and merely provides that
where, in pursuance of that section, any assets or part
thereof have to be released, the Income-tax officer shall
forthwith deliver the same to the person from whom custody
they were seized. Rule 112-C provides for the release of the
remaining assets, and it is to the effect that they shall be
made out or paid to the person from whose custody they were
seized, after the discharge of the liabilities referred to
in cl (i) of sub-section (1) of S. 132-A of the Act. Both
these are therefore beneficial rules, and there can be no
satisfactory reason for challenging their validity with
reference to article 14 of the Constitution. So when the
present case is not different from Pooran Mal’s case, there
is no merit in this writ petition. It is hereby dismissed.
There will however be no order as to costs.
P.H.P. Petition dismissed.
894