Full Judgment Text
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PETITIONER:
INCOME-TAX OFFICER, SPECIAL INVESTIGATIONCIRCLE-B, MEERUT
Vs.
RESPONDENT:
M/S. SETH BROTHERS AND ORS.
DATE OF JUDGMENT:
15/07/1969
BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
MITTER, G.K.
CITATION:
1970 AIR 292 1970 SCR (1) 601
1969 SCC (2) 324
CITATOR INFO :
R 1970 SC1651 (5)
D 1972 SC 591 (22)
R 1985 SC 989 (16)
ACT:
Indian lncome Tax Act (43 of 1961), s. 132--Search and
seizure-Scope of power--Seizure of a large number of
documents, some of which not, relevant to pending proceeding
under Act--If mala fide.
HEADNOTE:
Under s. 132 of the Income-tax Act, 1961, the
Commissioner of Income-tax or the Director of Inspection
may, after recording reasons, order the search of premises
if he has reason to believe that one or more of the
conditions in s. 132(1) exist. The officer authorised may
enter any place and make a search where he has reason to
believe that books or documents relevant to any proceeding
under the Act may be ,found. He may seize any books or
documents and place marks of identification on them, and may
remove them to the income-tax office. By the express terms
of the Act and the Income-tax Rules, the officer designated
to make the search may obtain the assistance of the police.
The Income-tax Officer issued notice to the respondent-
firm that its income chargeable to tax had escaped
assessment and that it was proposed to reassess the income.
He also gave information to the Commissioner of Income-tax
that the respondent was maintaining duplicate records for
evading assessment of the true income and requested the
Commissioner for authorisation under s. 132 to enter and
search the premises where the respondent was carrying on
business. The Commissioner recorded his reasons and issued
an order in the prescribed form authorising two Income-tax
Officers to enter the premises, to search for and seize such
books and documents as may be considered relevant or useful
for the purpose of reassessment, and to place identification
marks thereon and to convey them to the income-tax office.
The premises were accordingly searched and the account books
and certain documents found therein were seized and carried
to the income-tax office. Petitions were filed in the High
Court for writs of certiorari for quashing the proceedings
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of the Income-tax authorities, and consequential reliefs.
The High Court granted the writs on the grounds: (1) that
the order of search was made by the Commissioner at the
direction of the Directorate of Inspection and without
satisfying himself about the existence of circumstances
justifying search; (2) that besides the documents belonging
to the respondent the Income-tax Officers seized documents
relating to the transactions of their allied concern which
documents were irrelevant to the process of reassessment of
the respondent; (3) that marks of identification were not
placed on certain documents at the time they were seized;
(4) that the documents seized were detained by the Income-
tax Officer for more than two months; and (5) that the
police force employed during the raid was excessive.
In appeal to this Court,
HELD: (1) The Commissioner stated in his counter
affidavit that before issuing the authorisation he was
satisfied that it was necessary to take action under s. 132
and that the authorisation was not issued at the
602
direction of the Directorate of Inspection. The Deputy
Director of Inspection also stated in his affidavit that
he never gave any direction to the Commissioner to issue
authorisation for search and seizure. Therefore, in reaching
the conclusion that the Commissioner acted at the behest of
the Director of Inspection, the High Court was in error,
because, having held that the correctness of the opinion
formed by the income-tax authorities was not open to
scrutiny in a writ petition the High Court acted on mere
affidavits and accepted the assertions of the respondents
which were specifically denied by the Revenue authorities.
[612 B-C; 613 D; 614 A-B]
(2) Since the power conferred, though not arbitrary, is
a serious invasion upon the rights and privacy of the tax-
payer, the power must be strictly exercised in accordance
with law and only for the purposes for which the law
authorises it to be exercised. If the action of the officer
issuing the authorisation or of the officer designated to
make the search is challenged, they must satisfy the court
about the regularity of the action taken. If the action is
maliciously taken or for a collateral purpose it is liable
to be struck down. But where the power is exercised bona
fide and in furtherance of the statutory duties of the
Revenue Officers any error of judgment on the part of the
officers will not vitiate the exercise of the power. The
Act and the Rules do not require that the authorization
should specify the particulars of documents and books of
account; a general authorisation to search for and to seize
documents and books of account relevant to or useful for the
proceeding under the Act complies with the requirements of
the Act and the Rules. It is for the officer making the
search to exercise his judgment and seize or not to seize
any documents or books of account. An error committed by
the officer in seizing documents which may ultimately be
found not to be useful for or relevant to the proceeding
will not by itself vitiate the search, nor will it entitle
the aggrieved person to an omnibus order releasing all
documents seized. [608 G-H; 609 A-F]
In the present ease, therefore, merely because a large
number of documents, some of which related to the concerns
allied to the respondent-firm, were seized, it could not
lead to the inference that the search and seizure were for
a collateral purpose. On the contrary, the books of account
and the documents in respect of other businesses carried on
by the partners of the respondent-firm through the allied
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firms would be relevant, because, they would show inter-
relation between the dealings and supply materials having
a bearing on the case of evasion of income-tax by the
respondents. Therefore, the search and seizure were not
illegal or mala fide. [609 G; 612 F-]H
Income-tax Officer, A-ward, Agra v. Firm Madan Mohan, 70
I.T.R. 293, approved.
(3) Assuming that marks of identification were not
placed On some documents, it was a mere irregularity and,
unless the documents were shown to be tampered with, would
not make the search and seizure mala fide. [612 H]
(4) A delay of two months in issuing a notice calling
for explanation is also not a ground for holding that the
action was taken for a collateral purpose. [613 A-B]
(5) Keeping police officers present at the time of
search in the house of influential businessmen to ensure the
protection of the officers and the record, would not be a
case of excessive use of force. [613 B-C]
603
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 700 to
703 of 1965.
Appeals by special leave from the judgment and order
dated March 27, 1964 of the Allahabad High Court in Civil
Misc. Writs Nos. 3302, 3381, and 3382 of 1963.
Sukumar Mitra, S.K. Aiyar, R.H. Dhebar and B.D. Sharma,
for the ,appellant (in all the appeals).
M.C. Chagla, S.C. Manchanda, P.N. Pachauri, P.N. Duda
and D.N. Mukherjee, for respondent No. 1 (in C.A. No. 700 of
1965).
S.C. Manchanda, P.N. Pachauri, P.N. Duda and D.N.
Mukherjee for respondent No. 1’ (in C.A. No. 701 of 1965).
S.C. Manchanda, P.N. Pachauri, S.M. Jain and B.P.
Maheshwari, for respondent No. 1 (in C.As. Nos. 702 and 703
of 1965).
The Judgment of the Court was delivered by
Shah, J. M/s. Seth Brothers run a flour mill in the name
and style of "Imperial Flour Mills". From April 1, 1953 to
March 1956 the business was carried on by M/s. Seth
Brothers, of which the partners were Baikunth Nath and
Vishwa Nath. Between March 1956 and March 31, 1957, the
business was carried on by Baikunth Nath, Vishwa Nath, Dr.
Manmohan Nath, Mrs. Rama Rahi and Mrs. Sushila Devi. On
April 7, 1957 Mrs. Prem Lata was admitted as a partner. The
partners were engaged in carrying on other businesses in the
names of Seth Brothers (Private) Ltd., Nath Brothers
(Private) Ltd., and Meerut Cold Storage and General Mills.
The owners of the business were, year after year,
assessed to income-tax in respect of the income arising in
the course of the business. On March 14, 1963 the Income-tax
Officer, Meerut issued a notice under s. 148 of the Income-
tax Act, 1961, intimating M/s. Seth Brothers that there was
reason to believe that their income chargeable to tax had
escaped assessment and it was proposed to reassess this
income for the assessment year 1954-55. In response to the
notice Baikunth Nath and Vishwa Nath flied a return under
protest. In the meantime information was received by the
Income-tax Commissioner, U.P., that M/s. Seth Brothers were
maintaining "duplicate records" and were evading assessment
of their true income and that it was necessary to seize the
records which may be found at "Shanti Niketan," Meerut in
which M/s. Seth Brothers carried on the business of Imperial
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Flour Mills and other business. The Commissioner of Income-
tax, U.P., on May 29, 1963 drew up a memorandum that on a
report of the Income-tax Officer, D-Ward,, Meerut requesting
for
604
authorisation under s. 132 of the Income-tax Act, 1961, to.
enter and search the premises of M/s. Seth Brothers, he was
satisfied about the need for the issue of the authorisation.
The Commissioner also issued an order in Form 45 prescribed
under Rule 112 of the Income-tax Rules, 1962, authorising
two Income-tax Officers--R. R. Agarwal and R. Kapoor--to
enter the premises known as "Shanti Niketan", at Meerut and
to search for and seize such books and documents as may be
considered relevant or useful for the purpose of the
proceeding of reassessment, and to place identification
marks thereon and to convey them to the Income-tax Office.
On the. 7 and 8 of June, 1963 the premises described in
the order were searched and account books and certain
documents found therein were seized and were carried to the
Income-tax Office. M/s. Seth Brothers then moved a petition
in the High Court of Allahabad, for an order quashing the
proceedings of the Income-tax authorities. Petitions were
also filed by Nath Brothers (Private) Ltd., Seth Brothers
(Private) Ltd. and Seth Brothers, Meerut for the same
relief. By these petitions they claimed writs of certiorari
quashing the letters authorising search of the premises
at Shanti Niketan, and writs of mandamus directing the
Income-tax Officer to return all the books, papers and
articles seized during the search and for writs of
prohibition restraining the Income-tax Department from using
any information gathered as a result of the search. It was
submitted by the petitioners that K.L. Ananda, Income-tax
Officer and Satya Prakash an "ex-employee" of M/s. Seth
Brothers had given false information to the Deputy Director
of Inspection with a view to blackmail the partners of M/s.
Seth Brothers, and that the order of search was made by the
Commissioner of Income-tax at the direction of the Deputy
Director of Inspection, that the action of the Income-tax
Officer in searching the premises and in seizing the books
of account was malicious and that in any event s. 132 of
the Income-tax Act, 1961, and the rules framed thereunder,
were violative of the fundamental freedoms guaranteed by
Arts. 14, 19(1)(f) & (g) and 31 of the Constitution.
Affidavits were filed on behalf of M/s. Seth Brothers.
It was affirmed that "the so-called duplicate records"
seized by the Income-tax Officer were copies of the books of
account and that action had been taken by the Commissioner
of Income-tax, not on his own initiative but at the behest
of the Directorate of Inspection. In reply to the
contentions raised by the assessees several affidavits sworn
by Officers of the Income-tax Department were filed. The
Commissioner of Income-tax stated in his affidavit that
before issuing letters of authorisation and the warrant of
search he was satisfied that it was necessary to take
action
605
under s. 132 of the Indian Income-tax Act, 1961, and that
the letters of authorisation were not issued at the
direction of the Directorate of Inspection. The Income-tax
Officers stated that in consequence of the search a large
number of "duplicate account books and records" maintained
by M/s. Seth Brothers were recovered, that the search was
carried out according to law and in the presence of two of
the partners of the firm and their advocates, that all the
documents seized were relevant for the purpose of
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reassessment, that there was close connection between the
different business activities of the partners of M/s. Seth
Brothers and that all the documents which were seized were
in relation to those activities. The Deputy Director of
Inspection in his affidavit stated that he did not give any
direction to the Commissioner to issue authorization for
search and seizure.
The High Court of Allahabad held on a consideration of
the averments made in the affidavits filed on l behalf of
M/s Seth Brothers and the revenue that "there was reason to
believe" that instructions were issued by the Directorate of
Inspection for a general raid and seizure of all account
books and papers which may be found at the premises of the
firm; that some out of the documents seized by the Income-
tax Officers were irrelevant for the purpose of any
proceeding under the Act: that besides the documents
belonging to M/s Seth Brothers the Income-tax Officers
seized documents relating to the transactions of the allied
concerns; that marks of identification were not placed on
certain documents at the time they were seized; that the
documents seized were detained by the Income-tax Officer for
more than two months; and that the police force employed
during the raid was excessive. The High Court concluded:--
"It is true that there was no iII-will
between the ...... (partners of Seth
Brothers) on one side and respondent Nos. 1,
3 and 4 (Commissioners of Income-tax, U.P. &
Punjab and Income-tax Officer, Special
Investigation Circle A, Meerut) on the other
side. But the extent of the seizure was far
beyond the limits of s. 132 of the Act. The
action was mala fide in the sense that, there
was abuse of power conferred on Income-tax
Officers by s. 132 of the Act. The act being
main fide, the proceedings .should be quashed
by this Court by issuing a writ of mandamus."
The Income-tax Officer, S.I. Circle has appealed to this
Court with special leave.
Section 132 as originally enacted by Act 43 of 1961
was substituted by a modified provision by the Finance Act
of 1964 which in its turn was replaced by s. 1 of the
Income-tax (Amendment) Act, 1965. By s. 8 of that Act it
was provided, inter alia,
606
that any search of a building or place by an ......
Income-tax Officer purported to have been made in pursuance
of sub-s. (1) of s. 132 of the principal Act shall be deemed
to have been made in accordance with the provisions of that
sub-section as amended by the Act of 1965 as if those
provisions were in force on the day the search was
made ...... The relevant part of s. 132 as substituted by
the Income-tax (Amendment) Act, 1965 may, there.fore, be set
out:
"132.. Search and seizure.--(1) Where the Director of
Inspection or the Commissioner, in consequence of
information in his possession, has reason to believe
that--
(a) any person to whom a summons under sub-section (1)
of section 37 of the Indian Income-tax Act,1922 (XI of
1922), or under sub-seCtion (1) of section 131 of this
Act, or a notice under sub-section (4) of’ section 22 of the
Indian Income-tax Act, 1922,or under sub-section (1) of
section 142 of this Act was issued to produce, or cause to
be produced, any books of account or other documents has
omitted or failed to produce, or cause to be produced, such
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books of account or other documents as required by such
summons or notice, or
(b) any person to whom a summons or notice as
aforesaid has been or might be issued will not, or would
not, produce or cause to be produced, any books of account
or other documents. which will be useful for, or relevant
to., any proceeding under the Indian Income-tax Act, 1922
(XI of 1922), or under this Act, or
(c) any person is in possession of any money,
bullion, jewellery or other valuable article or thing and
such money, bullion, jewellery or other valuable article or
thing represents either wholly or partly income or
property which has not been disclosed for the purposes of
the Indian Income-tax Act, 1922 (XI of 1922), or this Act
(hereinafter in this section referred to as the undisclosed
income or property),
he may authorise any Deputy Director of Inspection,
Inspecting Assistant Commissioner, Assistant Director of
Inspection or Income-tax Officer (hereinafter referred to as
the authorised officer) to--
(i) enter and search any building or place
where he has reason to suspect that such
books of account, other documents, money,
bullion, jewellery or other valuable article
or thing are kept;
607
(ii) break open the lock of any door, box,
locker, safe, almirah or other
receptacle for exercising the powers conferred
by clause (i) where the keys thereof are not
available;
(iii) seize any such books of account, other
documents, money, bullion, jewellery or other
valuable article or thing found as a result
of such search;
(iv) place marks of identification on any
books of account or other documents or make’
or cause to be made extracts or copies
therefrom;
(v) make a note or an inventory of any such
money, bullion, jewellery or other valuable
article or thing.
(2) The authorised officer may
requisition the services of any police officer
or of any officer of the Central Government or
of both, to assist him for all or any of the
purposes specified in sub-section (1) and it
shall be the duty of every such officer to
comply with such requisition.
(3) The authorised officer may, where
it is not practicable to seize any such
books of account, other document, money,
bullion, jewellery or other valuable article
or thing, serve an order on the owner or the
person who is in immediate possession or
control thereof that he shall not remove, part
with or otherwise deal with it except with the
previous permission of such officer and
such officer may take such steps as may be
necessary for ensuring compliance with this
sub-section.
.................................
(8) The books of account or other
documents seized under sub-section (l ) shall
not be retained by the authorised officer for
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a period exceeding one hundred and eighty
days from the date of the seizure unless the
reasons for retaining the same are recorded by
him in writing and the approval of the
Commissioner for such retention is obtained:
Provided
(13) The provisions of the Code of Criminal
Procedure, 1898 (V of 1898), relating to
searches and seizures shall apply, so far as
may be, to searches and seizure under sub-
section (1)."
608
The Central Board of Direct Taxes has, in exercise of the
power conferred by s. 295(1) of the Act, framed r. 112
prescribing the procedure to be followed by the Commissioner
and the authorised officers.
The Commissioner or the Director of Inspection may
after recording reasons order a search of premises, if he
has reason to believe that one or more of the conditions in
s. 132(1) exist. The order is in the form of an
authorization in favour of a subordinate departmental
officer authorising him to enter and search any building
or place specified in the order, and to exercise the powers
and perform the functions mentioned in s. 132 (1 ). The
Officer so authorised may enter any building or place and
make a search where. he has reason to believe that any books
of account or other documents which in his opinion will be
useful for, or relevant to any proceeding under the Act, may
be found. The Officer making a search may seize any books
of account or other documents and place marks of
identification on any such books of account or other
documents or make or cause to be made extracts or copies
therefrom and may make an inventory of any articles or
things found in the course of any search which in his
opinion will be useful for, or relevant to. any proceeding
under the Act, and remove them to the Income-tax Office or
prohibit the person in possession from removing them. He
may also examine on oath any person in possession of or
control of any books of account or documents or assets.
The section does not confer any arbitrary authority
upon the Revenue Officer. The Commissioner or the Director
of Inspection must have, in consequence of information,
reason to believe that the statutory conditions for the
exercise of the power to order search exist. He must record
reasons for the belief and he must issue an authorization in
favour of a designated officer to search the premises and
exercise the powers set Out therein. The condition for
entry into and making search of any building or place is the
reason to believe that any books of account or other
documents which will be useful for, or relevant to, any
proceeding under the. Act may be found. ’ If the Officer has
reason to believe that any books of account or other
documents would be useful for, 0r relevant to, any
proceedings under the Act, he is authorised by law to seize
those books of account or other documents, and to. place
marks of identification therein, to make extracts or copies
therefrom and also to make a note or an inventory of any
articles or other things found in the course of the search.
Since by the exercise of the power a serious invasion is
made upon the rights, privacy and freedom of the tax-payer,
the power must be exercised strictly in accordance with the
law and only for the purposes for which the law authorizes
it to. be exercised. If the action of the Officer issuing
the authorization, or of the designated
609
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Officer is challenged the Officer concerned must satisfy the
Court about the regularity of his action. If the action is
maliciously taken or power under the section is exercised
for a collateral purpose, it is liable to be struck down by
the Court. If the conditions for exercise of the power
are’ not satisfied the proceeding is liable to be quashed.
But where power is exercised bona fide, and in furtherance
of the statutory duties of the tax officers any error of
judgment on the part of the Officers will not vitiate the
exercise of the power. Where the Commissioner entertains
the requisite belief and for reasons recorded by him
authorises a designated Officer to enter and search
premises for books of account and documents relevant to
or useful for any proceeding under the Act, the Court in a
petition by an aggrieved person cannot be asked to
substitute its own opinion whether an order authorising
search should have been issued. Again, any irregularity in
the course of entry, search and seizure committed by the
Officer acting in pursuance of the authorisation will not be
sufficient to vitiate the action taken, provided the Officer
has in executing the authorisation acted bona fide.
The Act and the Rules do not require that the warrant
of authorisation should specify the particulars of
documents and books of account: a general authorisation to
search for and seize documents and books of account relevant
to. or useful for any proceeding complies with the
requirements of the Act and the Rules. It is for the Officer
making the search to exercise his judgment and seize or
not to seize any documents or books of account. An error
committed by the Officer in seizing documents which may
ultimately be’ found not to be useful for or relevant to the
proceeding under the Act will not by itself vitiate the
search, nor will it entitle the aggrieved person to an
omnibus order releasing all documents seized.
The aggrieved party may undoubtedly move a competent
Court for an order releasing the documents seized. In such
a proceeding the Officer who has made the search will be
called upon to prove how the documents seized are likely to
be useful for or relevant to a proceeding under the Act. If
he is unable to do so, the Court may order that those
documents be released.. But the circumstance that a large
number of documents have been seized is not a ground for
holding that all documents seized are irrelevant or the
action of the Officer is mala fide. By the express terms
of the Act and the Rules the Income-tax Officer may obtain
the assistance of a police officer. By sub-s. (13) of s.
132 the provisions of the Code of Criminal Procedure, 1898,
relating to searches apply so far as may be, to searches
under s. 132. Thereby it is only intended that the officer
concerned shall issue the necessary warrant, keep present
respectable persons of the locality to witness the search,
and generally carry out the search
610
in the manner provided by the Code of Criminal Procedure.
But sub-s.(2) of s., 132 does not imply that the limitations
prescribed by s. 165 of the Code of Criminal Procedure are
also incorporated therein.
In Income-tax Officer, A-Ward, Agra & Others v. Firm
Madan Mohan Demma Mal and Another(1), it was observed that
the issue of a search warrant by the Commissioner is not a
judicial or a quasi-judicial act and even if the
Commissioner is enjoined to issue a warrant only when in
fact there is information in his possession in consequence
of which he may form the necessary belief, the matter is not
thereby subject to scrutiny by the Court. Section 132 of
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the Income-tax Act does not require specific mention by
description of each particular document which has to be
discovered on search: it is for the Officer who is
conducting the search to decide whether a particular
document found on search is relevant for the purpose or not.
That statement of the law, in our judgment, accurately
states the true effect of s. 132. The mere fact that it
may ultimately be found that some document seized was not
directly relevant to any proceeding under the Act or that
another officer with more information at his disposal may
have come to a different conclusion will not be a ground for
setting aside the order and the proceeding for search and
seizure.
The authorisation issued by the Commissioner was, in
the view of the High Court, open to challenge on the ground
that the Commissioner did not apply his mind to the
existence of circumstances which justified the exercise of
the power to issue authorisation. The action of the
Income-tax Officers who. searched the premises was quashed
on the ground that they seized some documents which were
irrelevant to the process of reassessment. In our judgment,
in reaching their conclusion that the Commissioner acted at
the behest of the Director of Inspection, the High Court
ignored important evidence on the record. It was averred in
the petition of M/s Seth Brothers that--
"(56) It appears that the Deputy Director of
Inspection at the instigation of Shri K.L.
Nanda and Sri Satya Prakash, without making
any enquiries or having any material, ’ordered
a raid for search and seizure of all ,the
account books and papers, which could be
found.
(57) That, according to such directions of
the Directorate, the Commissioner of Income-
tax, U.P. Lucknow, was made to issue
authorisations under s. 132 of the Act of 1961
in- favour of opposite Parties Nos. 3 and 4 to
search out the
(1) 70 I.T.R. 293.
611
premisses of Shanti Nikethan’,Civil Lines, Meerut, premises
of ’Shanti Niketan’and to seize the account ’books,
documents and papers, which could be recovered therefrom.
................................
The High Court observed that even though a number of
affidavits were’ filed by the Income-tax authorities, no
reference to paragraph 56 of the writ petition was made
and the "only affidavit filed by Shri A.L.Jha, Commissioner
of Income-tax was vague in the extreme". The allegation in
paragraphs 56 & 57 of the writ petition made no definite
allegation. that the Commissioner of Income-tax acted at
the behest of the Deputy Director of Inspection and not on
his own satisfaction reached in consequence of information
in his possession. In the verification clause Baikunth Nath
stated that the contents of paragraph 57 were true on
information received from Deputy Director of Inspection
(Investigation), Income-tax, Central Revenue Buildings, New
Delhi. but said nothing about the contents of paragraph 56.
The ’affidavits filed on behalf of the Income-tax Department
specifically denied the allegations made in paragraphs 56 &
57. R. R. Agarwal (one of the Income-tax Officers
authorised to conduct the search) in his affidavit affirmed
that the letter of authorisation was issued to him by the
Commissioner of Income-tax, U.P. Lucknow, after the
Commissioner had been satisfied on the report submitted by
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the deponent.
The Commissioner of Income-tax, Mr. A.L. Jha, by his
affidavit denied that letters of authorisation were
issued under the directions of the Deputy Director of
Inspection or anybody connected with Directorate. He also
stated that in respect of the case of M/s. Seth Brothers
some information was brought to him by the Directorate and
that information corroborated the report made to him by Mr.
R.R.. Agarwal and that after taking into consideration all
those materials he was satisfied that a search of the
premises of M/s. Seth Brothers "was called for" and that he
issued the impugned letters of authorisation.
Mr. R.V. Ramaswamy, Deputy Director of Inspection
(Investigation) in paragraph 6 of his affidavit denied that
the raid or search of the premises of M/s. Seth Brothers was
ordered by him.
The affidavit of R. Kapur, Income-tax Officer, Special
Investigation Circle, who was authorised by the
Commissioner of Income-tax to make the search is also
relevant. Mr. Kapur averred that some information was
received by Mr. R.R. Agarwal from which it appeared that
the firm of M/s. Seth Brothers and
its partners were "evading tax by maintaining duplicate sets
of accounts" and by suppressing relevant documents and
papers
612
from the Department; that Mr. R.R. Agarwal made a written
request to the Commissioner of Income-tax for letters of
authorisation in order to carry out the search of the
assessee’s premises and in pursuance thereof on May 29, 1963
the Commissioner of Income-tax issued three authorisation
letters, two in favour of Mr. R.R. Agarwal and one in favour
of the deponent authorising them to, carry out the search in
accordance with the terms of the ’authorisation letters.
In this state of the record we are unable to agree with
the High Court that the letters of authorisation were issued
by the Commissioner of Income-tax at the direction of the
Director of Inspection (Investigation). The attention of
the Court was presumably not invited to the relevant
paragraphs of the ’affidavits of the Officers concerned.
It is true that a large number of documents were seized
from the premises of M/s. Seth Brothers but that has by
itself no direct beating on the question whether the Income-
tax Officer acted mala fide. If the Income-tax Officer in
making ’a search had reason to believe that any books of
account or other documents useful for, or relevant to, any
proceeding under the Act may be found, he may make a search
for and seize those ’books of account ’and other,
documents. Some books, maps of the cold storage, assessment
returns, and doctor’s prescriptions were seized by the
Income-tax Officer. It appears, however, from the inventory
that a large number of documents which related to the
business of the assessees and their allied concerns were
also seized. It would be impossible merely from the
circumstance that some of the documents may be shown to have
no clear or direct relevance to any proceeding under the Act
that the entire search and seizure was made not in bona fide
discharge of official duty but for a collateral purpose. The
suggestion that the books of ’account and other documents
which could be taken possession of should only be those
which directly related to the business carried on in the
name of M/s. Seth Brothers has, in our judgment, no
substance. The books of account and other documents in
respect of other businesses carried on by the partners of
the firm of the assessees would certainly be relevant
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because they would tend to show interrelation between the
dealings ’and supply materials having a bearing on the case
of evasion of income-tax by the firm. We are unable to hold
that because the Income-tax Officers made a search for and
seized the books .of account and documents in relation to
business carried on in the names of other firms and
companies, the search and seizure were illegal.
It is also said that marks of identification were not
placed on several documents. Assuming that this allegation
is true, in the absence of anything to show that the
documents were’ either re-
613
placed or tampered with, that irregularity will not bY
itself supply a ground for holding that the search was mala
fide. A delay of two months in issuing a notice calling for
explanation is also not a ground for holding that the action
was taken for a collateral purpose.
It is not disputed that ’assistance of the, police may
be obtained in the course of a search. The High Court has,
however, found that the police force employed was excessive.
But we are unable to hold that on the evidence, in keeping
police officers present at the time of the search in the
house of influential businessmen to ensure the protection of
the officers and the record, "excessive force was used."
We accordingly see no good grounds to accept the finding
recorded by the High Court that the manner in which the
search and seizure were conducted "left no room for doubt
that the Income-tax Officer did not apply his mind and
formed no opinion regarding the relevancy or usefulness of
the account books and documents for any proceedings under
the Income-tax Act." The High Court accepted that the
correctness of the opinion actually formed by the Income-tax
Officer .was no.t open to scrutiny, in a writ petition,
but in their view no opinion was in fact formed by the
Officer and the search and seizure of documents and books of
account must on that account be held as made in excess of
the powers conferred upon the Income-tax Officer and mala
fide. For these observations we find no warrant. The
Income-tax Officers concerned have sworn by their affidavits
that they did in fact form the requisite opinion under s.
132 of the Act and the other evidence and the circumstances
do not justify us in discarding that assertion.
These proceedings were brought before the High Court by
way of a writ petition under Art.. 226 of the Constitution
before any investigation was made by the Income-tax Officers
pursuant to the action taken by them. In appropriate eases
a writ petition may lie challenging the validity of the
action on the ground of absence of power or on a plea that
proceedings were taken maliciously or for a collateral
purpose. But normally the High Court in such a ease does
not proceed to determine merely on affidavits important
issues of fact especially where serious allegations of
improper conduct are made against public servants. The
Income-tax Officers who conducted the search asserted that
they acted in good faith in discharge of official duties and
not for any collateral purpose. The Commissioner of Income-
tax also denied that he acted at the direction of the Deputy
Director of Inspection and that case was supported by the
Deputy Director of Inspection. If the ,learned Judges of
the High Court were of the view that the question was one in
respect of which an investigation
614
should be made in a petition for the issue of a writ, they
should have directed evidence to be taken viva voce. The
High Court could not, on the assertions by the partners of
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the firm which were denied by the Income-tax Officer, infer
that the premises of M/s. Seth Brothers were searched and
documents were seized for a collateral purpose, merely from
the fact that many documents were seized or that on some of
the documents seized marks of identification were not put or
that the documents belonging to the "sister concerns" of the
"Imperial Flour Mills" were seized.
In our view the decision of the High Court that the
action of the Commissioner of Income-tax, U.P., and the
Income-tax Officers who purported to act in pursuance of the
letters of authorisation was mala fide, cannot be accepted
as correct.
Counsel for M/s. Seth Brothers contended that
opportunity may be given to the assessees to lead evidence
viva voce to prove that the revenue officers acted for a
collateral purpose. We do not entertain this request since
we propose to remand the case to the High Court to decide
questions which have not been decided. The applicants, if
so advised, may move the High Court for leave to lead
evidence. It is for the High Court to decide whether at
this stage after nearly six years leave to examine witnesses
should be granted.
The order passed by the High Court is set aside and the
proceeding is remanded to the High Court. The High Court
will deal with and dispose of the proceeding according to
law. We may observe that counsel for the Income-tax Officer
did not invite us to decide the question of the vires of s.
132 of the Income-tax Act on which the High Court has
expressed no opinion. M/s. Seth Brothers and the other
petitioners in the High Court will pay the costs of these
appeals in this Court. There will be one hearing fee.
Costs in the High Court will be costs in the petition.
V.P.S. Appeals allowed and case remanded.
615