BASI REDDY J. - On the 5th January, 1966, the premises of Sri Venkateswara Lodge, Lakdi-ka-pool, Hyderabad, were searched by four Income-tax Officers and their staff, and, during the search, which went on from 9-30 a.m. up to 7-30 p.m. that day, a large number of account books, documents and slips were seized. The Income-tax Officer were armed with a warrant of authorisation issued by the Commissioner of Income-tax Hyderabad, under section 132 of the Income-tax Act, 1961, authorising the Income-tax Officers to enter the said premises and seize books of account, other documents, money, bullion, jewellery or other valuable article or thing, which may be found necessary or useful for the purpose of income-tax assessment proceedings till then pending or in respect of future assessment affecting Sri Venkataswara Lodge. In pursuance of that warrant of authorisation, the Income-tax Officer seized large number of account books, documents and slips after observing the formalities prescribed by rule 112 of the Income-tax Rules, 1962, as amended by the Rules of 1965. This writ petition has been filed by A. Ramaswamy and K. Ramamurty in their capacity as partners of Sri Venkateswara Lodge, challenging the legality and regularity of the entire proceedings pertaining to the search and seizure and seeking a writ of prohibition with the following prayers :
'(1) to issue a rule nisi calling up the records leading up to and inclusive of the notices 724(r) and 725(r) dated February 26, 1966, including the assessment orders dated March 29, 1966, for the assessment year 1961-62 and all the documents seized on the date of the seizure dated January 5, 1966, including the uninventoried two gunny bags of documents and the search warrant and the others preceding thereon passed by the first respondent (Commissioner of Income-tax, Hyderabad);
(2) to quash the search warrant and restrain the respondents from using the information contained in the seized material and making any use of either for re-opening the proceedings under section 147 or finalising the assessments for the years 1962-63 onwards;
(3) to quash the notices Nos. 724(r) and 725(r) dated February 26, 1966;
(4) to stay all further proceedings in pursuance of the notice issued under section 147 of the Act dated February 26, 1966.'
It may be mentioned that the three respondents to this petition are respectively the Commissioner of Income-tax, Hyderabad, the Income-tax Officer, A-1, 'A' Ward, Hyderabad, and the Income-tax Officer, Income-tax-cum-wealth-tax Circle II, Hyderabad.
So that, the relief which the petitioners seek in this writ petition is that, inasmuch as the search and seizure is illegal, the respondents should be interdirected from using any of the materials seized from Sri Venkataswara Lodge as a result of that search for any purpose, either in respect of pending proceedings or future proceedings.
Before adverting to the contentions raised by the learned advocate for the petitioners in support of the writ petition, it is necessary to state the rival versions-the version of the petitioners, on the one side, and the version put forward on behalf of the income-tax officials, who took part in the search, on the other, to see as to what exactly happened at the search and how the seizure was effected. The affidavit in support of this writ petition is sworn to by A. Ramaswamy, one of the partners of Messrs. Sri Venkataswara Lodge. According to the affidavit, A. Ramaswamy and K. Ramamurthy have been carrying on hotel business as partners since August, 1957. Prior to that date, Ramaswamy himself was doing that business as the sole proprietor. Prior to the formation of the partnership firm and subsequent thereto, income-tax returns were being submitted on the basis of the turnover accepted by the sales-tax authorities in respect of assessments to sales-tax. For the assessment year 1961-62 the return was filed on May 11, 1964, and it was represented to the concerned Income-tax Officer that the books of account and documents relating to Sri Venkateswara Lodge had been seized by the sales-tax department and had not been returned to the petitioners and, consequently, they could not be produced before the concerned Income-tax Officer. After submitting the return for the year 1961-62, they were awaiting orders of the concerned Income-tax Officer. Then, on the day in question, i.e., January 5, 1966, during the absence of the deponent, the income-tax officials raided the premises of Sri Venkateswara Lodge at 9-30 a.m. In paragraph 4 of his affidavit this is what the deponent says :
'However, to my great dismay and distress, the Income-tax Officer, A-1(A) Ward, the 2nd respondent herein on January 5, 1966, at about 9-30 a.m. with nearly twenty officers, inspectors and peons without any prior notice entered my business premises, Sri Venkataswara Lodge, at Lakdi-ka-pool, and Sri Venkateswaa Lunch Home near Secretariat and also the residential house at Erramanzil and searched all my belongings including the closed places wherein women live. During the course of these searches at all the three places, the officers did not find any cash, bullion, jewellery or other valuable articles except a cash of Rs. 222 and little jewellery belonging to the women. All this was done at the instance of one Mr. N. S. Mani, who was ex-manage of our business. He worked for about six years and when we questioned his behaviour regarding the business dealing and also his omission to make proper representation before the income-tax authorities in these assessment proceedings he grew inimical towards us and obstained from duty since March, 1965, and began to blackmail us for money and with other motives. When the Income-tax Office and his assistants came to my business premises at Lakdi-ka-pool, the said Mr. N. S. Mani brought two gunny bags containing loose sheets and small books and with the aid of the income-tax official he brought those bags inside the business premises and the search party had made an inventory of some of the papers therein and also seized them stating that they relate to our business. When the search party came, I was not at my business premises and on receiving information I came to that place at about 11 a.m. and I immediately protested that the two gunny bags load of books of accounts and loose sheets do not belong to our business and it was foisted on us by Sri Mani who bore illwill against us and who waited outside the premises of Ventakateswara Lodge from 7-30 a.m. with bags and brought into the premises just at the time when the search began. It is obvious he is hand-in-glove with the officers in search as a pre-planned affair. I was forced and pressed to pay rickshaw charges of Rs. 2 and under protest I paid the same and I was even forced and pressed to sign some of the documents so illegally seized against my will. I requested the officers to record statements from Sri N. S. Mani regarding the custody of these documents and how he could get them without our knowledge, but he slipped away even during the process of search. However, the officer was prepared to note in my statement that they were brought from Sri. N. S. Manis house (appendix 'D'). Accordingly they took a statement from me and, even without verifying the nature of documents contained in these bags, prepared an inventory for some of them, and they did not have the necessary patience to prepare a full inventory and so bundled up the documents after nothing them as bundle of papers. After some time they could not do even that but simply collected all those loose papers in those gunny bags. The officer did not give a receipt for the gunny bags but the Inspector who accompanied the Income-tax Officer gave a receipt (appendix 'C') stating that two gunny bags containing loose papers, etc., relating to M/s. Venkateswara Lodge, Lakdi-ka-pool, Hyderabad, were received. The documents relating to other business concerns, namely, Srinivasa Lodge, belonging to Sri Krishnamurthy, and Srinivasa Lunch Home, now defunct, were also seized. Thus, it is clear the seizure is enormous and not in proper exercise of the powers and is clearly mala fide in the sense that there was an abuse of power conferred on the Income-tax Officer under section 132 of the Act (43 of 1961), as it stood unamended and after the Amendment Act (I of 1965).'
It will thus be seen that, according to this affidavit, the villain of the piece was one N.S. Mani, ex-manager of Sri Venkateswara Lodge, who, after he had been discharged from service, borne illwill against the petitioners, colluded with the income-tax officials and at the nick of time, produced two gunny bags containing books of account, loose sheets, etc., which were somehow connected with the affairs of Sri Venkateswara Lodge, though in fact they had nothing to do with them. The further allegation is that the Income-tax Officers seized the contents of those bags without making an inventory of all of them and forced the deponent (A. Ramaswamy) to put his signature in some of those documents. Although it is stated in the paragraph extracted above that the documents relating to other business concerns, viz., Srinivasa Lodge belonging to Sri Krishnamurthy, and Srinivasa Lunch Home, now defunct, were also seized, it is not stated that those documents were recovered from the gunny bags brought by N.S. Mini. On the contrary, while the earlier sentences in that paragraph refer to loose papers, etc., seized from gunny bags purporting to relate to Sri Venkateswara Lodge, it is not stated that the documents relating to the other two lodges, Srinivasa Lodge and Srinivasa Lunch Home, which were admittedly seized, came out of the two bags, and were not seized from the premises themselves. Further, the affidavit shows that a statement was recorded from A Ramaswamy then and there. That statement reads as follows :
'I, A. Ramaswamy s/o Alagappa aged 30 years, resident of Erram Manzil and one of partners of M/s. Venkateswara Lodge, Lakdi-ka-pool, Hyderabad, solemnly declare on oath as under :
I have been carrying on hotel business for the last 10 years. The business has been run as a firm of two partners for the last about 8 years. The account books and vouchers connected therewith from the years 1959-60 were seized by the sales - tax authorities who now plead that the same might have been returned as they were not traceable in their officer.
Today, when you visited the hotel at 9-30 a.m., I was not present in hotel and I was told by my manager, Sri Chittal, that you were waiting for my appearance from 9-30 a.m. At about 11-30 a.m. I was told that two bags containing account books and vouchers were brought to the hotel by rickshaw by Sri Mani, who was the former manager of this hotel, and who was not attending for the last about one year, to be given in the hotel on the plea that these records related to the business of this hotel. These bags, it is told by my manager, were opened by your Inspector and the papers and vouchers were stamped by you and signed by you. My subscribing to signature on these records cannot be taken that the same are genuine and related to this hotel business as I have no time to minutely examine them. However, whenever, necessary I shall be present in your office to explain them.
Taken by me, read over and accepted by the deponent as correct.
Sd. D. B. R. Rao, 5-1-66
Sd. A. Ramaswamy
Witnesses. Sd. .......... 10-1-66
1. Sd. A. Samad.
2. Sd. Laxmaiah.
As against this version, the version on the side of the department appears from the counter-affidavit sworn to by the Income-tax Officer, Income-tax-cum-Wealth-tax Circle II, Hyderabad, the 3rd respondent in the writ petition. This is what he states :
'The true facts are as follows :
Consequent on information made available to the Ist respondent (Commissioner of Income-tax, Hyderabad) he had reason to believe that the petitioner would not produce or cause to be produced books of account and the other documents which will be useful for or relevant to assessment proceedings under the Income-tax Act and he is in possession of money, etc., not disclosed for the purposes of the Income-tax Act, he accordingly authorised four Income-tax Officers to search the petitioners premises and seize any books of account and documents, etc., Pursuant to this authorisation these officers, of whom I was one, conducted a search of the petitioners premises and seized various papers. The search and seizure were carried out with due regard for all the requirements of law. It is also true that the residence of the deponent of the affidavit was searched under another warrant. The allegation that 'closed place where women live' were searched is obscure. Due decorum was invariably observed when searching residential premises. What was seized was listed out in the inventory. The several allegations in paragraph 4 of the affidavit that the search was carried out at the instance of Mr. N. S. Mani and in collusion with him, etc., are not correct. It is true that, during the search, Mr. Mani arrived at the premises either some account books and papers which were subsequently handed over to us by the deponent of the affidavit under reply after he had subscribed his signature thereto. A receipt was also issued to him. The statement recorded at that time from the deponent of the affidavit under reply may be perused. The petitioners are put to strict proof of the allegation that there were ill-feelings between Mr. Mani and the petitioners and Mr. Mani was blackmailing them and out of illwill Mr. Mani has foisted two gunny loads of account books and loose sheets, etc., on them. The statement that those gunny bags contain papers which were unconnected with the petitioners business is not correct. The allegation that the seizure is enormous is imprecise. The quantum of the material seized per se does not render the seizure illegal. The allegation of mala fide or abuse of power are vague and irresponsible.'
To the allegation that the seizure in question was unreasonable or excessive and constitutes abuse of power, this is what is stated in the counter - affidavit :
'(a) The quantum of the material seized would depend upon the quantum available and has no sinister significance. The validity of the search will never depend upon the number of records seized.
(b) It has been found after enquiry that the concerns Srinivasa Lodge and Srinivasa Lunch Home are concerns belonging to the petitioner.
(c) The allegation that some of the papers seized are not relevant is vague.
(d) The documents were seized after bestowing due thought and consideration.
(e) The papers in the gunny bags which were not separately inventories cannot in strict law be treated as the documents seized. Those documents were handed over by the deponent of the affidavit under reply to one of our inspectors and a receipt taken.....
(i) There were three search parties covering three different premises and their strength was not abnormal having regard to the size of the premises searched.
(j) Sri N. S. Mani was examined on oath.
(k) The allegation of convince in para. 6 (k) is untrue...........'
It will be observed that, according to this counter -affidavit sworn to by the 3rd respondent, who was one of the Income-tax Officer who was authorised to conduct the search and was present throughout the proceedings, which culminated in the seizure of a large number of account books, documents etc., the Income-tax Officer, conducting the search genuinely believed that the materials seized relevant and useful for the purposes of assessment proceedings relating to Sri Venkateswara Lodge, of which the two petitioners are partners. It also appears from his affidavit that the search was conducted with due regard to all the requirements of law, and there was no element of high-handedness or arbitrariness, nor was there any indiscriminate seizure of all materials good, bad or indifferent. As regards the part played by N. S. Mani in the search and seizure, according to the 3rd respondent, the allegation that the arrival of N. S. Mani with incriminating material was pre-arranged and the whole thing was stage-managed is not true. His version is that Mani came in, while the search was in progress, with two gunny bags and the contents of those gunny bags were handed over by A. Ramaswamy, one of the partners, who arrived at 11-30 a.m. and was present throughout the search from that time. It further appears that Ramaswamy himself put his signature on quite a large number of papers, which were taken out from those gunny bags. As regards the other papers which were taken out of the gunny bags, Ramaswamy himself told the Income-tax Officer, to put them documents and papers from the various portions of the premises of Sri Venkateswara Ladge were all carefully inventoried and stampled by the income-tax official who seized them. The case set out in the counter-affidavit is that the search was not done arbitrarily and in disregard of the provisions of law or in any high - handed manner but in strict conformity with the provisions of section 132 and rule 112. Only such materials were seized as the Income-tax Officers bona fide believed to be relevant for the assessment pertaining to Sri Venkateswara Lodge. The documents and papers relating to Srinivasa Lodge and Srinivasa Lunch Home, which were recovered from the premises of Sri Venkateswara Lodge, were, according to the 3rd respondents affidavit, of concerns belonging to the writ petitioners, and that was why they were seized in the course of the search.
It is to be mentioned that N. S. Mani, who even according to the affidavit filed by Ramaswamy, slipped away when the search was in progress, was later examined on oath by the Income-tax Officer on March 18, 1966, and this is the statement he gave then :
'Statement on oath given by Sri N. S. Mani, aged 35 years, son of Nageswara Ayyar, 223-C, Krishna Bhavan, Maredpalli, Secunderabad.
I have attended your office to-day in response to a summons under section 131 of the Income-tax Act, 1961. I was asked to identify some papers which were said to have been seized by the income-tax authorities on January 5, 1966, from the premises of Sri Venkateswara Lodge, Lakdi-ka-pool. The papers have been identified by me as relating to the business done in the name and stylike of Sri Venkateswara Lunch Home, Venkateswara Lodge, etc. Some of them are in my handwriting. they came in my possession when I was the paid manager of Sri Venkateswara Lodge (inclusive of branches). I left the services of Sri Venkateswara Lodge in May, 1965. Thereafter, my services were required again in about September, 1965. Some of the vouchers, books, etc., shown to me are in my handwriting while others are in the handwriting of others. They came into my possession in the normal course of my duties and were returned to the owners on January 5, 1966.'
These are the material facts pertaining to the search and seizure, which were effected on that fateful day.
We will now advert to the contentions advanced by Mr. Kodanda Ramayya, learned advocate for the petitioners. The first point made by him was that the power of search and seizure conferred by section 132 of the Income-tax Act is ultra vires the Constitution, because it offends articles 14 and 19. The learned advocate first advanced his arguments on article 19(1)(f) and (g) of the Constitution. Article 19(1) lays down :
'All citizens shall have the right - .........
(f) to acquire, hold and dispose of property; and
(g) to practise any profession, or to carry on any occupation trade or business.'
Clauses (5) and (6) of article 19 make all the fundamental rights conferred by article 19 and in particular article 19(1)(f) and (g) subject to reasonable restrictions imposed by law made by the State. so the question in this case would be whether the right to property or to carry on business is subjected to reasonable restrictions by law. The learned advocate for the petitioners did not advance the conventional argument that the power of search and seizure is per se violative of article 19(1)(f) and (g) for the obvious reason that the Supreme Court has in M.P. Sharma v. Satish Chandra1 repelled such a contention. In that case, Jagannadhadas J., delivering the judgment of the court, said this at page 306 :
'A power of search and seizure is in any system of jurisprudence an overriding power of the State for the protection of social security and that power is necessarily regulated by law. When the Constitution makers have thought fit not to subject such regulation to constitutional limitations by recognition of a fundamental right to privacy, analogous to the Amercian Fourth Amendment, we have no justification to import it, into a totally different fundamental right, by some process of strained construction.'
No doubt, in that case their Lordships were dealing with searches and seizures under the provisions of the Criminal Procedure Code, but the same reasoning would apply to searches and seizures under the various tax laws conducted with a view to unearthing material for the purpose of detecting tax evasion and levying and collecting taxes which are legitimately due to the State. But what was contended by Mr. Kodanda Ramayya was that in Sharmas case their Lordships upheld the constitutional validity of searches and seizures because, under the Criminal Procedure Code, the power of issuing search warrants, which is a judicial function, is entrusted to judicial functionaries like Magistrates. The learned advocate relied on the following passage in the above judgment at page 307 :
'Nor is it legitimate to assume that the constitutional protection under article 20(3) would be defecated by the statutory provisions for searches. It is to be remembered that searches of the kind we are concerned with are under the authority of a Magistrate (excepting in the limited class of cases falling under section 165 of the Criminal Procedure Code). Therefore, issue of a search warrant is normally the judicial function of the Magistrate. When such judicial function is interposed between the individual and the officers authority for search, no circumvention thereby of the fundamental right is to be assumed. We are not unaware that in the present set up of the magistracy in this country, it is not infrequently that the exercise of this judicial function is liable to serious error, as is alleged in the present case. But the existence of scope for such occasional error is no ground to assume circumvention of the constitutional guarantee.'
It is difficult to see how this passage lends support to the contention of the learned advocate that only search warrants issued by Magistrates or other judicial officers would not infringe the fundamental right of the citizen under article 19(1)(f) and (g), but if search warrants are issued by an executive or administrative officer, however highly placed he may be, the fundamental right is defeated. That certainly is not the ratio of the decision of their Lordships in Sharmas case1. They were merely pointing out in that particular case that the warrant had been issued by a Magistrate who was a judicial officer and, therefore, circumvention of the fundamental right could not readily be assumed. In the present case, the authorisation warrant was issued by the Commissioner of Income-tax, who is a highly placed official in the departmental hierarchy of income-tax, and even a bare perusal of the warrant issued the warrant make it clear that he had applied his mind and given the matter serious thought and consideration which it deserved, and had only thereafter issued the warrant of authorisation to the Income-tax Officers to search the premises of Venkateswara Lodge and other premises belonging to the writ petitioners. Moreover, under the scheme of the Income-tax Act, the Commissioner does exercise quasi-judicial functions in some matters. In any view of the matter, the contention of the learned advocate must be negatived.
Although the learned advocate mentioned article 14 of the Constitution, he did not elaborate his argument and show how article 14, which guarantees equality before the law and the conferment of power to search and seize under section 132 of the Income-tax Act.
The main plank of the learned advocate on behalf of the petitioners was that the search and seizure effected in this case was in disregard of the mandatory provisions of section 132 of the Act and rule 112 of the Rules, and that the search and seizure effected by the Income-tax Officers was mala fide in the sense that it amounted to an abuse of power. It was contended that the provisions of section 132 have not been complied with inasmuch as there is nothing to show that the Commissioner of Income-tax had in his possession any information whereby he had reason to believe that the writ petitioners would not produce books of account or other relevant documents if notice was issued to them to do so. Section 132 of the Income-tax Act provides, inter alia :
'(1) Where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that - ...
(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 (11 of 1922), or under this Act, or
(c) any person is in position of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery o 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 (11 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;
(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...
(13) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub - section (1)'
In this connection, it is material to refer to Explanation 2 to the section, which is as under :
'Explanation 2. - In this section, the word proceeding means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year.'
Here we may refer to rule 112 also, which has to be read as supplementary to section 132. Rule 112, so far as material, runs as follows :
'(1) The powers of search and seizure under section 132 shall be exercised in accordance with sub - rules (2) to (14).
(2) The Director for Inspection or the Commissioner may, after recording his reasons for doing so, authorise any Deputy Director of Inspection or any Inspecting Assistant Commissioner or any Assistant Director of Inspection or any Income-tax Officer for the purpose of section 132 of the Art; such authorisation shall -
(i) be in writing under his signature;
(ii) bear his seal; and
(iii) authorise the Deputy Director of Inspection or the Inspecting Assistant Commissioner or the Assistant Director of Inspection or the Income-tax Officer, as the case may be (hereinafter referred to as the authorised officer), to enter and search any building or place specified therein and to exercise the powers and perform the functions under sub-section (1) of section 132, with such assistance of police officers or of officers of the Central Government, or of both, as may be required....
(6) Before making a search, the authorised officer about to make it shall call upon two or more respectable inhabitants of the locality in which the building or place to be searched is situate to attend and witness the search and may issue an order in writing to them or any of them so to do.
(7) The search shall be made in the presence of the witnesses aforesaid and a list of all things seized in the course of such search and of the places in which they were respectively found shall be prepared by the authorised officer and signed by such witnesses; but no person witnessing a search shall be required to attend as a witness of the search in any proceedings under the Indian Income- tax Act, 1922 (11 of 1922), or the Act unless specially summoned.
(8) The occupant of the building or place searched or some person in his behalf shall be permitted to attend during the search and a copy of the list prepared under sub-rule (7) shall be delivered to such occupant or person. A copy shall be forwarded to the Commissioner and also to the Director or Inspection where the authorisation under sub-rule (2) has been issued by him.....
(11) The authorised officer may convey the books of account and other documents, if any, seized by him in the course of the search made by him and the package or packages, if any, referred to in sub-rule (10) to the officer of any income-tax authority not below the rank of Income-tax Officer (hereinafter referred to as the Custodian). Any money seized in the search referred to above may also be deposited with the Custodian...
(14) The authorisation of the Director of Inspection or the Commissioner referred to in sub-rule (2) shall be in Form No. 45.'
(This form sets down the form in which warrant of authorisation under section 132 of the Income-tax Act, 1961, and rule 112(1) of the Income-tax Rules, 1962, is to be issued.)
It will thus be seen that before the Commissioner of Income-tax issues a warrant of authorisation, he has to record his reasons for issuing a warrant for search and seizure, and then issue the authorisation in accordance with the terms of rule 112(2). The authorisation issued in this case, as per Form No. 45 to the Income-tax Officers named therein, showed on its face that if summons under sub-section (1) of section 131 of the Income-tax Act, 1961, were issued to the partners of Sri Venkateswara Lodge, Lakdika-pool, to produce or cause to be produced books of account or other documents which would be useful for or relevant for the proceedings under the Indian income-tax Act, they would not produce or cause to be produced such books of account or documents as required by the summons or notice; that the partners of Sir Venkateswara Lodge had in their possession money, bullion, jewellery or other valuable articles or things which represent either wholly or partly the property which had not been disclosed for the purpose of the Income-tax Act, and further that, as the Commissioner had reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable articles or things have been kept and are to be found at the entire business premises of Sri Venkateswara Lodge situated in Lakdi-ka-pool or specified portions on the premises that had to be searched including Nos. 4 and 5 of the boarding and restaurant section building, the Commissioner authorised four named Income-tax Officers to enter the premises, search them and seize all relevant books, documents and the like which may be relevant or useful for the purpose of the Act. The complaint on behalf of the writ petitioners that the Commissioner of Income-tax had no reason to believe that a search of the petitioners premises would yield any useful material nor had he recorded any reasons in that regard is devoid of substance for the simple reason that the learned income-tax counsel has placed before us all the relevant papers and, on going through them, we find that the Commissioner had before him prima facie credible information regarding the various acts of ommission and commission alleged to have been committed by the petitioners with a view to evade income-tax and, on the basis of that information, he has in fact recorded reasons why he thought it necessary to issue a warrant authorising the Income-tax Officers to make a search not only of Sri Venkateswara Lodge, but the premises of two other concerns, with which the petitioners were suspected to be connected. We are fully satisfied that in issuing the warrant of authorisation, the Commissioner has acted in strict that in issuing the warrant of authorisation, the Commissioner has acted in strict conformity with section 132 and rule 112. Once such a warrant of authorisation is issued, the officers authorised therein have the power and are under a duty to search the premises and seize all relevant material. That is what has been done in the instant case.
It was then contended on behalf of the petitioners that the warrant of authorisation did not specify with any particularity what account books, what documents or what papers had to be seized, and it gave a blank authorisation to the Income-tax Officers to search and seize any papers that may be found in the premises, and, therefore, such authorisation is bad in law. A similar argument was advanced before the Supreme Court in Durga Prasad v. Superintendent (Prevention), Central Excise1, with regard to an authorisation issued under section 105 of the Customs Act, 1962 and their Lordships repelled the contention as follows at page 1216 :
'It was further submitted on behalf of the appellant that the power of search under section 105 of the Customs Act cannot be exercised unless the authorisation specifies a document for which search is to be made. In other words, it is contended that the power of search under section 105 of the Customs Act is not of general character. We do not accept this argument as correct. The object of grant of power under section 105 is not search for a particular document but of documents or things which may be useful or necessary for proceedings either pending or contemplated under the Customs Act. At that stage it is not possible for the officer to predict or even to know in advance what documents could be found in the search and which of them may be useful or necessary for the proceedings. It is only after the search is made and documents found therein are scrutinised that their relevance or utility can be determined. To require, therefore, a specification or description of the documents in advance is to misapprehend the purpose for which the power is granted for effecting a search under section 105 of the Customs Act. We are, therefore, of opinion that the power of search. But it is essential that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied, that is, the officer concerned must have reason to believe that any documents or things, which in his opinion are relevant for any proceeding under the Act, are secreted in the place searched. We have already mentioned the reasons for holding that this condition has been satisfied in the present case.'
Those observations apply with full vigour to the facts and circumstances of the present case. We are, therefore, satisfied that the warrant of authorisation issued by the Commissioner does not suffer from any legal infirmity.
The next point made by the learned advocate for the petitioners was that the Income-tax Officers, who were authorised to conduct the search, did not apply their minds to the numerous books of account, but seized everything that came their way indiscriminately and without regard to its relevancy or usefulness for any of the purposes contemplated in section 132 of the Act and rule 112 of the Rules. This contention is again devoid of merit. One of the Income-tax Officers, who participated in the search, has stated on oath in the counter-affidavit filed by him that he and his colleagues examined every account book, every document and every paper that was found inside the premises of Sri Venkateswara Lodge with meticulous care and seized them only when they were satisfied about their relevancy or usefulness; such documents were marked for identification and stamped with their departmental seal and also initialled by them; and all this was done in the presence of two respectable witnesses and also in the presence of A. Ramaswamy, one of the proprietors who arrived at the premises some time after the search began. It is scarcely to be expected that at that stage there must be conclusive proof of the relevancy or usefulness of the material seized. In the nature of things that is not possible; all that is necessary is that the officers must act honestly and believe as reasonable men that the material would be relevant or useful. If ultimately any document seized is found to be irrelevant or useless, it has certainly to be returned to the person from whom it was seized. But it is a far cry from that to saying that, even at the time of search and seizure, the relevancy or usefulness of every document seized must be made out conclusively. We are satisfied, on a scrutiny of the papers seized in the course of the search, that the officers conducting the search were fully alive to their responsibility and conducted the search and effected the seizure of the accounts and papers with due regard to the provisions of the Act and the Rules.
It was finally contended that, because of the large quantity of papers seized, the seizure was 'enormous' and amounted to an abuse of power. The use of the word 'enormous' is rather inappropriate with reference to the searches and seizures because in this, as in other things, the quantitative test is likely to be misleading. Whether, in a given case, the authorities effecting the search and seizure have exceeded their powers and acted arbitrarily and excessively depends upon the facts of that case. It may be that, in a given case, having regard to the nature of the assessment proceedings and the magnitude of the suspected evasion, a large quantity of material may have to be seized. That by itself does not render the search excessive or mala fide. We were referred to two decided cases, one from Allahabad and the other from the Punjab. In Seth Brothers v. Commissioner of Income-tax, as well as in N.K. Textile Mills v. Commissioner of Income-tax, the court found, on the facts and circumstances of that case, that the search and seizure were mala fide in the sense that situation. On the other hand, the Mysore High Court in C. Venkata Reddy v. Income-tax Officer (Central) I, Bangalore, on an examination of the facts of that case, reached strictly within the letter and spirit of the law and that there had been no abuse of power by the concerned officials.
Similarly, in the instant case, on a careful consideration of all the materials placed before us, we have no hesitation in holding that the seizure effected by the income-tax officials was neither arbitrary nor indiscriminate nor high-handed, but, on the contrary, it was done in strict conformity with the provisions of law. Indeed the 3rd respondent has stated in the affidavit filed by him that A. Ramaswamy, one of the partners of Sri Venkateswara Lodge, was quite co-operative during the search and the question of using force, threat or coercion never arose. We are satisfied that there is no factual basis for the somewhat reckless allegation made in the affidavit filed in support of the writ petition that the officials making the search had acted high-handedly even to the extent of invading the privacy of women folk. There is no warrant for this allegation at all.
Mr. Ananta Babu, the learned counsel for the department, referred us to Annamalai Chettiar & Co. v. Deputy Commercial Tax Officer, wherein it was held that even material which comes into the possession of the taxing authority as a result of an illegal search and seizure could be used in assessment proceedings, if such evidence is relevant and admissible. In that judgment Veeraswami J. referred to a decision of the Privy Council in Kuruma v. Queen in which the Judicial Committee quoted with approval the following observation of Crompton J. in Reg v. Leatham :
'It matters not how you get it (evidence); if you steal it even, it would be admissible.'
The learned judge held that the ratio deducible from those decisions was that irrespective of the means or the manner by which the evidence is secured, its admissibility is dependent on the question of relevancy of such evidence, and it cannot be ruled out on the mere ground that it had been procured by improper or illegal means. That, no doubt, is the correct principle and we are in respectful agreement with the learned judge. That question, however, is rather academic in this case because we have, as indicated above, reached the conclusion that the search and seizure do not suffer from any illegality, irregularity or impropriety.
It follows that this writ petition is devoid of merits and is accordingly dismissed with costs.
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