R.L. Gulati, J.
1. This is a petition under Article 226 of the Constitution arising out of a proceeding for search and seizure of the account books of the petitioner under Section 132 of the Income-tax Act, 1961.
2. At the outset we are constrained to say that this case like some other cases of this nature which have come to our notice reveals a sorry state of affairs. The income-tax department seems to be labouring under a misconception with regard to the scope of Section 132 and the powers of the authorities concerned.
3. The petitioner is a private limited company which is engaged in the business of transport at. Kanpur. On May 8, 1969, the income-tax department carried out a raid at the business premises of the petitioner-company as well as the residential premises of its cashier, Sri S. R. Verma, and seized 61 account books and other papers and documents. In its letter dated May 13, 1969 (annexure 'I' to the writ petition), the petitioner requested the first respondent, the Commissioner of Income-tax, for the copies of the following documents :
(a) reasons, if any, whether recorded or not, on which authorisation for the search was issued,
(b) copies of the warrant of authorisation to the person/persons participating in the search, and
(c) copies of the statements of person/persons recorded during the course of the search.
4. The Commissioner of Income-tax by his letter dated June 28, 1969, informed the petitioner that the copies of the search warrants and the other information asked for could not be furnished. The petitioner then on August 21, 1969, made an application to the Commissioner for the inspection of the following documents :
(I) search warrants;
(II) complaint, if any ;
(III) statement or affidavit of the complainant, if any;
(IV) report of the Income-tax Officer or any other officer, if any;
(V) reasons recorded, if any.
5. This was followed by a representation to the Commissioner dated August 28, 1969, in which the petitioner requested that the records of the search and seizure proceedings may be shown to him. Sri V. C. Chaturvedi, acting on behalf of the Commissioner of Income-tax, sent the following reply to the petitioner on October 9, 1969 :
'Please refer to your petitions dated August 21, 1969, and August 28, 1969, in the matter of inspection of search warrants, etc., and the return of the seized books, etc.
2. I am directed to inform you that in the absence of any provision for the inspection of documents mentioned in your application dated August 21/1969, your request cannot be acceded to. The search warrants were duly shown at the time of search.
3. As for the request for the return of the seized books, etc., the same are under scrutiny and would be returned thereafter.'
6. The second respondent, the Income-tax Officer, Companies Circle, B-Ward, Kanpur, had also impounded certain documents of the petitioner on May 6, 1971, under Section 131 of the Act. Some more documents were impounded on October 15, 1971. When these documents and account books seized were not returned to the petitioner for a long time, he filed the present writ petition. The seizure of the account books and the documents has been challenged mainly on three grounds :
(i) that the Commissioner did not record any reason before issuing the search warrants;
(ii) that the books of accounts were retained beyond the period allowed under the law without the sanction of the Commissioner, of Income-tax ; and
(iii) that the sanction by the Commissioner to retain the books of accounts and documents beyond the initial period specified in the section was not communicated to the petitioner.
7. Before we deal with these contentions, we wish to observe that the Commissioner of Income-tax appears to be labouring under a great misconception with regard to the scope of Section 132, As we have pointed out at an earlier occasion, the seizure of the books of accounts of a businessman is a serious encroachment upon his fundamental right to carry on business. Such an encroachment, of course, is permitted by law in public interest. But it is necessary that the powers under Section 132 as also under Section 131 should be exercised strictly in accordance with the law and the principles of natural justice. The petitioner asked for copies of the search warrants and the reasons recorded by the Commissioner for authorising the search. This request was refused. The petitioner then applied for inspection. That too was refused by the Commissioner on the ground that there was no provision permitting the inspection of the documents. This approach of the Commissioner is obviously erroneous. Unless there is a statutory prohibition, a person against whom action is being taken under Section 132 is entitled to inspect the record of the proceedings and to obtain copies of the orders passed in those proceedings. If such a right is denied to him, he will not be able to satisfy himself that the action against him is justified and to seek redress against any illegal action taken or order passed. It is a well-known maxim that 'justice not only should be done, but should be seem to have been done'. An aggrieved person is entitled to know that the requirements of the law have been complied with. We are thus satisfied that the Commissioner was not justified in refusing to the petitioner the inspection of the record or copies asked for by him. We may make it clear that in a given case it may be possible for the Commissioner to treat a particular information or a document as confidential and to withhold its inspection. But that is not the case of the department in the instant case. Wholesale refusal to grant copies or allow inspection is not justified by law.
8. Now, coming to the merits of the case, the first contention on behalf of the petitioner is that the Commissioner recorded no reasons before taking action under Section 132 against him. Dr. R. R. Misra, counsel for the department, concedes that no reasons have been recorded by the Commissioner. He passed on the file of the Commissioner relating to those proceedings and we do not find any reason recorded by the Commissioner.
9. Section 132 itself does not require the Commissioner to record any reasons unlike Section 131 which requires the Income-tax Officer to record reasons before impounding the documents produced before him. However, Rule 12 requires that reasons should be recorded by the Commissioner before issuing warrants of authorisation to carry out a search and seizure. Rule 12 has been framed by the Central Board of Direct Taxes in exercise of the powers given to it under Sub-section (14) of Section 132. These rules, therefore, have statutory force. Any. search and seizure made in contravention of Rule 12 would thus be illegal. The initial seizure of books of accounts being illegal, their retention would also be illegal.
10. Now, coming to the documents which have been impounded by the Income-tax Officer, we have been informed by the learned standing counsel that those documents have since been returned to the assessee. In the circumstances, it is not necessary to deal with the contention that the impounding and the subsequent retention of the documents was illegal. Since the petition succeeds on the first ground, it is not necessary to deal with the remaining two grounds.
11. For the reasons stated above, we allow this petition. The respondents are directed to return to the petitioner forthwith the books of accounts and documents seized during the search. The petitioner is entitled to its costs.