G.P. Singh, C.J.
1. This order shall also dispose of M.Ps. Nos. 759 and 760 of 1981.
2. The petitioner in M.P. No. 758 of 1981 is Naraindas who is a partner in the firm, M/s. Naraindas Shri Vallabhdas. The petitioners in M.P. Nos. 759 and 760 of 1981 are respectively, M/s. Venkatesh Trading Co. and M/s. Maheshwari Lime Works, two other partnership firms. In all these petitions under Article 226 of the Constitution, the petitioners challenge the search and seizure made by the authorised officers of the I.T. Department on May 12, 1981, under Section 132 of the I.T. Act, 1961.
3. The firm, M/s. Naraindas Shri Vallabhdas, carries on business in oil, oilseeds, sugar, kirana, grains, etc., at Katni. It consists of three partners, viz., Naraindas Gattani, Shri Vallabdas Gattani and Shyam Sunder Gattani, who are all brothers. The firm, M/s. Venkatesh Trading Co., consists of five partners. They are : (1) Bhagwandas Maheshwari who is the sister's son of Naraindas Gattani, (2) Savitri Devi Gattani who is the wife of Naraindas Gattani, (3) Ghanshyamdas Gattani who is the son of Shri Vallabhdas Gattani, (4) Vishwanath Somani, and (5) Shakuntala Somani, who are possibly related to Maheshwari. The firm, M/s. Maheshwari Lime Works, consists of six partners: (1) Shyamsunder Gattani, (2) Keshavdas Gattani, who is the son of Naraindas Gattani, (3) Smt. Girdhar Devi, sister of Naraindas Gattani, (4) Smt. Shakuntala Devi, who is the sister's son of Naraindas Gattani, (5) Yugal Kishore Maheshwari, and (6) Laxmidevi Somani, who is related to Yugal Kishore. These two firms carry on business in limestone at Katni. From the composition of the aforesaid firms it will be seen that they are dominated by Gattanis and their relations.
4. In pursuance of the authorisations issued by the Commissioner of Income-tax, Jabalpur, on May 10, 1981, residential premises of Naraindas and business premises of M/s. Venkatesh Trading Co. and M/s. Maheshwari Lime Works were searched by the authorised officers of the Department onMay 12, 1981. In the search conducted at Naraindas' premises, 1,664.900 grams of gold ornaments, cash amounting to Rs. 14,000 and books of account and other papers were seized. From the business premises of M/s. Venkatesh Trading Co. and M/s. Maheshwari Lime Works, books of account, documents, cheque books, etc., were seized by the authorised officers. It is this search and seizure which is challenged in these petitions.
5. The first contention of the learned counsel for the petitioners is that the warrants of authorisation were not in conformity with the requirements of Section 132(1) (b) and (c), and the reasons recorded by the Commissioner did not show that he had satisfied himself as to the requirements of these provisions.
6. On May 10, 1981, the Assistant Director (Inspection and Intelligence) submitted a detailed report that M/s. Venkatesh Trading Co. and its sister concerns were engaged in purchasing coal in fictitious names and selling them in black-market and that this business was carried on outside the books of account. On receiving this report, the Commissioner, on May 10, 1981, recorded at the foot of the report the following:
'I have considered the facts of the case. My information is that this group of assessees has been getting allotment of coal in the names of over a dozen bogus concerns. The coal so obtained is sold in black market. Coal has a thriving black market in Katni, owing to the lime industry. Bulk of the transactions of this assessee is outside the books. In my opinion, the assessee is in possession of unaccounted wealth in the shape of cash and jewellery. More important, they maintain records of transactions which are not disclosed and such records are not produced before the ITO. This is a fit case for search under Section 132. A.D.I, will please put up authorisation.'
7. Authorisations in Form No. 45 were put up before the Commissionerwhich he signed on the same date. The authorisations are in printedforms. The matter which was not applicable has been struck off in theforms and the authorisations are confined to matters relevant under Clauses (b)and (c) of Section 132(1).
8. We are unable to accept the contention of the learned counsel for the petitioners that the record made by the Commissioner does not satisfy the requirements of Section 132(1) (b) and (c). The reasons recorded by the Commissioner have to be read along with the authorisations and in the background that he had received a detailed report from the Assistant Director (Inspection and Intelligence). The information referred to in the record of reasons of the Commissioner which we have extracted above is the said report. It is plain from the record made by the Commissioner that hebelieved the information that the petitioners were engaged in clandestine business in coal outside the regular books of account, that they maintain record of this business and that they were in possession of unaccounted wealth in the shape of cash and jewellery. It is true that the words 'has reason to believe' do not occur in the record made by the Commissioner, but his conclusion that 'this is a fit case for search under Section 132' and his direction to put up authorisations for his signatures and his signing the same in Form No. 45 clearly make out that he was fully satisfied of the necessity of the action to be taken under Section 132(1)(b) and (c). It may here be mentioned that the form which the Commissioner signed opens with the words 'whereas information has been laid before me and on the consideration thereof I have reason to believe'. The deficiency, if any, in the record made by the Commissioner is supplied by the authorisations signed by him. It cannot also be argued that the belief of the Commissioner was not reasonable or was based on irrelevant information. A detailed report of the Assistant Director (Inspection and Intelligence) could be relied upon by the Commissioner as credible information for taking action under Section 132. There is no allegation of mala fides against the Commissioner or the Assistant Director; nor such a case has been argued before us by the learned counsel for the petitioners.
9. The learned counsel for the petitioners submitted that as the firm of Naraindas Shrivallabhdas only carried on business in oil, oilseeds, grains, etc., and not in limestone or coal, the Commissioner could not have formed any belief that this firm was also dealing in transactions of coal and that there was necessity for taking action against the members of this firm under Section 132(1)(b) and (c). There is no merit whatsoever in this submission. We have already mentioned the composition of the three firms. They are all sister concerns. Therefore, simply because the firm of M/s. Naraindas Shrivallabhdas was not apparently dealing in limestone or coal, it could not be said that there was no point in directing search of Naraindas' premises. The petitioner's learned counsel also argued that the Commissioner could not have reasonably believed that the books of account, etc., in which the transactions relating to coal were entered would not be produced if summons or notice was issued for its production under the provisions of the Act. This argument is also devoid of any merit. If the Commissioner had reason to believe that clandestine business in coal was being carried on by the group for assessees for which they maintained accounts, there was obvious reason to believe that such account would not be produced if the assessees were called upon to produce it by notice or summons issued under the Act for the simple reason that a tax evader does not normally do so.
10. The question relating to validity of search and seizure under Section 132 was dealt with by the Supreme Court in ITO v. Seth Brothers : 74ITR836(SC) , The decision of the Supreme Court in this case makes it clear that the power exercised by the Commissioner under Section 132 is not a judicial or quasi-judicial power and that the court cannot substitute its own opinion for that of the Commissioner. Therefore, where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated officer to enter and search premises for cash and jewellery and books of account and documents and the power is exercised bonafide, any error of judgment on the part of the Commissioner or the authorised officer will not vitiate the exercise of the power. The case further lays down that the Act and the Rules do not require that the authorisation should specify the particulars of documents and books of account. It was also held, in this case, that search and seizure of books of the assessee in respect of business carried on in other names could also be justified. The Supreme Court again dealt with the same question in Pooran Mal v. Director of Inspection : 93ITR505(SC) . In this case the Supreme Court upheld the validity of Section 132. With reference to Section 132(1)(b), the Supreme Court observed that it is possible that an assessee may, after knowing that the game is up, produce the requisite documents. But, in the nature of things, such an assessee would be rare and, therefore, only in very rare cases a tax evader may comply with the requisition. So the Commissioner or the Director of Inspection, who has reliable information that the assessee has concealed his income derived from certain financial deals, may be justified in entertaining the reasonable belief that the assessee, if called upon to produce the necessary documents, will not produce the same. Having regard to the facts, in the instant case, and the principles laid down by the Supreme Court in these cases, we are not prepared to accept the contention of the learned counsel for the petitioners that the authorisations issued by the Commissioner under Section 132(1)(b) and (c) were invalid.
11. Learned counsel for the petitioners cited some other cases, but they proceed upon different facts and we do not find it necessary to burden our judgment with those cases when the principles for application of Section 132 and for judging the validity of any action taken under that section have been authoritatively settled by the Supreme Court in the two cases mentioned above. We may, however, refer to the decision of the Calcutta High Court in Dwarka Prosad Agarwalla v. Director of Inspection : 137ITR456(Cal) , which is a decision of Sabyasachi Mukharji J. (as he then was), and which was relied upon by the learned counsel for the petitioners. This case is clearly distinguishable. In this case, the satisfaction was recorded by the Assistant Director of Inspection and not by the Director of Inspection who issued the authorisation. Further, the source and the nature of information did not find a place in the record made by the Assistant Director. In the case before us, the record of satisfaction has been made by the Commissioner who has issued the authorisation. The nature of information has also been disclosed by him. The source of information is clear because the satisfaction was recorded at the foot of the report made by the Assistant Director (Inspection and Intelligence). The Calcutta case is, therefore, not applicable.
12. Learned counsel for the petitioners next contended that the action of the authorised officers in making search and seizure was illegal. He has pointed out the following irregularities : (i) respectable persons of the locality were not called as witnesses, (ii) inventory of the books of account and documents was not made, (iii) boxes were not sealed, and (iv) ornaments were also seized from the ladies in the family. In our opinion, none of these objections can be reasonably sustained or can make the search and seizure illegal. It is stated in the return that the names of the witnesses were suggested by the petitioners. They wanted that outsiders should not be called as that would have effected their credit and prestige. The petitioners cannot now complain that the witnesses suggested by them were not respectable persons of the locality. As regards the inventory of the books and other documents seized, the return discloses that after the seizure of books and documents, Naraindas said that he was not feeling well and that the work of preparing the inventory could not be carried on. Naraindas requested that the books and documents be kept in a box and that he will himself come next day to Jabalpur and the inventory may then be prepared. It was on this request that the books and documents were kept in a box locked by Naraindas and the Department. Similar request was made after the seizure of books of account and other documents of M/s. Venkatesh Trading Co. and M/s. Maheshwari Lime Works by Y.K. Maheshwari who was present at the time of the search of the business premises of these two concerns which are at the same place. Maheshwari signed the Panchnama showing that the documents recovered were put in two boxes which were locked by the Department and also by him. The returns clearly state that this was done at the request of the petitioners on the plea that Naraindas was not well. It is thus clear that the inventory of the books of account and other documents seized could not be made because of the request made by the petitioners themselves. They cannot now complain that the officers conducting the search did not make the inventory of the books of account and other documents, that were seized, then and there. As regards the objection that ornaments from the ladies were also seized, the fact is denied in the return. In the return it is clearly stated that nothing was seized from the ladies of the family. We are satisfied that none of the objections raisedby the learned counsel for the petitioners has any weight. Moreover, as observed by the Supreme Court in the case of Seth Brothers : 74ITR836(SC) , any irregularity in the course of search and seizure committed by the officers acting in pursuance of the authorisations will not be sufficient to vitiate the action taken provided the officers had in executing the authorisations acted bona fide. In this case we are satisfied that the authorised officers had acted bona fide and, therefore, even if there was some irregularity, the action taken is not vitiated.
13. The petitions fail and are dismissed with costs. Counsel's fee Rs. 100 in each case. The balance amount of security deposit be refunded to the petitioners.