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S.C. Sibal Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ No. 348 of 1975
Judge
Reported in[1977]106ITR102(P& H)
ActsIncome Tax Act, 1961 - Sections 132(1), 132(5) and 132(13); ;Code of Criminal Procedure (CrPC) , 1973 - Sections 165
AppellantS.C. Sibal
RespondentCommissioner of Income-tax and ors.
Appellant Advocate Kuldip Singh, Adv.
Respondent Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Cases ReferredIn Wilkes v. Wood
Excerpt:
.....executive (to use the words of wade and phillips' constitutional law) to obtain material upon which to formulate charges against persons suspected of hostility towards the government. 1 against the petitioner to be illegal as well as the search and seizure to be contrary to law, and annul and set aside the final order, dated january 10, 1975, annexure p-6, passed by the income-tax officer under section 132(5) of the act......clauses (a), (b) and (c) of sub-section (1) of section 132 of the act for issuing the impugned search warrant of h. l. sibal's premises, and on the basis of which the impugned search had been conducted in that case. consequently, for the reasons recorded in that judgment, we hold that in the instant case also there was no such information with the commissioner of income-tax on the basis of which he could form the requisite belief. in view of our finding to the above effect about there being no information with the commissioner of income-tax on the basis of which he issued the authorisation warrant, the search and seizure were illegal and void. since the authorisation warrant, the search and the seizure have been found by us to be illegal and void on the various grounds referred to.....
Judgment:

1. On October 17, 1974, the house of the petitioner was searched by respondents Nos. 3 and 4 accompanied by other officers. The income-tax authorities purported to act on an authorisation which had been issued by respondent No. 1, the Commissioner of Income-tax, under Section 132 of the Income-tax Act, 1961. Shorn of all details, the fact remains that after the search of the premises of the petitioner had been completed, M. K. Dhar, respondent No. 3, got into touch with J. S. Dulat, respondent No. 2, on the telephone. The petitioner has stated that Dhar told Dulat on that occasion on the telephone that not much jewellery had been found. Dulat ordered Dhar to seize all the things found from the premises of the petitioner as per instructions, and thereafter, at about 2-40 or 2-45 p.m., Dulat came to the residence of the petitioner without being authorised to enter the premises, and on being told about the relevant facts by the petitioner, he directed respondent No. 3 to seize the sum of Rs. 4,000 and the jewellery as per instructions, in spite of the petitioner's protest against the seizure. The grievance of the petitioner in this respect, mentioned in paragraph 23 of the petition, is that it was the authorised officer, i.e., Mr. M.K. Dhar alone who could seize money, bullion, etc., as a result of application of his ownindependent mind and that inasmuch as the seizure was in fact ordered only as directed by Dulat, the same was illegal on that additional ground. In reply to the averments made by the petitioner in paragraphs 7 and 23 of the petition, Dhar has, however, in paragraph 2 of his affidavit, while denying the suggestion of the petitioner and describing it as incorrect, admitted that during the course of the proceedings, he did refer certain matters to respondent No. 2 (J. S. Dulat) and has claimed that this was done only to ascertain his views 'on matters arising out of the search and seizure'. The above-mentioned averment of Dhar is wholly consistent with the aforementioned allegations made by the petitioner, though they have been vaguely denied in the opening sentence of paragraph 2 of his affidavit. He has denied that Dulat ever gave any direction to him 'as alleged by the petitioner' and has claimed that the decisions were made by himself. He has not denied that though the search had been completed much earlier and he had rung up Dulat after the completion of the search, he did not effect any seizure till Dulat had actually arrived at the spot. Nor has he specifically denied that the petitioner apprised Dulat of all the facts to which the petitioner has adverted. It is significant that Dhar has not taken the court into confidence as to 'the matters arising out of the search and seizure' on which he consulted Dulat or sought his instructions. These facts are so eloquent that the conclusion appears to us to be irresistible that the seizure was in fact effected by Dhar as a result of the consultation made with Dulat and after receiving instructions from him. Otherwise, there is no reason why the seizure could not be effected before Dulat's arrival. On the facts of this case, therefore, we are satisfied that the authorised officer did not apply his mind before seizing the cash and jewellery taken over by him and that in making the seizure under instructions from Dulat, he acted under extraneous orders.

2. In H. L. Sibal v. Commissioner of Income-tax , Civil Writ No. 150 of 1975, decided on July 15, 1975, we held that even if the requirements of recording the grounds of belief and the specification, as far as possible, of the things for recovering which the search is being ordered, are not expressly mentioned in Section 132(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), they have assumed statutory character by the force of Sub-section (13) of that section. Section 165 of the Code of Criminal Procedure does not authorise a general search on the off-chance that something might be found. The warrant of authorisation issued in the present case was exactly in similar terms as the one issued in H. L. Sibal's case . Accordingly, for the reasons recorded in our judgment in that case, we hold that the warrant of authorisation issued in this case did not conform to the requirements ofsection 132(13) of the Act read with Section 165 of the Code of Criminal Procedure.

3. The information on the basis of which the respondents claim to have acted in the instant case is precisely the same on which the respondents relied in the case of Mr. H. L. Sibal, except that the alleged information was said to be initially against Mr. H.L. Sibal, and the warrant of authorisation against the present petitioner was issued merely on the suspicion that Mr. H.L. Sibal might have diverted his undisclosed income to the petitioner, as the latter is the real brother of Mr. H. L. Sibal. After considering the information in H. L. Sibal's case , we held in our aforesaid judgment that there was no information with the Commissioner of Income-tax on the basis of which he could form the belief requisite under Clauses (a), (b) and (c) of Sub-section (1) of Section 132 of the Act for issuing the impugned search warrant of H. L. Sibal's premises, and on the basis of which the impugned search had been conducted in that case. Consequently, for the reasons recorded in that judgment, we hold that in the instant case also there was no such information with the Commissioner of Income-tax on the basis of which he could form the requisite belief. In view of our finding to the above effect about there being no information with the Commissioner of Income-tax on the basis of which he issued the authorisation warrant, the search and seizure were illegal and void. Since the authorisation warrant, the search and the seizure have been found by us to be illegal and void on the various grounds referred to above, the order passed on that basis under Sub-section (5) of Section 132 of the Act cannot stand and must fall.

4. The question of allowing privilege in respect of the files of the income-tax authorities (which are the same as have been referred to in H.L. Sibal's case ) has now become merely academic as the relevant portion of those files has been made part of the judicial file in the above-mentioned case.

5. In the course of our judgment in H. L. Sibal's case we raised an inference about the warrant of authorisation issued in that case having been issued without the sense of responsibility, care and caution expected of a high official dignitary, in view of the admitted fact that at least one warrant of authorisation had been issued in blank in which the name of one Gurdial Singh Mann had subsequently been filled in by Dulat. We are not directly concerned with Gurdial Singh Mann's matter in this case, but we cannot forget the impact which this kind of an event has on the very foundation of the authorisations which were issued by this particular Commissioner of Income-tax in the cases of the Chandigarh advocates as these cases were dealt with by him in one bunch. The practice of issuing general warrants to arrest unspecified persons and tosearch property is said to have originated with the Court of Star Chamber. It was a powerful weapon to assist an embarrassed executive (to use the words of Wade and Phillips' Constitutional Law) to obtain material upon which to formulate charges against persons suspected of hostility towards the Government. At a later stage the practice was authorised by the Licensing Act, 1962, for use by a Secretary of State to prevent publication of unlicensed material, and such warrants continued after the lapse of that Act in 1695. The general warrant cases arose out of the attempt of George Ill's Government to stifle the political activities of John Wilkes and others and publications such as the North Briton, which were not to the liking of the then Government in England. Even at a later date the severity of the law against seditious publications was maintained largely by executive action. Judicial pronouncements in England later decided once for all that such general warrants were illegal and thereby the judicial pronouncements deprived the executive of a formidable instrument of oppression. In Wilkes v. Wood [1763] 19 State Tr. 1153 it was held that the papers of an unnamed person could not be seized on a warrant of this description. What is stated above is almost a quotation from Wade and Philips' Constitutional Law. We have referred to it so that the respondents may not in future make any such attempt and try to justify it. In the view we have taken about the legality of the authorisation, the search and the seizure, it is not necessary to go independently into the argument of the learned counsel for the petitioner regarding his attack on the validity and legality of the final order passed under Sub-section (5) of Section 132 of the Act.

6. In view of our findings recorded above and in the light of the law laid down by us in H. L. Sibal's case we allow this petition with costs, declare the authorisation for search issued by respondent No. 1 against the petitioner to be illegal as well as the search and seizure to be contrary to law, and annul and set aside the final order, dated January 10, 1975, annexure P-6, passed by the Income-tax Officer under Section 132(5) of the Act. We further direct that the documents, money and jewellery illegally seized from the petitioner's premises should be returned to him forthwith. At this stage Mr. D.N. Awasthy, the learned counsel for the respondents, makes an oral request that in view of the absence of the Income-tax Commissioner from the circle and also the absence of the Income-tax Officer from Chandigarh at the moment and the fact that the key of the Government locker, in which the jewellery of the petitioner has been kept, is lying in a sealed packet, which may have to be opened in court, a fortnight's time may be allowed to the respondents to comply with the order for the return of the seized jewellery, cash and the documents.Mr. Kuldip Singh opposes this prayer. In the interests of justice, however, we allow the respondents tww weeks' time to comply with the order for the return of the above-mentioned articles.


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