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Anand Swaroop Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petition No. 290 of 1975
Judge
Reported in[1976]103ITR575(P& H)
ActsIncome Tax Act, 1961- Sections 132(1) and 132(5)
AppellantAnand Swaroop
RespondentCommissioner of Income-tax and ors.
Appellant Advocate Kuldip Singh, Adv.
Respondent Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Cases ReferredH.L. Sibal v. Commissioner of Income
Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the..........an outside agency was no seizure in the eyes of law. (f) in the absence of a valid seizure of the assets action under section 132(5) of the act cannot be taken against an assessee. 5. the case of the petitioner was considered by the commissioner of income-tax along with the case of shri h. l. sibal, petitioner in c. w. no. 150 of 1975. in that case we have held that the material on the basis of which the commissioner of income-tax initiated action under' section 132 of the act was not such as could entitle him to take action against shri sibal. we further held that the statutory belief was formed by shri j. s. dulat, inspecting assistant commissioner of income-tax, chandigarh, who was not authorised to do so. the commissioner of income-tax while acting on such belief had virtually.....
Judgment:

M.R. Sharma, J.

1. The petitioner is a practising advocate of this court. On the morning of October 17, 1974, at about 8 a.m. when he was working in his office, respondents Nos. 2 and 3 accompanied by several other officials of the income-tax department and some police constables raided house No, 25, Sector 3-A, Chandigarh, which is stated to belong to the petitioner, his sons and grandson. Respondents Nos. 2 and 3 showed him an order signed by respondent No. 1 authorising them to conduct a search of the house under Section 132 of the Income-tax Act, 1961 (hereinafter called ' the Act '). The petitioner allowed this house to be searched upon which respondents Nos. 2 and 3 recovered and seized the articles mentioned in the list marked as annexure ' P-1 ' accompanying the petition. Some jewellery was also found from the premises, the details of which are mentioned in a list attached to the petition and marked as annexure ' P-2'. This list is signed by the Authorised Officer arid contains the following note :

'The above items of jewellery have been returned to Shri Anand Swaroop, advocate, and thus have not been seized under telephonic instructions of Shri J. S. Dulat, I.A.C., Chandigarh.'

2. On October 24, 1974, Miss R. K. Chahal, Income-tax Officer, Chandigarh, who was not the Authorised Officer within the meaning of Section 132 of the Act for the purpose of a search of the premises of the petitioner, addressed a letter to him mentioning therein the cash, jewellery and other articles found at his premises and calling upon him to explain the sources of acquisition of the assets, both seized and unseized. It was also mentioned therein that if he failed to offer a valid explanation or to produce evidence on which he might rely, it shall be presumed that he had nothing to say in the matter.

3. On November 23, 1974, the petitioner replied to this letter indicating the manner in which he came to possess these assets. In this letter, the petitioner particularly mentioned that from the year ending 31st March, 1958, till the year ending March, 1974, he had been assessed to a net income of Rs. four lakhs fifty-six thousand eight hundred and eight. Towards the end, he mentioned : ' I do not know what I have to explain. Any other question put to me can be answered willingly,' Some further correspondence followed on the subject which culminated in the passing of a final order against the petitioner under Section 132(5) of the Act under which tax liability of the petitioner from assessment years 1966-67 to 1975-76 was enhanced to Rs, 1,34,733. Since the total exceeded the value of the total assets seized, they were ordered to be retained.

4. The petitioner has challenged the search of his house, seizure of articles therefrom and the order passed under Section 132(5) of the Act against him on the grounds that there could possibly have been no information with the Commissioner of Income-tax for coming to the necessary belief under Section 132(1), Clause, (a), (b) or (c) of the Act. It was also averred that the Authorised Officer did not apply his mind at the time when he seized the assets. Reliance in this connection has been placed on a judgment rendered in C.W. No. 150 of 1975, H.L. Sibal v. Commissioner of Income-tax, . decided by us on July 15, 1975. In that case, we held as under;

(a) The existence of necessary facts on the basis of which the Commissioner of Income-tax could have formed the belief under Clause (a), (b) or (c) of Sub-section (1) of Section 132 was a condition precedent for taking action under that section.

(b) It was incumbent on the Commissioner of Income-tax to record these reasons in writing before authorising a search.

(c) The Commissioner of Income-tax was not empowered to merely change his opinion on the basis of information already in his possession.

(d) The Authorised Officer was also duty-bound to apply his own independent mind before seizing the assets found on the premises as a result of the search made.

(e) The seizure made at the intervention of an outside agency was no seizure in the eyes of law.

(f) In the absence of a valid seizure of the assets action under Section 132(5) of the Act cannot be taken against an assessee.

5. The case of the petitioner was considered by the Commissioner of Income-tax along with the case of Shri H. L. Sibal, petitioner in C. W. No. 150 of 1975. In that case we have held that the material on the basis of which the Commissioner of Income-tax initiated action under' Section 132 of the Act was not such as could entitle him to take action against Shri Sibal. We further held that the statutory belief was formed by Shri J. S. Dulat, Inspecting Assistant Commissioner of Income-tax, Chandigarh, who was not authorised to do so. The Commissioner of Income-tax while acting on such belief had virtually abdicated his functions in favour of a subordinate officer. On these grounds, the issuance of the authorisation for conducting the search of the premises of Shri Sibal was declared illegal. For the reasons mentioned in that case, we feel no hesitation in declaring that there was no justification for the Commissioner of Income-tax to authorise the search of the premises of the petitioner. The other reason which impels us to take this view is that the following note purported to have been recorded by the Commissioner of Income-tax on October 7, 1974, appears on the file where the case of the petitioner is discussed :

' Submits returns on estimate, does not co-relate fees with briefs. One of the top lawyers. Strange he is not a wealth-tax assessee. There is no jewellery. This needs looking into along with the fees earned by him.'

6. Apparently, respondent No. 1 is showing some concern about the lack of adequate assets with the petitioner. We do share his sympathetic feelings about him, but at the same time we feel that action under Section 132(1) of the Act cannot be sanctioned on these considerations. The above note shows that the object of the search was to make a probe into the reasons why the petitioner was not wealthy enough to possess jewellery or to become a wealth-tax assessee. Such inquisitorial searches cannot be justified under any system of civilized laws.

7. These considerations apart, it has been submitted on behalf of the petitioner that he had consistently been producing his statements of accounts which had invariably been accepted by the assessing authorities. A relevant portion of the actual assessment order for the year 1971-72 produced before us reads as under :

' The assessee was a practising lawyer and has maintained register for the fees received. Statement of accounts has been furnished and examined. Bank pass books also produced and examined. Case has been discussed and the income is worked out as overleaf.'

8. la the face of this order, we fail to understand how respondent No. 1 jumped to the conclusion that the petitioner submits returns on estimate basis. It appears that in his zeal for taking action under Section 132(1) of the Act he did not even care to have a look at the orders of assessment framed against the assessee by the Income-tax Officers. This also shows that respondent No. 1 did not at all apply his mind before initiating action against the petitioner. For all these reasons the search of the premises of the petitioner is declared to be illegal.

9. The note appearing in annexure ' P-2 ' quoted above shows that the Authorised Officer did not apply his own mind at the time of making the seizure inasmuch as he returned the jewellery under telephonic instructions of the Inspecting Assistant Commissioner of Income-tax. Such a seizure must, therefore, be declared to be illegal as was done in the case of Shri Sibal. We order accordingly.

10. Since there is no valid seizure of assets from the premises of the petitioner in the eyes of law, no order against him could have been passed under Section 132(5) of the Act. Consequently, we quash the order dated January 13, 1975, annexure ' P-3 ', passed by respondent No. 5 under Section 132(5) of the Act. The articles seized as a result of the search of the premises of the petitioner would be returned to him forthwith. The petition is accordingly allowed with costs, which are assessed at Rs. 200.

R.S. Narula, C.J.

I agree.


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