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Pooran Mal and Sons and anr. Vs. Director of Inspection (investigation) of Income-tax and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberCivil Writ No. 595 of 1972
Judge
Reported in[1974]95ITR1(Delhi)
ActsConstitution of India - Article 226; Income Tax Act, 1961 - Sections 132, 132(1), 132(5) and 132(11)
AppellantPooran Mal and Sons and anr.
RespondentDirector of Inspection (investigation) of Income-tax and anr.
Appellant Advocate M.C. Chagla,; N.D. Karkhanis and; Ram Lal, Advs
Respondent Advocate B.N. Kirpal, Adv.
Cases ReferredRex v. The Justices of Denbighshire
Excerpt:
direct taxation - seizure - article 226 of constitution of india and sections 132 of income tax act, 1961 - order retaining silver bars in custody to meet tax liability of petitioner challenged - ito did not have jurisdiction to pass impugned order beyond period prescribed under section 132 (5) - impugned order not valid thus quashed - silver bars seized and retained by respondents to be returned to petitioners subject to their retention under any proceedings. - - 5. it may also be stated that this order was passed by consent of the petitioners as well as the respondents in that writ petition. the income-tax authorities were satisfied that these 33 silver bars were the property of the firm and, thereforee, they did not seize these silver bars. the income-tax authorities were.....ansari, j. 1. by this petition under articles 226 and 227 of the constitution of india, m/s. pooran mal & sons, petitioner no. 1, and shri gopal das, claiming to be a partner of petitioner no. 1 firm, challenge the validity of the proceedings under sub-sections (3) and (5) of section 132 of the income-tax act, 1961 (hereinafter referred to as the act), and the order of the income-tax officer dated june 5, 1972, under section 132(5) of the said act and pray for the issue of a writ of mandamus directing the respondents to restore to the petitioners the 114 silver bars retained by the income-tax officer by his said order dated june 5, 1972.2. the facts which give rise to this writ petition may be briefly stated. in pursuance of an authorisation issued by the director of inspection.....
Judgment:

Ansari, J.

1. By this petition under articles 226 and 227 of the Constitution of India, M/s. Pooran Mal & Sons, petitioner No. 1, and Shri Gopal Das, claiming to be a partner of petitioner No. 1 firm, challenge the validity of the proceedings under Sub-sections (3) and (5) of Section 132 of the Income-tax Act, 1961 (hereinafter referred to as the Act), and the order of the Income-tax Officer dated June 5, 1972, under Section 132(5) of the said Act and pray for the issue of a writ of mandamus directing the respondents to restore to the petitioners the 114 silver bars retained by the Income-tax Officer by his said order dated June 5, 1972.

2. The facts which give rise to this writ petition may be briefly stated. In pursuance of an authorisation issued by the Director of Inspection (Investigation), New Delhi, under Section 132(1) of the Act, searches were carried out on October 15, 1971, at the following places, namely :--

1. Residence of Shri Pooran Mal, 12-K, Kamala Nagar, New Delhi-7,

2. Office premises of the firms where Shri Pooran Mal was stated to be a partner at A-14/3, Jamuna Bhavan, Asaf AH Road, New Delhi, and

3. Office premises of M/s. Udey Chand Pooran Mal and M/s. Pooran Mal and Sons, 14/16, Popatwadi, Bombay-2, in which Shri Pooran Mal was stated to be a partner.

3. Jewellery, cash and account books and other documents were seized from these premises. In addition, it was stated that 84 silver bars had been pledged with the Laxmi Commercial Bank Ltd, Sadar Bazar Branch, Delhi, by M/s. Udey Chand Pooran Mal and 30 silver bars were pledged with the Punjab National Bank, Naya Bazar, Delhi, by M/s. P.M. Motor and General Finance Company. A restraint order under Section 132(3) of the Act was passed in respect of the above silver bars. The seizure of the jewellery and cash was made and the restraint order passed in respect of the 114 silver bars on the ground that they were the property of Shri Pooran Mal, the individual. Thereafter, the Income-tax Officer made an inquiry under Sub-section (5) of Section 132 of the Act and on the basis of the material before him, he passed an order dated January 12, 1972, estimating the undisclosed income of Shri Pooran Mal, the individual, at Rs. 45,72,867 including the value of the 114 silver bars which were estimated at Rs. 18,00,000 and calculating the tax liability of Shri Pooran Mal on his undisclosed income of Rs. 41,90,463. By the same order, theIncome-tax Officer retained the 114 silver bars in his custody for the purpose of satisfying the tax liability of Shri Pooran Mal.

4. The petitioners thereupon filed Writ Petition No. 82 of 1972 in this court challenging the order of the Income-tax Officer dated January 12, 1972. This writ petition was disposed of by Prithvi Raj J., by his order dated April 6, 1972. The implication of this order is in dispute and it may be necessary to reproduce this order in extenso at a later stage, but for the purpose of the narration of facts, it would be sufficient to state that the learned judge-

(i) quashed the order of the Income-tax Officer dated January 12, 1972,

(ii) permitted the Income-tax Officer to look into the matter afresh,

(iii) permitted him to complete the case within two months, and (iv) permitted the seized property to be retained in the custody of the department till a fresh decision was taken.

5. It may also be stated that this order was passed by consent of the petitioners as well as the respondents in that writ petition.

6. In pursuance of the above order of this court dated April 6, 1972, the Income-tax Officer held a fresh inquiry after issuing a notice to the first petitioner-firm to adduce evidence to prove that the 114 silver bars were its property and were not the property of Pooran Mal, the individual. After considering the evidence adduced by the petitioners and also the other material gathered by the Income-tax Officer during the said inquiry, he passed an order dated June 5, 1972, under Section 132(5) of the Act again holding that the 114 silver bars belonged to Shri Pooran Mal, the individual, and not to the first petitioner-firm and estimating the undisclosed income of Shri Pooran Mal at Rs. 45,72,867 and calculating the tax liability of Shri Pooran Mal at Rs. 41,90,482. By the same order, he retained the 114 silver bars in his custody to meet the tax liability of Shri Pooran Mal, the individual. It is against this order of the Income-tax Officer that the petitioners have filed the present writ petition.

7. The averments in the writ petition are to the following effect :

The first petitioner is a firm carrying on, inter alia, the business of purchase and sale of silver bars in Bombay and in Delhi. It was constituted under an instrument of partnership dated October 19, 1970, and commenced its business with effect from October 1, 1970. The firm was registered with the Registrar of Firms, Bombay, and also with the sales tax department, Bombay. The firm had also applied for registration under the Act, but orders thereon had not yet been communicated to the petitioners. A notice under Section 148 of the Act was also served on the first petitioner-firm calling upon it to submit the return of its total income for theassessment year 1971-72. A notice under Section 139(2) of the Act was also issued to the petitioner-firm to submit its return of income for the assessment year 1972-73. In compliance with the notice under Section 148 of the Act, the petitioner-firm had filed its returns for the assessment year 1971-72. Shri Pooran Mal was only a partner of the first petitioner-firm just as the second petitioner was also a partner of the firm.

8. The account books which were seized by the Income-tax Officer disclosed that the first petitioner-firm was dealing in the purchase and sale of silver bars. They showed that out of 197 silver bars purchased by the first petitioner-firm, 164 silver bars had been sent to Delhi while the balance of 33 silver bars remained at Bombay. Out of these, 32 silver bars were found in the office premises of the firm and one silver bar was found in a locker in the Bank of India in the name of the firm. The income-tax authorities were satisfied that these 33 silver bars were the property of the firm and, thereforee, they did not seize these silver bars. Out of the 164 silver bars sent to Delhi, 50 silver bars were sold at Delhi and the sale proceeds were duly accounted for. The income-tax authorities were satisfied with the genuineness of this sale by the petitioner-firm and, thereforee, did not take any steps to recover these silver bars. The balance of 114 silver bars which are the subject-matter of the present writ petition were pledged with the Laxmi Commercial Bank and the Punjab National Bank through M/s. Udey Chand Pooran Mal and M/s. P. M. Motor and General Finance Company, as these two firms had over-draft accounts in the said banks. The pledge of these silver bars by these two firms was made on behalf of the petitioner-firm. These 114 silver bars were purchased by the petitioner-firm by the issuance of cheques and these purchases were reflected in the account books of the petitioner-firm. These silver bars were sent from Bombay to Delhi by the petitioner-firm under vouchers which were counter-signed by the customs authorities. Letters from M/s. P. M. Motor and General Finance Company and M/s. Udey Chand Pooran Mal were also produced before the Income-tax Officer to prove that the 114 silver bars pledged by these two firms with the banks were the property of the petitioner-firm and that these two firms had no interest or title in the said silver bars. Evidence was also produced before the Income-tax Officer to prove the purchase of these silver bars by the petitioner-firm from various parties. The 114 silver bars, thereforee, were the property of the first petitioner-firm and not that of Shri Pooran Mal, the individual, and the order of the Income-tax Officer holding that these silver bars represented the undisclosed income of Shri Pooran Mal, the individual, and retaining the silver bars in his custody to meet the tax liability of Shri Pooran Mal, the individual, was, thereforee, illegal. Theseveral grounds on which the order of the Income-tax Officer was challenged by the petitioners will be referred to at the appropriate stage.

9. In the reply filed by the respondents, certain preliminary objections were raised, namely, that the petitioners had an effective alternative remedy under Section 132(11) of the Act which they had not exhausted and further that disputed questions of fact were involved regarding the ownership of the 114 silver bars which could not be decided by this court in proceedings under Article 226 of the Constitution. On the merits of the petition, it was stated that petitioner No. 1 was a firm carrying on business of purchase and sale of silver bars at Bombay, but its business at Delhi was denied. While admitting that the petitioner-firm had led evidence with regard to the purchase of the silver bars from different parties and also that payments had been made by cheques, it was, however, alleged that the petitioners had not led any evidence in regard to the source of acquisition of the funds for the purchase of the silver bars. It was denied that the petitioner-firm had conclusively proved the ownership of the silver bars. On the other hand, reference was made to paragraph 9 of the order of the Income-tax Officer dated June 5, 1972, and it was stated that these silver bars belonged to Shri Pooran Mal, the individual. The several grounds on which the order of the Income-tax Officer was challenged by the petitioners were controverter and it was stated that the said order of the Income-tax Officer was a valid order passed under Section 132(5) of the Act in pursuance of the order of this court dated April 6, 1972. It was also stated that the petitioners were estopped from challenging the order of the Income-tax Officer on the ground of limitation, as the petitioners were consenting parties to the order of the court dated April 6, 1972, which, according to the respondents, directed the Income-tax Officer to pass a fresh order under Section 132(5) of the Act within a period of two months from the date of the said order. It was, thereforee, submitted that the order of the Income-tax Officer dated June 5, 1972, was a perfectly valid order and that it was not liable to be quashed.

10. The petitioners filed a rejoinder controverting the preliminary objections raised by the respondents in their reply (sic) appeal provided under Sub-section (11) of Section 132 of the Act was not an effective remedy and further that such remedy was not available to the petitioners inasmuch as the impugned order of the Income-tax Officer was passed against Shri Pooran Mal, the individual. It was also denied that there were any disputed questions of fact involved in the writ petition and that the evidence relied upon by the Income-tax Officer itself proved that the 114 silver bars were the property of the petitioner-firm and not that of Shri Pooran Mal, the individual. It was further stated that even if some of the facts were disputed, it was open to this court to decide those facts. It was deniedthat the order of this court dated April 6, 1972, authorised the Income-tax Officer to pass a fresh order under Section 132(5) of the Act or that it conferred jurisdiction on him to pass such an order beyond the period prescribed under Sub-section (5). With regard to the ownership of the 114 silver bars, the facts mentioned in the writ petition were reiterated and it was asserted that these silver bars were the property of the petitioner-firm.

11. We shall first consider the preliminary objections raised on behalf of the respondents against the maintainability of this writ petition. The first objection was that the Act itself provided an effective remedy to the petitioners and that without exhausting such a remedy, the petitioners could not seek any relief under Article 226 of the Constitution. Reference in this connection was made to Sub-section (11) of Section 132 of the Act under which any person objecting for any reason to an order made under Sub-section (5), may make an application to such authority as may be notified in this behalf by the Central Government requesting for appropriate relief in the matter and on receipt of such an application, the notified authority may, after giving the applicant an opportunity of being heard, pass, such order as it thinks fit.

12. Reference is also made in this connection to Section 132A of the Act which contemplates the completion of a regular assessment even after the passing of an order under Sub-section (5) of Section 132 of the Act. According to the learned counsel for the revenue, the petitioners will have ample opportunity at the time of the regular assessment to satisfy the Income-tax Officer that the 114 silver bars belonged to them and not to Shri Pooran Mal, the individual.

13. It is also contended that the petitioners have yet another opportunity of proving their ownership of the silver bars, namely, under Rule 11 of the Second Schedule to the Act. This rule relates to the investigation by the Tax Recovery Officer where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate for the recovery of tax.

14. The existence of an alternate remedy is not a bar to the exercise of the powers of this court under Article 226 of the Constitution. It is only a factor which has to be considered by the court when deciding whether it is a fit case for the grant of relief under Article 226. The petitioners, in this case, have raised certain contentions in the writ petition which could not be decided by the income-tax authorities under the Act. One of the contentions is that Sub-section (5) of Section 132 of the Act is ultra virus inasmuch as it requires the Income-tax Officer to obtain the previous approval of the Commissioner before passing an order under Sub-section (5) which is in the nature of a quasi-judicial order. Another contention raised is thatthe Income-tax Officer has no jurisdiction to pass the impugned order beyond the period prescribed under Sub-section (5). In view of the nature of the contentions raised by the parties, it cannot be said that the parties have an adequate alternative and equally efficacious remedy. The writ petition cannot be dismissed on this ground.'

15. The next preliminary objection raised by the learned counsel for the revenue is that the petition involves decision of disputed questions of fact. It is settled law that ordinarily disputed questions of fact will not be decided by courts in proceedings under Article 226 of the Constitution and it is only in exceptional cases that the court would decide such questions either on the evidence already on record or on the basis of fresh evidence recorded by it. In the present case, it may not be necessary for us to decide disputed questions of fact as the writ petition may have to be disposed of on some of the other legal questions raised by the petitioners.

16. Yet another preliminary objection raised by the learned counsel for the revenue against the maintainability of this writ petition is that necessary and proper parties have not been imp leaded. According to the learned counsel, Shri Pooran Mal, the individual, against whom the impugned order of the Income-tax Officer was passed, is a necessary party and failure to implead him is a fatal defect justifying the rejection of the writ petition on that ground alone. We are unable to accept this contention. Shri Pooran Mal is a partner of the petitioner-firm and even though the writ petition has been filed by the firm and one of the other partners, it must be deemed to have been filed on behalf of all the partners including Shri Pooran Mal. It is not necessary to implead Shri Pooran Mal separately either as a petitioner or as a respondent.

17. The last of the preliminary objections raised is that the petitioners have no locus standi to file the present petition, because even if they were the owners of the silver bars at one stage, they were no longer the owners of the silver bars on the date of the seizure. In this connection, reference is made to the vouchers under which the silver bars were dispatched from Bombay to Delhi in which the name of the buyer is mentioned as M/s. P. M. Motor & General Finance Company and the name of the seller is mentioned as M/s. Pooran Mal & Sons and in some vouchers the name of the buyer is mentioned as M/s. Udey Chand Pooran Mal. Reference also is made in this connection to the fact that the silver bars were pledged with the two banks not by the petitioner-firm but by M/s. P. M. Motor & General Finance Company and M/s, Udey Chand Pooran Mal on the basis that they were the owners of the silver bars. This objection really relates to the merits of the petitioners' claim regarding the ownership of the silver bars. If on a consideration of the merits of the petitioners' claim we were to hold that the petitioners continued to be the owners of the silver bars evenon the date of their seizure and that M/s. P. M. Motor & General Finance Company and M/s. Udey Chand Pooran Mal were only acting on behalf of the petitioner-firm, then it would follow that the petitioners have locus standi to file the present petition. If, on the other hand, we were to come to the conclusion that these were genuine sales by the petitioner-firm to M/s. P. M. Motor & General Finance Company and M/s. Udey Chand Pooran Mal, then the petition itself has to be rejected on that ground. thereforee, we cannot at this stage treat this objection as a preliminary objection and hold that the petitioner-firm has no locus standi to file the writ petition.

18. We shall now proceed to consider the grounds on which the petitioners seek to challenge the order of the Income-tax Officer passed under Section 132(5) of the Act, These grounds are as follows ;

(i) Sub-section (5) of Section 132 of the Act under which the impugned order has been passed is itself ultra virus for the reason that it provides for the Income-tax Officer passing a quasi-judicial order with the previous approval of the Commissioner ;

(ii) that the Income-tax Officer had no jurisdiction to pass the impugned order beyond the period prescribed under Sub-section (5);

(iii) that the material on record proved that the silver bars were the property of the petitioner-firm and not that of Shri Pooran Mal, the individual;

(iv) that even if the petitioner-firm was unable to explain the source of the funds for the purchase of the silver bars, such funds could be treated as the undisclosed income of the petitioner-firm ; and

(v) that even on the basis of the finding that the funds for the purchase of the silver bars were provided by Shri Pooran Mal and Shri Pooran Mal was unable to explain the source of these funds, such funds could be treated as the undisclosed income of Shri Pooran Mal. But the silver bars which were purchased by the petitioner-firm with the funds provided by Shri Pooran Mal could not be treated as the property of Shri Pooran Mal ; they should be treated as the property of the petitioner-firm itself.

19. With regard to the first ground on which the validity of the proceedings under Section 132(5) of the Act is challenged, reference is made by the learned counsel for the petitioners, Mr. Chagla, to Section 136 of the Act according to which ' any proceeding under this Act before an income-tax authority shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 and for the purposes of Section 196 of the Indian Penal Code'. Reference is also made to Rule 112A of the Income-tax Rules, 1962, which prescribed the manner in which an inquiry under subsection (5) of Section 132 of the Act has to be made by the Income-taxOfficer before passing an order under that sub-section. Sub-section (5) of Section 132 of the Act requires the Income-tax Officer to afford a reasonable opportunity to the person concerned for being heard and to make such inquiry as may be prescribed before passing an order under that subsection. Rule 112A of the said rules requires the Income-tax Officer to issue a notice within fifteen days of the seizure to the person in respect of whom inquiry under Sub-section (5) of section 132 is to be made requiring him either to attend at the office of the Income-tax Officer to explain or to produce or cause to be there produced evidence on which such person may rely for explaining the nature of the possession and the source of the acquisition of the assets. Sub-rule (3) of Rule 112A also authorises the Income-tax Officer to examine on oath any person or make such other inquiry as he may deem fit. On a reading of the provisions of subsection (5) of Section 132 of the Act and Rule 112A of the Rules, there can be no doubt that the proceedings before the Income-tax Officer under subsection (5) of Section 132 of the Act are judicial proceedings within the meaning of Section 136 of the Act. It is a well-settled rule that in judicial proceedings the judgment of the person conducting such proceedings should be wholly unfettered and there should be no interference with the exercise of his judicial functions. In this connection, the learned counsel for the petitioners has referred to a number of decisions in which interference in judicial proceedings has been held to vitiate such proceedings. In Orient Paper Mills Ltd. v. Union of India, : 1973ECR1(SC) it was found that in proceedings under Section 35 of the Central Excises and Salt. Act, 1944, the Collector, Central Excise, had acted under the directions issued by the Central Board of Revenue. As there was no provision in the Central Excises and Salt Act vesting any authority on the Central Board of Revenue to issue any such directions, the Supreme Court held that the proceedings of the Collector of Central Excise were vitiated for that reason. The Supreme Court observed thus :

' If the power exercised by the Collector was a quasi-judicial power--as we hold it to be--that power cannot be controlled by the directions issued by the Board. No authority, however high placed, can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system. ..... It is true that the assessing authorities as wellas the appellate authorities are judges in their own cause ; yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others. Then it is a misnomer to call their orders as their judgments ; they would essentially be the judgments of the authority that gave the directions and whichauthority had given those judgments without hearing the aggrieved party.'

20. In Sirpur Paper Mills Ltd. v. Commissioner of Wealth-tax, : [1970]77ITR6(SC) it was found that the Commissioner of Wealth-tax while exercising his powers under Section 25 of the Wealth-tax Act had acted upon the instructions and directions of the Central Board. Quashing the, proceedings of the Commissioner, the Supreme Court observed as follows :

' The power conferred by Section 25 is not administrative : it is quasi-judicial. The expression ' may make such inquiry and pass such order thereon ' does not confer any absolute discretion on the Commissioner. In exercise of the power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice : he cannot permit his judgment to be influenced by matters not disclosed to the assessed, nor by dictation of another authority. '

21. It may be noted, firstly, that in both the cases of the Supreme Court cited above, neither the Central Excises and Salt Act nor the Wealth-tax Act contained any provision under which directions could be given to the officer concerned by the Central Board of Revenue in respect of the impugned orders passed by the said officers and, secondly, that in both the cases, the Central Board of Revenue had given directions to the officers concerned to pass orders which were prejudicial to the persons against whom such orders were passed. thereforee, the directions given by the Central Board were without any statutory authority. In the present case, however, the Act itself contains provisions requiring the Income-tax Officer to obtain the previous approval of the Commissioner before making an order under subsection (5) of Section 132 of the Act. Further, if we carefully examine the provisions of Sub-section (5), it would be apparent that the requirement to obtain previous approval of the Commissioner is meant as a check against the Income-tax Officer passing an arbitrary order against any person and that it is more in the nature of a safeguard provided for the benefit of the person against whom an order under Sub-section (5) is passed. From the scheme of Sub-section (5), it is also apparent that it is left to the Income-tax Officer to come to an independent conclusion whether or not to make an order under Sub-section (5) against any person. If after affording a reasonable opportunity to the person concerned of being heard and after making such inquiry as may be prescribed, the Income-tax Officer is satisfied that the assets which have been seized did not represent the concealed income of any person, it is open to him not to pass an order under subsection (5) against any such person and his decision in this regard is unfettered. It is only when he comes to his own conclusion that the seized assets are not properly explained and that they represent the undisclosed income of any person that he has to seek the approval of the Commissioner for passing an order under Sub-section (5) against such person. The provision regarding the previous approval of the Commissioner does not imply that the Commissioner can direct the Income-tax Officer to pass an order under Sub-section (5) even if the Income-tax Officer is satisfied with the Explanationn offered by the person concerned. Any such direction if given by the Commissioner would not be under the provisions of Sub-section (5). and such directions would be clearly illegal. In the present case, there is no allegation by the petitioners that the Commissioner gave any such directions to the Income-tax Officer. We may also notice the second proviso to Sub-section (5) which requires that the Income-tax Officer should obtain the previous approval of the Commissioner for releasing the assets or such part thereof as he may deem fit in the circumstances of the case. This provision is a corollary to the provision in Sub-section (1) under which the Commissioner gives the authorisation for the search and seizure of the money, bullion, etc., if he has reason to believe that they represent the concealed income of any such person. The virus or the legality of Sub-section (1) has not been challenged before us. The Income-tax Officer is required to obtain the previous approval of the Commissioner for releasing the assets as the assets were seized under the authorisation given by the Commissioner,

22. Although the proceedings under Sub-section (5) of Section 132 of the Act are in the nature of judicial proceedings, the inquiry under that Sub-' section is made for a limited purpose, namely, for estimating the undisclosed income of the person concerned and the tax payable thereon for the purpose of retaining the whole or such part of the seized assets as are sufficient to satisfy the tax liability. The inquiry itself is of a summary character and the findings of the Income-tax Officer are not final. A regular assessment has to follow and the seized assets are only to be retained in the custody of the Income-tax Officer pending the final assessment. Notwithstanding the order under Sub-section (5), it will still be open to the person concerned to satisfy the Income-tax Officer at the time of the regular assessment that the seized assets did not represent his undisclosed income but were the property of some one else. Considering the nature of the inquiry under Sub-section (5), the requirement of obtaining the previous approval of the Commissioner does not, in our view, militate against the principle of noninterference in judicial proceedings. The contention that Sub-section (5) of Section 132 of the Act is ultra virus cannot, thereforee, be accepted.

23. The next ground on which the impugned order of the Income-tax Officer was challenged is that the Income-tax Officer had no jurisdiction topass the impugned order after the period prescribed under Sub-section (5). Under Sub-section (5) ' where any money, bullion, jewellery or other valuable Article or thing......is seized under Sub-section (1), the Income-taxOfficer......shall, within ninety days of the seizure, make an order.........'Admittedly, the seizure of the silver bars was made on October 15, 1971, and the impugned order was passed on June 5, 1972, i.e., more than 90 days after the seizure. But we have to take note of certain events which occurred between the date of the seizure and the date of the impugned order. There was an earlier inquiry by the Income-tax Officer under subsection (5) and an order was passed on January 12, 1972, by the Income-tax Officer under Sub-section (5). This order was challenged by the petitioners in this court in C.W. No. 82/72 and that writ petition was disposed of by Prithvi Raj J. by his order dated April 6, 1972. It would be necessary at this stage to reproduce that order :

' After the writ petition was argued for some time, it was noticed that full opportunity was not given to the petitioner to substantiate his claim that the property does not belong to him as an individual but belongs to the firm, M/s Pooran Mal and Sons, Bombay.

Mr. G.C. Sharma, learned counsel appearing for the respondents, fairly and frankly conceded that such an opportunity was not afforded to the petitioner. The parties are agreed that the impugned order be quashed and that the department be permitted to look into the matter afresh after giving an opportunity to the petitioner to place his case before the department in respect of the contention that the property belongs to the firm and not to Pooran Mal individually.

The parties are also agreed that the property shall remain in the custody of the department and shall not be sold by them till fresh decision is taken by the department in the light of evidence to be supplied by the parties.

Mr. B.S. Gupta, Income-tax Officer-cum-Assistant Director of Inspection (Intelligence) is personally present and he has undertaken to complete this case within two months.

The writ is accordingly accepted and disposed of in terms of the submissions of the parties recorded above, but with no order as to costs.'

24. The true implication of this order is a matter of controversy between the parties. According to the respondents, this order amounted to a direction by the court to the Income-tax Officer to pass a fresh order under Section 132(5) of the Act within two months from the date of the order of this court. Further, according to the respondents, the petitioners had agreed that the Income-tax Officer might pass an order under Sub-section (5) within the two months and that the petitioners only wanted that, before passing such an order, they should be given an opportunity to place evidence before theIncome-tax Officer to prove that the property in question belonged to the petitioners and not to Pooran Mal, the individual. On the other hand, the petitioners say that the order dated January 12, 1972, under Section 132(5) of the Act, was quashed by the court on the ground that the said order had been passed without giving an opportunity to the petitioners to be heard as required under Sub-section (5) and that the court merely permitted the Income-tax Officer to satisfy himself regarding the ownership of the property in dispute for taking such action as the law permitted him to take and that there was no direction by the court to the Income-tax Officer to pass a fresh order under Sub-section (5) of Section 132 of the Act. It is further contended that the court could not have given any direction to the Income-tax Officer to pass a fresh order under subsection (5) in view of the limitation prescribed under Sub-section (5) for passing an order within 90 days from the date of the seizure. According to the petitioners, this court could not confer jurisdiction on the Income-tax Officer to pass an order under Sub-section (5) beyond the prescribed period even if the petitioners had consented to such an order being passed. It is no doubt true that there is no specific direction by this court in the order dated April 6, 1972, to pass a fresh order under Sub-section (5) of Section 132 of the Act. The court advisedly did not give any such direction but merely permitted the department ' to look into the matter afresh', because the only order that the Income-tax Officer could pass under Sub-section (5) would be to estimate the undisclosed income of the person concerned, to calculate the amount of tax on the income so estimated and to specify the amount that would be required to satisfy the existing tax liability and to retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the total tax liability of such person. If, on the other hand, the person concerned satisfies the Income-tax Officer that the seized assets do not represent his concealed income, then no order under Sub-section (5) need be passed by the Income-tax Officer. thereforee, the court merely permitted the Income-tax Officer ' to look into the matter afresh '. But the further directions by the court contained in the order to the effect that ' the property shall remain in the custody of the department and shall not be sold by them till a fresh decision is taken by the department in the light of the evidence to be supplied by the parties' and also the observation that the Income-tax Officer had undertaken to complete the case within two months make it clear that the court permitted the Income-tax Officer to pass a fresh order under Sub-section (5) within two months if the petitioners were not able to satisfy him that the property belonged to them and did not belong to Pooran Mal, the individual. thereforee, the order dated April 6, 1972, was an order passed with the consent of both the parties permitting theIncome-tax Officer to pass a fresh order, if necessary, under Sub-section (5) of Section 132 of the Act.

25. It may also be noted that if the original order of the Income-tax Officer dated January 12, 1972, was itself an order which was passed without jurisdiction, i.e., beyond 90 days of the date of the seizure, then the order of this court dated April 6, 1972, could not confer jurisdiction on the Income-tax Officer to pass a fresh order. But, admittedly, the order dated January 12, 1972, was passed within the prescribed period and, thereforee, it was an order which the Income-tax Officer had jurisdiction to pass.

26. But the further question arises whether this order would in law have the effect of extending the period prescribed under Sub-section (5) of Section 132 of the Act for passing an order under that sub-section. Section 132 of the Act itself does not provide for the extension of the period prescribed under Sub-section (5) by the order of any court. The only provision which extends the period prescribed under Sub-section (5) is Explanationn 1 to Section 132 of the Act which says :

' In computing the period of ninety days for the purposes of subsection (5), any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.'

27. We cannot construe the order of this court dated April 6, 1972, as an order or injunction staying any proceedings under Sub-section (5). The absence of any provision in Section 132 analogous to Sub-section (3) of Section 153 of the Act would suggest that it was not the intention of the legislature to extend the period prescribed in Sub-section (5) of Section 132 of the Act excepting in cases covered by Explanationn. The period prescribed in Sub-section (5) is not merely a period of limitation as is generally understood under the Limitation Act and to which Section 5 of the Limitation Act could be applied. The period prescribed under Sub-section (5) is more in the nature of the limits placed upon the jurisdiction of the Income-tax Officer to pass an order under Sub-section (5). Just as the Income-tax Officer has no jurisdiction to make an assessment under Section 143 or 147 beyond the period prescribed under Section 149 except in cases covered by Sub-section (3) of Section 153, the Income-tax Officer has no jurisdiction to pass an order under Sub-section (5) of Section 132 of the Act after the expiry of the period prescribed under that sub-section.

28. Shri B.N. Kirpal, learned counsel for the revenue, contends that the order of this court dated 6th April, 1972, is in the nature of a mandamus issued by the court directing the Income-tax Officer to pass a fresh order under Sub-section (5) of Section 132 of the Act within a period of two months from the date of the order and that the effect of this mandamus is to extend the period of limitation prescribed under Sub-section (5) and alsoto confer jurisdiction on the Income-tax Officer to pass an order beyond the prescribed period. In support of this contention, he seeks to rely upon the following passage from Halsbury's Laws of England, third edition, volume 11, at pages 91 and 92 :--

' If public officials or a public body fail to perform any public duty with which they have been charged, an order of mandamus will lie to compel them to carry it out, even though the time prescribed by statute for the performance of the duty may have passed.'

29. This passage is actually reproduced from the common judgment of Darling J. in the cases of King v. Revising Barrister for the Borough of Hanley [1912] 3 K.B. 518 and King v. Town Clerk of Stoke on Trent [1912] 3 K.B. 518. The above observations of the learned judge must be read in their proper context. In these two cases the question for consideration was whether the court could issue a rule of mandamus directing the concerned authority to revise the parliamentary lists even though the time fixed for such revision had elapsed. It was held that the court could issue such a rule of mandamus even after the prescribed time for revision had elapsed. The learned judge quoted with approval the following observations of Martin B. in the case of Mayor of Rochester v. Reg :

' We agree with the opinion of Lord Ellenborough, as expressed on a subject somewhat similar in Rex v. The Justices of Denbighshire [1803] 4 East. 142 that common sense requires that, if the burgess list of a borough be not properly revised at the proper time, it should be done afterwards. But, were there no authority upon the subject, we should be prepared upon principle to affirm the judgment of the court of Queen's Bench. That court has power, by the prerogative writ of mandamus, to amend all errors which tend to the oppression of the subject or other misgovernment, and ought to be used when the law has provided no specific remedy, and justice and good government require that there ought to be one for the execution of the common law or the provisions of a statute. '

30. It would thus appear that such writs of mandamus are meant for the benefit of the subject and the public authorities concerned are directed to do what they omitted to do within the proper time. This rule cannot be construed as enabling the court to issue a writ of mandamus to a public authority to pass an order to the detriment of the subject even though such authority had omitted to pass such an order within the prescribed time.

31. Further, we cannot construe the order of this court dated April 6, 1972, as a writ of mandamus issued to the Income-tax Officer to pass an order under Sub-section (5) of Section 132 of the Act against the petitioner-firm or against Pooran Mal, the individual. This order only permitted theIncome-tax Officer to make a further inquiry under Sub-section (5) in which he should give an opportunity to the petitioner-firm to place its case and to arrive at a decision within two months. It was left open to the Income-tax Officer to accept the evidence placed before him by the petitioner-firm in support of its case. It was also left open to the Income-tax Officer to pass an order under Sub-section (5) against the petitioner-firm if he was not satisfied with the evidence placed before him by the petitioner-firm. But this would not amount to a writ of mandamus directing the Income-tax Officer to pass an order under Sub-section (5) to the detriment of the petitioner-firm. Such a writ cannot be issued by this court. thereforee, this court had no power to extend the period prescribed under Sub-section (5) for passing an order under that sub-section or to confer jurisdiction upon the Income-tax Officer which he ceased to have after the expiry of the prescribed period.

32. The learned counsel for the revenue next contended that even if the order of this court dated April 6, 1972, would not in law extend the period prescribed under Sub-section (5) for passing an order under that sub-section, the petitioners should not be permitted to challenge the impugned order of the Income-tax Officer on the ground of jurisdiction or limitation. It was pointed out that the order of this court dated April 6, 1972, was a consent order and the petitioners had agreed to an order being passed by the Income-tax Officer under Sub-section (5) beyond the period prescribed under that sub-section provided such an order was passed within two months from the order of the court. According to the learned counsel, this court was actually induced by the petitioners to pass such an order despite the knowledge on the part of the petitioners of the period of limitation prescribed under Sub-section (5). This, according to the learned counsel, amounted to dishonest conduct on the part of the petitioners which disentitled them to invoke the extraordinary jurisdiction of this court under Article 226 of the Constitution for the purpose of obtaining the reliefs claimed by them. We are afraid that there is not sufficient material before us from which we can definitely say that the petitioners had played any fraud upon the court and induced the court to pass the order dated April 6, 1972, That order makes it apparent that the earlier order of the Income-tax Officer dated January 12, 1972, suffered from a serious infirmity having been passed without full opportunity being given to the petitioners to substantiate their claim that the property did not belong to Pooran Mal, the individual, but belonged to the petitioner-firm. The learned counsel, who was then appearing for the revenue, also had conceded before the court at that time that such an opportunity was not afforded to the petitioners. The earlier order of the Income-tax Officer, thereforee, was liable to be quashed on this ground. It is quite possible that Realizing this position, the learned counsel,who was appearing for the revenue at that time, agreed that the order of the Income-tax Officer may be quashed and sought the permission of the court to pass a fresh order after giving an opportunity to the petitioners to place their case before the Income-tax Officer. It cannot be said' that the learned counsel for the revenue was not aware of the period of limitation prescribed under Sub-section (5). If it could be said that the revenue did not realise the implications of the concession made by their learned counsel, the same can be equally said about the petitioners. In any case, in the absence of clear indication about the petitioners' responsibility in inducing the court to pass an order which in law could not have the effect of extending the period of limitation prescribed under Sub-section (5), it cannot be said that the petitioners have not approached this court with clean hands.

33. As a result of the above discussion, it must be held that the Income-tax Officer did not have the jurisdiction to pass the impugned order dated June 5, 1972, beyond the period prescribed under Sub-section (5) of Section 132 of the Act and, as such, it is not a valid order and that order has to be set aside on this ground alone.

34. In view of our above finding, it is not necessary for us to consider the contentions of the petitioners regarding the merits of the impugned order. The petitioners have referred to various pieces of evidence which, according to them, conclusively proved that the 114 silver bars were the property of the petitioner-firm and were not the property of Pooran Mal, the individual. The Income-tax Officer, on the other hand, has referred to other material in support of his finding that the silver bars did not belong to the petitioner-firm but really belonged to Pooran Mal, the individual. Any opinion expressed by us on the merits of the contentions may prejudicially affect either of the parties in any other proceedings which the revenue may be authorised under law to institute in respect of these silver bars or in respect of the income which the silver bars represent. Proceedings under Sub-section (5) of Section 132 of the Act are only in the nature of provisional proceedings for the estimate of the income and these proceedings have to be followed by regular assessments. The revenue may still take some action in respect of the silver bars under some other provision in the Act which may be open to it. It will not be advisable to prejudice any of the parties by saying something in proceedings which we have held to be vitiated by lack of jurisdiction. We, thereforee, refrain from evaluating such evidence and from expressing any opinion on merits.

35. In the result, this petition is accepted and the order of the Income-tax Officer dated June 5, 1972, is quashed. The 114 silver bars seized and retained by the respondents under the said order shall be returned to the petitioners subject, however, to their retention under any other proceedingswhich the respondents may be competent to institute under the law. Under the circumstances, there shall be no order as to costs.


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