D. K. KAPUR J. - These four writ petitions (Nos. 1898, 1899, 1900 and 1934 of 1984) are concerned with the seizure and retention of certain books of account, documents, fixed deposit receipts, etc., which were detained by the Income-tax Department as a result of a search under section 132(1) of the Income-tax Act, 1961. The search was conducted in Delhi and Chandigarh as per the facts stated in the writ petitions. It was also claimed that certain other assets not belonging to the petitioner were also seized, but nothing much turns on that, as far as this petition is concerned. The search took place on May 14, 1981, and hence the books of account and other assets could be retained for 180 days under section 132 of the Act. After that, the period of retention could be extended with the approval of the Commissioner under the provisions of section 132(8) of the Act.
According to the petitioner, they had been asking for the return of the seized assets because 180 days had passed, but the same were not returned.
Eventually, an order dated October 5, 1983, was passed by the Commissioner of Income-tax, annexure I to the writ petition, which states that approval had been granted under section 131(3) for the continued retention of the books of account and documents. The petitioner claims that section 131(3) was not applicable to his case, as the books, etc., were seized as a result of the search and were not produced before any income-tax authority under section 131.
A show-cause notice was issued as to why the writ petition should not be admitted. We issued Rule D.B. on September 26, 1984, and partly heard the petition, but then permitted the respondents to file some further affidavits and adjourned for further hearing.
In reply to the petition, the counter-affidavit stated that the order passed on October 5, 1983, was not passed under section 131(3), but under section 132(8) and was legal and valid. Copies of various documents accompanied this affidavit showing that the Income-tax Officer had sought an extension of the retention period under section 132(8). It was claimed that the proper remedy was to move the Board against the order of the Commissioner passed under section 132(8). Various other facts have also been mentioned showing why the further retention of the books was necessary.
A rejoinder was filed stating that even if assuming that an order was passed under section 132(8), it was never communicated to the petitioner. Various other grounds were mentioned to show that an order could not be passed under section 132(8). Amongst other points, it was mentioned that as the search and seizure took place on May 14, 1981, the extension of the time of 180 days had to take place before that period expired. In other words, it was claimed that the extension had to be granted before November 14, 1981.
As a result of this rejoinder, yet another counter-affidavit was filed by the Income-tax Officer showing how the retention had been made for more than 180 days. It was also brought to the notice of the court at the hearing on September 26, 1984, that there were some orders passed under section 132(8). Those orders showed that the retention beyond 180 days was permitted up to June 30, 1982. But, there was no order available on the file after June 30, 1982. The last order allowed extension up to September 30, 1984, though it was passed on October 5, 1983.
The new affidavit just referred to states that an effort was made to find out the position subsisting between June 30, 1982, and October 5, 1983. The Officer-in-charge of Central Circle VI was Shri Durgesh Shankar who claimed that there was a proposal which he got signed by the then Commissioner, Shri Kanwal Krishan. It is now necessary to turn to the affidavit of Shri Durgesh Shankar. It states that he was in charge of Central Circle VI and there were a number of groups which were being assessed in that Circle. According to him, he had personally taken the proposal to Shri Kanwal Krishan for further approval, but the folder containing the proposal had not been traced out. In other words, the affidavit claims that when this officer handed over charge to Mrs. Divjot Kohli, his successor, he had handed over all the documents and probably this folder containing the proposal got mixed up with some other documents.
We think this matter does not only turn on the question of whether the Commissioner gave approval or not, but turns on as to whether the approval subsisted right from the date of the search to the present day. We had been shown the records-file containing the approval and had ourselves seen that there was no approval on record after June 30, 1982, but there was an approval after October 5, 1983, though it might have inadvertently been made under section 131(3). We are only concerned with whether the retention of the assets is valid and not with whether there are good grounds for retaining the books.
The scheme for searches and seizures contained in section 132 visualises initially a search of certain premises with a view to seize books of account or other relevant documents or to take into possession money, bullion, jewellery, etc. The purpose of these searches is to locate either documents showing that the assessed has evaded tax, or to take into possession money, bullion, jewellery, etc., which appears to have been acquired from undisclosed income. In the present case, the search and seizure was conducted on May 14, 1981. The next relevant provision, as far as we are concerned, is section 132(8), which is as follows :
'The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained :
Provided that the Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed.'
This provision visualises that the books of account and other documents seized as a result of the search are to be returned within 180 days unless an order is passed by the authorised officer which is approved by the Commissioner for further retention. As pointed out above, we have ourselves seen that the retention was permitted by an order up to June 30, 1982. We may, thereforee, take it that the retention up to that date is not invalid.
It is here necessary to refer also to sub-section (10) of section 132, which reads as follows :
'If a person legally entitled to the books of account or other documents seized under sub-section (I) or sub-section (1A) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents.'
Sub-section (12) visualises a hearing by the Board which may pass any order it deems fit on such an application.
The procedure, thereforee, can be summarised as follows. The documents can be retained for 180 days unless an order is passed by the authorised officer which is approved by the Commissioner. This order can allow for detention of the seized books of account and other documents beyond 180 days. If this approval is objected to by the person concerned, he may apply to the Board, who after hearing can pass such orders as it deems fit either upholding the further retention or directing the return. If no order is passed, then the person concerned cannot apply to the Board nor can he be heard.
In this case, there is absence of an order beyond June 30, 1982. We have been told that an order was passed but the same has not been found. In any event, that order was never communicated to the petitioner and an order which is signed and lost in the Department does not seem, in our opinion, to be of much value. We, thereforee, find that the retention beyond June 30, 1982, and up to October 5, 1983, is not valid. Even if an order was passed which is lost, we do not know for what period that order was to continue. It may be for a short period, it may be for a long period. But, the period for which the orders are said to be missing is from June 30, 1982, to October 5, 1983, which is a long period far in excess of 180 days. The order purported to have been made on October 5, 1983, has been communicated to the petitioner, but does not give any reasons. The order states :
'Approval is hereby accorded under section 131(3) of the Income-tax Act, 1961, to the Income-tax Officer, Central Circle VI, New Delhi, for continued retention of books of account and documents of M/s. Survir Enterprises, 8-9-10, Nehru Place, New Delhi, as specified in Income-tax Officers proposal referred to above till September 30, 1984.'
It has been stated before us and this appears from the record also that this order was really passed under section 132(8), i.e., this is an order purporting to extend the period of retention. The question of extending the period of retention would arise only if the period had already been extended up to October 5, 1983. There cannot be a gap of a single day because section 132(8) only allows extension of the time and not a fresh retention. This means that on a plain reading of the section, the retention is invalid.
If the order had been a valid order in the sense of being merely an extension of period, the assessed could have moved the Board. But, in this case, there seems to be no valid order after June 30, 1982, and, thereforee, the petitioner has rightly moved this court.
Though several points have been argued before us, we think the present case is covered by the two reported cases cited before us, namely, Metal Fittings P. Ltd. v. Union of India : 141ITR758(Delhi) and CIT v. Oriental Rubber Works : 145ITR477(SC) . In the first case, this court held that the pre-condition for retention beyond 180 days required that reasons for retaining the books should be recorded by the authorised officer and the approval of the Commissioner obtained. It was also held that the approval had to be taken before 180 days expired as otherwise the retention would become invalid. We, respectively, agree with this reasoning.
In the case decided by the Supreme Court, it was held that the reasons had to be recorded, approved by the Commissioner and communicated to the assessed. It was held that without communication, the order would be invalid. The view of the Division Bench of this court has, thereforee, been upheld. It has also been held that without communication, the approval itself would become invalid.
Applying these two decisions to the facts of this case, we have no hesitation in holding that whether the position may be up to June 30, 1982, thereafter, the retention was not in accordance with law. In this case, not only is the order for retention after June 30, 1982, said to be lost, but we do not even know for what period it was recorded. Furthermore, there is little doubt that it was not communicated to the petitioner, even if it was passed. It, thereforee, became invalid.
It was submitted that the petitioner had delayed this writ petition. Nevertheless, the books are still with the Income-tax Department though they had to be returned long ago. So, the delay in filing the writ petition, if any, is not very relevant.
Taking up the position now from October 5, 1983, when the order under section 131(3) was passed, we may say that this order can be read as an order under section 132(8), and the files which were shown to us, which we never showed to the assessed, seem to confirm the fact that the Income-tax Officer was wanting a further extension under section 132(8). Nevertheless, once the retention of the books beyond June 30, 1982, became invalid, it could not be validated by a new order passed on October 5, 1983. thereforee, we have no hesitation in holding that the present retention of the books is totally invalid and the books have got to be returned to the assessed.
It is indeed unfortunate that we have to reach this conclusion in a case in which these books have been retained by the Department for taking some action which was stated to be pending before various authorities. Learned counsel for the respondent stated that even if we order the return of the books, we should give directions to the petitioner to keep them intact and direct that they may be produced before the Department as and when required. We find ourselves unable to give such a direction. Once the bar set out in section 132(8) operates, the Department has got to return the books of account and other seized documents to the person concerned. However, in order to facilitate the return. we would direct that these documents and books be returned on or before December 12, 1984. The petitioner will be entitled to the costs of this writ petition. Counsels fee Rs. 500.