Govindan Nair, C.J.
1. These are appeals taken by the revenue from the judgment in O.Ps. Nos. 2453, 2460 and 2467 of 1975* which were allowed by the judgment under appeals in these cases. By that judgment an order which has been produced in O.P. No. 2453 of 1975 (W.A. No. 291 of 1975) as exhibit P-l purporting to have been passed by the authorised officer under Sub-section (3) of Section 132 of the Income-tax Act, 1961, for short, ' the Act ', has been set aside by the learned judge. The question that arises in these appeals, though they relate to three different assessees, is the same; the ambit and scope of the powers of the 'authority entitled to pass an order under Sub-section (3) of Section 132 of the Act.
2. Before we proceed further we shall extract the relevant parts of Section 132 which are Sub-sections (1), (2), (3), (5) and (7);
' (1) Where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that--
(a) any person to whom a summons under Sub-section (1) of Section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under Sub-section (1) of Section 131 of this Act, or a notice under Sub-section (4) of Section 22 of the Indian Income-tax Act, 1922, or under Sub-section (1) of Section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account, or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property),
he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax Officer (hereinafter referred to as the authorised officer) to--
(i) enter and search any building or place where he has reason to suspect that such bocks of account, other documents, money, bullion, jewellery or other valuable article or thing are kept ;
(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by Clause (i) where the keys thereof are not available;
(iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search ;
(iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom ;
(v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing.
(2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in Sub-section (1) and it shall be the duty of every such officer to comply with such requisition.
(3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this Sub-section. ...
(5) Where any money, bullion, jewellery or other valuable article or thing (hereinafter in this section and Section 132A referred to as the assets) is seized under Sub-section (1), the Income-tax Officer, after affording a reasonable opportunity to the person concerned for being heard and making such enquiry as may be prescribed, shall, within ninety days of the seizure, make an order, with the previous approval of the Commissioner,--
(i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him ;
(ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act;
(iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of Sub-section (1) of Section 230A in respect of which such person is in default or is deemed to be in default,
and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in Clauses (ii) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized :
Provided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized :
Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in Clauses (ii) and (iii) or any part thereof, the Income-tax Officer may, with the previous approval of the Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. ......
(7) If the Income-tax Officer is satisfied that the seized assets or any part thereof were held by such person for or on behalf of any other person, the Income-tax Officer may proceed under Sub-section (5) against such other person and all the provisions of this section shall apply accordingly.'
3. We shall also read the order, exhibit P-l, passed by the 1st appellant:
'By virtue of the powers conferred on me by Section 132(3) of the Income-tax Act, 1961, I, N. P. Padmanabhan, Income-tax Officar, A-Ward, Quilon, an authorised officer, order that you, the agent, The Federal Bank Ltd., Punalur, shall not remove, part with or otherwise deal with the books of accounts, other documents, money, bullion, jewellery or other valuable article or thing as per annexure of which you are in immediate possession or control either as owner or otherwise without any previous permission.
If you contravene this order, you shall be punishable with rigorous imprisonment which may extend to two years and shall also be liable to a fine under Section 275A of the Income-tax Act, 1961. Annexure(A) Bank Accounts : Savings Account No. 978/1971 in thename of Sri M. Shajahan, ShajiManzil, Valacode, Punalur.'
4. The learned judge has rested his decision, as we understand the gist of it, on the following basis :
' The above discussion would indicate that once money is deposited in a bank the depositor though he has got a legal title to the account has ceased to be the owner or having custody of the particular amount deposited in the bank in the account. He has really given the amount to the bank as loan : the money has become the bank's property which is absolutely at its disposal subject to the bank's obligation to honour the person's cheques drawn upon his account to the amount in credit in that account. With regard to that money I am of the view that no order under Section 132(3) of the Indian Income-tax Act could be passed in the light of the provisions in that section. This is because under Section 132(1)(c) the search is in respect of the money of which a person is in possession and which money either wholly or partly represents income or property which had not been disclosed for the purpose of the Income-tax Act and the order under Section 132(3) could also only be issued only in respect of such money on the ground that it is not practicable to seize the same.
Therefore, I do not find any way to sustain the legality of exhibit P-l order in the three cases.'
5. To state the necessary facts, we have to mention that the 1st respondent in Writ Appeal No. 291 of 1975, his wife, the 1st respondent in Writ Appeal No. 292 of 1975, and his son, the 1st respondent in Writ Appeal No. 293 of 1975, were carrying on the business of motor transport. They have accounts with the 2nd respondent in each of these appeals, the Federal Bank, Punalur. The Commissioned, in consequence of information received, recorded that he has reason to believe that the 1st respondent in Writ Appeal No. 291 of 1975 was in possession of money which represented wholly or partly income which had not been disclosed for the purpose of the Indian Income-tax Act, 1922, or the Act. He, therefore, authorised the Income-tax Officer, the 1st appellant in these appeals, to enter and search the residence cf the 1st respondent in W.A. No. 291 of 1975 with whom the 1st respondents in W.As. Nos. 292 arid 293 of 1975 were staying. At the time of the search, the Income-tax Officer, hereinafter referred to as the ' authorised officer ', came across certain pass books in the names of the 1st respondent in each of these appeals, with the 2nd respondent-bank, indicating that certain amounts were in deposit in the bank. These pass books were seized and it is after such seizure that the order, exhibit P-l, which we have extracted, has been issued under Sub-section (3) of Section 132 of the Act.
6. Elaborate arguments had been advanced before the learned judge which were repeated in a more succinct form before us relating to the legal relationship of customer and banker and as to whether the money deposited by the customer in a bank would continue to belong to the customer or to the bank. We need not tarry on this aspect of the case' because the position seems to be well-established that the money deposited in an account in a bank by a customer, after such deposit, would belong to the bank and that it has full control and has the right to use the money as it liked. The bank was only obliged to honour the cheque issued by the customer if it is a proper cheque and drawn up in a proper manner. We shall, therefore, proceed on that basis for deciding this case. This means that the monies in deposit as evidenced by the pass books that have been seized are the monies that belonged to the 2nd respondent-bank in each of these writ appeals and they had full liberty to use the money in such manner as they deem fit subject only to the obligation that if the customer demanded payment in the proper manner by the issue of cheques such cheques should be honoured. On this basis counsel for the 1st respondent in each of these appeals contended that no order could be passed under Sub-section (3) of Section 132 against the 2nd respondent-bank in these appeals. His submission was based on the observation in the judgment which we have extracted and he submitted that it is clear on a reading of the section that the whole section will apply only in cases where the person is believed to be in possession of money (leaving out the various other items mentioned in the section : bullion, jewellery or other valuable article or thing with which we are not concerned in these cases) which represented income which had not been disclosed for the purpose of the Indian Income-tax Act. Proceedings under the section will have to be taken against the person so believed to be in possession of such money and it is such money that could be seized- The further action that can be taken under Sub-section (3) must also be, therefore, in relation to such money and not to some other money which though it originally belonged to the person liable to be taxed had become the property of some other person and is in his complete control and custody. We shall consider these aspects.
7. Action under Sub-section (3) of Section 132 can be taken only ' where it is not practicable to seize any such books of account, other document, money, bullion, jewellery or other valuable article or thing '. On the facts of the case we think there is nothing arbitrary or even strange in having come to the conclusion that the monies deposited in the bank of the 2nd respondent in these appeals by the 1st respondent in each of these appeals represented the income of the 1st respondent in W.A. No. 291 of 1975. We have perused the files and we find there was enough material to have come to the prima facie conclusion that the monies in deposit represented income of the 1st respondent in W.A. No. 291 of 1975, which had not been disclosed for the purpose of the Indian Income-tax Act, 1922, and the Act. If that money, though by virtue of the legal relationship between the customer and the banker had become the money of the bank, the 2nd respondent, and was in his control and possession, will nevertheless be answerable to tax if it is ultimately found that the 1st respondent in each of these appeals is liable to pay income-tax. Such monies deposited in a bank, we consider, are impracticable to seize. In such cases, we conceive that action can be taken under Sub-section (3) of Section 132. We are of the view that the proper way in which the order under the subsection should be worded is to address the customer who had deposited the money in the bank directing him not to remove, part with or otherwise deal with the money except with the previous permission ' of the officer '. This is permissible because we are of the view that the customer though he has no ownership or immediate possession of the money has certainly the right at his will to withdraw the money from the bank and dispose of the same as he liked. Instead of issuing such an order, the order in question has been issued to the bank not to deal with the money. This may not be a correct procedure and the order, exhibit P-l, might imply that the bank had no authority to use the money after the order has been served on the bank. We need not consider this aspect because the bank has not complained. The order, exhibit P-l, directed to the bank has the same effect as far as the assessee, the 1st respondent, in each of the writ appeals is concerned, because by the bank complying with the direction, exhibit P-l, the 1st respondent in each of these appeals has been effectively prevented from operating on the account or otherwise dealing with the money in deposit in the account. If orders had been directly issued to the 1st respondent in each of these cases in terms of what we have indicated earlier, we conceive that these orders could not have been challenged in proceedings under Article 226 of the Constitution successfully. The question is whether by the mere fact that the order was directed against the bank, the 1st respondent in each of these appeals, we should set aside the orders under Article 226 of the Constitution. We do not think that in substance they are aggrieved by the order merely because of its bad form more than they would have been aggrieved had the order been issued against them. We may add that any order issued to the 1st respondent in each of these appeals could have been communicated to the batik as well and any prudent bank, we are sure, would in the light of such an order served on the customer, refuse the customer to operate on the accounts. We think that there is power to communicate the copy to the bank in view of the last part of Sub-section (3) of Section 132 reading 'and such officer may take such steps as may be necessary for ensuring compliance with this Sub-section '.
8. In the light of the above discussion, we would not be justified in setting aside the order, exhibit P-l, for we consider exhibit P-l only to be an indirect manner of doing what could have been done directly against the 1st respondent in each of these cases. In the circumstances, we are not satisfied that we should exercise our jurisdiction under Article 226 of the Constitution and vacate the order.
9. It is not necessary for us to consider the scope of Sub-section (5) of Section 132 in these cases nor the applicability of Sub-section (7) of that section. We shall only state that Sub-section (5) may not apply unless there has been a seizure and Sub-section (7) will apply when the seized assets or any part thereof were held by such person for or on behalf of any other person. Those circumstances do not exist here.
10. The procedure to be adopted would, therefore, be to assess the 1st respondent in each of these cases after affording full opportunity to them to state and prove their cases if they are assessable under the Act in respect of any money which represented income which had not been disclosed for the purpose of the Indian Income-tax Act, 1922, and the Act as expeditiously as possible. It is not permissible that amounts in deposit in banks should be frozen as has been done by exhibit P-l order for any length of time as it would be prejudicial to the 1st respondent in each of these cases and we consider prejudicial to the revenue because any harm that is done to the business of the assessees would certainly reduce the capacity of the assessee to pay any tax that may have to be imposed on them and might make recovery of that tax impossible.
11. We, therefore, direct that further steps will be taken as expeditiously as possible.
12. We are unable, with respect, to agree with the learned judge that the order, exhibit P-l, in each of the cases should be vacated. We, therefore, set aside the judgment under appeal, allow these writ appeals and dismiss the original petitions subject to what we have stated above. We direct the parties to bear their respective costs.