1. We have before us two writ petitions under Article 226 of the Constitution by Chiranjilal Shrilal Goenka, a businessman of Bombay, who had his ancestral home at Ramgarh in the State of Rajasthan. By writ petition No. 270 of 1966, he questions the validity of an order dated 4-3-1966 passed by Income-tax Officer (Central) Section X, Bombay, under Section 132(5) of the Income-tax Act, 1961, and prays for a writ of certiorari or any other appropriate writ, order or direction. By writ petition No. 269 of 1966, he challenges the legality of a notice issued to him on 3-2-66 by the Deputy Collector of Land Customs and Central Excise. Rajasthan, Jaipur, whereby the petitioner was called upon to show cause why the gold recovered from the petitioner's premises and seized by the Excise authorities be not confiscated under Rule 126-M of the Defence of India Rules. In this behalf he prays for a writ of prohibition restraining the respondents from taking any further proceedings against him and also for ordering the release of seized gold and ornaments to be returned to the petitioner.
2. As the two writ petitions raise some common questions of fact and law and 5 out of 10 respondents in writ petition No. 269 of 1966, also figure as respondents in the other writ petition No. 270 of 1966, it will be convenient to dispose of both the writ petitions together.
3. It is common ground between the parties that on 24-11-1965, the Income-tax authorities conducted searches at the petitioner's residence and offices at Bombay and thereafter from 1st to 13th December, 1965, searches of the petitioner's premises at Ramgarh in Rajasthan were made by the Income-tax Officers. In the course of these and other searches, which continued till January, 1966, the following articles were recovered from the various places searched :--
Date of seizure.
Nature of articles.
Place from where seized.
Gold (non-ornament)jewellery and cash.
Premises of Shri C. S. Goenka atRamgarh (Sikar District. Raj.).
Jewellery ornaments and cash.
Jewellery ornaments and cash.
Looker No. 1397 of the Allahabad Bank Ltd., Bombay.
Cash of Rs. 3,125/-
333, Kalbadevi Road, Bombay-2.
16, Waikeshwar Road Bombay-6.
Ground-floor of 16, Waikeshwar Road Bombay-6.
Documents evidencing loans advanced to various persons.
4. The Panchnamas were prepared by the Income-tax Officers in respect of these searches and seizures and copies thereof were supplied to the petitioner. The petitioner had also gone to Ramgarh on 1-12-65 and while he was there, he was shown an authorisation issued by the Commissioner of Income-tax (Central) Bombay, respondent No. 1, for taking the search. On subsequent dates when searches were conducted at Ramgarh, the warrant of authorisation was shown to Dhokal Singh, who was the Chowkidar at the petitioner's premises at Ramgarh. The gold and other valuables that were recovered from the petitioner's premises at Ramgarh were deposited with the State Bank of India at Jaipur. Later on, the Income-tax authorities handed over the custody of the primary gold that was recovered from the petitioner to the Excise authorities. On 18-12-1965, Shri Vanchinath, Income-tax Officer, Section X (Central), Bombay, issued notice to the petitioner under Rule 112-A of the Income-tax Rules to attend his office on 5-1-66 to explain or to produce evidence as to the nature of possession and the source of acquisition of seized assets. The petitioner was, however, not able to respond to the notice. A second notice was issued by Shri Vanchinath on 5-1-66 and he fixed 22-1-66 as the date of hearing. The petitioner was still not able to comply with the notice. He says that this was on account of his suffering from heart trouble. Some more notices were issued and dates were adjourned. It is not necessary to refer to all of them at this stage in detail. On 24-2-1966, the Income-tax Officer Shri Vanchinath reminded the petitioner of his failure to comply with the terms of the notices, issued to him under Rule 112-A (1) of the Income-tax Rules and he also informed him that if he had any explanation or evidence to produce he should do so. The petitioner, however, stated in reply to this communication that he would do so when his health would permit it. Eventually, the impugned order was passed on 4-3-1966. The Income-tax Officer determined the total value of the seized valuables under Section 132(5) of the Income-tax Act, as follows :--
(A) Gold(non-ornament) seized from the premises of Shri C. S. Goenka at Ramgarh 85617.8grammes at the rate of Rs. 130 per 10 grammes.
. . . Rs. 11,13,031.(B) Jewellery ornaments andcash seized from the assessee's premises at Ramgarh on 6/7th December 1968and 11th December 1965 as per joint valuation made by the valuers on 2ndMarch. 1966
. . Rs. 1,36,138.(C) Jewelleryand ornaments etc., seized from the Allahabad Bank Lockers as per the JointValuation done on 2-3-66.
. . Rs. 46,780.(D) Silver articlesseized from the ground-floor of 16, Walkeshwar Road on 20-12-65-27.7 Kilos atRs. 300 per Kg.
....Rs.8,310/-(E) Cash seizedfrom 333, Kalbadevi Road...3,125/-(F) Amountsgiven by Shri C. S. Goenka to various persons as per list furnished to him alongwith notice under rule 112-A(1)dated 28-1-66 ....4,60,515/-Total Rs. 17,67,899/-
5. The Income-tax Officer accordingly estimated the undisclosed income from which the seized articles were acquired at the above figure and on that basis further estimated that the amount of tax on this income would work out to Rs. 14,13,443/-. As primary gold was at that time in the custody of Central Excise authorities the Income-tax Officer retained the remaining assets holding that in the circumstances no portion thereof could be released.
6. We may now briefly refer to the grounds on which the validity of the proceedings taken by the Income-tax Officer is challenged before us. The contentions raised are as follows:
1. The provisions of Section 132 of the Income-tax Act. 1961, and particularly Subsection (1) (c) thereof was violative of Article 14 of the Constitution in that this section conferred arbitrary, naked and drastic powers on the Income-tax Officers without, in any manner, providing under what circumstances this power was to be exercised. It is maintained that the law does not disclose any policy which may afford guidance to the Income-tax authorities in exercising their powers. It is further submitted that there is no provision in this section for giving any notice to the affected party to show cause against the exercise of such powers.
2. The Income-tax authorities had no jurisdiction to lake any proceedings against the petitioner as, in pursuance of the gold-bond scheme sponsored by the Government of India by their Press Note dated 19-10-65, the petitioner had already made an application on 18-11-65, to the Stale Bank of India, Indore Branch, at Indore, whereby he made valid tender of the aforesaid gold and ornaments for the purpose of purchasing gold-bonds under the scheme, and thus the petitioner became entitled to the various immunities, concessions and exemptions mentioned in the aforesaid Press Note and the Taxation Laws (Amendment) Act. 1965. It is submitted that once the petitioner had made this tender, the Income-tax authorities were left with no jurisdiction whatsoever either to take any search or seize his valuables in the manner they have done. Nor were they entitled to initiate any proceedings under Section 182 of the Income-tax Act and pass the impugned order on 4-3-66.
3. The first respondent, i.e., the Commissioner of Income-tax (Central), Bombay, had no jurisdiction whatsoever to issue any authorisation in favour of the Income-tax Officer to take a search of the premises at Ramgarh which fell outside his territorial jurisdiction and to seize the gold and ornaments there (i.e. at Ramgarh). The so-called authorisation, according to the petitioner, was consequently null and void and this defect vitiated the entire proceedings taken by the Income-tax Officer. It is similarly alleged that the Income-tax Officer Shri Vanchinath had no territorial jurisdiction.
4. The said searches and seizures were not conducted in accordance with the provisions of section 182 and/or in accordance with the provisions of the Code of Criminal Procedure relating to searches and seizures. It is pointed out that no reason for the said searches and seizures were recorded in writing or communicated to the petitioner.
5. The Income-tax Officers were not authorised to transfer the primary gold recovered by them to the Superintendent of Central Excise, Jaipur, and/or the Central Excise authorities at Jaipur. It is also submitted that once this transfer was effected by the Income-tax authorities the seizure made by the Income-tax authorities had lost its efficacy with the result that subsequent proceedings taken by them were without jurisdiction.
6. The respondent No. 2, Shri Vanchinath, Income-tax Officer, had made the searches without the valid approval of the Commissioner of Income-tax (Central), Bombay.
7. The authorisation issued by the Commissioner of Income-lax (Central). Bombay, had no efficacy in so far as the seizure of debts was concerned. Such debts being in the nature of choses in action were only intangible rights which could not be subject matter of a valid seizure. It is further submitted that the value of these debts amounting to Rs. 4,60,515/-could not have been taken into consideration in estimating the value of the seized assets.
8. It was the duty of the Income-tax Officer before making the impugned order to disclose to the petitioner all the grounds or materials on which he was to pass the impugned order.
7. In Writ Petition No. 269 of 1966, the position about searches conducted by the Income lax Officers and seizure of goods effected by them was reiterated and relying on the gold-bond scheme sponsored by the Government of India it was again submitted that, as the petitioner had gone to Indore on or about 18-11-65 and addressed a letter to the State Bank of Indore at Indore, informing them that he was in possession of 86118 grammes of primary gold and 12000 grammes of gold ornaments lying at his house at Ramgarh and as he had also enclosed with that letter requisite application from duly signed by him. the proceedings taken by the Income-tax Officers were wholly without jurisdiction. It was also maintained that the making of this application immunised him against any proceedings under the Defence of India Rules relating to gold control as well. It was further pointed out that on 26-10-65, in exercise of the powers conferred under Rule 126-U of the Defence of India Rules, 1962, the Central Government had issued a notification that every person tendering gold on or after 27-10-65 as subscription for the issue of National Defence Gold Bonds, 1980, at any of the offices of the Reserve Bank or at the branches of State Bank of India and some other banks, shall be exempted from the operation of all the provisions of part XIIA (relating to Gold Control) or the Defence of India Rules in respect of such gold. The petitioner urges that in view of this order of the Government of India the Excise authorities were debarred from taking any proceedings against the petitioner under the Defence of India Rules relating to gold. The validity of the seizure of goods by the Excise authorities is further challenged on the ground that the mandatory provisions of Rule 126-L of the Defence of India Rules (Gold Control) were not complied with. It is pointed out that no proper authorisation had been issued in favour of Ihe Superintendent of Excise for making the seizure either by the Central Government or the Administrator. It is submitted that such authorisation has to be in writing. It is next urged that the procedure prescribed under the Criminal Procedure Code was not followed by the Central Excise authorities. It was also strongly urged that no Panchnama or recovery memo was prepared by the Central Excise Officers. Indeed, according to the petitioner, there was neither a warrant nor authorisation for making any seizure under Rule 126-L of the Defence of India Rules, nor was there any seizure of the said gold or ornaments by the Excise Officers. Repeating some of the grounds taken in the other writ petition it was urged that the Income-tax authorities had no power to transfer the custody of gold to the Excise Officers. It was then urged thai law did not empower the Excise Officers to seize goods which were already in possession or custody of the Income-lax Officers. In the light of this it is urged that as there was no valid seizure in accordance with Rule 126-L of the Defence of India Rides, the Excise authorities were not entitled to take any proceedings under Rule 126-M of the Defence of India Rules and it is thus maintained that the show cause notice issued to the petitioner by the Deputy Collector of Excise was bad. Without prejudice to the validity of the tender alleged to have been made by the petitioner on 18-11-65. the petitioner submits, that he had an unqualified right to make tender of gold even subsequently for getting the benefit of the gold-bond scheme and he proceeds to say that this he has done by issuing a notice to the respondents on 22-8-66. In the circumstances, he maintains that the Excise Officers cannot deprive him of the benefit of the gold band scheme by taking, any proceedings under Rule 126-L or 126-M of the Defence of India Rules. Therefore, he prays that they should be asked to produce the gold before the State Bank so that the petitioner may be entitled to claim the immunities, concessions or exemptions arising under the gold bond scheme.
8. The writ petitions have been opposed by the respondents. It is denied by them that Section 182(5) of the Income-tax Act is violative of Article 14 of the Constitution or is otherwise invalid. They further maintain that the various searches of the petitioner's premises at Bombay and at Ramgarh were validly conduct ed and the goods were properly seized. They point out that there has been valid authorisation by competent authority in favour of the Income-tax Officer, who conducted the search or made the seizure of valuables in the first instance. The respondents maintain that the Excise Officer had made the seizure of prima: gold on 9th December, 1905 at Jaipur while such goods were in the custody of the Income-tax Authorities. They submit that at the request of the Superintendent of Excise, Jaipur the Income-tax Officer at whose instance the valuables were deposited with the Treasury Officer took out one of the scaled boxes and then the Excise Officer seized the same according to law and prepared a Panchanama evidencing the seizure. They proceed to say that the Excise Officer removed the seals of the Income Tax Officer on the box containing primary gold and then put his own seals thereon and then redeposited it with the Treasury Officer at Jaipur on his own account. According to the respondents just as the Income Tax Officer was properly authorised to conduct the searches at Ramgarh and to make the seizure, the Superintendent of Excise al Jaipur was duly authorised by a proper order under Rule 126-L of the Defence of India Rules to make the seizure. Again the respondents submit that an Excise Officer acting under the Defence of India Rules could validly seize the goods, if he found that there had been a contravention of the Defence of India Rules relating to Gold Control, even though earlier to that gold had come into the custody of an Income Tax Officer. As regards the application alleged to have been filed by the petitioner on 18th November, 1965 for tendering gold at the State Bank at Indore, the respondents submit that this application was a subsequent fabrication. According to them no such application was filed on 18th November, 1965 and with the connivance of some petty officials in the Bank such an application was smuggled in subsequently In this behalf they draw attention to certain circumstances revealed in the case. They point out that though the searches of the premises of the petitioner both at Bombay and at Ramgarh in Rajasthan were conducted between the 24th November. 1965. and 13th December. 1965 for a fairly long period vet the petitioner never came forward with the story at that time that he having filed an application for tendering gold under the Gold Bonds Scheme had acquired Immunity against any proceedings whatsoever. According to the respondents if any such application were in existence by the time the searches and seizure were made the petitioner could not have kept quiet. According to the respondents even when the petitioner was called, from time to time, in pursuance of notices given to him he did not raise this plea that he had made a tender for the gold at the State Bank at Indore. The respondents further say that it was for the first time on 22nd March 1966 that he came forward with the story that he had made an application to the State Bank at Indore on 18th November, 1965 for tendering gold and gold ornaments for purchasing gold bonds under the Gold Bonds Scheme. This, the respondents point out, could not have been the attitude of the petitioner if any application were really there in the bank by the time the gold was detected and seized by the Government Officials. This application dated 18th November, 1955 contains as its enclosure a pro forma of a proper application and this pro forma, according to the respondents, was not in vogue on 18th November, 1965 and came to be introduced much later. This according to the respondents shows that this application was brought in existence much later. This application bears an endorsement by the Senior Accountant of the Bank, Shri Vijai Vargi, who, according to the respondents, was on leave on 18th November, 1965 and was not even at Indore. On the basis of these averments, the respondents submit that the petitioner has not come before us with clean hands, and has indulged in fabrication and forgery by trying to create evidence of a tender under the Gold Bonds Scheme and therefore we should decline to entertain this writ application in exercise of our extra-ordinary jurisdiction under Article 226 of the Constitution of India. The respondents also submit that as the petitioner has an alternative remedy by way of an appeal and/or revision against the orders passed by the Income Tax Officer as well as against what might be passed by the Collector of Central Excise we should not exercise our discretion in favour of the petitioner under Article 226 of the Constitution and leave him to pursue the remedies under the Statute. We propose to refer to the several other contentions raised by the respondents in their replies while dealing with the various points arising for consideration at the appropriate places tn our judgment.
9. It would be convenient to first deal with writ petition No. 270 of 1966. To start with, we may turn to the argument about the vires of section 182 of the Income Tax Act, 1961 on the ground that it is violative of Article 14 of the Constitution. Section 132 occurs in Chapter XIII of the Income Tax Act, 1961, which deals with Income Tax Authorities Section 131 of the Act defines the powers of the various Income Tax Authorities regarding discovery and production of evidence. That section reads as follows:
'131. Power regarding discovery, production of evidence etc.
1. The Income-tax Officer, Appellate Assistant Commissioner, Inspecting Assistant Commissioner and Commissioner shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (6 of 1908), when trying a suit in respect of the following matters, namely:
(a) discovery and inspection;
(b) enforcing the attendance of any person including any officer of a banking company and examining him on oath;
(c) compelling the production of books of account and other documents; and
(d) issuing commissions.
2. Without prejudice to the provisions of any other law for the time being tn force. where a person to whom a summons is issue either to attend to give evidence or produce books of account or other documents at a certain place and time, intentionally omits to attend or produce the books of account or documents at the place or time, the Income-tax authority may impose upon him such fine not exceeding five hundred rupees as it thinks fit, and the fine so levied may be recovered in the manner provided in Chapter XVII-D.
3. Subject to any rules made in this behalf any authority referred to in Sub-section (1) may impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceedings under this Act:
Provided that an Income-tax Officer shall not-
(a) impound any books of account or other documents without recording his reasons tor so doing, or
(b) retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Commissioner therefor.
10. Section 182 contains the powers of the various authorities regarding search and seizure and runs as follows: 182. Search and Seizure:
(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 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 India Income-tax Act, 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 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 books 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 (1) 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 book of account, other document, 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 the subsection.
4. The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922, or under this Act.
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 Jays 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 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.
6. The assets retained under Sub-section (6) may be dealt with in accordance with the provisions of Section 182A.
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 (6) against such other person and all the provisions of this section shall apply accordingly
8. The books of account or other documents seized under Sub-section (1) 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 or this Act in respect of the years for which the books of account or other documents are relevant are completed. 9. The person from whose custody any books of account or other documents are seized under Sub-section (1) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf at such place and time as the authorised officer may appoint in this behalf.
10. If a person legally entitled to the books of account or other documents seized under Sub-section (1) objects for any reason to the approval given by 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 hooks of account or other documents,
11. If any person objects for any reason to an order made under Sub-section (6), he may, within thirty days of the date of such order, make an application to such authority, as may be notified in this behalf by the Central Government in the Official Gazette (hereinafter in this section referred to as the notified authority), stating therein the reasons for such objection and requesting for appropriate relief in the matter.
12. On receipt of the application under Sub-section (10) the Board, or on receipt of the application under Sub-section (11) the notified authority, may after giving the applicant an opportunity of being heard, pass such orders as it thinks fit,
13. The provisions of the Code of Criminal Procedure, 1898 relating to searches and seizure shall apply, so far as may be, to searches and seizure under Sub-section (1).
14. The Board may make rule in relation to any search or seizure under this section; in particular, and without prejudice to the generality of the foregoing power such rules may provide for the procedure to be followed by the authorised officer :
(i) for obtaining ingress into such building or place to be searched where free ingress thereto is not available;
(ii) for ensuring safe custody of any books of account or other documents or assets seized.
Explanation 1(tm) In computing the period of ninety days for the purposes of Sub-section (5), any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded.
Explanation 2--In this section, the word 'proceeding means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1022 or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year. '
11. From a perusal of Section 132, it can not be gainsaid that the powers given thereby to Income-tax Authorities are very wide and even drastic in nature, but we are not impressed by the argument that this section vests arbitrary or naked powers in the Income-tax Officers without affording them any guidance in the matter.
12. The main ground of attack challenging the vires of this section is that although the object of giving powers to an Income-tax Officer by Section 131 and Section 132 is the same, it is left to the arbitrary will of Income-tax Authorities to use drastic powers against certain persons under Section 132 and to use their powers under Section 181 against others in similar circumstances. In our view this argument is not tenable. It is true that one of the purposes of both Sections 181 and 132 is to secure production of relevant evidence such as books of account and other documents so that the Income-tax Authorities may be properly aided in finding out the true income of a person. It is also true that the provisions of Section 182 are more stringent, but It is not correct to suggest that they operate in the same set of circumstances. An Income-tax Officer may feel in certain circumstances that the underlying purpose of Section 131 of the Act would not be achieved by the process that he might issue thereunder and therefore, Section 182 gives further powers to him so that he may go to the premises of the assessee after obtaining proper authority from the Commissioner of Income-tax to secure and obtain the necessary documents. When the Income-tax Officer believes that a particular person would not willingly produce the required documents and books of account apprehending that the production of documents might injure his interests, he may use his powers under this section. A person concerned cannot always be expected to produce the documents needed by the Income-Tax Department. If to meel such a contingency, power has been conferred on Income-tax Authorities under Section 132 of the Act for making searches, then such power cannot be said to be arbitrary or naked as is sought to be made out. The law does afford guidance to the officer acting under Section 132 of the Act and it is only when a Senior Officer like the Director of Inspection or the Commissioner has reason to believe that the process that might be issued under Section 131 of the Indian Income-tax Act would not bring the desired result that he authorises the Income-tax Officer to conduct a search. Vesting of discretion for achieving certain specified purpose underlying the Act cannot in the circumstances, be said to be arbitrary as it is certainly guided by the policy underlying the section viz.. that of getting at the required information. We may mention that validity of Section 37 (2) of the Indian Income-tax Act of 1922 was challenged before the Calcutta High Court on similar grounds and the Calcutta High Court held in Surajmull v. Commr of Income-tax : AIR1961Cal578 , that that section was not unreasonable or arbitrary and did not offend against any provision of th' Constitution. Section 37 (2) of the Income-Tax Act of 1922 was in pari materia with Section 132(1) of the Income-tax Act, 1961. The same view was taken by the Punjab High Court in Civil Writ No. 226 of 1964, Roshan Lal & Co. v. Commr., Income-tax, decided on 22-12-1964 (Punj). We respectfully agree with the view taken in the said cases and do not consider It necessary to repeat the reasons given in support of it since we adopt them. No new argument has been advanced on behalf of the petitioner in the present case. We, therefore, do not find any substance in the contention that Section 182 of the Income-tax Act is violative of Article 14 of the Constitution.
13. We may now turn to the plea raised by the petitioner that he having made an application to the State Bank of India, Indore Branch, Indore, on 18-11-66 wherein he disclosed the existence of his primary gold and other valuables lying at his house at Ramgarh, he had earned immunity against any proceedings under the Income-tax Act. We have given our serious consideration to this aspect of the matter and we find it extremely difficult to accept, that before the searches were made at the premises of the petitioner or the gold came to be seized, he had filed the application which purports to bear the date 18-11-1966. A photostate copy of that application is available at p. 55 of the paper book filed by the respondents in D. B. Civil Writ Petition No. 269 of 1966. It runs as follows :--
The State Bank of Indore,
Indore Dear Sir,
As I have come down to Indore to contact my clients, I learn that the Government has proclaimed a scheme of issuance of Defence Gold Bonds.
I am in possession of primary gold weighing about 86118 gms. & ornament weighing about 12,000 gms. kept at my house at Ramgarh, tehsll Sikar, district Jaipur. I want to invest the gold and ornaments in purchasing Defence Gold Bonds, so I am enclosing the required form for necessary action.
Kindly let me know the earliest convenient date on which I may tender the gold and ornaments to you.
Thanking you, Yours faithfully,
(Sd.) XX X . '
Generally it is not the practice of this Court to decide disputed questions of fact in proceedings under Article 226 of the Constitution, as for coming to the right conclusion all avail able evidence has to be properly appreciated but since it is the main basis of the writ application we must in the special circumstances of the case decide it on the material placed before us. It is really strange that when the searches of the petitioner's premises started, both at Bombay and at Ramgarh where he was certainly present when they so commenced, he did not raise any objection on the score that he had already made the tender of his gold by such an application and the officers there were consequently not entitled to seize It. He kept quiet for a long time even thereafter, though notices were served on him to show cause why action be not taken on the basis of the recovery of the gold. It also appears that at Ramgarh the petitioner was accompanied by Shri Y.M. Desai of his solicitor's firm Messrs Ambu Bhai & Diwanji. The explanation of the petitioner that he had not made the disclosure out of fear of one of the Income-tax Officers in the raid, Shri Jhun-Jhunwalla, cannot cut any ice. The petitioner could have easily sought intervention oi authorities mightier than Shri Jhunjhunwalla that he be afforded protection and the application made by him to the bank be made secure against apprehended tampering. Shri Vanchi Nath has filed an affidavit that Shri Jhunjhunwalla was not present at Ramgarh. Shri Jhunjhunwalla has stated in his affidavit that he had no illwill or animus against the petitioner.
14. Further, Bijawargi--the Senior Accountant, has inter alia, filed an affidavit that he was not present at the State Bank Indore on 18-11-65. We cannot ignore the affidavit of Bijawargi as it was he and one more undisclosed clerk who were responsible for bringing this application on the records of the Bank. There is also an application for leave by Bijawargi a photostat copy of which has been produced by the respondents in D. B Civil Writ Petition No. 269 of 1966. Its perusal shows that Bijawargi had filed the application on 17-11-65 for grant of leave from 18 11-05 to 20-11-65. Mr. Sen, learned counsel for the petitioner, points out that there appears to be some retouching on the dates '17-11-65 and '20-11-65' in this application. It is noi enough to throw doubts about the correctness of the dates. There is no material before us to arrive at the conclusion that this application was presented by Vijayawargi later on to save his skin. If the petitioner had given his application to him on the 18th and if he had received it on that day, there was no reason for him to deny that fact. The Manager of the Bank has also stated that Bijawargi was on leave from 18th to 20th. We are not prepared to believe that the evidence has been tampered with by the respondents. Moreover, we have no doubt that the form that was found with the application purporting to be dated 18-11-1965 was issued much later, that is. on 16-1-66. The letter of the Secretary of the Reserve Bank of India to the Commissioner of Income Tax in reply to his query made under Commissioner of Income-tax's letter dated 16-4-1966 makes the position clear. The Reserve Bank's letter is available at page 61 of the respondent's reply in D. B. Civil Writ Petition No. 270 of 1966. Ti says that the Reserve Bank had referred the matter to Public Debt Office, Bombay, and it is learnt that the form enclosed to the Government Notification dated 19th October, 1965 (as amended upto 19th November, 1965) was received by them from the Government Press on 15th January, 1966. The form found with the disputed application, according to the affidavit of respondents Nos. 1 to 4, is the amended form which could not have been available on 18-11-65. Learned counsel for the petitioner has tried to explain this by saying that in the first instance the petitioner filed the old form but as later on the form was amended and he wanted to keep his tender up-to-date, he submitted the new form after it was released lo subscribers. We are not satisfied that more than one form was filed by the petitioner with the Bank. The petitioner does not say that he had sent the 2nd form with any application. It is not believable how he could send the 2nd form without any forwarding letter and how he could dispense with the necessity of obtaining a receipt from the bank about its submission. The explanation offered by the petitioner appears to be false and is ridiculous. The respondents have further produced one cheque for a substantial amount of Rupees Four Lacs and odd, (2) a money order receipt, and (3) a postal acknowledgment receipt of a parcel bearing the date 18-11-65. which according to them bear signatures of the petitioner, for showing that the petitioner was at Bombay on that date and not at Indore. An entry from the diary of the petitioner showing that he had booked a telephone trunk call on 18-11-65 at Bombay has also been produced. The learned counsel for the petitioner has, however, tried to explain all these. He submits that the petitioner had left certain signed cheques to be filled in by his employees as and when necessary, earlier to his leaving Bombay and the cheque in question was made use of during his absence. As regards the money order receipt and the postal acknowledgment form, it is pointed out that the originals have not been produced and on the basis of the photostat copies the petitioner was unable to say that they bore his signatures. Similarly, as regards the entry about the trunk telephone call, it is submitted that this could have been booked in his name by some of his employees or family member and entered in the diary which was kept in his name, We cannot give much importance to entries about trunk telephones but we cannot ignore the photostat and certified copies of money order receipts and acknowledgment forms. Prima facie they show the petitioner's presence at Bombay on 18-11-65. We do not think that the postal authorities would oblige the respondents by forging such receipts within a short time.
15. We ought to mention that the petitioner has also placed on record a photostat copy of a letter dated 14-3-1966 received by his solicitor Ambu Bhai Diwanji from the Agent, State Bank of Indore wherein the Agent has stated that the petitioner had made the application on 18-11-65 as mentioned in solicitor's letter to which Agent was replying. That letter is as follows :--
'State Bank of Indore
Indore City 14th March 1966
23rd Phalguna 1887 (Saka) Ambubhai & Diwanji,
Solicitors & Notary,
With reference to your letter dated 10th March 1966 it is correct that your clients had made the application as mentioned therein, but in view of the circumstances referred by you in the said letter we are not in a position to do anything. We can only advice your client to make his own arrangements for tendering gold to us.
Yours faithfully, (Sd.) XXX
The letter dated 10th March, 1966 to which the Agent's letter is a reply, has not been placed before us. This letter of the Agent is hardly sufficient for showing that the petitioner made the application really on 18-11-66 as it purports to have been so made. When the Agent was writing he was only referring to the date actually appearing on that application but he did not mean to say that it was in fact presented on that date. It is nobody's case that the Agent had gone into the question of the genuineness of the application or that he was personally aware of its presentation. He appears to be stating what was just appearing in his records. If the petitioner wanted to derive any help from this then an affidavit of the Agent should have been got filed. This letter, to our mind, has no evidentiary value.
16. As we have already observed, it is not the practice of this Court to decide questions of fact in exercise of its extraordinary jurisdiction but still we have examined the evidence of both the parties. From what has been placed before us, the petitioner has not been able to satisfy us by unimpeachable evidence that he had usually made the application on 18-11-66. On the contrary the material placed by the respondents on record goes to show that the application and form were smuggled in the Bank records long after the seizure of the property. The application was ante-dated to create evidence in favour of the petitioner but tt did not strike him that the form which he was presenting therewith was of a later date and thus the trick sought to be played by the petitioner stands exposed.
17. It may be pointed out that there is yet another suspicious circumstance for which the petitioner has not given any explanation. Ramgarh is a place In Sikar District and there are branches of the State Bank at much nearer place, like, Jaipur, Bikaner and Jodhpur. We fail to understand why the petitioner thought of going to much farther place like Indore. Journey from Ramgarh to Jaipur should hardly take a few hours.
It may be further observed that even if the petitioner had presented the application on 18-11-65, tt could not he taken as a valid tender of gold. This application embodied in the letter dated 18-11-66 has already been reproduced by us above. It only says that the petitioner was in possession of primary gold and ornaments, weight of which was also given therein, and that they were kept at his house ft Ramgarh, Tehsil Sikar, district Jaipur. It further recites that the petitioner wanted to invest the gold in purchasing Defence Gold Bonds and that he was enclosing the required form for necessary action. We may reproduce the following words even at the risk of repetition :--
' I want to invest the gold and ornaments in purchasing Defence Gold Bonds, to I am enclosing the required form for necessary Action.
Kindly let me know the earliest convenient date on which I may tender the gold and ornaments to you.'
This was nothing but at best, an intention to make a tender but by no stretch of reasoning could this letter be regarded as tender of gold itself. Mr. Sen contended that the various provisions relating to exemption on the basis of tender did not lay down any particular procedure for tender and as it was not convenient to carry gold from a distant place this application dated 18-11-66 should Itself be taken to be a valid tender. We cannot bring ourselves to accept this submission. The Notification of the Government of India No. F. 4 (29) W & M/66 dated the 19th October, 1966, shows that it is the actual tender of gold, that is contemplated as a valid tender. Clause 10 of this notification lays down that applications should be accompanied by the tender of gold. Clause 11 provides that a provisional receipt for the gold tendered will be given by the receiving office, and after the gold has been assayed, a Anal receipt of the gold accepted in payment for the Bonds would be given at the time of the delivery of the Bonds. The form that is Appended to this Notification also indicates that the gold had to accompany the tender. The words 'I/We. .......... herewith tender . . . (particulars of the gold are to be mentioned after the word tender') occurring in the prescribed form are pregnanj with meaning. The words herewith tender show that it is the gold that has to be tendered. The application dated 18-11-66 can that hardly amount to a tender of gold delivered' as contemplated by the aforesaid notification of the Government of India.
18. We may now turn to the statutoryprovisions about exemption that may be earned as a result of a valid tender, the materialportion of section 8 of the Taxation Laws(Amendment and Miscellaneous Provision?Act, 1965, runs as under:--
' Section 8(1) Where a person who has ac quired any gold out of his Income which has not been disclosed by him for the purposes of the Indian Income-tax Act, 1992, or the Income-tax Act, 1961, or the Excess Profits-Tax Act, 1940, or the Business Profits Tax Act, 1947, or the Super Profit Tax Act, 1963, or the Companies (Profits) Surtax Act, 1964, tenders such gold as subscription for the National Defence Gold Bonds, 1680, prior to the detection of such income by the Income-tax Officer or the seizure of such gold under any law for th time being in force, such income shall, notwithstanding anything contained in the said Acts, not be included in his income, profits or gains chargeable to tax under the said Acts in an assessment or re-assessment for any assessment year made under the said Acts on or after the 20th day of October, 1965.'
A perusal of this section shows that exemption from tax in certain cases of undisclosed income can be earned only when such gold is tendered. The words tenders such gold asSibscription for the National Defence Gold onds, 1980' show that it is the actual tender of gold that can result in any exemption and not otherwise. Apart from this the gold has to be tendered prior to the detection of such Income by the Income-tax Officer or the seizure of such gold under any law for the time being In force. Thus, there being no tender of gold prior to the detection, search or seizure of gold by the Income-tax Authorities, section 8 cannot help the petitioner in earning the exemption.
19. We may now turn to Rule 126-U of the Defence of India Rules, 1962, and the Notification issued thereunder with a view to seeing whether they contemplate the actual ten-Bering of gold. Rule 126-U of the Defence of India Rules runs as under :--
Power to exempt--Whereon the recommendation of the Administrator or otherwise the Central Government is of the opinion that it is necessary or expedient in the public interest so to do, it may, by order and subject to such conditions, if any, as it may specify in the order-
(a) exempt any dealer or any refiner or any other person from the operation of all or any of the provisions of this Part; and
(b) as often as may be, revoke any such order and again subject, by order any dealer or any refiner or any other person to the operation of such provisions.'
Notification issued thereunder is as follows :--
'Published in Part II Section 8 (ii) of the Gazette of India Extraordinary dated the 26-11-1965.
Government of India
Ministry of Finance
(Department of Revenue)