1. The main question that arises for consideration in this case is whether the impugned proceedings of the Income-tax Officer, City Circle I(2), Coimbatore, in PAN PY-2276/1(2) dated May 23, 1985, is in accord with section 132(5) of the Income-tax Act, 1961.
2. A warrant was issued by the Director of Inspection, Madras, for a search of the residential premises of the petitioner at No. 93, Kaleeswarar Nagar, Coimbatore. Armed with that warrant, a search was made. Cash of Rs. 53,212 was found and Rs. 40,000 was seized from out of it. Out of the 1,926 grams of old jewellery, 800 grams were seized. A number of silver articles weighing 14,772 grams were also found but they were, however, not seized.
3. To finalise the order under section 132(5), a notice under rule 112A was issued on December 10, 1984. Thereupon, the assessee filed his reply on December 26, 1984. A further opportunity was given to the petitioner. The circumstances under which time came to be given need not be dilated. The assessee filed yet another reply on April 25, 1985. His explanation was gone through and ultimately by the impugned order, the Income-tax Officer, City Circle I(2), finalised the order as follows :
'A sum of Rs. 15,000 mentioned in the Hindu undivided family return and jewellery of 50 sovereigns and Yezdi motor cycle mentioned in the Hindu undivided family return are treated as belonging to Sri Jayaraman, individual, and as acquired during the financial year 1982-83. The jewellery, i.e., claimed to be belonging to Sri Jayaraman, individual, 316 grams and the sum of Rs. 25,000 are treated to be representing the unaccounted income of Sri K. Jayaraman for the period immediately preceding the search and as such assessable for the assessment year 1985-86.'
4. Ultimately, a total income of Rs. 2,16,310 was arrived at, and Income-tax was claimed as Rs. 1,09,611 and surcharge as Rs. 10,961. The probable penalty under section 271(1)(C) at 200% of tax evaded was worked out at Rs. 2,21,556 for the assessment year 1983-84. Likewise, for the assessment year 1984-85, certain sums were arrived at as estimated income, and the probable penalty was worked out at Rs. 72,746. Further, since the value of the seized materials, viz., 800 grams of jewellery and cash of Rs. 40,000 was less than the amount payable, the seized materials were ordered to be returned. It is the said order that is challenged before me in this writ petition for certiorarified mandamus to quash the order and to direct the return of the seized article.
5. Though a point was taken that the order was not passed within 120 days from the date of the seizure, viz., November 28, 1984, that point was not argued. The only point on which Mr. B. Shantha Kumar, learned counsel for the petitioner, presses for the issuance of a writ is that there has not been a proper approval by the Inspecting Assistant Commissioner as required under section 132(5) of the Act. According to him, the records which are produced before the court have been got up for the purpose of the case, after coming to know of the writ petition. The file does not contain any seal nor was it properly despatched and delivered by the officer concerned. It is rather strange that the very draft order refers to certain account books which are still retained for the purpose of investigation with the Additional Director of Investigation, Madras. Therefore, if the books were really in Madras, the officer who is supposed to put up the draft might have never perused the account books. All these vitiate the order.
6. Mrs. Nalini Chidambaram, learned counsel for the Department, produces the file and then contends that the argument that the file was got up for the purpose of the case is mischievous and there is absolutely no justification for such a wild accusation. In fact, the draft was put up before the officer concerned on May 21, 1985 (sic), and it was discussed with the concerned Income-tax Officer. After being satisfied about the reasons given, the draft was approved on April 22, 1985 (sic). Thereafter, the impugned order came to be passed. Merely because certain account books which were in Madras had been referred to, that will not in any way vitiate the entire order, assuming without admitting that that was actually the position. It is not necessary that the order itself should contain the wordings that there was prior approval by the Inspecting Assistant Commissioner so long as the file contains that approval.
7. I may first of all state that, having regard to the scope of section 132(5), it is not required to state in the order that previous approval of the Inspecting Assistant Commissioner was obtained. It is because the said sub-section reads as follows :
'Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) is seized under sub-section (1) or sub-section (1A), the income-tax Officer, after affording a reasonable opportunity to the person concerned of 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 Inspecting Assistant Commissioner.'
8. Though originally ninety days was prescribed, now it has been amended with effect from October 1, 1984, as one hundred and twenty days. The concluding portion of the above sub-section requires the Income-tax Officer to make an order, within one hundred and twenty days, with the previous approval of the Inspecting Assistant Commissioner. Therefore, as and when the Income-tax Officer proposes to make an order, he is to obtain the previous approval of the Inspecting Assistant Commissioner. It does not say, 'after reciting the same in the order'. To my mind it appears that the previous approval only invests the authority, viz., Income-tax Officer, to make an order under clauses (i), (ii), (iia) and (iii). Beyond that, there is nothing peculiar about it. To repeat, it is a mere investiture of power. Therefore, once I reject this argument of the petitioner, the next question is whether the file relating to the previous approval is a made-up one; I rather think it is not so at all. I have carefully perused the file. The concerned Inspecting Assistant Commissioner has made the following notes in the end :
'Draft order under section 132(5) perused. With reference to draft order reasoning, I have checked up the materials seized. The Income-tax Officer, in my view, has given valid reasons to retain the valuables seized. Memo approves the Income-tax Officer's draft order.'
9. Therefore, if the previous approval has been so obtained on May 22, 1985, the impugned order passed on May 23, 1985, is perfectly valid. The accusation against the officer is rather not only wild but highly unacceptable to me. It cannot be said that merely because the account books were in Madras, the Income-tax Officer could not have perused these accounts earlier and then put up a draft. Nor again is it required on the part of the Inspecting Assistant Commissioner to peruse all the accounts. The question to be considered is whether in the stated circumstances, approval could be granted for any one of the proposed actions under clauses (i), (ii), (iia) and (iii) of section 132(5). This is exactly the position here. Because the above note of May 22, 1985, shows that the approving authority perused the draft order and the reasons contained therein, it can be taken that it is enough compliance of law. Even otherwise, whether an order under section 132(5) has been properly made on merits, has nothing to do with the writ petition. Nor can that be canvassed before me under article 226 of the Constitution of India, especially when the petitioner has a right of appeal under the Act.
10. For all these reasons, I hold that the challenge of the procedural formality in the writ petition is unfounded. The writ petition is dismissed with costs. Counsel's fee Rs. 500.