PASSPORT CANNOT BE IMPOUNDED UNDER SECTION 131 OF INCOME TAX ACT, 1961

[Mr. M. GOVINDARAJAN]

Section 131 of the Income Tax Act, 1961 ('Act' for short) vests power in regard to search and seizure in the authorities under the Act. Section 131 (3) of the Act provides that subject to any rules made in this behalf, any authority referred to in sub section (1) or sub section (1A) (Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) and Chief Commissioner or Commissioner) 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 proceeding under this Act. Provided that an Assessing Officer or an Assistant or Deputy Director shall not-

* impound any books of account or other documents without recording his reasons for so doing; or

* retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General or Commissioner or Director therefore, as the case may be.

The issue taken in this article is whether the passport can be impounded under Section 131 of the Act.

Sec. 104 of the Criminal Procedure Code deals with the power to impound document etc., produced. It provides that any court may, if thinks fit, impound any document or thing produced before it.

In Suresh Nanda's case (2008) 3 SCC 674 the Supreme Court interpreted the provisions of Sec. 104 of the Criminal Procedure code. The Apex Court held that the phrase 'impound any document or thing' does not include a passport. After considering the relevant provisions in relation to search and seizure the Court has recorded a clear finding that the term 'document' does not include a passport. The Court further held that the Passports Act is a complete code in relation to impounding of the passport and even a court exercising powers under Sec. 104 of the Criminal Procedure Code has no authority, power or jurisdiction to impound a passport. It is held that the Passports Act is a special legislation dealing with a specific subject and hence for impounding of the passport, one has to have recourse to the provisions of the Passports Act. When there exists a special Act, the general provision would yield to the specific provision.

In 'Avinash Bhosale V. Union of India and others' - 2008 -TMI - 32428 - (BOMBAY HIGH COURT)  the impounding of passport under the Income Tax Act has been discussed in detail. In this case the petitioner along with his wife and friends had gone abroad on holidays and when the petitioner returned back to India the petitioner was charged for carrying dutiable goods on which duty was not paid as per the provisions ofCustoms Act, 1962. The petitioner was arrested by Directorate of Revenue Intelligence. The petitioner approached the court of Additional Chief Metropolitan Magistrate, Bombay and applied for bail. The petitioner was release don bail on the same day the Directorate of Revenue Intelligence has moved the Magistrate seeking judicial custody of the petitioner and also prayed for grant of permission by the court to retain the passport of the petitioner with a view to facilitate further investigation. The Directorate also challenged the order granting bail to the petitioner by filing a criminal application in the High Court. The High Court allowed the said petition and cancelled the bail granted to the petitioner. The petitioner, aggrieved by the order of the High Court, moved the apex court by filing criminal appeal. The Supreme Court set aside the order of High Court observing that the offence concerned was bailable.

During the course of investigation the passport of the petitioner had been retained by the Directorate. The petitioner was served with a show cause notice. The petitioner replied the show cause notice. Since he intended to travel broad he moved an application before the Additional Chief Metropolitan Magistrate seeking permission to go abroad with his family and also sought direction for return of the passport. The Directorate opposed the application. During the course of hearing the court did not order to retain the passport while granting bail to the petitioner, the petitioner was directed to make necessary representation before the Directorate for the release of his passport. The petitioner, accordingly, applied to Directorate to return the passport. As no decision was communicated to the petitioner approached the High Court with the present application.

The petitioner has advanced the following contentions:

* The authority carrying out investigation and/or inquiry under the Foreign Exchange Management Act and/or under the Income Tax Law has no authority, in law, to impound the passport. The passport can be impounded by having recourse to the provisions of the Passports Act by the Authority vested with the power under the said Act;

* Section 37 of the FEMA merely confers investigating power by making reference to Sec. 131(3) of the Income Tax Act. The power to search and seize 'documents' which is available to the authority underSec. 131(3) does not extend to seizure of passport. The term 'documents' cannot be construed to mean and include a passport, for dealing with which a separate enactment exists, viz., Passports Act, which is a special statute. It shall exclude the applicability of general provisions to be found in other enactments dealing with the seizure of documents;

* Personal liberty, within the meaning of Article 21 of the Constitution includes within its ambit a right to go abroad and consequently no person can be deprived of his right, except according to the procedure prescribed by law. Thus no person can be deprived of his right to go abroad unless there is a law made by the State prescribing the procedure for so depriving and the deprivation is effected strictly in accordance with such procedure;

* As impounding of passport results in adverse civil consequences, the same cannot be done unless an opportunity of hearing is offered to the person concerned;

* The procedure adopted by the Department for impounding the petitioner's passport being contrary to the express provisions of the Passports Act, the petitioner's rights under articles 19 and 21 of the Constitution of India has been violated;

 The Department put forth the following contentions:

* Sec. 23 of the Passports Act itself provides that the provisions of FEMA and other enactments relating to foreigners and foreign exchange are in addition to and not in derogation of the provisions of the Passports Act;

* The power and the authority of Enforcement Directorate includes the powers which are conferred on income tax authorities under Sec. 131(3) of the Income Tax Act, 1961;

* Section 131(3) vests the authority with power to seize and retain in its custody any books of account or other documents. The term 'document' which finds place would include a passport;

* To hold a passport and travel abroad is not an unqualified and absolute right and the same can always be subjected to regulations;

* The Passports Act, though enacted to regulate issuance and revocation of passport, that by no means to the only statute which empowers the executive authorities to retain or impound a passport;

* The passports officer's authority to impound the passport under Sec.10(3) is not exhaustive and if there are other statutes enabling the exercise of similar or analogous powers in relation to impounding or retention of the passport, then, those powers would also be available to the authorities for impounding the passport.

The court after hearing both sides held as follows:

* The Apex Court in 'Suresh Nanda's case' (supra) held that even a court cannot impound a passport, then, it would be highly inappropriate to interpret the term 'documents' used in Section 131 (3) of theIncome Tax Act, so as to enable the executive authorities to impound the passport;

* The power to seize cannot be equated with power to impound; impounding tantamount the retention over a period of time after seizure is made. Thus it is not possible to hold that the power under Section 131(3) of the Income Tax Act could be extended to validate impounding of passport;

* In view of the clear pronouncement by the Supreme Court holding the Passports Act to be a complete code in dealing with impounding of the passport, the Court has no iota of doubt that the department's act of impounding of the petitioner's passport is without authority of law;

* The writ petition, therefore, must succeed.