TMI Blog2012 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced before the court in connection with the case regarding which an offence appears to have been committed or which appears to have been used for the commission of the offence. Criminal courts are appropriate authority or the person in terms of sub-section (2) of Section 132A to issue for requisition books of account. - SPECIAL CIVIL APPLICATION No. 324 of 2012 - - - Dated:- 12-3-2012 - BHASKAR BHATTACHARYA, J.B. PARDIWALA, JJ. JUDGMENT Bhaskar Bhattacharya, Actg. CJ. By this application under Article 226 of the Constitution of India, the writ-petitioners, two brothers, have prayed for issue of writ of mandamus or any other appropriate writ for the purpose of quashing and setting aside the impugned warrant of authorization dated February 16, 2011 issued by the respondent No.1 under section 132A of the Income Tax Act, 1961 and have also prayed for a direction upon the respondents to handover the custody of the seized silver articles to the petitioners. 2. The case made out by the writ-petitioners in the writ-application may be summed up thus:- 1. The petitioners are residents of village Hupari, Taluka Hathagande, Dist. Kolhapur, Maharashtra State and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain, the silver ornaments carried by them were seized at the Bagwada Toll Naka on the suspicion that those did not belong to the petitioners and were stolen materials. The respondent No.4 registered a complaint being No.1 of 2011 under section 124 of the Bombay Police Act on February 15, 2011. 10. On February 14, 2011 itself, the respondent No.4 informed the respondent No.1 with regard to the seizure of the silver ornaments. Pursuant to such intimation, the respondent No.1 asked the respondent No.4, the police authorities, by a letter dated February 14, 2011 to withhold the silver ornaments and jewellery and not to release those without prior intimation to the Income Tax Department. Letters dated February 17, 2011 and May 16, 2011 followed this intimating the respondent No.4 regarding initiation of the process in respect of those seized silver ornaments under the provisions of the Income Tax Act. 11. On February 16, 2011, the respondent No.1 also issued a warrant of authorization in the prescribed form No. 45(c) dated February 16, 2011 under section 132A(1) of the Act read with Rule 112D(1) of the Income Tax Rules. 12. On February 28, 2011, the learned Magistrate passed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment, there was no reason to believe that the silver articles, which were seized by the respondent No.4 on February 14, 2011, were not disclosed to the Income Tax Officer. According to the petitioners, the seized articles were duly shown in the books of accounts of the petitioners and disclosed in the Returns of Income Tax filed by the petitioners before the respondent No.2 and thus, the provision of section 132A of the Act was not applicable. 21. The petitioners further contended that they had explained the source of silver articles, which are in the custody of the respondent No.4 and were ready and willing to give any further information that might be demanded by the respondent Nos.1 and 2. However, till the date of filing of the present petition, no notice or summons of any inquiry has been issued after the issue of warrant of authorization dated February 16, 2011. 22. According to the petitioners, the learned Magistrate, while acquitting the petitioners of the charges held that the seized silver ornaments were in the possession of the petitioners while doing business of sale of silver ornaments and that they were the owners of the said articles. The petitioners further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and Ismail Mahboob Mullah admitted that the said seized articles belonged to Sanjay Vidyadhar Gaat and they were merely accompanying him. 4. Sanjay Vidyadhar Gaat stated that the seized silver ornaments/articles belonged to him and his family members but he was unable to furnish any documentary evidence to prove the source, acquisition or ownership of the seized silver. In his statement, he has stated that he was carrying the said goods for sale to customers in Rajasthan and that he used to issue bills to customers at the time of sale. However, he was not found to be carrying any bill book for this purpose. 5. Senior Inspector of Police, Pardi Police Station, was requested, vide letter dated February 14, 2011, not to release the seized silver articles without prior notice or intimation to the Income Tax Department. 6. The concerned persons at the Maharashtra-Gujarat border made an inquiry with the Sales Tax Department regarding declaration of the seized silver at the time of entry from Maharashtra into Gujarat. It was informed that no such declaration was given at the border. 7. On February 16, 2012, the Income Tax Officer [Investigation] Unit-III Kolhapur at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an affidavit-in-rejoinder to the affidavit-in-reply filed by the respondent No.1 thereby denying the statement made by the respondent authorities and virtually reiterating the case made out in the writ-petition. 5. Mr. Karia, learned advocate appearing on behalf of the petitioners laboriously contended before us that both his clients being Income Tax Assessees and the seized silver having been disclosed in their accounts submitted before the Income Tax Officer, there was no justification of proceeding under section 132A of the Act. According to Mr. Karia, his clients were and are ready to answer all queries and supply all required information that will be demanded by the income tax authorities, if the income tax authorities so desire. Mr. Karia further contends that those articles being stock-in-trade of his clients, the seizure of those articles amounted to violation of their fundamental rights to carry on business. Mr. Karia further contents that his clients are ready and willing to give security of the proposed assessed tax as may be suggested by the respondent authorities in this regard in this Court subject to final decision of the authorities under the Act. 1. Mr. Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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, or would not be 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), then- (A) the Director General or Director or the Chief Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, as the case may be, may authorise any Assistant Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he powers under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the Chief Commissioner or Commissioner having jurisdiction over such person may be prejudicial to the interest of the revenue: Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may 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 authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business: Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922) or under this Act. [Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.] [(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- ( i ) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; ( ii ) that the contents of such books of account and other documents are true; and ( iii ) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) shall be exercisable by such Assessing Officer. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (IA) objects for any reason to the approval given by the Chief Commissioner, Commissioner, Director General or Director 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 and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. (11) Omitted (11A) Omitted (12) Omitted (13) The Provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A). (14) The Board may make rules 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 any building, place, vessel, vehicle or aircraft to be searched where fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the Director General or Director or the Chief Commissioner or Commissioner may authorise any Additional Director, Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer (hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. (2) On a requisition being made under sub-section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of authorization dated February 16, 2011 issued by the respondent No.1 under section 132A of the Act, we cannot lose sight to of the fact that the scope of investigation is very limited at this stage. 13. The High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a warrant of authorization issued under Section 132A of the Act, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may in such a proceeding, in exercise of its powers, ascertain whether the authority issuing such authorization is the appropriate authority who in consequence of information in his possession, had reason to believe that the conditions mentioned in either of the sub-sections (a) or (b) or (c) of the Section 132A (1) were present. The Court may also decide whether from the circumstances of the case, the appropriate authority might have reason to believe that any of those conditions existed. However, the jurisdiction of the Court extends no further. Whether on the information in his possession, the said authority should exercise his power under Section 132A, must be decided by the said authority and not by the High Court. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned authority cannot be said to be unreasonable justifying interference at this stage. We are also satisfied that no material has been placed by the petitioners to justify inference of any mala fide on the part of the Revenue in this case. 15. Mr. Karia, lastly made a desperate attempt to convince us that on the date of issue of warrant of authorisation, the seized silvers being in custody of the court, the same was not in the custody of the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of Section 132 A of the Act and thus, the impugned warrant of authorisation is liable to be set aside. In support of such contention, Mr. Karia relied upon the decisions of the Kerala and Patna High court in the cases of Abdul Khader v. Sub-Inspector of Police reported in [1999] 240 ITR 489 (Ker) and Janardan Das v. Bindeswari Prasad Sah reported in [1999] 238 ITR 65 (Pat) respectively. Mr. Bhatt, appearing for the Revenue, on the other hand placed strong reliance upon the decision of the Madras High Court in the case of Babu Rao v. Inspector of Police and another reported in [1991] 190 ITR 616 (Mad) taking a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in terms of sub-section (2) of Section 132A in view of our finding that the said court was the custodia legis of the seized articles. 19. We, consequently, are unable to follow the decisions of the Kerala High Court and the Patna High Court in the cases of Abdul Khader v. Sub-Inspector of Police ( supra ) and Janardan Das v. Bindeswari Prasad Sah ( supra ) as those decisions overlooked the above view taken by the Supreme Court in the case of Smt. Basava Kom Dyamogouda Patil v. State of Mysore and another ( supra ); on the contrary, we follow the decision of the Madras High Court in the case of Babu Rao v. Inspector of Police and another ( supra ). 20. All the points taken by Mr. Karia having failed, we find no merit in this Special Civil Application so as to quash the warrant of requisition under Section 132A of the Act. We make it clear that we have otherwise not entered into the merit of the defence that would be taken by the petitioner in the proceedings under the Act within the limited scope of this application. The dismissal of this application will not stand in the way of the petitioners in taking appropriate defence in the proceedings in the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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