1993 (12) TMI 47 - HC - Income Tax

Summary

Issues:
- Retention of impounded books of account under section 131(3) of the Income-tax Act, 1961.
- Requirement of communication of reasons for retention and order of approval to the concerned person.
- Comparison of provisions under section 131(3) and section 132 of the Act.
- Judicial interpretation of communication requirements for retention of seized books and documents.

Analysis:

The judgment pertains to three writ applications seeking the release of impounded books of account under section 131(3) of the Income-tax Act, 1961. The petitioners, registered partnership firms engaged in the sale and purchase of agricultural produce, had their books impounded by the Assistant Commissioner under section 131(3) of the Act. The retention of these books was approved by the Commissioner of Income-tax for various extended periods, based on undisclosed transactions leading to reassessment proceedings initiated against the petitioners.

The primary contention raised by the petitioners was that the retention of impounded books was contrary to the mandatory provisions of section 131(3) of the Act. The petitioners argued that the reasons for retention and the order of approval should have been communicated to them, citing the Supreme Court decision in CIT v. Oriental Rubber Works [1984] 145 ITR 477. The petitioners claimed that non-communication of reasons would render the retention invalid.

The Court analyzed the provisions of section 131(3) and compared them with section 132 of the Act, particularly sub-section (8) which mandates the recording of reasons for seizure of books. The Supreme Court's interpretation in the Oriental Rubber Works case emphasized the importance of communicating reasons and approval to the concerned person to safeguard their rights. The Court noted the absence of a statutory remedy for non-communication under section 131(3) as provided in section 132(10) and (12).

While acknowledging the importance of expeditious communication of reasons and approval, the Court held that the statutory provision of section 131(3) did not expressly require such communication. Since the orders of approval had been communicated and reasons disclosed in the counter-affidavit, the Court declined to declare the retention invalid. It highlighted that the petitioners had filed a revision before the Commissioner and had received xerox copies of the impounded books, indicating ongoing proceedings and disclosure of information.

In conclusion, the Court dismissed the writ applications, emphasizing the absence of a specific requirement for communication under section 131(3) and the pending revision before the Commissioner. The judgment underscores the importance of communication of reasons and approval in similar provisions but does not extend the same requirement to section 131(3) without explicit statutory backing or binding judicial precedent.