TMI Blog1985 (4) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... he search of his house on August 24, 1979 and for relief incidental and ancillary thereto. Briefly stated, the allegations were that respondent No. 6- Shri J. S. Ahuluwalia, Assistant Commissioner of Income-tax at Jullundur bore personal malice towards the appellants, amongst others, attributable to an incident concerning the servant of the appellants and an application for transfer of appeals pending before him made to the Chairman, Central Board of Direct Taxes by the first appellant. Actuated by this personal malice, respondent No. 6 first instigated respondent No. 2 to issue a search warrant under the authority of which a raid was carried out at the residence of the appellants on August 24, 1979 which led to the seizure of certain documents including some foreign currency. Thereafter, when the appellants made various representations for return of documents, again instigated by respondent No. 6, respondent No' S issued a warrant of authorisation under sec. 132A of the Income Tax Act on April 9, 1984 by which respondent No. 2 was directed to deliver such rooks of accounts and other documents and goods seized during the search to the requisitioning officer As the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place. The appellant contended that no material was placed on record which may permit an inference that the second respondent had reason to believe that any documents which in his opinion would be useful for or relevant to any investigation or proceeding under the Act were secreted in the house of the appellants. It was urged that respondent No. 6 who was actuated by personal malice towards the appellants and who being a friend of respondent No. 2 instigated and provoked him to- exercise this power of search and seizure not to effectuate any purpose for which power is conferred but with a view to humiliating and harassing the appellants. A little while after, we will examine the allegation of personal malice. Suffice it to say that there is no substance in the allegation. Respondent No. 2 is a responsible officer being the Assistant Director, Enforcement, Foreign Exchange Regulation Act stationed at Jullundur. He issued the impugned search warrant which led to the seizure. In the affidavit in reply on behalf of the respondents Nos. l to 4, it was clearly stated that search was authorised by the second respondent after he was fully satisfied on the basis of the information ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astly it was submitted that if the court is going to look into the file, produced on behalf of the second respondent, the same must be disclosed to the appellants so that they can controvert any false or wholly unsustainable material set out in the file. When an officer of the Enforcement Department proposes to act under Sec. 37 undoubtedly, he must have reason to believe that the documents useful for investigation or proceeding under the Act are secreted. The material on which the belief is grounded may be secret, may be obtained through Intelligence or occasionally may be conveyed orally by informants. It is not obligatory upon the officer to disclose his material on the mere allegation that there was no material before him on which his reason to believe can be grounded. The expression 'reason to believe' is to be found in various statutes. We may take note of one such. Sec. 34 of the Income Tax Act, 192. inter alia provides that the Income Tax officer must have 'reason to believe' that the incomes, profits or gains chargeable to income-tax have been under-assessed, then alone he can take action under sec. 34. In S. Narayanappa V. Commissioner of Income Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the authorisation did not expressly employ the phrase reason to believe' occurring in Sec. 105 of the Customs Act. Negativing both the contentions, Subba Rao, C. J. speaking for the court observed that the subject underlying Sec. 105 of the Customs Act which confers power for issuing authorisation for search of the premises and seizure of incriminating articles was to search for goods liable to be confiscated or documents secreted in any place, which are relevant to any proceeding under the Act. The legislative policy reflected in the section is that the search must be in regard to the two categories mentioned in the section. The court further observed that though under the section, the officer concerned need not give reasons if the existence of belief is questioned in any collateral proceedings he has to produce relevant evidence to sustain his belief. A shield against the abuse of power was found in the provision that the officer authorised to search has to send forthwith to the Collector of customs a copy of any record made by him. Sub-sec. (2) of Sec. 37 of the Act takes care for this position inasmuch as that where an officer below the rank of the Director of Enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission, reliance was placed on a decision of the Punjab and Haryana High Court in H.L. Sibal v. Commissioner of Income Tax, Punjab Ors.( [1975] 101 ITR 112.) The court was examining the expression 'in con. sequence of information in his possession, has reason to believe' in Sec. 132 of the Income Tax Act, 1961. The Court after referring to the decision of this Court in Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver([1966] ITR 664.) held that the obligation to record in writing, the grounds of the belief as enjoined by Sec. 165 (1), if not complied with would vitiate the issuance of search warrant and the seizure of the articles'. It was then submitted that if the search is illegal, anything seized during such an illegal search has to be returned as held by a learned Single Judge of the Calcutta High Court in New Central Jute Mills Co. Ltd. v. T. N. Kaul Ors.( AIR 1976 Cal. 178.) Sec. 37 (2) provides that 'the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Sec. 37 (1). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was material enough before the officer to form a reasonable belief which prompted him to direct the search. That the documents seized during the search did not provide sufficient material to the officer for further action cannot be a ground for holding that the grounds which induced the reasonable belief were either imaginary of fictitious or mala fide conjured up. Assuming that it is obligatory upon the officer proceeding to take search or directing a search to record in writing the grounds of his belief and also to specify in such writing, so far as possible, the thing for which the search is to be made, is mandatory and that non recording of his reasons would result in the search being condemned as illegal, what consequence it would have on the seizure of the documents during such illegal search. The view taken by a learned Single Judge of the Calcutta High Court in New Central Jute Mills Co. Ltd. case that once the authorisation for carrying out the search is found to be illegal on account of the absence of recording reasons in the formation of a reasonable belief, the officer who has seized documents during such search must return the documents seized as a result of the ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight Court the Enforcement Directorate submitted that it does not wish to take any further action in respect of the material seized during the search. There is no warrant for the assertion that every search must result in seizure of incriminating material. Such an approach would be a sad commentary on human ingenuity. There can be cases in which search may fail or a reasonable explanation in respect of the documents may be forthcoming. In Income Tax officer, Special Investigating Circle.B,- Meerut v. M/s Seth Brothers Ors.,( [1970] 1 S.C.R. 601.) it was in terms held that 'from amongst the documents seized during the search, if some are found not to be useful for or relevant to the proceeding, that by itself will not vitiate the search. Nor can an inference be made that the power was initially exercised mala fide.' The Cour in Puran Mal's case held that if the books of account and other documents collected during the search were after words found to be not relevant that by itself does not make the search and seizure illegal. In this case, however as the documents and other materials have been sealed under the warrant of authorisation issued under Sec. 132 A of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaving their servant Gyan Chand to look after their house, the servant of respondent No. 6 left his job whereupon respondent No. 6 nursed a feeling that his servant had left the job on being tutored by the petitioner's servant. Thereupon respondent No. 6 got Gyan Chand detained and maltreated by the police. When the petitioners learnt about it at Bombay, they requested a common friend to get Gyan Chand released and in fact Gyan Chand was released. It was then stated that the friend contacted the Police Officer who had detained Gyan Chand and before him, the Police Officer admitted that Gyan Chand was detained at the instance of the sixth, respondent.' Could there be more vague and completely misleading averments to support serious allegation of personal mala fide against the officer discharging his duties ? We are not inclined to dilate any more on this aspect save and except saying that the affidavit of Gyan Chand is not forth-coming, that the name of the friend is not mentioned and the Police Officer cannot be identified from the material disclosed in the petition. One can only say that a nefarious attempt has been made to cook up a wholly imaginary allegation for attribu ..... 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