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TMI Blog1969 (7) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. On March 14, 1963, the Income-tax Officer, Meerut, issued a notice under section 148 of the Income-tax Act, 1961, intimating M/s. Seth Brothers that there was reason to believe that their income chargeable to tax had escaped assessment and it was proposed to reassess this income for the assessment year 1954-55. In response to the notice, Baikunth Nath and Vishwa Nath filed a return under protest. In the meantime information was received by the Income-tax Commissioner, U.P., that M/s. Seth Brothers were maintaining " duplicate records " and were evading assessment of their true income and that it was necessary to seize the records which may be found at " Shanti Niketan ", Meerut, in which M/s. Seth Brothers carried on the business of Imperial Flour Mill and other businesses, The Commissioner of Income-tax, U.P., on May 29, 1963, drew up a memorandum that on a report of the Income-tax Officer, D-Ward, Meerut, requesting for authorisation under section 132 of the Income-tax Act, 1961, to enter and search the premises of M/s. Seth Brothers, he was satisfied about the need for the issue of the authorisation. The Commissioner also issued an order in Form 45 prescribed under rule 112 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment were filed. The Commissioner of Income-tax stated in his affidavit that before issuing letters of authorisation and the warrant of search he was satisfied that it was necessary to take action under section 132 of the (Indian) Income-tax Act, 1961, and that the letters of authorisation were not issued at the direction of the Directorate of Inspection. The Income-tax Officers stated that in consequence of the search a large number of " duplicate account books and records " maintained by M/s. Seth Brothers were recovered, that the search was carried out according to law and in the presence of two of the partners of the firm and their advocates, that all the documents seized were relevant for the purpose of reassessment, that there was close connection between the different business activities of the partners of M/s. Seth Brothers and that all the documents which were seized were in relation to those activities. The Deputy Director of Inspection in his affidavit stated that he did not give any direction to the Commissioner to issue authorisation for search and seizure. The High Court of Allahabad held on a consideration of the averments made in the affidavits filed on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (XI of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom 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 (XI 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 disclosed for the purposes of the Indian Income-tax Act, 1922 (XI of 1922), or this Act (hereinafter in this section referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer conferred by section 295(1) of the Act, framed rule 112 prescribing the procedure to be followed by the Commissioner and the authorised officers. The Commissioner or the Director of Inspection may, after recording reasons, order a search of premises, if he has reason to believe that one or more of the conditions in section 132(1) exist. The order is in the form of an authorization in favour of a subordinate departmental officer authorising him to enter and search any building or place specified in the order, and to exercise the powers and perform the functions mentioned in section 132(1). The officer so authorised may enter any building or place and make a search where he has reason to believe that any books of account or other documents which in his opinion will be useful for, or relevant to, any proceeding under the Act, may be found. The officer making a search may seize any books of account or other documents and place marks of identification on any such books of account or other documents, make or cause to be made extracts or copies therefrom and may make an inventory of any articles or things found in the course of any search which in his opinion will be useful for, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents relevant to or useful for any proceeding under the Act, the court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the officer has in executing the authorisation acted bona fide. The Act and the Rules do not require that the warrant of authorisation should specify the particulars of documents and books of account : a general authorisation to search for and seize documents and books of account relevant to or useful for any proceeding complies with the requirements of the Act and the Rules. It is for the officer making the search to exercise his judgment and seize or not to seize any documents or books of account. An error committed by the officer in seizing documents which may ultimately be found not to be useful for or relevant to the proceeding under the Act will not by itself vitiate the search, nor will it entitle the aggrieved person to an omnibus order releasing all documents seized. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by the Commissioner was, in the view of the High Court, open to challenge on the ground that the Commissioner did not apply his mind to the existence of circumstances which justified the exercise of the power to issue authorisation. The action of the Income-tax Officers who searched the premises was quashed on the ground that they seized some documents which were irrelevant to the process of reassessment. In our judgment, in reaching their conclusion that the Commissioner acted at the behest of the Director of Inspection, the High Court ignored important evidence on the record. It was averred in the petition of M/s. Seth Brothers that : " (56) It appears that the Deputy Director of Inspection at the instigation of Shri K. L. Nanda and Sri Satya Prakash, without making any enquiries or having any material, ordered a raid for search and seizure of all the account books and papers, which could be found. (57) That, according to such directions of the Directorate, the Comimissioner of Income-tax, U.P., Lucknow, was made to issue authorisations under section 132 of the Act of 1961 in favour of opposite Parties Nos. 3 and 4 to search out the premises of 'Shanti Niketan', Civil Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it appeared that the firm of M/s. Seth Brothers and its partners were " evading tax by maintaining duplicate sets of accounts " and by suppressing relevant documents and papers from the department ; that Mr. R. R. Agarwal made a written request to the Commissioner of Income-tax for letters of authorisation in order to carry out the search of the assessee's premises and in pursuance thereof on May 29, 1963, the Commissioner of Income-tax issued three authorisation letters, two in favour of Mr. R. R. Agarwal and one in favour of the deponent authorising them to carry out the search in accordance with the terms of the authorisation letters. In this state of the record we are unable to agree with the High Court that the letters of authorisation were issued by the Commissioner of Income-tax at the direction of the Director of Inspection (Investigation). The attention of the court was presumably not invited to the relevant paragraphs of the affidavits of the officers concerned. It is true that a large number of documents were seized from the premises of M/s. Seth Brothers but that has by itself no direct bearing on the question whether the Income-tax Officer acted mala fide. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ensure the protection of the officers and the record, "excessive force was used". We accordingly see no good grounds to accept the finding recorded by the High Court that the manner in which the search and seizure were conducted " left no room for doubt that the Income-tax Officer did not apply his mind and formed no opinion regarding the relevancy or usefulness of the account books and documents for any proceedings under the Income-tax Act ". The High Court accepted that the correctness of the opinion actually formed by the Income-tax Officer was not open to scrutiny, in a writ petition, but in their view no opinion was in fact formed by the officer and the search and seizure of documents and books of account must on that account be held as made in excess of the powers conferred upon the Income-tax Officer and mala fide. For these observations we find no warrant. The Income-tax Officers concerned have sworn by their affidavits that they did in fact form the requisite opinion under section 132 of the Act and the other evidence and the circumstances do not justify us in discarding that assertion. These proceedings were brought before the High Court by way of a writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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