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TMI Blog1964 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, decided to get the premises of the firm searched for obtaining documents which would be useful for assessment of income-tax. On May 29, 1963, letters of authorization were issued in favour of the Income-tax Officer, D-Ward, Meerut. Under that authority, the two Income-tax officers searched the premises of M/s. Seth Brothers (Shanti Niketan, Civil Lines, Meerut) on the 7th and the 8th of June, 1963. The two officers seized a large number of documents from these premises. The documents so recovered included documents belonging to M/s. Seth Brothers and also documents belonging to three other associated business concerns. Since then, these documents have been in the custody of the income-tax authorities. These connected writ petitions are directed against those proceedings dated the 7th and the 8th of June, 1963. According to the petitioners, the documents were unlawfully seized from their possession. Civil Miscellaneous Writ No. 3302 of 1963 is the leading case. M/s. Seth Brothers are the petitioners in the case. Nath Brothers Private Limited is a private limited company. It is the petitioner in Writ No. 3380 of 1963. Seth Brothers Private Limited is another private limited co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or any of the following acts, namely : (a) to enter the said building or place with such assistance of police officers as may be required ; (b) to search the same and to place identification marks on such books of account or other documents found therein as, in his opinion, will be relevant to or useful for any proceedings under the Act and to make a list of such books or documents with particulars of the identification marks thereon ; (c) to examine such books or documents and to make, or cause to be made, copies of or extracts from such books or documents ; (d) to take possession of or seize any such books or documents ; (e) to make a note or an inventory of any articles or things found in the course of such search which, in his opinion, will be useful for or relevant to any proceedings under the Act ; (f) to convey such books or documents to the office of the Income-tax Officer or any other authority not below the rank of an Income-tax Officer employed in the execution of the Act. .............................. (10) The order of the Commissioner referred to in sub-rule (2) shall be in Form No. 45. " Form No. 45 as contemplated by sub-rule (10) of rule 112 runs th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also reference to the Commissioner. The second sentence in sub-rule (2) of rule 112 is : " Such order may authorise the Income-tax Officer to do all or any of the following acts, namely : (a) ....... ; (b) to search the same and to place identification marks on such books of account or other documents found therein as, in his opinion, will be relevant to or useful for any proceedings under the Act and to make a list of such books......... " The expression " in his opinion " appearing in clause (b) has reference to the Income-tax Officer. The plan of section 132, rule 112 and Form No. 45 appears to be this. Initially, the Commissioner receives certain information which makes it expedient to organize a search. When the Commissioner has reason to believe that relevant documents can be recovered by arranging a raid, he authorises an Income-tax Officer to make a search. When he is so authorised, the Income-tax Officer proceeds to search a building or place. During the search the Income-tax Officer can seize such documents as, in his opinion, would be useful for any proceedings under the Act. It will be seen that at different stages in the proceedings the Commissioner and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eth Brothers. But the documents seized by respondents Nos. 3 and 4 not only cover documents belonging to Seth Brothers, but also documents belonging to three other business concerns which are the petitioners in the other three cases. For justifying the seizure of documents belonging to those other concerns, it was contended for the respondent that all the four business concerns are closely associated with one another. There are three brothers, Prithwinath, Vishwanath and Baikunth Nath. Prithwinath's son is Man Mohan Nath. These four persons or most of them figure as partners, shareholders or directors in all the four business concerns, It, therefore, became necessary to seize documents belonging to the other three business concerns also. It is true that the four business concerns are closely associated to one another. But the four concerns are being treated as four separate entities for income-tax purposes. The letters of authorization issued by respondent No. 1 made mention of the case of Seth Brothers only. Documents belonging to other firms or companies could not be seized under that authority unless it can be shown that those documents are useful for the proceedings in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counter-affidavit by Sri A. L. Jha, who was then the Commissioner of Income-tax. His counter-affidavit contains no reference to paragraph 56 of the writ petition. Another counter-affidavit has been filed by Sri Agarwal, respondent No. 4. This counter-affidavit is much more detailed. In paragraph 19 of this counter-affidavit it is stated that the deponent has no knowledge of the averments contained in paragraph 56 of the writ petition. Another counter-affidavit has been filed by Sri Mitra, who is the Income-tax Officer in charge of Special Investigation, Circle B, Meerut. This counter-affidavit contains no reference to paragraph 56 of the writ petition. A counter-affidavit has been filed by Sri Ramaswamy, who is the Deputy Director of Inspection (Investigation), New Delhi. In paragraph 6 of this counter-affidavit it is merely stated that paragraph 56 of the writ petition is vague. The deponent denied having ordered any raid or search. It will be seen that no one has expressly denied the allegation contained in paragraph 56 of the writ petition to the effect that there was an order for search and seizure of all account books and papers. In paragraph 62 of the writ petition it is sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Procedure, 1898, relating to searches shall apply, so far as may be, to searches under this section. It will, therefore, be useful to examine the provisions of the Code of Criminal Procedure (hereinafter referred to as the Code) relating to searches. Chapter VII of the Code deals with searches and allied matters. Under section 94, Criminal Procedure Code, a court may summon a document or thing. Section 96, Criminal Procedure Code, provides for the issue of a search warrant. Section 96, Criminal Procedure Code, states : " (1) Where any court has reason to believe that a person to whom a summons or order under section 94 ... has been or might be addressed will not or would not produce the document or thing ... it may issue a search warrant... " Section 98 Criminal Procedure Code, provides for search of a house. Section 98, Criminal Procedure Code, states : " If a District Magistrate ... has reason to believe that any place is used ... for the deposit ... of forged documents ... he may by his warrant authorise any police officer above the rank of a constable-- (a) to enter, with such assistance as may be required, such place ; and (b) to search the same in the manner specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them belonged to armed police. They did not carry fire-arms during the search. Two constables were sent away after an hour. The other members of the police party withdrew at 5 p.m. on 7th June, 1963. No policeman was present during the search on 8th June, 1963. It will be seen that the police party accompanying the Income-tax Officers consisted of 12 officials in all. It may be that the strength of the police party was fixed by the Superintendent of Police, Meerut. But he must have consulted the Income-tax Officers in this matter. There is no indication that the partners of the firm were likely to resort to violence, or that any member was a previous convict. The strength of the police party appears excessive. The property examined by the Income-tax Officers included several ornaments. Inventories of these ornaments were prepared. It is true that the ornaments were not taken away by the Income-tax Officers. But the question remains whether it was at all necessary to prepare a list of ornaments. According to clause (e) of sub-rule (2) of rule 112, the Income-tax Officer is authorised " to make a note or an inventory of any articles or things found in the course of such search wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls on books or documents. The request for opening the books was made as late as in the middle of August only. " It may be that some of the documents seized by the respondents were sealed up by the petitioner. But the respondents have not suggested that all the documents were thus sealed up by the petitioner. Admittedly, several documents were available for inspection and scrutiny. It was not till 13th August, 1963, that the petitioner was called upon to open up the books. The documents seized from the petitioner included several current books of account. Detention of these books of account for over two months must have seriously prejudiced the various petitioners in their business activities. A similar case came up before a Full Bench of the Assam High Court in Senairam Doongarmal Agency (P.) Ltd. v. K. E. Johnson. The court unanimously held that the search was mala fide. According to the petitioner, Satya Prakash, respondent No. 7, had enmity with the petitioner. He persuaded respondent No. 9 to assess the petitioner to income-tax highly. It is at the instance of respondent No. 9 that the search was organized. Respondent No. 9 stated in paragraph 29 of the counter-affidavit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n two months before the writ petitions were filed in this court. (g) The police force employed during the raid was excessive. In view of all these circumstances, the search does not appear to be bona fide. It is true that there was no illwill between the four petitioners on one side and respondents Nos. 1, 3 and 4 on the other side. But the extent of the seizure was far beyond the limits of section 132 of the Act. The action was mala fide in the sense that there was abuse of power conferred on the Income-tax Officers by section 132 of the Act. The Act being mala fide, the proceedings should be quashed by this court by issuing a writ of mandamus. The letters of authorization dated 29th May, 1963, were issued by Sri A.L. Jha, who was then the Commissioner of Income-tax, U. P. He died in December last. It will be open to the new Income-tax Commissioner to initiate a fresh proceeding under section 132 of the Act, if he is so advised. In case another letter of authorization is issued under section 132 of the Act, the Income-tax Officer will have to conduct the search in accordance with law as explained in this judgment. In my opinion, the four connected petitions should be allowed w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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