9911796707
TMI Blog1973 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... earches were carried out on October 15, 1971, at the following places, namely:-- 1. Residence of Shri Pooran Mal, 12-K, Kamala Nagar, New Delhi-7, 2. Office premises of the firms where Shri Pooran Mal was stated to be a partner at A-14/3, Jamuna Bhavan, Asaf Ali Road, New Delhi, and 3. Office premises of M/s. Udey Chand Pooran Mal and M/s. Pooran Mal and Sons, 14/16, Popatwadi, Bombay-2, in which Shri Pooran Mal was stated to be a partner. Jewellery, cash and account books and other documents were seized from these premises. In addition, it was stated that 84 silver bars had been pledged with the Laxmi Commercial Bank Ltd, Sadar Bazar Branch, Delhi, by M/s. Udey Chand Pooran Mal and 30 silver bars were pledged with the Punjab National Bank, Naya Bazar, Delhi, by M/s. P. M. Motor and General Finance Company. A restraint order under section 132(3) of the Act was passed in respect of the above silver bars. The seizure of the jewellery and cash was made and the restraint order passed in respect of the 114 silver bars on the ground that they were the property of Shri Pooran Mal, the individual. Thereafter, the Income-tax Officer made an inquiry under sub-section (5) of section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners have filed the present writ petition. The averments in the writ petition are to the following effect: The first petitioner is a firm carrying on, inter alia, the business of purchase and sale of silver bars in Bombay and in Delhi. It was constituted under an instrument of partnership dated October 19, 1970, and commenced its business with effect from October 1, 1970. The firm was registered with the Registrar of Firms, Bombay, and also with the sales tax department, Bombay. The firm had also applied for registration under the Act, but orders thereon had not yet been communicated to the petitioners. A notice under section 148 of the Act was also served on the first petitioner-firm calling upon it to submit the return of its total income for the assessment year 1971-72. A notice under section 139(2) of the Act was also issued to the petitioner-firm to submit its return of income for the assessment year 1972-73. In compliance with the notice under section 148 of the Act, the petitioner-firm had filed its returns for the assessment year 1971-72. Shri Pooran Mal was only a partner of the first petitioner-firm just as the second petitioner was also a partner of the firm. The acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he silver bars in his custody to meet the tax liability of Shri Pooran Mal, the individual, was, therefore, illegal. The several grounds on which the order of the Income-tax Officer was challenged by the petitioners will be referred to at the appropriate stage. In the reply filed by the respondents, certain preliminary objections were raised, namely, that the petitioners had an effective alternative remedy under section 132(11) of the. Act which they had not exhausted and further that disputed questions of fact were involved regarding the ownership of the 114 silver bars which could not be decided by this court in proceedings under article 226 of the Constitution. On the merits of the petition, it was stated that petitioner No. 1 was a firm carrying on business of purchase and sale of silver bars at Bombay, but its business at Delhi was denied. While admitting that the petitioner-firm had led evidence with regard to the purchase of the silver bars from different parties and also that payments had been made by cheques, it was, however, alleged that the petitioners had not led any evidence in regard to the source of acquisition of the funds for the purchase of the silver bars. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner-firm. We shall first consider the preliminary objections raised on behalf of the respondents against the maintainability of this writ petition. The first objection was that the Act itself provided an effective remedy to the petitioners and that without exhausting such a remedy, the petitioners could not seek any relief under article 226 of the Constitution. Reference in this connection was made to sub-section (11) of section 132 of the Act under which any person objecting for any reason to an order made under sub-section (5), may make an application to such authority as may be notified in this behalf by the Central Government requesting for appropriate relief in the matter and on receipt of such an application, the notified authority may, after giving the applicant an opportunity of being heard, pass such order as it thinks fit. Reference is also made in this connection to section 132A of the Act which contemplates the completion of a regular assessment even after the passing of an order under sub-section (5) of section 132 of the Act. According to the learned counsel for the revenue, the petitioners will have ample opportunity at the time of the regular assessment to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessary and proper parties have not been impleaded. According to the learned counsel, Shri Pooran Mal, the individual, against whom the impugned order of the Income-tax Officer was passed, is a necessary party and failure to implead him is a fatal defect justifying the rejection of the writ petition on that ground alone. We are unable to accept this contention. Shri Pooran Mal is a partner of the petitioner-firm and even though the writ petition has been filed by the firm and one of the other partners, it must be deemed to have been filed on behalf of all the partners including Shri Pooran Mal. It is not necessary to implead Shri Pooran Mal separately either as a petitioner or as a respondent. The last of the preliminary objections raised is that the petitioners have no locus standi to file the present petition, because even if they were the owners of the silver bars at one stage, they were no longer the owners of the silver bars on the date of the seizure. In this connection, reference is made to the vouchers under which the silver bars were despatched from Bombay to Delhi in which the name of the buyer is mentioned as M/s. P. M. Motor & General Finance Company and the name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pooran Mal and Shri Pooran Mal was unable to explain the source of these funds, such funds could be treated as the undisclosed income of Shri Pooran Mal. But the silver bars which were purchased by the petitioner-firm with the funds provided by Shri Pooran Mal could not be treated as the property of Shri Pooran Mal ; they should be treated as the property of the petitioner-firm itself. With regard to the first ground on which the validity of the proceedings under section 132(5) of the Act is challenged, reference is made by the learned counsel for the petitioners, Mr. Chagla, to section 136 of the Act according to which "any proceeding under this Act before an income-tax authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196 of the Indian Penal Code". Reference is also made to rule 112A of the Income-tax Rules, 1962, which prescribed the manner in which an inquiry under sub-section (5) of section 132 of the Act has to be made by the Income-tax Officer before passing an order under that sub-section. Sub-section (5) of section 132 of the Act requires the Income-tax Officer to afford a reasonable opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others. Then it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party. " In Sirpur Paper Mills Ltd. v. Commissioner of Wealth-tax it was found that the Commissioner of Wealth-tax while exercising his powers under section 25 of the Wealth-tax Act had acted upon the instructions and directions of the Central Board. Quashing the proceedings of the Commissioner, the Supreme Court observed as follows : "The power conferred by section 25 is not administrative: it is quasi-judicial. The expression 'may make such inquiry and pass such order thereon' does not confer any absolute discretion on the Commissioner. In exercise of the power the Commissioner must bring to bear an unbiassed mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the Income-tax Officer to pass an order under sub-section (5) even if the Income-tax Officer is satisfied with the explanation offered by the person concerned. Any such direction if given by the Commissioner would not be under the provisions of sub-section (5) and such directions would be clearly illegal. In the present case, there is no allegation by the petitioners that the Commissioner gave any such directions to the Income-tax Officer. We may also notice the second proviso to sub-section (5) which requires that the Income-tax Officer should obtain the previous approval of the Commissioner for releasing the assets or such part thereof as he may deem fit in the circumstances of the case. This provision is a corollary to the provision in sub-section (1) under which the Commissioner gives the authorisation for the search and seizure of the money, bullion, etc., if he has reason to believe that they represent the concealed income of any such person. The vires or the legality of sub-section (1) has not been challenged before us. The Income-tax Officer is required to obtain the previous approval of the Commissioner for releasing the assets as the assets were seized under the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary at this stage to reproduce that order: "After the writ petition was argued for some time, it was noticed that full opportunity was not given to the petitioner to substantiate his claim that the property does not belong to him as an individual but belongs to the firm, M/s Pooran Mal and Sons, Bombay. Mr. G. C. Sharma, learned counsel appearing for the respondents, fairly and frankly conceded that such an opportunity was not afforded to the petitioner. The parties are agreed that the impugned order be quashed and that the department be permitted to look into the matter afresh after giving an opportunity to the petitioner to place his case before the department in respect of the contention that the property belongs to the firm and not to Pooran Mal individually. The parties are also agreed that the property shall remain in the custody of the department and shall not be sold by them till fresh decision is taken by the department in the light of evidence to be supplied by the parties. Mr. B. S. Gupta, Income-tax Officer-cum-Assistant Director of Inspection (Intelligence) is personally present and he has undertaken to complete this case within two months. The writ is according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, to calculate the amount of tax on the income so estimated and to specify the amount that would be required to satisfy the existing tax liability and to retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the total tax liability of such person. If, on the other hand, the person concerned satisfies the Income-tax Officer that the seized assets do not represent his concealed income, then no order under sub-section (5) need be passed by the Income-tax Officer. Therefore, the court merely permitted the Income-tax Officer "to look into the matter afresh". But the further directions by the court contained in the order to the effect that "the property shall remain in the custody of the department and shall not be sold by them till a fresh decision is taken by the department in the light of the evidence to be supplied by the parties" and also the observation that the Income-tax Officer had undertaken to complete the case within two months make it clear that the court permitted the Income-tax Officer to pass a fresh order under sub-section (5) within two months if the petitioners were not able to satisfy him that the property belonged to them and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except in cases covered by sub-section (3) of section 153, the Income-tax Officer has no jurisdiction to pass an order under sub-section (5) of section 132 of the Act after the expiry of the period prescribed under that sub-section. Shri B. N. Kirpal, learned counsel for the revenue, contends that the order of this court dated 6th April, 1972, is in the nature of a mandamus issued by the court directing the Income-tax Officer to pass a fresh order under sub-section (5) of section 132 of the Act within a period of two months from the date of the order and that the effect of this mandamus is to extend the period of limitation prescribed under sub-section (5) and also to confer jurisdiction on the Income-tax Officer to pass an order beyond the prescribed period. In support of this contention, he seeks to rely upon the following passage from Halsbury's Laws of England, third edition, volume 11, at pages 91 and 92 :- "If public officials or a public body fail to perform any public duty with which they have been charged, an order of mandamus will lie to compel them to carry it out, even though the time prescribed by statute for the performance of the duty may have passed." This passag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months. It was left open to the Income-tax Officer to accept the evidence placed before him by the petitioner-firm in support of its case. It was also left open to the Income-tax Officer to pass an order under sub-section (5) against the petitioner-firm if he was not satisfied with the evidence placed before him by the petitioner-firm. But this would not amount to a writ of mandamus directing the Income-tax Officer to pass an order under sub-section (5) to the detriment of the petitioner-firm. Such a writ cannot be issued by this court. Therefore, this court had no power to extend the period prescribed under sub-section (5) for passing an order under that sub-section or to confer jurisdiction upon the Income-tax Officer which he ceased to have after the expiry of the prescribed period. The learned counsel for the revenue next contended that even if the order of this court dated April 6, 1972, would not in law extend the period prescribed under sub-section (5) for passing an order under that sub-section, the petitioners should not be permitted to challenge the impugned order of the Income-tax Officer on the ground of jurisdiction or limitation. It was pointed out that the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave the effect of extending the period of limitation prescribed under sub-section (5), it cannot be said that the petitioners have not approached this court with clean hands. As a result of the above discussion, it must be held that the Income-tax Officer did not have the jurisdiction to pass the impugned order dated June 5, 1972, beyond the period prescribed under sub-section (5) of section 132 of the Act and, as such, it is not a valid order and that order has to be set aside on this ground alone. In view of our above finding, it is not necessary for us to consider the contentions of the petitioners regarding the merits of the impugned order. The petitioners have referred to various pieces of evidence which, according to them, conclusively proved that the 114 silver bars were the property of the petitioner-firm and were not the property of Pooran Mal, the individual. The Income-tax Officer, on the other hand, has referred to other material in support of his finding that the silver bars did not belong to the petitioner-firm but really belonged to Pooran Mal, the individual. Any opinion expressed by us on the merits of the contentions may prejudicially affect either of the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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