TMI Blog1995 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... 38, College Road, Madras, that survey having been commenced at 3.20 p.m. on July 26, 1994, and concluded at 5.00 a.m. on July 27, 1994. The statement on oath of the petitioner was recorded at the conclusion of the survey. While the survey was in progress, the respondents served on the petitioner a notice under section 131 of the Income-tax Act at 7.45 p.m. on July 26, 1994, calling upon the petitioner to produce the documents, return of which has been sought in this petition. Also on July 26, 1994, an order of attachment in Form No. ITC P. 9 under rule 30 of the Second Schedule to the Income-tax Act, 1961, was served on the petitioner by the third respondent, Tax Recovery Officer, attaching the promissory notes and related papers connected therewith, belonging to the Hindu undivided family of which the petitioner is the karta, as also of certain firms in which the Hindu undivided family is a partner. That order of attachment sets out that the petitioner was in arrears of tax for which recovery certificates Nos. 35, 37 to 40 dated August 28, 1992, had been issued by the Tax Recovery Officer. In the counter-affidavits filed by the respondents it has been stated that the petitioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the petitioner, while the fourth respondent was working as a senior Departmental Representa tive before the Income-tax Appellate Tribunal, he had made certain statements which were indicative of his prejudice against the petitioner. According to the petitioner, the fourth respondent had exploited his friendship with the fifth respondent, who was then a Deputy Commissioner of Income-tax, to have the survey conducted with a view to harass the petitioner. The fourth respondent as also the fifth respondent have filed affidavits denying these allegations of mala fides. The fifth respondent in his affidavit has stated that " I have reasons to believe that there is evidence to show A and establish that the petitioner had defalcated huge amounts from the exchequer by filing false bank challans and tax deduction certificates in false names. The petitioner's residence as well as his business premises have been searched a number of times by the Income-tax Department, Central Bureau of Investigation, Directorate of Revenue Intelligence, Customs, etc. It is also learnt that proceedings taken against the petitioner on the basis of the charge sheets filed by the Central Bureau of Investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvey and were present when the survey was conducted. Moreover, the Commissioner of Income-tax (Appeals) is not an authority who is concerned with directing or authorising the survey and the officers who had carried out the survey, though lower in rank, are not the immediate subordinate officers under the fourth respondent. Any ill feeling between the fourth respondent and the petitioner, even if it be true, cannot be regarded as the cause for the survey. The respondents have stated that the petitioner was in default of a large sum as arrears of tax and it was necessary to carry out the survey with a view to ascertain the nature of the assets held by or under the control of the petitioner. Having regard to these facts, the allegation of the petitioner that the survey is vitiated by mala fides has to be rejected. The allegation, as rightly con tended by the respondents, in the circumstances, has been made only to malign the Department, with which the petitioner appears to have had a strained relationship not only as regards his position as an assessee under the Act but also in relation to his profession as an income-tax practitioner. It has been averred in the counter affidavits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession and, in the case of any other place, only after sunrise and before sunset. (3) An income-tax authority acting under this section may, (i) if he so deems necessary, place marks of identification on the books of account or other documents inspected by him and make or cause to be made extracts or copies therefrom, (ii) make an inventory of any cash, stock or other valuable article or thing checked or verified by him, (iii) record the statement of any person which may be useful for, or relevant to, any proceeding under this Act. (4) An income-tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any books of account or other documents or any cash, stock or other valuable article or thing. (5) Where, having regard to the nature and scale of expenditure incurred by an assessee, in connection with any function, ceremony or event, the income-tax authority is of the opinion that it is necessary or expedient so to do, he may, at any time aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions occur in Chapter XIII of the Act. Section 131 deals with the power regarding discovery, production of evidence, etc. Section 132 deals with search and seizure, section 132A deals with power to requisition books of account, etc., section 132B deals with application of retained assets. Section 133 deals with power to call for information. Section 133A deals with power of survey. Section 133B deals with power to collect certain information. Section 134 deals with power to inspect registers of companies. Section 135 deals with power of the Director-General or Director, the Chief Commissioner or the Commissioner and the Deputy Commissioner. By section 136, it is declared that proceedings before income-tax authorities are judicial proceedings. Section 133A opens with a non obstante clause. The income-tax authorities may exercise the powers conferred by this section notwithstanding anything contained in any of the other provisions of the Act. The power so conferred is also subject to certain limitations. The power of survey may be exercised only at a place where a business or profession is carried on and the authority may enter any such place of business or profession only durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be exercised only during business hours and the continuance of the survey after the business hours is wholly impermissible under section 133A and, therefore, illegal. Though the submission so made appears plausible, such an interpretation of the provision would defeat the object of the provision and has to be rejected. The object of conducting a survey is to secure information. The section does not require prior notice of the survey being given to the affected person, in order to prevent the possibility of relevant materials whether it be accounts, documents, negotiable instruments or cash or other valuables, being removed from the place at which the business or profession is carried on. The section, therefore, advisedly provides that the authority may " enter " only during business hours. After such entry, no further limitation is imposed by the section regarding the period for which he may remain in that premises. If the volume of materials to be scrutinised is such as to require the survey being continued even after the business hours, the continued presence of the authority in that premises and the continuance of the survey cannot be regarded as " illegal ". Sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) of section 133A(1). It is for this limited purpose the powers conferred on the officers referred to in section 131(1), namely, the same powers, as are vested in a court under the Code of Civil Procedure while trying a suit in respect of (a) inspection and discovery, (b) enforcing the attendance of any person and examining him on oath, and (c) compelling the production of books of account and other documents, and (d) issuing of commissions, are also conferred on the income-tax authority while carrying out a survey, if the persons connected with the business or profession present at the time of survey, refuse or evade complying with the requisitions made in respect of the matters referred to in section 133A(1). The contents of section 131(1) are incorporated into section 133A(6) by reference. By such incorporation the other sub-sections of section 131 are not engrafted into section 133A(6). Parliament has taken particular care to avoid any reference to section 131(3) which empowers the authority before whom books and accounts are produced to impound the same, in view of the express and emphatic bar imposed by section 133A(4), against removal by the income-tax authority, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e declined to make available the documents and records or that he did not afford the necessary facilities to check or verify the cash or stock or valuable articles found in the premises. In the counter-affidavit filed by the Assistant Commissioner of Income-tax who is also the Assessing Officer, he has justified the impounding of the documents by stating " Since the petitioner who was available throughout the survey operation did not give any satisfactory explanation regarding the Hindu undivided family assets, there was no course left to the Assessing Officer other than to invoke the provisions of section 131 of the Income-tax Act read with sub-section (6) of section 133A treating the spot as his camp office and impound the various incriminating documents and other books of account under section 131(3) of the Act." Thus, the impounding is sought to be justified by the respondents on the ground that under section 133A(6) the authority is entitled to invoke section 131(1) and after so invoking that provision exercise the powers under section 133(3) of the Act. This justification so sought to be given is fallacious and does not find support in section 133A of the Act. As noticed ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that in the absence of any specific reference to sub-section (3) of section 131 in section 133A, the officers exercising the powers under section 133A are not empowered to impound documents during the course of a survey. Counsel also referred to a decision of the Punjab and Haryana High Court in the case of Gheru Lal Bal Chand v. ITO [1982] 137 ITR 190, wherein it was held that the Income-tax Officer had no jurisdiction to resort to the powers under sub-sections (1) and (2) of section 131 while surveying the accounts of the assessees under section 133A when the assessees neither refused nor evaded to co-operate with the Income-tax Officer and whatever books or documents the Income-tax Officer required were made available to him. In the result, this petition is partly allowed. All the documents removed at the conclusion of the survey by the respondents from the place of business or profession of the petitioner except the promissory notes which have been attached by the Tax Recovery Officer, shall be returned to the petitioner. The respondents are at liberty to make copies of the same before returning the documents. In the circumstances of the case, there will be no order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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