TMI Blog1991 (8) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents, included some articles which were antique pieces. No seizure was effected but the respondents purported to pass an order under section 132(3) of the Act restraining the petitioners as well as the partners of the firm and their family members from operating or removing or dealing with the stock or other valuable articles or things lying in the premises. The entire room in which the stocks were lying was sealed and restraint orders were passed against some savings bank accounts. On April 9, 1991, the Assistant Director of Inspection (Income-tax) who had originally passed the restraint order under section 132(3) lifted the restraint order dated February 11, 1991, when the said premises were stated to have been visited by him. Thereafter, a fresh restraint order in respect of those very goods was passed on that very date, viz., April 9, 1991. The premises were again visited by the respondents on April 24, 1991, and, on that date also, the respondents repeated the exercise of first revoking the restraint order and then passing a fresh one on that very day. Again on June 6, 1991, the premises of the petitioners were visited by the officers of the respondents. The restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioners was not seized. The respondents have passed successive orders under section 132(3). The question is whether this is valid. Before going into the validity of the action in the present case, it will be necessary to refer to the relevant provisions of the Act. A search is conducted pursuant to an authorisation issued under section 132(1) of the Act after the empowered officer has reason to believe that any, of the conditions specified in sub-clause (a), (b) or (c) of subsection (1) of section 132 exists. When the search is conducted, the authorised officer is, inter alia, empowered to seize any books of account, documents, money, bullion, jewellery or other valuable articles or things which are found as a result of such search. With effect from April 1, 1989, second proviso to section 132 (1) was inserted which reads as follows : "Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f seizure is not effected but an order of restraint under section 132(3) is issued, then such restraint order can be continued by invoking the provisions of sub-section (8A) in the case of books of account and all the other articles which are the subject-matter of such an order. The right of filing an appeal is not granted, if a restraint order is merely continued. Reading the second proviso to section 132(1) and sub-section (3) of section 132, it appears that the Legislature, with effect from April 1, 1989, has regarded certain orders of restraint as amounting to an order of seizure. The phraseology of the two provisions is somewhat identical. Subsection (3) of section 132 enables the authorised officer to pass a restraint order where it is "not practicable to seize" any such books of account, documents, valuable articles, etc. The second proviso to section 132(1) also talks of a case where it is not practicable to take physical possession of a valuable article or thing and in which case an order of restraint may be issued but the second proviso would come into play only where it is not practicable to take physical possession of the valuable article for any of the four reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, in the present circumstances, we do not think that this was validly done. In the affidavit-in-reply, it has been stated that the stocks which were found in the premises were not seized because the petitioners had not been able to explain the existence of the stocks by any documentary evidence. It was further stated that the petitioners had not come forward to identify the items of stock from the purchase vouchers and to give the value of the various items. It is the case of the respondents, while justifying the authorisation under section 132(1) that the entries in the books which were retained did not show possession of the items of stock correctly. There were a large number of handicraft items some of which were antique which the petitioners could not identify or co-relate with the purchase vouchers which were available with them. This may be a ground or good reason for effecting seizure but, in our opinion, it cannot be said that this is a valid ground for exercising jurisdiction under section 132(3). Section 132(3) can be resorted to if there is any practical difficulty in seizing the item which is liable to be seized. If there is no practical difficulty, then an author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods which were found at the premises could have been seized by actually seizing the articles or by making an order of restraint under the second proviso to section 132(1) of the Act. This was not done in the present case. Whenever there is a seizure of articles under section 132(1) including a deemed seizure, an order under sub-section (5) has to be passed within 120 days of the seizure. Where no such order is passed, the goods have to be released. The period of 120 days came to an end on or about June 8, 1991. As no order under section 132(5) has been passed, the said goods are liable to be released. There is another reason for ordering the release of the said goods even on the assumption that a valid order under section 132(3) was passed. Firstly, when an order under section 132(3) is issued, it must, in our opinion, be recorded as to why it is not practicable to effect seizure. This is for the reason that whenever any such order is passed, then the Commissioner can grant an extension under sub-section (8A) of section 132 after recording reasons in writing. In the present case, we are informed that, on June 20, 1991, reasons were recorded by the Commissioner while granting e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the goods. In our opinion, even when an order under section 132(3) has been passed, the Departmental officials are not restrained from examining the goods. An order under section .132(3) restrains the owner or the person in possession of the goods from removing, parting with possession or dealing with them. The order of restraint is effective against the owner or the person in possession thereof and is not aimed at the Department itself. By issuing an order under section 132(3), the Department is not restrained from examining the goods in respect of which a restraint order has been passed. There was no valid reason, therefore, for seeking to revoke the orders on April 9, 1991, and June 6, 1991. Seeing the dates when such auction was taken, we find considerable force in the contention of learned counsel for the petitioner that this device was resorted to solely with a view to circumvent th provisions of section 132(8A). The first revocation was effected on April 9, 1991, only about one or two days before the expiry of 60 days. Similarly, the second revocation of June 6, 1991, was also effected only about one or two days before the expiry of 60 days from April 9, 1991. We are, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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