TMI Blog1966 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... f seized gold and ornaments to be returned to the petitioner. 2. As the two writ petitions raise some common questions of fact and law and 5 out of 10 respondents in writ petition No. 269 of 1966, also figure as respondents in the other writ petition No. 270 of 1966, it will be convenient to dispose of both the writ petitions together. 3. It is common ground between the parties that on 24-11-1965, the Income-tax authorities conducted searches at the petitioner's residence and offices at Bombay and thereafter from 1st to 13th December, 1965, searches of the petitioner's premises at Ramgarh in Rajasthan were made by the Income-tax Officers. In the course of these and other searches, which continued till January, 1966, the following articles were recovered from the various places searched :-- Date of seizure. Nature of articles. Place from where seized. 6/7 12.65 Gold (non-ornament) jewellery and cash. Premises of Shri C. S. Goenka at Ramgarh (Sikar District. Raj.). 11-12-65 Jewellery ornaments and cash. -do- 14-12-65 Jewellery ornaments and cash. Looker No. 1397 of the Allahabad Bank Ltd., Bombay. 18-12-65 Cash of ₹ 3,125/- 333, Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows :-- (A) Gold (non-ornament) seized from the premises of Shri C. S. Goenka at Ramgarh 85617.8 grammes at the rate of ₹ 130 per 10 grammes. . . . ₹ 11,13,031. (B) Jewellery ornaments and cash seized from the assessee's premises at Ramgarh on 6/7th December 1968 and 11th December 1965 as per joint valuation made by the valuers on 2nd March. 1966 . . ₹ 1,36,138. (C) Jewellery and ornaments etc., seized from the Allahabad Bank Lockers as per the Joint Valuation done on 2-3-66. . . ₹ 46,780. (D) Silver articles seized from the ground-floor of 16, Walkeshwar Road on 20-12-6527.7 Kilos at ₹ 300 per Kg. ....₹ 8,310/- (E) Cash seized from 333, Kalbadevi Road. ....3,125/- (F) Amounts given by Shri C. S. Goenka to various persons as per list furnished to him along with notice under rule 112-A(1)dated 28-1-66 ....4,60,515/- Total Rs. 17,67,899/- 5. The Income-tax Officer accordingly estimated the undisclosed income from which the seized articles were acquired at the above figure and on that basis further estimated that the amount of tax on this income would work out to ₹ 14,13,443/-. As primary gold was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid and this defect vitiated the entire proceedings taken by the Income-tax Officer. It is similarly alleged that the Income-tax Officer Shri Vanchinath had no territorial jurisdiction. 4. The said searches and seizures were not conducted in accordance with the provisions of section 182 and/or in accordance with the provisions of the Code of Criminal Procedure relating to searches and seizures. It is pointed out that no reason for the said searches and seizures were recorded in writing or communicated to the petitioner. 5. The Income-tax Officers were not authorised to transfer the primary gold recovered by them to the Superintendent of Central Excise, Jaipur, and/or the Central Excise authorities at Jaipur. It is also submitted that once this transfer was effected by the Income-tax authorities the seizure made by the Income-tax authorities had lost its efficacy with the result that subsequent proceedings taken by them were without jurisdiction. 6. The respondent No. 2, Shri Vanchinath, Income-tax Officer, had made the searches without the valid approval of the Commissioner of Income-tax (Central), Bombay. 7. The authorisation issued by the Commissioner of Income-lax (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) were not complied with. It is pointed out that no proper authorisation had been issued in favour of Ihe Superintendent of Excise for making the seizure either by the Central Government or the Administrator. It is submitted that such authorisation has to be in writing. It is next urged that the procedure prescribed under the Criminal Procedure Code was not followed by the Central Excise authorities. It was also strongly urged that no Panchnama or recovery memo was prepared by the Central Excise Officers. Indeed, according to the petitioner, there was neither a warrant nor authorisation for making any seizure under Rule 126-L of the Defence of India Rules, nor was there any seizure of the said gold or ornaments by the Excise Officers. Repeating some of the grounds taken in the other writ petition it was urged that the Income-tax authorities had no power to transfer the custody of gold to the Excise Officers. It was then urged thai law did not empower the Excise Officers to seize goods which were already in possession or custody of the Income-lax Officers. In the light of this it is urged that as there was no valid seizure in accordance with Rule 126-L of the Defence of India Rides, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Ramgarh and to make the seizure, the Superintendent of Excise al Jaipur was duly authorised by a proper order under Rule 126-L of the Defence of India Rules to make the seizure. Again the respondents submit that an Excise Officer acting under the Defence of India Rules could validly seize the goods, if he found that there had been a contravention of the Defence of India Rules relating to Gold Control, even though earlier to that gold had come into the custody of an Income Tax Officer. As regards the application alleged to have been filed by the petitioner on 18th November, 1965 for tendering gold at the State Bank at Indore, the respondents submit that this application was a subsequent fabrication. According to them no such application was filed on 18th November, 1965 and with the connivance of some petty officials in the Bank such an application was smuggled in subsequently In this behalf they draw attention to certain circumstances revealed in the case. They point out that though the searches of the premises of the petitioner both at Bombay and at Ramgarh in Rajasthan were conducted between the 24th November. 1965. and 13th December. 1965 for a fairly long period vet the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer to the several other contentions raised by the respondents in their replies while dealing with the various points arising for consideration at the appropriate places tn our judgment. 9. It would be convenient to first deal with writ petition No. 270 of 1966. To start with, we may turn to the argument about the vires of section 182 of the Income Tax Act, 1961 on the ground that it is violative of Article 14 of the Constitution. Section 132 occurs in Chapter XIII of the Income Tax Act, 1961, which deals with Income Tax Authorities Section 131 of the Act defines the powers of the various Income Tax Authorities regarding discovery and production of evidence. That section reads as follows: 131. Power regarding discovery, production of evidence etc. 1. The Income-tax Officer, Appellate Assistant Commissioner, Inspecting Assistant Commissioner and Commissioner shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (6 of 1908), when trying a suit in respect of the following matters, namely: (a) discovery and inspection; (b) enforcing the attendance of any person including any officer of a banking compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or this Act (hereinafter In this section referred to as the undisclosed income or property), he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax Officer (hereinafter referred to as the authorised officer) to- (i) enter and search any building or place where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by Clause (1) where the keys thereof are not available; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in Clauses (ii) and (iii) and forthwith release the remaining portion, if any. of the assets to the person from whose custody they were seized: Provided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such Income or part were the total Income chargeable to tax at the rates in force in the financial year in which the assets were seized: Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in clauses (ii) and (iii) or any part thereof, the Income-tax Officer may, with the previous approval of the Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. 6. The assets retained under Sub-section (6) may be dealt with in accordance with the provisions of Section 182A. 7. If the Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply, so far as may be, to searches and seizure under Sub-section (1). 14. The Board may make rule in relation to any search or seizure under this section; in particular, and without prejudice to the generality of the foregoing power such rules may provide for the procedure to be followed by the authorised officer : (i) for obtaining ingress into such building or place to be searched where free ingress thereto is not available; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1(tm) In computing the period of ninety days for the purposes of Sub-section (5), any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded. Explanation 2--In this section, the word proceeding means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1022 or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year. 11. From a perusal of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot bring the desired result that he authorises the Income-tax Officer to conduct a search. Vesting of discretion for achieving certain specified purpose underlying the Act cannot in the circumstances, be said to be arbitrary as it is certainly guided by the policy underlying the section viz.. that of getting at the required information. We may mention that validity of Section 37 (2) of the Indian Income-tax Act of 1922 was challenged before the Calcutta High Court on similar grounds and the Calcutta High Court held in Surajmull v. Commr of Income-tax, AIR 1961 Cal 578 (SB), that that section was not unreasonable or arbitrary and did not offend against any provision of th Constitution. Section 37 (2) of the Income-Tax Act of 1922 was in pari materia with Section 132(1) of the Income-tax Act, 1961. The same view was taken by the Punjab High Court in Civil Writ No. 226 of 1964, Roshan Lal Co. v. Commr., Income-tax, decided on 22-12-1964 (Punj). We respectfully agree with the view taken in the said cases and do not consider It necessary to repeat the reasons given in support of it since we adopt them. No new argument has been advanced on behalf of the petitioner in the present case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on him to show cause why action be not taken on the basis of the recovery of the gold. It also appears that at Ramgarh the petitioner was accompanied by Shri Y.M. Desai of his solicitor's firm Messrs Ambu Bhai Diwanji. The explanation of the petitioner that he had not made the disclosure out of fear of one of the Income-tax Officers in the raid, Shri Jhun-Jhunwalla, cannot cut any ice. The petitioner could have easily sought intervention oi authorities mightier than Shri Jhunjhunwalla that he be afforded protection and the application made by him to the bank be made secure against apprehended tampering. Shri Vanchi Nath has filed an affidavit that Shri Jhunjhunwalla was not present at Ramgarh. Shri Jhunjhunwalla has stated in his affidavit that he had no illwill or animus against the petitioner. 14. Further, Bijawargi--the Senior Accountant, has inter alia, filed an affidavit that he was not present at the State Bank Indore on 18-11-65. We cannot ignore the affidavit of Bijawargi as it was he and one more undisclosed clerk who were responsible for bringing this application on the records of the Bank. There is also an application for leave by Bijawargi a photostat copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the necessity of obtaining a receipt from the bank about its submission. The explanation offered by the petitioner appears to be false and is ridiculous. The respondents have further produced one cheque for a substantial amount of Rupees Four Lacs and odd, (2) a money order receipt, and (3) a postal acknowledgment receipt of a parcel bearing the date 18-11-65. which according to them bear signatures of the petitioner, for showing that the petitioner was at Bombay on that date and not at Indore. An entry from the diary of the petitioner showing that he had booked a telephone trunk call on 18-11-65 at Bombay has also been produced. The learned counsel for the petitioner has, however, tried to explain all these. He submits that the petitioner had left certain signed cheques to be filled in by his employees as and when necessary, earlier to his leaving Bombay and the cheque in question was made use of during his absence. As regards the money order receipt and the postal acknowledgment form, it is pointed out that the originals have not been produced and on the basis of the photostat copies the petitioner was unable to say that they bore his signatures. Similarly, as regards the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cide questions of fact in exercise of its extraordinary jurisdiction but still we have examined the evidence of both the parties. From what has been placed before us, the petitioner has not been able to satisfy us by unimpeachable evidence that he had usually made the application on 18-11-66. On the contrary the material placed by the respondents on record goes to show that the application and form were smuggled in the Bank records long after the seizure of the property. The application was ante-dated to create evidence in favour of the petitioner but tt did not strike him that the form which he was presenting therewith was of a later date and thus the trick sought to be played by the petitioner stands exposed. 17. It may be pointed out that there is yet another suspicious circumstance for which the petitioner has not given any explanation. Ramgarh is a place In Sikar District and there are branches of the State Bank at much nearer place, like, Jaipur, Bikaner and Jodhpur. We fail to understand why the petitioner thought of going to much farther place like Indore. Journey from Ramgarh to Jaipur should hardly take a few hours. It may be further observed that even if the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Government of India. 18. We may now turn to the statutory provisions about exemption that may be earn ed as a result of a valid tender, the material portion of section 8 of the Taxation Laws (Amendment and Miscellaneous Provision? Act, 1965, runs as under:-- Section 8(1) Where a person who has ac quired any gold out of his Income which has not been disclosed by him for the purposes of the Indian Income-tax Act, 1992, or the Income-tax Act, 1961, or the Excess Profits-Tax Act, 1940, or the Business Profits Tax Act, 1947, or the Super Profit Tax Act, 1963, or the Companies (Profits) Surtax Act, 1964, tenders such gold as subscription for the National Defence Gold Bonds, 1680, prior to the detection of such income by the Income-tax Officer or the seizure of such gold under any law for th time being in force, such income shall, notwithstanding anything contained in the said Acts, not be included in his income, profits or gains chargeable to tax under the said Acts in an assessment or re-assessment for any assessment year made under the said Acts on or after the 20th day of October, 1965. A perusal of this section shows that exemption from tax in certain cases of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gold Control) of the said Rules, in respect of such gold. Sd. B.N. Banerji, Assistant Secretary to the Government of India. A perusal of the Notification unmistakably shows that it is only the tender of gold at any of the Banks indicated therein as subscription for the issue of the National Defence Gold Bonds 1980 that will save the person concerned from the operation of the provisions of the Defence of India Rules relating to the Gold Control. 20. In the present case, therefore, it cannot be said that the petitioner has tendered gold for subscription to the gold bonds. What the law contemplates is the tender of gold itself and not mere disclosure of gold. We are, therefore, unable to hold that the jurisdiction of the Income-tax Authorities or for that matter that of the Excise Authorities to take proceedings under the Indian Income-tax Act and the Defence of India Rules respectively has been ousted on account of any tender of gold made by the petitioner by virtue of his application dated 18th November, 1965. This is apart from the question that such tender has to be made, to earn immunity against taxation prior to the seizure of the gold or the detection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld Act contemplates that the Commissioner may be authorised to perform the functions in respect of areas or such persons or classes of persons or of such incomes or classes of Income or of such cases or classes of cases as the Board may direct. 23. The respondents have placed before us a copy of order No. 56 (1) IT/58 of the Central Board of Revenue dated 16-7-1968, whereby the petitioner's case was assigned to the Commissioner of Income-tax (Central) Bombay. The relevant portion of that order runs as follows :-- ORDER Under Sub-section (8) of Section 6 of the Indian Income-tax Act, 1922 (XI of 1922), the Central Board of Revenue hereby assigns the following further cases to the Commissioner of Income-tax (Central) Bombay, namely :-- S. No. Name Address: Shri Chiranjilal Shrilal C/o M/s. Samnarain Chiranjilal, 19-21, Vithal Wadi, Bombay. Shri Ramnarain Shrilal -do- Bai Bhagwandevi Chiranjilal -do- Bai Kamla Bai Ramnarain -do- Shri Mahaveer Prasad Ramkumar C/o. M/s. Mahabir Prasad Co., 47-51, Kalbadevi Road, Bombay. Shri Shrilal Goenka Ramgadh, Jaipur. Sd. K B Deb, Under Secretary Central Board of Revenue. 24. It appears from the affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t vears, concerning the particular person whose case is entrusted to them. The jurisdiction based on the entrustment of specified cases or specified persons cannot be said to be territorial in character According to Section 4 of the Income-tax Act. 1961, which is the charging section, Income-tax is to be charged for any assessment year in respect of the total income of the previous vear or vears of the person concerned. Therefore, the Income-tax Officer, who has to deal with the case or cases of a particular assessee will be competent to exercise his jurisdiction in assessing the total income of that person wherever the income may have accrued or been received in the country. Powers under Section 131 or for that matter under Section 132 of the Income-tax Act are incidental to the exercise of the jurisdiction to assess the total income of a person and, therefore, the processes of Income-lax Authorities under Sections 131 or 132 of the Act cannot be limited to any particular area specially when the jurisdiction is not exercised on the basis of area, but on the basis of the entrustment of any case to the Income-tax Authorities in accordance with Section 121 of the Income-tax Act. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II, III, IV, V, VI, VIII. IX, X, XI, XII, XIII, XIV and Central Circles II-C and II-D at Bombay. The notification does contemplate that the Commissioners shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of incomes or of such cases or classes of cases as are comprised in the various Circles, Wards or Districts as per schedule. But the first proviso makes it quite clear that the Commissioner shall also perform his function in respect of such persons or of such cases as have been or may be assigned by the Central Board of Revenue to any Income-tax Authority subordinate to him. In other words, cases already assigned or that may be assigned in future will have to be dealt will irrespective of territorial jurisdiction. Therefore, this notification cannot cut down the jurisdiction enjoyed by the Commissioner of Income-tax (Central), Bombay, or his subordinate Income-lax Officer in respect of such persons whose cases have already been assigned. Thus, both the Commissioner of Income-tax (Central), Bombay and the Income-tax Officer subordinate to him that is, the Income-tax Officer of Central Section X, Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Officer, Section II (Central) had no jurisdiction having regard to the provisions of Section 64 of the Income-tax Act. It was held by the learned Judges of the Bombay High Court that the Income-tax Officer, Section II (Central) was not the Income-tax Officer, of the area in which the applicant's place of business was situate, and as there was such an officer In existence, namely, the Officer of Ward C, Section II, It was only the latter officer who could assess the assessee. It was further held that the right to transfer cases or classes of cases under Section 6 (2) covered pending assessments, but did not cover a case in which an assessment was completed. It was also observed that Section 64 of the Income-tax Act wai intended to ensure that as far as practicable, an assessee should be assessed locally, and the area to which an Income-tax Officer is appointed, must so far as the exigencies of tax collection allow, bear some reasonable relation to the place where the assessee carries on business or resides. 27. It may be observed that the view expressed by the learned Judges in the above case did not hold good even before the Indian Income-tax Act, 1061 was enacted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were effected pursuant to an order made by him on the basis of the information in his possession. The respondents then placed Wore us the search warrant issued by the Commissioner, a copy of which has been taken on record. We may pause to observe that the petitioner has admitted in his writ petition that the authorisation was shown to him and it was also read to his Chowkidar after he had left Ramgarh. The warrant of authorisation purports to be under Section 132 of the Income-tax Act and Rule 112 (1) of the Income-tax Rules, 1962. It bears the seal of the Commissioner and inter alia recites that 'whereas information has been laid before me and on the consideration thereof I have reason to believe etc . Then the portions in the cyclostyled copy which were inapplicable have been cut out and the relevant portion which was applicable and made use of, was not struck off. It recites that if a summons be issued to Shri Chiranjilal to produce or cause to be produced the books of account etc., he would not produce or cause to be produced such books of account. Then the Commissioner has signed the authorisation warrant. The warrant, to our mind, is not defective in any manner and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d garages. In view of this specific authorisation it was thereafter unnecessary for the Income-tax Officer to record further that he had reason to suspect that the relevant documents and things may be available in the house. This argument about the conducting of search loses much of its efficacy as the recovery of gold, gold ornaments and other valuables from the house of the petitioner at Ramgarh is admitted. We, therefore, reject this plea about the invalidity of searches and seizures made by the Income-tax Officer. 33. We may next consider the submission whether the Income-tax Officer was authorised to transfer the primary gold recovered by him to the Superintendent of Central Excise, Jaipur, and whether as a result of this transfer, the seizure made by the Income-tax Officer would lose its efficacy with the result that any subsequent proceedings taken by him are rendered without jurisdiction. Inviting our attention to Sub-section (5) of Section 182 of the Income-tax Act, 1961. Shri Sen argued that this sub-section enjoined on the Income-tax Officer to retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Rule 126-L of the Defence of India Rules on 9th December, 1965, (3) no Panchnama or recovery memo was prepared by the Central Excise Officer, and (4) that according to Rule 126-W of the Defence of India Rules, gold having already come under the control of the Government as a result of the seizure made by the Income-tax authorities, was exempt from the operation of the provisions of the Defence of India Rules relating to gold control. We may deal with each of these four points in the order in which we have mentioned them. 35. Re. 1 : Mr. Sen took us through the correspondence that was exchanged between the respondents and the petitioner and pointed out that the respondents had taken the stand that the gold had been seized from the petitioner on 6th December, 1965 and, therefore, the respondents have subsequently fabricated the recovery of 9th December, 1965. He invites our attention to the show cause notice dated 3rd February, 1960 wherein it was mentioned that on 6th December, 1965 during the search of his residential premises at village Ramgarh gold was recovered from a safe secreted in a wall. Then he draws our attention to another letter written by the Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own seals and prepared a Panchanama which was signed by the two officers and two motbirs. After this was done, the box having the seals of the Central Excise Department was re-deposited with the treasury at Jaipur. The second affidavit is by Shri G.K. Mehrotra, Superintendent of Central Excise and Customs, Jaipur, who has stated that he was deputed to be present at the search conducted by the officers of the Income-tax Department at Ramgarh and he proceeded to say that on 6th December, 1965 gold was recovered from the petitioner's premises in his presence and that he was also a signatory to the Panchnamas prepared by the Income-tax authorities. He then stated that on 9th December, 1965 he asked Shri J. P. Bhargava to withdraw the sealed box containing primary gold from the Government Treasury. Accordingly Shri Bhargava withdrew the box and then after breaking the seals put by the Income-tax Department, he puts his own seals on that box, he having suspected that there was violation of the Defence of India Rules relating to Gold Control in respect of the gold that was seized. After his own seals were put by him, the sealed box was put back by him with the Treasury Officer. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber along with that of 6th December. We do not think that so many officers have conspired to forge the seizure memo of 9th December. At least the Treasury Officer had no reason to file a false affidavit. 37. Having carefully considered the matter, we are satisfied that the gold had been formally seized by the Superintendent, Central Excise, on 9th December, 1965, since he had witnessed the search conducted by the Income-tax authorities on 6th December, 1965 at Ramgarh. 38. Re. 2 and 8 : The relevant portion of Rule 126-L of the Defence of India Rules is as follows : Rule 126-L :-- Power of entry, search, seizure to obtain information and to take samples. (1) Any person authorised by the Administrator by writing in this behalf may- (a) enter and search any refinery of which the refiner, or the establishment of a dealer who is licensed under this Part; (b) seize any gold in respect of which he suspects that any provision of this Part has been, or is being, or is about to be, contravened, along with the package, covering or receptacle, if any in which such gold is found and thereafter take all measures necessary for their safe custody; (c) seize any books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government. It is available at page 65 of the paper-book submitted by the respondents in case No. 269 of 1966. The relevant portion of that notification is as under :-- NOTIFICATION In pursuance of Sub-rule (2) of Rule 126-L of the Defence of India Rules, 1962 the Central Government hereby authorises the officers of and above the rank of officers specified below to exercise all or any of the powers conferred by that rule. I. (1) Sub-Inspector of the Central Excise Department. (2) Preventive Officers of the Customs-Department for the time being employed for the prevention of smuggling; Provided that the Sub-Inspector or the Preventive Officer shall obtain the written permission of a gazetted officer of the Central Excise Department or the Customs Department as the case may be. ... On the basis of this notification, it is submitted that since a Superintendent of Central Excise is an officer above the rank of a Sub-Inspector this notification empowers him to make search or seizure under Rule 126-L of the Defence of India Rules. The respondents also submit that this Notification is necessarily an authorisation in writing as contemplated by Rule 126-L of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Rule 126-L of the Defence of India Rules. 41. The learned counsel also submitted that the seizure was not male in accordance with the provisions of the Criminal Procedure Code We have, however, not been shown what provisions of the Criminal Procedure Code were disregarded in this behalf. The Superintendent of Central Excise was witnessing the search of the petitioner's premises and that could have reasonably led him to believe that the gold was contraband having not been declared in accordance with the provisions of the Defence of India Rules relating to Gold Control, and he may have very well thought that this gold was liable to confiscation. If under such a belief he seized the sold as he appears to have done, then we do not think that this was contrary to any provisions of the Criminal Procedure Code When the Excise Officer was making a seizure, he was not conducting any house search but he was only making a seizure. The learned counsel vehemently contends that Rule 120-L contemplates such seizure as is pursuant to a search and not seizure generally. In this regard he points out that where seizure had to be made from the person of any body that person has to be taken t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old which was in the custody of the Income-tax Officers in accordance with the provisions of the Income-tax Act and the Rules made thereunder was in the possession or under the control of the Government within the meaning of rule 126-W. In our view, the custody of the Income-tax Officer was in the nature of custodia legis as he was holding it for the purposes underlying the Act as a statutory functionary. There is no provision under the Income-tax Act or the Rules which empowers the Government to exercise control over assets seized by an Income-tax Officer. In the circumstances, we are unable to hold that rule 126-W applies in the facts and circumstances of the case. The Treasury Officer was holding the gold in his safe custody on behalf of the Income-tax authorities. Therefore, to our mind, it was competent for the Excise authorities to seize such gold in exercise of their own powers under the Defence of India Rules. We are, therefore, unable to hold that the seizure of gold by the Superintendent of Central Excise was in contravention of any provision of law and therefore, illegal on that account. It follows from this that the action of the Income-tax Officer in surrendering the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments evidencing the debts may be only intangible property being choses-in-action, but all the same they are certainly valuable articles or things which represent income or property in appropriate cases. Such documents evidencing the debts could, therefore, be taken in possession. A perusal of the search warrant shows that the Income-tax Officer was empowered to seize any such books of account, documents, money, bullion, jewellery or other valuable articles or things. Thus to our mind the documents evidencing the debts could properly be seized. 44. The next question is whether the value of these debts could have been taken into consideration in estimating the value of the seized assets. Sub-section (5) of Section 182, in our view, is wide enough to enable the Income-tax Officer to estimate the undisclosed Income of the person concerned in a summary manner to the best of his judgment on the basis of such materials as are available with him. Consequently he could arrive at an estimate of undisclosed income on the basis of the debts that the petitioner had to realise from others. We have been told that the Income-tax authorities have also made recoveries of debts from persons wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have apprised the petitioner of all the grounds or materials on which he was to pass the impugned order. Reliance is placed by the learned counsel for the petitioner on Dhakeshwari Cotton Mills Ltd. v. Commr. of Income-tax. West Bengal. AIR 1955 SC 65. It was a case where the Income-tax Officer had made a best judgment assessment under Section 28 (8) of the Income-tax Act, 1922 and in that connection their Lordships observed as follows : (8) As regards the second contention, we are in entire agreement with the learned Solicitor General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a Court of law, but there the agreement ends; because it is equally clear in making the assessment under Sub-section (8) of Section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 28 (8). The rule of law on this subject has, in our opinion, been fairly and rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tender, that gold and earn the exemption and the Excise Officer cannot prevent him from doing so by taking any proceedings under rule 126-L (1) and (M) of the Defence of India Rules relating to gold assets. It is, therefore, prayed that the Excise Officer should be asked to produce the gold before the States Bank so that the petitioner may bo entitled to claim the immunities, concessions or exemptions arising under the Gold Bonds Scheme. The learned counsel for the petitioner submits that whereas Section 8 of the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1965 requires that in order to earn the immunity from taxation the gold should be tendered prior to the detection of such income by the Income-lax Officer or seizure of such gold under any law, there is no such limitation under the Defence of India Rules. He relies on Rule 126 (U) and the notification of the Government dated 26th October, 1965 which we have already quoted in this judgment. The learned counsel points out that any person can tender gold, be it declared or undeclared till 31st May. 1966 and, therefore, the petitioner is entitled to make this tender and claim the immunity against the Defence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed only after the matter had been heard almost for three days at sufficient length we did not like to dismiss the writ petition only on this technical plea and we have examined all the contentions of the learned counsel for the petitioner. To summarise we hold : (1) that the provisions of Section 132 of the Income-tax Act are not ultra vires on account of any violation of Article 14 of the Constitution; (2) that, the Income-tax authorities and the Excise authorities had jurisdiction to take proceedings against the petitioner under the Income-tax Act and the Defence of India Rules respectively as the so-called tender of gold made by the petitioner by his application dated 18th November, 1965 has not been established and that there was no valid tender as it was not presented along with the gold. (3) That tile Commissioner of Income-lax (Central) Bombay as well as the Income-lax Officer (Central) Section X, Bombay had jurisdiction to order the search of the petitioner's house at Ramgarh and to seize the several valuables found as a result of the search. The authorisation issued by the Commissioner of Income-tax was a proper one and did not suffer from any infirmity. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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