TMI Blog2021 (11) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st respondent sent the letters encashing the IVP's on behalf of the 2nd respondent, is on the face of the record, wholly untenable. Respondents 1 and 2 are independent statutory authorities. They perform functions that are distinct and separate. They can never be regarded as an agent of one another or as acting on behalf of another. Accordingly, the finding of the learned Single Judge that the encashments of IVP's were carried out by the 2nd respondent-assessing officer, while the 1st respondent had only co-ordinated in the collection and encashment of IVP's, is set aside. We, therefore, hold that the encashments of IVP's as per Ext.P2 series and Ext.P3 series were carried out by the 1st respondent. Whether the encashments of the seized IVP's were in accordance with law? - In the instant case, the search and seizure were conducted on 30.12.1994 till 07.01.1995. By 22.01.1995, the 1st respondent had become functus officio and ought to have handed over the documents and assets seized to the 2nd respondent. The fact that the order under section 132(5) was issued on 28.04.1995 presupposes that the 1st respondent had handed over the documents before that date. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and purpose of the Act. What reliefs are the assessee entitled to? - As found the invocation of IVP's as without authority and the consequent adjustment as done contrary to the provisions of the Act, it is necessary that the status quo ante be restored as on the date of application under the KVS Scheme to meet the ends of justice. We set aside the judgment of the learned Single Judge. Ext.P2 series and Ext.P3 series produced in the writ petition are hereby quashed. Ext.P5, insofar as it relates to the assessment years 1991-92, 1992- 93, 1993-94, 1994-95 and 1995-96, is also quashed. Even though the KVS Scheme is not in existence now, the appellant ought not to be prejudiced on account of the long pendency of this writ appeal before this Court. As we have set aside the invocation of the IVP s and the consequent adjustment of the amounts encashed and restored status quo ante, the application for the grant of benefit under the KVS Scheme shall stand revived. The 3rd respondent shall pass fresh orders on the application claiming benefit of the KVS Scheme, in accordance with law. - WA No. 352 of 2005 - - - Dated:- 30-7-2021 - Honourable Mr.Justice S.V.Bhatti And Honou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full benefit of the KVS Scheme, since by then, the tax arrears for the assessment years 1994-95 and 1995-96, were adjusted from the amounts obtained by encashing the IVP's. This adjustment disentitled the assessee to the benefit of the KVS Scheme. Ext.P5 certificate issued by the Commissioner of Income Tax under KVS Scheme denying the benefit of the scheme for the years mentioned above resulted in the writ petition. 3. The learned Single Judge, after considering the merits of the matter, disposed of the writ petition. It was held that the encashment of IVP's was valid and that the recovery and adjustments of tax and advance tax for the year 1995-96 were also proper. However, the recovery of tax and interest by adjustment from the encashed value of the IVP's for all the other years effected prior to the due dates for such payments were held to be bad in law, and the same was directed to be reconsidered. Aggrieved by the said judgment, the assessee is in appeal before us. During the pendency of the appeal, the original appellant died, and his legal heirs were impleaded as additional appellants. 4. To consider the issues raised at the Bar, it may be necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... postmaster, there was no assumption that the 1st respondent had initiated the refund. The counter-affidavits further stated that the 1st respondent never exercised any jurisdiction to withdraw the IVP's or adjust the amounts so encashed. It was further asserted that the appropriation of the proceeds of the IVP's were carried out at the request of the assessee, and since the said adjustments were at the behest of the assessee, the action of the respondents cannot be faulted. The 3rd respondent, while reiterating the contentions of other respondents, pointed out that the department had acted as per the instructions given by the assessee in Ext.R3(a) letter. It was further pleaded that in view of Ext.R3(a) the assessee could not turn around and question the action carried out as per his request. 6. The assessee filed reply affidavits. It was stated that the 1st respondent encashed the IVP's even before the quantification of tax. It was pleaded that the quantification for the years 1990-91 to 1994- 95 was carried out only on 23.12.1997, while for the year 1995-96 the quantification was made on 25.11.1997. Appellant pleaded that the adjustments were made in gross violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were encashed, while Ext.P3 series are the documents intimating the encashments of other IVP's to the assessee. For a better appreciation , the first page of Ext.P2 is extracted below:- NO.ADI/INV/KTN/S S/BNC-49A/94-95. OFFICE OF THE Assistant Director of Income-tax (Investigation),Mangad Buildings Kottayam, dated 29th March, 1995 The Post Master, Head Post Office, Kottayam, Sub:- Encashment of Indira Vlkas Patras- request for Sir, Please refer to the above. 2. I tender herewith the following Indira Vikas Patras with a request to encash the same, and pay the proceeds being the maturity thereof amounting to ₹ 4,00,000 (Rupees four lakhs only) to the undersigned:- Sr. No. Distinctive numbers of IVPS. Maturity Date. Amount. 1 10C 561030 - 561039 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ext.P3 will reveal that the IVP's were encashed by the 1st respondent and not by the 2nd respondent. By issuing Ext.P2 series letters and tendering the IVP's along with those letters and directing the proceeds to be paid to the 1st respondent, it cannot be assumed that 1st respondent was only co-ordinating the encashment. As a matter of fact, only copies of letters requesting the postmaster to encash the IVP's were sent to the 2nd respondent. It is evident from Ext.P2 series that 2nd respondent had no role at all in the encashment of IVP's. 14. The contention that the 1st respondent sent the letters encashing the IVP's on behalf of the 2nd respondent, is on the face of the record, wholly untenable. Respondents 1 and 2 are independent statutory authorities. They perform functions that are distinct and separate. They can never be regarded as an agent of one another or as acting on behalf of another. Accordingly, the finding of the learned Single Judge that the encashments of IVP's were carried out by the 2nd respondent-assessing officer, while the 1st respondent had only co-ordinated in the collection and encashment of IVP's, is set aside. We, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculate the amount of tax on the income, so estimated, (c) to determine the amount of interest payable and the penalty to be imposed, (d) to specify the amount required to satisfy any existing liability, and (e) to retain in his custody such assets as are in his opinion sufficient to satisfy the amounts determined as tax, interest, penalty and the defaulted amount till that date. 17. Section 132 of the Act is a code by itself. The various steps are provided with a salutary purpose. It has an inbuilt mechanism to prevent arbitrary actions. Sections 132 to S.132B embody an integrated scheme laying down the procedure comprehensively for search and seizure and the power of the authorities making the search and seizure to order the confiscation of the assets seized. Reference to the decisions in Pooran Mal v. Director of Inspection (Investigation) [(1974) 1 SCC 345], and P.R.Metrani v. Commissioner of Income Tax, Bangalore [(2007) 1 SCC 789] are advantageous in this context. 18. The inevitable conclusion on comprehending the scheme of S.132 is that the authorised officer who conducted the search and seizure becomes functus officio, as far as the seized articles or docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in sub-section (8) is the same authorised officer referred to in sub-section (9A) as having no jurisdiction over the person. The net result, therefore, would be that if the authorised officer is an Income-tax Officer having jurisdiction over the person, he can retain the records himself for 180 days under sub-section (8). But, however, he will have to make an order under subsection (5) within 120 days. If the records are required by him for any other purpose, for example under section 288(5), that Income-tax Officer also can ask for approval of the Commissioner for such retention. If the authorised officer happens to be an officer rather than an Income-tax Officer having jurisdiction over the person to make an order under sub-section (5), that authorised officer shall hand over the documents and assets to the Income-tax Officer having jurisdiction over the person and once that is done, the Income-tax Officer gets jurisdiction not only to make an order under sub-section (5) and also to exercise the powers of an authorised officer under sub-section (8) or sub-section (9) of that section. Thus, though under section 132(1), the Director of Inspection may authorise a Deputy Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. In the counter affidavits and the additional counter affidavit it is asserted that the seized documents and assets were handed over to the assessing officer on 10-01-1995. It is manifest that, the 1st respondent could not have exercised any power after 22.01.1995. He could also not have been in possession of any of the documents or assets from 22.01.1995 or thereafter. 23. The first letter demanding encashment of IVP's is dated 29.03.1995, which was even before Ext.P1 order under section 132(5). All the remaining encashments were subsequent to 29.03.1995. It fails our comprehension as to how the 1st respondent could have encashed the IVP's when he was not legally entitled to be in possession of the seized documents. Therefore, no further elaboration is required to conclude that all encashments were done by the 1st respondent without authority or jurisdiction and that too after he had become functus officio. In view of our discussion as above, we are of the considered view that the encashments of the IVP s were contrary to law and were void as having been carried out by a person without authority. Q.(iii) Whether the encashed amounts under the IVP s were liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Ext.R3(a) letter written by the assessee. The learned Single Judge held the said letter to be an authorisation given to the 2nd respondent to encash the IVP s and to adjust the recovered amounts towards the tax liabilities. With respects, we find ourselves unable to agree to the said finding for more reasons than one. 29. Primarily, Ext.R3(a) cannot be regarded as a letter giving blanket authority to the respondents to encash the IVP's or to adjust the encashed amount towards the tax liability. The letter is in fact addressed to the 2nd respondent requesting him to encash and appropriate the same towards the liability, if it was not possible to ascertain the previous year to which the investment relates. The letter also refers to adjusting the advance tax. Even if it is assumed that the letter confers authority upon the respondents to encash the IVP's, the same has to be done in accordance with law. The officers empowered to act in the exercise of the statutory powers must conform to the statutory prescription in letter and spirit. If the letter Ext.R3(a) is assumed as the authority to encash the IVP's; it is evident that the same being addressed to the 2nd resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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