TMI Blog2009 (4) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... the power under the proviso to sub-section (3) of section 131 of the Act are required to compensate the petitioner for the hardship and losses suffered. - 6564 of 2009 (T-IT) - - - Dated:- 24-4-2009 - D. V. SHYLENDRA KUMAR J. K. Kiran Kumar for the petitioner. Aravind for M. V. Seshachala for the respondent. JUDGMENT Writ petition by a private limited company which claims to be carrying on business in real estate as a builder and developer. 2. It appears the petitioner's activities had attracted the attention of the income-tax authorities and in a survey conducted, the officers of the Income-tax Department had visited the business premises of the petitioner as on September 20,2005, examined the general activities of the petitioner, various books of account and other documents maintained at the office premises of the petitioner and as a follow up action issued a notice on the same day summoning the petitioner to appear before the officer with ledgers, cash book, vouchers and bank pass books and its details. 3. It appears the respondents also made an inventory of the books of account, documents, and such other papers available there and while taking away th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had addressed a letter dated February 26, 2006 (copy at annexure D) seeking for return of the impounded documents pointing out that the docurnents, amongst others, contain sale deeds, agreements also belonging to some other parties and they were all very essential for the purpose of the petitioner and sought for return of such documents forthwith. 8. This appears was followed up for the same purpose by communication as per letter dated May 2, 2006 (copy at annexure E). 9. While the petitioner went on representing for return of such documents and the latest such request is as per letter dated January 21, 2009 (copy at annexure H), the petitioner was only responded with the periodic extension accorded by the Commissioner extending the period for a year as per memorandum dated Marc 26, 2007 (copy at annexure J) and further memorandum dated December 19, 2007 (copy at annexure K) indicating that the extension of period of retention approved by the Commissioner on this occasion was up to March 31, 2009. 10. It is the version of the petitioner that on the petitioner submitting the representation as at annexure H, the response on the part of the respondents (copy at annexure L) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndamus to compel the authority to return the documents impounded. The impounded documents were evidenced as per the inventory, reducing into writing and furnished a copy thereof to the petitioner, as produced at annexure B to the writ petition, which reads as under: 1. Triplex file containing copy of sale agreements. 2. Ebsons file containing copy of sale agreement and receipts. 3. Triplex file containing copy of sale deed and connected papers. 4. Thickest file containing copy of absolute sale deeds and agreement. 5. Marry file containing account with Arun Associates. 6. Classic file containing agreement papers. (copy) 7. Triplex folder containing correspondence and pay receipts Pramila S. Suvarna. 8. Triplex file containing copy of sale agreements and loose papers. 9. Thickest bank pass sheet account No. 7649 and loose papers. 10. Prestige files-copy of deeds, declarations, sale deeds, etc. 11. Triplex file containing bank pass sheet BK account No. 29280 and loose sheets. 12. Harry file containing sale agreements, receipts, etc. 13. Super, thickest file containing sale agreements, receipts, etc. 14. Epsons print file containing copy of absolute sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the statutory provision does not enable the authorities to retain the impounded documents for such a long duration : that the frivolous and inexplicable orders are being passed by the authority concerned postponing the return of documents time after time; that this is a clear case of gross misuse of the statutory power and as the respondents are not prepared to return the documents even now and are holding the same without authority of law a writ of mandamus should be issued directing the respondents to return the documents. The stand of the respondents is that while the impounding is under the powers conferred on the authorities under section 131 of the Act, the assessee has been called upon to explain various nothings and contents of the documents, but the petitioner-assessee did not co-operate with the authorities; that an order had come to be passed and the petitioner has preferred an appeal, which is pending consideration. It is sought to be contended that in view of the pendency of the appeal, it has become necessary for the authorities to retain the impounded documents with the special approval of the Commissioner. Even a cursory glance of the provision of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such approval has been obtained even as per the orders which have been produced by the very petitioner along with the writ petition and, therefore, no exception can be taken to the retention of the documents; that the respondents were justified in retaining the books of account and other documents as such documents were required for perusal and examination by the appellate authority and during the pendency of the petitioner's appeal before the first appellate authority where under the petitioner has questioned the validity of the assessment order and determination of tax liability of the petitioner is very well permitted in law and such questions have been examined by the courts and the power for retention of the documents is very well established. 17. In support of the submission, Sri Aravind, learned counsel for the respondents has placed reliance on the division Bench judgment of the Patna High Court in the case of M. L. Enterprises v. CIT reported in [1994] 209 ITR 872 (Patna) and also a single Bench decision of the Madhya Pradesh High Court in the case of Deepak Kutnar v. Asst. CIT reported in [2006] 284 ITR 624. 18. Submission with reference to the above two dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance cannot be impounded; that the impounding order should be made only by the authority impounding and retention beyond fifteen days being only with the approval of the Commissioner of Income-tax, the Commissioner can only pass an order for extension and not for an order himself for impounding or for retaining it indefinitely and, therefore, it is pointed put that in the present case, there being no order for impounding passed by the retaining authority subsequently after the initial period of impounding, if at all there is no order in law for retaining the document as of now and it is the duty of the respondents to return the documents. 21. It is also submitted that on reading of the statutory provisions, it is very clear that the power to extend the period of retention beyond fifteen days while can be exercised by the Commissioner for relevant and justifiable reasons, that power can be exercised only once and not repeatedly and time and again as has been done in the case of the writ petitioner; that the proviso does not enable even the Commissioner to pass orders for extension of period of retention time and again and at any rate for retaining a document impounded in the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1994] 4 SCC 269. 27. Sri Aravind, learned counsel for the respondents, has further submitted that the initial impounding if is of the concerned officer, the extension automatically enures for the benefit of further retention, etc. 28. The question in the present writ petition is as to whether the orders 28 passed by the respondents for retaining the documents such as books of account belonging to the petitioner which are purported to be retained as per order dated October 7, 2005, till now, on the strength of orders passed by the Commissioner extending the period of impounding and if such retention is permitted and valid in law. 29. The statutory provision is one providing for retention of documents and 29 books of account which are noticed by the authorities in the context of any action taken under the Act against the assessee. 30. The power under sub-section (3) of section 131 of the Act being subject to the rules for exercising the power, the outer limit of the power is again to be found in the proviso and it says that such documents or books of account cannot be impounded without recording reasons for impounding and further that the retention cannot be beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soning or logic. In this regard, with great respect, I am unable to agree with the views taken by the Division Bench of the Patna High Court and the Single Bench decision of the Madhya Pradesh High Court. 36. If one should peruse the scheme of the Act, it is obvious that section 131 of the Act which occurs in Chapter XIII sub-Chapter C indicating the powers of the income-tax authorities, is a provision which confers certain powers on the income-tax authorities during the conduct of proceedings under the Act and conferring on such authorities some of the powers of a civil court as contemplated under the Code of Civil Procedure, 1908, facilitating the authority to obtain necessary information, gather relevant evidence and to compel the assessees and the related persons for production of documents, material, appearance and other evidence in their possession for the purpose of ascertaining the income of an assessee in a given assessment year and for computing the tax liability for the year. The provisions are designed to supplement the powers of the authorities for such purpose. A specific analysis of the provisions of section 131 of the Act which confers power regarding discover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the scheme of the Act, the provision occurs in section 131 of the Act which is one for supplementing the proceedings under the Act. The books of account or documents while can be compelled to be produced and while so, produced can be retained for some period as indicated in the statutory provision, that cannot be retained or elevated to be put on a higher pedestal to virtually seize the documents for an indefinite period. The whole object of the Act is to peruse the books of account and documents for some other purpose and so far as the Income-tax Act is concerned for the purpose of determining the tax liability of the petitioner and nothing beyond. 40. In the instant case, the petitioner's tax liability has already been deter mined by the assessing authority and the assessee filing a appeal in the normal course if he is aggrieved by the determination, can never be a ground for retention of the impounded documents indefinitely when such retention is not provided for under the statute itself. 41. The provisions of section 132 of the Act which is for search and seizure and more drastic powers on the authorities, contains more safeguards and imposes greater restrictions on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable period and not for indefinite period. The reasonable period that can constitute outer limit of fifteen days should take its colour from the normal period of fifteen days fixed as outer limit and, therefore, can supplement the normal fifteen days period by a few more days and not either by few more months or few more years. Permitting the proviso to enable the authorities to retain the documents for few more years is nothing but doing violence to the statutory provision. 43. I am of the clear view that the proviso to sub-section (3) of section 131 of the Act does not enable the Chief Commissioner or other authority who has the power to extend the period and supplement it to an outer limit of fifteen days to keep extending the period repeatedly as is done in the present case and for years together. The extension can only be a one-time exercise and supplementing the outer limit of fifteen days for some more days depending on the circumstances. The extension period should be counted only in days and not in months or years as outer limit is indicated in days. As already observed the length of extension should necessarily take its colour from the outer limit prescribed for rete ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
