TMI Blog1975 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... pper storey of the premises. Each of the petitioners and their wives are income-tax assessees. During the aforesaid search, 31 items of ornaments and jewellery were found in the bed-cum-store room of Shri Om Parkash Jindal. An inventory, the copy of which is annexure " D-1 ", was prepared for the same. Seventeen items of ornaments and jewellery (shown in annexure " D-III " and (contained in a separate receptacle as stated by the petitioners) were recovered from another portion of the ground floor occupied by Shri Om Parkash Jindal. Another five items of ornaments and jewellery and currency notes of the value of Rs. 708 and 18 silver coins of rupee one each (shown in annexure " D-IV " and contained in another receptacle as represented by the petitioner), were also recovered from the portion of the premises in occupation of the petitioner, Shri Om Parkash Jindal. Four items of ornaments shown in annexure " D-II") were found from the bedroom of Shri Prithvi Raj Jindal. The authorised officers placed all these ornaments and jewellery, etc., in two boxes, sealed the same and then placed the said boxes in a Godrej almirah lying in the premises. It (Godrej almirah) was also locked and sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid items of jewellery, ornaments, etc. They impeached the authorisation issued by respondent No. 1 as illegal, stating that he had neither any credible information in his possession nor he had reason to believe that Shri Om Parkash Jindal, petitioner, was in possession of undisclosed jewellery or ornaments, and that he (respondent No. 1) had issued warrants of authorisation to search the premises and seized the ornaments, etc., under the dictates of higher authorities for extraneous considerations, including political influences. They treated the acts of the authorised officers in placing the jewellery, ornaments, etc., in two boxes and placing the same with locks and seals on, in the Godrej almirah on June 6, 1974, and then placing the same in two boxes with locks in the wooden almirah embedded in the premises and sealing the same on July 12, 1974, as seizure and challenged it as illegal so far as it related to recovery of four items of ornaments (annexure " D-II ") from the bedroom of Shri Prithvi Raj Jindal on the ground that his name did not figure in the warrant of authorisation. They impeached the acts of the authorised officers terming the same as seizure respectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorised officers to search the premises and seize the ornaments, etc., was illegal because the Director of Inspection had no information, much less credible, on the basis of which he could have reason to believe that Shri Om Parkash Jindal, petitioner, had in his possession ornaments and jewellery, which were undisclosed property. (2) That there had been, in fact, seizure of the ornaments, jewellery, etc., and since neither notice of 15 days under rule 112A of the Rules had been issued, nor inquiry as envisaged by section 132(5) of the Act had been instituted and no order had been passed thereunder within 90 days from the date of seizure, the retention of the ornaments, jewellery, etc., by the respondents had become illegal. (3) That even if the acts of the authorised officers in sealing the ornaments and jewellery in the Godrej almirah, firstly, on June 6, 1974, and, secondly, in the wooden almirah embedded in the premises on July 12, 1974, are not considered as seizure, their aforesaid acts would be illegal having been actuated by extraneous and unlawful considerations. (4) That the search of the portion of the premises in occupation of Shri Prithvi Raj Jindal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorised officer may, where it is not practicable to seize any such ...money, bullion, jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any...money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922, or under this Act. (5) Where any money, bullion, jewellery or other valuable article or thing (hereinafter in this section and section 132A referred to as the assets) is seized under sub-section (1), the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry as may be prescribed, shall, within ninety days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of any person, and also to use it to justify the said conclusion in the event of necessity. The expression " has reason to believe " would mean that there are grounds for the necessary belief. The said belief is the assent of mind to the truth of what has been conveyed by the information, whereas mere suspicion may not be sufficient, but then a conviction of the nature required in a criminal case cannot be insisted upon. The standard of belief should be that of a reasonable man. But at the same time it has to be remembered that it is the belief of the Director of Inspection or the Commissioner that counts and the courts cannot substitute their own opinion for his belief. It is only when the grounds on which the belief of the Director of Inspection or the Commissioner has been founded are non-existent or are irrelevant or are such on which no reasonable man can come to that belief, that the exercise of the power to issue the warrant of authorisation by the Director of Inspection or the Commissioner would be bad, but short of that the courts would not interfere with the reason for belief bona fide arrived at by him (Director of Inspection or the Commissioner). The object o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ornaments, etc., found during the search are undisclosed property. The said investigation may not be a full inquiry or of the nature as contemplated by sub-section (5) of section 132. It may be summary, oral or otherwise as permissible in the circumstances of a given case. The result of the said investigation or inquiry may be : (a) that the authorised officer has reason to believe that the particular ornaments, etc., found in the search, are undisclosed property, (b) that there are no grounds to believe reasonably that the same are undisclosed property, or (c) that he has doubts respecting the said ornaments or jewellery being undisclosed property. It is, I think, only in the case of his satisfaction under (a) that the authorised officer would seize the aforesaid ornaments, jewellery, money, etc., under clause (iii) of sub-section (1) of section 132. In the cases mentioned in (b) or (c), I do not think he (authorised officer) would be competent or empowered to seize the said ornaments, jewellery or money and it is also doubtful that he can take action under sub-section (3) of section 132 of the Act respecting those ornaments. It may be stated here that any act performed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for search, etc., for extraneous considerations, including political influence, were controverted in the written statement, which was verified by the affidavit sworn to by the Assitant Director of Inspection. At the instance of Sri B. S. Gupta. I asked Shri D. N. Awasthy to produce the record containing the information on the basis of which the Director of Inspection had issued the warrant of authorisation Mr. Awasthy readily made the said record available to me. I went through it minutely and noticed that the information conveyed to the Director of Inspection through different sources was sufficient for believing that Shri Om Parkash Jindal was in possession of money, bullion, jewellery, etc., which were undisclosed property On enquiry of Shri B. S. Gupta, I informed him about the matters which could be disclosed, contained in the information on the basis of which warrant of authorisation had been issued. Having gone through the said record, I had the satisfaction that the information with the Director of Inspection was such as could induce any reasonable man to believe that action under section 132 of the Act was called for. There was nothing on the record produced by Mr Awasthy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " belonged to Bajrang Lal and 5 ornaments of annexure " D-IV " belonged to Chuni Lal and they had placed the same with him for safe custody. Orders were also passed by the authorised officers under section 132(3), restraining Shri Om Parkash Jindal and Shri Prithvi Raj Jindal from removing or parting with or dealing with the ornaments, jewellery, etc., found on search and were served upon them on June 6, 1974, and July 12, 1974, respectively. The acts of the authorised officers in placing the ornaments in two boxes and then putting the same with seals in the Godrej almirah on June 6, 1974, and on the second occasion in the wooden almirah on July 12,1974, seem to be covered by the latter part of, sub-section (3) of section 132, namely, " that such officer may take such steps as may be necessary for ensuring the compliance with this sub-section ". The aforesaid acts of the authorised officers, of which much capital had been made by Shri B. S. Gupta, cannot, therefore, tantamount to seizure of ornaments, jewellery. etc , as contemplated by sub-section (1) of section 132. Thus, having given my careful consideration to the entire circumstances of the case and to all what was said by Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch the Jindal House. Admittedly, the portion of the premises occupied by Shri Prithvi Raj Jindal, petitioner, is a part of the Jindal House. Therefore, search of the said portion of the premises by the authorised officers, irrespective of the fact that it was in the possession of Shri Prithvi Raj Jindal, as represented by the petitioners, cannot in any way be assailed as illegal. In that view of the matter, the contention of Shri B. S. Gupta, mentioned at No. (4) of paragraph 5, is without merit and is declined. Per discussion under para. 10 above, the acts of the authorised officers in sealing the ornaments, etc., in the boxes and putting the same firstly in Godrej almirah on June 6, 1974, and for the second time in the wooden almirah on July 12, 1974, and sealing the same do not fall within the purview of sub-section (3) of section 132. Mr. Awasthy, taking a contrary view ; justified their action and contended that since they wanted to verify the statement of Shri Om Parkash Jindal made on June 6, 1974, they thought it proper and desirable to seal the ornaments, etc., in the manner stated above, and cited Bhagwandas Narayandas v. Commissioner of Income-tax, Director of Inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statement of Shri Om Parkash Jindal, petitioner, recorded on June 6, 1974. Therefore, I am of the view that the acts of the authorised officers in attaching ornaments, etc., in the case in hand on June 6, 1974, or on July 12, 1974, had been committed in error of judgment, though I have no doubt in my mind that the same were not countenanced by the provisions of sub-section (3) of section 132. Per discussion in para. 8 above, the word " practicable " occurring in sub-section (3) of section 132 cannot, in my opinion, be extended to a case where the authorised officer on finding ornaments, etc., on a search has doubts or is not certain that there are reasons to believe that the same were undisclosed property. It is only when he has reason to believe that such ornaments are undisclosed property but the seizure of the same is impracticable on account of the nature or location of the same or on any other ground rendering the seizure of the said ornaments, etc., impossible or unsafe that the authorised officer can have recourse to the provisions contained in sub-section (3) of section 132. In the case in hand, the stand taken up by the respondents has been that they did not seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re " D-II " were undisclosed property. Further, there is nothing in the Act or the Rules to show that the authorised officer can keep the property, found on search, under his seal and retain the same for an indefinite period by having recourse to sub-section (3) of section 132. He may attach the said property under sub-section (3) of section 132 if so permitted by the provisions contained therein and retain the same for a reasonable period. When the provisions of rule 112A of the Rules require the Income-tax Officer to issue requisite notice within 15 days and provisions contained in sub-section (5) of section 132 require the Income-tax Officer to record the necessary order within 90 days from the date of the seizure of the ornaments, etc., it can be justly said that the said reasonable period during which the ornaments, etc., can be retained would not ordinarily exceed 90 days from the date of attachment of the same. Attachment of ornaments, etc., under sub-section (3) of section 132 would necessarily deprive a citizen of use of the same as he pleases and thereby it is infraction of his liberty to the free use of the said ornaments. Therefore, it is desirable that the authorised o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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