TMI Blog1975 (7) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in favour of the Assistant Director of Inspection to enter and search the said premises, to place identification marks on such books of account and documents as may be found in the course of the search and considered relevant to or useful for the proceedings under the Income-tax Act, to seize any such books of account, documents, money, bullion or jewellery or other valuable article or thing and to make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing. The authorisation included the exercise of all other powers and performance of all other functions under section 132 of the Income-tax Act. During the search the Assistant Director of Inspection came across large holdings of silverware, gold and diamond jewellery and cash at the said residence. A panchanama was prepared and attested by two witnesses on 23rd June, 1971, in respect of the articles seized between 10-30 a.m. and 8-40 p.m. It described certain books of account and documents as having been taken possession of. It also set out certain articles which were not seized. Similarly, the jewellery found in the premises as described in the annexure to the panchanama was shown to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961". It was, therefore, requested that the action proposed to be taken in his letter dated 7th July, 1971, might be dropped. On 10th August, 1971, a valuer who had been appointed by the income-tax department to value the gold and diamond jewellery and the silverware seen in search, valued the jewellery at Rs. 5,94,140 and the silverware at Rs. 1,22,380. For the purpose of valuation the seals were removed and they were reaffixed after the valuation was over. On 29th January, 1972, there was a letter to the advocate for the petitioner asking him to "settle the issues". It was added that as the Commissioner was pressing for a report with particular reference to the prohibitory order still in existence, the Assistant Director of Inspection looked forward to the advocate's immediate response for speedy closure of the proceedings. It is not clear as to what happened subsequent to that letter. But from the counter-affidavit it appears that from or about 3rd March, 1972, there was a strike in the mill premises and that the situation worsened as a result of which the petitioner had to seek out a new residence. The petitioner, it was stated, was not willing to allow access to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the articles seized as income from undisclosed sources. The petitioner was also required to explain the source of the acquisition on 18th October, 1972. On that day the petitioner wanted the queries on which the explanation was asked to be put in writing. Nearly two months after the said notice, on the 25th November, 1972, there was a letter from the Income-tax Officer running to about 6 typed papers in which details of the various queries were set out. The petitioner was required to give an explanation by 4th of December, 1972. This letter itself came to be served on the petitioner on 29th of November, 1972. On 4th December, 1972, the petitioner asked for extension by 15 days which would have taken us to 19th December. This request was declined. However, the petitioner was asked to submit his reply by 8th of December, 1972, under a letter of 7th December, 1972, from the Income-tax Officer. The petitioner filed an elaborate reply on 16th December, 1972. By an order under section 132(5), dated 19th December, 1972, in which there is no reference to the reply of the 16th December, 1972, the Income-tax Officer observed that the acquisition of unexplained amounts as detailed in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g him not to remove, part with or otherwise deal with it except with the previous permission of such officer. This would have the effect of attachment of the items covered by the prohibitory order. Where any money, bullion, jewellery, etc., were seized under sub-section (1), then the Income-tax Officer was empowered by clause (5) to give the parson concerned an opportunity of being heard and also to make his own enquiry. Within 90 days of the seizure he had to make an order with the previous approval of the Commissioner estimating this undisclosed income in a summary manner to the best of his judgment on the basis of such materials as were available to him, calculating the amount of tax on the income so estimated, and specifying the amount that would be required to satisfy any existing tax liability. He could retain in his custody the seized assets or any part thereof as were in his opinion sufficient to satisfy the aggregate of the tax liability and release the remaining portion to the person from whose custody they were seized. Where the person had paid or made satisfactory arrangements for payment of tax liability referred to above, then the Income-tax Officer could, with the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 22nd September, 1972, so that the order passed on 19th December, 1972, was very much within time; and (3) that ample opportunities were given to the petitioner to make his representations to the enquiry proposed under section 132(5) and that the petitioner was trying to unreasonably prolong the enquiry so as to get the proceedings time-barred. The first point that arises for consideration is whether the appeal filed by the petitioner before the Central Board of Direct taxes is a bar to the present writ proceedings. It is not disputed that the petitioner has filed an appeal within the time prescribed by section 132(11). The rule of exhaustion of statutory remedies before a writ is granted is a self-imposed limitation, a rule of policy and discretion rather than a rule of law and the court may, therefore, in exceptional cases, issue a writ of certiorari not withstanding the fact that the statutory remedies have not been exhausted. See Rashid Ahmed v. Municipal Board, Kairana and Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad . The Supreme Court has qualified this rule of fetter with two exceptions, viz., (1) where the provision under which the order is purported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected and see whether the impugned order is time-barred. There are 3 dates in this connection, viz., (1) 23rd June, 1971,(2) 6th June, 1972, and (3) 22nd September, 1972. Unless the seizure could be said to have been effected on 22nd September, 1972, the order of 19th December, 1972, would manifestly be time-barred and, therefore, lack jurisdiction. Mr. Swaminathan, the learned counsel for the petitioner, vehemently contended that the proceedings for the seizure were completed on 23rd June, 1971, that nothing was done thereafter and that on 7th July, 1971, the respondents had themselves issued a notice under section 132(5) of the Act which could be issued only if there was already a seizure. For the respondents the submission was that even the panchanama prepared on the 23rd June, 1971, showed that the search and seizure were incomplete and that even in the assessee's letter of 5th August, 1971, which was in response to the notice of 7th July, 1971, the petitioner had stated that there was no seizure. According to the learned counsel for the department the petitioner could not now be heard to say that the seizure was complete on 23rd June, 1971, itself. We consider that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he seizure of the relevant items and substitute its own judgment for that of the authorised officer. In other words, the discretion of the authorised officer would have to be allowed full play in determining a question of this nature. Both in the panchanama and also in the letter dated 18th November, 1971, addressed by the Income-tax Officer to the petitioner and referred to in the counter-affidavit it is clearly stated that there was no seizure of the goods. Even the petitioner in his reply of the 5th August, 1971, has stated that there was no seizure. The petitioner's argument that there was a seizure on 23rd June, 1971, at this stage is contradicted by them and appears to be born out of convenience and cannot be accepted. As it is largely a matter of intention and as the intention in this case is clear that the authorised officer did not want to seize the goods on 23rd June, 1971, there is no question of the goods being taken as seized on that date. It is true that there was a letter of 7th July, 1971, asking for an explanation with reference to the proposed proceedings under section 132(5) of the Act. Section 132(5) would come in for application only where any money, bullion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But it is curious to find the respondents taking an undertaking from the petitioner himself to see to the safety of the items. Thus the case of the department on this part is neither consistent nor convincing. It is not clear also as to how the delivery of the keys by the petitioner to the respondents is likely to act as a kind of security against the theft or damage to the goods or articles in which the department was interested. There is no magic in the possession of keys which would ward off the danger to the articles. Having considered the facts, we are of the view that the keys were taken only to reduce the attached items to the possession of the respondents. We are unable to find any other purpose behind the taking over of the keys. The respondents acquired complete control over the valuables in the almirah or the iron safe on 6th June, 1972, by having the keys with them. We have already extracted the passage from volume 16 of Halsbury's Laws of England and noticed that seizure is largely a matter of intention. Possession may be actual or constructive. One of the well-known modes of acquiring constructive possession is to take over the keys, say of a godown where goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be returned. This is the consequence here. We do not think it necessary to go into the contention that the principles of natural justice were violated. This application of principles of natural justice would arise only if there was an order within 90 days. There is no such order. We may at this stage add that a search and seizure conducted in the premises of the petitioner's brother ended in an order under section 132(5) of the Act similarly passed. The Central Board of Direct Taxes has cancelled that order on the ground that the Income-tax Officer had not acted properly in ignoring the objections filed by the petitioner's brother. That is only by the way. As the goods were seized on the 6th June, 1972, the order of the 19th December, 1972, would be wholly without jurisdiction, as it was passed beyond the period of 90 days provided in the statute. In our opinion, the petitioner is entitled to the writ of certiorari. The order of 19th December, 1972, is accordingly quashed and the petitioner is entitled to the return of the articles of jewellery and the silverware in the possession of the department. We direct the return of those items within four weeks from this date. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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