2000 (2) TMI 27 - HC - Income Tax

Invalid Impounding of Documents in Tax Survey: Court Quashes Order, Directs Return

The court held that impounding documents during a survey under section 133A of the Income-tax Act, 1961, was invalid and an abuse of power. The impugned ... Income Tax Survey, Scope of Section 133A Issues involved: The issues involved in this case are the legality of impounding books of account and documents during a survey conducted under section 133A of the Income-tax Act, 1961, and the validity of the summons issued under section 131 for verification of entries.Impugned Order and Petition Details: The writ petition sought to quash the impugned order dated December 22, 1999, impounding the books of account and documents, as well as the summons under section 131 dated December 21, 1999, and requested the release of the impounded items.Arguments Presented: The petitioner contended that impounding books of account and documents during a survey under section 133A is illegal, while the respondents argued that the impounding was justified as the petitioner's representatives did not provide explanations for the entries.Legal Provisions: Section 133A prohibits the removal of books of account or documents during a survey, while section 131 empowers authorities to impound and retain such items. The proviso to section 131(3) limits the retention period of impounded documents.Judicial Precedents: Various High Courts have held that impounding during a survey is impermissible and that section 131(3) cannot be used to circumvent the restrictions of section 133A. Courts emphasized that what is prohibited directly cannot be done indirectly.Court's Decision: The court found the impounding of documents during the survey to be invalid and an abuse of power. The order impounding the items was quashed, and the respondents were directed to return the books of account and documents. The court allowed the retention of photocopies for future verification to prevent tampering. No costs were awarded in the matter.