1967 (1) TMI 85 - HC - Income Tax

Court dismisses petition challenging search & seizure jurisdiction, emphasizes no need for Central Govt involvement.

Shiv Shanker Lal Gupta Versus Commissioner Of Income Tax Bombay

The Court dismissed the petition challenging search and seizure conducted by the Income-tax Officer, citing lack of jurisdiction as the cause of action ... - Issues:Jurisdiction of the Court in entertaining the petition challenging search and seizure, necessity of Central Government as a party, challenging the vires of Section 132(5) of the Income-Tax Act, jurisdiction of the Court in relation to the application under Section 132(11), liability of Central Government to pay interest on assets retained under Section 132A(4)(a).Analysis:1. The Court addressed the preliminary objection regarding its jurisdiction to entertain the petition challenging the search and seizure conducted by the Income-tax Officer. The petitioner sought various reliefs, including quashing the search and seizure, challenging the order passed under Section 132(5) of the Income-Tax Act, and declaring certain sections of the Act ultra vires. The Court observed that since the cause of action arose in Bombay, where the searches took place, the reliefs sought prima facie fell outside the jurisdiction of the Delhi High Court.2. The petitioner argued that the Central Government should be a necessary party due to the money seized being appropriated towards tax and going to the Consolidated Fund of India. However, the Court rejected this argument, stating that not all seized money automatically becomes part of the Consolidated Fund. The validity of the searches and seizures was the main issue, and the Central Government's involvement was not necessary for deciding this matter.3. The petitioner challenged the vires of Section 132(5) of the Income-Tax Act and contended that the Central Government should be a party to such proceedings. The Court clarified that there is no legal requirement for the Central Government to be involved in cases challenging the validity of a Central Act. The petitioner's argument was deemed unfounded, and the Court emphasized that the Central Government's presence was not mandatory in such cases.4. The Court discussed precedents regarding the necessity of the Central Government as a party in cases challenging Central Acts. While the petitioner relied on a decision from the Allahabad High Court, the Court found more persuasive the view expressed by the Rajasthan High Court, which emphasized that the Central Government's involvement is not compulsory unless relief is sought against it directly.5. The petitioner argued that the decision of the Central Board of Direct Taxes on an application filed under Section 132(11) could be challenged in the High Court. The Court disagreed, stating that the rule of merger of orders did not apply in this case as no appellate authority had made a decision. The absence of an appeal provision against the authorization issued by the Commissioner of Income-Tax further weakened the petitioner's argument.6. Another contention raised was that the 3rd respondent had no jurisdiction to hear the petitioner's application under Section 132(11), making the respondent a necessary party. The Court dismissed this argument, highlighting that the petitioner initiated the application and could not impose jurisdiction on the Court by doing so. The petitioner should have awaited the 3rd respondent's decision before approaching the Court.7. The petitioner also claimed that the Central Government should be a party due to its liability to pay interest on assets retained under Section 132A(4)(a). However, the Court clarified that the relief sought in the petition did not involve Section 132A, and therefore, the mere existence of Section 132(5) did not justify the petitioner's application.8. Ultimately, the Court concluded that it lacked jurisdiction to entertain the petition due to the issues discussed. Without delving into the merits of the case, the petition was dismissed with costs. The Court's decision was based on the jurisdictional aspects rather than the substantive legal issues raised by the petitioner.