Service of recorded reasons and approval is essential for valid retention of seized documents under tax search provisions.

Retention of seized books of account, documents and share scrips under section 132(8) of the Income-tax Act was held unsustainable where the Assessing Officer's recorded reasons and the Commissioner's approval were not shown to have been served on the assessee. The Court noted that valid retention requires written reasons, prior approval, and expeditious communication of both to the assessee. The respondents failed to prove service, the despatch register was unavailable, and the presumption of regularity under section 114(e) of the Indian Evidence Act could not override evidence that service was in dispute and rebutted. Section 132(10) was not an alternative remedy because it presupposes receipt of the approval.

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Issues: Whether the retention of seized books of account, documents and share scrips under section 132(8) of the Income-tax Act, 1961 was lawful when the recorded reasons of the Assessing Officer and the Commissioner's approval were not shown to have been served on the assessee.

Analysis: Retention under section 132(8) is valid only when the Assessing Officer records reasons in writing, the Commissioner approves retention, and both the reasons and approval are communicated to the assessee expeditiously. On the materials before the Court, the respondents failed to establish service of the recorded reasons and the Commissioner's subsequent orders of approval. The record did not support the alleged service, the relevant despatch register was unavailable, and the presumption of regularity under section 114(e) of the Indian Evidence Act, 1872 could not assist the respondents where the fact of service itself was in issue and stood rebutted by the evidence. The suggested remedy under section 132(10) was not an alternative remedy because it presupposes receipt of the approval, which was precisely denied.

Conclusion: The retention of the seized books, documents and share scrips was not sustainable and the petitioner was entitled to their return.

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