1975 (7) TMI 69 - HC - Income Tax

Court quashes tax order, returns seized items, awards costs under Income-tax Act

The court allowed the writ petition, quashing the order dated 19th December 1972 under section 132(5) of the Income-tax Act. It directed the return of ... Income Tax Act, Income Tax Authorities, Search And Seizure Issues Involved:1. Whether the writ petition should be dismissed due to the existence of an alternative remedy.2. Determination of the date of seizure and whether the impugned order was time-barred.3. Whether the principles of natural justice were violated in the proceedings under section 132(5) of the Income-tax Act.Issue-Wise Detailed Analysis:1. Alternative Remedy and Maintainability of Writ Petition:The respondents argued that the writ petition should be dismissed in limine as the petitioner had availed himself of the right of appeal under section 132(11) of the Income-tax Act, which constituted an alternative remedy. The court held that 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. The court cited Rashid Ahmed v. Municipal Board, Kairana and Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad to support the exceptions to this rule, which include cases where the provision under which the order is made is ultra vires, where the impugned order violates principles of natural justice, or where there is a patent lack of jurisdiction. The court concluded that the presence of a right of appeal does not qualify its power to issue a writ if the facts so warrant.2. Date of Seizure and Timeliness of the Impugned Order:The court examined three potential dates for the seizure: 23rd June 1971, 6th June 1972, and 22nd September 1972. The petitioner argued that the seizure was completed on 23rd June 1971, while the respondents contended that the seizure was completed on 22nd September 1972. The court found that the sealing of the almirah and iron safe on 23rd June 1971 did not constitute a seizure, as contemporaneous correspondence and subsequent actions indicated that the search and seizure were incomplete. The court also noted the prohibitory order served on 29th June 1971, which suggested that it was not practicable to seize the goods at that time.The court then considered the events of 6th June 1972, when the petitioner handed over the keys to the respondents. The court found that the keys were taken to reduce the attached items to the possession of the respondents, thereby completing the seizure on that date. The court rejected the respondents' argument that the keys were taken merely to secure the items against theft or damage.The court held that the seizure was complete on 6th June 1972, and therefore, the order passed on 19th December 1972 was beyond the 90-day period prescribed by section 132(5) of the Income-tax Act, rendering it time-barred and without jurisdiction.3. Violation of Principles of Natural Justice:The court noted that the principles of natural justice would be relevant only if an order was passed within the 90-day period. Since the order was passed beyond this period, the court found it unnecessary to delve into whether the principles of natural justice were violated. However, it was mentioned that the Central Board of Direct Taxes had canceled a similar order against the petitioner's brother on the grounds that the Income-tax Officer had ignored the objections filed, indicating procedural lapses.Conclusion:The court quashed the order dated 19th December 1972, under section 132(5) of the Income-tax Act, and directed the return of the seized articles of jewellery and silverware to the petitioner within four weeks. The writ petition was allowed, and the petitioner was awarded costs of Rs. 250.