1986 (7) TMI 110 - SC - Customs

Invalidity of Search Warrants under Income-tax Act

COMMISSIONER OF INCOME-TAX, AND OTHERS Versus TARSEM KUMAR

The Supreme Court upheld the High Court's decision, ruling that the search and seizure warrants issued under Section 132 of the Income-tax Act were ... Search and seizure - Held that:- The High Court observed that the word 'search' has varied meanings and it should be given the general meanings 'to look for' or 'seek' which are also well known. But in the context the expression 'seizure' and in the context the expression 'search' where the location of the property was known to the Government, we are of the opinion that it could not be said that one government Department could search any other government Department, and seize those documents. Relying on the decision of the Allahabad High Court in Motilal's case (1970 (10) TMI 5 - ALLAHABAD High Court) as well as the decision of the Calcutta High Court in Laxmipat's case (1970 (11) TMI 16 - CALCUTTA High Court) the learned single judge of the Punjab and Haryana High Court in Ramesh Chander v. Commissioner of Income Tax [1972 (5) TMI 20 - PUNJAB AND HARYANA High Court] held that the word 'seizure' implied forcibly taking from the owner or who has the possession and who was unwilling to part with the possession. In that case custody was with the police and it would be inappropriate to accept the position that the Income tax Department which was another Department of the Union of India had to be armed with authority to seize from the unwilling persons. We are in agreement with these views of the learned single judge. In the view of the law as it stood at the relevant time, we are unable to sustain the challenge to the order, impugned in this appeal. The appeal, therefore, fails and is accordingly dismissed with the observations that it will be open to the Income-tax authorities to approach the appropriate authorities to realise any amount of money or to recover any books of account or documents in accordance with law. Issues Involved:1. Legality of the authorisation warrant under Section 132 of the Income-tax Act.2. Conflict between actions taken by Income-tax authorities under Section 132 and provisions of Section 110(2) of the Customs Act.3. Validity of search and seizure warrants issued by the Income-tax Department.4. Definition and implications of 'possession' under Section 132 of the Income-tax Act.Detailed Analysis:1. Legality of the Authorisation Warrant under Section 132 of the Income-tax Act:The High Court found that the authorisation warrant issued under Section 132 was illegal because the money was not in the possession of the individual but with the Customs authorities. It was concluded that 'the search and seizure warrants issued under sub-section (1) of Section 132 of the Income-tax Act were illegal' as the person named in the warrant did not possess the currency notes or account books. The court emphasized that the Income-tax authorities could not seize items from another government department holding them under legal authority.2. Conflict Between Actions Taken by Income-tax Authorities under Section 132 and Provisions of Section 110(2) of the Customs Act:The High Court held that the Income-tax authorities' actions under Section 132 conflicted with Section 110(2) of the Customs Act, which required the Customs authorities to return the seized money to the person entitled to it once the seizure was deemed illegal. The court observed that the Income-tax authorities could not seize such amounts from the Customs authorities under Section 132 of the Act.3. Validity of Search and Seizure Warrants Issued by the Income-tax Department:The High Court quashed the search and seizure warrants issued by the Income-tax Department, directing the return of the money to the Customs authorities. The court reasoned that the warrants were invalid as they were issued in the name of a person who did not have possession of the seized articles. The judgment emphasized that 'the search and seizure warrants were liable to be quashed and the money returned into the customs department.'4. Definition and Implications of 'Possession' under Section 132 of the Income-tax Act:The court discussed the term 'possession' extensively, noting that it is a word of ambiguous meaning with legal senses that do not always coincide with the popular sense. The court referred to various legal dictionaries and case law to illustrate that 'possession' could include physical custody under legal authority, as was the case with the Customs authorities. The court concluded that 'when the physical custody of the moneys and goods were with the customs authorities, and that too by a legal sanction and authority to have that custody, it would be improper to contend that possession as used in Section 132 of the Act was still with the respondent.'The court also noted that the term 'immediate possession' used in sub-section (3) of Section 132 did not change the meaning of possession in the popular sense. The judgment cited previous rulings from the Allahabad High Court and the Calcutta High Court to support the view that the Income-tax Department could not seize items already in the legal custody of another government department.Conclusion:The Supreme Court upheld the High Court's decision, dismissing the appeal and confirming that the search and seizure warrants issued under Section 132 of the Income-tax Act were invalid. The court observed that the Income-tax authorities could approach appropriate authorities to realize any amount of money or recover any documents in accordance with the law. The appeal was dismissed with the observation that each party would bear its respective costs.