TaxTMI 
TaxTMI 
1970 (10) TMI 5
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....lf the silver was now returned to them. On September 4, 1969, the petitioners filed a petition (Writ Petition No. 3073 of 1969) under article 226 of the Constitution praying for a direction to the customs authorities to return their silver. Notice of the writ petition was served on the customs authorities on September 22, 1969. On September 27, 1969, a report was submitted by Shri S. S. Hitkari, Inspecting Assistant Commissioner of Income-tax, Agra, to the Commissioner of Income-tax, Kanpur, requesting that certain Income-tax Officer's be authorised under section 132(1) Income-tax Act, 1961, to Search and seize account books, money, bullion, jewellery and other valuable articles or things discovered during the search. On, September 28, 1969, the Commissioner of Income-tax Officer, Agra, one of the Income-tax Officers authorised under section 132(1), made an order according the requisite authorisation in respect of the residential and business premises of the petitioners and also of the Assistant Collector, Customs and Central Excise, Agra, and the Directorate of Revenue (Intelligence), New Delhi. On September 29, 1969, the Income-tax Officer, Agra, not to remove, part with or ot....
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....r 28, 1969, of the Commissioner of Income-tax, Kanpur, according authorisation to certain designated Income-tax Officers under section 132. (3) Warrants of authorisation issued pursuant to the aforesaid order of the Commissioner of Income-tax, Kanpur. To appre ate the first contention raised on behalf of the petitioners it will be appropriate, I think, to set out the relevant provisions of section 132 : " 132. (1) Where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (XI of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would ....
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....ome-tax Act, 1922, or the Income-tax Act, 1961, or a person who would not, in spite of such summons or notice, produce or cause to be produced the account books or documents or a person is in possession of money, billion, jewellery or other valuable article or thing representing either wholly or partly income or property which has not been disclosed for the purposes of either Income-tax Act. Where the authorised officer finds that it is not practicable to seize such account books, document, money, bullion, jewellery or other valuable article or thing he is empowered by sub-section (3) of section 132 to serve an order on the owner or the person in immediate possession or control thereof prohibiting him from removing, parting with or otherwise dealing with it without the previous permission of such officer. It is clear that the articles or things referred to in sub-section (3) of section 132 are those which the authorised officer was empowered to search for and seize and no other. That is plain from the language of sub-section (3), which refers to " such books of account other document, money, buillion jewellery . . ", that is, those articles or things which are the subject of aut....
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....ing with the Assistant Director of Revenue (Intelligence), New Delhi, and the silver was in the custody of the Assistant Collector, Central Excise, Agra. Clearly, the location of the silver was known to the income-tax department, and it cannot be disputed that as it was in the custody of a public officer it would have been readily handed over to income-tax department upon proper requisition made in that behalf. There is no material whatever on the record to suggest that the customs authorities would refuse to co-operate with the income-tax department and decline to comply with any reasonable request made to them. On the contrary, it would appear that the two departments were acting in co-operation. On June 5, 1969, when the customs officers effected the search and seizure of the petitioners' premises they were accompanied by an Income-tax Officer, H. G. Seymore. Could it within reason be supposed that the customs authorities would concea1 the silver from the income-tax department, rendering a search necessary, and upon a a reasonable request made in that behalf refuse to deliver it up ? That is a question to which an affirmative answer does not seem possible. I am firmly of opin....
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.... The petitioners are entitled to their costs. R. L. GULATI J.-I agree with my learned brother, Pathak J., that the impugned order dated September 29, 1969, passed under sub-section (3) of section 132 of the Income-tax Act, 1961, should be quashed. I, however, would like to add the following by way of elucidation. In order to determine the scope of sub-section (3) of section 132 of the Income-tax Act, 1961, it is necessary to examine the scheme underlying the provisions relating to search and seizure as contained in section 132. Section 132 confers upon certain income-tax authorities the power of search and seizure of books of accounts and other documents as also money, bullion, jewellery and other articles (hereinafter referred to as the assets). When an action under this section is taken with regard to assets the scheme appears to be to empower the authorised officer to seize the assets recovered as a result of the search and under sub-section (5) to retain such assets sufficient to meet the tax liability of an assessee which the Income-tax Officer is entitled to determine summarily and to add to it the other outstanding tax liability of the assessee not only under the two I....
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....ssets which are seized as a result of search under sub-section (1) of section 132. Sub-section (3) of section 132 finds no mention in that provision. According to the literal interpretation of that provision, therefore, it can be said that the provisions of sub-section (5) of section 132, and, consequently, of section 132A, which deal with the application of assets retained under sub-section (5) of section 132 do not apply to the assets in respect of which merely an order under sub-section (3) of section 132 has been made. Under sub-section (3) of section 132 the authorised officer may, where it is not practicable to seize any assets, serve an order on the owner or the person, who is in immediate possession or control of the assets, not to remove, part with or otherwise deal with them except with the previous permission of such officer. The logical conclusion of such an interpretation would be that the assets which have been attached as it were, under sub-section (3) of section 132, cannot be retained or appropriated towards the tax liability of the assessee in the manner provided in section 132A of the Act. Even sub-section (5) of section 226 also cannot be pressed into aid by the....
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....e department to retain the silver in its custody as has been alleged by the petitioner. A question then arises as to whether such a search was permissible under section 132. From a reading of that section it is obvious that section 132 is applied only to unearth hidden books of accounts and assets. So far as the silver seized by the excise authorities was concerned. It had already come to surface. Its exact quantity and location was within the knowledge of the income-tax department as is obvious from the letter of Sri S. S. Hitkari, the Inspecting Assistant Commissioner of Income-tax, and on the basis of which the search was carried out. In that letter Sri S. S. Hitkari had clearly stated that silver weighing 136.936 kg. had been recovered from the business and residential premises of the petitioner-firm and its partners and was lying in the custody of the Assistant Collector, Central Excise, Agra. There was, therefore, no occasion for any search being organised in respect of that silver. In his letter to the Commissioner, Sri Hitkari had also stated that the assessee was not a dealer in silver and the same had not been disclosed in its closing stock, profit and loss account or the....