TaxTMI 
TaxTMI 
1974 (5) TMI 1
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.... to be the petitioner's agent for doing income-tax cases, was also present there. It is alleged that after the books of account of the petitioner-firm had been seized by the respondent they placed about eleven sheets, some of them in type-script and others in manuscript, and insisted that Murlidhar and Jopat sign them. These persons refused to sign the sheets as they did not know anything about them. Thereupon, the respondents who were present at the shop telephoned Sri H. C. Garg, respondent No. 5, who was Assistant Director (Investigation), Kanpur, and told him that these persons were refusing to sign the loose sheets. It is alleged that Sri Garg arrived at the shop at about 4 p.m. along with a stenographer and other employees of the department. He threatened Murlidhar and Jopat that if they did not sign the sheets the godown and the business premises shall be sealed and the residence of the partners of the firm will be searched and sealed. Under this strain and coercion, Murlidhar and Jopat ultimately signed the sheets. Thereafter, Sri Garg examined Murlidhar and recorded his statement. This statement was also got signed by Murlidhar. According to the petitioner, at this stage ....
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....rvey of the various other firms. According to him, after he had seen the account books of M/s. Yarn Traders and M/s. Vanaspati Agents, the account books of M/s. United Chemical Agency (the petitioner-firm) were produced for survey. The stock register of the petitioner-firm had, however, inside it five typewritten and seven handwritten papers. Respondent No. 1 required Murlidhar to provide necessary facility to inspect the documents and place marks of identification on them, and he further wanted to take extracts therefrom. He also wanted to verify these loose papers with reference to the books of account of the petitioner-firm present at the shop. He required Murlidhar to facilitate the doing of these acts, but he evaded and refused to comply with the requirements and did not allow him to place marks of identification and to take extracts from the said loose papers. Thereupon, he issued notice under section 131 to S. N. Jopat who was also present at the spot. S. N. Jopat advised Murlidhar to comply with the notice. The notice was served on S. N. Jopat at 2-50 p.m. requiring compliance by 3 p.m. Thereupon, Murlidhar effected compliance with the notice then an there. Before actual co....
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.... marks of identification thereon or cause to be made extracts therefrom : Provided that the Income-tax Officer or such Inspector of Income-tax may enter any place referred to in this section only during such hours as the place is open for the conduct of the business or profession : Provided further that while acting under this section the Income-tax Officer or such Inspector of Income-tax shall not remove or cause to be removed from the place which he has entered any books of accounts or other documents. (2) If a person who under sub-section (1) is required to afford facility to the Income-tax Officer or the Inspector of Income-tax to inspect books of account or other documents either refuses or evades to do so, the Income-tax Officer shall have all the powers under sub-sections (1) and (2) of section 131 for enforcing compliance of the requirements made." Under it the Income-tax Officer has the power to require a proprietor and employee, etc., who may be present at the time of survey to afford him the necessary facility to inspect the books of account or other documents and on their inspection to place marks of identification thereon or cause to be made extracts therefrom. If ....
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....end my office at Kanpur on the 23rd day of April, 1974, at 3-00 O' clock p.m. there to give evidence and/or to produce either personally, or through an authorised representative the books of account or other documents specified overleaf, and not to depart until you receive my permission to do so. Without prejudice to the provisions of any other law for the time being in force, if you intentionally omit to so attend, to give evidence or produce the books of account or documents, a fine up to Rs. 500 may be imposed upon you under section 131(2) of the Income-tax Act, 1961." The list attached to this notice refers to seven documents, of which the first six are references of the loose sheets alleged to have been found in the petitioner's stock book. They give a summary of their contents. The documents at serial No. 7 are the various account books for the year 1973-74. This notice belies the counter-affidavit of respondent No. 1 in two significant respects. If the respondent's case that Murlidhar who had produced the account books was not affording facility for the placing of identification marks and the taking of extracts from the loose sheets and in order to enforce compliance of the....
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....pliance of the requirements made. He had no power to examine anyone for any other purpose. A perusal of the statement of Murlidhar as recorded by the surveying officer shows that he did not put a single question with a view to enforce compliance of the requirements aforesaid : all the questions were directed to elicit information about the contents of the accounts and the loose sheets as well as the business affairs of the petitioner-firm. For instance, he is alleged to have stated that the loose sheets are in the handwriting of Chandra Bhushan Shukla, munim of the firm, that they contain entries of the names to whom chemicals and soda ash had been sold, the quantity and the rates at which they were sold and the amount of sales recorded in the books and the amount realised as difference. The statement nowhere relates to enforcing compliance of the requirements. It deals with matters which are wholly outside the purview of section 133A. The first respondent blatantly transgressed the limits of his powers. He had no power to examine Murlidhar on matters on which he did. Similarly, the notice issued to Chandra Bhushan Shukla to appear and be examined the next day had no relation to t....
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....oose sheets and papers which the respondents alleged were discovered in the stock register of the petitioner-firm pose a curious problem. The petitioner does not accept this case of the respondents. In the writ petition it has been stated : " 16. That after the books mentioned above had been seized and taken away into custody by respondents, they placed about eleven loose sheets, some of them in type-script and others in manuscript, and insisted Sri Murlidhar and Sri Jopat to sign them. 17. That these two persons refused to sign the sheets as they did not know anything about these sheets." Further on, it has been stated that when Sri Garg arrived, he threatened and under coercion Murlidhar and S. N. Jopat signed these loose sheets. The case of the respondents that these loose sheets were found in the stock register and that after service of the notice at 2-50 p.m. Murlidhar and S. N. Jopat signed these loose sheets voluntarily has been denied in the rejoinder-affidavit. Paragraph 18 of the rejoinder-affidavit says that " the allegation in the paragraph under reply that in the stock register five typed sheets and seven hand-written papers were found are denied as false". The las....
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....g, and that Sri Pandey advised him not to sign those papers. It is thus evident that consistently and persistently the petitioner's case is that these loose sheets were not found in the stock register of the petitioner-firm and that its employees and its manager had no knowledge of their existence or contents. In substance, the petitioner's case is that these loose sheets did not belong to the petitioner-firm but that they were placed in the account books by the surveying officer. As we have seen, the impounding of documents and their being taken into custody by the respondents was illegal because they had no such power while conducting a survey. The petitioner can legitimately ask for the return of the account books and documents belonging to it and which were impounded or seized by the respondents. But the petitioner cannot ask for the return of those documents, which according to it did not belong to it but which were placed by the respondents in the account books. The petitioner does not accept the respondents' case that these documents belonged to it and that they referred to the business affairs of the petitioner-firm. Under the circumstances we are unable to record a posit....