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2004 (11) TMI 59
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.... of petitioner No. 1, mandamus is sought to return the cash and restrain respondent Nos. 1, 2 and 4 from taking any further action pursuant to the impugned orders (P-1), (P-2) and (P-3). It is averred in the petition that petitioner No. 1 is a resident of Sendhwa, Distt. Barwani, M. P., and petitioner No. 2 is also a resident of Sendhwa and is the uncle of petitioner No. 1. Both the petitioners are assessed to income-tax by the Income-tax Officer, Khargone. Petitioner No. 1 on his way to Bhopal in his car was checked by respondent No. 3/Police Station, Talaiya, Bhopal, on January 24, 2003, at Retghat, Bhopal. Petitioner No. 1 was carrying cash Rs. 29,80,000 belonging to petitioner No. 2 in a bag. Petitioner No. 2 is the proprietor of the firm M/s. Om Cotton Corporation. Petitioner No. 2 for his business requirements wanted to deposit cash in his bank account at Indore for which he had withdrawn an amount of Rs. 28,00,000 in cash from his bank account with the State Bank of Indore, Branch Sendhwa, at Sendhwa. The said amount was withdrawn on two consecutive days. Rs. 13,00,000 was withdrawn on January 22, 2003, and Rs. 15,00,000 was withdrawn on January 23, 2003. Petitioner No. 2....
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....Magistrate, was released by the Magistrate. The Director of Income-tax (Investigation) under section 131(3) of the Income-tax Act by order (P-2) dated January 24, 2003, got the said cash deposited in the State Bank of India, Udyachal Branch, Bhopal, for issuing draft for Rs. 29,80,000 in favour of the Commissioner of Income-tax P.D. account and impounded the slips attached with the cash. Thereafter, respondent No. 2 issued notice under section 131(1A) of the Income-tax Act dated January 24, 2003, to petitioner No. 1 directing him to personally appear and to produce his books of account on January 27, 2003. Petitioner No. 1 appeared before respondent No. 2 with his books of account on January 27, 2003. On this day, the matter was adjourned to January 30, 2003. On January 30, 2003, respondent No. 2 impounded the books of account produced by petitioner No. 1 by order (P-3) dated January 30, 2003, under section 131(3) of the Income-tax Act. On the instructions of the Income-tax Officer, Khargone, conducted a survey at the business premises of the petitioners on January 24, 2003, in the evening and verified the availability of cash in the books of account of petitioner No. 2. This fact ....
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....the cash found with him was the same as withdrawn by his uncle/petitioner No. 2 from the bank which is not factually correct. It is claimed that petitioner No. 2 had withdrawn cash amounting to Rs. 13 lakhs on January 22, 2003, and Rs. 15 lakhs on January 23, 2003, from his bank account at State Bank of Indore, Sendhwa. It is also claimed that the same cash was given to petitioner No. 1 by petitioner No. 2. It was further claimed by the petitioners that the remaining amount of Rs. 2 lakhs was given to petitioner No. 1 by petitioner No. 2 out of the cash balance of Rs. 2,83,498. On the contrary, it is found that the seized currency notes of denomination of Rs. 500, Rs. 100 and Rs. 50 consist of bank slips, most of these were dated January 17, 2003, January 18, 2003, January 20, 2003, January 21, 2003, and January 22, 2003. Besides these, bundles of currency notes were issued from different banks based at Indore such as Vyasya Bank Ltd., Indore/Vijaya Bank, Indore/Central Bank of India, Indore/Shubh Laxmi Mahila Co-operative Bank, Indore/HDFC Bank, Indore/UCO Bank, Indore/Indore Cloth Merchant Co-operative Bank, Indore/Premier Co-operative Bank Ltd., Indore/Union Bank of India, Indor....
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....th a large amount of cash totalling to Rs. 30 lakhs in his possession and without any instructions whatsoever as to what to do with it. This is an unbelievable scenario. (vii) Petitioner No. 1 has stated that petitioner No. 2 had left Sendhwa for Maharashtra at 9.30 p.m. on January 23, 2003. However, Sharma, the accountant, stated that petitioner No. 2 had left Sendhwa only on the next day, i.e., on January 24, 2003 at 12.30 p.m. (viii) Petitioner No. 2 has admitted that he was aware of the seizure of the cash by the police by 11 a.m. on January 24, 2003, while he was at Sendhwa. It is not believable that he would leave for Maharashtra immediately instead of sorting out the matter with the police and to claim the cash to be his. Instead of coming personally, he merely sent a fax and left for Maharashtra. It is further contended that petitioner No. 2 had faxed certificate dated January 23, 2003, no reasons have been given why the certificate (which was apparently meant to be carried by petitioner No. 1) was not handed over to him along with the cash. In response to question No. 6 of the statement under section 131 of the Income-tax Act recorded on January 27, 2003, it is st....
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....ry and there is no bar as such. Simply because a person is carrying a huge amount of cash that does not itself give any person reason to believe that such cash has not been disclosed or would not be disclosed for the purposes of the Act. Recording the statement is without the authority. An additional return has been filed by the respondents. It is, inter alia, contended that the order of the magistrate is not required for proceedings under the Income-tax Act. Petitioner No. 1 who was in possession of the cash was not able to give any satisfactory explanation for the source of Rs. 29.80 lakhs. On physical verification, it was also observed that the currency notes in the custody of petitioner No. 1 were of the denominations of Rs. 500, Rs. 100, Rs. 50 and contained bank slips most of which were dated January 17, 2003, January 18, 2003, January 20, 2003, January 21, 2003, and January 22, 2003. They were issued from different banks, cash was not the same as that withdrawn by petitioner No. 2 from the bank account in Sendhwa. The statement of Shri Jagdish Chandra Chaturvedi has been wrongly referred to. The contents have not been correctly mentioned. From the statement it is clear th....
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.... Indore. He has also referred to the statement of the bank manager and other statements to submit that possession stood explained, as such notices (P-1), (P-2) and (P-3) deserve to be quashed along with the entire proceedings. Shri Rohit Arya, learned senior counsel with Shri Ajit Ade, appearing for respondents Nos. 1, 2 and 4 has submitted that action has been taken in accordance with law. There was reason to believe available to respondent No. 1 to authorize respondent No. 2 to take action. Respondent No. 2 is authorized to issue the notices, etc., sufficiency of the reasons cannot be a ground to be agitated in a writ petition considering the fact that the amount was carrying the slips of different banks at Indore. It is clear that the amount was not withdrawn from the concerned bank at Sendhwa by the petitioner. On verification, its possession could not be explained immediately by the petitioner, Amar Agrawal. There were doubtful circumstances, the initial stand was contradictory, cash was found in possession of petitioner No. 1. It was prima facie not the same which was withdrawn by petitioner No. 2 from the bank. In case the amount was to be deposited at Indore, as alleged,....
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....s possession by the police authorities. Thus, it appears that there is reason to believe that the assets represent either wholly or partly income or property which has not been, or would not have been disclosed for the purposes of the Income-tax Act, 1961, by Shri Amar Agrawal from whose possession or control such assets have been taken into custody by the police authorities. It was, therefore, proposed by the Deputy Director of Income-tax (Investigation) to initiate the action, if deemed fit, to issue warrant of authorisation. The proposal was put up before respondent No. 1, Director of Income-tax (Investigation), Bhopal. He, on the basis of the facts collected, has observed that he has reason to believe that the amount in question represents income/property, which has not been and would not have been disclosed for the purpose of the Income-tax Act, the warrant of authorization was, therefore, issued to take into Departmental custody the cash amounting to Rs. 29.80 lakhs, the warrant of authorization under sub-section (1) of section 132A was issued on January 24, 2003, by the Director of Income-tax (Investigation), Bhopal, as apparent from the original files, which have been produ....
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....hdrawn from the State Bank of India, the fax letter (P-4) mentions that amount was withdrawn from a different bank, State Bank of Indore at Sendhwa. He has stated that he has made the statement due to mistake. When he was questioned that on certain bundles of currency notes, there was a seal of "Shubh Laxmi Mahila Cooperative Bank Ltd., Indore, dated January 22, 2003" and as per fax, the amount has been withdrawn on January 22, 2003," and January 23, 2003, from the Sendhwa bank and on some of the bundles there were slips of Tube Traders, Shastri Market, Indore, and on the remaining bundles there were bank slips of Indore bank as such question was put to petitioner No. 1 that he has withdrawn the amount from different places at Indore and contradiction in his statement that the amount was withdrawn from Sendhwa whether the amount has been recovered from Indore, he has stated that he was not aware of these facts. On being questioned when his uncle left for Maharashtra, he answered that uncle left on January 23, 2003 in the night at about 9.00-9.30 p.m. In the initial statement recorded by respondent No. 2 Shri Amar Agrawal was unable to explain the possession as apparent from his sta....
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....r manner to initiate the proceedings under section 132A of the Income-tax Act. In Rugmini Ram Raghav Spinners (P.) Ltd. v. Union of India [1992] 196 ITR 674 (Mad), it has been held that it is not for the court to find out that belief is rational and has nexus with information, in case circumstances exist to form an opinion. In the instant case, I find that the opinion was formed on relevant facts. In Sudarshan and Co. v. CIT [1983] 139 ITR 1032 (All), it has been observed by the Allahabad High Court that existence of belief can be challenged but not sufficiency of reasons for belief. If the information is sufficient for formation of the belief that assets would not be disclosed. Filing of returns subsequent to seizure is not relevant. In Mamchand and Co. v. CIT [1970] 76 ITR 217 (Cal), it has been held that there must be existence of prima facie reason to believe. He has to show facts which prima facie will convince the court that a reasonable man could, under the circumstances, form a belief which will impel him to take action under the law. The court will not go into the sufficiency or adequacy of such reasons. In B. P. Abdul Gafoor v. CIT [1983] 142 ITR 108 (Ker), it has been ob....
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....ot be said to be ousted because the assessment was earlier done still it is open to the Director of Inspection to entertain necessary belief. The apex court has observed thus: "In this petition also it was alleged that the Director of Inspection could possibly have no reason to believe the existence of circumstances required by sub-clauses (b) and (c) of sub-section (1) of section 132 because the petitioner's assessment for the year 1970-71 had been already completed and so also the wealth-tax assessment for the year 1969-70. But this does not mean that on the information in the possession of the Director of Inspection, he cannot entertain the necessary belief. The grounds for the belief recorded by the Director of Inspection before the authorization were shown to us and we do not think that on the material the authority could not have entertained the belief. A big godown has been newly constructed by the petitioner but his books of account did not reflect the expenditure on account of this construction. It is alleged on behalf of the Department that, on search, terrain documents in the nature of maps, etc. were seized which showed that the petitioner had constructed the buildin....
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....ch the law authorizes it to be exercised. If the action of the officer issuing the authorization, or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the court. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed. But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the officers will not vitiate the exercise of the power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorizes a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorizing search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorization will n....
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....d Kumar Jaiswal for purposes of the Act. Mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the Act'." It has been held that merely on unexplained possession of amount without anything more it cannot be said that information which could be treated as sufficient by a reasonable person. In the instant case explanation was given which was not found to be prima facie believable and was contradictory, thus action has been taken, hence the ratio of the above case is not attracted. Counsel for the petitioner has further relied upon the decision of the Allahabad High Court in Vindhya Metal Corporation v. CIT [1985] 156 ITR 233, wherein it was held that unexplained possession of amount alone without anything more would hardly constitute information sufficient for leading to an inference that it was income which would not have been disclosed by the persons in possession thereof. The person was carrying huge cash while on a railway journey. He w....