TaxTMI 
TaxTMI 
2005 (4) TMI 43
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....se such power under section 131(1) and (1A) of the Income-tax Act 1961, hereinafter in short referred to as "the Act" for the purpose of convenience. The said action is challenged by writ petitioners Nos. 1 to 4. The first petitioner is M/s. A. P. Wine Dealers Association, represented by its general secretary, a registered Association, the second petitioner is M/s. Twin Cities Wine Merchants Association, represented by its president, an unregistered association and yet another two, viz., Sri Pentala Ramesh Babu and Sri Aravapalli Laxminarayana, who are said to be carrying on business as wine merchants. The first respondent is Deputy Director of Income-tax (Investigation), Unit 1(2), Hyderabad. The second respondent is the Commissioner of Prohibition & Excise, Government of Andhra Pradesh. Respondents Nos. 3 to 26 are the Prohibition & Excise Superintendents in the State of Andhra Pradesh representing different districts. The relief prayed for in the writ petition is for a writ of mandamus declaring the action of the first respondent in calling upon the Superintendents of Excise and Prohibition in the State of Andhra Pradesh to produce the demand drafts submitted by various applican....
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..... Learned counsel also would comment that even otherwise the powers specified under section 131(1) of the Act can be exercised only for the limited purpose as specified under the Act as such and not otherwise. It is no doubt true that each applicant has a right to get his demand draft back but on that ground distinct court fee need not be paid by each of such applicants, since a common cause or common grievance of the participants is being ventilated by the first petitioner. The mere fact that the first petitioner was unable to furnish the names as required by the Income-tax Department would not alter the situation in any way. At any rate, counsel would contend that in the light of rule 4A of the Writ Rules, inasmuch as the writ petition is based on the common cause of action questioning the impugned proceeding, separate court fee need not be paid. Learned counsel also further contended that the decisions dealing with this aspect and on which strong reliance is being placed, had never considered rule 4A of the Writ Rules and hence the said decisions may not be applicable in the light of the specific rule referred to supra. Learned counsel also while further elaborating his submissi....
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....o substantiate his submissions in this regard. Submissions of Sri S. R. Ashok, senior counsel appearing on behalf of the Income-tax Department: Sri S. R. Ashok, learned senior counsel representing the Income-tax Department raised a preliminary objection relating to the locus standi of the writ petitioners to maintain the writ petition and the maintainability of the writ petition and also the objection relating to the payment of court fee. Learned counsel would maintain that in the light of the relief prayed for in the writ petition, the affected applicants are unknown and it is not known whether any members of the first petitioner-association had participated by making applications and by depositing the demand drafts and whether their legal rights are infringed at all. Learned counsel would maintain that though specific request had been made, counsel representing the writ petitioners had not furnished the particulars of the members of the first petitioner-association and in the light of the same, the association cannot espouse the cause of such persons, the unknown applicants. Learned counsel also would submit that at the best, the membership of the first petitioner-associati....
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....opies of the demand drafts, the same cannot be worked out and learned counsel explained the difficulties involved in relation to the same. Learned counsel also had drawn the attention of this court to several definitions of "document" and would contend that at the best this may fall under the "escrow arrangement" and made elaborate submissions in this regard. Counsel made it very clear that this is not a case of seizure falling under section 132 and the Department is interested in setting the investigative agency into motion while taking these documents and looking into these documents for the purpose of unearthing the real persons for the purpose of reaching at the real persons dealing with the monetary transactions. Counsel would maintain that if the crucial material is returned to the applicants, the investigation cannot be completed by the Income-tax Department. Learned counsel had made elaborate submissions on the aspect of "negotiable instrument", the procedure involved in the banking transactions and also would maintain that the writ petitioners are not clear whether they had approached this court by way of public interest litigation or adversary litigation or whether it is ....
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....artment and its investigative agency in taking such steps which are permissible in law under the provisions of the Act. Further, the learned Advocate General would submit that taking the over-all facts and circumstances it would be just and proper to dispose of the matter at an early date. Locus standi of the writ petitioners and the maintainability of the writ petition: While dealing with the aspect of locus standi one of us (P. S. Narayana J.) in the Law of Writs, 3rd edition, at page 381, commented: "The term locus standi can be understood as legal capacity to challenge an act, an order or decision. This is one of the most vexed questions of administrative law. Where a party who has no locus standi files a petition it need not be heard on merits. The concept of locus standi is being liberalized and the scope of the concept is being expanded day to day". Thus, the traditional view relating to the concept of locus standi had undergone a sea change by different judicial pronouncements. The under-noted decisions may be usefully referred to in this context: (1) Dhronamraju Satyanarayana v. N. T. Rama Rao [1988] 1 ALT 178; AIR 1988 AP 144 [FB]; (2) S. P. Gupta v. Uni....
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....and each petitioner shall pay a separate set of court fee. It is relevant to note that the cause of action to file the writ petition as regards all the petitioners is common. The cause of action is the refusal of the management of APOILFED to treat the petitioners as its employees. Since the writ petition is grounded on a common cause of action and since common relief is sought by all the petitioners, a single set of court fee on behalf of the petitioners is sufficient.' But, it appears that a Division Bench judgment of this court was not shown to the court at the time of hearing of the matter. The Division Bench of this court in G. Kondaiah v. A. P. Agricultural Development Bank [1985] 3 APLJ 376 held that "it is obligatory for each individual petitioner to pay court fee unless jural relationship is established". The court was relying on a judgment of the Supreme Court reported in Mota Singh v. State of Haryana, AIR 1981 SC 484. The matter is no longer res integra and the Supreme Court has held it in clear terms as to in which cases several petitioners joining together will have to pay one court fee or individual court fee. In the matter before the Supreme Court, independent tr....
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....ot alter the situation in any way. Apart from this aspect of the matter, in the decisions referred to supra, rule 4A of the Rules had not been referred to nor a decision had been rendered considering the language employed in the aforesaid rule. Inasmuch as it is a common cause of action, especially in the light of the impugned proceeding which had been questioned being common, this objection that the individual court fee is payable by each applicant cannot be sustained. In A. P. Arrack Contractors Association v. Government of A. P. [1997] 5 ALT 228 a learned single judge observed at para. 10 as hereunder: "In the case of a body incorporated by law, the corporate body acquires by law a legal entity or a legal personality of itself and by reason thereof is entitled to sue and be sued in its own name. But an un-incorporated association has no such legal personality or entity. It is nothing but an aggregation of its members who can only bring legal proceedings in their individual capacity. Even when all of them are affected by an official act, they can challenge the same only if all members join in the proceedings by name. The association, in such a case, cannot maintain an applicat....
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.... though in the case of some of the writs like habeas corpus or quo warranto this rule may be relaxed or modified. In Bombay Dyeing and Mfg. Co. Ltd. v. State of Bombay, AIR 1958 SC 328 it was held by the apex court at para. 28: "It is then argued that this is an objection open only to the employees, and that the appellant can make no grievance of it. It is no doubt true that a question as to the constitutionality of a statute can be raised only by a person who is aggrieved by it; but here, the statute deals with rights arising out of contract, and that presupposes the existence of at least two parties with mutual rights and obligations, and it is difficult to see how when the rights of one party to it are interfered with, those of the other can remain unaffected by it. Let us assume that the appellant makes a payment to the Board under section 3(1) of the impugned Act on the footing that the law is not unconstitutional as against him. What is there to prevent the employee from suing to recover the same amount from the appellant on the ground that the Act is unconstitutional? It will be no answer to that claim to plead that the appellant has already paid the amount to the Board. ....
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....heir nature and functions and funding, should not be allowed lightly to undertake litigation in the name of public interest which can cause a lot of damage to others. In the present case, because of the litigation the students have not been able to complete their B.H.M.S. course for a number of years. Pursuant to the interim order these students have been permitted to appear for examinations conducted in December, 1996, and the results have also been declared. We direct that in accordance with the results so declared the students may be allowed to continue/complete the B.H.M.S. course with the University of Rajasthan in accordance with law and those who have qualified for the B.H.M.S. degree as per these results be granted the degree by the University of Rajasthan." Further submissions had been made by learned senior counsel representing the Income-tax Department that the nature of the litigation itself is not clear, whether it is a public interest litigation, benami litigation, individual litigation, adversary litigation, and in the absence of particulars and also in the absence of a clear stand relating to the nature of the litigation, the relief prayed for in the writ peti....
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....ervation of this court in People's Union for Democratic Rights v. Union of India [1982] 3 SCC 235; [1982] SCC (L & S) 275 which reads thus: 'But the traditional rule of standing which confines access to the judicial process only to those to whom legal injury is caused or legal wrong is done has now been jettisoned by this court and the narrow confines within which the rule of standing was imprisoned for long years as a result of inheritance of the Anglo Saxon system of jurisprudence have been broken and a new dimension has been given to the doctrine of locus standi which has revolutionised the whole concept of access to justice in a way not known before to the western system of jurisprudence... It is therefore necessary to evolve a new strategy by relaxing this traditional rule of standing in order that justice may become easily available to the lowly and the lost.' R.S. Pathak J. (as the learned Chief Justice then was) while agreeing with the directions proposed by Bhagwati J. (as the learned Chief Justice then was), in Bandhua Mukti Morcha v. Union of India [1984] 3 SCC 161; [1984] SCC (L & S) 389; [1984] 2 SCR 67, 159 expressed his view stating, 'In public interest litigat....
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.... motive to approach the court for enforcement of the constitutional or legal rights of socially or economically disadvantaged persons who on account of their poverty or total ignorance of their fundamental rights are unable to enter the portals of the courts for judicial redress, yet no precise and inflexible working definition has been evolved in respect of locus standi of an individual seeking judicial remedy and various activities in the field of PIL. Probably, some reservation and diversity of approach to the philosophy of PIL among some of the judges of this court as reflected from the various decisions of this court, is one of the reasons for this court finding it difficult to evolve a consistent jurisprudence in the field of PIL. True, in defining the rule of locus standi no 'rigid litmus test' can be applied since the broad contours of PIL are still developing apace seemingly with divergent views on several aspects of the concept of this newly developed law and discovered jurisdiction leading to a rapid transformation of judicial activism with a far-reaching change both in the nature and form of the judicial process." While dealing with the right of the Contractors Welfa....
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.... by Superintendent, Central Excise to the respondents or on the basis of any superior authority's order as mentioned in para. 33 of the order of the learned single judge at page 291. We also make it clear that the decision shall be rendered by the adjudicating authority strictly on merits after considering the evidence led before it and without being influenced; whatsoever by the earlier observations of the High court. It is also made clear that if adjudication ultimately culminates against the respondent, it will be open to it to file an appeal before CEGAT and till the decision of CEGAT on appeal, there will be no recovery of the amount even if it is adjudicated upon by the adjudicating authority in these proceedings. Learned counsel for the appellant submitted that if there is any adjudication made by the authority pursuant to the impugned show-cause notice, an appeal would certainly be maintainable before CEGAT. In our view on the peculiar facts of this case only and not as a precedent we have directed that the recovery of the adjudicable amount shall remain stayed till CEGAT's decision if at all any occasion arises for the respondent to go in appeal. However, it will be open t....
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....ed senior standing counsel representing the Income-tax Department would maintain that when the facts are suppressed and when the material is not placed bona fide before the court, definitely such party is not entitled to any relief under article 226 of the Constitution of India. Yet another submission was made that this is not a writ petition filed in a representative capacity nor is it a case of public interest litigation since 1,43,000 applicants are neither the persons who are incapable of prosecuting their litigations nor otherwise disabled for any other reason and on this ground also the merits of the writ petition need not be gone into. These submissions made in elaboration by learned senior counsel representing the Income-tax Department on the aspect of locus standi and maintainability of the writ petition need not detain this court any longer for the reason that the writ petitioners are ventilating a common grievance and a common cause and the impugned action is the common cause in relation to the trading community concerned with the excise policy of the State Government and inasmuch as the first petitioner-Association is entitled to ventilate the common grievance of the sa....
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....t the order of the Excise Commissioner was passed in violation of law, we do not wish to nip the motion out solely on the ground of locus standi. If the Excise Commissioner has no authority to permit a liquor shop owner to move out of the range (for which auction was held) and have his business in another range it would be improper to allow such an order to remain alive and operative on the sole ground that the person who filed the writ petition has strictly no locus standi. So we proceed to consider the contentions on merits." As can be seen from the observations referred to supra, it is clear that reliance had been placed on Jasbhai Motibhai Desai v. Roshan Kumar [1976] 1 SCC 671, a judgment of four-judge Bench. No doubt there is some discussion relating to what is the meaning of an aggrieved person. A very technical ground had been raised that even petitioners Nos. 3 and 4, the individuals who had joined the present writ petition, had not specifically averred that they made the applications and made the deposits. On an over-all appreciation of the facts and circumstances, especially in the light of the liberalized trend of the apex court on the concept of locus standi and als....
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....g before the hon'ble High Court of Andhra Pradesh. Whereas the undersigned has reason to suspect that large amounts of cash were deposited in various banks from undisclosed sources, to obtain the demand drafts submitted along with the applications and thus it constitutes concealed income. Whereas on a prima facie enquiry, it is opined that a large number of applicants and/or account holders from whose accounts the funds were drawn for obtaining the aforesaid DDs are found to be either benami/fictitious persons and the return of the DDs to such applications would thwart the enquiry by the Income-tax Department rendering recovery of taxes also an impossible task. Whereas the undersigned is vested with powers to call for the documents required for conducting enquiry in relation to cases involving concealment of income by any person or class of persons in terms of sub-sections (1) and (1A) of section 131 of the Income-tax Act, 1961. Accordingly, I call upon you To produce all the demand drafts submitted along with the relevant applications of the applicants within 24 hours of the delivery of the judgment of the hon'ble High Court of Andhra Pradesh in the pending writ pet....
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....on need not be deeply gone into especially in view of the remoteness of this question and not being directly germane to the present litigation. Hence, this court is not inclined to express any opinion relating to the same in this regard. Pleadings in brief: In the affidavit filed in support of the writ petition, certain details relating to the excise policy in pursuance of which the applications and the deposits by way of demand drafts had been made and also the policy of the State Government which had been questioned in the writ petitions and writ appeals had been averred. The provisions of sections 131 and 132 of the Act had been referred to and several details had been furnished how these provisions are not applicable and the first respondent cannot invoke the power of issuing the impugned proceeding in the light of the language employed therein. The writ petitioners also pleaded that in the normal course after filing of an application for grant of IL 24 licence, the 1/3rd fee paid in advance would have been adjusted in the case of successful applicants towards the licence fee, with an obligation on such successful applicants to pay balance 2/3rd fee. In the case of unsucc....
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....ormation of particulars about demand draft which are filled up in the application form in any case, there would be no necessity for the first respondent to take the demand drafts from the custody of the Excise Superintendents. Certain other details also had been averred in paras. 13 and 14 of the affidavit filed in support of the writ petition and ultimately the relief which had been referred to supra had been prayed for. In the counter affidavit filed by the first respondent, several of the aspects had been specifically denied. No doubt a supplementary affidavit was filed by the first respondent taking a specific stand that in spite of specific request made, the first petitioner had not furnished the relevant information of the first petitioner-Association and had not disclosed the persons on whose behalf the cause is being espoused. The maintainability of the writ petition had been specifically raised denying almost all the allegations in this regard and it was stated that the first petitioner-Association cannot be construed to be a representative body of the applicants who participated in the tender process initiated by the Government in the month of February, 2005, and it is....
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.... broken by the bankers in issuing demand drafts for more than Rs. 50,000 against cash deposits. In view of the aforesaid facts and circumstances the Directorate of Income-tax Department called upon the Joint Commissioner and Commissioner of Prohibition & Excise to furnish photostat copies of the applications and/or in the alternative permit the Income-tax Department to peruse the material by letter dated March 11, 2005. The second respondent replied on March 15, 2005, that the issue was sub judice before this court and that the Income-tax Department's request was being referred to the learned Advocate General for opinion. Thereafter nothing was heard from the Excise Department. In spite of the fact that the first respondent renewed his request by personally approaching the authorities in the Excise Department no information was furnished. In these circumstances the Income-tax Department was left with no option except to invoke the jurisdiction vested in it under section 131(1) read with section 131(1A) of the Act calling upon the Prohibition & Excise Superintendents of the respective districts, respondents Nos. 3 to 24, to produce the relevant applications and demand drafts for inv....
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....artment that quite a good number of applicants are non-existing and their names had been used by vested interests. There is every possibility for existence of quite a good number of benami cases and fictitious persons and it was averred that if the demand drafts are allowed to be returned it would be impossible for the Income-tax Department to unearth the real persons and keeping these aspects in mind the Income-tax Department had invoked the jurisdiction under section 131 read with section 131(1A) of the Act for summoning all the applications and the relevant demand drafts for further investigation. It was further averred in para. 8 of the counter affidavit that under section 131 of the Act, the jurisdiction can be invoked for production of document if the authority "has reason to suspect" that any income had been concealed or is likely to be concealed by any person or class of persons and the reports received from the field officers establish the ingredients required for forming the opinion that there has been concealment or likely concealment of income and hence the jurisdiction under section 131(1) read with section 131(1A) of the Act had been invoked. It was also further plead....
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.... an important issue like tax evasion of a huge order. In any event, having regard to the scheme and background of the tendering process evolved by the Excise Department of the State of Andhra Pradesh, the demand drafts cannot be said to be intended to be used as a negotiable instrument and it is not as if the Prohibition & Excise Superintendent has got unfettered freedom to encash the demand drafts drawn in his favour at any and every stage. Under the scheme of tendering, all the applicants have to furnish demand drafts for an amount equivalent to 1/3rd of the probable licence fees. After drawal of lots, the successful applicant is called upon to obtain licence by depositing the balance 2/3rd and in the eventuality of such applicant not coming forward to take the licence, the deposit amount is forfeited and draw would be conducted amongst the remaining tenderers. The demand drafts belonging to remaining unsuccessful tenderers are eventually liable to be returned by the authorities and therefore the Excise Superintendent has neither power or authority to encash the demand draft in respect of unsuccessful applicants nor could they transfer it in favour of a third party. The only opti....
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....emand drafts the petitioners have not given details of those small merchants much less the cases in which borrowed funds were utilized at higher rate of interest. At any rate the same has no relevance in the context of adjudication of the jurisdictional aspect on the relief required to be granted. However, it is surprising that the petitioner, without specifying the details as to the members of the Association, is espousing the cause of third persons without indicating its authority to represent their case and thus the petitioners appear to be interlopers representing the cause of a class of people without any ostensible connection whatsoever. Further, the assertion of the petitioners that demand drafts could not give any information as to the source of funds of a particular applicant or by what process it was purchased is not correct but it is only on the circumstantial evidence the Department would be able to prove as to the real person figuring in each transaction as a group of transactions. The very fact that some of the applicants had been grouped as part of formation of a syndicate are also to be proved from the mode and method adopted by the applicants in the matter of purch....
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....poses of conducting investigation, it is not necessary that the possible assessee should be within the jurisdiction of the first respondent. It was pleaded in para. 19 that the petitioners have not made out a case for invoking the jurisdiction of this court and the real person who is possibly affected by the impugned action is not before this court. None of the applicants who submitted their applications or demand drafts came forward before this court seeking any relief. It is not the case of the writ petitioners that any of the 1,43,000 applicants are members of the first petitioner-Association. In so far as petitioners Nos. 2, 3 and 4 are concerned, they have absolutely no locus standi to file the present writ petition. It is not the case of the petitioners that 1,43,000 applicants belong to such class of persons in the Association who were unable to espouse their cause. As the applicants have got wherewithal to pursue their legal rights, if any, it is not open to the petitioners to espouse the case of 1,43,000 applicants who participated in the tendering process especially when the petitioners have absolutely no concern with the said applicants. It was pleaded at para. 20 of the....
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....- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions. (1A) If the Director-General or Director or Joint Director or Assistant Director or Deputy Director, or the authorized officer referred to in sub-section (1) of section 132 before he takes action under clauses (i) to (v) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority.... (3) Subject to any rules made in this behalf, any authority referred to in sub-section (1) or sub-section (1A) may impound and retain in its custody for such period as it th....
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....ficer, or (B) such Joint Director or Joint Commissioner, as the case may be, may authorize any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, (the officer so authorized in all cases being hereinafter referred to as the authorized officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out Of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorized officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; ....
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....l, vehicle or aircraft. (2) The authorized officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition. (3) The authorized officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub-section (1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation.- For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-sect....
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....g the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him; (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act; (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment; (iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized: Provided that if, after taking into account the....
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...., as the case may be, Commissioner for such extension: Provided that the Director or, as the case may be, Commissioner shall not approve the extension of thee period for any period beyond the expiry of thirty days after the completion of all the proceedings under this Act in respect of the years for which the books of account, other documents, money, bullion, jewellery or other valuable articles or things are relevant. (9) The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorized officer or any other person empowered by him in this behalf, at such place and time as the authorized officer may appoint in this behalf. (9A) Where the authorized officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents or assets seized under that sub-section shall be handed over by the authorized officer to the Income-tax Officer having jurisdiction over such person within a period of fifteen days of such seizure and thereupon the powers exercisab....
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....in sub-section (5) for the purposes of that sub-section, any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. Explanation 2.- In this section, the word 'proceeding' means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorized under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year." Meaning of "document" : These submissions at length were made by the respective counsel on the aspect of meaning of "document" especially in the light of the language employed in section 131 of the Act. The word or expression "document" is defined in inclusive form in section 2(22AA) of the Act and the said provision reads as hereunder: "'document' includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);" In Random's Dictionary, in relation to 'document' it is stated: (1) a written or pr....
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....rrency, specie, change. 7. funds, capital, assets, wealth, riches. In this context a specific stand had been taken by senior standing counsel representing the Income-tax Department that the demand drafts in the present context are only an "escrow arrangement" and placed strong reliance on a Division Bench decision in Global Trust Bank Ltd. v. Kakatiya Cement, Sugar and Industries Ltd. [2000] 6 ALD 135; [2000] 6 ALT 130, 140 wherein it was observed at paras. 17, 18 and 22 as hereunder: "As seen from exhibit B1 plaintiff deposited an amount of Rs. 200 lakhs in 'escrow' deposit with the defendant in connection with the purchase of shares from the third party under the MOU. The said fact is admitted in exhibit All also. As stated above for creation of an 'escrow' arrangement it is not necessary that the party, for whose benefit the amount is kept in deposit, should be a signatory to the arrangement. Since the third party with whom the money or deed is deposited is under an obligation to return the same to the grantee after the conditions of the grant are fulfilled, it is necessary for the person holding the money or deed to satisfy itself if the terms and conditions of the agreem....
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....settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not trustee and beneficiary. The banker is entitled to use the moneys without being called upon to account for such user, his only liability being to return the amount in accordance with the terms agreed between him and the customer. And it makes no difference in the jural relationship whether the deposits were made by the customer himself, or by some other persons, provided that customer accepts them. There might be special arrangement under which a banker might be constituted a trustee, but apart from such an arrangement, his position qua Banker is that of a debtor and not trustee', In New Bank of India Ltd. v. Pearey Lal [1962] 32 Comp Cas 91 (SC); AIR 1962 SC 1003, it is held that: 'In the absence of other evidence a person paying money into a bank, whether he is a constituent of the bank or not, may be presumed to have paid the money to be held as bankers ordinarily hold the moneys of their constituents. If no specific instructions are given at the time of payment or thereafter, and even if the money is held in a sus....
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....t" as: "The word 'document' denotes any matter expressed or described upon any substance by means of letters, figures, or marks, or by more than one of those means intended to be used, or which may be used, as evidence of that matter. Explanation 1.- It is immaterial by what means or upon what substance the letters, figures or marks are formed, or whether the evidence is intended for, or may be used in, a Court of Justice, or not. Illustrations: A writing expressing the terms of a contract, which may be used as evidence of the contract, is a document. A cheque upon a banker is a document. A power-of-attorney is a document. A map or plan which is intended to be used or which may be used as evidence, is a document. A writing containing directions or instructions is a document. Explanation 2.- Whatever is expressed by means of letters, figures or marks as explained by mercantile or other usage, shall be deemed to be expressed by such letters, figures or marks within the meaning of this section although the same may not be actually expressed. Illustrations: A writes his name on the back of a bill of exchange payable to his order. The meaning of the endorsement, as explai....
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.... in law, the State Government may have to return the said demand drafts. The investigative agency of the Income-tax Department had entered this fray to the limited extent of unearthing the real persons behind these monetary transactions. Learned senior standing counsel representing the Income-tax Department had placed a lot of material relating to several districts and also produced the statistical data in several cases and meticulously had explained how the applicants who can be said to have made the applications along with the demand drafts are not the real persons and why bona fide the Income-tax Department is suspecting and how the directions issued in the impugned proceedings are essential for the purpose of such investigation had been explained. It is true that in the interest of protecting the public exchequer this move was taken by the Income-tax Department. However, the investigative machinery of the Income-tax Department may have to operate within the permissible limits as provided by the statutory provisions and it cannot act beyond them under the guise of protecting the public exchequer. In this backdrop, now it has to be seen whether the impugned proceeding of the firs....
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....pose for which they have been incorporated in the said section. In ITO v. James Joseph O'Gorman [1993] 204 ITR 454 the Division Bench of the Calcutta High Court while dealing with the powers of income-tax authorities to summon for furnishing information and production of documents under section 131 held (headnote): "A plain reading of sub-section (1) of section 131 of the Income-tax Act, 1961, makes it clear that the persons mentioned in the subsection are vested with the powers of a court as provided under the Code of Civil Procedure, 1908. Order XI of the Code of Civil Procedure empowers a court of discovery and inspection under various rules of the Order and those rules are only applicable and could be exercised by a court in a pending suit. Under the circumstances, when similar powers have been given to the authorities concerned in section 131(1) of the Income-tax Act, as have been given under the Code of Civil Procedure to a court, unless there is a proceeding pending before the authorities concerned, no such power can be exercised." A Division Bench of the Patna High Court in Rina Sen v. CIT [1999] 235 ITR 219 (Patna) held (headnote): "The existence of a pending proc....
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....tion of ascertainment of income during the period relevant to the assessment year 1990-91 under section 143(3) of the Act, the Assessing Officer could not travel back to the alleged period of construction. The petitioner had produced evidence which strongly suggested that after purchase of the land in 1965, she constructed a portion of the house at least prior to December, 1968 when she was granted electric connection and completed the construction prior to 1974 when the Ranchi Municipality started collecting taxes, etc., with respect to the house. In her return filed for the assessment year 1982-83, the petitioner had declared rental income, allegedly from the said house, at Rs. 5,714 which after due enquiry was accepted by the Income-tax Officer under section 143(3) of the Act. This also showed, prima facie, that the house was in existence prior to April 1,1982. The impugned notice was not valid and was liable to be quashed." In Jamnadas Madhavji and Co. v. J. B. Panchal, ITO [1986] 162 ITR 331 (Bom) it was held (headnote): "The officers mentioned in section 131(1) of the Income-tax Act, 1961, viz., the Income-tax Officer, Appellate Assistant Commissioner, Inspecting Assist....
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....5, the assessment proceedings became time-barred in March, 1977. Subsequently, the assessee received from the Income-tax Officer summons under section 131 of the Act calling upon the assessee to furnish information, documents and books of account on various points specified therein in respect of the previous years relevant to the very assessment years 1972-73 to 1974-75. In reply thereto, it was submitted that the assessments for the assessment years 1972-73 and 1973-74 were completed long back in March/April, 1975 and the assessment for the assessment year 1974-75 had become time-barred. Consequently, as no proceedings were pending, there was no question of any summons being issued. The assessee then received a letter dated October 30, 1980 along with a fresh summons stating that section 131 could be invoked even where no proceedings were pending and that the purpose of the information called for was with a view to investigate whether the above assessment should be reopened under section 147 or not. On a writ petition: Held, (i) that no proceeding was pending when the Income-tax Officer issued the impugned summons and, therefore, the summons was liable to be quashed; (ii) th....
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.... as such. When the first respondent intends to lake shelter under the umbrella of sub-section (1) and sub-section (1A) of section 131 of the Act, it is the bounden duty of the said authority to justify the issuance of the impugned proceeding and to satisfy the court that in law it is permissible for him to do so. In the absence of such justification, on such a ground, the writ court cannot come to the aid of the Income-tax Department in upholding the impugned proceeding under the guise of protecting the public exchequer. Counsel representing the writ petitioners in fact made it clear that the investigative machinery of the Income-tax Department can be well utilized for the purpose of unearthing the real persons behind the monetary transactions by resorting to the procedure as specified by different provisions of the Act but definitely not by issuing the impugned proceeding under the provisions which would not authorize the Department to do so. Be it small or big, true or ostensible, real or benami fish in the applicants pool, the resultant of the excise policy of the State Government, though the object aimed at by the Income-tax Department is appreciable, the mode adopted by the is....