TaxTMI 
TaxTMI 
1994 (5) TMI 20
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....khla Industrial Area. The second petitioner is a director of the said company. The petitioner-company has been subjected to assessment under the Income-tax Act and assessments up to the years 1988-89 have been completed while for the subsequent years they were pending at the time of the writ petition. For the purpose of the petitioner's manufacturing activity the Commissioner of Industries files and allots the quota of copper wire bars which is the raw material used by the petitioner-company. The raw material is being supplied by the fifth respondent-company which is a public sector undertaking. On fixation of the allotment of the quota the petitioner gets itself registered with the fifth respondent-company for the requirements, and the petitioner-company had to make payment of the price in advance at the rates stipulated by the fifth respondent. As and when the material is made available the petitioner-company takes the same. In March, 1991, the price of copper wire bars was Rs. 1 lakh per metric tonne. The petitioner sought release of the quota of 32 metric tonnes of copper wire bars for the said month and paid a sum of Rs. 31,36,925 by way of bank pay order. The fifth respondent....
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....y of goods had unexplained money and this was the reason for the impugned restraint orders. The relevant statements made on behalf of the Revenue are as follows : "(iv) Perusal of accounts of Messrs. Shri Ganesh Enterprises Pvt. Ltd. with Messrs. Hindustan Copper Ltd. showed that an amount of Rs. 28,44,846 remained with Messrs. Hindustan Copper Ltd. pending execution of supply. (v) Perusal of the books of Messrs. Hindustan Copper Ltd. showed that Messrs. Shri Ganesh Enterprises Pvt. Ltd. had deposited a sum of Rs.3.77,32,721 with Messrs. Hindustan Copper Ltd. in the month of March, 1991. (vi) Efforts were made to determine the source of funds out of which such amounts were deposited by Shri Ganesh Enterprises Pvt. Ltd. and to find out whether the sources were out of explained or unexplained sources. (vii) In the course of enquiries Messrs. Shri Ganesh Enterprises Pvt. Ltd. submitted that amounts deposited with Messrs. Hindustan Copper Ltd. were out of the amounts received in March, 1991, to the tune of Rs. 3,30,30,000 on different dates from Messrs. Gandhi Metals owned by Shri Pradeep Grover and a sum of Rs. 48,75,000 from Messrs. R. A. International received in the per....
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....e in possession of vehicle No. DNJ 0224, which has a mobile telephone installed which was stated by him to be registered in the name of Messrs. Shri Ganesh Enterprises. (vi) Source of amounts deposited by showing cash sales in books of R. A. International are also not explained as even the names of such parties to whom sales have been made have not been furnished." Again in another counter, the case of the Revenue is stated as follows: "The Income-tax Department further found that pay orders were purchased by the said two parties, namely, Messrs. Gandhi Metals and Messrs. R. A. International, from the banks on tendering cash. As the source of the deposits by the petitioner, Shri Ganesh Enterprises P. Ltd., with Hindustan Copper Ltd. was not proved, therefore, a restraint order under section 132(3) of the Income-tax Act was issued to Hindustan Copper Ltd. restraining the amounts which were lying deposited with them which at that time was Rs. 28,44,846. Messrs. Ganesh Enterprises Pvt. Ltd. is assessed by the Assistant, Commissioner of Income-tax, Company Circle No. 1(3), New Delhi. He has completed the assessment for the assessment year 1989-90 on March 31, 1992, on an in....
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....titioner, Messrs. Shri Ganesh Enterprises Pvt. Ltd., has failed to explain the source of its deposit with Hindustan Copper Ltd., and, therefore, the restraint order under section 132(3) was validly issued to Hindustan Copper Ltd. by my directorate. However, in view of the fact that the provisional attachment order under section 281B of the Income-tax Act has since been issued by the Assessing Officer, namely, Assistant Commissioner of Income-tax, Company Circle No. 1(3), New Delhi, the said restraint order has become infructuous." From the above, it is clear that the failure of Gandhi Metals to establish its source of income from which payments were made to the petitioner company was the ultimate reason for the impugned action. Further, an order was later made, lifting the restraint order during the pendency of the writ petition in view of the provisional order of attachment made under section 281B of the Act attaching a sum of Rs. 28 lakhs with the fifth respondent for which the Commission issued the directive to the concerned officer of the Income-tax Department on December 15, 1992. Technically, the writ petition became infructuous since the restraint order ceased to opera....
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....uperior authority or court, provided the law permits it to be rectified. The said rectification or nullification is part of the appellate or revisional power, which the law should specifically provide for. The writ jurisdiction is not so comprehensive as to comprise within it such an appellate or revisional power. It is essentially a supervisory jurisdiction to see that statutory authorities function within their bounds and that their decisions are not arbitrary, fanciful or based on irrelevant considerations. The scope of the writ jurisdiction while examining the validity of the authorisation under section 132(1) is clearly limited to see whether the reasonable belief formed by the authority issuing the authorisation was a reasonable belief, in the sense whether the said belief was formed only on the basis of relevant material/information." After a few more observations, the order proceeded to say : "The power vested in the State is to see that rights and liberties vested in individuals are not misused to the detriment of the public. The menace of tax evasion has to be curbed by the State so that the vast revenues needed by the State to expend on its welfare activities, bene....
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....there is every likelihood of further manipulative devices being adopted by such persons to give a different orientation to the relevant facts. The person against whom the action is to be taken will be given all the relevant facts and materials on which further action is proposed, after investigation is completed. Search and seizure is only an initial step in the enquiry to be held regarding tax evasion. At this stage, its purpose is to get hold of evidence bearing on the tax liability of a person, which the said person is suspected to have been withholding from the assessing authority and to get hold of the assets representing income believed to be undisclosed income. The stage for disclosure of the materials is reached only when the Revenue resolves to proceed to make an appropriate order imposing tax liability or penalty, etc., and at that stage, all relevant materials from which the liability of the taxpayer is sought to be inferred, shall have to be disclosed. At the initial stage of search and seizure, it is sufficient if the Revenue places the material before the court to examine whether the said material on which search and seizure is ordered, was relevant to the exercise....