Delhi High Court
Thanthi Trust vs Commissioner Of Income-Tax And Others on 23 March, 1987
Equivalent citations: [1987]167ITR397(DELHI)
Author: Yogeshwar Dayal
Bench: Yogeshwar Dayal
JUDGMENT Yogeshwar Dayal, J.
1. Today only C.M. No. 687 of 1987 is listed but with the consent of the learned counsel for the parties, the writ petition it self is being disposed of since it is stated that the matter if covered by a decision of the Supreme Court.
2. A search was conducted pursuant to an authorisation issued under sub-section (1) of section 132 of the Income-tax Act, 1961, and certain documents as mentioned in annexure "A" to the writ petition and the books of accounts were seized from the room of a director of the petitioner. The seizure list is dated August 7, 1976. It appears that thereafter the Income-tax Officer concerned by order dated December 15, 1977, communicated to the petitioner-trust that the Commissioner of Income-tax (Central), Madras, has given permission to retain the books and documents till December 31, 1978. Along with this communication, the reasons which prompted the Commissioner to grant the permission/approval to retain the books of account till December 31, 1978, were not furnished.
3. The petitioner consequently went up in appeal before the Central Board of Direct Taxes and the Board dismissed the appeal by its order dated July 14, 1981. In this order, the Central Board of Direct Taxes took the view that it is not the scheme of section 132 of the Act to communicate the reasons which the Income-tax Officer had forwarded to the Commissioner who granted permission for continued detention of the seized documents and the books of account.
4. Learned counsel for the petitioner has brought to our notice the decision of the Supreme Court in CIT v. Oriental Rubber Works [1984] 145 ITR 477. In this judgment the Supreme Court has analysed the scheme of section 132 of the Income-tax Act and has observed as under (headnote) :
"The scheme of sub-section (8), (10) and (12) of section 132 of the Income-tax Act, 1961, makes it amply clear that where books and documents of an assessed seized in a search conducted pursuant to an authorisation issued under sub-section (1) are retained beyond the period of 180 days from the date of seizure, there is a statutory obligation on the Revenue to communicate to the assessed not merely the Commissioner's approval but also the reasons recorded by the authorised officer or the Income-tax Officer on the basis of which the approval has been obtained; and such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner. In default of such expeditious communication, the Commissioner's decision according approval will not become effective and any further retention of the books or documents seized would become invalid and unlawful. Such obligation arises in regard to every approval of the Commissioner that might be accorded from time to time.
Two conditions must be fulfillled before an extended retention of books or documents seized in a search conducted under section 132 becomes permissible in law : (a) Reasons in writing must be recorded by the authorised officer or the Income-tax Officer concerned seeking the Commissioner's approval; and (b) the Commissioner's approval for such extended retention must be obtained. If either of these conditions is not fulfillled, such extended retention will become unlawful and the person from whose custody such books or documents have been seized or to whom they belong acquires a right to their return forthwith."
5. It is clear from this judgment that the Supreme Court has spelt out the conditions which must be fulfillled before the extended retention of books or documents seized in a seized in a search conducted under section 132 of the Act becomes permissible in law. One of the conditions precedent mentioned in the aforesaid decisions is that the reasons in writing recorded by the authorised officer or the Income-tax Officer concerned seeking the Commissioner's approval must be communicated to the assessed from whom the books or documents have been seized. Admittedly, the reasons were not communicated and the petitioner had to go in appeal.
6. In view of the aforesaid decision, the further retention of the seized documents and the books of accounts thus becomes illegal and unauthorised.
7. We would accordingly direct the respondents to return the seized documents and the books of account within a week from today.
8. Since the books of account and the documents have been seized by the income-tax authority, the petitioner was naturally handicapped and was unable to file the requisite returns as contemplated by section 12A read with section 139 of the Income-tax Act. In the circumstances of the case, we allow the petitioner one year's time to file its returns as contemplated by section 12A read with section 139 of the Act from the date the documents and the books of accounts, which were seized, are returned.
9. Since the law has now been settled after the passing of the orders of the authorities concerned, parties are left to bear their own costs.