Kerala High Court
Raju vs Director General Of Income Tax on 21 October, 2005
Equivalent citations: [2006]283ITR154(KER), 2006(1)KLT147
Author: K.S. Radhakrishnan
Bench: K.S. Radhakrishnan, K.T. Sankaran
JUDGMENT K.S. Radhakrishnan, J.
1. Petitioner's residential premises as well as hospital premises were searched on 7-10-2004. Hospital premises was searched by Deputy Commissioner of Income Tax, Alleppey Range and the residential premises was searched by Deputy Commissioner of Income tax, Kollam Circle. Separate Panchanamas were prepared. Petitioner submits search did not unearth any black money or unexplained income. However, books of accounts and other documents were inventorised and seized by the searching party and are in the possession of the investigation wing of the Income tax Department.
2. Petitioner is however, aggrieved by the illegal detention of those documents by second respondent, an officer functioning under first respondent. Petitioner submits that though second respondent was not an authorised officer who conducted search, he being subordinate, first respondent is entrusted with post search duties to process the case for eventual entrustment to the Assessing Officer. Petitioner submits under Sub-section (9A) of Section 132 of the Income-tax Act 1961, the authorised officer or his colleagues in the investigation wing of the Income tax Department has power to retain the seized books of accounts and documents for a period of 15 days from the date of conclusion of execution of warrant of search. The time upto which the investigation wing could retain the books of accounts and documents was enlarged to 60 days from 1-6-2002. Petitioner submitted that in view of the amendment the maximum period of retention of documents and books of accounts is 60 days which expired on 6-12-2004 and further detention of books of accounts and documents is illegal and therefore the second respondent had no jurisdiction to issue summons Ext.P3 and to enforce the same. Counsel also submitted since the action of the investigation wing retaining the books etc. is illegal, the entire search and seizure proceedings evidenced by Exts.Pl and P2 series of Panchanamas are illegal and therefore of no consequence and any attempt at block assessment under Chapter XIVB would be unauthorised and illegal.
3. Learned single Judge found no reason to interfere with the search operations and disposed of the Writ Petition recording the submission of the revenue that the second respondent would prepare the appraisal report and forward the file to the assessing authority for follow up action. Petitioner is aggrieved by the nonconsideration of the various grounds raised by him in the Writ Petition and has come up with this appeal.
4. Counsel appearing for the writ petitioner Sri. Vijayan Nair submitted that the learned single Judge was not justified in not examining the question as to whether the intelligence wing of the Income tax Department represented by R1 and R2 have exceeded their powers and retained the search documents beyond the time allowed by Section 139(9A) of the Income tax Act. Counsel placed reliance on the decision of the Madras High Court in K.V. Krishnaswamy Naidu v. Commissioner of Income Tax and Ors. (1987) 166 ITR 244 affirmed by the Supreme Court in . Counsel submitted Ext.R2(c) and R2(d) are documents created to cover up the illegal custody established by Ext.P3 summons. Hence petitioner wanted a declaration that the 2nd respondent has no power to gather evidence or to improve upon evidence unearthed as a result of search and that the assessing authority alone has the power to gather further evidence and that the act of 2nd respondent is usurpation of power of the assessing authority and hence arbitrary.
5. Counsel appearing for the revenue Sri. George K. George on the other hand, contended that the 2nd respondent (Asst. Director of Income tax (Investigation-II), Kochi is the authorised officer having jurisdiction over the assessee by virtue of notification dated 23-1-2002. It was also pointed out second respondent was assigned the work of post search enquiries and preparation of appraisal report. Counsel submitted second respondent is an assessing officer having jurisdiction over the case as per orders issued under Section 120(2) of the Income tax Act, 1961 by the Director of Income Tax (Investigation), Kochi. The authorised officers in this case, i.e. Deputy Commissioner of Income Tax, Circle-1, Alleppey and the Deputy Commissioner of Income tax, Central Circle, Kollam have handed over the seized documents as per the Panchanama to the Assistant Director of Income tax (Investigation)-1, Ernakulam who is an assessing officer as per Section 2(7A) of the Income tax Act, 1961. The works relating to post search enquiries and appraisal report have been entrusted to the Assistant Director of Income Tax (Investigation)-II, Ernakulam who is also an Assessing Officer as per Section 2(7A) of the Income tax Act, 1961 by the Director of Income tax (Investigation), Kochi. He has been assigned with the jurisdiction under orders issued under Section 120(2) of the I.T. Act, 1961by the Director of Income tax (Investigation), Kochi. Further it was also pointed out that the Assistant Director of Income Tax (Investigation)-I, Ernakulam and Assistant Director of Income Tax (Investigation)-II, Ernakulam have concurrent jurisdiction and reference was made to notification dated 23-1-2002 authorising the 2nd respondent with jurisdiction.
6. We heard counsel on either side and also perused the argument notes submitted by counsel on either side. Assessee's residence as well as place of business was searched on 7-10-2004. Second respondent (Asst. Director of Income tax (Investigation-II) Kochi is the authorized officer having jurisdiction over the assessee by virtue of notification dated 23-1-2002. Jurisdiction of second respondent over the assessee has been elaborately stated in paragraphs 5 to 10 and 13 of the counter affidavit filed by the Additional Director of Income tax and requires no reiteration. Second respondent is the authorised officer having jurisdiction over the case as per orders issued under Section 120(2) of the Income tax Act, 1961 by the Director of Income tax (Investigation), Kochi. Deputy Commissioner of Income tax, Circle-1, Alleppey and the Deputy Commissioner of Income tax, Central Circle, Kollam have handed over the seized documents as per the Panchanama to the Assistant Director of Income tax (Investigation)-I, Ernakulam who is an assessing officer as per Section 2(7A) of the Act and an authorised officer. The works relating to post search enquiries and appraisal report have been entrusted to the Assistant Director of Income tax (Investigation)-II, Ernakulam who is also an assessing officer as per Section 2(7A) of the Income Tax Act, 1961 by the Director of Income tax (Investigation), Kochi. He has been assigned with the jurisdiction under order issued under Section 120(2) of the I.T. Act, 1961 by the Director of Income tax (Investigation), Kochi. Authorised officers handed over the seized documents to the Assistant Director of Income tax (Investigation)/Deputy Director of Incometax (Investigation) having jurisdiction over the case after the search. Post search enquiries and preparation of appraisal report are thereafter taken by the ADI/DDI. All these facts would indicate that the assessing officer exercising the powers of assessment (Assistant Commissioner of Income Tax, Circle 2(2), Ernakulam) is the only officer having power to retain the documents is not correct, especially with effect from 1-10-1996 "assessing officer" includes ADI/DDI as per Section 2(7A) of the Income tax Act and as such retention of the seized documents by the ADI is perfectly legal.
7. We also notice that the second respondent is an assessing officer having jurisdiction over the case and he is subordinate to the first respondent. Sub-section (9A) of Section 132 of the I.T. Act itself would show that second respondent is an officer having jurisdiction over the assessee. Facts would indicate that in the instant case the procedure laid down under Sub-section (9A) of Section 132 has been complied with. We are of the view the dictum laid down by the Madras High Court is not applicable to the facts of this case. So far as this case is concerned the seized records were received back later as per letter dated 3-12-2004 of the Asst. Commissioner of Income Tax, Circle (2) Range II, a copy of the letter dated 3-12-2004 has been produced along with the counter affidavit filed by 2nd respondent as Ext.R2(d). Hence the legal custody of the document seized was always with the Asst. C.I.T. Circle 2(2) from 2-12-2004 and with the 2nd respondent. Seized documents were returned at the request of the 2nd respondent only for the limited purpose of preparation of appraisal report. In the Madras case (166 ITR 244) affirmed by the Supreme Court the legal custody of the documents was always with the Asst. Director. That being the situation facts of the Madras case is distinguishable, so far as this case is concerned.
8. We are also in agreement with the decision of the Gujarat High Court in 256 ITR 498 that the purpose of Section 132 (9A) of I.T. Act, 1961 is to help the assessing officer to make a speedy assessment. The search and seizure proceeding can be declared as illegal and void only if it is established that the condition precedent for issuance of a search warrant is not satisfied and in the course of search, the search party has acted in material irregularities/violated the procedure prescribed so as to vitiate the search. Petitioner could not succeed in establishing so since there is a valid search and since the officer has got jurisdiction to proceed with the search as well and also to conduct post search enquiries. We therefore find no reason to exercise our jurisdiction under Article 226 of the Constitution of India. Writ Appeal lacks merits and the same is dismissed.