Gujarat High Court
Cowasjee Nusserwanji Dinshaw vs Income-Tax Officer on 18 March, 1987
Equivalent citations: [1987]165ITR702(GUJ)
Author: A.M. Ahmadi
Bench: A.M. Ahmadi
JUDGMENT A.M. Ahmadi, J.
1. Rule Mr. R. P. Bhatt waives service of rule. By consent, to be heard to-day.
2. The petitioner, an assessee to income-tax and wealth-tax, challenges the retention of certain documents and books of accounts seized under section 132(1) of the Income-tax Act, 1961 (hereinafter called "the Act"), by the concerned authorities. The officers of the Income-tax Department raided the premises of the company as well as the residential premises of the petitioner on November 13, 1984, and December 27, 1984, and seized certain documents during the course of the raid in exercise of power under sub-section (1) of section 132 of the Act. Thereafter, the Income-tax Officer from Ward-B, Bhuj, passed an order under sub-section (5) of section 132 on March 4, 1985, exhibit "B" to the petition. The documents, account books, etc., are in the possession of the Income-tax Authorities since the date of their seizure on the aforesaid dates.
3. The grievance made by the learned advocate for the petitioner is based on the language of sub-section (8) of section 132 of the Act. That sub-section reads as under :
"132. (8) The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained."
4. The proviso to that sub-section is not material for our purposes.
5. On a plain reading of the above sub-section, it becomes clear that two conditions must be satisfied before the authorities officer is permitted to retain the documents/account books seized under sub-section (1), namely, (i) the reasons in writing must be recorded by the authorised officer seeking the Commissioner's approval; and (ii) the Commissioner's approval for such extended retention is obtained. If neither of these conditions is not fulfilled, extended retention will become unlawful and the concerned person would be entitled to the return of the document/account books forthwith. Sub-section (10) of section 132 next provides that if a person legally entitled to the books of accounts and/or other documents seized under sub-section (1) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of accounts and/or other documents. If such an application is received by the Board, sub-section (12) enjoins upon the Board to give the applicant an opportunity of being heard and thereafter pass such orders as it may think fit. On a conjoint reading of the aforesaid sub-sections, it seems clear that the assessee must be communicated the reasons recorded by the authorised officer on the basis whereof the Commissioner granted the necessary approval.
6. In CIT v. Oriental Rubber Works [1984] 145 ITR 477 (SC), precisely the same question came up for determination. The Supreme Court after considering the scheme of sub-section (8), (10) and (12) of section 132 of the Act came to the conclusion that where books of accounts and documents of an assessee are seized in a search conducted pursuant to an authorisation issued under sub-section (1), such books of accounts and/or documents can be retained for a period of 180 days from the date of seizure and if they are intended to be retained beyond the said period, the law casts an obligation on the revenue authorities to communicate to the assessee not merely the Commissioner's approval but also the reasons recorded by the authorised officer on the basis whereof the approval was granted. The Supreme Court further observed that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner failing which the Commissioner's decision according approval would become invalid and unlawful. Lastly, the Supreme Court stated that such obligation arises in regard to every approval of the Commissioner that might be accorded from time to time and that not only the Commissioner's approval but also the reasons recorded by the authorised officer on the basis whereof the Commissioner granted approval must be communicated to the assessee expeditiously; failure to do so, would render the further retention of the account books/ documents seized under sub-section (1) of section 132 illegal, invalid and in unlawful.
7. In the present case, the account books/documents were seized in November/December, 1984. Admittedly, after the expiry of the period of 180 days, the documents have been retained by the revenue authorities without communicating the reasons stated by the authorised officer and the approval of the Commissioner. To date, no such intimation has been given to the assessee and, therefore, in view of the ratio of the above decision, there can be no doubt that the extended retention of the account books/documents is wholly illegal and unlawful. We are, therefore, of the opinion that the grievance made by the assessee is well-founded.
8. We, therefore, allow this petition and make the rule absolute in that, we direct the revenue authorities to return the account books/documents forthwith and not later than two weeks from the date of receipt of the writ of this court. The writ to be dispatched forthwith. There will be no order as to costs.