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1. Shri Ramesh Chander, petitioner, is a partner of Messrs. Shiv Iron Traders, Tanda Road, Jullundur City, and Messrs. Katak Ram Ramji Dass, Tanda Road, Jullundur City. These firms carry on the business of purchase and resale of iron and steel on wholesale basis. Another common partner of the two firms is Shri Diwan Chand Aggarwal, father of Ramesh Chander, petitioner. The third partner in Messrs. Shiv Iron Traders is Roshan Lal, brother of Shri Ramesh Chander, while the third partner in Messrs. Katak Ram Ramji Dass is Shri Krishan Dass, son of Shri Ram Parkash. All the three petitioners and the partners of the two firms, petitioners Nos. 2 and 3, are assessees of the income-tax department. Neither the petitioner-firms nor their partners submitted returns of their income for the assessment years 1970-71 and 1971-72. On August 6, 1971, Ramesh Chander, petitioner, was travelling in an Ambassador car which was stopped by Balwant Singh, Traffic Inspector of Police, near Kartarpur at about 11 a.m. Balwant Singh recovered two bags from the car one of which contained currency notes of the value of Rs. 1,61,000 and the other contained a ledger book and some other documents. He took the occupants of the car along with the car and the recovered bags to the police station, Kartarpur, and got into touch with the Income-tax Officers at Jullundur and the Commissioner of Income-tax at Patiala on phone. The Commissioner of Income-tax issued warrants of authorization empowering Sarvshri Nathu Ram, P. R. Gupta and Kuldip Raj Chopra, Income-tax Officers of Jullundur, to search and seize money, bullion, jewellery or other valuable articles or things and sent them through Shri J. S. Cheema, Income-tax Officer, Special Investigation Branch, in the staff car from Patiala to Jullundur. Shri J. S. Cheema, on arrival at Jullundur at about 5-30 p.m., was told by Shri Gujjar Mal and Shri G. S. Sandhu, Income-tax Officers, that Shri Nathu Ram, Income-tax Officer, had gone to the business premises of the petitioner-firms while Shri P. R. Gupta had gone to the police station, Kartarpur. Shri J. S. Cheema took Shri Gujjar Mal with him to the business premises of the petitioner-firms where he found Shri Nathu Ram, to whom he handed over the warrant of authorization meant for him and himself proceeded to police station, Kartarpur, to hand over the warrant of authorisation to Shri P. R. Gupta which was in his name. After the receipt of the warrant of authorization, Shri P. R. Gupta seized the bags containing the money, the ledger book and other documents and prepared panchnama. He also recovered a sum of Rs. 411 from the person of Shri Ramesh Chander. The seized articles were brought to the income-tax office, Jullundur, and were deposited in the safe, the keys of which were with Shri P. R. Gupta. Thereafter, Shri Nathu Ram, Income-tax Officer, started proceedings under Section 132(5) of the Income-tax Act, 1961 (hereafter called " the Act "), for making a summary assessment. The petitioners asked for inspection of the ledger and other documents seized from the police station, Kartarpur, and books and documents seized from their business premises and residential quarters. The Income-tax Officer refused to allow them inspection of the ledger and the documents seized from police station, Kartarpur, but allowed inspection of the books of account and other documents seized from the business premises and residential quarters of the petitioners on 6th and 8th of September, 1971. The petitioners then filed the present petition on October 19, 1971, challenging the search and seizure made by the Income-tax Officers in pursuance of the warrants of authorisation and the proceedings for making the summary assessment and prayed for the return of the money and the books of account and other documents seized from them. This petition was admitted on October 20, 1971, with the following order :

6. The report of Shri J. S. Cheema, recorded on August 9, 1971, after his return to Patiala, reveals that he was told on his arrival at Jullundur, by Shri Gujjar Mal and Shri G. S. Sandhu, Income-tax Officers, that they had already requested the D.I.G. and the Superintendent of Police, Jullundur, to hand over the money to the income-tax department and that on their persuasion, the police authorities had agreed to hand over the money to them. The telephonic message received by the Commissioner of Income-tax, Patiala, from Shri Balwant Singh, as recorded in the order, shows that Balwant Singh had already recovered the sum of Rs. 1,61,000 from Ramesh Chander along with the books of accounts and other documents. There was thus no question of making a search for that money or the documents or for seizing them. There could be no apprehension that Ramesh Chander would in any way resist the taking of money and the documents Which had already been taken possession of by Shri Balwant Singh and were lying in the office room of the Station House Officer, Kartarpur, as has been deposed to by Shri J. S. Cheema. It is now argued on behalf of the respondents that Shri Balwant Singh had not taken possession of the money or the documents. He had only taken Shri Ramesh Chander into custody. This is unbelievable. Shri Balwant Singh handed over a memorandum at 8 p.m. on August 6, 1971, to the Station House Officer, Kartarpur, on the basis of which First Information Report was recorded in that police station. The date and hour of occurrence is mentioned as August 6, 1971, at 11 a.m. It is significant to note that Balwant Singh did not prepare this memorandum when he arrested the petitioner and detained his companions and the recovered articles at 11 a.m. although he had taken Ramesh Chander and his companions along with the two bags containing the money and the documents to the police station and lodged them in the office room of the Station House Officer. Evidently, he was waiting for some one from the income-tax office to arrive and tell him as to what should be done with the money, the ledger and the documents taken possession of by him. He had told the Commissioner of Income-tax on telephone that Rs. 1,61,000 had been recovered from Shri Ramesh Chander as that specific amount is mentioned in the order of the Commissioner of Income-tax. It cannot, therefore, be said that the money bag was still in the possession of Ramesh Chander when Shri P. R. Gupta made the search and seized the bag containing the money. Shri J. S. Cheema has stated that the bag containing the money was lying on the table while the account books and other documents were lying in a bag on the floor and Shri Ramesh Chander was sitting beside them. If Shri Balwant Singh had not taken possession of the two bags containing the money and the documents and had not arrested Shri Ramesh Chander, he could not keep him in custody along with his companions in the police station. In the First Information Report, it is recorded, on the basis of the memorandum received from Shri Balwant Singh :

" The driver of the car named Charan Singh was asked to come out of the car. Ramesh Chander was holding a bag in his hand and a bag containing currency notes was in his other hand. He was apprehended and was enquired as to what was in that bag. He told that the big bag contained currency notes oi Rs. 1,6,1,000 while the second bag contained his business papers. He could not give satisfactory reply, about these currency notes. Hence, in order to know the truth, Income-tax Officers, Jullundur and Patiala, were informed, who reached Kartarpur, and checked the papers and ledger of Ramesh Chander. The Income-tax Officers told that Ramesh Chander had no such flourishing business as he could keep such a big amount with him. Hence, the Income-tax Officer, according to the search warrants, took into his possession currency notes worth Rs. 1,61,000 and a sum of Rs. 411, which were recovered at the time of the search of the person of Ramesh Chander, after making entries. Shri P. R. Gupta, Income-tax Officer, Jullundur, who took possession of the currency notes, prepared memos with regard thereto which were signed by Hazara Singh, Lambardar, and Balwant Singh himself. Ramesh Chander did not give any satisfactory reply for keeping such a big amount in his possession. Hence he was satisfied that some offence had been committed regarding those currency notes. It appeared that Ramesh Chander was a member of a big group, and he had committed an offence punishable under Sections 411, 413 and 414 of the Indian Penal Code and Sections 4, 5 and 8 of the Foreign Exchange Regulation Act. 1947, and the Foreign Exchange Regulation (Amendment) Act, 1957-58, by keeping in his possession the stolen property with the intention of illegally distributing it amongst the relative s of the person living in England, who are residing in the illaqa oi Kartarpur." (The memorandum and the First Information Report are in Gurmukhi and the above extract is the English rendering of the relevant portion thereof.)

9. On his own side, the Commissioner of Income-tax, having obtained the information that a sum of Rs. 1,61,000 had been recovered from Shri Ramesh Chander, decided to obtain possession thereof and for that purpose issued the warrant of authorisation for search and seizure. At that time, according to the deposition of Shri Jaswant Singh Cheema, neither the Commissioner of Income-tax nor Shri Cheema, knew anything about Shri Ramesh Chander, that is, what vocation he was following, what was his income and whether he had been assessed to income-tax or not. The mere recovery of Rs. 1,61,000 without, more cannot lead to the belief that tax has been evaded. The Commissioner of Income-tax rather acted in a hurry. He should have enquired from the concerned Income-tax Officer, Jullundur, as to the antecedents of Ramesh Chander and other particulars about him and he could then, if satisfied with the information supplied by the Income-tax Officer concerned that Ramesh Chander had evaded tax for the previous year or years, issue the warrants of authorisation. But in the absence cf any such information from the right quarters, it cannot be said that he had a genuine belief that Ramesh Chander had evaded the payment of the tax and the money recovered from him represented that income. It is nothing unusual for a businessman to have this much amount of money in his possession for the purpose of his business. There is no doubt left in my mind that the Commissioner of Income-tax issued the warrant of authorisation for search and seizure of the money and other documents solely with the purpose of obtaining possession of that amount, which possibly the police officer could not keep in his possession without registering a case for the commission of some offence against Shri Ramesh Chander. It is really curious that the said case was registered against him after the recovered money, the subject of the offence, had been allowed to be taken away by the Income-tax Officers. The provisions of Section 132 of the Act were abused in this case. A reference may usefully be made to the decision of a Division Bench (Pathak and Gulati JJ.) of the Allahabad High Court in Motilal v. Preventive Intelligence Officer. Central Excise and Customs, Agra, [1971] 80 I.T.R. 418, 422, 424 (All.) wherein the scope of the power under Section 132 of the Act was considered. Pathak J. observed as under :