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Gyanendra Prakash Gupta v. Union Of India & Ors - WRIT TAX No. 486 of 2000  RD-AH 11903 (13 July 2007)
Civl Misc. Writ Petition No.486 of 2000
Gyanendra Prakash Gupta v. Union of India and others.
Hon'ble R.K.Agrawal, J.
Hon'ble Bharati Sapru, J.
(Delivered by R.K.Agrawal, J.)
By means of the present petition filed under Article 226 of the Constitution of India the petitioner Gyanendra Prakash Gupta seeks a writ, order or direction in the nature of certiorari quashing the entire proceedings initiated by the Deputy Commissioner of Income-tax, Central Circle-V, Kanpur, respondent No.5, issuance of notice dated 1st June, 1999 under Section 158 BC of the Income-tax Act, 1961, hereinafter referred to as "the Act", and followed up by the Assistant Commissioner of Income-tax, Investigation Circle-II(1), Kanpur, respondent No.4, in terms of the communication dated 5th May, 2000 and the search and seizure operation conducted by the respondents at the residential premises of the petitioner as well as his bank locker under Section 132 of the Act. The petitioner further seeks a writ of mandamus commanding the respondents to release all the documents, books of account and other records seized from the residence of the petitioner on 11th August, 1998.
Briefly stated the facts giving rise to the present petition are as follows.
The petitioner is living in House No.195-A, Faithful Ganj, Kanpur, purchased by his father Late Radha Raman Gupta, who was a leading businessman. He is carrying on his own business in the name and style of "Narain Chemicals" since 1980, which is a partnership firm consisting of himself and two ladies, namely, Smt. Shashi Kanta Gupta and Smt. Munni Devi Gupta. The other members of the family of Late Radha Raman Gupta are not at all connected with the said business. According to him, after his marriage in the year 1981 he separated from the other family members and his portion in the House No.195-A was got specified. The separate portions were specified in respect of other family members of Late Radha Raman Gupta, namely , petitioner's brothers. On 11th August, 1998 officials of the Income-tax Department entered the premises No.195-A Faithful Ganj, Kanpur in terms of the warrant of authorisation dated 10th August, 1998 issued by the Director of Income-tax, Kanpur, respondent No.2. The warrant of authorisation was in the name of Somendra Prakash Gupta and Bhanu Prakash Gupta. Though there was no search warrant in the name of the petitioner yet the officers of the Income-tax Department entered into the petitioner's residential portion and prepared inventories of cash and jewellery found there. Looking to the smallness of the cash and jewellery found in the petitioner's residential premises they were not seized and only books of account of Narain Chemicals and other loose papers were seized by the search party. The respondent no.4 had issued a noticed dated 1st June, 1999 purporting to be under Section 158 BC of the Act which is under challenge in the present petition on the ground that the search conducted at the residential premises of the petitioner is wholly illegal, without jurisdiction and also without the authority of law and consequently no notice under Section 158BC of the Act could have been issued.
In the counter affidavit filed by Sri V.L.Sharma, Income-tax Inspector on behalf of the respondents, it has been stated that though House No.195-A, Faithful Ganj, Kanpur is distinct and separate from other houses of the locality but within this house although there were several rooms, yet no separate distinct portions which could be unapproachable and inaccessible by the residents of the House No.195-A, Faithful Ganj, Kanpur and it does not prove a separate entity of each member. The search warrant was issued authorising the officers to enter and search and to seize any money, bullion and jewellery, cash or any other articles or thing or books of account, papers, documents found at premises No.195-A, Faithful Ganj, Kanpur and, therefore, the search carried out on 11th August, 1998 at the premises No.195-A, Faithful Ganj, Kanpur was legal and valid. The locker bearing No.83, at Allahabad Bank, Faithful Ganj, Kanpur in the name of Gyanendra Prakash Gupta and Smt. Suman Gupta is covered by a valid warrant of authorisation under Section 132 of the Act. The said locker was sealed on 11th August, 1998 and as the search has been validly conducted the proceedings under Section 158BC has rightly been initiated.
In the rejoinder affidavit filed by the petitioner the averments made in the counter affidavit have not been accepted and the plea taken in the writ petition has been reiterated.
We have heard Sri Shakeel Ahamad, learned counsel for the petitioner and Sri Shambhu Chopra, learned Standing Counsel appearing for the respondents.
Learned counsel for the petitioner submitted that there was no valid search warrant authorising search of the petitioner's residential portion as he was living separately and was doing independent business unconnected with the business of his brothers, namely, Somendra Prakash Gupta and Bhanu Prakash Gupta, who were doing business in the name of Raman & Sons and, therefore, the entire search operation being invalid and without the authority of law is liable to be quashed. He further submitted that the notice issued under Section 158BC of the Act could not have been issued as the precondition for issuance of the same is non-existent. He, therefore, prayed for quashing of the proceedings along with the notice already issued. In support of his arguments he relied upon a decision of the Andhra Pradesh High Court in the case of Mukutla Lalita v. Commissioner of Income-tax and others, (1997) 226 ITR 23.
In reply Sri Shambhu Chopra, learned Standing Counsel, submitted that the warrant of authorisation was in respect of the premises No.195-A, Faithful Ganj, Kanpur in which the petitioner also resides and, therefore, the search operation was legally valid and consequently the notice under Section 158BC of the Act is also valid. In support of his aforesaid plea he has relied upon a decision of the Punjab and Haryana High Court in the case of Vinod Goel and others v. Union of India and others, (2001) 252 ITR 29.
We have given our anxious consideration to the various pleas raised by the learned counsel for the parties. In order to find out as to whether any warrant of authorisation for search operation against the petitioner had been issued by the respondents or not, the Court vide its order dated 26th February, 2007 directed the learned Standing Counsel to produce the records relating to search operation and authorisation, which record has been produced by him and perused by the Court. On perusal of the record, so produced, we find that in the satisfaction note prepared by the Assistant Director (Investigation), the name of the petitioner nowhere finds mention. The entire exercise appears to have been taken for conducting search in respect of the business carried on in the name and style of Raman & Sons, Somendra Prakash Gupta and Bhanu Prakash Gupta. The Additional Director of Investigation, Unit-2, Kanpur in his recommendation dated 10th August, 1998 had concurred with the satisfaction note prepared by the Assistant Director, Investigation and recommended for authorisation of the search warrant which the Director of Income-tax(Investigation), Kanpur also concurred and issued the authorisation. On 11th August, 1998, the authorisation for search of locker No.83, Allahabad Bank, Faithful Ganj, Kanpur in the name of the petitioner and Smt. Suman Gupta was also authorised. From the search warrants which are on record we find that there is no search warrant issued against the petitioner except for locker no.83, Allahabad Bank, Faithful Ganj, Kanpur standing in the name of the petitioner and Smt. Suman Gupta. The search warrant issued in the name of Prakash Brothers and Raman Products, Bhanu Prakash Gupta, Madhulata Gupta, Somendra Prakash Gupta and Smt. Shashi Kanta Gupta cannot be pressed in aid for justifying search operations conducted in the accommodation in which the petitioner resides.
In the case of Ajit Jain v. Union of India, (2000) 242 ITR 302, the Delhi High Court has held that for a valid search there should be information which provides reason for believing that the person concerned is in possession of money or other assets representing, either wholly or in part, income which has not been or which would not be disclosed by such person, and in the absence of such information search could not be validly authorised and a valid search was a pre-requisite for invoking the provisions relating to block assessment. The Civil Appeal preferred by the Union of India against the aforesaid decision being Civil Appeal No.5534 of 2001 has been dismissed by the Apex Court vide order dated 16th January, 2003 by holding that there is no reason to interfere with the decision of the High Court. The order of the Apex Court has been reported in (2003) 260 ITR 80.
Recently the Apex Court in the case of Manish Maheshwari v. Asstt. Commissioner of Income Tax and another, (2007)3 SCC 794, has held that the condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132-A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132 or documents or assets have been requisitioned under Section 132-A. The provisions of Chapter XIV-B of the Act would be applicable only when the aforesaid two conditions are fulfilled . From the aforesaid, it necessary follows that the search or the requisition contemplated therein is to be a valid search or requisition and if for any reason the search or requisition is held to be invalid or illegal, the provisions of Chapter XIV-B including Section 158BC would not be applicable. The search and seizure under the provisions of Section 132 of the Act can only be effected wherein the authorities specified in sub-section (1) of Section 132 of the Act on the basis of information in their possession have reason to believe that in spite of the summons or notice issued under the relevant provisions of the Act, the person has failed or shall not produce the books of account or other documents as required in the summons or notice or where the person is in possession of money, bullion, jewellery or other valuable article or thing and the same represents either wholly or partly income or property which has not been disclosed for the purposes of this Act, only then a search or seizure operation can be undertaken upon issue of an authorisation/summons/notice in this behalf. In the present case from the record produced before us we find that so far as the petitioner is concerned, there is no information before the concerned authorities nor any papers or information, which was available with them by which any reasonable belief could have been formed that the petitioner would not produce books of account and other documents or in possession of any undisclosed money, bullion, jewellery or other valuable article or thing. From the satisfaction note prepared by the authorities, we find that it is only in respect of M/s. Raman & Sons, Somendra Prakash Gupta and Bhanu Prakash Gupta and nobody else. In the course of this search conducted at the premises in which the petitioner happens to reside but is carrying on his independent business cannot be said to be a valid search in so far as the petitioner is concerned. The information received during the course of the search of the petitioner's locker no.83 at Allahabad Bank, Faithful Ganj, Kanpur where it was suspected that valuable article or things representing wholly or partly the unaccounted income may be kept cannot also form the basis for authorising search. In this view of the matter, we are of the considered opinion that the search conducted in the premises of the petitioner is wholly illegal and without any authority of law. As we have come to the conclusion that the search is wholly illegal, the provisions of Chapter XIV-B including Section 158BC of the Act are not at all attracted.
In the case of Mukutla Lalita(supra) the Andhra Pradesh High Court has held as follows:
"....Chapter XIV-B lays down special procedure for assessment of search cases, the Assistant Commissioner or a person above him is the designated officer to act as an Assessing Officer instead of the normal procedure of the assessment being done by the Income-tax Officer..."
In the case of Vinod Goel(supra) the Punjab and Haryana High Court after analysing the provisions of Sections 132 and 132-A of the Act has held "the Director General or Director or Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner, who has been empowered in this behalf by the Board may authorise an officer to undertake search and seizure operation. This is subject to the condition that the concerned authority has reason to believe that any person to whom a summons under Section 37(1) of the Indian Income-tax Act, 1992(for short, "the 1992 Act") or under Section 131(1) of the Act or a notice under Section 22(4) of the 1922 Act or under Section 142(1) of the Act was issued to produce or cause to be produced any books of account or other documents has omitted or failed to produce or caused to be produced such books of account or other documents as required by such summon or notice or any person to whom summon or notice has been issued will not produce or cause to be produced any books of account or other documents which will be useful for or relevant to any proceedings under the 1922 Act or the Act or any person in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be disclosed for the purpose of the 1922 Act or the Act. The officer authorised in the manner indicated above can enter and search any building, etc., where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search. Section 133A of the Act begins with a non obstante clause. It empowers an income-tax authority to enter any place within the limits of the area assigned to him or place occupied by any person in respect of whom he exercises jurisdiction at which a business or profession is carried on and require any proprietor, employee or any other person, who may be attending in any manner to, or helping in, the carrying on of such business or profession to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place. The officer concerned can also check or verify the cash, stock or other valuable article or thing which may be found at the site."
The decision relied upon the by petitioner has no application to the facts of the present case. There cannot be any dispute in respect of the proposition laid down by the Punjab and Haryana High Curt regarding the scheme of Sections 132 and 132-A of the Act. However, as already held hereinbefore the search can be ordered in the event where the concerned authority on the information available with him has a reason to believe that the person is either in books of account or other documents or has failed to produce the same or is in possession of the money, bullion, jewellery or other valuable article or thing which has not been disclosed. In the present case there is no material to show that the concerned authority had formed any belief whatsoever in respect of the petitioner. Thus, the search and seizure operation were conducted in violation of the mandatory provisions of Section 132 of the act and cannot be sustained. Consequently the notice issued under Section 158BC is also illegal and is set aside as the provisions of Chapter XIV-B of the Act are not attracted.
In view of the foregoing discussions the writ petition succeeds and is allowed with costs which we assess at Rs.5000/-.
July 13, 2007
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