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M/S. Babu Lal & Others v. Director Of Income Tax & Others - WRIT TAX No. 275 of 1999  RD-AH 673 (9 March 2005)
CIVIL MISC. WRIT PETITION NO.275 OF 1999
M/s. Bablu Lal & Ors. .......... Petitioners
Director of Income-Tax (Investigation), Kanpur & Ors.
Hon'ble Dr. B.S. Chauhan, J.
Hon'ble Dilip Gupta, J.
(By Hon'ble Dr. B.S. Chauhan, J.)
This writ petition has been filed by the petitioner-partnership firm for quashing the warrant of authorization dated 20.03.1999 (Annex.6) issued under the provisions of Section 132 of the Income Tax Act, 1961 (hereinafter called ''the Act') and further for directing the respondents to refund the amount of Rs. 3,06,00,000/- (Rupees Three Crores Six Lakhs Only) to the petitioner-firm.
The facts and circumstances giving rise to this case as given by the petitioner are that the petitioner-firm has 12 partners and the Deed of Partnership had been executed on 27.02.1999. The same stood registered with the Registrar of Firms, Allahabad on 6th March, 1999. The petitioner-firm deposited CDRs/Banker Cheques worth Rs. 3,06,00,000/- with the District Excise Officer, Rewa on 10th March, 1999 as security to enable the firm to participate in the auction for allotment of privilege of selling country-made liquor in certain parts of the State of Madhya Pradesh. The said CDRs/Banker Cheques etc. had been seized by the Income Tax authorities on 20th March, 1999. Hence, the present petition.
Shri S.K. Garg, learned counsel for the petitioner Firm has submitted that CDRs/Banker Cheques belong to the firm and one Shri Babu Lal, a partner of the firm, had been authorized in Partnership Deed itself to participate in the auction for grant of licence for dealing in liquor. The said CDRs/Banker Cheques/Demand Drafts etc. worth Rs. 3,06,00,000/- had been seized by the Income-tax authorities on 20th March, 1999 in flagrant violation of the provisions of the Act. The search and seizure was illegal, not being in consonance of the provisions of the Act; warrant of authorization had been issued in the name of "S/Shri Babu Lal Jaiswal, Sheo Kumar Jaiswal, Rajiv Jaiswal and Shishir Jaiswal"; the authorization to search the office of the District Excise Officer, Rewa was not permissible; the said warrant of authorization dated 15.03.1999 had been issued without there being any information in possession of the authority under the Act to form an opinion that the firm was having undisclosed/unaccounted money and, therefore, the search itself was invalid, illegal and if the order of authorization itself was illegal, the entire proceedings stood vitiated. As the CDRs/Banker Cheques etc. were lying in the custody of the District Excise Officer, the proceedings could have been initiated under Section 132-A and not under Section 132 (1) of the Act itself. The proceedings are void and the petitioners are entitled for refund of the amount and petition deserves to be allowed.
Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Revenue has vehemently opposed the petition submitting that the firm is bogus; it never came into existence; it had no concern with the said FDRs/Banker Cheques etc.; search and seizure had been strictly in accordance with the statutory provisions; no fault can be found with the same; the person concerned had been assessed also under the provisions of Chapter XIV-B; notices under Section 158-BC of the Act were issued; none of them turned up; the assessment orders dated 23.03.2001 had been passed against the person concerned; the persons aggrieved/assessees have filed appeals which are pending before the Appellate Authorities. The warrant of authorization which is sought to be quashed is not a part of the record, therefore, the question of its quashing does not arise; what has been challenged in the writ petition is the Panchnama which cannot be a subject matter of the writ jurisdiction nor it can be quashed; petitioner has not approached this Court with clean hands; even if there had been any procedural defect in the search and seizure, then too unless the Court reaches the conclusion that it was not bona fide, the Court should not interfere in its equitable discretionary jurisdiction; there was sufficient material in the possession of the authorities on the basis of which an opinion was objectively formed; there were reasons to believe that the income had not properly been disclosed and was not to be disclosed; the authorization etc. had been strictly in compliance of the statutory provisions. Hence, the petition is liable to be dismissed.
We have considered the rival submissions made by learned counsel for the parties and perused the record including the original record produced before us by the Revenue.
Section 132 (1) of the Act reads as under:-
"Section 132 (1) - Where the Director General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner, as may be empowered in this behalf by the Board, in consequence of information in his possession, has reason to believe that -
(a) .................. (b) ...........................
(c) any person is 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 purposes of the Indian Income-tax Act, 1992 (11 of 1992), or this Act (hereinafter in this section referred to as the undisclosed income or property),
the officer so authorized in all cases being hereinafter referred to as the authorized officer to -
(i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;
(ii) ........... ...............
(iia) ........... ...............
(iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search;
Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of jurisdiction of any Chief Commissioner or Commissioner, but such Chief Commissioner or Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in Section 120, it shall be competent for him to exercise the powers under this sub-section in all cases where he has reason to believe, that any delay in getting the authorization from the Chief Commissioner or Commissioner having jurisdiction over such person may be prejudicial to the interests of the revenue; ........"
Section 132A of the Act was introduced by the Taxation Laws (Amendment) Act, 1975 with effect from 01.10.1975 which provides that where the Director General or the Director or the Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to believe that -
(a) ............ ...............
(b) ............ ..............
(c) any assets represent either wholly or partly income or property which has not been, or would not be disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force,
then, the Director General or Director or the Chief Commissioner or Commissioner may authorize any Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer (hereinafter in this section and in sub-section (2) of Section 278D referred to as the requisitioning officer) to require the office or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer."
It is evident from the aforesaid provisions that authorized officer, if in consequence of the information in his possession, has reason to believe that a person is in possession of the money/document, which has not been and would not be disclosed, may issue warrant of authorization to the designated officer to search a place/person and seize the amount/document.
In case the documents/money etc. are in possession of a department, the designated officer, on such authorization may requisition the same.
The question does arise as to whether the search and seizure in this case has been conducted in consonance with the provisions of the Act and if not to what relief the petitioner is entitled for?
The issues involved herein are no more res-integra. A Constitution Bench of the Hon'ble Supreme Court in M. Ct. Muthiah Vs. Commissioner of Income-tax, AIR 1956 SC 269, considered the expressions "reason to believe" and distinguished the same from "reason to suspect" comparing the provisions with the unamended provisions of Section 34 (1) of the Income-tax Act, 1922 and held that after amendment, the expressions "reason to believe" had to be based as a consequence of "definite information" which came into possession of the Revenue. However, there must be some material in possession of the Revenue on the basis of which an objective opinion can be formed that the person concerned has undisclosed amount for the purpose of the Act.
In Income-tax Officer, Calcutta & Ors. Vs. Lakhmani Mewal Das, AIR 1976 SC 1753, the Hon'ble Supreme Court held as under:-
"As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief............It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time, we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment.........The reason for the formation of the belief must be held tin good faith and should not be a mere pretence. The powers of the Income-tax Officer to reopen assessment though wide are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". ......."
In Commissioner of Income-tax Vs. Vindhya Metal Corporation, (1997) 5 SCC 321, the Hon'ble Supreme Court, while dealing with a similar issue, held as under:-
"Mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the Acts."
Similar view had been taken by the Hon'ble Supreme Court in Commissioner of Income-tax Vs. Dr. Nandlal Tahiliani, (1988) 172 ITR 627.
The Hon'ble Apex Court in Income-tax Officer, Special Investigation Circle ''B', Meerut Vs. Seth Brothers & Ors., AIR 1970 SC 292, has held that the search and seizure under Section 132 of the Act may violate and have serious invasion upon the rights of privacy and freedom of the tax-payer, therefore, the powers must be exercised strictly in accordance with the law and only in furtherance of the purpose of the Act. The Court observed as under:-
".......Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be exercised strictly in accordance with the law and only for the purposes for which the law authorizes it to be exercised. If the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the court. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed. But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the officers will not vitiate the exercise of the power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorizes a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceedings under the Act, the court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorizing search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorization will not be sufficient to vitiate the action taken, provided the officer has in executing the authorization acted bona fide............... An error committed by the officer in seizing documents which may ultimately be found not to be useful for or relevant to the proceeding under the Act will not by itself vitiate the search, nor will it entitle the aggrieved person to an omnibus order releasing all documents seized."
The right of privacy has been held to be a fundamental right of the citizen being an integral part of Article 21 of the Constitution of India by Hon'ble Apex Court in Mr. X Vs. Hospital Z, (1998) 8 SCC 296; and People's Union for Civil Liberties (PUCL) & Anr. Vs. Union of India & Anr., (2003) 4 SCC 399.
The Delhi High Court in R.L. Gupta, Vs. Union of India, (1992) 194 ITR 32, explained the expression "information" observing that it must be something more than a mere rumour or a gossip or a hunch. There must be some material, which can be regarded as information, which must exist on the file on the basis of which the authorizing officer can have reason to believe that action under Section 132 is called for. The Court further observed as under:-
"......an assessee is under no obligation to disclose in his return of income all the moneys which are received by him which do not partake of the character of income or income liable to tax. If an assessee receives, admittedly, a gift from a relation or earns agricultural income, which is not subject to tax, then he would not be liable to show receipt of that money in his income-tax return. Non-disclosure of the same would not attract the provisions of Section 132 (1) (c). It may be that the opinion of the assessee that the receipt of such amount is not taxable may be incorrect and, in law, the same may be taxable, but where the Department is aware of the existence of such an asset or the receipt of such an income by the assessee, then the Department may be fully justified in issuing a notice under Section 148 of the Act, but no action can be taken under Section 132 (1)(c)........"
Similarly, the Delhi High Court in Ajit Jain Vs. Union of India & Ors., (2000) 242 ITR 302, considered the scope of the provisions of Section 132 and Chapter XIV-B of the Act, explaining that Chapter XIV-B was inserted by the Finance Act, 1995 laying down a special procedure for assessment in search cases. It deals with assessment of a block period as defined in Section 158B of the Act. It is axiomatic that the search under Section 132 of the Act contemplates a valid search and an illegal search is not a search and where the search was not legal, the provisions of Chapter XIV-B would not apply. In order to authorise a search under Section 132 of the Act, there must exist two conditions, namely; (1) information in the possession of the named authority, and (2) in consequence of which, he may have "reason to believe" that the person concerned is in possession of money etc. which represents, either wholly or partly, income which had not been or would not be disclosed for the purposes of the Act. In order to resort to the proceedings under Section 132, both the conditions must be fulfilled. Therefore, the information in consequence of which the authority proceeds and forms his belief, should not be merely authentic but capable of giving rise to the inference that a person is in possession of money etc. which had not been or would not be disclosed for the purpose of the Act. The sufficiency or otherwise of the information cannot be examined by the Court in writ jurisdiction, the existence of information and its relevance to the formation of the belief is open to judicial scrutiny for the reason that it is the foundation of the condition precedent for exercise of a serious power of search of the private property or person, and to prevent violation of the privacy of a citizen. The words "reason to believe" means that a reasonable man, under the circumstances, would form a belief which will impel him to take action under the law. Such formation of opinion must be in good faith not a mere pretence. The authority does not possess naked powers to order search against any person and exercise of such arbitrary power is not permissible in a Society governed by rule of law. In that case, the proceedings were quashed on the ground that the petitioner therein had been a regular assessee and the authority had acted on bare intimation of the police without something more which was not sufficient for exercising the powers under Section 132 of the Act.
A similar view has been reiterated by this Court in Ganga Prasad Maheshwari Vs. Commissioner of Income Tax, (1983) 139 ITR 1043; Dr. Nandlal Tahiliani Vs. Commissioner of Income-tax, (1988) 170 ITR 592; Dr. Sushil Kumar Rastogi Vs. Director of Investigation, Income-tax Department, (2003) 260 ITR 249; Ravi Iron Industries Vs. Director of Investigation, (2003) 264 ITR 28; Smt. Kavita Agarwal Vs. Director of Income-tax (Investigation), (2003) 264 ITR 472; and Dr. (Mrs.) Anita Sahai Vs. Director of Investigation, (2004) 266 ITR 597.
There must be relevant material/information with the Authorized Officer upon which he must reasonably and rationally form the requisite belief. The material/information, referred to herein, means information or knowledge derived from an external source concerning facts or particulars in this regard. (Vide Income-tax Officer Vs. Saradbhai M. Lakhani, (2000) 10 SCC 371; Srikrishna (P) Ltd. Vs. Income-tax Officer, (1996) 9 SCC 534; Income-tax Officer Vs. Selected Dalurband Pvt. Coal Co. (P) Ltd., (1996) 217 ITR 597; M/s. Ganga Saran & Sons Pvt. Ltd. Vs. Income-tax Officer & Ors., AIR 1981 SC 1363; Commissioner of Income-tax Vs. M/s. A. Raman & Co., AIR 1968 SC 49; and Calcutta Discount Co. Ltd. Vs. Income-tax Officer & Ors., AIR 1961 SC 372).
It is not necessary that the reasons be supplied to the person concerned, but the same should exist on record. (Vide S. Narayanappa & Ors. Vs. The Commissioner of Income-tax, Bangalore, AIR 1967 SC 523; and Madhya Pradesh Industries Ltd. Vs. The Income-tax Officer, Nagpur, AIR 1970 SC 1011).
It is also settled legal proposition of law that when the Revenue is called upon to explain its action, it must satisfy the Court either from the order impugned or from the original record on the basis of which it exercised its power under Section 132 of the Act but it cannot be explained merely by filing further affidavits. Legality of an order is to be judged on the face thereof as reasons/explanations etc. cannot be furnished subsequent thereto, by filing affidavits. (Vide Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner & Ors., AIR 1978 SC 851; State Government Houseless Harijan Employees' Association Vs. State of Karnataka & Ors., (2001) 1 SCC 610; and Chandra Singh & Ors. Vs. State of Rajasthan & Anr., (2003) 6 SCC 545).
Undoubtedly, if the order at its inception is bad and illegal, that will not be valid merely because after having search and seizure, there could be a basis for such an action as it is condition precedent to have such an opinion. In Upendra Chandra Gogai Vs. State of Assam & Ors., (1998) 3 SCC 381, the Hon'ble Apex Court held that a Writ Court should not validate an action which was not lawful at inception.
The law in this respect can be summarised that the citizens' right of privacy is not lightly to be disturbed. The powers of search and seizures under the provisions of the Act should be exercised only when there is sufficient material in possession of the competent authority on the basis of which it can have reasons to believe that there had been assets which have not been and would not be disclosed for the purpose of assessment under the Act.
It is not necessary that those reasons on the basis of which the belief has been formed, have to be communicated to the person concerned. In case action of the Authority is challenged, the record is to be placed before the Court for its satisfaction that facts existed therein warranted the action under Section 132 of the Act. If the exercise of power is in good faith, some procedural defect may be overlooked by the Court but it should not be a fundamental procedural defect. Power should be exercised only to further the object of the Act. Authorization should be by the Competent Authority, issued objectively on the basis of the material in its possession after having the requisite belief. The Court cannot examine the adequacy or sufficiency of such information but existence of information and its relevance for formation of belief is always subject to judicial review.
The case requires to be examined in the light of the aforesaid settled legal propositions.
In the writ petition, quashing of warrant of authorization dated 20.03.1999 (Annex.6) is sought. In fact (Annex.6) is a Panchnama dated 20.03.1999 not an authorization dated 15.03.1999. As neither the said authorization has been placed on record nor its quashing has been prayed, the said warrant of authorization cannot be quashed.
It is a settled proposition of law that unless the order sought to be quashed is filed and placed on record, the Court has no power to quash the same. In Surender Singh Vs. Central Government, AIR 1986 SC 2166, the Hon'ble Supreme Court has held as under:-
"In absence of order under challenge, the High Court could not quash the same. Normally whenever an order of the Government or some authority is impugned before the High Court under Article 226 of the Constitution, copy of the order must be produced before it. In absence of impugned order it would not be possible to assign the reason which have impelled the authority to pass the order. It is therefore, improper to quash an order which is not produced before the High Court in a proceeding under Article 226 of the Constitution."
Even otherwise, the petition had been filed by the petitioner-firm claiming to be a partnership firm consisting of 12 partners whose names have been mentioned in the paragraph 1 of the writ petition. The firm came into existence on 27.02.1999 and got registered with the Registrar of the Firms, Allahabad on 06.03.1999. We have examined the contents of the Partnership Deed and it may be relevant to quote some of them:-
"1. The partnership, as formed by Sarva Sri Baboo Lal, Sanjeev Kumar Jaiswal, Prem Kumar, Brij Lal Jaiswal, Onkar Nath Jaiswal, Rakesh Kumar Jaiswal, Santosh Kumar Jaiswal, Ajai Kumar Jaiswal, Rabi Shanker Jaiswal, Ram Milan Varma, Arun Kumar Dwivedi and Md. Salim, the parties no. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 hereto respectively shall be deemed to have come into existence from the date from which the license for sale of country liquor and/or Indian-made Foreign Liquor procured by the firm either in its own name or in the name of any partner or a group of partners thereto respectively in an auction to be conducted by the District Excise Authorities of Madhya Pradesh Government in future. ....... ........
6.2 All such finances as are required for the purposes of carrying on the business of the firm, after coming into force of the license for sale of country liquor and/or Indian made Foreign Liquor shall also be arranged and/or contributed by partners as may be mutually agreed to amongst them.
......... ............ ..............."
The notable feature of the case is the implication of clause (1) of the Partnership Deed which clearly specifies that the partnership firm itself will come into existence only from the date the licence for sale of country-made liquor and other items is procured by the firm, either in its own name or in the name of any partner. A perusal of the aforesaid clause would leave no room for doubt that the contingency of the existence of the partnership firm is dependant on the procurement of the licence and not otherwise. The inference which can be drawn therefrom is that since the licence was never granted, the firm did not come into existence. The question, therefore, arises as to whether the petitioner-firm is in existence or not and as to whether the said firm is entitled as a juristic person to maintain the instant petition.
Writ is a remedy sought for redressal of the personal injury unless it is a writ of quo warranto or habeas corpus.
A perusal of the aforesaid facts and the admitted position in the Partnership Deed would leave no room for doubt that the partnership firm never came into existence as the contingency contemplated therein for the existence of the partnership firm did not happen at all. In view of this position, it can be safely assumed that no partnership firm in the shape of the petitioner is in existence. If the aforesaid assumption is correct, then the present writ petition would not be maintainable on behalf of a non-existent partnership firm. Accordingly, we hold that since the partnership firm did not come into existence at all, the present writ petition cannot be maintained for the reliefs claimed in the present writ petition.
We are further fortified in our view in arriving at the aforesaid conclusion on account of the facts brought on record, as indicated in the counter affidavit wherein it has been mentioned that none of the persons, referred to in the Partnership Deed, were found to be genuine or existing persons or available on the addresses indicated in the Partnership Deed and it is also stated in the counter affidavit that the names of such persons do not appear in any government records available so as to identify their existence, such as voters' list, etc. The counter affidavit further discloses that efforts were made to find out existence of these persons but the Department failed to locate their existence and which facts have not been successfully rebutted by the petitioner by filing any evidence in support thereof and hence it can safely be presumed at this stage that there are no persons in existence, in fact, so as to constitute the aforesaid partnership firm. It has already been indicated herein that the real investors in the aforesaid syndicate have been located by the Revenue Department, as is evident from the assessment order dated 23.03.2001, referred to herein. The aforesaid facts, therefore, leave no room for doubt that such a partnership firm never came into existence and does not exist either in fact or in law.
The case of the respondents is that in fact the CDRs/Banker Cheques do not belong to the partnership firm or to those partners whose names have been mentioned in paragraph 1 of the writ petition. In fact, Baboo Lal, who has filed this writ petition on behalf of the firm, has made it clear when his statement was recorded during the course of the search that he had nothing to do with the securities/money or with business. He did not spend a single rupee in the said firm. He was merely an employee in the firm, getting Rs. 3 to 4 thousand per month. The actual amount was of other persons like, Shri Sheo Kumar Jaiswal, Shri Babu Lal Jaiswal, Rajiv Jaiswal, and Shishir Jaiswal and some of them had deposited the Banker Cheques/CDRs etc. in favour of the District Excise Officer, Rewa for participating in the auction for liquor sale. As their bid had not been accepted, the same CDRs etc. were deposited for participating in another bid in this case. In reply to the supplementary affidavit filed by the petitioner, it has clearly been stated by the Revenue that the cheques/bank draft numbers deposited by those persons earlier tallied with the number of the Bank Drafts and Cheques etc. deposited in this case. Its details have been furnished in paragraph 12 of the said affidavit explaining that the Banker Cheque Nos. 943869/69 for Rs.45,000/-; 943868/69 for Rs. 1,45,000/-; 943864/64 to 943866/64 for a sum of Rs.1,50,000/- had earlier been deposited for participating in the bid, in the name of Dharmendra Kumar Jaiswal and as he could not succeed, those securities have been submitted in this case which have been seized by the Department and Rs. 1,78,00,000/- remained unexplained. There was sufficient material before the authority concerned for forming a reasonable belief in this respect, particularly, depositing the same securities which had earlier been deposited in the case of Dharmendra Kumar Jaiswal, which reflected the modus operandi wherein the identity of the persons concerned was sought to be erased from the official record and a large number of documents have been seized from different premises in different cities and statements of large number of persons had been recorded and inference could be drawn that the instruments were out of undisclosed income and the firm, in fact, was a Benami concerned. The actual persons behind this transaction had been assessed; notice under Section 157BC of the Act had been served upon them; none of them turned up to reply; assessment had been made; being aggrieved, they have filed the appeals and the same are pending before the Appellate Authority, as is evident from the assessment orders, referred to earlier, dated 23.03.2001. Position of the block assessment of persons of the said group, has been shown by the Revenue as under:-
Sl. No. Name of cases Assessed Income Date of Assess-ment Under Section Appeal Position
1 Late Ashok Kr. Jaiswal Rs.16,07,92,900/- 23.3.01 158BC Appeal pending before I.T.A.T., Allahabad
2 Sri Satish Kr. Jaiswal Rs.10,33,63,986/- -do- -do- -do-
3 Sri Babu Lal Jaiswal Rs. 3,85,28,083/- -do- -do- -do-
4 Sri Bharat Kr. Jaiswal Rs.15,78,42,900/- -do- -do- -do-
5 Sri Shrish Kr. Jaiswal Rs. 12,24,31,447/- -do- -do- -do-
6 Sri Shiv Kr. Jaiswal Rs.14,89,73,258/- -do- -do- -do-
7 M/s Jai Maa Sharda Travels Rs. 2,50,71,000/- -do- -do- -do-
8 M/s Hotel Sakshi And Sajan Restaurant Rs.1,20,54,630/- -do- -do- -do-
9 M/s Shiv Kr. Jaiswal & Others Rs.38,77,40,625/- 28.4.04 158BC read with Section 15BD Appeal pending before C.I.T. (Appeals) Allahabad
In this case, we have gone through the entire records including the warrant of authorization under Section 132 of the Act which is contained in Form No. 45 as provided for under Rule 112 (1) of the Income-tax Rules, 1962. A bare perusal of the said warrant of authorization clearly indicates that it has been signed on 15th March, 1999 by the Director of Income-tax (Investigation), Kanpur, which clearly mentions that from the information placed before him and on a consideration of the same the persons mentioned therein are in possession of money, bullion, jewellary or other valuable items or things which had not been disclosed for the purposes of the Act and that he has reason to believe that such articles would be found in the possession of the District Excise Officer, Rewa and, therefore, he has authorized the Joint Director to enter and search the said office.
In this connection, we have also examined the original records of the case which have been placed before us by Shri Bharat Ji Agrawal, learned Senior Counsel appearing for the Revenue. A perusal of the Note clearly indicates that there was sufficient material before the Director of Income-tax (Investigation), Kanpur to form the requisite opinion having reason to believe that there had been unaccounted money which had been deposited in the form of the Banker Cheques etc. with the Excise Department so as to invoke the provisions of Section 132 (1) of the Act.
After considering the entire record, we are of the candid view that the authority has proceeded strictly in accordance with law and the order of search and seizure by the Competent Authority has been issued strictly in accordance with law and there was sufficient material before the authority concerned to reasonably believe on the basis of the information in his possession that action was required to be taken under the provisions of Section 132 (1) of the Act.
In view of the above, we reach the inescapable conclusion that the petitioner-firm is a bogus, non-existing partnership firm. Shri Garg could not furnish any explanation as under what circumstances the firm can not be said to have come into existence if the same was to take place on the eventuality of grant of privilege in dealing with Indian-made Foreign Liquor, as no such privilege had ever been granted in favour of the firm till today. No explanation could also be furnished by Shri Garg as to how the security deposited by the unsuccessful bidders in the earlier auction had been deposited in this case for participating in the auction for grant of the said privilege and that its partners have not come forward and under what circumstances, the statement was made by Shri Babu Lal, the deponent in this case, at the time of search that he had nothing to do with the case. More so, no explanation could be furnished further, as after the investigation conducted by the Revenue, none of them could be found therein and the actual amount had been of other persons, namely, Shri Sheo Kumar Jaiswal, Shri Babu Lal Jaiswal, Rajiv Jaiswal, and Shishir Jaiswal against whom, the notices under Section 157BC had been issued; and none of them turned up and the assessment orders have been passed on 23.02.2001. Their appeals, as referred to above, are pending consideration. The firm was never registered with the Income-tax Department, as required under Section 184 of the Act.
There may be some substance in the submissions made on behalf of the petitioner firm that this was not a fit case where the Revenue could have resorted to powers under Section 132 of the Act as the securities had been deposited with the Excise Department. Those securities ought to have been requisitioned under Section 132-A of the Act. (Vide Commissioner of Income-tax & Ors. Vs. Tarsem Kumar & Anr., AIR 1986 SC 1477). However, in view of the fact that the firm is non-existent and is not competent to maintain a writ petition, the balance shall not tilt in favour of the petitioner on this count.
In view of the above, we are of the considered opinion that the petitioner is a bogus firm; litigation has been initiated by a Benami on behalf of the persons whose appeals are pending.
When a person approaches a Court of equity in exercise of its extraordinary jurisdiction under Article 226/227 of the Constitution, he should approach the Court not only with clean hands but also with clean mind, clean heart and clean objective. (Vide Ramjas Foundation & ors. Vs. Union of India & ors., AIR 1993 SC 852; K.P. Srinivas Vs. R.M. Premchand & ors., (1994) 6 SCC 620). Thus, who seeks equity must do equity. The legal maxim " Jure Naturae Aequum Est Neminem cum Alterius Detrimento Et Injuria Fieri Locupletiorem", means that it is a law of nature that one should not be enriched by the loss or injury to another.
In Nooruddin v. Dr. K.L. Anand (1995) 1 SCC 242, the Hon'ble Supreme Court observed as under:
"..........Equally, the judicial process should never become an instrument of appreciation or abuse or a means in the process of the Court to subvert justice."
Similarly, in Ramniklal N. Bhutta V. State of Maharashtra, AIR 1997 SC 1236, the Hon'ble Apex Court observed as under:-
"The power under Art.226 is discretionary. It will be exercised only in furtherance of justice and not merely on the making out of a legal point. ............the interest of justice and public interest coalesce. They are very often one and the same. .........The Courts have to weigh the public interest vis-à-vis the private interest while exercising the power under Art.226..... indeed any of their discretionary powers."
In Dr. Buddi Kota Subbarao Vs. K Parasaran, AIR 1996 SC 2687, the Hon'ble Supreme Court has observed as under:-
"No litigant has a right to unlimited drought on the Court time and public money in order to get his affairs settled in the manner as he wishes. Easy access to justice should not be misused as a licence to file misconceived or frivolous petitions."
Similar view has been reiterated by the Supreme Court in K.K. Modi Vs. K.N. Modi, (1998) 3 SCC 573.
In Sabia Khan & Ors. Vs. State of U.P. & ors., (1999) 1 SCC 271, the Hon'ble Apex Court held that filing of a totally misconceived petition amounts to abuse of the process of the Court and such a litigant is not required to be dealt with lightly.
In Abdul Rahman Vs. Prasoni Bai & Anr., 2003 AIR SCW 14, the Hon'ble Supreme Court held that whenever the Court comes to the conclusion that the process of the Court is being abused, the Court would be justified in refusing to proceed further and stop the party from pursuing the remedy in law.
Writ jurisdiction is a discretionary. It is not issued merely because it is lawful to do so. The purpose of the writ Court is not only to protect a person from being subjected to violation of law but also to advance justice and not to thwart it. The Constitution does not place any fetter on the power of the extraordinary jurisdiction but leaves it to the discretion of the Court. However, the power being discretionary, the Court has to balance the competing interest, keeping in mind that interest of justice and public interest can coalesce in certain circumstances. (Vide Champalal Binani Vs. Income Tax Commissioner, West Bengal, AIR 1970 SC 645; Ramniklal N. Bhutta Vs. State of Maharastra, (1997) 1 SCC 134; Chimajirao K. Shrike Vs. Oriental Fire and General Insurance Co. Ltd., AIR 2000 SC 2532; Ganpatrao Shama Prashant Raje Vs. Ganpat Rao, AIR 2000 SC 3094; LIC of India Vs. Asha Goyal, AIR 2001 SC 549; Roshandeen Vs. Preeti Lal, AIR 2002 SC 33; S.D.S. Shipping Pvt. Ltd. Vs. Jay Container Services Co. Pvt. Ltd. & Ors., 2003 (4) Supreme 44; and Chandra Singh Vs. State of Rajasthan & Anr. JT 2003 (6) SC 20).
In A.M. Allison Vs. B.L. Sen, AIR 1957 SC 227, the Apex Court held that writ Court can refuse to exercise its jurisdiction as the writ proceedings cannot ''of course', if it is satisfied that there has been no failure of justice.
In Dal Singh Vs. King Emperor of India, 1917 PC 25, the Privy Council held that in case the authority/court has done substantial justice, the Court may not interfere even if the order was passed without jurisdiction or suffers from some kind of illegality. Same view has been reiterated in Mohammad Swalleh & ors. vs. IIIrd Addl. District Judge, Meerut, AIR 1988 SC 94; and Shree Jain Swetambar Terapanthi Vid (s) Vs. Phundan Singh & ors., AIR 1999 SC 2322.
In Collector, Land Acquisition, Anantnag Vs. Mst. Katiji & ors.,AIR 1987 SC 1353, the Hon'ble Apex Court held as under:-
"............When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done........"
Therefore, Court has to examine the case with this angle also bearing in mind that cause of substantial justice cannot be defeated on mere technicalities.
In view of the above, we are of the considered opinion that the case does not present special features warranting equitable discretionary relief in writ jurisdiction. Petition stands dismissed. No costs.
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