Case Law Details
ORDER
Ahhay M. Naik, J.
This writ petition under Article 226 of the Constitution of India has been preferred against the warrant of authorization dated 11.06.2007 issued under Section 132A(1) of the Income Tax Act, 1961, whereby respondent No. 1 requisitioned the amount of Rs. 26,00,000/- seized from petitioner No. 2 by Police Station In-charge, Chandan Nagar Police Station, Indore.
2. Briefly stated relevant facts are that at about 2.45 AM on 10.06.2007, the City Superintendent of Police, Indore intimated telephonkally the ITO (Investigation) about the seizure by Police Station In-charge of Chandan Nagar Police Station, Indore of cash amount of Rs. 1,23,50,000/- from the possession of four persons on checking of luxury bus number MP-41 P-0150, which was scheduled to Ahmedabad from Indore. A request was made by the Income Tax Officer (Investigation), Indore to the Police Station In-charge of Chandan Nagar Police Station that the department has stated angrily with regard to the sources of seized amount and the same should not be released to any one until enquiry by the Income Tax Department is completed. A sum of Rs. 26,00,000/- was seized from the custody of petitioner No.2, whose statement was recorded on 10.06.2007 itself under Section 131 of the Income Tax Act, 1961 (hereinafter referred to as the IT Act). This petition relates to the authorization issued in respect of the said amount. Warrant of authorization was issued on 11.06.2007, which has been challenged in the present writ petition on the ground that the authority had no information in his possession to enable him to form a reason to believe that money seized from petitioner No.2 has not been or would not have been disclosed for the purposes of the IT Act.
3. Petitioner No. 1 is M/s. Patel Rajesh Kumar Amrutlal & Company, a partnership firm duly constituted under the deed of partnership dated 02.12.2006 (Annexure P/1), whereas petitioner No. 2 is Amish Kumar Patel from whose possession the amount in question was seized. It is stated in the petition that petitioner No. 1 is engaged in the business of rendering Courier Services to its clients viz. in relation to envelopes, parcels, money and other valuable articles. Article including cash is accepted from the clients by giving proper printed receipt, containing relevant particulars. Such receipts are prepared in duplicate and the original is handed over to the persons concerned, whereas second copy is retained by the petitioner-firm. Petitioner No. 1 is having PAN AAJFP2745 E. Proper jurisdiction over the petitioners firm is that of Additional CIT Range-2, Ahmedabad and Commissioner of Income Tax, Ahmedabad-1, Ahmedabad. It is further stated that the Main Office of the petitioner-firm is at Ahmedabad with its branch at Indore having its Office at Lodhi Rajput Complex, Ram Mandir, 1st Floor, 18 Jail Road, Indore. Petitioner firm’s branch at Indore required an amount of Rs. 26,00,000/-, which was arranged and sent to Indore by Head Office. Later on, the said amount of Rs. 26,00,000/- was handed over to be transferred to its Head Office, which was being carried by petitioner No. 2, who was an employee of the petitioner’s firm. He was intercepted on 10.06.2007, when he was carrying the money from Indore to Ahmedabad in a bus, by Chandan Nagar Police and the amount in question was seized from him. The factum of seizure was intimated by the Police Authorities to Income Tax Department. Consequently, respondent No. 1 issued a warrant of authorization on 11.06.2007, in exercise of its powers under Section 132A(1) of the IT Act and has proposed to requisition the said amount of Rs. 26,00,000/- seized from the possession of petitioner No. 2. It is submitted that the aforesaid warrant of authorization issued by respondent No. 1 requisitioning thereby the seized cash from the Police Authorities is illegal and without jurisdiction for want of satisfaction of the conditions precedent for assumption of jurisdiction under Section 132A of the IT Act. According to the petitioner, there was no information in possession of respondent No. l, which would lead to information of belief about the existence of any of the conditions specified in clauses (a) to (c) of the said provision. According to the petitioner, the authorization was issued merely on account of the seizure, without having any material requisite for the satisfaction to have reason to believe that money has not been or would not have been disclosed for the purpose of the IT Act.
4. Respondents submitted the reply, refuting thereby the averments contained in the petition. Accordingly, it has been stated that the powers to issue warrant of authorization has been properly and rightly exercised and the same is valid.
5. Shri P.M. Choudhary, learned counsel appearing for the petitioner and Shri R.L. Jain, learned senior counsel appearing for the revenue made their respective submissions, which have been considered in the succeeding paragraphs.
6. Firstly, we feel it proper to reproduce Section 132A of the IT Act for convenience:-
“132A. (1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner], in consequence of information in his possession, has reason to believe that-
(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as required by such summons or notice and the said books of account or other documents have been taken into custody by any officer-or authority under any other law for the time being in force, or
(b) any books of account or other documents will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act and any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, such books of account or other documents on the return of such books of account or other documents by any officer or authority by whom or which such books of account or other documents have been taken into custody under any other law for the time being in force, or
(c) any assets represent either wholly or partly income or property which has not been, or would not have been, 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 authorise any [Additional Director, Additional Commissioner,] [Joint Director], [Joint Commissioner], [Assistant Director [or Deputy Director]], [Assistant Commissioner [or Deputy Commissioner] or Income-tax Officer] (hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer) to require the officer 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:
(2) On a requisition being made under sub-Section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody.
(3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning . officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words “the authorised officer” occurring in any of the aforesaid sub-sections (4A) to (14), the words “the requisitioning officer” were substituted.]”
7. Constitutional validity of Section 132A of the IT Act has already been upheld by the Hon’ble Supreme Court of India long back in the case of Pooran Mal v. Director of Inspection (Investigation) IT AIR 1974 SC 348. IT has been observed:-
“17. We are not, therefore, inclined to hold that the restrictions placed by any of the provisions of Section 132, 132A or Rule 112A are unreasonable restrictions on the freedoms under Article 19(1)(f) &(g).”
8. It is almost a settled law that in exercise of powers under writ jurisdiction, High Court has inherent powers to enter into question of existence of information, which would provide a basis to form a reason to believe that the amount seized has not been or would not have been disclosed for the purpose of IT Act. In a recent case of Smt. Suman Singhai v. DIT (Investigation) [2012] 20 taxmann.com 835 a Division Bench of this Court consisting of Hon’ble the Chief Justice Shri S.R. Alam and Hon’ble Shri Justice Alok Aradhe, the scope and ambit of powers under Section 132A of the IT Act has been clarified in the following passage:-
“10. At this state we deem it appropriate to deal with the scope and ambit of powers under Section 132A of the Income Tax Act with regard to search and seizure. In Seth Brothers (supra), the Supreme Court while dealing with the provisions of Section 132 of the Income Tax Act relating to search and seizure which is ‘pari materia to Section 132A of the Income Tax Act has held that Section does not confer any arbitrary power on revenue officers. It was further observed that 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 the action. If it is found that action has been taken maliciously or power is exercised for collateral purpose, the same is liable to be struck down by the Court. It has been further held that power exercised by the Commissioner under Section 132 is not a judicial or quasi-judicial power and that the Court cannot substitute its own opinion for that of the Commissioner.”
9. The Apex Court in the case of Union of India v. Ajit Jain [2003] 260 ITR 80/129 Taxman 74 has held that the intimation simplicitor by CBI, without something more, did not constitute “information” within the meaning of Section 132 of IT Act.
10. Scope of writ jurisdiction in a case containing the challenge to authorization under Section 132A of the IT Act is in our opinion well explained by the Rajasthan High Court in the case of Sohanlal Mundra v. Union of India [1996] TLR 960 (Raj.) in the following passage: –
“It is further true that when issuance of an authorisation under section 132A of the Income Tax Act, 1961, is challenged in a court of law, it will be open to the petitioners to contend that on the facts or information disclosed no reasonable man could have arrived at the conclusion that the action under section 132A was called for although formation of opinion under the said section is subjective. It is well to remember that jurisdiction under article 226 of the Constitution of India of this court is very limited. In fact this court cannot afford to act as an appellate or revisional court and as such has no justification to exarnine meticulously the information in order to decide for itself as to whether action under section 132A was called for or not. Suffice it to say that in exercise of extraordinary jurisdiction this court can examine whether the act or issuance of an authorisation under section 132A is arbitrary or mala fide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate authority. According to me the reason to believe must be based on definable material or materials and if the information or the reason to believe has no nexus with the belief or there is no definable material or tangible information for formation of such belief then in such a case action taken under section 132A of the Income Tax Act, 1961, would be treated as illegal.”
11. In the case of Jai Bhagwan Om Prakash v. Director of Inspection [1994] 208 ITR 424/[1993] 67 Taxman 33 (Punj. & Har.) it has been observed that in case there is information with the authorities and the department had satisfied itself with regard to the authenticity of the information available and bona fide belief was found, it is not for the Court to make interference.
12. Thus, existence of information having nexus with the reason to believe that assets have not been or would not have been disclosed for the purpose of the Act, is sufficient. Sufficiency of the information is not to be gone into by this Court, which is not empowered to substitute its opinion. Sufficiency of reasons for belief cannot be equally questioned before this Court.
13. Single Bench of this Court in the case of Krishnagopal v. DIT (Investigation) [2009] 182 Taxman 203 has observed:-
“6. A statutory functionary must act in a manner laid down in a statute. A bare reading of Section 132A (1) makes it clear that the power conferred on the authority is conditional and the conditions precedent for authorizing action are possession of information by the authority and in consequence of which the authority must have reason to believe that the person concerned has assets which have not been or would not have been disclosed for the purpose of the Act.”
14. Shri P.M. Choudhary appearing for the petitioner placed much reliance on the decision of the Apex Court in the case of CIT v. Vindhya Metal Corpn. [1997] 91 Taxman 192 wherein it has been held that if the amount is seized by the GRP from the possession of a traveller, who at that time, had no documents as to the ownership or possession of sum and whose name was not borne on the General Index Register of ITO of the place which that traveller belonged to, warrant of authorization on the basis of mere aforesaid information, is not sustainable in law, because no reasonable person could have entertained a belief that the amount seized represented income that traveller person would not have disclosed for the purpose of IT Act.
15. Keeping in mind the above settled principles of law, we would now advert to the facts of the present case.
Facts of The Case
Police of Chandan Nagar Police Station, Indore on information seized amount of Rs. 26,00,000/- from Amish Kumar s/o Karsan Bhai Patel. He was carrying the money to Ahmedabad on 09.06.2007 by luxury bus number MP-41 P-0150 from Indore. Seizure was intimated immediately at 2.45 AM on 10.06.2007 by the City Superintendent of Police to the Income Tax Department. Record was produced by the Income Tax Department before us through Shri R.L. Jain, learned senior advocate appearing for the revenue, which contains the statement of Amish Kumar Patel recorded on oath under Section 131 of the IT Act. He stated that he was an employee at Ahmedabad office of M/s. Rajesh Bhai Amrutlal & Company, House No. 17, Ground Floor, Ratan Pol, Manak Chowk, Ahmedabad. He has been shifted to Branch Office at Indore. He further stated that the owner of the company is Mr. Praveen Bhai Darbar whose residence and telephone numbers were not known to him. Money in question was handed over to him in the evening of 09.06.2007 by Mr. Praveen Bhai for being delivered to Govind Bhai Patel at the Office of M/s. Rajesh Bhai Amrutlal & Company at Ahmedabad. He further stated that he had no document in relation to the money in question. Record shows that the department tried to trace out Praveen Bhai, who was not traceable at the given address at Jail Road, Indore.
16. On perusal of the averments of the writ petition, it is observed that in paragraph 4 of the writ petition at page 7, it is mentioned that petitioner No. 2 was also carrying a memo dated 09.06.2007 along with covering letter issued by the Indore Branch of petitioner No. 1 for transfer of the said amount to the Head Office at Ahmedabad, which is contrary to the statement of Amish Kumar recorded under Section 131 of the IT Act. Though it is mentioned in the said paragraph that the amount in question was arranged and sent to Indore by Head Office by effecting withdrawals from the firm’s bank account, no particulars of the bank account are described in the writ petition. Similarly, statement of account of the petitioner firm’s bank account is also not annexed to the writ petition to substantiate that money in question was withdrawn from any known sources. It is further pertinent to note that Amish Kumar Patel in his statement under Section 131 of the IT Act did not state that the money in question belonged to petitioner’s firm or it was handed over to him on behalf of the said firm. Similarly, it is nowhere said in his statement that the money in question was to be delivered to the petitioner’s firm. On the contrary, he has clearly stated that the money was to be delivered to Govind Bhai Patel at Ahmedabad office of the firm. Nothing was disclosed about relation of Govind Bhai Patel with the petitioner firm. Thus, the explanation furnished by Amish Kumar Patel from whose possession the money was seized was not found satisfactory by the department and the aforesaid material was in possession of the authority when on 11.06.2007 the warrant of authorization was issued. Thus, we find that there was sufficient information in possession of the authority in order to enable him to form an opinion/reason to believe that the amount in question has not been or would not have been disclosed for the purpose of IT Act.
17. In the case of Vindhya Metal Corpn. (supra), the Apex Court affirmed the order of High Court quashing the warrant of authorization on the ground that there was nothing before the Commissioner to suggest that it was, in fact, wholly or in part, Income of any person connected with Vinod Kumar Jaiswal so as to induce a belief that, if called upon, Vinod Kumar Jaiswal would not have disclosed it for the purpose of the Act. In the instant case, Amish Kumar Patel in his statement under Section 131 of the IT Act has nowhere said that the money in question belonged to the petitioner’s firm or was to be delivered to it. Instead, he has stated that the money in question was handed over to him by Praveen Bhai who was found untraceable at the address provided by Amish Kumar. This being so, the petitioners do not get any advantage of Vindhya Metal Corpn.’s case (supra), being distinguishable on facts.
18. In view of the totality of facts and circumstances discussed hereinabove, more so as revealed in the original record made available to us by the revenue, we observe that it cannot be said that the authority, which issued warrant of authorization, was not in possession of information contemplated under law and that there was no application of mind before issuing warrant of authorization.
19. In the result, the writ petition fails and is hereby dismissed. However, with no order as to costs.
