Case Law Details
In the present case, in September 2007 the search was carried out in the premises of Dr. Yogi Raj Sharma. The document Annexure RJ-1 was seized by the respondents. At the relevant time petitioner no. 1 was the Chief Health Secretary and this fact was within the knowledge of the respondents, but why the search was conducted on 30.5.2008 after a period of near about 9 months, there is no explanation in this regard. The document Annexure RJ-1 was seized from the premises of Dr. Yogi Raj Sharma but until and unless there is corroborating evidence the respondents could not have formed the basis of issuing warrant of authorization. It appears that because of the allotment of house to respondent no.4, there was some annoyance of the authorities and as soon as on 20.5.2008 the house was got allotted by Chief Minister, on 28.5.2008 warrant of authorization was issued and on 30.5.2008 search was conducted. If there was some material with the Department that the petitioners had purchased some house or land property, then there could have been definite evidence in this regard, but for a period of 8 months no information was collected and all of a sudden the warrant of authorization was issued. From the perusal of panchnama prepared during seizure it appears that no objectionable document or undisclosed property was found except those which were declared in the earlier return. There is no other evidence available on record that the document Annexure RJ-1 relates to the petitioner and the word ‘ch’ of which correctness is disputed by the petitioner indicates to the petitioner. In absence of any cogent reasons in the present matter warrant of authorization could not have been issued, as has been held by the aforesaid judgments. Issuance of warrant of authorization is a serious action and for this authorization officer should have recorded his satisfaction. Though normally this Court is not looking to the reasons of satisfaction, but in the present case it appears that the warrant of authorization was issued merely on hypothecated grounds, which is not sustainable under the law.
A Division Bench of this Court in Gaya Prasad Pathak Vs. Assistant Commissioner of Income Tax and others (2007) 290 ITR 128 (MP) has considered that in the assessment proceedings the authorities have no power to consider the validity of authorization under section 132(1) of the Act and the remedy available to the petitioners is by way of filing writ petition.
In the present case, we have examined the entire proceedings, satisfaction note, the document Annexure RJ- 1, which is the basis for issuance of warrant of authorization and ultimately the seizure memo and find that the entire action which was initiated and taken was based on without any sufficient ground or material and it appears that because of dispute in respect of allotment of house, the respondents could get an opportunity to issue warrant of authorization, resultantly search in the premises of petitioners as conducted.
In view of aforesaid, the action of the respondents cannot be sustained under the law and accordingly this petition is allowed and the issuance of warrant of authorization and consequent search and seizure proceedings are hereby quashed.
HIGH COURT OF MADHYA PRADESH
PRINCIPAL SEAT AT JABALPUR
Writ Petition No. 13833 of 2010
1. Rajesh Rajora,
2. Smt Sameeta Rajora
Vs
1. Union of India,
2. The Chief Commissioner of Income-tax
3. The Commissioner of Income-tax
4. The Director Of Income-tax (Investigation)
5. The Assistant Director of Income-tax (Investigation)
6. The Assistant Commissioner of Income-tax Circle
7. The Income Tax Officer
JUDGEMENT
27/06/2013
Per Krishn Kumar Lahoti, Acting Chief Justice
The petitioners have challenged the search and seizure operation undertaken by the respondents under section 132(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’ for short), in their premise (residence) on date 30.05.2008.
2. The facts of the case are that both the petitioners are Government servants. They are salaried persons and are filing their Income Tax return on time, duly supported by necessary documents. Both the petitioners had been regularly assessed by the Income Tax Department. The Accounts submitted by them were duly verified by the Assessing Officer every year. The petitioners were also maintaining their account books with vouchers and documents in support thereof, which were also being produced along with the return. The petitioners were occupying official residence No.XD -A1, Char Imli, Bhopal. The search was conducted as a consequential search after the search was carried out at the premises of Dr. Yogi Raj Sharma, the then Director of Department of Public Health and Family Welfare, Government of Madhya Pradesh. The petitioner no.1 was posted as Home Secretary in the Government of Madhya Pradesh at the relevant time when the search was carried out on 30.5.2008 by the respondents on the basis of an authorization issued by respondent no.4. During the search all the documents, books vouchers available at the premises of the petitioners were taken away by the respondents without any verification. The aforesaid search has been alleged to be conducted by the respondents with a predetermined belief that all the assets in the house of petitioners were un-accounted and un-disclosed. As per the petitioners, 31 pages were seized from the possession of the petitioners out of which 25 pages were photocopies of their official passport and rest 6 pages were either dumb documents or were not related with the petitioners. Similarly 31 pages were seized from petitioner no.1’s father-in-law, who had retired from Indian Army in 1984 and was residing in the Guest House of the residence of the petitioner, who had came at the relevant time to visit his daughter. Cash of Rs. 27,767/-, gold jewellery weighing 435 grams, silver utensils and articles worth Rs. 2.07 lakhs were found in the possession of petitioners. A panchnama Annexure P-1 was prepared in respect of the aforesaid search and seizure memo was also prepared. This search and seizure has been challenged by the petitioners by filing present petition on the grounds :-
(a) that there was no satisfaction recorded by the respondents for issuing order of search. The power could have been exercised only when in consequence of information in the possession of the respondents/He had reasons to believe that any person to whom summon or notice might have been issued will not or cause to produce any books of accounts useful to any proceeding under the Act or the property which could have been found in possession of the person were not disclosed property and only then such an officer may cause search and seizure in the manner provided under section 132 of the Act.
(b) That merely in the premises of Dr. Yogi Raj Sharma some search was conducted and one document Annexure RJ-1 was found could not have been a ground to form an opinion for issuance of search and seizure. Reliance was placed by the petitioner on the judgment of Income Tax Officer Vs. Seth Brothers and others (74 ITR 836 (SC), Commissioner of Income Tax Vs. Vindhya Metal Corporation & ors (224 ITR 614), Rajendran Chingaravelu Vs. R.K. Mishra, Additional Commissioner of Income Tax & ore. (227 CTR 520 (SC)), Ramjibhai Kalidas Vs. I.G. Desai, ITO (80 ITR 721 (Guj)), Dr. Nand Lal Tahiliani Vs. CIT (170 ITR 592 (All.)), Vindhya Metal Corporation and others Vs. Commissioner of Income Tax and others 156 ITR 233 and submitted that the entire search and seizure may be quashed.
3. The respondents have supported the order. It was submitted that this petition is highly belated. The search was carried out in the premises on 30.5.2008 and the present petition has been filed on 27.9.20 10, which is highly belated. So far as the action of the respondents is concerned it was submitted by Shri Lal, learned counsel for respondents that in September 2007 search in the premises of Dr. Yogi Raj Sharma was carried out, in which certain documents were found which were the basis of forming an opinion to conduct search and seizure in the premises of the petitioner. It is submitted that the search was duly carried out by the respondents.
4. In reply to it Shri Vikas Pahwa, learned Senior Advocate appearing on behalf of petitioners submitted that the conduction of search and seizure was entirely malafide on the part of respondent no.4 and in fact it is a mala fide search because the petitioner no.1 who was the Home Secretary at the relevant time was assigned with the work of allotment of houses. That the officer who had issued warrant of authorization Shri S.S. Rana applied for allotment of the house on 23.1.2008. The petitioner who was In charge for the allotment of the house, processed the application, but took near about 4 months time. Because of the aforesaid delay of process the respondent no.4 who was the Director of Income Tax Investigation became highly annoyed with the petitioner and directly applied to the Chief Minister for the allotment of the house. The said house was directed to be allotted by the Chief Minister on 20.5.2008. Immediately thereafter, the respondent no.4 on 28.5.2008 issued warrant of authorization and on 30.5.2008 the search was conducted. Stating aforesaid it was submitted that the entire action on the part of respondent is mala fide and tainted with the act of prejudiced-mind and on this ground warrant of authorization could not have been issued. No recovery or any illegal property was seized from the premises of the petitioners, however on 25.1.2010 a notice under section 153A of the Act was issued and the petitioner no.1 was suspended and on 19.3.2010 though a charge sheet was issued, but on 9.11.2012 the said was dropped. It is submitted that there is no delay on the part of petitioners in challenging the aforesaid action. It is also submitted by the petitioners that the search and seizure could have been challenged only by filing a petition and for this purpose no other proceeding except invocation of jurisdiction of this Court under Article 226/227 of the Constitution of India could have been made.
5. In reply to it Shri Sanjay Lal submitted that on the basis of search and seizure an order of assessment has been passed and appeal against such an order has been partially allowed by the CIT (A), so this petition may be dismissed with liberty to the petitioner to assail the order passed in appeal.
6. In reply to it, it is submitted by Shri Pahwa that to challenge the search and seizure only remedy available to the petitioners is by way of filing present petition and for this purpose the present petition may be entertained. It is also submitted by the petitioners that the document Annexure RJ-1, which is the basis of search and seizure may be looked into. In the said document the word which has been used against the petitioners, to connect the petitioners, is that the document relates to transaction with the word ‘ch’ while in fact it is ‘etc’. Apart from this, the aforesaid document was seized from the premises of Dr. Yogi Raj Sharma and until and unless there is some corroborative evidence against the petitioner, such document could not have been used against the petitioners for forming an opinion against the petitioners. Dr. Yogi Raj Sharma in his statement Annexure RJ-5 has denied that the aforesaid document was written by him . The handwriting expert also supports the aforesaid contention. It is also submitted by the petitioners that even if it is found that such a document was seized from the premises of Dr. Yogi Raj Sharma, then until and unless there is some corroborative evidence, the same cannot be connected with the petitioners, as the document does not reflect the name of petitioners. Apart from this, no undisclosed property, money or jewellery was found in the possession of petitioners in the search, but the respondents are taking into consideration that the entire amount reflecting in the document Annexure RJ-1 was paid to the petitioners and on the basis of only this entire amount has been made addition in the income of petitioners, without any other evidence.
7. In reply to it, Shri Sanjay Lal, learned counsel for respondents submitted that these question cannot be decided in this writ petition and the petitioners may assail the order of appellate authority before the Income Tax Appellate Tribunal, in accordance with law.
8. In this case the short point involved is whether the document Annexure RJ-1 in which word ‘ch’ has been written, whether it indicates to the petitioner or it is ‘etc’ or could have been basis for forming an opinion for issuance of search warrant against the petitioner may be looked into.
9. The learned counsel for Revenue has produced the satisfaction note in a sealed cover for the perusal of this Court and from the perusal of satisfaction note it appears that the satisfaction note is in respect of three officers including petitioner no.1 Rajesh Rajora and the entire satisfaction note is centered in respect of the search conducted in the premises of Dr. Yogi Raj Sharma and on the basis of document Annexure RJ-1 it has been recorded that Dr. Rajesh Rajora had invested money in the house and land property. The aforesaid money was received by him in respect of supply orders of medicines, medical equipments etc. It appears that the entire basis of recording satisfaction was the search conducted in the premises of Dr. Yogi Raj Sharma it will be pertinent to mention here that the document Annexure RJ-1 does not bear the name of either of the petitioners, but on the basis of word ‘ch’ a conclusion has been recorded that it indicates to the petitioner no.1. In absence of name, what was the evidence before the respondents to indicate that the word ‘ch’ indicates to the petitioner is not there. Apart from this Dr. Yogi Raj Sharma in his statement had specifically denied the aforesaid fact on 24.12.2010 and stated that such document does not belong to him and it is not in his writing. In the aforesaid circumstances what was the basis of issuance of warrant of search and seizure is not on record. Merely there was some suspicion could not be a ground to record a satisfaction in this regard. Apart from this if certain land and house properties were purchased by the petitioner then it could have been verified from various other sources and then satisfaction could have been recorded. From the perusal of proceedings of satisfaction note we also find that for the first time on 27.5.2008 a note sheet was written by the Additional Director of Income Tax on which on 28.5.2008 the order was passed. This fact creates a doubt that why no action was taken in the matter from the date of search and seizure in the premises of Dr.Yogi Raj Sharma and why action was initiated only after the allotment of house in question to respondent no.4. A strong suspicion goes in the matter for evaluating the proceedings of search and seizure.
10. The Apex Court in Seth Brothers (supra) held that section 132 of the Act does not confer any arbitrary authority upon the revenue officers. The Commissioner or the Director of Inspection must have, in consequence of information, reason to believe that the statutory conditions for the exercise of the power to order search exist. He must record reasons for the belief. Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must have been exercised strictly in accordance with the law or 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.
11. In H. L. Sibal Vs. Commissioner of Income Tax, Punjab and others 101 ITR 112 (P&H) a Division Bench of Punjab and Haryana High Court held that the word information has been defined as ‘that of which one is apprised or told’. The word ‘reason’ has been defined as a ‘statement of fact employed as an argument to justify or condemn some act. On the other hand the word ‘conclusion’ is defined as the judgment arrived at by reasoning; an inference; deduction, etc’. A necessary concomitant of this approach is that the facts constituting information’ must be relevant to the enquiry. They must be such that a reasonable and prudent man can come to the requisite belief or conclusion there from. If either of the aforementioned elements is missing, the action of the authority shall be regarded as lying outside the ambit and scope of the law and such an action would be liable to be struck down on the basis of what is commonly known as ‘legal malice’. Similar view has been taken in other cases.
12. In the present case, in September 2007 the search was carried out in the premises of Dr. Yogi Raj Sharma. The document Annexure RJ-1 was seized by the respondents. At the relevant time petitioner no. 1 was the Chief Health Secretary and this fact was within the knowledge of the respondents, but why the search was conducted on 30.5.2008 after a period of near about 9 months, there is no explanation in this regard. The document Annexure RJ-1 was seized from the premises of Dr. Yogi Raj Sharma but until and unless there is corroborating evidence the respondents could not have formed the basis of issuing warrant of authorization. It appears that because of the allotment of house to respondent no.4, there was some annoyance of the authorities and as soon as on 20.5.2008 the house was got allotted by Chief Minister, on 28.5.2008 warrant of authorization was issued and on 30.5.2008 search was conducted. If there was some material with the Department that the petitioners had purchased some house or land property, then there could have been definite evidence in this regard, but for a period of 8 months no information was collected and all of a sudden the warrant of authorization was issued. From the perusal of panchnama prepared during seizure it appears that no objectionable document or undisclosed property was found except those which were declared in the earlier return. There is no other evidence available on record that the document Annexure RJ-1 relates to the petitioner and the word ‘ch’ of which correctness is disputed by the petitioner indicates to the petitioner. In absence of any cogent reasons in the present matter warrant of authorization could not have been issued, as has been held by the aforesaid judgments. Issuance of warrant of authorization is a serious action and for this authorization officer should have recorded his satisfaction. Though normally this Court is not looking to the reasons of satisfaction, but in the present case it appears that the warrant of authorization was issued merely on hypothecated grounds, which is not sustainable under the law.
13. A Division Bench of this Court in Gaya Prasad Pathak Vs. Assistant Commissioner of Income Tax and others (2007) 290 ITR 128 (MP) has considered that in the assessment proceedings the authorities have no power to consider the validity of authorization under section 132(1) of the Act and the remedy available to the petitioners is by way of filing writ petition.
14. In the present case, we have examined the entire proceedings, satisfaction note, the document Annexure RJ- 1, which is the basis for issuance of warrant of authorization and ultimately the seizure memo and find that the entire action which was initiated and taken was based on without any sufficient ground or material and it appears that because of dispute in respect of allotment of house, the respondents could get an opportunity to issue warrant of authorization, resultantly search in the premises of petitioners as conducted.
15. In view of aforesaid, the action of the respondents cannot be sustained under the law and accordingly this petition is allowed and the issuance of warrant of authorization and consequent search and seizure proceedings are hereby quashed. Considering the facts of the case, there shall be no order as to costs.
