Case Law Details
HIGH COURT OF KERALA
Joshi P. Mathew
Versus
Deputy Commissioner of Income-tax
W.P (C) NO. 620 OF 2012(B)
DECEMBER 5, 2012
JUDGMENT
1. The petitioner is an assessee under the Income Tax Act. A search under Section 132 of the Act was conducted in his business and residential premises on 10.01.2008 and 11.01.2008. During the search, certain documents were seized as per Exts.P1 to P3 mahazars. Subsequently, assessment was completed under Section 153A of the Act for the years 2002-2003 to 2007-2008 and Exts.P4 to P9 assessment orders were issued on 28.12.2009. The petitioner is prosecuting his grievances regarding the assessment orders before the statutory forums.
2. Seeking to return documents seized as per Exts.P1 to P3 mahazars, the petitioner submitted Ext.P14 application dated 26.12.2011. Immediately thereafter, he received Ext.P15 letter dated 28.12.2011 from the first respondent enclosing Ext.P16, by which, on account of the pendency of appeal and penalty proceedings, approval was granted by the third respondent for the continued retention of the documents upto 31.03.2012 or for period of 30 days after all the proceedings under the Act are completed, whichever is earlier. On receipt of Exts.P15 and P16, this writ petition was filed relying on Section 132 (8) of the Income Tax Act and seeking an order requiring the respondents to return the documents seized as per Exts.P1 to P3 Mahazars.
3. A statement has been filed on behalf of the respondents. Along with the statement, they have produced as Ext.R1(a), the request made by the first respondent seeking approval of the third respondent under Section 132(8) of the Act for the continued retention of the documents seized. This document is dated 18.01.2010. They have also produced Ext.R1(b), the proceedings of the third respondent dated 22.01.2010 whereby the approval has been granted as sought for in Ext.R1(a) till 31.03.2011 or for a period not exceeding 30 days after the termination proceedings under the Income Tax Act, whichever is earlier.
4. Relying on Exts.R1(a) and R1(b), it is contended that the first respondent having recorded the reasons for the continued retention of the documents and obtained approval of the third respondent, the petitioner is not entitled to have the documents returned to him. It is also stated that on the expiry of the period mentioned in Ext.R1((b), by Ext.P16 and later by Ext.R1(d) approval for retaining the documents till 31.03.2013 or for a period not exceeding 30 days after the termination of the proceedings under the Income Tax Act, whichever is earlier, have been granted by the third respondent.
5. The entitlement of the petitioner for return of the documents will have to be decided in the light of Section 132(8) of the Act which reads thus:
“The books of account or other documents seized under sub-section (1) shall not be retained by the authorized officer for a period exceeding (thirty days from the date of the order of assessment (under Section 153A or clause (c) of section 158BC)) unless the reasons for retaining the same are recorded by him in writing and the approval of the (Chief Commissioner, Commissioner, Director General or Director) for such retention is obtained:
Provided that the (Chief Commissioner, Commissioner, Director General or Director) shall not authorize the retention of the books or account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income Tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed.”
6. As per this provision, the books of account seized under sub-section (1) shall not be retained by the Authorized Officer for a period exceeding thirty days from the date of order of assessment passed under Section 153A. However, this Section enables retention of the seized documents beyond the aforesaid period, if the Authorized Officer records in writing his reasons for the same and the approval of the Chief Commissioner, Director General or Director, as the case may be, for such retention is obtained. Relying on these provisions of the Act it was contended by the learned standing counsel for the respondents that reasons were recorded and that by Ext. R1(b) approval was obtained within the 30 days period specified in the Section. According to him, the subsequent orders, viz., Ext.P16 and R1(d) were issued extending the period also. On this basis, the counsel contended that the petitioner is not entitled to the relief sought for.
7. However, the counsel for the petitioner contended that the respondents not only had the obligation to record the reasons and obtain approval, but also had the obligation to communicate within the 30 days period those reasons and the approval to the petitioner. In support of this contention, learned counsel for the petitioner relied on the Apex Court judgment in CIT v. Oriental Rubber Works [1984] 145 ITR 477/[1983] 15 Taxman 51. This judgment was rendered in the context of Section 132(8) as it stood prior to the amendment in 2002 and the relevant portion of the judgment reads thus:
“4. In order to decide the aforesaid contention it will be desirable to set out the material provisions of Section 132 of the Act, namely, sub-secs. (8), (10) (12) thereof, which run as follows:
“132 (8) The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be retained by the authorized officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained:
Provided that the Commissioner shall not authorize the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (XI of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed.
(10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents.
(12) On receipt of the application under sub-section (10) the Board … may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.”
On a plain reading of the aforesaid provisions it will be clear that ordinarily the books of account or other documents that may be seized under an authorization issued under sub-section (1) of Section 132 can be retained by the authorized officer or the concerned Income-tax Officer for a period of one hundred and eighty days from the date of seizure, where after the person from whose custody such books or documents have been seized or the person to whom such books or documents belong becomes entitled to the return of the same unless the reasons for any extended retention are recorded in writing by the authorized officer/the concerned Income-tax Officer and approval of the Commissioner for such retention is obtained. In other words two conditions must be fulfilled before such extended retention becomes permissible in law: (a) reasons in writing must be recorded by the authorized officer or the concerned Income-tact Officer seeking the Commissioner’s approval and (b) obtaining of the Commissioner’s approval for such extended retention and if either of these conditions is not fulfilled such extended retention will become unlawful and the concerned person (i.e. the person from whose custody such books or documents have been seized or the person to whom those belong) acquires a right to the return of the same forthwith. It is true that sub-section (8) does not in terms provide that the Commissioner’s approval or the recorded reasons on which, it might be based should be communicated to the concerned person but in our view since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfillment of either of the conditions it is obligatory upon the Revenue to communicate the Commissioner’s approval as also the recorded reasons to the person concerned. In the absence of such communication the Commissioner’s decision according his approval will not become effective.
Moreover, sub-section (10) confers upon the person legally entitled to the return of the seized books and documents a right to object to the approval given by the Commissioner under sub-section (8) by making an application to the Central Board stating therein the reasons for such objection and under sub-section (12) it is provided that the Central Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. It is obvious that without the knowledge of the factum of the Commissioner’s approval as also of the recorded reasons on the basis of which such approval has been obtained it will not be possible for the person to whom the seized books or documents belong to make any effective objection to the approval before the Board and get back his books or documents. In our view the scheme of sub-sections (8), (10) and (12) of Section 132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner’s approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communication any further retention of the seized books or documents would become invalid and unlawful. It is obvious that such obligation arises in regard to every approval of the Commissioner that might have been accorded from time to time.
8. Although, learned counsel for the Revenue attempted to persuade me not to rely on this judgment for the reasons that the Section was substantially modified by an amendment, a close perusal of the provision as it stood prior to the amendment and as it stands now, show that there is no substantial difference at least insofar as this case is concerned. Both under the unamended provision and the amended provision, the obligation to record reasons and to obtain the approval of the Commissioner for retention of the documents beyond the permissible period is provided in identical terms. It is interpreting this provision which is similar in all receipts that the Apex Court has held that within the period specified in the Section the reasons should not only be recorded and the approval obtained, but also that it should be communicated to the assessee. In this case even the respondents have no case that Exts.R1(a) or (b) were communicated to the assessee. If that be so, the requirement of Section 132(8) is not satisfied and in which event, the retention of the documents beyond 30 days period of completion of the assessment was illegal.
9. For that reason, the petitioner is entitled to succeed. The writ petition is therefore, disposed of directing the respondents to return the documents seized from the petitioner under Exts.P1 to P3 mahazars. This shall be done as expeditiously as possible, at any rate, within four weeks of receipt of a copy of this judgment.
Needless to say that this judgment shall not prevent the respondents from retaining the copies of the documents.
Writ petition is disposed of as above.
