Decided on January 19,2007



- (1.) Writ Petition CWP 13236/2006 was filed on 22.8.2006 challenging the legal propriety of the Search conducted sixteen months earlier, on 16.2.2005, on the ground (a) for the non-existent reasons to believe on the lines stated in clauses (a), (b) and (c) of Section 132(1) of the Act; (b) that the assessment proceedings initiated under Section 153-A of the Income Tax Act ('the Act' for short) pursuant to the Search are illegal. The Petitioner has prayed for the issuance of a writ of Certiorari quashing the Warrant of Authorisation and the said Search and for the quashing of Notice dated 10.7.2006 issued under Section 153-A of the Act. The Petition has been signed and verified by an affidavit of one of its Directors, Shri G.L. Jain, son of Late G.D. Jain, resident of 11/2A, Pusa Road, New Delhi-110 005. However, the shareholding of the Petitioner company has not been disclosed in the Petition. CWP 15824/2006 was filed on 5.10.2006 by Shri S.K. Jain (brother of Shri G.L. Jain and resident at the same address) as an individual, having also been served with the impugned Notice under Section 153-A of the Act dated 10.7.2006 praying, in substance, for the same reliefs.
(2.) It has been asseverated that S.K. Industries (P) Ltd. was incorporated on 5.1.1991, and is carrying on the business of manufacture of confectionery; that it has regularly filed its Return of Income and has been assessed to tax each year. It has been pleaded that the Company has paid its Tax dues. This is also the stand of Shri S.K. Jain. In the Counter Affidavit the Revenue has disclosed that the Petitioners are part of the Group companies owned and managed by S/Shri Suresh Jain, Sajal Jain, son of Shri S.K. Jain, Ganeshi Jain and Yogesh Jain. This Group comprises S.K. Industries (P) Ltd., Harsh International (P) Ltd. at 11/2A, Pusa Road, New Delhi-110005, Mansarover Promoters (P) Ltd. at 1/1B, Pusa Road, New Delhi, H.B. Industries (P) Ltd. and Mahak Food (P) Ltd. These facts have not been traversed in the Rejoinder and hence stand admitted. On a perusal of the Rejoinder it is evident that the shareholding in New Generation Promoters P. Ltd. was transferred in favour of ?Shri G.L. Jain and his family members?. The Petitioners have evaded giving details of the original shareholders in New Generation (P) Ltd. They have stated that prior to 2002 it had given the ?complexes at Pusa Road? on rent to Millennium Hospital and Diagnostic Centre P. Ltd. There is a bald statement that the Shareholders, Directors, Managers and Administrators of New Generation(P) Ltd. and Millennium Hospital and Diagnostic Centre are completely different. In the Rejoinder it has also not been controverted that Shri Sajal Jain is the son of Shri S.K. Jain [one of the Directors of the Petitioner company]; or members of his family own 1/8B, Pusa Road, New Delhi and/or 12, Pusa Road, Motor Market, New Delhi. In order to dispel all doubts pertaining to the common family ownership or Group ownership of these properties their holding ought to have been clearly and categorically stated. In respect of properties bearing Municipal No.6013/1 and 6013/3, Dev Nagar, Arya Samaj Road, New Delhi and 7/A1, W.E.A. Karol Bagh, New Delhi as well as the property at Karol Bagh the Petitioner has made a correction that these properties were not sold by Shri Sajal Jain but by his father, Shri S.K. Jain [Director of the Petitioner Company]. These pleadings and facts have been mentioned by us with a view to highlighting the nebulous nature of the dealings and ownership of properties within the Group companies. This will indubitably have a bearing on the action of the Respondents that has been assailed in these proceedings. The product that is at the fulcrum of the factual matrix is Chaini Khaini which is manufactured by Harsh International P. Ltd. which is stated to have commenced business from 1.2.2003. It is indeed remarkable that the shareholding of Harsh has not been disclosed by the Petitioners. However, the records disclose that Shri G.L. Jain [64 years] is the elder brother of of Shri S.K. Jain [54 years], being the sons of late G.D. Jain, both of whom are residing at the same house i.e. 11/2A, Pusa Road, New Delhi-110005. Shri S.K. Jain has filed CW No.15824/2006 in his individual capacity and has not impleaded any of the other Group companies. It appears plain to us that if credence is to be given to the Petitioners' submission that facts pertaining to the manufacture of Chaini Khaini are irrelevant so far as S.K. Industries or S.K. Jain are concerned, the Petitioners ought to have clearly spelt out the shareholding in Harsh. A reading of the Rejoinder leads only to the confusion being worse-confounded; it does not set-down any foundation for the ipse dixit that neither of the Petitioners have any direct or indirect connection with the affairs of Harsh. It is, therefore, not possible even for us to cull out any meaningful distinction between the business interest and activities of the Petitioner on the one hand and the shareholders of Harsh. Since the Petitioners were in the best position to remove and dispel doubts and unravel the skein of common and obscure dealings, an adverse inference would have to be drawn against them.
(3.) On behalf of the Revenue it has been emphasised that there is no valid explanation as to why the challenge to the Warrant of Authorisation and the Search conducted thereon in February, 2005 should have been raised after sixteen long months. We are not impressed with the argument that these writ Petitions became necessary only upon the issuance of the impugned Notice dated 10.7.2006 under Section 153-A of the Income-Tax Act since the gravamen of this legal action is predicated on the Search. This would have been sufficient reason for us to dismiss the Writ Petitions as being barred by laches but since we have heard arguments in detail, we refrain from doing so. Briefly stated, the argument of learned counsel for the Petitioners is that a mere suspicion, in contradistinction to the belief that circumstances envisaged under Section 132 of the Act exist, should not be the motivation for authorising and conducting a Search. The argument is that there must be objective criteria or information having a direct nexus or live link to the persons subjected to a Search in order to justify such action being carried out by the Revenue, which action invariably has a socially deleterious impact on the persons subjected to it. This is indeed trite and the Court would always be quick to castigate the Department if it proceeds to conduct searches and/or seizures for fishing or flippant reasons. One of the facets of the fundamental right to life is that no person shall be permitted to jeopardise or harm the honour and social standing of an innocent person.;

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