Sabyasachi Mukharji, J. - (1.)The petitioner, New Central Jute Mills Ltd., challenges in this petition under Article 226 of the Constitution the summons dated 6th June, 1969, issued by the Income-tax Officer under Section 131 of the Income-tax Act, 1961. In order to appreciate the controversy it will be necessary to set out certain facts. On the 11th April, 1963, an order was passed under Section 237(b)(i)/(ii) of the Companies Act, 1956, appointing an inspector to investigate the affairs of the petitioner-company. On the 12th June, 1964, another order was passed under Section 23.7(b)(i)/(ii) of the Companies Act, 1956, appointing another inspector along with the previous inspector to investigate the affairs of the petitioner-company. On the 30th June, 1964, another order was passed under Section 237(b)(i)/(iii) of the Companies Act appointing another inspector in place of the earlier inspector and extending the time for investigation. On the 20th July, 1964, inspectors appointed under Section 237(b)(i)/(ii) seized a large number of books, documents and papers pursuant to the warrants obtained by them from the Magistrates under Section 240A of the Companies Act, 1956. On 21st July, 1964, an application was made under Article 226 of the Constitution by the petitioner challenging the appointments of the said inspectors. A rule nisi was issued and an interim order was made. The said matter was Matter No. 272 of 1964 of this hon'ble court. Oil the 23rd July, 1964, another order was passed in the said Matter No. 272 of 1964, whereby the interim order issued on 21st July, 1964, was varied. By the aforesaid order the inspectors were allowed to continue with the search and seizure for four days and thereafter to keep all the seized books, papers and documents with the Registrar of Companies, West Bengal. It was further directed that if the petitioner-company required the documents, books or papers, they would be at liberty to take back the same in the manner provided for in the said order. On the 31st March, 1965, assessment of the petitioner-company for the assessment year 1960-61 was made under Section 23(3) of the Indian Income-tax Act, 1922. Then, on the 1st April, 1965. the Matter No. 272 of 1964 was heard and hearing was concluded before the learned judge taking the said matter. On the 3rd June, 1965, 'another application under Article 226 of the Constitution was moved by the petitioner-company challenging the search and seizure made by the said inspectors and a Civil Rule 581(w) of 1965 was issued by this court. On the 4th August, 1965, judgment was delivered in Matter No. 272 of 1964. By the aforesaid judgment the rule obtained by the petitioner-company in the aforesaid matter was discharged. On 29th September, 1965, the peti tioner preferred an appeal against the said judgment dated 4th August, 1965, and there was an interim order by the court of appeal directing [1966] 36 Comp. Cas. 512 (Cal.). maintenance of the status quo. On 30th March. 1966, assessment of the petitioner-company for the assessment year 1961-62 was completed under Section 23(3) of the Indian Income-tax Act, 1922. In 1967 assessment of the petitioner-company for the assessment year 1962-63 was made under Section 143(3) of the Income-tax Act, 1961. On the 5th March, 1968, judgment was delivered in Civil Rule No. 581(w) of 1965, whereby the warrants issued by the Magistrates authorising the inspectors to conduct the search were quashed. It was further provided in the order that it would suffer such modifications as might be necessary after the appeal in Matter No. 272 of 1964 was disposed of. On the 29th March, 1968, the petitioner's assessment for the assessment year 1963-64 was completed under Section 143(3) of the Income-tax Act, 1961. On the 7th March 1969, the appeal preferred by the petitioner-company in the said Matter No. 272 of 1964 was allowed by the court of appeal of this court and stay of the operation of the order was granted at the instance of the respondents. On the 25th March, 1969, assessment for the assessment year 1964-65 was made on the petitioner-company under Section 143(3) of the Income-tax Act, 1961. Between 18th April, 1969, and 30th April, 1969, from time to time stay granted by the court of appeal from the Matter No. 272 of 1964 was extended at the instance of the Government. On the 3rd May, 1969, a notice was issued under Section 19(2) of the Foreign Exchange Regulation Act, 1947, and served on the Registrar of Companies by the Assistant Director of Enforcement. On the 7th May, 1969, stay was granted in appeal from the said Matter No. 272 of 1964 which was further extended at the instance of the Government. On the 31st May, 1969, another notice under Section 19(2) of the Foreign Exchange Regulation Act, 1947, was served on the Registrar of Companies by the Assistant Director, Enforcement Directorate. On June 3, 1969, a letter was sent from the Registrar of Companies to the Assistant Director, Enforcement Directorate, stating that he could not part with the seized documents as the same were held by him pursuant to orders of this hon'ble court. On the 5th June, 1969, a letter from the Assistant Director, Enforcement Directorate, to the Registrar of Companies, was sent requiring him to comply with the notice under Section 19(2) of the Foreign Exchange Regulation Act, 1947. On the 5th Jane, 1969, summons was issued under Section 131 of the Income-tax Act. 1961, by the Income-tax Officer on the Registrar of Companies requiring him to produce all the seized documents. It is the validity and the propriety of this summons which are under challenge in this application under Article 226 of the Constitution.
(2.)Counsel for the petitioner contended firstly, that prior to the 5th June, 1969, all assessments for the assessment years 1964-65 had been completed. The books, documents and papers which had been seized were all relating to periods prior to July, 1964, and, therefore, the said books, documents and papers which had been directed to be produced pursuant to the said summons could not be relevant for any pending assessment. The books, papers and documents, it was contended, could be only relevant for the purpose of assessments for the years preceding the date of seizure and it was further contended that as all assessments for the period prior to the date of seizure had been completed before the impugned summons had been issued, there was no necessity for the Income-tax Officer to look to the said documents for the purposes of the Income-tax Act. It was contended that power under Section 131 of the Income-tax Act, 1961, was only intended to be used for the purposes of the Act and it was submitted that the purposes of the Act were the assessments to be made. The said books, documents and papers could not be relevant for the purposes of the Act. Therefore, the Income-tax Officer had acted without jurisdiction in issuing the said summons. It was urged that the Income-tax Officer had utilized his power under Section 131 of the Act not for purposes of the Income-tax Act, 1961, but for ulterior purposes, namely, to facilitate the investigation by the Company Law Board, which had been prevented by the orders of this court. It was urged that the respondents were doing indirectly what they could not do directly. In those circumstances it was submitted that it was male fide exercise of the power. It was next urged that in any event the respondent, Income-tax Officer, had no knowledge and could not have any knowledge about the contents of the said books, papers and documents and without that knowledge he could not determine the relevancy or otherwise of the said books, documents and papers to the income-tax proceedings. The very order itself, it was suggested, indicated that the Income-tax Officer had not applied his mind. Counsel for the petitioner contended that it was an omnibus order to produce all papers and documents indicating non-application of mind by the Income-tax Officer. Counsel for the petitioner further urged that in order to apply Section 131 of the Income-tax Act, 1961, there should be valid application of mind by the Income-tax Officer on the question whether the documents required to be produced were such which would be relevant for any of the purposes of the Act. It was submitted that there had been no such application of mind. It was also urged on this aspect that the older was vague and as such a vague order should not have been made. It was submitted that in any event the books, papers and documents were in the custody of the court pursuant to the directions of the court. So the order that was made on the Registrar of Companies was not a proper and valid one without leave being obtained from this court. In order to appreciate this contention it would be necessary to set out the impugned summons: "To The Registrar of Companies, West Bengal, " Narayani Buildings " Brabourne Road, Calcutta. Whereas your attendance is required in connection with the proceedings under the Income-tax Act in the case of Messrs. New Central Jute Mills Co., 11, Clive Row, Calcutta, you are hereby required personally to attend my office at 18, Rabindra Sarani, Calcutta-1, on the 6th day of June, 1969, at 11 a.m. there to give evidence and/or to produce either personally or through an authorised representative the books of account or other documents specified overleaf, and not to depart until you receive my permission to do so. Without prejudice to the provisions of any other law for the time being in force if you intentionally omit to so attend to give evidence or produce the books of account or documents, a fine up to Rs. 500 may be imposed upon you under Section 131(2) of the Income-tax Act, 1961. (Sd.) IIIegible, Income-tax Officer, CC. XX. Cal. Books of account or documents to be produced. 1. Books of accounts, documents and other papers of Messrs. New Central Jute Mills Co. Ltd., of 11, Clive Row, Calcutta, in your custody."
(3.)In this application there are several respondents, namely, the Income-tax Officer, Union of India and the Registrar of Companies, West Bengal. The allegation of the petitioner in the petition is that the Income-tax Officer has acted at the instance of the Union of India to facilitate the said investigation by the Company Law Board.