DIRECTOR OF INSPECTION Vs. K C AND CO
LAWS(J&K)-1986-12-4
HIGH COURT OF JAMMU AND KASHMIR
Decided on December 10,1986

UNION OF INDIA (UOI),DIRECTOR OF INSPECTION Appellant
VERSUS
K.C. AND CO.,SATISH KUMAR MAHAJAN Respondents

JUDGEMENT

- (1.) THESE three letters patent appeals are directed against the orders passed by the learned single judge of this court dated October 24, 1986.
(2.) IT appears that the petitioners before the learned single judge had made an application for return of the seized books and other documents and the learned single judge has, after issuing notice to the other side, issued certain directions. The directions issued by the learned single judge pertain to the handing over of the seized account books to the respondents after every page of these account books was initialled and stamped with the official seal of the concerned authority and the respondents have to give an undertaking that they will make available the same to the authorities as and when the authorities will require the same. 2. Mr. R. P. Bakshi, appearing for the appellants, has submitted that the orders of the learned single judge were without jurisdiction, because he has no competence to pass such an order in absolute terms. He has drawn our attention to Section 132 of the Income-tax Act (for short hereinafter called "the Act"). His contention is that account books can be retained by the Income-tax Department for 180 days and even thereafter on fulfilling certain conditions. Proceedings under Sub-section (5) of Section 132 of the Act were stayed by the High Court. Therefore, the Income-tax Department cannot proceed in the matter in the face of the stay order which was in existence. The return of the seized account books and other documents at this stage would be violative of Sub-section (8) of Section 132 of the Act and also it would hamper the process of determination of assessment. It is true that Sub-section (8) of Section 132 of the Act empowers the appellants to retain the account books and documents for a period up to 180 days from the date of the seizure thereof, and even after the expiry of this period for reasons to be recorded in writing and also with the approval of the Commissioner, an order for retention of the documents could be obtained by the appellants. It is contended that the respondents are entitled to take extracts from the account books if they so desire. In this behalf a letter is said to have been addressed to them by the appellants. We have considered the provisions of Section 132 of the Act. This section is essentially a procedural section, which empowers the income-tax authorities to effect search and seizure in some cases where the income and assets are not disclosed voluntarily. The discovery of undisclosed assets and income of the assessees are regulated by this section. The provisions of Section 132 of the Act are self-contained. The object of retention of books by the Income-tax Department up to 180 days is to allow the appellants to have inspection of these books in order to arrive at some conclusion about the undisclosed asset or income of an assessee which has escaped assessment. The object of retention of books is not to penalise the assessee or to confiscate the books for ever. The learned single judge has obtained an undertaking from the respondents to the effect that as and when the Income-tax Department will require the records, they will make the same available to them. The appellants have, therefore, not been rendered unable to have access to the records and the documents seized by them. Only a temporary custody is created by the learned single judge till the other side was heard in respect of the possession of the seized documents and the account books. The conditions placed by the learned single judge in his order have sufficiently safeguarded the interests of the Department inasmuch as every page of the books is to be initialled and stamped by the appellants. The undertaking of the respondents that they will make the records available before the appellants as and when the same are required by them, in our opinion, is sufficient safeguard for the appellants. However, if the appellants feel that the respondents will hamper the process of assessment, on the basis of their custody of the seized account books in respect of the undisclosed wealth or income of the respondents, they can approach the learned single judge for making such orders as may be warranted in the facts and circumstances of the case and as may secure the ends of justice.
(3.) THE learned single judge has passed the impugned order after issuing notice to the appellants, which would mean that the learned single judge was keen to hear the other side in respect of the orders which he passed and he has competence after hearing the appellants to modify/alter or amend or confirm the orders passed by him. We do not agree with Mr. R. P. Bakshi's contention that the impugned orders are absolute. THE orders are subject to the objections of the appellants and the appellants are at liberty to make out a case before the learned single judge for vacation/alteration/modification of the orders passed by the learned single judge. We also do not agree with Mr. Bakshi that the learned single judge has no power to pass such an order under Section 132 of the Act. The passing of any order in aid of seeking observance of the provisions of the Income-tax Act would depend on the facts of each case. The learned single judge is seized of the matter and, therefore, he has to decide the application as also the objections filed by the respondents on merits having regard to the facts and circumstances of the case.;


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