- (1.) This case is an off-shoot of a search and seizure in pursuance of the provisions of Sec. 132 of the Income-tax Act, 1961 dealt with in the decision of this Court in Pooran Mal v. Director of Inspection, (1974) 1 SCC 345 = (AIR 1974 SC 348). One of the cases there dealt with was Writ Petition No. 446 of 1971 filed by one Pooran Mal. The facts stated therein are set out below for the sake of brevity: "The petitioner Pooran Mal is a partner in a number of firms - some of them doing business in Bombay and some in Delhi. His permanent residence is 12-A Kamla Nagar, Delhi. His business premises in Delhi are A-14/16 Jamuna Bhavan, Asaf Ali Road, New Delhi. It would appear that on an authorization issued by the Director of Inspection, his residence and business premises in Delhi were searched on October 15/16 1971. On the 15th his premises in Bombay were also searched and at that time it appears the petitioner was present in Bombay ........." "The search in the business premises was made when a number of persons who usually worked there were present. Books of account, documents, some jewelry and a large amount of cash amounting to about Rs. 61,000 were seized. On October 16 there was a search in the Branch Offices of Laxmi Commercial Bank and the Punjab National Bank. 84 silver bars were seized from Laxmi Commercial Bank and 30 silver bars were seized from the Punjab National Bank." (It appears that the bars themselves were not actually seized but were only attached under the provisions of sub-section (3) of Section 132 of the Income-tax Act. 1961). "The value of these silver bars comes to nearly 18 lakhs. It is the case of the petitioner that these bars belong to M/s. Pooranmal and Sons of Bombay who sent the same to the Motor and General Finance Company of which the petitioner is a partner and this Finance Company, it is alleged, kept these bars with the two banks. 84 bars were kept in the account of M/s. Udey Chand Pooranmal for an alleged overdraft limit while the 30 silver bars were pledged with the Punjab National Bank in the account of the Finance Company. In all these aforesaid firms the petitioner is a partner and it is the Department's case that all these bars are the undisclosed assets of the petitioner. It appears that the Income-tax Officer made a summary enquiry as required by Section 132 (5) after issuing notice to the petitioner and his order dated January 12, 1972 shows, of course prima facie, that all the assets which had been seized in the house, the business premises and the banks, except for the value of the ornaments declared by Mrs. Sharda Devi in her Wealth Tax Return, had to be retained for being appropriated against tax dues from 1969 onwards which amounted to nearly 42 lakhs. Indeed this prima facie liability was subject to regular assessment and re-assessment."
(2.) In the case dealt with earlier by this Court the constitutional validity of Section 132 and legality of the search and seizure alone were under consideration. This Court held the provisions valid and the search and seizure legal.
(3.) Thereafter respondent 1, which is a firm of which Pooran Mal was a partner, and respondent 2, who claims to be another partner of the 1st respondent firm, filed Writ Petition No. 82 of 1972 challenging the order of the Income-tax Officer dated 12-1-1972. This writ petition was disposed of on 6-4-1972 on the basis of the consent of the parties. The relevant portion of the order is as follows: "Mr. G. C. Sharma, learned counsel appearing for the respondents, fairly and frankly conceded that such an opportunity was not afforded to the petitioner. The parties are agreed that the impugned order be quashed and that the Department be permitted to look into the matter afresh after giving an opportunity to the petitioner to place his case before the Department in respect of the contention that the property belongs to the firm and not to Pooran Mal individually. The parties are also agreed that the property shall remain in the custody of the Department and shall not be sold by them till fresh decision is taken by the Department in the light of evidence to be supplied by the parties. Mr. B. S. Gupta, Income-tax Officer -cum-Assistant Director of Inspection (Intelligence) is present and he has undertaken to complete this case within two months. The writ is accordingly accepted and disposed of in terms of the submissions of the parties referred to above, but with no order as to costs." In that writ petition the contention of the petitioner was that the silver bars were the property of the 1st respondent firm and not that of Pooran Mal the individual who was only one of the partners. After the disposal of the writ petition the Income-tax Officer duly held a fresh enquiry and passed an order on 5-6-1972 holding that the silver bars belonged to Pooran Mal the individual and not to 1st respondent firm. Respondents 1 and 2 thereafter filed Civil Writ Petition No. ,595 of 1972, out of which this appeal arises contending that the silver bars belonged to the 1st respondent firm and that the order of the Income-tax Officer holding that they represented the undisclosed income of Pooran Mal the individual was illegal. It was also contended that the Income-tax Officer had no jurisdiction to pass the impugned order beyond the period prescribed in sub-section (5) of S. 132. This second contention found favour with the learned Judges of the High Court. As a result they set aside the order of the Income-tax Officer dated 5-6-1972 and ordered the return of the 114 silver bars to respondents 1 and 2.;