R.M. Sahat, J. - (1.) FAMILY feud between real brothers led to the filing of a First Information Report on October 3, 1970, by Chaturbhuj Das Maheshwari, for the theft of jewellery, against petitioner No. 1, his own brother, petitioner No. 2, wife of petitioner No. 1 and petitioner No. 3, their son-in-law. All of them were tried under Sections 379/411/424 of the IPC. On 14th July, they were acquitted and it was held that no theft of any property belonging to the informant took place from his room No. 77, Rani Mandi, Allahabad, and that he had not kept any valuables in his almirahs in the said house. The ornaments and jewellery (Exs. 1 to 82) were not proved to have been recovered from any hiding place from the house of Ganga Prasad or from the possession of Ram Gopal. In the operative portion of the order a direction was issued. The property Exs. 1 to 84 should be returned to Ganga Prasad under intimation to the I.T. authorities after the expiry of the period of appeal, if no appeal was filed. The criminal adven- ture of Chaturbhuj Das, having miserably failed, he knocked at the door of income-tax department and is alleged to have sent a written complaint to the Govt. of India and the CIT, Allahabad, under the fake name of Dinesh Chandra Sahu that the petitioner was possessed of three hundred tolas of of gold, which he claimed, in the criminal proceedings, to have received in a family partition, but failed to disclose it or file any return under the W.T. Act. This set the ball rolling for proceedings under Section 132A of the I.T. Act, and it is the validity of these proceedings which is under challenge in this petition.
(2.) IT appears, while the complaint of Sahu was still in the process of examination in the office of the Commissioner, a letter was received from the Under Secretary to the Govt. of India to make necessary inquiries regarding the evasion of wealth-tax by the petitioner. This letter along with the complaint, which was already pending in the office of the Commissioner, was forwarded by the IAC to the Assistant Director of Inspection (Intelligence), in charge of a cell maintained in the I.T. office for probing such matters, for investigation and report. In pursuance of it the Assistant Director summoned the petitioner and recorded his statement on oath on August 4. 1978. This statement is on record. IT is in two parts. In the first, the petitioner was asked whether he was an assessee under the I.T. or the W.T. Act and whether the jewellery was seized from him and why. IT was stated by the petitioner that he was not an assessee under either of the Acts because he was below the taxable limit. He admitted that the jewellery which was in the custody of the Chief Judicial Magistrate was seized from him on his brother's complaint who was inimical to him but he was acquitted. Then starts the second part which is headed, " Further ". " Question.--What was the source of the property lying with Sri Ganga Prasad ? Answer.--The property belongs to Sri Ganga Prasad's wife Smt. Raj Kumari, who received it at the time of her marriage in 1932. IT consisted of about 100 tolas gross which would be worth about Rs. 30,000 to 35,000 (present value), (2) Sri Ganga Prasad received jewellery on partition of HUF (higher) in 1954 and that will be gross weight of 90 tolas which will have present valuation of about Rs. 30,000 to 35,000 (present value) by estimate. (3) His daughter, Prabha, was married in 1943 and she received at the time of marriage from her in-laws etc., about 90 tolas (gross) which would have value of about Rs. 30,000 to 35,000 (present value). The total value taken together is less than Rs. 1 lakh or round about Rs. 1 lakh. So no W.T. return was filed. Smt. Prabha was previously living with him (Ganga Prasad) and she died in June, 1970. " After this the statement was closed and signed by Ganga Prasad. No further enquiry was made nor was the petitioner asked to substantiate these allegations. The Assistant Director, thereafter, submitted a report that the petitioner was not paying income-tax and action be taken against him. On this material, which is supposed to have been " information ", the Commissioner had reason to believe to take action under Section 132A. He, accordingly, issued a requisition to the ITO in Form No. 45 on October 18, 1978, to require the Chief Judicial Magistrate to deliver the assets of the petitioner which were in his custody. Being faced with this difficulty and left with no other alternative, the petitioner sought the protection of this court under Article 226 of the Constitution of India. Before adverting to the main question, whether there was material on which the Commissioner could have reason to believe that the jewellery, which was in the custody of the Chief Judicial Magistrate, represented wholly or partly the undisclosed income of the petitioner so as to confer jurisdiction on him to issue an authorisation warrant for requisitioning the same under Section 132A, it would be better to have a glimpse of the legislative background in which this provision was enacted. In the Act of 1922, the only circumstance in which the Commissioner could authorise a search of any building or place tinder Section 37(2) was when he had reason to believe that books of account or other documents which may be found there, shall be useful in proceedings pending under the Act. In 1954, it was held by the Supreme Court in M.P. Sharma v. Satish Chandra, AIR 1954 SC 300, 306. " A power of search and seizure is, in any system of jurisprudence, an overriding power of the State for the protection of social security and that power is necessarily regulated by law." This power is thus given to assessing authorities for social security. Despite this the power to search remained confined to books of account and document only even when Section 37 of the Act of 1922 was replaced by Section 132 of the Act of 1961. But, due to enormous economic activity which increased the tendency to evade payment of tax, in order to devise ways and means to check it, Commissions were appointed which recommended a widening of the power of search and seizure. The Parliament, therefore, amended Section 132 in 1964, and power was conferred on the Commissioner to issue an authorisation warrant for the search of any building or place if he had reason to believe that any person was in possession of any article or valuable thing, including money, if it was disproportionate to his known source of income. In 1965, the section was amended further. In the objects and reasons appended to the bill it was said that the power of search and seizure was being enlarged enabling the seizure of only money, bullion, jewellery or other valuable article or thing, which represented either wholly or partly undisclosed income or property. The ITO was being empowered to retain such of the assets seized as he may consider necessary to satisfy the liability estimated by him and also in exceeding the liability under the direct laws, in respect of which the person concern- ed was in default or was deemed to be in default. Sri R. K. Gulati, learned standing counsel, attempted to suggest that this indicated the anxiety of Parliament to widen the grounds on which the power to issue an authorisation could be exercised. We do not find any substance in it. By Sub-Clause (c), of Section 132 introduced since 1965, power was conferred on the Commissioner and the Director of Inspection to authorise a search in respect of bullion, jewellery, etc., as well, provided, it represented wholly or partly undisclosed income of the person in whose possession it was. The Act also conferred, for the first time, the power of seizure. The widening, therefore, was in respect of items in respect of which authorisation could be issued and to seize it. It did not expand the power in respect of the ground or the material on which it could be exercised. The 'section reads as under : " 132. (1) Where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that... (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed for the purposes of the Indian I.T. Act, 1922.(Act 11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax Officer (hereinafter referred to as the authorised officer) to-- (i) enter and search any building or place where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;...... (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search;...... (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing. "
(3.) IN the course of time, it was felt that at times the jewellery or bullion or money may be in the custody of any officer or court. Therefore, in 1975, Section 132 was amended further**, the old Section 132A was renumbered as Section 132B and a new section was inserted as Section 132A. Sub-clause (c) of this section which is relevant is quoted below : " 132A(1) Where the Director of INspection or the Commissioner, in consequence of information in his possession, has reason to believe that... (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the INdian INcome-tax Act, 1922 (Act 11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the Director of INspection or the Commissioner may authorise, any Deputy Director of INspection, INspecting Assistant Commissioner, Assistant Director of INspection or INcome-tax Officer [hereinafter in this section and under Sub-section (2) of Section 278D referred to as the requisition officer] to require the officer or authority referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. " From the legislative history given above, it stands out clearly that with passage of time the power to search has been widened and what was originally meant for procuring the account books only has been extended not only to articles or valuable things but to money, jewellery and bullion as well. It shall, however, be noticed that along with the extension of the power there has been a simultaneous circumscribing of limits in which the power could be exercised. From 1922 to 1964, the search could be made if the accounts or documents were useful in proceedings under the Act. In respect of articles or valuable things, the authorised officer could make an inventory only. It was in 1964, when the first inroad on a citizen's right in respect of things other than account books was made and it was provided that building or place could be searched if it was found that there was money, jewellery, etc., which was disproportionate to known source of income of the person in whose possession it was. When in 1965, bullion and jewellery were added to it and the power of seizure was conferred, it was further restricted by providing that the Commissioner or the Director should have reason to believe not only about the possession but that it represented wholly or partly an undisclosed income.;