BISHAMBHAR DAYAL, J. - (1.) THESE connected appeals arise out of writ petitions filed on behalf of several trading units and one trust governed by the members of a certain family in Firozabad against different orders passed by the income-tax department against one or the other of them. Four of these Special Appeals Nos. 89, 90, 91 and 92 of 1967 have been field by the department against the orders of a learned single judge of this court and the other four appeals have been filed by the assessees being Special Appeals Nos. 123, 124, 125 and 127 of 1967. In Firozabad liquid gold is in great demand for decorating glass bangles which are manufactured at Firozabad and which is the main industry there. The learned single judge had given a pedigree in his judgment which brings out the relationship of different members of the family and whose names occur during the proceedings. The main business of the family was carried on in partnership under the name and style of Firm Madan Mohan Damma Mal. Both Sarvasri Madan Mohan and Damma Mal are ancestors of the persons now living. Shri S. G. Chandra is now a leading member of the family and he is said to be carrying on business of all the units either himself or through the other members of the family. In the beginning the firm used to import liquid gold from England against import licences. But subsequently Firozabad Glass and Chemical Industries Ltd. was started in the year 1954 and liquid gold was manufactured by this limited company. The firm used to sell this liquid gold also manufactured by the company. After the manufacture of liquid gold had been started in Firozabad, a trust was created called Madan Mohan Damma Mal Trust Society for promotion of technical education and in order to provide funds for this Trust Society, the Firm Madan Mohan Damma Mal passed a resolution that liquid gold which was to be imported on the import licences till then left in the hands of the firm would be transferred at cost price to the Trust Society and the profits thus received by sale of that liquid gold would be profits of the Trust Society for the purpose of promoting the purpose of the Trust Society. Thus, a third unit in this group, namely, the Trust Society came into existence. The family was also carrying on the trade of preparing oil and this was done by the Madan Mohan Damma Mal Private Co. Limited. There was another unit called the Firm Kumar Pharmaceutical Works which was started in the year 1959, and originally owned by Surendra kumar. But it became a partnership in the year 1961, between Surendra kumar and Hemant kumar. All these units were housed in buildings belonging to the members of the family either at Kotla Road, Firozabad, or at Gher Khokhal. It may also be noted that within the compound of the buildings at Kotla Road, the office and the residence of the Income-tax Officer, Firozabad, were also stationed in the building belonging to a member of the family. In June, 1960, there was some misunderstanding between Shri G. C. Garg, the then Income-tax Officer, Firozabad and Shri S. G. Chandra and some other members of the family. As a result of this misunderstanding, complaints were made and all the case of this family were transferred in 1961, from Firozabad to the Income-tax Officer, (A) Ward, Agra. On the 6th of July, 1964, on account of some secret information sent in writing by the members of this family, the residence and the luggage of Shri G. C. Garg were searched and he was transferred to (c) Ward, Agra. He is still under suspension and enquiries are going on in the matter. The case of the assessees and the petitioners here in court is that this action greatly enraged not only Shri G. C. Garg but all the officers of the income-tax department who combined together and decided to wreak vengeance upon the assessees. As a result of this scheme of teaching a lesson to the assessees, Shri F. D. Helms, who was the Inspecting Assistant Commissioner, Agra, at the investigation of Shri G. C. Garg, took advantage of the amendments made in the Income-tax Act and organised indiscriminate searches and seizures in the premises of the assessees. On the 8th of February, 1965, a large number of Income-tax Officers headed by Shri F. D. Helms and assisted by a posse of police officers raided the premises of : (1) the factory of Firozabad Glass and Chemical Industries Ltd., Kotla Road, Firozabad, (2) the office and the premises of the firm kumar Pharmaceutical Works situate at Kotla Road, Firozabad, (3) the residence of Gopal Chandra and Surendra kumar situate in the same compound at Kotla Road, (4) the premises of Madan Mohan Damma Mal Trust Society also in the same compound, (5) the Gaddi of the firm Madan Mohan Damma Mal at Gher Khokhal, (6) the residence of L. Dau Dayal and Rameshwar Dayal at Gher Khokhal, (7) the office and godown of the firm Kunji Lal Har Dayal situate at Mutwali Gali, Firozabad, (8) the residence of Trilokinath at Gher Halwaiyan, Firozabad, and (9) the residence of Prem Bihari Lal at Gher Halwaiyan. The validity of this search is being challenged on several grounds which will be considered hereafter. It is alleged that unnecessary force was utilised and an indiscriminate search was carried out during which all the safes were broken, floors and walls were dug up at several places and all the account books and papers available were indiscriminately seized and taken away without proper lists being prepared and without following the procedure laid down by law. After this raid, the Income-tax Officer, (A) Ward, served notices on the 4th of March, 1965, under section 22(4) of the Income-tax Act on the Firozabad Glass and Chemical Industries Ltd. and the firm Madan Mohan Damma Mal asking them to produce further documents showing their concealed income from sale of liquid gold as the Income-tax Officer had discovered from account books recovered during raids that a considerable amount of business in manufacture and sale of liquid gold had been carried on by them which was not entered in the regular books of accounts which were submitted before the department. Correspondence thereupon ensured whereby the assessees denied the existence of any such transactions and also the genuineness of any account books that may have given that impression. The Income-tax Officer fixed several dates but no further accounts were produced. On the other hand, the assessees requested for further time for summoning of witnesses, etc., in order to show in their own way that the alleged books recovered at the time of the raid which had created suspicion, were not reliable and no action could be taken on the basis thereof. Adjournment not having been granted, a number of writs were filed for quashing the assessment proceedings. The Firm Madan Mohan Damma Mal filed Writ Petition No. 1265 of 1965 on the 30th March, 1965. The Firozabad Glass and Chemical Industries Ltd. filed Writ Petition No. 1141 of 1965 on the 29th of March, 1965. The Income-tax Officer in the meanwhile passed best judgment assessment orders for the year 1960-61, against the Trust Society and issued a demand notice on the 23rd of March, 1965, along with a penalty notice under section 274 read with section 271 of the Income-tax Act for the same year. Against these orders and notices, Writ Petitions No. 1406 of 1965, was filed on behalf of the Trust Society on the 15th of April, 1965. Other writ Petitions were also filed with which this Bench is not concerned as special appeals do not relate to them. While these writ petitions were pending, the Commissioner of Income-tax U. P. (2) passed orders on the 16th of October, 1965, creating a special circle in Agra for dealing with income-tax assessment cases relating to these units and appointed Shri K. C. Gupta, Income-tax Officer in-Charge of (C) Ward, to take carge of this special circle, which was to take effect from the 1st of November, 1965. He transferred all these cases pending before the Income-tax Officer (A) Ward, to the Income-tax Officer, Special Circle. On the 29th of October, 1965, the Board of Direct Taxs issued a notification including this special circle in the schedule as within the jurisdiction of the Commissioner of Income-tax U. P. (2) with effect from the 1st of November, 1965. On the 12th of November, 1965, notices under section 23(2) of the Income-tax Act were issued fixing dates for appearing against the firm Modan Mohan Damma Mal and the Firozabad Glass and Chemical Industries Ltd. for the assessment year 1961-62 by the Income-tax Officer, Special Circle. The jurisdiction of the Income-tax Officer, Special Circle, to proceed with these cases is challenged. Proceedings were started against these two units for the assessment year 1960-61. Thereupon, the firm Madan Mohan Damma Mall filed Write petition No. 672 of 1966 on the 21st of February, 1966, challenging the jurisdiction of the Income-tax Officer, Special Circle, to proceed with those cases. Shri Surendra Kumar filed Writ petition No. 775 of 1966 for himself and on behalf of the Firm Kumar pharmaceutical Works on the 25th of February. 1966, and the Firozabad Glass and Chemical Industries Ltd. filed Write Petition No. 673 of 1966 on the 21st of February, 1966. All these writ petitions were heard together by a learned single judge of this court and were disposed of by one common judgment on the 19th of March, 1967. Against this judgment the present special appeals have been filed both by the assessees and by the department as mentioned above. Instead of giving all the details how the learned judge dealt with the contentions of the respective parties, it will be more convenient to take up the points raised on behalf of the assessees in the writ petitions which are material at this stage in the special appeals. To my mind, the most important questions that have been raised on behalf of the assessees challenging the validity of the proceedings which must be decided in these special appelas are : (1) whether the creation of the special circle was illegal and consequently all the proceedings before the Income-tax Officer, Special Circle are without jurisdiction, (2) whether the raid organised by the income-tax department was against law and, therefore, any material that may have been seized at the time of the raid cannot be utillised against the assessees, and (3) whether the raid and subsequent proceedings taken by the income-tax department against these assesses were actuated by malice and a mala fide motive to teach them a lesson and were, therefore, invalid and nullity. The first two points have been decided against the department and so are the subject of challenge in special appeals by the department and the last was decided against the assessees and has been raised in the special appeals by them among other points. Most of the other points that have been raised on behalf of the assessees in this court are such as are open for consideration in the departmental appeals which, admittedly, have been filed and are pending against the orders passed by the Income-tax Officer from time to time. In due course, I will deal with only those points which cannot be raised and decided in the proceedings pending under the Income-tax Act. In my opinion, the questions which can be raised and properly decided in the appeal against the orders of the Income-tax Officer should not be considered in writ proceedings, particularly when an alternative remedy is being ultilised and is available.
(2.) I will now proceed to deal with the above three questions one by one. The first point is the validity of the creation of the special circle in Agra. As stated above, the orders creating special circle, transferring cases to that circle and appointing an Income-tax Officer to that circle with effect from the 1st of November, 1965, were passed by the Commissioner of Income-tax U. P (2) Section 124 of the Income-tax Act, 1961, provides that all Income-tax Officers shall perform their functions in respect of such areas or of such persons so classes of persons, etc. as the Commissioner may direct. Shri K. C Gupta who was the Income-tax Officer, (C) Ward, Agra, was subject to such directions under section 124 of the Income-tax Act issued by the Commissioner. And as the Commissioner directed him to be in-charge from the 1st of November, 1965, of all those cases which were pending in (A) Ward, the Income-tax Officer validly got the power to deal with those cases. The Commissioner was within his jurisdiction to direct one Income-tax Officer to take charge of particular cases and to start work from a particular date. The contention on behalf of the learned counsel for the assessees was that it is the power of the Board to place a particular area or circle within the jurisdiction of the Commissioner and unless that is done, the special circle could not come within the jurisdiction of the Commissioner of Income-tax, U. P (2), as long as such orders were not passed. The notification of the Board, and therefore, it is contended that all the orders passed by the said Commissioner on the 16th of October and the 22nd of October, 1965, were without jurisdiction. Section 121 of the Act, which has been relied upon, is as follows. 121. (1) Commissioners shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases as the Board my direct. In the present case, the Income-tax Commissioner, U. P. (2) had already the whole of Agra division in his jurisdiction when he issued the impugned orders. His jurisdiction was defined by area and, therefore, the whole of Agra and Firozabad and cases arising therein were under his jurisdiction. He could thus validly exercise this power of transferring cases to a particular Income-tax Officer under him under section 124 of the Act. Since in the schedule issued by the Board, the jurisdiction of the Commissioner had been detailed with reference to areas and a new circle was created by the Commissioner which had no reference to any area, the notification of the 29th of October, 1965, was issued by the Board of Direct Taxes merely to bring the schedule up-to-date. No orders were passed by the Board creating the circle. That notification merely amended the Schedule by adding a special circle also within the jurisdiction of the Commissioner in the schedule. I am unable to see why before this notification of the 29th of October, 1965, there was no special circle, and hence the orders of the Commissioner assigning cases to Shri K. C. Gupta and appointing Shri K. C Gupta as the officer-in-charge of these cases in the special circle were legal. It was next contended that on receipt of the notices issued by the Income-tax Officer, Special Circle, his jurisdiction to decide cases was challenged by the assessees and he was bound under section 124(4) of the Act to refer the question to the Commissioner for decision. That sub-section is as follows. 124. (4) Where a question arises under this section as to whether an Income-tax Officer has jurisdiction to assess any persons the question shall be determined by the Commissioner..... I am unable to see any force in this contention. In the present case, the Commissioner himself passed orders transferring the cases from (A) Ward to special circle. The question of jurisdiction had not arisen independently of such orders. The Income-tax Officer was bound by the orders of the Commissioner and since the Commissioner had himself directed him to hear those cases there was no point in referring the matter back to the Commissioner for decision. To my mind, cases challenging the validity of transfer orders cannot be covered by this provision. Sub-section (6) of section 124 of the Act is as follows : Subject to the provisions of sub-section (5) where an assessee calls in question the jurisdiction of an Income-tax Officer, then, the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (4) before assessment is made. This sub-section contemplates that an Income-tax Officers where he is satisfied with the correctness of the claim will himself refuse to proceed with the assessment. But where he is not satisfied with the correctness of the claim be will refer the matter to the Commissioner. This at least contemplates that Income-tax Officer has to apply his mind and to come to a conclusion whether he has jurisdiction or not. But in a case where the Commissioner has transferred cases to be tried by him, there is nothing for the Income-tax Officer to apply his mind upon. He has merely to obey orders and to do the needful. Moreover, this power to refer to the Commissioner is also subject to the provisions of sub-section (5) which provides a time-limit within which such objection as to jurisdiction ought to be made. But in the present case the objection was raised much beyond that time-limit as in this case returns were filed several years before cases were transferred to the special circle. This also indicates that the Legislature contemplated an objection of jurisdiction being raised only in those cases which were to be initiated before a particular Income-tax Officer and did not relate to cases which were already pending for several years and were then transferred from one Income-tax Officer to another. I, therefore, see no force in this contention and I am of opinion that the Income-tax Officer, Special Circle, had jurisdiction to deal with these income-tax cases according to law. The next question for consideration at this stage is the validity of the search and the utility of the documents which were recovered at such search. The contention on behalf of the assessee is that the search was mala fide and was contrary to the provisions of law. The question of mala fide will be considered separately but here I will deal with the illegality alleged to have been committed in this connection. In the first place it is contended that under section 132 of the Income-tax Act, 1961, as amended in 1965, on search warrant could be issued unless the Commissioner (who issued the search warrant) had information in his possession in consequence of which he had reason to believe that the the assessee would not produce the books of account which might be useful or relevant in assessing the tax. It is argued that the existence of such information is a matter of fact which can be adjudicated upon by a court of law althought the formation of opinion may be subjective. In this connection, main reliance was placed on the case of Nakkuda Ali v. M. F De S. Jayaratne. In that case their Lordships of the Privy Council were considering the provisions of Regulation No. 62 which contained the relevant words : Where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as dealer. These words were interpreted to mean that there must in fact exist such reasonable grounds known to the Controller before he can validly exercise the power of cancellation. But their Lordships further proceeded to note that the Controller was not required to perform any judicial or quasi-judicial functions and unless that was the position the matter would not become justiciable. Their Lordships observed : It is long step in the argument to say that because a man is enjoined that he must not take action unless he has reasonable ground for believing something, he can only arrive at that belief by a course of conduct analogous to judicial process. And yet, unless that proposition is valid, there is really no ground for holding that the Controller is acting judicially or quasi-judicially when he acts under this Regulation. If he is not under a duty so to act, then it would not be according to law that his position should be amenable to review and if necessary to avoidance by the procedure of certiorari. In the present case the issue of search warrant by the Commissioner was certainly not a judicial or a quasi-judicial act and even if the Commissioner was enjoined to issue a warrant only, when he could form the necessary belief, the matter would not thereby become subject to scrutiny by the court. On fats, the Commissioner has in his affidavit (paragraph 6) stated that he had acted on the basis of information and material placed before him to the effect that the firm had been carrying on a large scale business in the manufacture and sale of liquid gold, the profit from which were not being incorported in the account books of the petitioner-company and the company had thus evaded tax to a very substantial extent. He also stated that this information indicated that the petitioner-company had been maintaining duplicate sets of accounts different from those which were being produced before the income-tax department which the company was not likely to produce. Shri. F. D. Helms, the Inspecting Assistant Commissioner, has also stated in his affidavit as follows : The fact is that some secret information was passed on to me which prima facie gave an indication that the petitioner-company had been carrying on large scale business in the manufacture and sale of liquid gold and the sale of such liquid gold was being effected through the allied business of modan Mohan Damma Mal who were the sole selling agents of the petitioner-firm which was not accounted for in the companys books of account.... that the petitioner was maintaining duplicate sets of accounts which were different from the books which were being produced before the income-tax U. P. (2), who asked for some further clarifincation from me. I sent detailed report to the Commissioner through a special messenger and was later on called by the Commissioner for personal discussion together with the records of the case. After the Commissioner for personal discussion together with the records of the case. After the Commissioner was satisfied about the authority of the information he issued the necessary authorisation letter under section 132 of the Income-tax Act, 1961.
(3.) THE department has also produced one statement of Kalicharan which was recorded in this connection on the 30th of January, 1965. Among other things he had stated that he was serving with M/s. Madan Mohan Damma Mal, that he was realising the amounts for the sale of liquid gold and that he was also keeping accounts thereof. He also stated that these realisations, were not entered in the regular books of account and that he was maintaining another set of accounts. THEre is other information also contained in his statement but it is unnecessary to refer to the same. In my opinion, on these affidavit of responsible officers, coupled with this evidence which has been disclosed, there is no reason to doubt that the Commissioner had information which led him to issue the necessary warrant. The next contention raised was that the statement of Kalicharan was not sufficient to issue a search warrant for all the places mentioned in the warrant and that the search itself was conducted at least at two places which was not authorised by the warrant, namely, at the premises of Madan Mohan Damma Mal Trust Society and the Kumar Pharmaceutical Works. The justification for the issue of the warrant for the search of so many places is, as put forward by the department, that all these units were allied concerns of the firm Madan Mohan Damma Mal and the duplicate sets of accounts which they were out to find out, could be placed at any of these premises and the search of all the places simultaneously was, therefore, not only justified but necessary. There is no denial of the fact that the places where the search was conduct the were within the control of the partners of the firm Madan Mohan Damma Mal and their direct relations. It is, therefore, difficult to say that there was no justification for conducting the search simultaneously at all the places. Another contention against the search was that there was an indiscriminate search where all the safes were broken open, floors were dug up at several places, even walls were sometimes dug up and everything possible irrespective of their relevance for the purpose was seized. In this connection, the learned single judge has given three instances of the documents taken into possession by the department at this search which he considered, were wholly irrelevant for the purpose. These documents were shown to us by the learned Advocate-General who was appearing on behalf of the department and he explained that these three items were relevant for the purpose in hand. I am satisfied that these documents cannot be said to be wholly irrelevant. No other instance was brought to our notice by the learned counsel appearing for the assessees which was wholly irrelevant for the purpose. The documents taken away at the time of the search were entered in the lists, although some of the items did not indicate the nature of the document but from that alone it is not possible to hold that the documents were wholly irrelevant. It was also very seriously contended on behalf on the assessees that under section 132 of the Income-tax Act, it was incumbent for the Commissioner to specify particular documents which had to be searched and in the warrant issued in the present case no such documents were specified. It was further contended that the officer authorised to make the search should merely be directed to find out particular documents and that he had no discretion of his own to decide which documents were relevant and which were not. The relevant words of section may be quoted as follows. Where... the Commissioner... has reason to believe that any person to whom... a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce... any books of account or other documents has omitted or failed to produce.... or any person to who a summons or notice as aforesaid has been or might be issued will not,... produce ... any books of account or other documents which will be useful for, or relevant to, any proceeding.... he may authorise any... Inspecting Assistant Commissioner... Income-tax Officer (...) to enter and search any building or place where he has reason to suspect that such books of account,..... are kept.... It may be noted here that the search is to be authorised for the purpose of finding out account books which may be relevant for the purpose of income-tax. Where the income-tax department has to discover duplicate sets of account books from which the real account of profit and loss of a particular assessee is to be discovered, it is impossible for the Commissioner to exactly know the nature of those papers from which such discovery can be made. In the very nature of things, the warrant cannot specifically describe the documents and the language of the section is certainly wide enough to include a general description of the documents which would be relevant for finding out the real income of the assessee. I am, therefore, of the opinion that the section does not require specific mention by description of each particular document which has to be discovered on search. It is for the officer who is conducting the search to decide whether a particular document found on search was relevant for the purpose or not. In this connection reliance was placed on a decision of this court in Seth Brothers v. Commissioner of Income-tax. In that case, after a search, more than five hundred documents were seized and many of those documents were in fact found to be irrelevant for purpose of the assessment. Besides the documents of the assessee, the officers seized documents belonging to some connected firms and companies. Marks of identification were not put on the documents, and the documents were retained for more than the authorised period and the police force used was found to be excessive. In these circumstances it was held that the search was not bona fide inasmuch as the extent of seizure was far beyond the limit and the action amounted to an abuse of the power conferred under section 132 of the Act. It was held in that case that the Income-tax Officer did not apply his mind at all as to which document was to be searched and formed no opinion regarding relevance or usefulness of the document. The search was held to be illegal. In the present case it has not been shown that irrelevant documents had been seized and, in fact, it was admitted in the affidavit that many account books and registers were left with the owners. Shri Rameshwar Dayal in his affidavit (paragraph 4) filed in writ petition No. 1406 of 1965 admitted that the documents seized were closely examined before they were taken possession of. With regard to the allegation of excessive force being used, Shri F. D. Helms, in paragraph 10 of his counter-affidavit filed in writ petition No. 1406 of 1965, has stated that in view of the fact that a large number of premises were to be searched simultaneously, seventeen Income-tax Officers were authorised to make searches. Police assistance was also taken in order to prevent any breach of the peace. The police officers, however, did not take part in the actual search. I was also alleged that on a previous occasion, when the search was carried out by the sales tax authorities in the business and residential premises of the chairman and some of the members of the partnership, a violent resistance was offered from their side with show of fire-arms and in order to prevent such occurrence it was necessary to take police protection. In the present case, fourteen premises were simultaneously searched and in view of the allegations mentioned above, I find it difficult to hold that the number of persons taking part in the search was excessive. ;