S.H.A. Raza J. - (1.) M/s. Shyam Jewellers and its proprietor have filed these writ petitions claiming various reliefs against the Income-tax Department and the action taken by it which, according to the petitioner, is against propriety and legality and which has caused huge loss and is the result of mala fide and calculated action.
(2.) THE first writ petition (Writ Petition No. 6218 of 1987) is against the action to seal off the petitioner's shop and the notice which has been pasted over the shop. THE petitioners have prayed for issue of a writ, order or direction for quashing the order contained in annexure No. 2 to the writ petition and have further prayed for issue of a writ in the nature of certiorari for quashing the first information report (annexure No. 1). In the second Writ Petition No. 22 of 1988, the original relief was for the issue of a writ of mandamus, directing the opposite parties to restore the articles, etc., to the petitioners, which were seized and to declare the sealing of the shop as illegal and without jurisdiction. THE petitioners have also prayed for a direction to the effect that the ornamental articles seized by the opposite parties were not liable to be seized ; and further for issue of a writ in the nature of certiorari for quashing the authorisation to the Income-tax Officer under Section 132 of the Income-tax Act, 1961. Subsequently, an order under Section 132, Sub-section (5), of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was passed as a result of which the writ petition was amended and relief for quashing annexure No. 3 dated January 5, 1988, passed by opposite party No. 3 was also made. It has been stated that the petitioner-firm has been carrying on business in gold and silver and has been obeying the provisions of the Excise Act and have been submitting the details of receipt or purchase of gold articles quarterly and have been maintaining all the details and have furnished them to the Excise Department. The details up to July, 1987, have already been furnished to the Excise Department and they have also complied with the provisions of the Sales Tax Act and the authorities of these Departments used to regularly visit the shop and have been carrying on their duty of screening and the petitioners have been submitting their income-tax returns regularly and have been properly maintaining their accounts. It has been stated that, even after the search, not only the return of the previous years, but of the subsequent years were filed and the account books have been accepted and the Income-tax Department people have been making survey of the shop in the past and they have found nothing incriminating. It has been stated that the officers of the income-tax department used to identify themselves to the person who happened to be the owner or the partner of the firm at the time of their visit. In the past, these surveys used to be maintained regularly as most of the firms/shops are subject to the payment of income-tax notwithstanding the small business. It has further been asserted that the legal position has changed and income to the extent of Rs. 2 lakhs per year has been exempted from the payment of income-tax and as such, such cases were then not subject to survey or verification by the Income-tax Department. The petitioners have also made reference to the woes of the shopkeepers who have been harassed by the income-tax inspectors and officers and have stated that these officials have been unlawfully and illegally earning money by harassing the shopkeepers by paying visits, but by the amendment of the said provision, the earning of such persons has been badly affected as the amended provision has shortened their right to visit shops. It has been stated that, in order to harass the petitioners and other shopkeepers unusual and unidentified visits were made by persons claiming to be officers/employees of the Income-tax Department, and, as such, a situation has arisen whereby the shops of the petitioners and others have been forcibly closed and their business has been badly affected.
(3.) REFERENCE to the happenings on August 31, 1987, has been made by the petitioners. It has been stated that, on that date, six persons rushed to the shop of the petitioners without disclosing their identity and they started threatening the petitioners. The petitioners, however, did not stop such persons from carrying on survey of the shop but required them to disclose their identity and enquired from them as to which Department they belonged and asked them as to why they were using abusive language when the petitioners have always been complying with the provisions of the Income-tax Act. It has further been stated by the petitioners that, in the meantime, many persons, including owners of a few shops, collected at the spot and they requested the visiting team to disclose their identity but they, instead of disclosing their identity, threatened the petitioners to close down the firm and the business at Aminabad. It has been stated that, when the aforesaid persons did not find anything illegal in the shops, they, without disclosing their identity, left the shop. The petitioner, after 7closing down the shop at 7.30 p.m. on August 31, 1987, left for his residence. It has further been stated that in the midnight of August 31, 1987, the petitioner No. 2 and his employees and a number of persons of the vicinity received information that a number of shops have been closed down by putting seal over the locks and this was done by the officers of the Income-tax Department with the help of the police of the police station, Aminabad. The petitioners tried to know the reason on account of which the shops were sealed off but could not get any clear answer, but, ultimately, the petitioners received a copy of a first information report containing certain allegations against a number of persons as a result of which their shops were sealed off. The first information report was lodged at 10.30 p.m. in the night of Augtist 31, 1987, in which it has been stated that, while making survey, the petitioners and other persons badly dealt with the officers and officials and thus the petitioners committed breach of Section 133A of the Income-tax Act. Even in the first information report, it was not stated that petitioner No. 2, the proprietor of petitioner No. 1, in any way opposed the survey. It has been alleged that objections were made by petitioner No. 2 to the effect that as there was an apprehension of terrorists entering the shop and taking away goods and articles and money, the persons entering the shop must disclose their identity. It has been stated that although the so-called survey was made at 11 a.m., the first information report was lodged at 1.30 p.m. which, according to the petitioner, was lodged after ten hours. On September 1, 1987, on the shutter of the shop an order was found pasted which was alleged to have been passed by the Commissioner of Income-tax purporting to have been passed, in exercise of the powers conferred on him under Sub-section (3) of Section 132 of the Act. But even after the expiry of one week, the shop continued to remain sealed off with the result that the petitioner had to incur heavy losses. Ultimately, the petitioners were compelled to file a writ petition before this court on September 7, 1987. Notice of the writ petition was given to the departmental counsel who placed the notice dated September 7, 1987, before the court which reads as under : "Messrs. Shyam Jewellers, Aminabad, Lucknow. As you are aware that an operation under Section 132 of the Income-tax Act, 1961, is continuing in your case, your premises were sealed on August 31, 1987, as due to law and order problem the search operations could not be carried out. Now you are required to see the undersigned either today or tomorrow along with the keys of the sealed premises so that action for opening the seals and completing the work under Section 132 of the Income-tax Act, 1961, may be taken up earliest. JUDGEMENT_243_ITR196_1992Html1.htm In view of this notice which was produced before the court, the court was not inclined to grant an interim order at that stage as the opposite parties expressed readiness to open the seal, and, as such, it was provided : "This action, i.e., opening of the seals or removal of the locks and the action contemplated under Section 132 of the Income-tax Act shall be done in the presence of the petitioners or any of their authorised representatives . . ." ;