M.B.SHARMA, J. - (1.) THE petitioner, Smt. Kusum Lata Singhal, carries on a business under the name and style of M/s. Lata and Company and is the authorised stockist of Baba brand tobacco manufactured by Dharampal Premchand Ltd., New Delhi. The petitioner is the wife of Shri R. K. Singhal who owns a house No. E -117, Shastry Nagar, Jaipur, and the petitioner lives with her husband. Shri R. K. Singhal, husband of the petitioner, is a partner in Lata Sales Centre and he is said to be a sub -dealer of Lata and Company. A search under Section 132 of the Income -tax Act, 1961 (for short, 'the Income -tax Act'), was conducted at house No. E -117, Shastri Nagar, Jaipur, on November 25, 1987, and was concluded on November 26, 1987. During the search, valuables and books of account of the petitioner were seized on November 26, 1987, and the notice under Rule 112A of the Income -tax Rules, 1962 (for short, 'the Rules'), read with Sub -section (5) of Section 132 of the Income -tax Act, was issued to the petitioner by the Income -tax Officer, H -Ward, Jaipur, on December 10, 1987, and served on the husband of the petitioner, Shri R. K. Singhal, on December 16, 1987. The file was transferred from the Income -tax Officer, H -Ward, Jaipur, to the Income -tax Officer, Special Investigation, Circle -I, Jaipur, by the Commissioner of Income -tax, Jaipur, in exercise of his powers under Section 127 of the Income -tax Act. The petitioner has claimed return of the account books and other valuables of the petitioner which were seized on November 26, 1987. The return as aforesaid is claimed because, according to the petitioner, the retention of the books and valuables is in violation of the provisions of Section 132 of the Income -tax Act
(2.) IN the return filed by the non -petitioner, a case has been set up that the petitioner is only a benamidar of her husband so far as the business of Lata and Company being run in the name of the petitioner is concerned and reliance has been placed on the statement recorded on November 25, 1987, of the petitioner as well as of her husband by the authorities at the time of the search. It is also stated that though the assessment was framed under Section 143, necessary steps are being taken to reopen the assessment as, according to the Department, the income from the firm, Lata and Company, does not belong to her and that she is only a benamidar. The case of the petitioner that there was no information with the Director of Inspection on the basis of which the authorisation under Section 132 of the Income -tax Act, for conducting the search have been issued is denied and it is stated that the Department had definite information on the basis of which the Director of Inspection was satisfied and hadissued a warrant of authorisation for the search of the premises belonging to Lata and Company and the petitioner. It is also denied that the statement of the petitioner as well as that of Shri Singhal were obtained by terrorising them. The non -petitioners have dropped the proceedings against the petitioner and no order, so far as the petitioner is concerned, under Section 132 of the Income -tax Act has been made but they are satisfied that the business of Lata and Company is in fact that of Shri R. K. Singhal, husband of the petitioner, and an order under Section 132 of the Income -tax Act has been made against Shri R. K. Singhal. The non -petitioners have also given out that the books of account and cheques which were seized are being retained in accordance with the law with the permission of the Commissioner of Income -tax, Jaipur. The non -petitioners justify the retention of the books and other documents on the ground that as the final assessment has not been made, the said documents cannot be returned and therefore, the petitioner could not have claimed them.
(3.) IN our opinion, there can be no doubt that the search and seizure under the provisions of Section 132 of the Income -tax Act can only be legal if the Commissioner or Director of Inspection, in consequence of information in his possession, has reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income -tax Act, 1922 (11 of 1922), or the Income -tax Act (hereinafter referred to as the undisclosed property). Thus, it is clear that the search and seizure under Section 132 of the Income -tax Act could be legal only if the Director of Inspection, in consequence of information in his possession, has reason to believe that 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 is undisclosed. It appears that the authorisation under Section 132 of the Income -tax Act by the Director of Inspection was to enter into the house No. E -117 situated at Shastri Nagar, Jaipur, where, as per the record, the office of Lata and Company was situated.;