C.I.T. WEST BENGAL - III & ORS. ETC. v. ORIENTAL RUBBER WORKS ETC

Citation: [1984] 1 S.C.R. 817

Court: Supreme Court of India

Bench: V.D. TULZAPURKAR, V. BALAKRISHNA ERADI, D.P. MADON

Case summary

The Division· Bench, however, negatived '· all the cont~ntionsa dismissed the.

Judgment text

• • . c. I. T. WEST BENGAL~III & ORS. ETC. v. ' ORIENTAL RUBBER WORKS ETC. . November 15, 1983 . (V. D. TULZAPURKAR, V. BALAKRISHNA BRAD! ! 'ND D. P. MADON, JJ. } Income Tax Act, l961-Sec. 132-1nterpret'ation of-Sub-sec. (1)-Seizure ofbooks ofaccount and documents-Sub·sec. (8) rete11tion ofbooks beyond l 80 days ofseizure-Read with sub-secs, (10)"& (12)-lmpose . statutory obligation on c· . R~venue to ·communicate ·Commissioner's appr. oVat and recorded . reasons ofth1 . authorisf! d officer to person en{itled for return of books. Retention ofbooks-·• Without such conununicati ! ler of Income-tax for such e·xtended retention from time to time anCI therefore such retention of the seized . ~ books and:documenls beyond iso days was perfectly legal and . valid. · .... . that there was no obligation under sec.

132(8) of the Act to commu· nicate the Commissioner's approval for such 'extended retention· or · · the ·recorded reasons of the Income Tax ·Officer· therefor to the resp~no:l~nt·assessee and that i_n any event due ·inspection of the seized . books and documents. was. ,afforded to tlie_ ·respondent· assessee who was also permitted to take copies of the entries in the. t . . . • ,.. books· and after giving propeF hearing t_o the respondent-assessee the assessment for the year l964·65 · had been validly completed on Sth Fel)ruary;· 1969 long before the respondent·assessce appn:iached the Court and obiained a Rule Nisi: A learned Single Judge of the High'_Court ·held that the seized books of account and ·other docu·· ~ ments could not be retained beyond the period of 180 days without a ·. i compleie and em;;tive order of approval for such extended retention · ·of the said books and documents and that since . the approval of \- ·C. I. T. v. ORIENTAL RU. BBER ~OR~ Ctulzapilrkat, J.

) 821 • th~ Commissioner and the reecirded reasons therefor had ~ot been communicated to the respondent-assessee, the retention of the books and documents beyond 180 days was unla~ful. The learned Judge, therefore;·ordered the issuance of a ma11damu1 directing the Conimis- . sioner and the ·concerned Income ·Tax Officer ·to return all the seized books and documents and. he further orde. red that the concerned Income Tax Offiocr shall be at liberty to complete the assessment for the year 1954·55 after the . returnof the ·said llQoks and documents arid after issuing afresh statutory ·notices u)ider section 142(1)1143(2) ofthe Income-tax Act to the . respondent-assessee. ln rendering the· aforesaid decision, the learned Judge ·followed·two earlier decisions. · · of his own High Court in Mahabir Prasad Poddar's case decidied by ·T. K. Ba;u, J. and his owu d~cision in C. K. Wadhwa's case {Which · is the· subject matter of the ~ompauion Ctvil Appeal Np. 760 of 1973 before usi.

At the instance of the Commissioner of Income-tax, an appeal was preferred 'to the Division Berich of the High Court being Appeal No. 2. l3of1970. The self:samc content'ions w~re urged on. , behalf of the Revenue i'n the appeal and it was speCifically submitted thctt the assessment for th,:· ... to set out the' material provisions of sec 132 . of ·the Act, namely, "' sub-secs. (8), QO) and (12) thereof, which run as follows : "132 (8)· The books of account or other documents ,. seized under sub-section (I} or sub-section (IA) shall not be retained by the authorised officer for a period exceeding one hundred· and eighty days from the date of the seizure unless the reasons . for retaining the same are recor-Oed by ]lim in wdting and the approval of the Commissioner for such retention is-obtained: Provided that the Commissioner shall not authorise the .. retention of the b. ooks ·of accou11t . and other docu- , ments for a period exceeding thirty days after all the· .

proceedings under the Indian Income-tax Act, 1922 . (XI of 1922),. or this Act in respect of the years' for . C. t. T. v. ORIENTAL RUBBER WORKS (TulzajJurkar, J. ) 823 . which the books _of account or other docume_nts are relevant are completed. • (10) Ifa person legally entitled to the books of . accouni or other documents seized under sub-section (1) or sub-section (! A). objects. for any reason to the approval given by the Commissioner under sub-section (8), be may m1ke an application ·to the Board stating _therein the · reasons for suth objection and requesting for the return of the books of account . or other doci1ments. (12) On rccei pt of the application under sub-section (IO) th~ Board may, after giving the applicant an opportunity of being beard, pass such orders as it t~inks fit. " • On a. plain reading of the aforesaid provisions it will be· clear that ordin;rily the books of account. or. other documen_ts that may be. ' seized under an authorisation issued under sub-sec.

(l) of sec. 132 ' can be retained by the authorised officer or. the concerned Income-tax Officer for a period of one hundred and eighty days from the. date of sei~ure, \Vh~reafter . the pcirson from whose custody. such books or documents have been seized or the person to whorn such books· or documents belong becomes entitled to the-_return of tile same . u_nless the reasons for any extended retention are recorded in writing by the. authorised officer/the concerned Income Tax· Officer and approval of the Commissioner. for such retention is obtained. In. other words" tw-0 conditions must be fulfilled before such c~tei1ded retention becomes permissible in law : (a) reasons in writing must be recorded by the authorised officer or the . concerned Inco~e-tax. Officer seeking ·. the·Commissioner's approval and (b} obtaining of the Commissioner's. approval for such extend~d retention and if either· of these conditions is not fulfilled such extended retention will bccomt.

unlawful and the ·concerned person (i. e. tbe person frdm whose custody such books or . _documents have been seized or. the. person to whom these belong) acquires a right to the return of the same forthwith. It is true that sub·sec. (8) does not in terms provide that the Commissioner's approval or the recorded reasons on which it might be based should be communicatep to the concerned person . but in our v_iew since the person concerned is bound _to be inaterially_prejudiced in the enforcement of his right to have such books and documentsreturned to ·him by being-kept ignorant about the factum of fulfilment of either ofthe • sμPRili. rn COURT REPORTS [1984j i s. c. R c:Onditions it is obligatory upon the Revenue to communicate the . Commissioner's approval as also the recorded -reasons to the person· . ·concerned. In the absence of such communication the Commissioner's . decision according his approval will. not become effective. . Moreover, sub-sec.

(10) confers upon the person legally_ entitled · to the return of the seized books and· documenis a right to object to 8 the' approval given by ihe Commissioner under sub-sec. (8) by making· an application to the Central Board stating therein the reasqns for . ··such objection and under sub-sec. (12) it is provided that the Central - Board may; after givirig the applicant an opportunity of being heard pass· such orders as it thinks fit: It' is·obvious that withbut the knowledge of the factum of the Commissioner's approval as also of· the recorded reasons on tiie basis of which such approvai has_ been obtained it will not be possible. for -the person to whom the seized -' ' . . . . books or documents belong to make any effective. objection to the approval bofore the Board and get. back his books or documents, In our view the scl1em. e of sub-secs. (8); (10) and (12) of sec. 132 I) . m.

akes it amply clear that tlicre is a _statutory obligation on the Revenue to communicate to the person concerned. not merely the Commissioner's . approval but the recorded reasons on which ,the' · sa_me has been obtained and that su. ch communicatioIJ must be made· as expeditiously as possible after the passin& of the. order of approval by the Commissioner and in default. of . such. expeditious comniunication any f~rtherretention of the seized books or documents would .. , b~come invalid and unlawful. _It ·is obvious that such obligation -arises in regard to. -every approval of the Commissioner _that might •have been. accorded· from time to time. In the resuli the order< passed by the High Court directing the . F return of. the--seized books of account ~nd documents t_o the respoU"dents in each of the appeals are confirmed and the appeals (subject "to"the directions given below in two of them) are'dismissed with no" order as to·costs. · · · In Ci". il Appeal No.

1652 of 1973 the assessment order passed · . on 5th-February, 1969 is upheld subject to the result ofthe appeals• · . that may have been preferred against it. In Ci~il Appeal No. 661 of- . 1975 it is directed th. at the assessment orders passed for the concerned assessment years- would be subject to the ·appeals aiready preferred ir any fJf such as might. "be preferred in accord_ance· with law, against_ . · the same. H. S. K:. Appeals. dismissed.