# COMMISSIONER OF INCOME-TAX v. JAWAHAR LAL RASTOGI

- **Citation:** [1971] 1 S.C.R. 581
- **Court:** Supreme Court of India
- **Decided:** 1970-05-07
- **Case number:** Civil Appeal No. 16 of 1970
- **Bench:** J.C. Shah, K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-income-tax-v-jawahar-lal-rastogi-5099
- **Pages:** 5

## Headnote

5 81
Income t<1x Act, 1961, as amend.ed by Finance Act 1965, s. 13:!(5)-
St'izure of doc:tonent.\' and retention heyond 180
clay.s-J\/o
recor,f of
reasons by l.T.O. or appro~·at Df Conunissiuner of such r'1tention--Legality of rt•tt•111ion,
On September 14, 1964 the Income tax Officer called upon the as;essee
to furnish within I 0 days statements relatin~ to four assessment years
ending on March 3 I. 1960. The asse<see did not furnish the infcrmation
by the 19th and on that date on the report of the Income-tax Officer. the
Commissioner authorised the Income tax Officer to ••arch the premises of
the assessee.
On September 21st and 22nd the premises were searched
and a large number of documents- were scizc<l and retained till May 1966,
that is, for a period of 19 months.
Jn a writ petition ficl<l by the asscsscc, the High Court, follo\\·ing its
own decision in Serh B.ro<. v. CJ.T., 62 J.T.R. 44 held that the
searcJo
was indiscriminate and beyond the· scope of s. 132 of the Income-tax
Act, 1961
In appeal to this Court.
HELD: (i) The decision relied on by the High Court was o'errule<l
by this Court in /.T.0. v. Seth Bros., 74 I.T.R. 836, but it vas held that
the power of search must he exerciseJ strictly in accordanc;;: \\'ith the
law and only for the purposes for which the law authorises it to b.:- .:xercised. Whether the action of the
Commissioner in a
oarticui~tr
case
amounted to indiscriminate search
and
hcyond
the sCope
of -...
13~
\\10uld dcpenJ on the cvi<ler.ce in the case. f-583 E: 584 E-F]
(2) Jn the present case, there "'·as no or<ler of the authorities rcccrJing
reasons for retainin.(! the documents seized beyond 180 days. n0r \\'as
there any approval of the Commissioner for such retention. Therci0re the
retention \vas contrary to the terms of s. 132(8) of the Act as am~ndcd
hy lhe lncomc·lax ( Amcndmenl) Acl. 1965. 1585 C-Dl
( 3) Though failure to record reasons hy the l.T.0. and want of approval
by the Commissioner for retainin.!Z the documants beyond 180 Jay.;. \Vere
not urged before the High Court as grounds for release of the documents.
when it was found that the documents were retained for 19 month.;;. the
department should have tendered evi<.lence of such ·record of re::1-.on.;; or
approval hy the Commissioner if it v.:as the case of the dcpartn1cnt that
the retention of the documents coul<.l he supported by such rcaso!l;; or
approval. 1585 E-C]
C1v1t APPELLATE JuR1s01cnoN:
Civil Appeal No. 16 of
1970.
Appeal bv special leave from the judgment and order dated
May 22, 1969 o.f the Allahabad High Court in Civil Misc. Writ
No. 588 of 1966.
582
5UPREME COURT REPORTS
[1971] l S.C.R:
Jagadish Swarup, Solicitor-General, R. N. Sachthey and B. D.
Sharma, for the appellants.
G. C. Sharma and P. K. Mukherjee, for the respondent.
The Judgment of the Court. was delivered by
Shah, J.
Jawahar Lal Rastogi--hereinafter called 'the
assessee-is a Hindu Undivided Family which carries on the
business of money-lending at Lucknow and is also interested as
a partner in different firms engaged in the business of manufacturing barbed wire, pharmaceuticals, etc.
On September 14, 1964, the Income-tax Officer, A-Ward,
~ailed upon the asses~ee to furnish within
10 days
certain
information with regard to its income and assets.
On September
17, 1964 the Income-tax Officer submitted to the Comn1issioner
of Income-tax a report requesting that he be authorised to emer
and search the premises of the assessee.
The Commissioner by
his order dated September 19, 1964, authorised en\ry and search
after recording reasons for his belief that it was necessary to
carry out the search.
On September 21 and 22, 1964, the premises of the assessee were searched and a large number of
documents were seized and were taken away to the Income-tax
Officer.
The Income-tax Office.r also prepared inventories of the
ornaments and other goods kept in the premses searched.
After
the seizure of the books of account and other documents
the
case wa~ fixed for hearing before

## Text

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D
F
G
H
COMMISSIONER OF INCOME-TAX
V.
JAWAHAR LAL RASTOGI
May 7, 1970
[J.C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.J
5 81
Income t<1x Act, 1961, as amend.ed by Finance Act 1965, s. 13:!(5)-
St'izure of doc:tonent.\' and retention heyond 180
clay.s-J\/o
recor,f of
reasons by l.T.O. or appro~·at Df Conunissiuner of such r'1tention--Legality of rt•tt•111ion,
On September 14, 1964 the Income tax Officer called upon the as;essee
to furnish within I 0 days statements relatin~ to four assessment years
ending on March 3 I. 1960. The asse<see did not furnish the infcrmation
by the 19th and on that date on the report of the Income-tax Officer. the
Commissioner authorised the Income tax Officer to ••arch the premises of
the assessee.
On September 21st and 22nd the premises were searched
and a large number of documents- were scizc<l and retained till May 1966,
that is, for a period of 19 months.
Jn a writ petition ficl<l by the asscsscc, the High Court, follo\\·ing its
own decision in Serh B.ro<. v. CJ.T., 62 J.T.R. 44 held that the
searcJo
was indiscriminate and beyond the· scope of s. 132 of the Income-tax
Act, 1961
In appeal to this Court.
HELD: (i) The decision relied on by the High Court was o'errule<l
by this Court in /.T.0. v. Seth Bros., 74 I.T.R. 836, but it vas held that
the power of search must he exerciseJ strictly in accordanc;;: \\'ith the
law and only for the purposes for which the law authorises it to b.:- .:xercised. Whether the action of the
Commissioner in a
oarticui~tr
case
amounted to indiscriminate search
and
hcyond
the sCope
of -...
13~
\\10uld dcpenJ on the cvi<ler.ce in the case. f-583 E: 584 E-F]
(2) Jn the present case, there "'·as no or<ler of the authorities rcccrJing
reasons for retainin.(! the documents seized beyond 180 days. n0r \\'as
there any approval of the Commissioner for such retention. Therci0re the
retention \vas contrary to the terms of s. 132(8) of the Act as am~ndcd
hy lhe lncomc·lax ( Amcndmenl) Acl. 1965. 1585 C-Dl
( 3) Though failure to record reasons hy the l.T.0. and want of approval
by the Commissioner for retainin.!Z the documants beyond 180 Jay.;. \Vere
not urged before the High Court as grounds for release of the documents.
when it was found that the documents were retained for 19 month.;;. the
department should have tendered evi<.lence of such ·record of re::1-.on.;; or
approval hy the Commissioner if it v.:as the case of the dcpartn1cnt that
the retention of the documents coul<.l he supported by such rcaso!l;; or
approval. 1585 E-C]
C1v1t APPELLATE JuR1s01cnoN:
Civil Appeal No. 16 of
1970.
Appeal bv special leave from the judgment and order dated
May 22, 1969 o.f the Allahabad High Court in Civil Misc. Writ
No. 588 of 1966.
582
5UPREME COURT REPORTS
[1971] l S.C.R:
Jagadish Swarup, Solicitor-General, R. N. Sachthey and B. D.
Sharma, for the appellants.
G. C. Sharma and P. K. Mukherjee, for the respondent.
The Judgment of the Court. was delivered by
Shah, J.
Jawahar Lal Rastogi--hereinafter called 'the
assessee-is a Hindu Undivided Family which carries on the
business of money-lending at Lucknow and is also interested as
a partner in different firms engaged in the business of manufacturing barbed wire, pharmaceuticals, etc.
On September 14, 1964, the Income-tax Officer, A-Ward,
~ailed upon the asses~ee to furnish within
10 days
certain
information with regard to its income and assets.
On September
17, 1964 the Income-tax Officer submitted to the Comn1issioner
of Income-tax a report requesting that he be authorised to emer
and search the premises of the assessee.
The Commissioner by
his order dated September 19, 1964, authorised en\ry and search
after recording reasons for his belief that it was necessary to
carry out the search.
On September 21 and 22, 1964, the premises of the assessee were searched and a large number of
documents were seized and were taken away to the Income-tax
Officer.
The Income-tax Office.r also prepared inventories of the
ornaments and other goods kept in the premses searched.
After
the seizure of the books of account and other documents
the
case wa~ fixed for hearing before the
Income-tax Officer on
several occasions, but no substantial step was taken.
In May 1966 the assessee filed a writ petition in the High
Court of Allahabad challenging the validity of the search made
by the Department contending that it "was illegal and in excess
of the power conferred by s. 132 of the Income-tax Act, 1961"
and prayed that the documents seized may be ordered to be
released. The High Court of Allahabad considered the evidence
appearing from the affidavits filed and observed that in the pre··
sent case the assessee had established the following "points" :
(I) The Income-tax Officer was apparently
interested
in
investigating transactions prior to 1953.
On September 14,
1964, the assessee was directed to furnish statements relating
to four years ending on March 31, 1960, yet the Commissioner
of Income-tax issued letters of authorisation permitting Incometax Officer to seize documents
relevant
to
nine
as,essment
years:
(2) The raid was ordered arid organised before the dpiry
of the period of the notice;
''
( 3) More than 300 books and registers were seized during
the raid and the Income-tax Officers carried away thousands of
promissory notes.
Some of the documents seized appear' to. be
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C.I.T. v. JAWAHAR LAL (Shah, J.)
583
irrelevant for assessment pu:oses and some of them were public
documents.
( 4) There is reason to believe that all or almost all the
documents found on the premises were seized and carried away
by the Income-tax Officers;
( 5) Marks of identification were not placed on the docu·
rnents in spite of the direction contained in the letters of autho·
risatiou; aod
( 6) The documents seized during the raid were detained
by the lncome-tax Officers for 19 months before the petition was
filed.
Jn the view of the Higb Court the circumstances of the case
indicated that the Commis~oner of Income-tax and the Incometax Officers acted beyond "the legitimate scope of s. 132 of the
Act and the.e was force in the complaint of the assessee that
the Allahabad High Court in Seth Brothers' Case(') was overtituted abuse of power conferred on Income-tax authorities by
s. 132 of the Act". In reaching its conclusion, the High Court
relied upon the judgment of the Allahabad High Court in Seth
Brothers v. Commissioner of Income-tax(').
In this appeal filed by the Commissioner of Income-tax with
special leave, the Solicitor-General contends that the decision of
the Allahabad High Court in Seth Brothers' Case(') was over·
ruled by this Court in Income-tax Officer, Special Investigation
Circle "B", Meerut v. Seth Brothers & Ors.(2). and on that
account the judgment under appeal is liable to be oet aside. In
Seth Brothers' case( 2) this Court examined the scheme of s. 131
in some detail and observed :
"The condition for entry into and making <earch
of any building or place is the reason to believe that any
books of account or other documents which
wil!
be
useful for, or relevant to, any proceeding under the
Act may be found. If the Officer has reason to believe that any books of account or other documents
would be useful for, or relevant to, any proceedings
under the Act, he is authorisw by law to seize those
books of account or other documents,
and
to
place marks of identification therein, to make extracts
or copies therefrom and also to make a note or an
inventory of any articles or other things found ia the
course of the search.
Since by the exercise of the
power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be
(I) 62 LT.R. 44.
584
SUPREME COURT REPORTS
(1971] l S.C.R.
exercised strictly in accordanc~ with the law and only
for the purposes for which the law authorises it to be
exercised.
.
.
.
.
.
. If the conditions for
exercise of the power are not satisfied the proceeding
liable to be quashed.
The Act and the Rules do not require
that
the
warrant of authorisation should specify the particulars
of documents and books of account : a general authorisation to search for and seize documents and books
of account relevant to or useful for any proceeding
complies with the requirement of the
Act
and· the
Rules.
It is for the officer making the search to exercise his judgment and seize or not to seize any doucments or books of account.
The aggrieved party may undoubted! y
mo~e a
competent court for an order releasing the documents
seized.
In such a proceeding the Officer who has made
the search will be called upon to prove how the documents seized are likely to be useful for or rekvant
to a proceeding under the Act. If he is unable to do
so, the court may order that those document> be •eleased.
But the circumstance that a large number of
documents seized is not a ground for holding ihat all
documents seized are irrelevant or the action of the
officer is ma/a fide."
It must, however, be stated that the findings that the action of
the Commissioner of Income-tax and the
Income-tax
Officer
amounted to "indiscriminate search" and was beyond the "le~i
timate scope of s. 132" depends upon the evidence
i;,
ea~h
case and no general rule can be laid down in that behalf.
In the present case the High Court has no!Iced two important circumstances : ( 1) that where as the notice dated September 14, 1964, required the assessee to furnish statements relating to the four assessment years ending on
March 31, 1960.
the Commissioner of Income-tax authorised search for a period
of nine assessment years even before the period fixed
by
the
notice had ·expired; and ( 2) that contrary to the plain terms
of s. 132 ( 8) the Income-tax Officer retained
with
him
the
books of account for a period exceeding 180 days.
Under s. 132(2) as in force on the date on which the search
and seizure took place stood as follows :
"The books of account or other documents seized
under sub-section ( 1) shall not be retained
by
the
Inspecting Assistant Commissioner or the Income-tax
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C.l.T. v. JAWAHAR LAL (Shah, J.)
Officer for a period .exceeding one hundred end eighty
days from the date of the seizure unless the reasom for
retaining the same are recorded by him in writing and
the approval of the Commissioner for such .retention is
obtained :
Provided
.
.
.
.
. "
585
By th~ Finance Act of 1965, sub-s. (2) was re-~11acted as sub-s.
( 8) with the modification that for the words "Inspecting Assis·
tal)t Commissioner or the Income-tax Officer" the words .. authorised officer" be substituted.
In the present. case the premises of the assessee were sear~h
ed on September 21 and 22, 1964, and the
document;
were
retained till May 1966, i.e. for a period of 19 months.
Our
attention has not been invited to any order of the
authorities
recording reasons for retaining the documents seized after the
expiry of 180 days, nor is there any approval of the Commissioner for retaining such documents.
The retention of
the
documents without complying with the . requirements of the
statute
after expiry of the period of 180 days would be plainly contrary
to Jaw.
The Solicitor-General said !\lat it was not urged before the
High Co.irt that
because the authorised officer did not record
reasons and the Commissioner did not approve retention of the
documents after 180 days, the revenue authorities were bound
to release the documents.
Counsel submitted that failure 10 produce evidence on a matter not put in issue may not be ngarded as a ground in support of an order releasing document,.
But
the High Court has found that the documents
sci?ed
d:uir·g
the raid were detained by the authorised officer 'or 19 months
before
the
application
was
filed.
If it was the case of the
Department that retention of the documents after the e\piry or
180 days was. supported by good and adequate r~asons record~d
by the Income-tax Officer and th.~ approval of the Commissior•er
as required by the Act was obtained, such recorci of reasons and
approval would have been tendered in evidence.
It cannot be
said that the attention of the parties was not directed to the circumstance that the Income-tax Officer had failed to comp1v with
the requirements of the Act.
·
The order recorded by the
High Court must be sustained
on the ground that the documents taken possession cf were retai,ned without authority of law for a period exceeding 180 days
contrary to the terms of s. 132 ( 8) as amended by the Income-tax
(Amendment) Act, 1965.
Th.~ appeal therefore fails ai1d is dismissed with cost<..
V.P.S
Appeal dismissed.