# DIRECTOR OF INSPECTION OF INCOME TAX (INVESTIGATION) NEW DELHI AND ANOTHER v. POORAN MAL & SONS & ANOTHER - **Citation:** [1975] 2 S.C.R. 104 - **Court:** Supreme Court of India - **Decided:** 1974-09-20 - **Case number:** writ :Petition No. 829 of 1972 - **Bench:** P. Jaganmohan Reddy, Alagiriswami - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/director-of-inspection-of-income-tax-investigation-new-delhi-and-another-v-6277 - **Pages:** 11 ## Headnote I11<·ume-Tax AU, 1961, Si•ction 132(5):._Altachment of Ji/ver bars in 1he banks-Writ proceedings ending in a consent order--Frtsh enquiry by the Income-Tax 0/fi<'er-Respondents c/w//enging (he order as or.e passed beyond the period of ninety days-Respondents deriving benefit under sec, 132(5), if could waive the bencfii.r. lllcome-Tax Acr, 1961, Sub-sectiom (5), (II) and (12) of Sc£'1ion 132-· Income-Tax Officer tleciding to whom property seized' belongs-Initial order and ,,μbsequent order in comequem:e of direcrion.I' from High Co11rt-lf should he within 11i11ety days. lllcome-Tax Act, 1961, Section 132(3 )-Order a11avlti11g the sifrer bars in ti,. banks-Income Tax Officer deciding to whdm they belong--01der, if can be que•li011ed under sec. 132(5)-When ca11 Hixh Court order return of thr .~ilrf'r frar.t. On an authorisation issued by the Director of Inspection, Pooran Mal's residence and business premises in Delhi were searched in October 1971. His premises in Bombay were also searched. On a search made in the Branch offices of Lumi Commercial Bank and the Punjab National Bank 84 silver bars in the former bank were attached under sec. 132(3) of the Income-Tax Act, 1961, and similarly 30 silver bars in the other bank were attached. In Poor/ara111 v. B. N. R1111g11·1mi A.T.R. 1974 S.C. 150, refcrml to. CIVIL APPELLATE JURISDICTION: Civil Appeal No .. 1118 of 1974. Appeal by Special Leave from the Judgment & Order dated the 30th November, 1973 of the Delhi High Court in Ref. C.W. No. 595 of 1972. F. S. Nariman, Addi. Sol. General of !11dia, G. L. Sanghi and S. P. Nayar, for the appellants .. N. D. Karkha11is and Ram Lal for the respondents. The Judgment of the Court was delivered by ALAGIR!SWAM!, J.-This case is an oil-shoot of a search and seizure in pursuance of the provisions of s. 132 of the Income-tax Act, 1961 dealt with in the decision of this Court in Poora11 Mal v. Director of lnspection(t). One of the cases there dealt with w~ Writ Petition No. 446 of 1971 filed by one Pooran Mal. The facts sta1ed therein arc set out below for the sake of brevity : "The petitioner Pooran Mal is a partner in a number of firms--some of them doing liusiness in Bombay and some in Delhi. His permanent residence is 12-A Kamla Nagar, Delhi. His business premises in Delhi arc A-14/16 Jamuna Bhavan. Asaf Ali Road, New Delhi. It would appear that on an authorisation issued by the Director qf Inspection, his residence and business premises in Delhi were searched on October 15I16, 1971. On the 15th his premises in Bombay were also searched and at that time it •appears the petitioner was present in Bombay ...... '' The search in the business premises was made when a number of persons who usually worked there were present. Books of account, documents, some jewellery and a large amount· of cash amounting to about Rs. 61,000 were seized. On October 16 there was a search in the Branch Offices of Laxmi Commercial Bank and the Punjab National Bank. 84 silver bars were sc:ized from Laxmi Commercial Bank and 30 silver bars were sc:ized from the Punjab National Bank." (It appears that the bars themselves were not actually seized but were only attached under the provisions of sub-s.(3) of s. 132 of the Income-tax Act, 1961). "The value of these silver bars comes to nearly 18 lakhs. It is the case of the petitioner/that these bars belong to M/s. Pooranmal and Sons of Bombay (I) [1974] [ s. c. c. 345, A B c ' D E F G H B G l) E G ll DIRECTOR INCOMllTAX \', POORAN (Alagiriswami, ],) l 07 who sent the same to the Motor and General Finance Company of which the petitioner is a partner and this Finance Company, it is alleged. kept these bars with the. two banks. 84 .bars were kept in the account of M/s. Udey Chand Pooranmal for an al'.cgcd overdraft limit while the 30 silver bars were pledged with the Ptmjab National Bank in the ac-. count of the Finance Company. In all these aforesaid firms the petitioner is a partner and it is the Department's case that all these bars are the undisclosed assets of the petitioner. It appears that the Income-tax Officer made a summary enquiry as required by Section 132(5) after issuing notice tc;> the petitioner and his order dated January 12, 1972 shows, of course prima faci<'. that an the a~scts which had been seized .in the house, the husincss premises and the banks, except for the value of the ornaments declared by Mrs. Sharda Devi in her Wealth Tax Return, had to be retained for being appropriated against tax dues from 1969 onwards which amounted to nearly 42 lakhs. Indeed this prima facie liability was subject to regular assessment and re-assessment." In the case dealt with earlier by this Court the constitutional validit~ llf s. 132 and lcgali:y ol' th~ search and seizure alone were umlcr consideration. This Court held the provisions valid and the search and seizure ·legal. Thereafter respondent 1, which is a firm of which Pooran Mal was a partner, and respondent 2, who claims to be another partner of the 1st respondent firm, filed Writ Petition No. 8? of l 972 challenging the order of the Income-tax Otlkcr dated 12-1-1972. This writ petition was di>.poscd of on 6-4-1972 on the basis of the consent of the parties. The relevant portion of the order is as follows :- "Mr. G. C. Sharma, learned counsel appearing for the respondents, fairly and frankly conceded that such an opportunity was not afforded to the petitioner. The parties arc agreed that the impugned order be quashed and that the Department be permitted to look into the matter afresh after giving an opportunity to the petitioner to place his case before the Department in respect of the contention that the property belongs to the firm and not .to Pooran Mal ined income of Pooran Mal the individual was illegal. Jt was also contended that the Income~tax Ofticcr had no jurisdiction to pass the impugned order beyond the period prescribed in sub-s. (5) of s. 132. This second contention found favour with the learned J ud,ges of the High Court. As a result they set aside 1.he order of the !ncome-tax Officer dated 5-6-1972 and ordered the re- «urn of the 114 silycr bars to ;:cspondents 1 and 2. . . . Before us the learned Additional Solicitor General put forward five ·:ontcntions : I. Section l 32(5) is for the. benefit of the person concerned A B c and it is competent for him to waive this benefit. The n petitioners waived the benefit by the consent order and by appearing before the Income-tax Officer and leadinp: evidence. 2. Period of time runs from the date of seizure and on a true construction of the airder it is a new seizure. 3. The period of time applies only to the initial order and E not to any subsequent order that may be directed under s. 13 2 ( 12) or by a Court in writ proceedings. 4. The period of time is directory and not mandatory, and finally. 5. The order for return of the silver bars was also illegal on the ground that only properties seized under the provisions of s. 132(1) could be ordered to be released and not property which has been attached under s. 132(3) as in this case. In the view we take of the matter we think it would be sufficient to deal with contentions 1 and 3. We do not, therefore, propose to consider the question whether the period of time provided in s. 132(5) is directory or mandatory nor the other two questions. Even if the period of time fixed under s. 132(5) is held to be mandatory that was satisfied when the first order was made. Thereafter if any direction is given under s. 132(12) or by a Court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under s. 132(5). Once the order has been made within ninety days the aggrieved person has got th.e right to approach the notified authority under s. B2(11) within thirty days and that authority can direct the F G. H A c D E F G H DIRECTOR INCOMETAX: v. POORAN (Alagiriswami, J,) l 0 9 Income-tax: Officer to pass a fresh order. We cannot accept the contention on behalf of the respondents that even such a fresh order should be passed within ninety days. It would make the sub-sections ( 11) and ( 12) of s. 132 ridiculous and useless. It cannot be said that what the notified authority could direct under s. 132 could not be done by a Court which ex:ercises its powers under Article 226 of the Constitution. To hold otherwise would make the powers of courts under Article 226 wholly ineffective. The Court in ex:ercising its powers under Article 22(} has to mould the remedy to suit the facts of a case. If in a particular case a Court takes the view that the Income-tax Officer while pass-· ing an order under s. 132(5) did not give an adequate opportunity to the party concerned i~ should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income-tax Officer was correct or dismissing the petition because otherwise the party would get unfair advantage. The power to quash an order under Article 226 can be ex:ercised not merely when the order mught to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it. But in the circumstances of a case the Court might take the view that another authodty has the jurisdiction to deal with the matter and ma) direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circumstances like failure to ob- ~crve the principles of nat14ral justice the Court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting forward its case. Otherwise, it would mean that where a Court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case. A Division Bench of the Punjab High Court in C.l.T. v. Ramesh Cha1ul.er(l) took the view that what the notified authority could do under s. 132(12) a Court could do in writ proceedings. Though the observation was obiter we consider that it is correct. In this connection we must refer to the decision of the Gujarat High Court, relied upon by the respondents, in Ramjibhai Kalidas v. l. G. Desai, l.T.0.(2). In that case it was held that Rule 112A, which provides that a show cause notice in respect of an inquiry under s. 132(5) is to be made within 15 days from the date of the seizure, is mandatory and if that is not done no order under s. 132 (5) can be passed. It seems to have been admitted before .the Bench by the Advocate General who appeared on behalf of the Revenue that he did not dispute that the period of ninety days prescribed under s. 162 (5) fa a mandatory period. That decision is, therefore, no authority for the proposition that the period fixed under section 132(5) is mandatory. But even if it were the decision that Rule 112A is also mandatory is clearly erroneous. When s. 132(5) perm.its an Income-tax Officer to pass an order within ninety days that pow~r cannot be in any way whittled down by a rule made under that section. · On behalf of the r~pondents a number ~f decisions were ~elied. upon for contending that no equitable consideration should enter mto m de- (I) 93 I. T. R. 450, 478. (2) 80 I. T. R. 721. I I 0 SUPRE:\1E COURT RE!'O;ns 11975) 2 S.(.R. dding lh~ muucr. Reliance was placed on the observations of Rowlatt .I. in Ca pi• llr£1ndy Syndicate v. /11/a11d Revenue Commissioner( 1) re· t'cm1<.I to with Approval i11 the decision in Commr. of /n{'0/111! Ta.r v . . .fjtJX Product.~ Ltd(2), tlrnt: "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about u tax. There is no presumption as to a tax. Nothing is to be rcodl in, nothing is to be implied. One can only look fairly at the language used.'' · ' We do not consider that every provision of a taxing statuto will fall within this rule. The question whether a certain provision of law is direc- :orv docs not fall to be decided on different standards because it js round in a taxing statute. There is no rule that every provision in a taxing statute is mandatory. The strict construction that a citizen does not become liable to tax unless he comes within the specific words of a statu~c is a different proposition. That a person cannot be taxed on the principle of cstoppel docs not admit of much argument. Article 265 of the Constitution lays down that no tax shall be levied except when aut hori~.cd by law. It was also argued based on Explanation I to s. 132 and similar provision in certain other sections which lay down that in computing the period of limitation any period during whic.h any proceeding is stay- ~d by an order or injunction of any court shall be excluded, that where it is intended that the period of limitation prescribed by any of the provisions of the Income-tax Act should not be strictly enforced the law itself makes a specific provision. It is a well established principle of 1uJicial procedure that where any proceedings arc stayed by an order or a Court or by an injunction issued by any Court that period should b:: cxciuded in computing any period of limitation laid down by Jaw. Especially after the Limitation Act 1963, the provisions of which arc now applicable to all proceedings, a provision like Explanation I to s. l 3 2 is superfluous and no argument can be based on it. Reference was made to various decisions of the various Courts which have held that the particular period of limitation under consideration by the Court should be strictly construed. There is no doubt that there is no equity about limitation. Most of the decisions relied on relate to provisions which la.id down a period of limitation for taking one ;,iml of action or other in order to assess to tax the person concerned. Naturally faftcr the period of limitation has expired no proceedings can be taken to assess nor could any period of limitation laid down by the Act be extended merely by a superior tribunal directing an inferior tribunal to make an assessment or to take proceedings which result in assessment after the period of limitation is over. They are not in pari - nwteria with the present proceeding~. In deciding to whom any property seized under s. 132(1) belongs the Income-tax Officer cannot be said to be exercising any powers of taxation. He is not deciding the ,1uestion of taxing a person after the period prescribed therefor is over. (I) [191!] I K. B. 64, 71. t2) 55 IT. R. 741, 747, .. c [ F G a A B c D E F H DIRECTOR INCOMETAX v. POORAN (Alagiriswami, J.) 111 He is really deciding to whom the property seized belongs and to such a case the provisions of ordinary law which deals with tribunals and courts which decide the questions of title to properties should be deemed to apply. This 'is not a case where equity is relied upon to tax a pcrso11 who is not otherwise liable to be taxed. It is a general principle gpplicable to all judicial proceedings. But the most important principle on the basis of which the order of the Income-tax Officer should be upheld is that it is in pursuance of an agreement between the parties which has obtained the imprimatur or the Court that this orc.lcr has been made. The period of limitation is one intended for the benefit of the person whose property has been seized. It is open to him to waive it. We considc.r that to hold that the period of ninety days which is mentioned in s. 132(5) is an immutable one would cause more injury to the citizen than to Revenue. It is, there-. tore, open to the aggrieved person, as happened in this case, to agree to a fresh disposal of the case by the Income.tax Officer and thereby waive l he period of limitation. Even apart from the consent of the parties it was open to the Court in Writ Petition No. 82 of 1972 to have set aside the earlier. order of the Income-tax Officer and directed a fresh disposal of the matter by the I ncomc-tax Officer on the ground which was .in fact. agreed to by the parties, that the aggrieved party had no reasonable opportunity of putting 'forward its case. It was within its powers to do so. If respondents .I and 2 wanted to urge that the order of the Income-tax Officer impugned in W ,P, 82 was liable to be set aside as they had no reasonable opportunity to put fo:'Ward their case they could have done so. · They need not have agreed to the matter being considered afresh. The Court would in any case have passed such an order. Having agreed and thus persuaded the Court to direct the Income-tax Officer to pass a fresh order respondents 1 and 2 cannot question the order of the Income-tax Officer on the basis of such direction, They should be deemed to be cstoppcd from so contending. They had by their consc:it made the I ncomc-tax Officer to put himself at a disadvantage, because he is now ;iced with the contention that he had rio jurisdiction to pass a fresh order. Furthermore, it is not a case of the Court conferring jurisdiction on the Income-tax Officer to decide a case after he had lost Jurisdic1 ion over the matter. The procedure from the date of seizure to the date of the second order of the Income-tax Officer is an integrated process. Thou!!h a proceeding under Article 226 is an original proceeding and not by ~vay of an appeal agP.ins.t the order of a Court or of Tribunal. it is part and parcel of our established judicial procedure and to treat it as though it were something outside the normal procedure and not part of an integrated whole would be wholly unrealistic. It is, therefore. possible for the parties to agree to a fresh disposal by the Incometax Officer even as the Court would have ordered. It is also not a case of the parties conferring jurisdiction on the Income-tax Officer by consent. Jt is a case where the parties agreed to a particular inode of exercise by the Income-tax Officer of a jurisdiction which he cannot be said to have lost or in respect of which he has become functus officio· Though it is true that on passing an order under s. 132(5) the Incometax Officer can be said to become functus officio it is the Court's order !hat revives his powers and jurisdiction. 112 SUPRl~ME COURT REPORTS (1975] 2 S.~.R. We also find ourselves unable to accept the contention on behalf of the respondents that the order contemplated to be passed by the Incometax Officer after the fresh i11quiry in pursuance of the order of the High Court in W.P. No. 82 of 1972 was not necessarily an order under s. 132(5). !t was an order under s. 132(5) that was impugned before the High Court. It was that order that was set aside by consent. It A wa.> th~ subject matter of that order which had to be considered by the B Income-tax Officer after giving a fresh opportunity to the petitioners and a new order passed. It could riot therefore be anything but an order under s. 132(5) that was under contemplation when the consent order was passed by the High Cc1urt in W.P. No. 82 of 1972. We may in this connection refer to the decision in Wilson v. Mc/11tosh (l). In that case an applicant to bring lands under the Real ProC pcrty Act fifod his case in Court under s. 21, mor.: than three months after a caveat had been lodged, and thereafter obtained an order that the caveator should file her case, which she accordingly did. It was held that he had thereby waived his right to have the caveat set aside as lapsed under s. 23. The Privy Council held that the limitation of time contained in s. 23 was introduced for the benefit of the applicant, to enable him to obtain a speedy determination of his right to have the land D brought under the provisions pf the Act and that it was competent for thl.l applicant to waive the limit of the three months, and that he did waive it by stating a case and applying for and obtaining an order upon the appellant to state her case, both which steps assumed and proceeded on the assumption of the continued etlstence of the caveat. They referred with approval to the decision in Phillips v. Marti11(2) where the Chief Justice said : E "Herc there is abundant evidence of waiver, and it is quite clear that a man may by his conduct waive a provision of an Act of Parliament intended for his benefit. The caveator was not brought into Omrt in any way until the caveat had lapsed. And now the applicant, after all these proceedings have been taken by him, after doubtless much expense has been incurred on the part of the caveator, and after lying by and hoping to get a judgment of the Court in his favour, asks the Court to do that which but for some reasons known to himself he might have asked the Court to do before any other step in the proceedings had been taken. I think he is altogether too late. It is to my mind a clear principle of equity, and I have no doubt there arc abundant authorities on the point, that equity will intt-'Tfere to prevent the machinery of an Act of ParliamenL being used by a person to defeat equities which he has himself raised, and to get rid of a waiver created by his own acts." These principles will apply 1exactly to the facts of this case. F G In Wrig!it v. loh11 Bagmlll & Son.