# INCOME-TAX OFFICER, SPECIAL INVESTIGATION cmCLE:B, MEERUT v. MIS. SETH BROTHERS AND ORS

- **Citation:** [1970] 1 S.C.R. 601
- **Court:** Supreme Court of India
- **Decided:** 1969-07-15
- **Case number:** Civil Appeals Nos. 700 to 703 of 1965
- **Bench:** J. C. Shah, G. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/income-tax-officer-special-investigation-cmcle-b-meerut-v-mis-seth-brothers-and-4668
- **Pages:** 14

## Headnote

Indian Income Tax Act (43 of 1961), s. 132-Search and seizureScope of power-Seizure of a (arge number of documents, some of which
not relevant to pending proceeding under Act-If mala fide.
C
Under s. 132 of tbe Income-tax Act, 1961,
the Commissioner of
Income-tax or the Director of Inspection may, after recording 'reasons,
order the search of premises if he .has reason to believe that one or more
of the conditions in s. 132(1) exist.
The officer authori~ed may enter
any place and make a search \Vhere he has reason to believe that books or
documents relevant to a!ly proceeding under the Act may be found.
He
may seize any books ~r documents and place marks of identification on
them, and may remov~ them to the income-tax office.
By the express
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terms of the Act. and ilie Income-tax Rules, the officer designated to make
the search may obtain ;the assistance of the police.
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The Income-tax Officer issued notice to the respondent-firm that its
income chargeable to ta~ had escaped assessment and that it was proposed
to reassess the income.: He also gave information to the Commissioner
of Income-tax that the re·spondent was maintaining duplicate records fdr
evading assessment of l]le true income and requested the Commissioner
fdr authorisation under tS. 132 to enter and search the premises where the
respondent was
carryin~ on business.
The Commissioner recorded his
reasons ,And issued an order in the prescribed form authorising two Incometax Officers to enter th~.· pfemises, to search for and seize such books and
documents as may be considered relevant or useful for the purpose of
reassessment, and to place identification marks thereon and to convey
them to the income-taxi' office.
The premises were accordingly searched
and the account books and certain documents found therein were seized
and carried to the income-tax office.
Petitions were filed in the
High
Court for writs of certihrari for quashing the, proceedings of the Incometax authorities, and consequential reliefs.
The High Court granted the
writs on the grounds : ,(1) that the order of search was made by the
Commissioner at the direction of the Directorate of Inspection and without satisfying himself about the existence of circumstances justifying seafch;
(2) that besides the documents belonging to the respondent the Incometax Officers seized 'docutnents relating to the transactions of their allied
concern which documents were irrelevant to the process of reassessment
of the respondent; (3) that marks of identification were not placed on
certain documents at the! time they were seized;
( 4) that the documents
seized were detained by the Income-tax Officer for more than two months;
and (5) that the police force employed during the raid was excessive.
i
In appeal to this Court,
HELD : ( J) The O:)nunissioner stated in his counter affidavit that
before issuing the authorisation he was satisfied that, it was necer-sary to
take action under s. 132 and that the authorisation Was not issued at the
602
SUPREME COURT REPORTS
[1970) l S.C.R.
direction of" the Directorate of InsPection.
The Deputy Director of Ins-
'pection also stated in his affidavit
that
he never
gave any
direction
to the Commissioner to issue authorisation for seafch 'and seizure. Therefore, in reaching the cohclusion that the Commissioner acted at the behest
of the Director of lnspection, the High Court was in error, because, having
held that the correctness o'f the opinion formed. by tho income-tax authorities was not open to scrutiny in a writ petition the High Court acted on
mere affidavits and accepted the assertions of the respondents which )Vere
specifically denied. by the Revenue authorities. [6}2 B-C; 613 D; 614 A-Bl
(2) Since the power conferred: though not arbitrary, is a sefious invasicn upon the' fights and privacy of thlf tax-paye'r, the power
must be
stuctly exercised in accordance with law and only for the purposes for
\vh1ch the la\v authorises it to be exercised.
If- the 'action of the offic

## Text

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INCOME-TAX OFFICER, SPECIAL INVESTIGATION
cmCLE:B, MEERUT
v.
MIS. SETH BROTHERS AND ORS.
July 15, 1969
[J. C. SHAH AND G. K. MITTER, JJ.]
Indian Income Tax Act (43 of 1961), s. 132-Search and seizureScope of power-Seizure of a (arge number of documents, some of which
not relevant to pending proceeding under Act-If mala fide.
C
Under s. 132 of tbe Income-tax Act, 1961,
the Commissioner of
Income-tax or the Director of Inspection may, after recording 'reasons,
order the search of premises if he .has reason to believe that one or more
of the conditions in s. 132(1) exist.
The officer authori~ed may enter
any place and make a search \Vhere he has reason to believe that books or
documents relevant to a!ly proceeding under the Act may be found.
He
may seize any books ~r documents and place marks of identification on
them, and may remov~ them to the income-tax office.
By the express
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terms of the Act. and ilie Income-tax Rules, the officer designated to make
the search may obtain ;the assistance of the police.
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The Income-tax Officer issued notice to the respondent-firm that its
income chargeable to ta~ had escaped assessment and that it was proposed
to reassess the income.: He also gave information to the Commissioner
of Income-tax that the re·spondent was maintaining duplicate records fdr
evading assessment of l]le true income and requested the Commissioner
fdr authorisation under tS. 132 to enter and search the premises where the
respondent was
carryin~ on business.
The Commissioner recorded his
reasons ,And issued an order in the prescribed form authorising two Incometax Officers to enter th~.· pfemises, to search for and seize such books and
documents as may be considered relevant or useful for the purpose of
reassessment, and to place identification marks thereon and to convey
them to the income-taxi' office.
The premises were accordingly searched
and the account books and certain documents found therein were seized
and carried to the income-tax office.
Petitions were filed in the
High
Court for writs of certihrari for quashing the, proceedings of the Incometax authorities, and consequential reliefs.
The High Court granted the
writs on the grounds : ,(1) that the order of search was made by the
Commissioner at the direction of the Directorate of Inspection and without satisfying himself about the existence of circumstances justifying seafch;
(2) that besides the documents belonging to the respondent the Incometax Officers seized 'docutnents relating to the transactions of their allied
concern which documents were irrelevant to the process of reassessment
of the respondent; (3) that marks of identification were not placed on
certain documents at the! time they were seized;
( 4) that the documents
seized were detained by the Income-tax Officer for more than two months;
and (5) that the police force employed during the raid was excessive.
i
In appeal to this Court,
HELD : ( J) The O:)nunissioner stated in his counter affidavit that
before issuing the authorisation he was satisfied that, it was necer-sary to
take action under s. 132 and that the authorisation Was not issued at the
602
SUPREME COURT REPORTS
[1970) l S.C.R.
direction of" the Directorate of InsPection.
The Deputy Director of Ins-
'pection also stated in his affidavit
that
he never
gave any
direction
to the Commissioner to issue authorisation for seafch 'and seizure. Therefore, in reaching the cohclusion that the Commissioner acted at the behest
of the Director of lnspection, the High Court was in error, because, having
held that the correctness o'f the opinion formed. by tho income-tax authorities was not open to scrutiny in a writ petition the High Court acted on
mere affidavits and accepted the assertions of the respondents which )Vere
specifically denied. by the Revenue authorities. [6}2 B-C; 613 D; 614 A-Bl
(2) Since the power conferred: though not arbitrary, is a sefious invasicn upon the' fights and privacy of thlf tax-paye'r, the power
must be
stuctly exercised in accordance with law and only for the purposes for
\vh1ch the la\v authorises it to be exercised.
If- the 'action of the officer
issuing the authorisation or of 'the officer designated to make the search
is challenged, they must satisfy the court about the regularity of the action
taken.
If the action is maliciously taken or. for a collateral purpose it is
JiabJe to be struCk down.
But where the power is exercised bona fide Bnd
in furtheranCe of the statutory duties of the Revenue Officers any error
ot judgment on the part of the officers will not; vitiate the exercise of the
pc\ver.
The Act and the Rules do not requite that the
authorization
shcult.I specify the particulars of •documents and books of account; a general t1uthoriSation to search.-"'for and to seize ,documents and books of
acccunt relevant to or useful for the proceeding under 'the Act complies
with the requi'rements 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
dccun1enls or books of account.
An error committed by the officer in
seizing documents \vhich may ultimately be found not to be useful for or
relcV:.lnt to the proceeding will not by itself vitiaJe the search. nor will it
entitle the aggrieved person to an omnibus order releasing all documents
seized. [608 G-H; 609 A-Fl
Jn the present ca'se, therefore, merely 'becattse a Jarge number of
Uocurnl·nts. some of which related to the concerns allied to the respon-
<lcnt-fhn1, \Vere seized, it could not lead to the inference that the search
and seizure
\Vere for a collateral purpose: On the· contrary, the books
c.f :J:ccount and the doi::uments in r.espect of other busi!1esses carried on
by the partners of the respondent-firm through the a11ied firms would be
relevant, because, they would show inter-relation
bet\veen the
dealings
and supply materials having a bearing on tQe case of evasion of incomet:J:x hy the respondents.
Therefore, the
s~arch and seizure were not
i!legol or ma/a fide. [609 G; 612 F-]H
111cv111!!-tax Officer, A-ward, Agra v. Firm Madan Mohan, 10 I.T.R.
293. approved.
(3) Assuming that marks of identification were not placed on some
dcc11m.::nts. it \\'3£ a mere irregularity and, unless the documents were
s.ho\vn to be tampered \Vith. would not m8ke the
search
and
seizure
ma/a fide, [612 H]
(-1-) A delay of hvo months in issuing a notice calling for explanation
is :1lso no't a ground for holding that the action wa:s taken for a collamol purpose. [613 A-Bl
( 5) Keeping police . officers present at the -time of sea'rch in the
hcusc of influential businessmen to ensure the p,rotection of the officers
and the record, would not be a case of excessive itse of force. [613 B-C]
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J.T.O. V. SETH BROS. (Shah, J.)
60 3
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 700 to
703 of 1965.
Appeals by special leave from the judgment and order dated
March 2 7, 1964 of the Allahabad High Court in Civil Misc.
Writs Nos. 3302, 3381, and 3382 of 1963.
Sukumar Mitra, S. K. Aiyar, R.H. Dhebar and B. D. Sharma,
for the appellant (in all the appeals).
M. C. Chagla, S. C. Manchanda, P. N. Pachauri, P: N. Duda
and D. N. Mukherjee, for respondent No. 1 (in C.A. No. 700 of
1965).
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S. C. Manchanda, P. N. Pachauri, P. N. Duda and D. N.
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Mukherjee, for respondent No. 1 (in C.A. No. 701 of 1965).
S. C. Manchanda, P. N. Pachauri, S. M. Jain and B. P. Maheshwari, for respondent No. 1 (in C.As. Nos. 702 and 703 of 196,5).
The Judgment of the Court was delivered by
Shah, J. Mis. Seth Brothers run a flour mill in the name and
style of "Imperial Flour Mills".
From April 1, 1953 to March
1956 the business was carried on by Mis. Seth Brothers, of which
the partners were Baikunth Nath and Vishwa Nath.
Between
March 1956 and March 31, 1957, the business was carried on
by Baikunth Nath, Vishwa Nath, Dr. Manmohan Nath, Mrs.
Rama Rabi and Mrs. Sushila Devi. On April 7, 1957 Mrs. Prem
Lata was admitted as a partner. The partners were engaged, in
carrying on other businesses in the names of Seth Brothers (Private) Ltd., Nath Brothers (Private) Ltd., and Meerut Cold Storage and General Mills. '
·
The' owners of the business were, year after year, assessed
to income-tax in respect of the income arising in the course of
the business. On March 14, 1963 the Income-tax Otllcer, Meerut
issued a notice under s. 148 of the Income-tax Act, 1961, intimating Mis. Seth Brothers that there was reason to believe that
their income chargeable to tax had escaped assessment and it was
proposed to reassess this income for the assessment year 195455. Jn response to the notice Baikunth Nath and Vishwa Nath
filed a return under protest.
In the meantime information was
received by the Income-tax Commissioner, U.P., that Mis. Seth
Brothers were maintaining "duplicate records" and were evading
assessment of their true income and that it was necessary to seize
the records which may be found at "Shanti Niketan," Meerut in
which M/s. Seth Brothers carried on the business of Imperial
Flour Mills and other business.
The Commissioner of Incomctax, U.P., on May 29; 1963 drew up a memorandum that on a
report of the Income-tax Officer, D-Ward, Meerut requesting for
604
SUPREME COURT REPORTS
[1970] l S.CR
authorisation under s. 132 of the Income-tax Act, 1961, to enter
and search the premises of Mis. Seth Brothers, he was satisfied
about the need for the issue of the authorisation. The Commissioner also issued an order in Form 45 prescribed under Rule 112
of the Income-tax Rule~. 1962, authorising two Income-tax Offi·
cers--R. R. Agarwal and R. K~poor-to enter the premises known
as "Shanti Niketan", at Mecrut and to search for and seize such
books and documents as mav be considered relevant or useful
for the purpose of the proceeding of reassessment, and to place
identification marks thereon and to convey them to the Incometax Office.
On the 7 and 8 of June, 1963 the premises described in
the order were searched and account books and certain documents
found therein were seized and were carried to the Income-tax
Office.
M/s. Seth Brothers then moved a petition in the High
Court of Allahabad, for an order quashing the proceedings of
the Income.tax authorities. Petitions were also filed by Nath Brothers (Private) Ltd., Seth Brothers (Pri·•are) Ltd. and Seth Brothers, Meerut for the same relief. By these petitions they claimed
writs of certiorari quashing the letters
authorising search of
the premises at Shanti Niketan, and writs of mandamus directing
the Income-tax Officer to return all the books, papers and articles seized during the search and for writs oi prohibition restrain·
ing the Income-tax Department from using any information gathered as a result of the search.
It wa' submitted by the petitioners that K. L. Ananda, Income-tax Officer and Satya Prakash
an "ex-employee" of Mis. Seth Brothers h::c'. ;iiven false infonnation to th~ Deputy Director of Inspection with a view to blackmail
the partners of Mis. Seth Brothers, and that the order of search
was made by the Commissioner of Income-tax at the direction
of the Deputy Director of Inspection, that the action of the
Income-tax Officer in searching the premises and in seizing the
book~ of account was malicious and that in any event s. 132 of
the Income-tax Act, 1961, and the rules framed thereunder, were
violative of the fundamental freedoms guarainleed by Arts. 14,
19(1)(f) & (g) and 31 of the Constitution.
Affidavits were filed on behalf of Ylls. Seth Brothers. It was
affirmed that "the. so-called duplicate records" seized by the Income-tax Officer were copies of the books of account and that
action had been taken by the Commissioner of Income-tax, not
on his own initiative but at the behest oi the Directorate of InSpcction. In reply to the contentions raised by the assessees several affidavits sworn by Officers of the Income-tax Department
were filed.
The Commissioner of Income-tax stated in his affidavit that before issuing letters of authorisation and the warrant
of search he was satisfied that it was necessary to take action
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J.T.O. V. SETH BROS. (Shah, J,)
605
under s. 132 of the Indian Income-tax Act, 1961, and that the
letters of authorisation , were not issued at the direction of the
Directorate of Inspection. The Income-tax Officers stated that in
consequence of the search a large number of "duplicate account
books and records" maintained by M/ s. Seth Brothers were recovered, that the search was carried out according to law and
in the presence of two of the partners of the firm and their advocates, that all the documents seized were relevant for the purpose
of reassessment, that there was close connection between the
different business activities of the partners of Mis. Seth Brothers
and that all the documerts which were seized were in relation
to those activities. The Deputy Director of Inspection in his affidavit stated that he did not give any direction to the Commissioner
to issue authorization for search and seizure.
The High Court of Allahabad held on a consideration of the
averments made in the affidavits filed on behalf of M/ s Seth
Brothers and the revenue that "there was reason to believe" that
instructions were issued 'by the Directorate of Inspection for a
general raid and seizure of all account books and papers which
may be found at the premises of the firm; that some out of the
documents seized by the Income-tax Officers were irrelevant for
the purpose of any proceeding under the Act: that besides the documents belonging to M/ s Seth Brothers the Income-tax Officers
seized documents relating! to the transactions of the ailied concerns;
that marks of identificati?n were not placed on certain documents
at the time they were seized; that the documents seized we;e detained by the Income-tax Officer for more than two months; and
that the police force employed during the raid was excessive.
The High Court concluded:-
"It is true that there was no ill-will between the
...... (partners of Seth Brothers) on one side and
respondent Nos. 1, 3 and 4 (Commissioners of Incometax, U.P. & Punjab and Income-tax Officer,
Special
Investigation Circle f.-, Meerut) on the other side. But
tho extent of the seizure was far beyond the limits of
s. 132 of the Act. '.l]he action was ma/a fide in the sense
that, there was abuse of power conferred on Income-tax
Officers .by s. 132 of1 the Act. The act being mala fide,
!he .proceedings should be quashed by this Court by
lSSUJng a Writ of mal)damus."
The Income-tax Officer, ~.I. Circle has appealed to this Court
with special leave.
Section 132 as originally enacted by Act 43 of 1961 was
substituted by a modified, provision by the Finance Act of 1964
which in its tum was replaced by s. 1 of the Income-tax (Amendment) Act, 1965.
Bys. 8 of that Act it was provided, inter alia,
606
SUPREME COURT REPORTS
(1970] l S.C.R.
that· any search of a building or place by an. . . . . . Income-tax
A
Officer purported to have been made in pursuance of sub-s. ( 1)
of s. 132 of the principal Act shall be deemed to have been made
in accordance with the provisions of that sub-section as amended
by the Act of 1965 as if those provisions were in force on the day
the search was made ...... The relevant part of s. 132 as substituted by the Income-tax (Amendment) Act, 1965 may, thereB
fore, be set out :
"132. Search and seizure.-(l)Where the Director
of Inspection or the Co=issioner, in consequence of
information in his possession, has reason to believe
that-
( a) any person to whom a summons under subsection (1 ) of section 3 7 of the Indian Income-tax Act,
1922 (XI of 1922), or under sub-section
(1) of
section 131 of this Act, or a notice under sub-section
( 4) of section 22 of the Indian Income-tax Act, 1922,
or under sub-section ( 1) of section 142 of this Act was
issued to produce, or cause to be produced, any books
of account or other documents has omitted or failed to
produce, or cause to be produced, such books of account
or other documents as required by such summons or
notice, or
(b) any person to whom a SJI=ons or notice as
aforesaid has been or might be issued will not, or would
not, produce or cause to be produced, any books of
account or other documents which will be useful for, or
relevant to, any proceeding under the Indian Income-tax
Act, 1922 (XI of 1922), or under this Act, or
( c) 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 has not been disclosed for the purposes
of the Indian Income-tax Act, 1922 (XI of 1922), or
this Act (hereinafter in this section referred to as the
undisclosed income or property),
he may authorise any Deputy Director of Inspection,
Inspecting Assistant Commissioner, Assistant Director
of Inspection or Income-tax Officer (hereinafter referred
to as the authorised officer) to--
(i) enter and search any building or place where
, he has reason to suspect that such books of
account, other · documents,
money,
bullion,
jewellery or other valuable article or thing are
kept;
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l.T.O. V. SETH BROS. (Shah, J.)
(ii) break open the Jock of any door, box, locker,
safe, :!Imirah or other receptacle for exercising
the powers conferred by clause ( i) where the
keys thereof are not available;
(iii) seize any such 'books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such
search;
(iv) place marks of identification on any books of
account or other documents or make or cause to
be made extracts or copies therefrom;
(v) make a note or an inventory of any such money,
bullion. jewellery or other valuable article or
thing.
(2) The authorised officer may requisition the services of any police officer or of any officer of the Central
Government or of both, to assist him for all or any of
n
the purposes specified in sub-section ( 1) and it shall be
the duty of every such officer to
comply with such
requisition.
( 3) The authorised officer may, where it
is
not
practicable to seize any such books of account,
other
document, money, bullion. jewellery or other valuable
607
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article or thing, serve an order on the owner or the
person who is in immediate possession or control thereof that he shall pot remove, part with or otherwise deal ·
with it except with the previous permission
of such
officer and such officer may take such steps as may be
necessary for ensuring compliance with this sub-secti011.
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( 8) The bopks of account
or other documents
seized under sub-section ( l) 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 recorded by
him in writing and the approval of the Commissioner
for such retention is obtained :
Provided
H
( 13) The provisions of the Code of Criminal Procedure, J 898 (V of 1898), relating to searches and
seizures shall apply, so far as may be. to searches and
seizure under sub-section ( 1 )."
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SUPR foME COURT REPORTS
[1970] I S.C.R
The Central Board of Direct Taxes has, in exercise of the power
conferred by s. 295 (I) of the Act, framed r. 112 prescribing the
procedure to be followed uy the Commissioner and the authorised
officers.
The Commissioner or the Director· of Inspection may
after
recording reasons order a search of premises, if he has reason to
believe that one or more of the conditions ins. 132( 1) exist. The
order is in the form of an authorization in favour of a subordinate
departmental officer authorising him to enter and search any
building or place specified in the order, and to exercise the powers
and perform the functions mentioned in s. 132 (I). The Officer
so authorised may enter any building or place and make a search
where he has reason to believe that any books of account or other
documents which in his opinion will be useful for, or relevant to,
any proceeding under the Act, may
be
found.
The
Officer
making a search may seize any books of account or other documents and place marks of identification on any such books of
account or other documents or make or cause t<' be made extracts
or copies therefrom and may make an inventory of any articles
or things found in the course of any search which in his opinion
will he useful for, or relevant to any proceeding under the
Act.
and remove them to the Income-tax Office or prohibit the !JCrson
in possession from removing them.
He may also examine on
oath any person in possession of or control of any books d
account or documents or assets.
The section docs not confer any arbitrary authority upon tne
Revenue Oflicer.
The Commissioner or the Director of Inspection must have. in consequence of information, reason to bei':ve
that the statutory conditions for the exercise of the power to order
search exist.
He must record reasons for the belief and he must
issue an authorization in favour of a designated officer to search
the premises and exercise the powers set out therein.
The condition for entry into and making search of any building or place is
the reason to believe that any books of account or other <.'ocuments which will be useful for, or relevant to,
any proceeding
under the Act mav be found.
If the Officer bas reason to believe
that any books of account or other documents would be useful
for, or relevant to. any proccedin~s under the Act. he is authorised 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 in 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 tax-payer. the power must be
exercised strictly in accordance with the law and only for the purposes for ~hich the law authorizes it to be
exercised. If the
action of the Officer issuing the authorization, or of the designated
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l.T.O. v. SETH BROS, (Shah, J,)
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Officer is challenged the Officer concerned must satisfy the Court
about the regularity of his action. If the action is maliciously
taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the Court. If the conditions for exercise of the power are not satisfied the proceeding is
liable to be quashed.
But where power is exercii.ed bona fide,
and in furtherance of the statutory duties of the tax officers any
error of judgment on the part of the Officers will not vitiate the
exercise of the power.
Where the Commissioner entertains the
requisite belief and, for reasons recorded by him
authorises
~
designated Officer to enter and search premises for books of
account and documents relevant to or useful for any proceeding
under the Act, the Court in a petition by an aggrieved person
cannot be asked to, substitute its own opinion whether an order
authorising search should have been issued.
Again, any irregularity in the course of entry, search and seizure committed by the
Officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the Officer has in executii:ig the authorisatio11 acted bona fide.
The Act and the Rules .do not require that the warrant of
authorisation shou.ld specify the partii;ulars 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 wijh the requirements of the Act' and the Rules.
It is for the Officer tnaking the search to exercise his judgment
and seize or not tor seize any documents or books of account.
An error committed, by the· Officer in seizing documents which
may ult!mately be f6und not to be useful for or relevant to the
proceeding under th~ Act will not by itself vitiate the search, nor
will it entitle the aggrieved person to an omnibus order releasing
all documents seized,
The aggrieved part~· may undoubtedly move
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 relevant to a 1proceeding under the Act. If he is unable
to do so, the Court may order that those· documents be released.
But the circumstance' that a large number of documents have been
seized is not a groul).d for holding that all documents seizea are
irrelevant or the action of the Officer is mala fide.
By the express terms of the A~t and the Rules •::e Income-tax Officer may
obtain the assistance pf a police officer.
By sub-s. (13) of s. 132
the provisions of the ~Code of Criminal Procedure, 1898, relating
to searches apply, so' far as may be, to searches under s.
132.
Thereby it is only iniended that the officer concerned shall issue
the necessary warrant, keep present respectable persons of the
Jccality to witness the search, and generally carry out the search
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SUPREME COURT REPORTS
[1970] l S.C.R.
in the manner provided by the Code of Criminal Procedure. But
sub-s. (2) of s. 132 does not imply that the !imitations prescribed
by s. 165 of the Code of Crimirial Procedure are also incorporated
therein.
In Income-tax Officer, A-Ward, Agra & Others v. Firm Madan
Mohan Demma Mal and Another('), it was observed that the
issue of a search warrant by the Commissioner is not a judicial or
a quasi-judicial act and even if the Commissioner is enjoined to
issue a warrant only when in fact there is information in his possession in consequence of which he may form the necessary belief,
the matter is not thereby subject'to scrutiny by the Court. Section
132 of the Income-tax Act does not require specific mention by
description of each particular document which has to
be
discovered on search : it is for the Officer who is conducting the
search to decide whether a particular document bund on search
is relevant for the purpose or not.
That statement of the law, in
our judgmenj, accurately states the true effect of s.
132.
The
mere fact that it may ultimately be found that som0 document
seized was not directly relevant to any proceeding under the Act
or that another officer with more information at his disposal ma 1
have come to a different conclusion will not be a ground for setting
aside the order and the proceeding for search and seizure.
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Th~ authorisation issued by the Commissioner was, in
the
view ol the High Court, open to challenge on the ground !hat the
Commissioner did not apply his mind to the existence of cirE
cumstances which justified the exercise of the power to
issue
authorisation.
The action of the Income-tax Officers who searched th~ premises was quashed on the ground that they seized some
documents which were irrelevant to the process of reassessment.
In our judgment, in reaching their conclusion that the Commi,ssioner acted at the behest of the Director of Inspection, the High
F
Court ignored important evidence on the record.
It was averred
in the petition of M/ s Seth Brothers that-
"(56) It appears that the Deputy Director of Inspection at the instigation of Shri K. L. Nanda and
Sri Satya Prakash, without making any enquiries
or having any material, ordered a raid for search
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and seizure of all the account books and papers,
which could be found.
(57) That, according to such directions of the Directorate, the Commissioner of Income-tax, U.P.
Lucknow, was made
to
issue
authorisationo
under s. 132 of the Act of 1961 in favour of
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opposite Parties Nos. 3 and 4 to search out the
(l) 70 l.T.R. 293.
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I.T.O. V, SETH BROS. (Shah, J.)
premises of 'Shanti Niketan', Civil Lines, Mecrut,
and to seize the account books, documents and
papers, which could be recovered therefrom.
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The High Court observed that even though a number of ~ffidavits
we1e filed by the Income-tax authorities, no reference to paragraph 56 of .the writ petition was made and the "only affidavit
filed by Shri A. L. Jha, Commissioner of Income-tax was vague in
the extreme".
The allegation in·paragraphs 56 & 57 of the Mil
petition made no definite allegation that the
Commissioner of
Income-tax acted at the behest of the Deputy Director of Inspection and not on his own satisfaction reached in consequence of ·
infc1mation in his possession.
In the verification clause Baikunth
Nath stated that the contents of paragraph 57 were true on informalicn received from Deputy Director of Inspection (lnvestigation), Income-tax, Central Revenue Buildings, New Delhi. but
said nothing about the contents of paragraph 56. The affidavits
filed on behalf of the Income-tax Department specifically denied
the allegations made in paragraphs 56 & 57.
R. R. Aganval
(one of the Income-tax Officers authorised to conduct the search)
in his affidavit affinned. that the letter of authorisation was issued
to him by the Commissioner of Income-tax, U.P., Lucknow, after
the Commissioner had been satisfied on the report submitted by
the deponent.
The Commissioner q.f Income-tax, Mr. A. L. Jha, by his affidavit denied that letters of authorisation were issued under
the directions of the Deputy' Director of Inspection or anybody
connected with Directorate.
He also stated that in respect of the
case of M/s. Seth Brothers some information was brought to
him by the Directorate and that infonnation corroborated the
report made to him by Mr. R. R. Agarwal and that after taking
into consideration all those materials he was satisfied that
a
search of the premises of M/s. Seth Brothers "was called for"
and that he issued the impugned letters o;f authorisation.
Mr. R. V. Ramaswamy, Deputy Director of Inspection (Investigation) in paragraph p of his affidavit denied that the raid or
seμrch of the premises of M/ s. Seth Brothers was ordered by _
him.
The affidavit of R. Kapur, Income-tax Officer, Special Investigation Circle, who was authorised by
the
Commissioner of
lncomc-tax to make the search is also
relevant.
Mr.
Kapur
averred that some inform~tion was received by Mr. R. R. Agarwal
from which it appeared that the firm of M/s. Seth Brothers and
its partners were "evading tax by maintaining duplicate sets of
accounts" and by suppressing relevant documents and
papers
612
SUPREME COURT REPORTS
[1970] l S.C.R.
from the Department; chat Mr. R. R. Agarwal made a written
request 10 the Commissioner of Income-tax for letters of' authorisation in order lo carry out the search of the asscssee"s premises
and in pursuance thereof on May 29, 1963 the Commissioner of
Income-tax issued lhree authorisalion letlcrs lwo in favour of
Mr. R. R. Agarwal and one in favour of 1hc depanent au1horising them to carry out the search in accordance with the terms
of the authorisation letters.
ln this state of th" record we arc unable to agree with the
H;gh Court that the letters of authorisation were issued by the
Commissioner of Income-tax at the direction of the Direcior of
Inspection (Investigation).
The attention of the Court was presumably not invited to the relevant paragraphs of the affidavits
of !he Officers concerned.
It is true that a large number of documents were seized from
the premises of M/s. Seth Brothers but that has by i1self no direct
bearing on the question whether the Income-tax Officer
acted
ma/a fide.
If the Income-tax Officer in making a search had
reason to believe that any books of account or other documents
useful for, or relevant to, any proceeding under the Act may be
found, he may make a search for and seize those
books
of
account and other documents.
Some books, maps of !he cold
storage, assessment returns, and doctor"s prcscripiions were seized
by the Ir.come-tax Officer. It appears, however, from the inventory that a la<ge number of documents which related to the business of the asscssces and their allied concerns were also seii:cd.
It would be impossible merely from the circumsiance that some
of 1hc documents may be shown to have no clear or direct relevance to any proceeding under the Act tha1 the entire search and
seizure was made not in bona fide discharge of offtr.ial duty but for
a collateral purpose. The suggestion that the books of account and
other documents which could be taken possession oi should only be
those which directly related to the business carried on in the name
of M/s. Seth Brothers has, in our judgment. no substance. The
books of account and other documents in respect of other businesses carried on by the partners of the firm of ~he asscssees would
certainly be relevant because they would tend to
show
i~ler
relation between the dealings and supply materials having a bearing on the case of evasion of income-tax by the firm.
We are
unable to hold that because the In.come-tax Officers made a search
for and seized the books of account and documents in relation to
business carried on in the names of other firms and companies,
the search and seizure were iilegal.
It is also said that marks ol identification were not placed on
several documents.
Assuming that this allegation is true, in the
absence of anything to show that the documents were either re·
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J.T.O. V. SETH BROS. (Shah, J.) 1
613
placed or tampered with, that irregularity will not by itself supply
a ground for holding that the search was ma/a fide.
A delay of
two months in issuing a notice calling for explanation is also not
a ground for holding that the action was taken for a collateral
purpose.
It is not disputed that assistance of the police may be obtained in the course of a search.
The High Court has, however,
found that the police force employed was excessive. But we are
unable to hold that on the evidence, in keeping police officers
present at the time of the search in the house of influential businessmen to ensure the protection of the officers and the record,
"excessive force was used."
We accordingly see no good grounds to accept the finding
recorded by the High Court that the manner in which the search
and seizure were conducted "left no room for doubt that the
Income-tax Officer did not apply his mind and formed no opinion
regarding the relevancy or usefulness of the account books and
documents for any proceedings under the Income-tax Act." The
High Court accepted that the correctness of the opinion actually
formed by the Income-tax Officer was not open to scrutiny, in
a writ petition, but in their view no opinion was in fact formed
by the Officer and the search and seizure of documents and books
of account must on that account be held as made in excess of the
powers conferred upon the Income-tax Officer and
mala fide.
For these observations
we find no warrant.
The Income-tax
Officers concerned have sworn by their affidavits that they did in
fact form the requisite opinion under s. 132 of the Act and the
other evidence and the circumstances do not justify us in discarding that assertion.
These proceedings were brought before the High Court by
way of a writ petition under Art. 226 of the Constitution before
any investigation was made by the Income-tax Officers pursuant
to the action taken by them. In appropriate cases a writ petition
may lie challenging the validity of the action on the ground of
absence of power or on a plea that proceedings were taken maliciously or for a collateral purpose.
But normally the High Court
in such a case does not proceed to determine merely on affidavits
important issues of fact especially where serious allegations of
improper conduct are made against public servants.
The
Income-tax Officers who conducted the search asserted that they
acted in good faith in discharge of official duties and not for any
collateral purpose. The Commissioner of Income-tax also denied
that he acted at the direction of the Deputy Director of Inspection
and that case was supported by the Deputy Director of Inspection. If the learned Judges of the High Court were of the view
that the question was one in respect of which an investigation
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SUPRBIE COt:RT REPORTS
[l 970] l S.C.R.
should be made in a petition for the issue of a \Hit, they should
have directed evidenct to be taken l'im voce.
The High Court
could not, on the assertions by the partners of the firm v.hich were
denied bv the Income-tax Officer, infer that the premises oi M;s.
Seth Brother; were searched and documents were seized for a
collateral purpose, merely from the fact that many documents
were seized or that on some of the documents seized marks of
identification were not p·ut or that the documents belonging to
the "sister concerns" of the "Imperial Flour Mills" were seized.
In our view the decision of the High Court that the action
of the Commissioner of Income-tax, U.P., and the Income-tax
Officers who purported to act in pursuance of the letters cl authorisaticn was ma/a fide, cannot be accepted as correct.
Counsel for M/s. Seth Brothers contended that opportunity
may be given to the assessees to lead evidence viva 1•oce to prove
that the r~\enuc officers acted
for a collateral
purpose.
We
do not entertain this request since we propose to remand the case
to the High Court to decide questions which have not been decided.
The applicants, if so advised. may move the High Court for
leave to lead evidence.
It is for the Hieh Court to decide whether
at this stage after nearly six years leave to examine witnesses
should be granted.
The order passed by the High Court is set aside and the proceeding is remanded to the High Court.
The High Court will
deal with a,.'1d dispose of the proceeding according to law.
We
may cbserve that co'unsel for the Income-tax Officer did nn1 'i:ivite
us to decide the question of the vires of s. 132 cl the Income-tax
Act en which the High Court has expressed no opinion.
M/s.
Seth Brothers and the other petitioners in the High Court will
pay the costs of these appeals in this Court.
There will be one
hearing fee.
Costs in the High Court will be costs in the petition.
V.P.S.
Appeals allowed and case remanded.
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