1997 P T D 1951

[224 I T R 614]

[Supreme Court of India]

Present: S. C. Agrawal and G. B. Pattanaik, JJ

COMMISSIONER OF INCOME-TAX

Versus

VINDHYA METAL CORPORATION and others

Civil Appeal No.5526 of 1983, decided 5th March, 1997.

(Appeal from the judgment and order, dated May 4, 1983, of the Allahabad High Court in Civil Miscellaneous Writ Petition No.99 of 1982.).

Income-tax---

----Search and seizure---Commissioner---Power to issue warrant of authorisation---Person found in possession of big sum of money with no proof of ownership---Person in possession not an assessee on files of I.T.O.---Material not sufficient for reasonable belief that sum represented income that would not be disclosed---Issue of warrant of authorisation not valid---Indian Income Tax Act, 1961, Ss. 132 & 132-A.

One V, a resident of Mirzapur, was detained while travelling to Calcutta by train and cash of Rs.4,63,000 was seized from him on the suspicion that the money was stolen property or had been obtained through some other offence lie was charged under section 411 of the Indian Penal Code. Intimation of the seizure of the money was sent to the Commissioner of Income-tax by the Inspecting Assistant Commissioner alongwith the information that V had no papers regarding ownership or possession of the money, and that V was not an assessee on the files of the Income-tax Office at Mirzapur. The Commissioner issued a warrant o: authorisation under section 132-A(1) of the Income Tax Act, 1961, for the Income-tax Officer concerned to receive the money from the railway police. A search was conducted under section 132 of the Act on the premises of the respondent firm, during which the books of the firm were found to contain an entry that the sum of Rs.4,63,000 had been handed over to V, who was serving as munim of the firm, for being carried to Calcutta in connection with the business of the firm,. A sum of Rs.17,353 being the cash balance, and the books of account were seized from the respondent-firm. The railway police reported that the money found in the possession of V did not represent stolen property or property acquired from any offence, and that the sum belonged to the respondent firm. The respondent firm filed an application for return of the money carried by V. The magistrate ordered return, but on a revision petition by the Income-tax Department, the High Court permitted the Income-tax Department to take possession of it. The respondent firm filed a writ petition questioning the validity of the warrant of authorisation issued by the Commissioner under section 132-A(1) of the Act. The High Court held that on the information in the possession of the Commissioner, no reasonable person could have entertained a belief that the amount in the possession of V represented income, which would not have been disclosed by him for purposes of the Acts, and allowed the writ petition. The Commissioner appealed to the Supreme Court:

The Supreme Court, on a consideration of the facts, affirmed the decision of the High Court and dismissed the appeal.

Vindhya Metal Corporation v. CIT (1985) 156 ITR 233 affirmed.

P. A. Choudhary, Senior Advocate (Ms.- Lakshmi Iyengar, B. Krishna Prasad and C. Radha Krishna, Advocates with him) for Appellants.

Manoj Goel and P. K. Jain, Advocates for Respondents.

JUDGMENT

This appeal is directed against the judgment of the Allahabad High Court (see (1985) 156 ITR 233), dated May 4, 1983, whereby Civil Miscellaneous Writ Petition No.99 of 1982, filed by the respondents was allowed and the authorisation made by the Commissioner of Income-tax under section 132-A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and the proceedings in. consequence therefore were quashed. It was also directed that the action of the appellants in seizing the books and documents as well as the sum of Rs.17,353 on December 30, 1981, was contrary to law and the same be returned to the respondents.

On December 25, 1981, one Vinod Kumar Jaiswal, while he was travelling from Mirzapur to Calcutta by the Kalka Mail, was detained at Moghal Sarai Railway Station by the Government Railway Police and an attache case containing a sum of Rs.4,63,000 was seized froth him on the suspicion that the money was stolen property or had been obtained through some other offence. A case under section 411 of the Indian Penal Code, read with sections 41 and 102 of the Criminal Procedure Code, was registered against him. An intimation about the seizure of money was sent to the Income-tax authorities at Varanasi on December 26, 1981. On December 29, 1981, the Inspecting Assistant Commissioner, Varanasi, sent an intimation about it to the Commissioner about the fact of possession of the aforesaid amount by Vinod Kumar Jaiswal and also that he did not have any papers and documents regarding the ownership or possession of the amount and that no person in the name of Vinod Kumar Jaiswal was borne on the General Index Register of the Income-tax Officer at Mirzapur. The Commissioner issued a warrant of authorisation under section 132-A(1) of the Act on the basis of which the Income-tax Officer sent a letter of requisition to the Station Officer Incharge, Government Railway' Police, Moghal Sarai, requiring the Station Officer to hand over the seized sum of money to him (the Income-tax Officer) who had been authorised by a warrant of authorisation to receive it. The Inspecting Assistant Commissioner, Varabasi, in exercise of his power under section 132 of the Act, authorised search of the residential premises of Rajendra Kumar Pandey, respondent No.2, a partner of Vindhya Metal Corporation, Imamganj, Mirzapur, and respondent No. 1. The Income-tax Inspector visited the premises of respondent No. 1 on December 29, 1981, and found entered in the books of account that the aforesaid amount of Rs. 4,63,000 had been handed over to Vinod Kumar Jaiswal, who was the nephew of Samosh Kumar Gupta (Jaiswal), respondent No.3, for being carried to Calcutta in connection with the business of the said firm. On December 30, 1981, the party which searched the premises of respondent No.l carried away the sum of Rs.17,353 found as total balance and the books of account. After completing the investigation, the railway police submitted the final report on January 21, 1982, wherein it was stated that the money found in the possession of Vinod Kumar Jaiswal did not represent stolen property or property acquired from any offence and the said sum belonged to respondent No. 1. Prior to that, on January 1, 1982, Rajendra Kumar Pandey had filed an application before the Judicial Magistrate (Railway), Varanasi, praying that the amount which belonged to the respondents and was being carried by Vinod Kumar, who was serving as a Munim with respondent No. 1, be released to the applicant or in favour of Vinod Kumar. On January 4, 1982, the Income-tax Officer requisitioned the said amount and on January 13, 1982, he filed an objection to the application submitted by Kumar Pandey. The Judicial Magistrate, by his order dated February 3, 1982, rejected the said objection of the Income-tax Department and directed the return of money to Rajendra Kumar Pandey. The said order of the Magistrate was assailed by the Income-tax Department by filing a revision before the Allahabad High Court which was allowed by the High Court by order, dated April 19, 1982, and the Income-tax Department was permitted to take possession of the sum of Rs.4,63,000.

In these circumstances, the writ petition, which has given rise to this appeal, was filed by the respondents before the Allahabad High Court wherein they assailed the validity of the warrant of authorisation issued by the Commissioner under section 132-A(1) o1 the Act on the ground that condition precedent for the exercise of the powers under the said provision was not satisfied. Before the High Court an affidavit was field by Shri Hira Singh, Commissioner of Income-tax who had issued the warrant of authorisation. After examining the file containing the order passed by the Commissioner, the High Court has observed that the information on the basis of which the Commissioner had issued the warrant of authorisation was as follows (at page 241):

"(a) a sum of Rs.4,63,000 had been seized by the Government Railway Police from the possession of one Vinod Kumar Jaiswal resident of Imamganj, Durga Devi, Mirzapur;

(b) at the time of the seizure by the Railway Police, no papers or documents in regard to the ownership or possession of the amount were in possession of Vinod Kumar Jaiswal and

(c) no person by the name of Vinod Kumar Jaiswal was borne on the General Index Register of Income-tax assessees of the Income-tax Offices at Mirzapur. "

The High Court, after considering the material on which reliance was placed by the Commissioner, has held that on the information in the possession of the Commissioner no reasonable person could have entertained a belief that the amount in the possession of Vinod Kumar Jaiswal represented income which would not have been disclosed by him for purposes of the Act. The High Court has observed (at page 241):

Vinod Kumar Jaiswal according to the information in the possession of the Commissioner was not borne on the General Index Register of income-tax assessees of the Income-tax Officer at Mirzapur to which place he belonged. Obviously, therefore, there was no occasion for him to have disclosed the amount as his income in any assessment proceedings under the Act. Without anything more than what was actually there before the Commissioner, how could it have been assumed that he would not have disclosed it for purposes of any proceedings under the Act. There was nothing before the Commissioner to suggest that it was in fact wholly or in part, income of any person connected with Vinod Kumar Jaiswal so as to induce a belief that; if called upon, Vinod Kumar Jaiswal would not have disclosed it for the purpose of the Act. The mere fact that Vinod Kumar Jaiswal was in possession of this amount and did not have any documents with him regarding its ownership or possession could not be treated as appears to have been done by the Commissioner as information relatable to a conclusion that it represented income which would not have been disclosed by Vinod Kumar Jaiswal for purposes of the Act. Mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the Acts.

We have heard learned counsel for the appellant in support of the appeal and we have perused the impugned judgment of the High Court. Having considered the facts and circumstances of the case, we do not find any ground to interfere with the impugned judgment of the High Court. The appeal is, therefore, dismissed. No order as to costs.

M.B.A./1369/FCAppeal dismissed.