1999 P T D 1580

[226 I T R 498]

[Rajasthan High Court (India)]

Before V.K. Singhal, J

BANKE BIHARI LAL AGARWAL

Versus

Order accordingly.

UNION OF INDIA and others

S.B. Civil Writ Petition No.5896 of 1991, decided omSth~May,-1995

Income-tax---

--Search and seizure---Authorised officers---Protection froth prosecution-- Proper care to be taken by ;authorised officer to justify act of seizure-- Authorised Officer responsible for safe custody of seized records---Protection 'under S.293 not available to officer who has lost books seized---Government Officer has ,personal responsibility to see that State revenue is not lost through any act of his ---Assessee can claim damages from officers for loss of books seized---Loss cannot be determined in proceedings under Art.226 of Constitution---Remedy of assessee is by way of filing suit---Indian Income Tax Act, 1961, Ss.132 & 293---Indian Income-tax Rules, 1962, 8.112-- Constitution of India, Art,226.

The act of search and seizure is an invasion on the rights of the subjects and cannot be indiscriminately used. Proper care has to be taken at all stages so as to justify even the act of seizure.

Whenever a search is made and books of account are seized by the authorised officer, he is responsible for the safe custody of those seized records. If the said record has been handed over to some other officer/custodian, then the other officer or custodian is responsible for it. The protection under section 293 of the Income Tax Act, 1961, is not available to an officer who has lost the books of account so seized, because such an action cannot be said to be done in good faith. The books of account could be removed after the seizure in the following circumstances: (i) The person from whose possession, the books of account have been seized may be interested in removing the same so as to . escape his liability to tax/prosecution. This could be in connivance with the staff of the officer in whose possession the books of account are (ii) The officer in order to harm the assessee may remove books of account, so that he may not be in a position to explain the disputed entries. (iii) The officer or his staff in connivance with the assessee may remove the books of account. (iv) There may be gross negligence on the part of the officer seizing the' books of account in not taking it with him.

A Government Officer, who has a duty to perform a particular act, has a personal responsibility to see that the State revenue is not lost for any act of his. If the loss of revenue is caused by inaction, he can be made personally responsible. The officers responsible could be taken to task by the Department by taking disciplinary action against, them and making them personally responsible for the loss of revenue. They cannot be absolved of personal responsibility on the ground that the act performed was during the course of official duty. If the Department finds that the assessee was responsible for removal of the books, they can file prosecution/criminal complaint against the assessee.

An assessee who has lost his books. of account can also claim damages for the loss of the books of account from the officer who has seized the said books of account. The loss or compensation to the assessee cannot be determined in proceedings under Article 226 of the Constitution. The proper remedy for the assessee is to file a suit in respect thereof.

R.P. Agarwal for Petitioner.

K.S. Gupta for Respondents.

JUDGMENT

V. K. SINGRAL, J.---The only dispute in the present writ petition is with regard to the seizure of 23 books of account by the authorised officer of the Income-tax Department on September 20, 1989. A panchnama (Annexure "A-1 ") was prepared and signed by the authorised officer, the witnesses and the petitioner.

According to the list of inventory of account books attached with the panchnama against the description of the account books seized, the period to which they pertain has been written in most of the cases and in few cases it is not mentioned as to which period they pertain to. The period mentioned started from April 1, 1981, and the said books are up to December 31, 1986. The books are as bulky as containing 193 pages (nakkalbai) and as thin as containing 9 pages of (hathbali).

The facts of the case are that the residental premises of the petitioner were searched on September 14, 1989, and the list of books was prepared. The said books were left in the premises searched and it was sealed. The search was resurized on September 20, 1989, and the panchanama was prepared, which was signed by the authorised officers as well as the witnesses, Shri Surendra Kumar and Arjun Singh. The respondents have stated in the reply that the panchanama of September 14, 1989, was prepared by the authorised officers and the signatures of Surendra Kumar Sharma and Ramesh Chand Sharma as witnesses were obtained.

The claim of the petitioner is that the books of account which were seized on September 20, 1989, for which panchanama was prepared on September 20, 1989, and a copy of which was delivered to the petitioner, the said books of account have not been made available for inspection, so that the petitioner could have explained in respect of the various entries for which notices have been issued and for which the direction of inspection were given by this Court. The file of the Income-tax Department was called for in which there is a panchnama of September 14, 1989, with the list of inventory of account books seized numbering 11 (eleven) for the period from November 18, 1982, to November 12, 1985. The panchnama of these 23 books of account, dated September 14, 1989, was not available on file though the list of inventory of account books found/seized is, dated September 14, 1989, and the panchnama was prepared on September 20, 1989. In the reply it has been stated by the respondent, it appears that Annexure "A-1 " showing seizure of books of account, inventory and panchnama of which were prepared on September 14, 1989, and books were left with the petitioner were utilised for preparing seizure memo. on September 20, 1989, without physically verifying the books of account which were taken away/removed by the petitioner, may be in collusion with any member of the raiding party, whereas the other panchnamas and seizure memos were prepared on September 20, 1989, itself. Thus, it appears that the books of account mentioned in Annexure "A-1 " were missing right from that time and that was the reason that the Assessing Officer at Alwar reported to the Deputy Commissioner of Income-tax. Alwar, on December 19, 1989, that the seized material mentioned in Annexure "A-1" was not handed over to him by the Additional Director of Income-tax, staff concerned though the then Additional Director of Income-tax (Investigation)-II, who was in charge of the search operation, who prepared the appraisal report and handed over the same alongwith the other seized material to the Assessing Officer at Alwar, on December 8, 1989. The Deputy Commissioner of Income-tax Alwar Range, Alwar, in turn reported the matter to the Commissioner of Income-tax as well as the Deputy Director of Income-tax. The late. Shri A.K. Fotedar was then acting as the Deputy Director of Income-tax (Investigation), Jaipur, as the regular incumbent- was on earned leave.

It is pertinent to mention here that the alleged seizure and disappearance of books of account mentioned in Annexure-A-1 of panchnama, dated September 14; 1989, is a matter of vigilance scrutiny and the Directorate of Income-tax (Investigation), Ahmedabad, and the Directorate of Income-tax (Vigilance), New Delhi, are seized of the matter as it was already referred and subjected to a thorough vigilance enquiry.

The respondent recorded the statement" on April 22, 1991, and in reply to questions Nos. 10 and 11 it was stated that 23 books of account were seized and those books were carried by the Income-tax Department on September 20, 1989, with them. The statement of Surendra Sharma was recorded on July 18, 1991, and he has given the reply of question No.6 that the 23 books of account were found on September 14, 1989, and were sealed in a room. The said room was opened in their presence on September 20, 1989, and the officers of the Income-tax Department have taken the seized records with them. The statement of Arjun Singh was recorded on August 6, 1991, and he has stated that he has gone to the house of Banke Bihari Agarwal after the proceedings were started and he is not having the full knowledge of the search and seizure. It was further stated that because he has reached late on September 20, 1989, he cannot say as to whether the 23 books seized were carried by the Department or not. It was further stated that he remembered that the Income-tax Department has carried one bundle containing the books. He cannot say whether it contained the 23 books seized as per Annexure "A-1 " or other books or how many books were there.

The witness of September 14, 1989, Ramesh Chand Sharma, has stated that the jewellery, cash, books of account, note books, etc., were sealed in a room and he has put his signature on the seal, dated September 14, 1989. The said items were not carried by the Departmental officials on September 14, 1989, and were put in a room after sealing it.

The submission on behalf of the respondent is that the assessments have been framed for the assessment years 1988-89, 1989-90 and 1990-91 against which even the appeals have been preferred and decided. It is submitted that the books of account seized under Panchnama A-1 has no relevance to the years of assessment and that it may be the petitioner himself, who is responsible for removing the books even on the day of seizure.

I have considered over the matter. From a perusal of the file produced by the respondent it is evident that the inspector of the Department who has taken delivery of the seized records has put a note on the panchnama on December 8, 1989, that the account books as per Annexure "A-I" were not received.. This makes it clear that the account books were not handed over to the Assessing Officer (Assistant Commissioner of Income-tax Alwar). This fact is further corroborated by the order passed under section 132(5) of the Income-tax Act, dated January 17, 1990, in which in paragraph 5 it is mentioned "as per panchnama, dated September 20, 1989, 23 items of the books of account have been shown as seized from the residence of Shri Banke Bihari LAI Agarwal. as per Annexure "A-1 ". However, no such books of account from serial Nos. l to 23 as per Annexure "A-1" have been handed over to me by the Assistant Director of Income-tax (Investigation)-II, for scrutiny. I am, therefore, passing the order without considering the books of account mentioned in Annexure-A-1 ".

The question of the petitioner being involved in removing the books of account on September 20, 1989, or subsequently till December 8, 1989, if the officers who were having custody of the books or responsible for it have filed a first information report, or taken any steps during that time, or immediately on December 8, 1989, could have been considered, but no such action has been taken. The evidence which has come on record including the panchnama itself shows that there was seizure of 23 books of account on September 20, 1989, and those books seized were carried by the authorised officer. The books were so bulky containing voluminous pages that they could not have been mixed with other books nor was there any possibility of leaving those books after their seizure.

The power of search and seizure conferred by the Act has been tested with reference to the fundamental rights guaranteed under Chapter III of the Constitution with particular reference to Articles 14, 19 and 21 of the Constitution. The provisions have been held valid because sufficient safeguards have been provided by the Act and Rules made thereunder. The act of search and seizure is no doubt an invasion on the rights of the subjects and cannot indiscriminately be used. Proper .care has to be taken at all stages so as to justify even the act of seizure. The contention of the respondent that the books of account from serial Nos. l to 23 have no relevance as per Annexure "A-1 " has no substance. If the books of account were not relevant then why were they seized? The seizure itself shows that the books of account were relevant and the authorised officer at the time of seizure was of the view that the books searched and seized will be useful and relevant for the purpose of proceedings under the Act.

Rule 112 of the Income-tax Rules provides the procedure for search and seizure. It has been provided under sub-rule (6) of the said rule that before making a search the authorised officer shall (i) where a building or place is to be searched, call upon two or more respectable inhabitants of the locality in which the building or place to be searched is situate. Sub-rule (7) provides that the search shall be made in the presence of the witnesses aforesaid and a list of all things seized in the course of such search and of the places in which they were respectively found shall be prepared by the authorised officer and signed by such witnesses. The copy of the list prepared under sub-rule-(7) is required to be delivered under sub-rule (8) to the person or occupant and a copy has to be forwarded to the Commissioner. Under Rule .112(11) the authorised officer may convey the books of account and other documents, if any, seized by him in the course of the search made by him and the package or packages, if any, referred to in sub-rule (10) to the office of any authority not below the rank of Income-tax Officer (hereinafter referred to as the custodian). Related, provisions have been made in the Act for exercise of the power under section 132 and also in Rule 112 made thereunder. A period of more than five years has lapsed and it is stated that the Directorate of Income-tax (I & G), Ahmedabad, and Directorate of Income-tax (Vigilance), New Delhi, are seized of the matter. It is really surprising that' even after a lapse of five years they are still seized and no effective steps have been taken and brought to the notice of this Court. Whenever a search is made and the books of account are seized by the authorised officer, he is responsible for the safe custody of those seized records. If the said record has been handed over to some other officer/custodian then the other officer or custodian is responsible for it. The protection under section 293 of the Income-tax Act is not available to an officer who has lost the books of account so seized, because such an action cannot be said to be done in good faith. The books of account after the seizure could be removed beside the other in the following circumstances:

(i) The person from whose possession the books of account have been seized may be interested in removing the same so as to escape his liability to tax/prosecution, etc. This could be in connivance with the staff of the officer in whose possession the books of account are. If the respondents were of the view that it is the petitioner who is responsible for the removal of the books, then they could have filed a first information report/complaint during the period from September 20, 1989 to December 8, 1989, or immediately thereafter, but no such steps have been taken. No first information report/complaint has been filed.

(ii) The officer in order to harm the assessee may remove the books of account so that he may not be in a position to explain the disputed entries. This is not the position here nor has any such allegation been made against any of the officers having prejudice against the petitioner.

(iii) The officer or his staff in connivance with the assessee may remove the books of account. It may be either to help the assessee or to cause loss to the revenue or to get monetary consideration for such an act.

(iv) There may be gross negligence on the part of the officer seizing the books of account in not taking it with him. It could have been understandable where the seized record is very small in quantity but even for that purpose the authorised officer has to be careful otherwise the act could fall within the category of gross negligence.

The books of account were seized and it prima facie shows that the authorised officer was satisfied at the time of seizure that the said books are relevant for detecting or unearthing the concealed income. The limitation for framing reassessment had not expired at that time and now the books are not available. It can only be presumed that the said books contain such income which were not disclosed and a loss has been caused to the revenue. The Government Officer, who has the duty to perform the particular act, has a personal responsibility to see that State revenue is not lost for any act of his. If loss of revenue is caused by inaction, he can be made personally responsible.

The officers responsible could have been taken to task by the Department by taking disciplinary action which could have been taken besides filing the prosecution/criminal complaint and making them personally responsible for the loss of revenue.

If an officer is entrusted to do a particular duty and if the duty is not performed with due care and caution, the protection under section 293 is not available to him. The Income-tax Department could have taken effective steps for prosecution of such an officer who is responsible for the loss of the books of account seized under section 132. The loss of revenue in the absence of books cannot easily be determined but, if it is possible to determine such loss, then he can be made responsible for the loss of revenue as well. The personal responsibility cannot be absolved in the garb that the act, performed was during the course of official duty. The assessee who has lost his books of account can also claim damages for the loss of the books of account from the officers who had seized the said books of account. The question of determining the loss or compensation to the petitioner cannot be determined in proceedings under Article 226 of the Constitution. The proper remedy for the petitioner is to file a suit in respect thereof. A copy of this order may be sent to the Chairman. Central Board of Direct Taxes, for taking immediate action against the officers who were responsible for the loss of the books of account and submit the compliance report within a period of four" months from the date of receipt of this order.

The writ petition stands disposed of in accordance with the directions given above.

M.B.A. /1989/FCOrder accordingly.