Om Prakash, J.:— The petitioner carried on a business in manufacture and sale of carpets as sole proprietor of the concern, Sriram Carpet Industries, Gopiganj, district Varanasi. A search and seizure operation was conducted on July 22, 23, 1987, at the principal place of business, Gopiganj, district Varanasi, at the shopping complex, Maldahia, and at the residential premises, D-64/143, Shastri Nagar, Sigra, Varanasi, of the petitioner. During the search and seizure operation, gold ornaments, silver ornaments, cash, etc., were seized under section 132(1) of the Income-tax Act, 1961 (briefly “the Act”) and a restraint order was passed under section 132(3) of the Act, for want of verification in respect of the following assets:

Rs. (i) Stock of woollen yarn, etc. 7,00,855 (ii) Stock of 85 carpets 5,58,603 12,59,458

2. Thereafter, the Income-tax Officer, Bhadohi, Varanasi, passed an order under section 132(5) determining the total tax liability for the assessment years 1981-82, 1983-84, 1984-85, 1987-88 and 1988-89 at Rs. 25,85,988. The value of all the seized assets was determined at Rs. 7,30,683 in the order passed under section 132(5) of the Act and as the total tax liability aggregating to Rs. 25,85,988 for the aforesaid years exceeded the total value of the seized assets, the Income-tax Officer ordered retention of the entire seized assets. Thereupon, the petitioner filed this writ petition for quashing the order dated November 17, 1987, passed under section 132(5) of the Act (annexure “25” to the writ petition) and demanding immediate release of the assets seized under section 132(1) and attached under section 132(3) also the petitioner prayed for a mandamus that the respondents be directed to return all the books of account seized under section 132(1) forthwith.

3. Affidavits having been exchanged between the parties, we propose to decide the writ petition finally.

4. The submissions of Sri V.B Upadhyaya, learned counsel for the petitioner, are:

(i) The authority who issued the warrant of search had no information on the basis of which he could have reason to believe within the meaning of section 132(1) that the petitioner was in possession of undisclosed assets.

(ii) Under section 132(5), the Income-tax Officer can retain only those assets which have been seized under section 132(1) and he has no power to retain the assets for which an order has been passed under section 132(3), after having passed the order under section 132(5).

(iii) Under section 132(3), the authorised officer can pass a restraint order only in respect of the undisclosed assets and no such order can be passed simply to make an investigation whether a given asset is dis-closed or undisclosed.

(iv) The books of account, having been seized under section 132(1), are liable to be returned, as they cannot be retained after the expiry of 180 days, without valid approval of the Commissioner within the meaning of section 132(8).

5. Sri Upadhyaya vehemently pressed that learned standing counsel be asked to produce the record to show the information having been received by the Department. His simple submission is that since the petitioner denied that there was valid information with the Department, it is for the respondents to show that there was information within the meaning of section 132(1) with the authority, who issued the warrant of search. The question is whether the respondents can be called upon to disclose information, simply because it is denied by the petitioner that there was valid information with the Department. Ordinarily, when the existence of a fact is denied by a party, the onus will shift to the other party to prove that the fact or the state of things, alleged to have existed, in fact, existed but this ordinary rule does not fit in the scheme of section 132 of the Act. A search, either of somebody's person or premises, is a serious violation of the right of privacy which is a very valuable right in a civilized society. Keeping all this in view, power to issue a warrant of search has been conferred by the statute under section 132(1) only on senior authorities of the Department and it has been impressed upon the authorities, so empowered, time and again, that warrant of search should not be issued in a casual way, and that before issuing the warrant, the authorities must assure and reassure themselves of the existence of valid information that the person, whose premises are sought to be searched, is in possession of undisclosed assets. There is no averment in this case that the Department has given a go-by to this principle and that the warrant of search had been issued against the petitioner without any thought or caution or due to any mala fides or animosity against the petitioner. The petitioner has given no basis for the averment that there was no valid information in the possession of the Director of Inspection, who issued the warrant of search. This being so, mere denial is not enough and the petitioner, in whose knowledge the fact specially lies whether all his assets are fully disclosed or not, should have supported the denial with cogent material. The writ petition was filed on December 7, 1987, that is, after the order under section 132(5) was passed on November 17, 1987. The Income-tax Officer has already set out the details of the undisclosed assets in the said order and, therefore, it became easier for the petitioner to show that the assets said to be undisclosed in the order passed under section 132(5) had, in fact, been disclosed. There is no precise averment and no supporting material in this behalf. On these facts, merely on the basis of denial of the petitioner, we do not consider it proper to call upon the respondents to disclose the information they received for having acted under section 132(1).

6. The matter may be looked at from another angle also. The order under section 132(5) prima facie shows that assets worth Rs. 7,30,683 were acquired from undisclosed sources. The question is whether, on these facts, it will be proper or just to exercise discretionary jurisdiction under article 226 of the Constitution. When already the Income-tax Officer has found in the order passed under section 132(5) that the petitioner had acquired the seized assets from undisclosed sources and when the petitioner has an alternative remedy under sub-section (11) of section 132 by way of filing objections before the Commissioner, in our view, the courts should be loath to interfere under article 226.

7. If the submission of Sri Upadhyaya is accepted and if, in each and every case, the income-tax authorities empowered to issue such warrant of search, are called upon to disclose information on the basis of mere denial of valid information by a petitioner, then the whole scheme of section 132 would be frustrated. In that case, the Department cannot proceed under section 132, unless the information is cleared by the courts. Time element and secrecy are the important features of any search and seizure operation and if on a mere denial of a petitioner, the Department is asked to disclose information, then both the elements will disappear and no search could become successful. It is only in those cases where a petitioner furnishes adequate and cogent material in support of his denial of valid information that the courts can justifiably call upon the Department to disclose information.

8. For the above reasons, we decline to call upon the respondents to disclose the information which they received before having acted under section 132(1).

9. Then, the submission of Sri Upadhyaya, is that power to retain assets can be exercised under section 132(5) only with regard to seized assets and it cannot be exercised with regard to the assets for which an order has been passed under section 132(3). As already pointed out, the order under section 132(3) was passed with regard to the stock of woollen yarn, etc., and stock of 85 carpets found at the principal place of business of the petitioner for want of verification. The question is whether such assets can be retained after the order under section 132(5) had been passed. This submission seems to be misconceived. The question of retaining the assets covered by the order passed under section 132(3) does not arise. An order passed under section 132(3) does not amount to “seizure” and this has been made amply clear by the Explanation, which shall be inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The Explanation, which is to be inserted with effect from April 1, 1989, runs as follows:

“For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1).”

10. What was implied in sub-section (3) has been made explicit by the aforesaid Explanation. When an order under section 132(3) does not give rise to seizure, the question of retaining assets mentioned in clause (iii) of sub-section (1) of section 132 does not arise. An order under section 132(3) gives rise to attachment and not to seizure. By the order of attachment, the owner of the assets or the person, who is in immediate possession or control thereof, is restrained from removing, parting with or otherwise dealing with the assets except with the previous permission of the officer who passes such order. The possession of the attached assets continues with the owner of the assets, and, therefore, the question either of retaining or not retaining them by the Income-tax Officer after the order under section 132(5) having been passed, does not arise.

11. Then, we come to the important question whether an order under section 132(3) can be passed merely to ascertain whether a given asset is disclosed or undisclosed. To find out the true answer to this question, we will have to dissect the anatomy of section 132. Section 132, sub-section (1), so far as is relevant for our purposes, read that where the authorising officer, as specified in sub-section (1) of section 132, in consequence of information in his possession has reason to believe that 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, or would not be, disclosed for the purposes of the Act of 1961, then the authorised officer, as specified in clause (a) of sub-section (1), may seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search. So, the requirement of section 132(1) is that the authorising officer must be in possession of information not amounting to mere pretence or suspicion, but substantial information on the basis of which he could have reason to believe that any person is in possession of any asset, as mentioned in clause (c) and, then, he may authorise any officer, as specified in clause (a), who, on being satisfied that the person about whom information has been received, is in possession of undisclosed income or property, may seize such assets under clause (iii). The word “such” occurring in clause (iii) of sub-section (1) clearly shows that the assets as mentioned in clause (iii) refer to undisclosed assets as mentioned in clause (c). Thus, what can be seized under clause (iii) is the asset as mentioned in clause (c) which has not been or would not be disclosed for the purpose of the Income-tax Act. Some courts took the view that seizure means taking physical possession of any valuable article or thing. To overcome this, the Legislature has amended section 132(1) by the Finance Act, 1988. The effect of this amendment is that a second proviso shall be inserted with effect from April 1, 1989, in sub-section (1) of section 132. The second proviso, which is not relevant for the instant petition, because that would be inserted only with effect from April 1, 1989, enables the authorised officer to serve an attachment order on the owner, or the person, who is in immediate possession or control thereof, in respect of an asset where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to to its volume, weight or other physical characteristic or due its being of a dangerous nature. The second proviso raises a fiction that such attachment order shall be deemed to be seizure of such valuable article or thing under clause (iii) and a consequential amendment has been made in sub-section (3) with effect from April 1, 1989, by adding a parenthetical clause thus : (“for reasons other than those mentioned in the second proviso to sub-section (1)”).

12. Whereas, sub-section (1) of section 132, read with the second proviso, to be inserted with effect from April 1, 1989, refers to seizure or deemed seizure, sub-section (3) of section 132 refers to attachment of the assets mentioned in clause (iii). Sub-section (4) empowers the authorised officer to examine on oath, any person who is found to be in possession or control of any asset mentioned in clause (iii) of sub-section (1). Sub-section (4A) raises certain presumptions. Then comes sub-section (5) which contemplates a summary enquiry with a view to determine how much of the seized assets can be legitimately and reasonably retained to cover the tax liability already incurred. Sub-section (11) provides a remedy against the order made in sub-section (5), in that objections may be filed before the Commissioner challenging the order for any reason passed under subsection (5).

13. The scheme of section 132 shows that a warrant of general search can be issued on having received information and on having reason to believe therefrom that a person is in possession of assets which have not been or would not be disclosed. Then, the authorised officer will proceed to seize such assets under clause (iii) of sub-section (1). This shows that an investigation regarding the nature of asset whether it is disclosed or undisclosed, has to be made twice: firstly, by the authorising officer and, secondly, by the authorised officer. Having received information, the authorising officer has to satisfy himself that a particular person is in pos session of undisclosed assets. No warrant be issued merely on the basis of suspicion or to make a roving or fishing enquiry to unearth the concealed assets. It is only when the authorising officer is fully satisfied that the information would lead to the discovery of undisclosed assets, that the warrant of search will be issued. When the authorised officer acts upon the warrant, then the law enjoins upon him to make an investigation again on the questions:

(i) Whether the assets found during search were disclosed?

(ii) Whether the assets so found were not disclosed?

(iii) Whether the assets found during search need further verification, which is necessary only when the authorised officer is in doubt as to whether such asset is disclosed or undisclosed?

14. If he is satisfied that the assets are fully disclosed, then no order can be passed either under sub-section (1) or sub-section (2). If the assets are undisclosed, then the authorised officer may act either under sub-section (1) or sub-section (3) depending on the fact whether it is practicable or not to seize the assets, found to be undisclosed during the search. If it is practicable to seize, then the asset will be seized under sub-section (1); but if it is otherwise, then an order will be passed under sub-section (3). It is manifest that the condition precedent to make a seizure under clause (iii) of sub-section (1) or to make an attachment under sub-section (3) is the discovery of undisclosed assets during search. If no undisclosed asset is found during search, then no action can be taken either under clause (iii) of sub-section (1) or under sub-section (3) of section 132.

15. In the instant case, we are concerned with two types of orders, one for seizure and the other for attachment. Against the former, the petitioner has an alternative remedy under sub-section (11) of section 132. But the question is whether the authorised officer legally passed the order under sub-section (3) in respect of raw material, i.e, woollen yarn, and the finished product of the petitioner, i.e, carpets, for want of verification. As already pointed out, no order under sub-section (3) can be passed, when the authorised officer is in doubt whether the asset is disclosed or undisclosed. So, undoubtedly, the order passed under sub-section (3) of section 132 attaching the woollen yarn and carpets is illegal.

16. Then, the question is whether the attachment, being illegal, should be vacated forthwith or after making necessary enquiry into the fact whether the subject-matter of the order passed under sub-section (3) represents disclosed or undisclosed assets. As already observed, a warrant of general search was issued and thus the authorised officer could enquire about every asset found during search, whether it was disclosed or undisclosed. So, initiation of such enquiry by the authorised officer cannot be said to be without jurisdiction. The case of the Revenue is that the enquiry was prolonged due to non-co-operation of the petitioner. Annexure “3” to the counter-affidavit is a letter addressed by the Income-tax Officer, Bhadohi, to the petitioner requiring him to attend his office on December 8, 1987, to find out the correct position of the various stocks held by him on the date of search. Then, another letter (annexure “4” to the counter-affidavit) was issued having fixed the date as January 29, 1988. In paragraph 22 of the rejoinder-affidavit, the petitioner stated that he had fully explained the position in his letter dated October 5, 1987 (annexure “17” to the writ petition) of the stock, in respect of which the restraint order was passed. On perusal of the said letter, it appears that it is bereft of any details. The petitioner simply stated only in general terms that the stock was fully verifiable from the books. Not being satisfied with the explanation sans details, the Income-tax Officer called upon the petitioner, vide letters dated December 1, 1987, and January 21, 1988 (annexures “3” and “4”, respectively), to appear with the accountant to explain the position of the stock. No steps were taken by the petitioner in this behalf. On these facts, we are of the considered view that the order passed under section 132(3) with regard to woollen yarn and carpets cannot be vacated before the conclusion of the necessary enquiry as to whether the woollen yarn and carpets represent disclosed assets.

17. It is, however, made clear that the stock attached under sub-section (3) cannot be held indefinitely. The purpose and scheme of sub-section (3) being absolutely different from that of sub-sections (1) and (1A) occurring in sub-section (5) of section 132, the limitation prescribed under subsection (5) cannot be extended to sub-section (3), but at the same time, an order under section 132(3) cannot continue for an unlimited period and such order should terminate after the expiry of a reasonable period. When no limitation is prescribed, then the golden rule is that action should be taken within a reasonable period. The Legislature, realising this difficulty, has added a new sub-section (8A) with effect from April 1, 1989, by the Direct Tax Laws (Amendment) Act, 1987, and by virtue of this sub-section, an order under sub-section (3) shall not be in force for a period exceeding 60 days from the date of the order, except where the approval has been obtained from the Commissioner by the authorised officer.

18. The authorised officer having had lawful jurisdiction to, make an enquiry whether a given asset found during search was disclosed or undisclosed and he having taken steps to make such enquiry, we see no good reason to quash the order made under section 132(3) right at this stage, but on the facts and circumstances of the case, we direct respondent No. 7 to conclude the enquiry within 10 days from the date on which a copy of our order is produced before him by the petitioner. It is needless to say that the petitioner will fully co-operate with respondent No. 7 while he makes enquiries about the woollen yarn and carpets, in respect of which an order under sub-section (3) had been passed. It is well known that this court can, while exercising the powers under article 226 of the Constitution, mould the remedy to suit the facts of a particular case. Though the order under sub-section (3), which was passed for waht of verification, is illegal, at the same time, the power of the authorised officer to seize the assets if he has material with him to justify that action, cannot be taken away. Similar view was taken in Om Parkash Jindal v. Union of India, [1976] 104 ITR 389 (P & H) and Kanwal Shamsher Singh v. Union of India, [1974] 95 ITR 80 (Delhi).

19. Then, the question is how would the Income-tax Officer deal with the assets after conclusion of the enquiry. The enquiry will be directed only to ascertain whether the woollen yarn and the carpets represent disclosed or undisclosed assets. If they were disclosed, then there would be no justification for the Income-tax Officer to hold them any more. The question is what will happen, if such assets are found to be undisclosed on enquiry. Whereas sub-section (5) sets out a complete procedure for dealing with the seized assets, sub-section (3), to our surprise, is wholly silent as to how the undisclosed assets would be dealt with. It simply says that the assets, which are under attachment, shall not be removed, parted with or otherwise dealt with, except with the previous permission of the attaching officer. When permission is sought to remove, part with or otherwise deal with the attached assets by the owner thereof, the attaching officer may either accord permission or refuse the same. Sub-section (3) does not furnish a guideline as to how the assets would be dealt with in case permission is refused by the officer. In our view, this is a snag in sub-section (3). When both clauses (iii) of sub-section (1) and sub-section (3) of section 132 refer to undisclosed assets, then it is desirable for the Legislature to lay down a complete procedure under sub-section (3) as to how the assets would be dealt with, if the permission sought by the owner thereof is refused by the officer. Sub-section (5) clearly says that undisclosed assets, which are seized, would be retained, if the value thereof does not exceed the existing tax liability and only surplus assets would be released. So far as the assets retained under sub-section (5) to satisfy the liability already incurred are concerned, section 132B sets out a full procedure to deal with them. No such machinery has been provided under sub-section (3). This being a legal snag in sub-section (3), we direct the Income-tax Officer, Bhadohi (respondent No. 7), to release the woollen yarn and the carpets covered by the order passed under sub-section (3), immediately after the conclusion of the enquiry, even if they are found to be undisclosed assets.

20. Lastly, we come to the question whether the petitioner is entitled to a mandamus directing the respondents to return his books of account forthwith. The submission of Sri Upadhyaya is that before the expiry of 180 days, no approval of the Commissioner was obtained by the Income-tax Officer, Bhadohi, within the meaning of sub-section (8) of section 132. Whether the approval was obtained or not—this is a question of fact. In the grounds of the petition, no averment that before expiry of 180 days, no approval to retain the books beyond 180 days was given by the Commissioner had been made. It is only in paragraph 3 of the supplementary affidavit dated January 21, 1988, that the petitioner deposed that though more than 180 days expired, no communication had been received by the petitioner from the Department that any approval had been accorded by the Commissioner to retain the books of account beyond 180 days. In paragraph 4 of the supplementary counter-affidavit dated February 9, 1988, it is stated that the approval (being annexure “CA-1”) to retain the account books was obtained from the Commissioner of Income-tax, Allahabad, within time. A perusal of annexure “CA-1” shows that the Commissioner accorded approval to retain the books up to December, 31, 1988. Sri Upadhyaya submitted that whereas the period of 180 days expired on January 18, 1988, the approval was accorded by the Commissioner on January 19, 1988. No such pleading having been raised in the grounds of the petition and the question whether the approval was accorded on January 18 or 19, 1988, being a question of fact, we decline to go into this factual dispute, more so, in view of the fact that the approval having been accorded by the Commissioner up to December 31, 1988, is on the verge of termination. For these reasons, the petitioner is not entitled to the writ of mandamus prayed for. It is to be made clear that the order under section 132(3) pertains to other assets also, but the controversy was limited only to woollen yarn and carpets, which had been attached from the office-cum-factory premises of the petitioner at Gopiganj, as the remaining assets had been, admittedly, released by the Department to the petitioner.

21. In the result, the writ petition is partly allowed. The Income-tax Officer, Bhadohi, respondent No. 7, is directed to conclude the enquiry within ten days from the date on which a copy of our order is produced before him by the petitioner, whether the stock of woollen yarn and carpets attached from the principal place of business of the petitioner at Gopiganj, represent disclosed or undisclosed assets. Respondent No. 7 is further directed to release the said stock of woollen yarn and carpets immediately after the conclusion of the enquiry to the petitioner. On the facts and circumstances of the case, there will be no order as to costs.