The Judgment of the Court was delivered by

Gokulakrishnan, J.:— One K. Raju is the petitioner in both the writ petitions. W.P No. 181 of 1983 is for the issue of a writ of mandamus directing the respondents, in particular, the 7th respondent, to return all the seized materials to the petitioner immediately including the fixed deposit receipts, etc., covered by the prohibitory orders to the banks. W.P No. 182 of 1983 is for the issue of a writ of prohibition prohibiting the respondents from passing any order in respect of the search and seizure effected on March 3, 1982, and March 4, 1982, at the premises of the petitioner at No. 2.D, S.V Lingam Street, K.K Nagar, Madras-78, at the work-spots at (i) H.I.G Flat Site, Ashok Pillar Road, K.K Nagar, Madras-78, and (ii) Open Plot in Jeevanandam Street, K.K Nagar, Ashok Nagar, Madras-83, and at Seelanaickenpatti, Salem.

2. The writ petitioner is a building contractor and a regular income-tax assessee from the assessment year 1972-73. On March 3, 1982, the 7th respondent, under the purported instructions of respondents Nos. 5 and 6, made a search under s. 132 of the I.T Act (hereinafter referred to as “the Act”) simultaneously at No. 2.D, S.V Lingam Salai, K.K Nagar, Madras-78, H.I.G Flat Site, Ashok Pillar Road, K.K Nagar, Madras-78, and at the open plot in Jeevanandam Street, K.K Nagar, Ashok Nagar, Madras-83. In respect of the seizure, a panchanama was prepared and given to the petitioner. While searching the premises at No. 2.D, S.V Lingam Salai, K.K Nagar, Madras-78, the 7th respondent had locked up one room with the petitioner's records and served a prohibitory order on the petitioner under s. 132(3)-of the Act. Similarly, the residence of the petitioner at Seelanaickenpatti, Salem, was searched and in that house, a steel almirah was sealed and a prohibitory order under s. 132(3) of the Act was given to the petitioner. After the search, a panchanama was prepared and the same was served upon the petitioner. The 7th respondent has further served a prohibitory order under s. 132(3) of the Act to the various banks whereby the petitioner was not allowed to operate either the savings bank account or any other account the petitioner is having with the respective banks. Correspondingly, similar prohibitory orders were issued under s. 132(3) of the Act on the petitioner also. It is further alleged by the petitioner that on his representation to the 7th respondent stating that his business is being paralysed by such prohibitory orders, the 7th respondent by his order dated March 6, 1982, released a sum of rupees one lakh and had also pointed out therein that the prohibitory order for the balance of Rs. 3,78,498.90 in S.B Account No. 11078 shall continue to be in force. It is further alleged by the petitioner that by subsequent representation made by the petitioner, the 7th respondent had lifted the prohibitory order issued to some other banks also. The petitioner was writing letters to the 7th respondent to release certain documents seized from him. On August 20, 1982, the petitioner wrote a letter to the 7th respondent pointing out that notwithstanding the fact that originally the search was commenced on March 3,] 982, and completed on that day itself, rooms had been locked and sealed by the 7th respondent and he having taken the key with him, nothing had been done thereafter, and that, therefore, the 7th respondent should release the fixed deposit receipts and other documents so that the petitioner could deal with the same. On November 2, 1982, and November 8, 1982, the petitioner wrote to the 7th respondent requesting for lifting of prohibitory order and also pointing out that the order had not been passed by the 7th respondent in time. The petitioner also wrote to various respondents herein to release the fixed deposit receipts and other documents. The petitioner has further specifically alleged that he was seriously prejudiced in so far as his fixed deposit receipts had been seized along with several other documents, that prohibitory orders had been issued whereby the moneys belonging to the petitioner were seized and, as such, the petitioner has been deprived of the use of the money which he could have lawfully used for his business, and that his business has practically come to a standstill by reason of the improper attitude of the respondents herein. The petitioner has further alleged that the authorities concerned have failed to pass orders under s. 132(5) of the Act within 90 days of the seizure of the documents and, as such, the seizure has become ineffective. Under s. 132(9A) of the Act, according to the petitioner, respondents Nos. 5 to 7, who had seized the materials, should have handed over all the materials seized from the petitioner within 15 days of such seizure. In this, case, the documents and assets seized from the petitioner have not been handed over by the 7th respondent to the 1st respondent within 15 days from March 4, 1982. The seizure of the documents and other records having been made on March 3, 1982, and March 4, 1982, the retention of the documents any further has become illegal since the authorities concerned ought to have passed orders under s. 132 of the Act within 90 days from March 4, 1982. Even assuming that the seizure was completed on September 30, 1982, the petitioner submits, there is a clear violation of s. 132(5) of the Act. The petitioner has further contended that as per s. 132(8) of the Act, the books of account and other documents seized shall not be retained for a period exceeding 180 days from the date of seizure unless the reasons for retaining the same are recorded in writing by the officer who seized the same and the approval of the Commissioner for such retention is obtained. No order has been communicated to the petitioner so far regarding any extension that has been granted in accordance with s. 132 of the Act. Hence, the documents seized cannot be retained by the authorities concerned any further and such a retention is clearly illegal since the seized documents are with them for over j-80 days. It is further contended by the petitioner that the respondents have not communicated any order passed for extension. According to the petitioner, the respondents also have not conformed to rules 112, 112A, 112B, 112C and 112D of the I.T Rules. Since the provisions of the Act and the Rules have not been complied with, the petitioner has stated that the respondents are bound to return the materials, documents and moneys seized to the petitioner. The attitude of the respondents in keeping these documents beyond the period of limitation prescribed under the Act is violative of the freedom of profession, trade and occupation guaranteed under art. 19(1)(g) of the Constitution of India. In these circumstances, the petitioner submitted that the retention of the materials seized from him and the continuance of the prohibitory orders as against him by the respondents herein are clearly outside their powers and jurisdiction and that they cannot hereafter pass any order and if such orders are passed, they would be void, illegal, a nullity and non-est. With these allegations, the petitioner has prayed for the issue of a writ of mandamus and a writ of prohibition, as stated in the beginning of the judgment.

3. The respondents herein have filed a common counter-affidavit denying every one of the allegations made by the petitioner in his common affidavit except those that were admitted by them in the counter-affidavit. The respondents have stated that out of a total sum of Rs. 18,10,564, which was initially subjected to the prohibitory orders, a sum of Rs. 6,28,639 was released to the assessee and the balance amount alone was kept under the prohibitory orders as investigation is pending. The respondents have further alleged that the petitioner has not submitted correct accounts and has failed to declare his return properly, which forced the authorities to resort to seizure and prohibitory order by virtue of s. 132 of the Act. This was necessitated because of the fact that the authorities, on an appraisal, believe that a sum of rupees thirty-five lakhs will be the concealed income from 1973 to 1983. The respondents then stated that, they have released the fixed deposit receipts which were kept under the prohibitory orders, and that the prohibitory order issued with regard to the almirah at the petitioner's native place was lifted on March 4, 1982, itself. The respondents have further stated that the petitioner has been given adequate opportunity to inspect the records and the petitioner cannot insist on all the documents and records seized from him to be released forthwith because they are required for further scrutiny in the course of investigation. That is why, according to the respondents, the Commissioner of Income-tax has been periodically extending the time-limit for keeping the documents and papers seized in the custody of the Department. It is further contended by the respondents that the delay in the matter of investigation and enquiry is wholly due to the petitioner's delaying tactics and wanton non-co-operation with the Department and his refusal to furnish the requisite particulars. The current account of the petitioner was not put under prohibitory orders and the petitioner was allowed to operate the same. The petitioner was given the fullest opportunity to inspect the records and he cannot have any grievance regarding the inspection of the records for the purpose of submitting income-tax returns. The respondents have further stated that the petitioner cannot insist on the return of all the documents and records seized from him because they are required for further scrutiny in the course, of investigation and that it is only in those circumstances, the Commissioner of Income-tax has been periodically extending the time-limit for keeping the seized papers and records under the powers conferred on him. It has been specifically stated by the respondents that if the seized documents and papers are released, the petitioner will tamper with them and thereby jeopardise the investigation by the Department. The respondents have further stated that the assets of the petitioner were not seized except freezing certain bank accounts by issue of a prohibitory order under s. 132(3) of the Act. In the circumstances, s. 132(5) of the Act is not attracted to the facts of the case. It is further submitted by the respondents that during the course of search and further investigations, funds/investments to the extent of Rs. 43 lakhs were found in the name of the petitioner and/or his close relations and members of his family. All along, the petitioner was submitting income-tax returns on an estimate basis and was assessed as such. His statement that he was not maintaining books of account is a falsehood as several books and documents have been seized. Hence, according to the respondents, these facts justify the action of the Department under s. 132 of the Act. Section 132(5) of the Act is not attracted when action is initiated under s. 132(3) of the Act, as in this case. It is further submitted by the respondents that the time-limit prescribed under s. 132(5) of the Act is not applicable to the present facts of the case and further, the petitioner himself is responsible for the delay in the completion of the investigation. Further, the investigation could not be proceeded with because of the stay of the proceedings granted by this Hon'ble court. The documents, according to the respondents, and papers seized have been handed over to the first respondent within 15 days from the date of seizure as he is the authority having jurisdiction to assess the petitioner, that as the said documents were again required to co-ordinate further investigations under s. 132 of the Act, they were taken back from the ITO for that purpose, and that, consequently, there is no infringement of the provisions of s. 132(9A) of the Act as alleged by the petitioner. The respondents have further reiterated that the time-limit of 90 days provided under s. 132(5) of the Act when assets are actually seized under s. 132(1) or s. 132(1A) of the Act will not apply to this case. It has been specifically averred by the respondents in their counter-affidavit that the approval of the Chief Commissioner of Income-tax has been taken for the retention of the books, from time to time. As the investigation has been impeded by the action of the petitioner and/or the non-co-operation of the petitioner and/or the interlocutory orders of this Hon'ble court, according to the respondents, the petitioner cannot make any grievance by raising the question of retention of the books in excess of the specified period. According to the respondents, if the seized books and records are handed over to the petitioner at this stage, there is every reason to apprehend that the petitioner will either tamper with them or cause them to disappear. Finally, the respondents have alleged that prima facie the estimate of undisclosed income of the petitioner comes to nearly Rs. 35 lakhs, that it is not advisable to return the records and documents, which will be very necessary to investigate into such undisclosed assets and that the entire process of investigation and assessment can be completed at an early date if the petitioner co-operates with the Department. For all these reasons, the respondents prayed for the dismissal of both the writ petitions.

4. The petitioner has also filed a reply affidavit, inter alia, contending that he is not maintaining regular books of account, that the documents seized will show that only mere jottings were made for the purpose of memory, that the returns were filed immediately after getting the clarification regarding the person before whom they have to be filed and that the petitioner has written a number of letters requesting respondents Nos. 4 and 7 to finalise the matter. The petitioner has denied in his reply affidavit that he had invested in business to the extent of Rs. 10,10,590 as also the allegation that there was an investment in jewellery to the extent of Rs. 15,250. The petitioner has also flatly denied the allegation of the respondents to the effect that there are unaccounted investments to the extent of Rs. 35 lakhs and asserted that he is always ready and willing to co-operate for the completion of the case as early as possible. It is further contended by the petitioner that periodical extension of time by the Commissioner of Income-tax will not in any way make the retention of the documents legal and even assuming for the purpose of argument that such extension of time is warranted, it will have to be done at least under notice or information to the petitioner and that, in the instant case, no notice or information has been given to the petitioner. Hence, the petitioner submitted that any extension alleged to have been made is invalid and has to be considered as non est in law. It is then contended that the entire procedure adopted by the 7th respondent is illegal inasmuch as the extension of time ought to have been asked for only by the concerned ITO and not by the 7th respondent. As regards the allegation of undisclosed asset, the petitioner has contended that the assets could not be taken as they are without considering the liabilities. He further contended that the present value of the assets cannot be taken into consideration but their value as on the date of their acquisition alone has to be taken into consideration and that if the matter is looked at from that angle, there cannot be any question of excess investment. Finally, the petitioner prayed that the writ petitions may be allowed since there is an inordinate delay in completing the assessment.

5. W.P No. 181 of 1983 is for the issue of a writ of mandamus directing the respondents to return all the seized materials to the petitioner immediately including the fixed deposit receipts, etc., covered by the prohibitory orders to the banks. The facts of the case clearly reveal that the seizure was made as early as March 3, 1982, and March 4, 1982. It is unnecessary to repeat the facts of the case once over again since I have already extracted them in paragraphs supra. Section 132(5) deals with the procedure as to how any money, bullion, jewellery or other valuable article or thing is to be seized under sub-s. (1) or (1A) of s. 132 of the Act. Here, the seized materials will not fall under the category mentioned in s. 132(5) but will come under s. 132(8) of the Act. Section 132(8) of the Act reads as follows:

“The books of account or other documents seized under sub-section (1) or sub-section (1A) 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 that the Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (XI of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed.”

6. From a reading of the abovesaid section, it is clear that the Authorised Officer should not retain the books seized over and above 180 days from the date of seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner of Income-tax for such retention is obtained.

7. Section 132(9A) of the Act deals with cases as to how the Authorised Officer, who has no jurisdiction over the person from whose custody the books of account and other documents are seized, should hand over within 15 days from such seizure, the seized documents to the ITO having jurisdiction over such a person.

8. The objection raised, viz., if the Authorised Officer, who is the 7th respondent herein, has no jurisdiction over the person from whom the documents were seized and, as such, he ought to have handed over the said documents to the first respondent and that he has no authority to write to the Commissioner of Income-tax for the purpose of getting his approval to have the documents over and above the period of 180 days, cannot be sustained. The 7th respondent has jurisdiction over the petitioner herein and that he is the Authorised Officer as revealed by D.O Letter No. 277-N/INV)/66 dated July 21, 1966, printed at page 653 of Part II of Volume XII of the Central Board of Direct Taxes Bulletin. The said bulletin reads as follows:

“The jurisdiction, of the Intelligence Wing is, for the present, confined to the Commissioner's charges in which the various units of the Wing are located so that they may be able to do intensive work in the limited area and show results. There is, however, no objection to utilising the officers of the Intelligence Wing outside the present Commissioner's charges if an important case arises and it is necessary to do so in the interests of Revenue. This may be done only when the case is very important and you consider it necessary in the interests of Revenue.”

9. Thus, it is clear that the jurisdiction of the officers of the Intelligence Wing over the persons will be co-extensive with that of the Commissioner's charge in which the wing is located. Therefore, when an Assistant Director of Inspection is authorised by the Commissioner under s. 132(1)(a) of the Act to conduct a search, it would follow that such an Assistant Director of Inspection would also be the Authorised Officer having jurisdiction over the person subjected to search within the meaning of s. 132(8) of the Act. Hence, the 7th respondent can perform all the functions under sub-ss. (8) and (9) of s. 132 of the Act in his capacity as the Authorised Officer having jurisdiction over the person referred to in clause (a) or (b) or (c) of subsection (1) of s. 132 of the Act without prejudice to the power of the ITO who has jurisdiction under s. 124 of the Act over the persons subjected to search. The Board's D.O Letter No. 27.7-M (INV)/66 dated July 21, 1966, has been incorporated in the I.T Act as s. 131(1 A), with effect from October 1, 1975.

“If the Assistant Director of Inspection has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then for the purpose of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority.”

10. In view of the above provision, the 7th respondent has jurisdiction to hand over the books of account and other documents to the 1st respondent and take them back for the purposes of investigation and, hence, the question that the 7th respondent, who is the Authorised Officer in this case, ought to have handed over the documents to the 1st respondent within a period of 15 days of such seizure, will not arise. In this case, the Assistant Director of Inspection handed over the seized books to the ITO to facilitate him to conduct certain investigations and enquiry for purposes of assessment and also for the recording of reasons with reference to the retention of the seized material, reopening completed assessments, issuing notices under the I.T Act/W.T Act, issuing attachment notices in respect of the assets located from the seized material, etc. The documents and papers seized were handed over to the ITO as he was the person who had jurisdiction to assess the petitioner. The materials were taken back by the Assistant Director of Inspection from the ITO to pursue the investigation under s. 132 of the Act. Such action of the 7th respondent is quite in order as per the abovesaid provisions.

11. As per s. 132(10) of the Act which reads as follows:

“If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1 A) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents”

12. The aggrieved party from whom the documents were seized and who objects to the reason recorded by the Commissioner for extending the time under s. 132(8) of the Act, may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents. As far as the present case is concerned, the seizure of the documents was made on March 3, 1982, and March 4, 1982. The 7th respondent has put in an application to the 4th respondent for the retention of the books and documents impounded for a period extending 180 days, as per s. 132(8) of the Act. The reason given for obtaining the extension is for conducting a detailed investigation. The 4th respondent allowed the retention of the documents uptill March 31, 1983. In this application made on August 23, 1982, it has been specifically mentioned that the documents were seized on March 3, 1982. The approval for extension was granted by the 4th respondent on August 27, 1982. In CIT v. Oriental Rubber Works [1983] 145 ITR 477 (SC), a three judges' Bench of the Supreme Court had an occasion to deal with s. 132(8) read with s. 132(1) of the Act. The Supreme Court, after extracting s. 132(8), (10) and (12) of the Act, held as follows (p. 483):

“On a plain reading of the aforesaid provisions, it will be clear that ordinarily the books of account or other documents that may be seized under an authorisation issued under sub-s. (1) of s. 132 can be retained by the Authorised Officer or the concerned ITO for a period of one hundred and eighty days from the date of seizure, whereafter the person from whose custody such books or documents have been seized or the person to whom such books or documents belong becomes entitled to the return of the same unless the reasons for any extended retention are recorded in writing by the Authorised Officer/the concerned ITO and approval of the Commissioner for such retention is obtained. In other words, two conditions must be fulfilled before such extended retention becomes permissible in law: (a) reasons in writing must be recorded by the Authorised Officer or the concerned ITO seeking the Commissioner's approval, and (b) obtaining of the Commissioner's approval for such extended retention and if either of these conditions is not fulfilled, such extended retention will become unlawful and the concerned person (i.e, the person from whose custody such books or documents have been seized or the person to whom those belong) acquires a right to the return of the same forthwith. It is true that sub-s. (8) does not in terms provide that the Commissioner's approval or the recorded reasons on which it might be based should be communicated to the concerned person but in our view since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfilment of either of the conditions, it is obligatory upon the Revenue to communicate the Commissioner's approval as also the recorded reasons to the person concerned. In the absence of such communication, the Commissioner's decision according his approval will not become effective.

Morever, sub-s. (10) confers upon the person legally entitled to the return of the seized books and documents a right to object to the approval given by the Commissioner under sub-s. (8) by making an application to the Central Board stating therein the reasons for such objection and under sub-s. (12), it is provided that the Central Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. It is obvious that without the knowledge of the factum of the Commissioner's approval as also of the recorded reasons on the basis of which such approval has been obtained, it will not be possible for the person to whom the seized books and documents belong to make any effective objection to the approval before the Board and get back his books or documents. In our view, the scheme of sub-ss. (8), (10) and (12) of s. 132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner's approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communication any further retention of the seized books or documents would become invalid and lawful. It is obvious that such obligation arises in regard to every approval of the Commissioner that might have been accorded from time to time.

In the result, the orders passed by the High Court directing the return of the seized books of account and documents to the respondents in each of the appeals are confirmed and the appeals (subject to the directions given below in two of them) are dismissed with no order as to costs.”

13. It is not the case of the respondents that the approval accorded by the Commissioner for extension of time under s. 132(8) of the Act was communicated to the petitioner. As per the above-cited Supreme Court decision, inasmuch as the respondents have not communicated the order extending the further retention of the seized books or documents to the petitioner, the retention of the seized documents any further is invalid and unlawful. In view of the above Supreme Court decision, there is no need to deal with the other decisions cited at the Bar. The above Supreme Court decision is enough to allow W.P No. 181 of 1983, Math a direction to the respondents, in particular to the seventh respondent, to return all the seized materials (seized on March 3, 1982, and March 4, 1982) to the petitioner on or before February 10, 1984. Hence, W.P No. 181 of 1983, is allowed. There will be no order as to costs.

14. The prayer in W.P No. 182 of 1983 is for the grant of a writ of prohibition prohibiting the respondents from passing any order in respect of the seach and seizure effected on March 3, 1982, and March 4, 1982, at the premises of the petitioner. The prayer as such is vague. In view of the fact that I have directed in W.P No. 181 of 1983 to return all the documents seized from the petitioner's premises on March 3, 1982, and March 4, 1982, there is no need to prohibit the respondents from passing any order in respect of such seizure. Any order parsed by the respondents in respect of such search and seizure has to be studied and decided on the merits of such orders that may be passed. It is too premature to issue a writ of prohibition as at present. Hence, W.P No. 182 of 1983 is dismissed. There will be no order as to costs.