1. As per authorisation issued by the respondent No. 1, who is Commissioner of Income-tax, Gujarat-II, under section 132 of the Income-tax Act, 1961, hereinafter referred to as "the Act", the respondent No. 3, V.C. Shah, who is an Income-tax Officer and his party proceeded to the village, Nani Daman, and began the search of the business as well as residential premises of the petitioner, Bhagwandas Narayandas, on 10th July, 1969. While the search was in progress, there was some commotion created by some local people with the result that the search remained incomplete and was subsequently completed on 26th August, 1969. Certain articles including case of Rs. 59,000 and some fixed deposit receipts as well as ornaments were seized under a panchnama. Thereafter, on 29th August, 1969, a notice contemplated by rule 112A of the Income-tax Rules, 1962 (hereinafter referred to as "the rules"), was issued allowing the petitioner an opportunity to explain the nature of the possession and source of the acquisition of the currency of Rs. 59,000. After the petitioner offered his explanation, the respondent No. 3, who is also an Income-tax Officer, passed the order contemplated by section 132(5) of the Act, determining the total income of the petitioner from undisclosed source at Rs. 2,64,500. For the tax assessed on this account, the cash of Rs. 59,000 which was seized, was appropriated. Other documents and valuable things seized during the course of the search have been retained by the department.
2. Being aggrieved with this, the petitioner has now approached this court, inter alia, praying for a writ of mandamus or any other appropriate writ or direction or order directing the respondents to hand over to the petitioner the sum of Rs. 59,000 and fixed deposit receipts which have been attached during the course of the search. One of the prayers of the petitioner is for obtaining declaration that section 132 of the Act is ultra vires of the Constitution of India. But in view of the decision given by this court in Ramjibhai Kalidas v. I.G. Desai, Income-tax Officer [[1971] 80 ITR 721 (Guj).] this question is not agitated.
3. Shri Bhatt, who appeared on behalf of the petitioner, raised only the following four points during the course of hearing of this petition :
(1) Notice found at exhibit C and issued under rule 112A of the Rules is illegal inasmuch as it is issued beyond the period of 15 days from the date of the seizure, which, according to the petitioner, was made on July 10, 1969, and not on August 26, 1969, as contended by the department.
(2) Even the eventual order passed by the concerned Income-tax Officer under the provisions of sub-section (5) of section 132 of the Act on 22nd November, 1969, is beyond the period of 90 days from the date of the seizure, which is, as said above, according to the petitioner, 10th July, 1969.
(3) The department has not given any show-cause notice as contemplated by rule 112A of the Rules with regard to the fixed deposit receipts and documents of title relating to immovable properties, which were seized during the course of the search and, therefore, the retention of these documents by the department is illegal.
(4) The seizure carried out on 26th August, 1969, requires fresh authorisation in view of the fact that the authorisation issued on July, 1969, had already served its purpose by the search and seizure made on July 10, 1969, and, therefore, the cash amount of Rs. 59,000 and the fixed deposit receipts which have been seized on 26th August, 1969, cannot be retained by the department.
4. Since these are the only four points, which are raised on behalf of the petitioner, during the course of hearing of this petition, we concentrate our attention only on these points.
5. It should be noted that points Nos. 1, 2 and 4 are based on the petitioner's contention that the seizure of the cash amount of Rs. 59,000, golden ornaments and fixed deposit receipts had taken place on July 10, 1969, and not on August 26, 1969, as contended by the department. Relying on these premises the petitioner has pointed out that since the notice contemplated by rule 112A of the Rules has been given as late as 19th August, 1969, it falls clearly beyond the period of 15 days from 10th July, 1969, and, therefore, all the proceedings which were further taken up by the department under sub-section (5) of section 132 of the Act are vitiated. On going through the record of the case, we find that this contention is totally devoid of merits. It is undoubtedly true that the respondent No. 2 and his party first visited the residential and business premises of the petitioner on July 10, 1969, but the search, which was stated by this party, was not complete on that day. On that day, books of accounts such as rojmel and khatavahi of the relevant period, some files containing vouchers and other correspondence, lease deeds, bank pass books and some fixed deposit receipts were actually seized. But the further work of the search could not be proceeded with as some of the friends and well-wishers of the petitioner created uproar and made the situation tense. These facts are clearly borne out by reference to the affidavits made by respondents Nos. 2 and 3. Respondent No. 2 states in his affidavit that pursuant to the authorisation under section 132 of the Act, he and one W. Hasan started making search of the residential and office premises of the petitioner at Nani Daman on 10th July, 1969. During the course of the search, he collected account books and other documents and made an inventory thereof. What happened thereafter is best put in the words of the deponent himself as is found in paras. 1(d) & (c) and 2 of his affidavit :
"While preparing the inventory of the first floor by about 7.00 p.m. we heard a public noise and sounds of gun fire. When we came out to enquire about the matter it was found that the local public had become very uprorious and it was throwing stones on the Income-tax Officer who were making searches in the different houses nearby. Within no time the house in which we were making the search was also surrounded by a huge public and stonethrowing also started at this place. While we were enquiring about the cause of this uproar and stonethrowing our local inspector, Shri Shahstri, came to us and asked us to leave the premises without any loss of time as our lives were in danger because of the angry mood of the public which had become violent. Mr. Hasan and I immediately left the premises.
(e) Because of this sudden and dangerous development Mr. Hasan and I were neither able to complete the said inventory nor we were able to complete the panchnama. The cash and the golden ornaments which were found as stated above had also to be left where they were. I handed over all these books and other materials to Shri M.M. Pandya, Income-tax Officer, the third respondent herein, who was also an authorised officer and who is also the assessing officer for this case.
2. ........ I say that when Mr. Hasan and I left the petitioner's premises, the keys of the cupboard and drawer referred to hereinabove and also the papers found by Mr. Hasan and myself from the first floor of the premises and from the 2nd floor of the premises had remained with us...... Mr. Hasan and I carried with us the papers seized from the first floor of the unfinished inventory and the keys of the cupboard. I say that as the search could not be completed on the 10th July, 1969, I made an order under section 132(3) of the Act on the 11th July, 1969, requiring the petitioner not to remove or part with or otherwise deal with the money and valuable articles and things noticed at the time of the search but which could not be seized."
6. In paragraph 3 of his affidavit, this respondent has explained that the cash amount and jewellery, which were noticed in the cupboard, were not seized on 10th July, 1969, because further proceedings of the panchnama of seizure were not possible on account of the rowdy and violent attitude adopted by some of the residents of the village. It is further found by reference to exhibit A that on 11th July, 1969, an order, contemplated by section 132(3) of the Act, was passed. By this order the petitioner was requested not to remove, part with or otherwise deal with the cash and ornaments, which were noticed in the cupboard.
7. Shri Bhatt, the learned advocate of the petitioner, contended that even though it is true that on 10th July, 1969, the respondent No. 2 could not carry out complete search of the premises, the proceedings, which he had already undertaken on that day, reveal that all the articles including cash, ornaments and other documents were seized by him and, therefore, 10th or 11th July, 1969, should be considered as the proper due dates for computing the period of 15 days, for the purpose of the notice contemplated by rule 112A of the Rules. We are unable to accept this contention for the simple reason that the facts stated by the respondents Nos. 2 and 3 in their affidavits make it very clear that the cash and ornaments noticed in the cupboard were not at all seized on 10th July, 1969. The order passed under section 132(3) of the Act found at exhibit A clearly shows that these cash and ornaments were merely "attached" by the officer concerned. Shri Bhatt contended that attachment of cash and ornaments taken together with the fact that the officer concerned had also taken away the key of the cupboard with him would be sufficient for concluding that even the cash and ornaments were actually seized by him. This contention is not acceptable for the simple reason that the officer concerned was required to take the key with him only with a view to see that in the meanwhile the articles which were noticed in the cupboard were not tampered with. As a matter of fact, the order passed under section 132(3) of the Act found at exhibit A satisfactorily shows that this cash and ornaments were attached and the only method by which this attachment could have been effectively carried out was to take the possession of the key of the cupboard in which these articles were stored. Under the circumstances, we are of the opinion that it cannot be contended successfully that the seizure of cash and ornaments was carried out either on 10th or 11th July, 1969. We find that subsequently the search proceedings continued and cash as well as ornaments were actually seized on 26th August, 1969. The notice under rule 112A is found to have been given within 15 days after the seizure of the cash and ornaments in question. In view of this, we do not find any substance in points Nos. 1 and 2 raised on behalf of the petitioner.
8. So far as point No. 4 is concerned, Shri Bhatt's contention was that if it is held that the seizure of the cash and ornaments was carried out on 10th or 11th July, 1969, then the order passed under section 132(3) of the Act would not be proper as it does not fall within 90 days thereof. Even this contention is found to be without any force because of our finding that the seizure of the cash and ornaments was carried out only on 26th August, 1969. Thus, we do not find any substance even in point No. 4.
9. What remains now to be considered is only the point No. 3. Here, the contention of Shri Bhatt is that the department has admittedly seized some fixed deposit receipts and title deeds evidencing purchase of one property in Daman in the name of one Kalan Keshav. According to the petitioner, the retention of this fixed deposit receipt and title deeds is illegal in view of the fact that the notice under rule 112A of the Rules found at exhibit C does not refer to those articles but refers only to the cash amount of Rs. 59,000. According to the petitioner these fixed deposit receipts and title deeds are valuable things and articles to which the provisions of rule 112a of the rules apply. As against this, Shri Kaji, who appeared on behalf of the department, contended that section 132 of the Act as well as rule 112A of the Rules make a clear distinction between the assets such as money, bullion, jewellery or other valuable articles and things on the one hand and more documents on the other. So far as the assets as described above are concerned, the section as well as rule 112A provide a particular procedure but so far as the documents and books of accounts are concerned, section 132 contemplated altogether a different procedure. In this connection, he drew our attention to sub-section (8) of section 132 which says that books of accounts or other documents seized under sub-section (1) of section 132 shall not be retained by the authorised officer for a period exceeding 180 days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and approval of the Commissioner for such retention is obtained. According to Shri Kaji, therefore, the fixed deposit receipts and the title deeds of the immovable property as well as other documents which have been seized have been retained by the department under sub-section (8) of section 132 and, that being the position, there is no question of the application of the provisions contained in rule 112a of the rules.
10. It is evident from the above contentions of both the sides that the real question which is involved is whether the fixed deposit receipts and the documents of title relating to an immovable property are the specified items of assets contemplated by sub-section (5) of section 132 of the Act as well as rule 112A of the Rules.
11. Before considering this question, we find it would be of some assistance first to consider the scheme of section 132 of rule 112A. Section 132 of the Act refers to search and seizure and says that where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that any person to whom a summons or notice as referred to in clause (a) of that section might be issued, will not or would not produce any books of accounts or other documents, which are likely to be useful for or relevant to any proceeding under the Indian Income-tax Act, he may authorise any of the several officers mentioned in clause (c) of the section to seize any such books of accounts and other documents. Clause (c) of this section further provides that if the Commissioner has reason to believe that any person is in possession of any money, bullion, jewellery or other valuable articles or thing and such money, bullion, jewellery or other valuable articles or thing represents either wholly or partly income or property which has not been disclosed for the purpose of the Indian Income-tax Act, he may issue an authorisation to any of the officers mentioned in this clause to enter and search any building or place, to break open the lock of any door, box, locker, safe, etc., to place marks on identification on books of account and to make a note or an inventory of such money, bullion, jewellery or other valuable article or thing. Thus, clauses (b) and (c) of section 132 empower the Commissioner to authorise any of the officers mentioned in clause (c) to conduct a search and to seize assets such as money, bullion, jewellery or other valuable article or thing. For the purpose of considering this point, we are not concerned with sub-sections (2), (3) and (4) of section 132. But, sub-section (5) of this section authorises the Income-tax Officer concerned to estimate the undisclosed income of the assessee concerned in a summary manner to the best of his judgment, to calculate the amount of tax on the income so estimated and to specify the amount that would be required to satisfy any existing liability of the assessee under the Act. Of course, this order should be passed with the previous approval of the Commissioner and within 90 days of the seizure. Clause (iii) of sub-section (5) is material for our purpose, because it contains the directions as regards the retention to seized assets, or part thereof of the assessee, which, in the opinion of the Income-tax Officer, is sufficient to satisfy the aggregate of the amounts referred to in clauses (ii) and (iii) and to release the remaining portion, if any, of the said assets. This clause (iii) is in the following words :
"(iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230a in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized."
12. There are two provisos attached to sub-section (5) but for the purpose of this discussion reference to these two provisos is not necessary. These provisos of sub-section (5) make it clear that assets which are seized by the authorised officer of the department under sub-section (1) of section 132 are ultimately to be utilised for satisfying the tax liability of the assessee concerned. The provision as regards the retention of the assets or part thereof, which, in the opinion of the officer concerned, is sufficient to satisfy the tax liability of the assessee, does suggest that the assets which could be retained by the department should be such as are legally capable of being converted into cash amount. We shall discuss this aspect of the matter at a little later stage. For the present we may further proceed with the consideration of the scheme of section 132 and rule 112A.
13. Sub-section (6) of this section says that the assets retained under sub-section (5) may be dealt with in accordance with the provisions of section 132A of the Act. If a reference is made to section 132A, it will be found that it contains detailed provisions about the manner in which the assets retained under sub-section (5) of section 132 can be dealt with. For the present, we are not concerned with any of these provisions of section 132A. Sub-section (7) of section 132 provides for the contingency when the seized assets or any part thereof are held on behalf of some other person. Sub-section (8) refers to the seizure of account books and documents. Sub-section (9) provides for the copies of books of account and documents, which are seized. Sub-section (10) is also with regard to the account books and other documents which are retained. Sub-section (11) provides for the remedy of a person aggrieved by an order under sub-section (5). Sub-sections (12), (13) and (14) are not relevant for the purpose of this point.
14. Now, rule 112A provides for the manner in which inquiry under section 132 of the Act should be conducted. Sub-rule (1) contemplates the issuance of the show-cause notice. It is in the following terms :
"(1) Where any money, bullion, jewellery or other valuable article or thing (hereinafter referred to as assets) are seized, the Income-tax Officer shall within fifteen days of the seizure issue to the person in respect of whom enquiry under sub-section (5) of section 132 is to be made requiring him on the date to be specified therein (not being earlier than fifteen days from the date of service of such notice) either to attend at the office of the Income-tax Officer to explain or to produce or cause to be there produced evidence on which such person may rely for explaining the nature of the possession and the source of the acquisition of the assets."
15. We are not concerned with sub-sections (2), (3) and (4) for the purpose of this discussion.
16. It is evident from clause (e) of sub-section (1) read with the provisions of sub-section (5) of section 132 of the Act, that the officer authorised under section 132 can seize and retain for the purpose of sub-section (5) only those articles which fall within the category of "money, bullion, jewellery or other valuable article or thing". Sub-section (5) says that all those specified articles are shortly referred to as "assets". Rule 112A makes it clear that the show-cause notice contemplated by it is required to be given only with reference to those specified "assets" in respect of which inquiry under sub-section (5) of section 132 is contemplated. It, therefore, follows that if an article seized during the course of the search contemplated by section 132 of the Act is not covered by any category of the assets mentioned in sub-section (5) thereof, a show-cause notice contemplated by rule 112A need not be given. This position is not in dispute.
17. Shri Bhatt, however, contended that fixed deposit receipts and title deeds of an immovable property which are seized during the course of the search which was conducted on July 10, 1969, are covered by one of the categories of the assets mentioned in sub-section (5) of section 132, and, therefore, a show-cause notice contemplated by rule 112A within a period of fifteen days from the seizure was necessary with regard to them. Shri Kaji, however, contended on behalf of the department that neither fixed deposit receipts nor title deeds of the immovable property concerned are "valuable things or articles" the retention of which would require a show-cause notice under rule 112A. According to him, these articles are mere documents which can be dealt with as contemplated by sub-section (8) of section 132. Thus, the real controversy is whether the fixed deposit receipts and title deeds of the concerned immovable property are "valuable articles or things" within the meaning of sub-section (5) of section 132 of the Act.
18. On close consideration of the scheme of sub-section (5) of section 132, we find that the above referred contention of Shri Bhatt is not acceptable. As already pointed out by us in the foregoing discussion, it is evident from the scheme of sub-section (5) of section 132 that the "assets", which are seized during the course of an authorised search under section 132, are expected to be retained only for the purpose of satisfying the tax liability of an assessee as ascertained from his undisclosed income. Therefore, by using the words "valuable article or thing", what the legislature has intended to imply is that the assets covered by these words should be such as could be converted into cash so that the tax liability of the assessee concerned, as revealed from his undisclosed income, could be duly satisfied. In other words, the thing or article which can be retained under sub-section (5) of section 132 should be the one which is carrying its own intrinsic value in terms of money. Therefore, the question is whether the fixed deposit receipts and documents of title relating to an immovable property are the things or articles which can be evaluated in terms of money. Obviously, a document of title relating to an immovable property or even a fixed deposit receipt issued by a bank in favour of a particular person are merely the documents of title which, though possessing much evidentiary value, do not passes any intrinsic market value. They do supply evidence of assets which by themselves are valuable but they being mere documents of title, they can neither be negotiated nor be transferred for a valuable consideration. Under the circumstances, we are of the opinion that documents of title, which have no greater value than an evidentiary one, and which do not carry any saleable interest, are not the "valuable things or articles" contemplated either by sub-section (5) of section 132 of the Act or by rule 112A of the Rules. There is nothing in the record to show that the fixed deposit receipts, which are seized in this case, carry any inherent market value with them. They are merely the documents evidencing the debt due to the assessee. Similarly, the documents of title relating to an immovable property also contain no more value than an evidentiary one. Thus, since none of those documents has got any intrinsic value in terms of money, we are of the opinion that they are not covered by sub-section (5) of section 132 of the Act or rule 112A of the Rules. They would, of course, be covered by sub-section (8) of section 132 of the Act. But, for the purpose of this petition, we are not concerned with sub-section (8) of section 132. It is undoubtedly true that these fixed deposit receipts and documents of title relating to an immovable property were actually seized on 10th July, 1969, and if those documents were found to be "valuable articles or things", as contemplated by sub-section (5) of section 132 and rule 112A, then a notice within 15 days from the date of that seizure was necessary. But, as we have found that these documents are not valuable things or articles, we are of the opinion that no notice contemplated by rule 112A was necessary. In this view of the matter, the petitioner cannot succeed even so far as point No. 3 is concerned.
19. The result, therefore, is that this petition should fail. The same is, therefore, dismissed and the rule is discharged with costs.
20. Petition dismissed.
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