Citation Codes

Equivalent Citations

citation codes

Case Number

Civil Misc. Writ No. 3302 of 1963

Judges

V.G Oak
Gangeshwar Prasad, JJ.

Acts

Section 132 of the Income-tax Act, 1961 and Rule 111 (10) of the Income. tax Rules, 1962:
SECTION 132 INCOME TAX ACT 1961
Clause (e) of Sub-rule (2) of Rule 112, the Income-tax
Act. 8. Up to 1961 the Indian Income-tax Act, 1922
SECTION 297 INCOME TAX ACT 1961
provisions of the Indian Income-tax Act, 1922.
Section 132 of the I. T. Act, 1981
Section 132 of the I. T. Act, 1961.
Sections 96 and 98, Criminal P. C.
Section 132 and Rule 112
Sub-rule (10) of Rule 112
Sub-rule (2) of Rule 112.
INCOME TAX ACT 1961
Indian Partnership Act
Section 132, Rule 112
Section 96, Cr. P. C.,
Section 98, Cr. P. C.,
Sub-rule (2)

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Smart Summary

Structured Summary of the Court's Opinion

Factual and Procedural Background

These four connected writ petitions challenge search-and-seizure proceedings conducted under Section 132 of the Income-tax Act, 1961. The principal petitioners include the firm "Seth Brothers" (Meerut), Nath Brothers Private Limited, Seth Brothers Private Limited, and a partnership operating cold storages registered under the Indian Partnership Act. The firm Seth Brothers had pending assessment proceedings for the years 1960-61, 1961-62 and 1962-63 before the Income-tax Officer, D-Ward, Meerut.

The Commissioner of Income-tax, U.P., received reports alleging evasion and decided to search the premises of M/s Seth Brothers to obtain documents relevant to assessment. The opinion states that letters of authorization were issued in favour of Income-tax Officer, D-Ward, Meerut (the text records the date of issue in one place as 2-9-1963), and that under that authority two Income-tax Officers searched the premises at Shanti Niketan, Civil Lines, Meerut on the 7th and 8th of June, 1963 and seized a large number of documents.

The seized documents included materials belonging to Seth Brothers and to three other associated concerns (the other petitioners). The petitioners moved these writ petitions (filed in this Court on 22-8-1963) contending unlawful seizure and raising, among other points, the constitutionality of Section 132 (Articles 14 and 19 were pleaded). The court disposed of the four petitions by a common judgment.

Legal Issues Presented

Whether the search and seizure carried out under Section 132 of the Income-tax Act, 1961 (and Rule 112/Form No. 45) were lawful and within the limits of the power conferred on Income-tax Officers and the Commissioner.
Whether the practice followed in authorising and executing the search permitted a "fishing" or general raid rather than a focused seizure of documents the officer had reason to believe would be relevant (i.e., whether the requirements of "reason to believe" and a formed opinion were observed by the Commissioner and the Income-tax Officer).
Whether documents belonging to other, separately assessed entities could lawfully be seized under an authorization referring to Seth Brothers alone.
Whether procedural safeguards (specifying the thing to be searched for, placing identification marks on seized documents, proportionality of police accompaniment, and timely return or scrutiny of current books) required by the Criminal Procedure Code (as applied "so far as may be" by Section 132(2)) and Rule 112 were observed.
Whether Section 132 of the Act violates Articles 14 and 19 of the Constitution (noted in the petitions; the Court did not decide this point because it disposed of the matter on abuse-of-power grounds).

Arguments of the Parties

Petitioners' Arguments

The documents seized on 7 and 8 June 1963 were unlawfully taken from their possession and custody.
Section 132 of the Income-tax Act violates Articles 14 and 19 of the Constitution (this constitutional challenge was raised).
The search constituted a general raid or fishing expedition; large numbers of documents (over 500 entries in the lists) were seized, many of which were irrelevant to the assessment proceedings or belonged to other distinct entities.
The income-tax officers did not place identification marks on all seized documents; some documents were kept for over two months, causing prejudice to the petitioners' business activities.
The police strength and conduct during the raid were excessive and unnecessary; inventories (e.g., of ornaments) caused embarrassment.

Respondents' Arguments

The Commissioner issued authorization under Section 132 (Form No. 45) in respect of Seth Brothers; the two Income-tax Officers were thereby empowered to search and seize documents useful for proceedings in the case of Seth Brothers.
The documents seized included materials of closely associated business concerns; the respondents contended the four business concerns were closely associated (partners, shareholders, directors overlapping), which justified seizure of documents belonging to the other concerns as relevant to the Seth Brothers' case.
It was the Department's belief that the petitioners had not produced real books of account for certain years and had produced false account-books; this justified the investigation and search.
Some respondents denied knowledge of any order to conduct a general raid (the affidavits varied as to whether an instruction to impound everything had been given); the Commissioner and some officers filed counter-affidavits responding to particular allegations.
Respondents stated an intention to return current books after priority scrutiny and blamed the petitioners for obstructing that process (e.g., by sealing some books and not responding to requests to open them for examination); petitioners denied putting seals on all books and suggested the Department's request to open books came late.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Doongarmal Agency v. K. E. Johnson, AIR 1964 Assam 1 (Full Bench)	Authority for the proposition that a search may be held mala fide and invalidated where the search amounted to an improper or general raid.	The court cited this Full Bench decision as a similar case in which a search was unanimously held mala fide, using it to support the conclusion that a wide-ranging, non-focused seizure can be quashed.
Partap Singh v. State of Punjab, AIR 1964 S C 72	Principle that a person seeking to invalidate a governmental act must establish bad faith or abuse or misuse of power, but that abuse of power (even without proven personal enmity) may suffice to invalidate an act.	The court relied on this observation to explain that invalidation of the search could be grounded in abuse of statutory power (mala fide exercise) even without proof of personal enmity between the petitioners and officials.

Court's Reasoning and Analysis

The court's analysis proceeded in several linked steps, closely tied to the statutory scheme (Section 132 of the Income-tax Act), Rule 112, Form No. 45, and the analogous Criminal Procedure Code provisions that Section 132(2) brings into play "so far as may be."

1. Statutory scheme and division of functions: The court examined Section 132, Rule 112 (particularly Sub-rule (2)) and Form No. 45 and concluded these provisions allocate distinct and sequential duties. The Commissioner must first consider information and have "reason to believe" that a search is expedient; the authorization (Form No. 45) is issued by the Commissioner. After authorization, the Income-tax Officer conducts the search and is to form his own opinion "in his opinion" during the search as to which documents are relevant or useful for proceedings under the Act.

2. Relationship to Criminal Procedure Code: Because Section 132(2) incorporates search provisions of the Criminal Procedure Code "so far as may be," the court reasoned that searches under Section 132 ought to proceed on lines similar to Sections 96, 98 and 165 Cr. P. C. Those provisions require recording grounds of belief and, where possible, specifying the thing for which search is to be made. The court stated that Section 132 does not contemplate a "fishing inquiry"; there must be a fairly clear idea beforehand of which documents are to be seized from a certain place.

3. Application to facts — indicators of mala fide/abuse of power: The court carefully catalogued the facts suggesting the search and seizure exceeded lawful bounds:

There was an "enormous extent" of seizure (over 500 entries in the lists annexed), including broad entries like "one bundle loose papers" or "bundle of vouchers," indicating a non-specific, wide-ranging seizure.
Many seized documents appeared irrelevant to income-tax assessment (examples examined by the court: medicine vouchers, old cash-books and ledgers relating to another company and to years prior to the assessments in hand, advertisement files, temperature reports, patwari papers, maps, opinion for indemnity, certain powers of attorney), undermining the claim that each item was seized as "useful or relevant" to proceedings against Seth Brothers.
The authorization letters referenced only Seth Brothers; yet documents belonging to other separate entities were seized. The respondents' justification — that the entities were closely associated — did not dispense with the need for the Commissioner or the Income-tax Officer to show that those particular documents were relevant to the Seth Brothers' proceedings.
Identification marks required by the authorization were not placed on all seized documents; respondents conceded marks were placed only "wherever it was thought necessary."
Police accompaniment appeared excessive (a party of 12, none armed) without evidence that violence or risk justified such strength; inventories of ornaments were prepared though no case was made that such inventories were relevant to assessment, creating unnecessary embarrassment.
Seized documents, including current books of account, were detained for more than two months before the writ petitions were filed, prejudicing petitioners' business activities; although respondents stated an intention to scrutinize and return documents, the court found the detention lengthy and unjustified on the record before it.
Affidavit evidence left unanswered allegations that a Directorate-level instruction had ordered a general raid to seize all account-books and papers; no respondent flatly denied the averment in paragraph 56 of the petition that such an order existed, and some affidavits either did not address it or described the allegation as vague.

4. Legal conclusion from facts: The court concluded that the Income-tax Officers did not apply their minds to form an opinion as to relevancy or usefulness of the many documents seized; in particular, many documents were not examined or even looked into. The court emphasized that while the correctness of an officer's opinion is not open to judicial inquiry, it is open to inquiry whether any opinion was in fact formed. On the evidence, it was obvious no such focused opinion had been formed and the search had the character of an improper general raid.

5. Standard for invalidation of administrative action: Citing Partap Singh (AIR 1964 SC 72), the court noted that proving bad faith or personal enmity is not the sole route to invalidate a government action: abuse or misuse of power suffices. The court treated the excessive and unfocused seizure, seizure of irrelevant documents and other procedural lapses as an abuse of the power conferred by Section 132.

6. Reliance on precedent and remedial step: The court also invoked the Full Bench decision in Doongarmal Agency v. K. E. Johnson where a search was held mala fide. Considering all circumstances and authorities, the court found the search in the present cases mala fide in the sense of an abuse of statutory power, and that the proceedings should be quashed.

Holding and Implications

Holding:

The four connected writ petitions are allowed with costs.

Direct orders and immediate effects on the parties:

The Court directed respondents Nos. 3, 4 and 5 to return the documents seized on the 7th and 8th June, 1963 to the persons from whom they were recovered.
Costs were awarded in favour of the petitioners.

Broader implications as stated by the Court:

The Court quashed the impugned search and seizure proceedings as an abuse of the power conferred under Section 132; this decision was made on the facts of excessive, unfocused seizure and procedural failings rather than on the constitutionality of Section 132 (the constitutional challenge to Section 132 under Articles 14 and 19 was explicitly not decided because the petitions succeeded on abuse-of-power grounds).
The Court observed it would be open to the new Income-tax Commissioner to initiate a fresh proceeding under Section 132 of the Act if advised; in any fresh proceeding the Income-tax Officer must conduct searches in accordance with the law as explained in the judgment (i.e., with a proper application of mind to relevancy, specification as far as possible, marking of seized items, proportional police accompaniment, and not engaging in a fishing expedition).
No new constitutional precedent on Section 132 was laid down (the Court expressly did not reach the constitutional challenge), and the ruling is a fact-driven quashing of the specific search/seizure conducted in June 1963 on grounds of mala fide exercise/abuse of power.

Note: This summary is based exclusively on the content of the provided opinion. Where the opinion itself contained inconsistent date references (for example, differing dates for the issuance of authorization and other dates recorded in affidavits), the summary reflects the facts as presented in the opinion without correction or inference.

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Seth Brothers, Partnership Firm Through Sri Vishwa Nathi v. The Commissioner Of Income-Tax, U.P, Lucknow And Others

1. These four connected writ petitions ate directed against a proceeding under Section 132 of the Income-tax Act, 1961 (hereafter referred to as the Act). The same questions of law have been raised in the four cases. Most of the facts are common. It will, therefore, be convenient to dispose of the four writ petitions by a common judgment.

2. At Meerut there is a firm under the name and style 'Seth Brothers'.' The firm has been in existence for several years. Its constitution has been changed from time to time. The firm was reconstituted with effect from 2-4-1957. There are at present six partners in the firm. It has been assessed to income-tax. Assessment proceedings for the years 1960-61,1961-62 and 1962-63 are pending before the Income-tax Officer, D-Ward, Meerut. The Commissioner of Income-taxi U. P., Lucknow received reports to the effect that the firm has been evading payment of income-tax. He, therefore, decided to get premises of the firm searched for obtaining documents, which would be useful for assessment of income-tax. On 2-9-1963, letters of authorization were issued in favour of Income-tax Officer, D-Ward, Meerut. Under that authority, the two Income-tax Officers searched the premises of M/s Seth Brothers (Shanti Niketan, Civil Lines, Meerut) on the 7th and the 8th of June, 1963. The two officers seized a large number of documents from these premises. The documents so recovered included documents belonging to M/s Seth Brothers and also documents belonging to three other associated business concerns. Since then these documents have been in the custody of the income-tax authorities. These connected writ petitions are directed against the proceedings dated the 7th and the 8th of June, 1963. According to the petitioners, the documents were unlawfully seized from their possession.

3. Civil Miscellaneous Writ No. 3302 of 1963 is the leading case. M/s Seth Brothers are the petitioners in this case. Nath Brothers Private Limited is a private limited Company. It is the petitioner in Writ No. 3380 of 1963. Seth Bothers Private Limited is another private limited Company. It is the petitioner in Writ No. 3381 of 1963. M/s. Seth Brothers, Meerut, running Cold Storage at Chhibramau, district Farrukhabad and at Patna, are a firm registered under the Indian Partnership Act It is the petitioner in Writ No. 3382 of 1963. Documents belonging to these four business concerns have been seized by the income-tax authorities.

4. The learned counsel for the petitioners contended that Section 132 of the Act violates Articles 14 and 19 of the Constitution. Since these petitions succeed on the ground of abuse of power, it is not necessary to discuss the question of constitutionality of Section 132.

5. Section 132 of the Act deals with powers of search and seizure. Section 132 states:--

"(1) Subject to any rules made in this behalf, any Income-tax Officer specially authorised by the Commissioner in this behalf may,--

(i) enter and search any building or place where he has reason to believe that any books of account or other documents which in his opinion will be useful for, or relevant to, any proceeding under this Act,. may be found, and examine them, if found;

(ii) seize any such books of account or other documents;

(iii) place marks of identification on any such books of account or other documents or make or cause to be made extracts or copies therefrom;

(iv) make a note or an inventory of any articles or things found in the course of any search under this section which in his opinion will be useful for, or relevant, to any proceedings under this Act,--

(2) The provisions of the Criminal P. C., 1898, relating to searches apply, so far as may be, to searches under this section."

The Central Board of Revenue has framed Rules under the Act. Rule 112 deals with search and seizure. Rule 112 is in these terms:--

"(1) The powers of search and seizure under Section 132 shall be exercised in accordance with sub-Rules (2) to (10).

(2) The Commissioner may, for reasons to be recorded, issue a written order under his own signature and bearing his seal, specially authorising any Income-tax Officer, subordinate to him, to enter any building, or place, to be specified therein, where he has reason to believe that books of accounts or other documents which, in his opinion, will be relevant to or useful for any proceedings under the Act may be found. Such order may authorise the Income-tax Officer to do all or any of the following acts, namely:--

(a) to enter the said building or place with such assistance of police officers as may be required;

(b) to search the same and to place identification, marks on such books of account or other documents found therein as, in his opinion, will be relevant to or useful for any proceedings under the Act and to make a list of such books or documents with particulars of the identification marks thereon;

(c) to examine such books or documents and to make, or cause to be made, copies of or extract from such books or documents;

(d) to take possession of or seize any such books or documents;

(e) to make a note or an inventory of any articles or things found in the course of such search which, in his opinion, will be useful for or relevant to any proceedings under the Act;

(f) to convey such books or documents to the office of the Income-tax Officer or any other authority not below the rank of an Income-tax Officer employed in the execution of the Act;

(3) ...............

(4) ..............

(5) ..........

(8) ...............

(7) ...............

(8) ...............

(9) ...............

(10) The order of the Commissioner referred to in Sub-rule (2) shall be in Form No. 45." Form No. 45 as contemplated by Sub-rule (10) of Rule 112 runs thus:--

"Warrant of Authorization under Section 132 of the Income-tax Act, 1961 and Rule 111 (10) of the Income. tax Rules, 1962:

The Income-tax Officer.....

Whereas information has been laid before me and on the consideration thereof I have been led to believe that certain books of account and/or documents which are or may be relevant to or useful for proceedings under the above Act in the case (name of the assessee with G. I. R. No......) have been kept and are to be found at (specify particulars of the building or place).

This is to authorise and require you (Name of the Income-tax Officer).

(a) to enter and search, with such assistance of police officers as may be required, the said premises;

(b) to place identification marks on such books and documents as may be found in the course of the search and as you may consider relevant to or useful for the proceedings aforesaid and to make a list thereof together with particulars of the identification marks;

(c) to examine such books and/or documents and make, or cause to be made, copies or extracts from such books and documents;

(d) to seize such books of account and/or documents, and take possession thereof;

(e) to convey such books or documents to the office of the Income-tax Officer or any other authority not below the rank of an Income-tax Officer employed in the execution of the Act; and

(f) to exercise all other powers and duties under the said section and the rules relating thereto.

Commissioner of Income-tax."

6. It will be segn that under Section 132 and Rule 112 different duties have been assigned to the Commissioner and the Income-tax Officer. The expression "where he has reason to believe" appears in the fourth line of Sub-rule (2) of Rule 112. There was a good deal of discussion as to whether the pronoun 'he' refers to the Commissioner or the Income-tax Officer. It will be noticed that the first sentence of Form No. 45 contains a similar provision. Form No. 45 is signed and issued by the Commissioner. Form No. 45 opens thus :

"... . Whereas information has been laid before me and on the consideration thereof I have been led to believe. . . .."

In this sentence the pronoun T clearly refers to the Commissioner. It, therefore, appears that the pronoun 'he' in the phrase "where he has reason to believe" in the fourth line of Sub-rule (2) of Rule 112 has also reference to the Commissioner. The second sentence in Sub-rule (2) of Rule 112 is :

"Such order may authorise the Income-tax Officer to do all or any of the following acts, namely :

(a)...............................

(b) to search the same and to place identification marks on such books of account or other documents found therein as, in his opinion, will be relevant to or useful for any proceedings under the Act and to make a list of such books......"

The expression "in his opinion" appearing in Clause (b) has reference to the Income-tax Officer.

7. The plan of Section 132, Rule 112 and Form No. 45 appears to be this. Initiality, the Commissioner receives certain information, which makes it expedient to organize a search. When the Commissioner has reason to believe that relevant document can be recovered by arranging a raid, he authorises an Income-tax Officer to make a search. When he is so authorised, the Income-tax Officer proceeds to search a building or place. During the search the Income-tax Officer can seize such documents, as, in his opinion, would be useful for any proceedings under the Act. It will be seen that at different stages in the proceeding the Commissioner and the Income-tax Officer have to apply their mind to the problem of relevancy of documents for purposes of proceedings under the Act.

8. Up to 1961 the Indian Income-tax Act, 1922 was in force. The Income-tax Act, 1961 came into force on 1-4-1962. Assessment proceedings for Seth Brothers for three financial years 1960-61, 1961-62 and 1962-63 are pending before the Income-tax Officer concerned. It will be noticed that a part of this period was before 1-4-1962. Section 297 of the Income-tax Act, 1961 deals with repeals and savings According to Clause (a) of Sub-section (2) of Section 297 of the Act,

"where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed."

In paragraph 38 of the counter-affidavit of respondent No. 4, it is stated that returns of income for assessment years 1960-61, 1961-62 and 1962-83 were filed on 8-7-1960, 30-6-1961 and 5-10-1962 respectively. It will be seen that returns for two assessment years 1960-61 and 1961-62 were filed by Seth Brothers before the commencement of the Income-tax Act, 1961. Assessment of income-tax for those two years will have to be done under the provisions of the Indian Income-tax Act, 1922. It may not ba possible to treat those assessment proceedings as proceedings under the 1961 Act. Assessment for the year 1962-63, will undoubtedly be a proceeding under the 1961 Act.

9. The first point that one notices about the impugned seizure proceedings is the enormous extent of the seizure. Annexures 'Z-1' to 'Z-19' to the petition in Writ No. 3302 of 1963 are lists of documents seized by respondents Nos. 3 and 4. After omitting ornaments etc., we come across more than 500 entries relating to documents. Some of these entries are: "one bundle loose papers", "bundle of vouchers" etc. Each of such entries accounts for several documents seized by the respondents. So the total number of documents seized during the raid must considerably exceed 500.

10. Annexures 'D-l' and 'D-2' to the writ petition are copies of letters of authorization issued by the Commissioner of Income-tax. In those letters it was stated that the two Income-tax Officers could seize documents which would be useful in proceedings in the case of Seth Brothers. But the documents seized by respondent Nos. 3 and 4 not only cover documents belonging to Seth Brothers, but also documents belonging to three other business concerns which are the petitioners in the other three cases. For justifying the seizure of documents belonging to those other concerns, it was contended for the respondents that all the tour business concerns are closely associated with one another. There are three brothers-- Prithwinath, Vishwanath and Baikunth Natiu Prithwinath's son is Man Mohan Nath. These four persons or most of them figure as partners, shareholders or directors in all the four business concerns. It, therefore, became necessary to seize documents, belonging to the other three business concerns also. It is true that the four business concerns are closely associated to one another. But the four concerns are being treated as four separate entities for income-tax purposes. The letters of authorization issued by respondent No. 1 made mention of the case ot Seth Brothers only. Documents belonging to other firms or Companies could not be seized under that authority, unless it can be shown that those documents are useful for proceedings in the case of Seth Brothers.

11. On going through the lists of documents. (Annexures Z-l to Z19), we come across several documents, the relevancy of which is questionable Clause (e) of entry No. 6 of list No. 7 is: "File containing vouchers for medicine." Vouchers for medicine purchased by some partner or partners can have little bearing on income tax proceedings. Serial Nos. 30, 31 and 32 of list No. 9 relate to two cash-books and one ledger belonging to Nath Brothers for the years 1958 and 1959. In the first place, the registers belonged to Nath Brothers, and not to Seth Brothers. Secondly, those registers are for a period prior to the assessment proceedings in hand. Serial No. 3 of list No. 10 is: "Advertisment file". I do not see how an advertisement file can help an Income-tax Officer in an assessment proceeding. Item No, 11 of list No, 10 is: "File, Temperature Report. Patna". I do not understand what bearing a temperature report can have on an assessment proceeding. Serial No. 51 of list No. 10 is: "Patwari papers ot Pabli". In the first place, the respondents are not handling any proceeding for agricultural income-tax. Secondly, it is always possible for the respondents to obtain copies of village papers from the official concerned. It was hardly necessary to seize Patwari papers from the petitioner's office. Item No. 62 of list No. 10 is: "three maps of Cold Storage". If the authorities wish to ascertain the extent ot business conducted at the Cold Storage, a local inspection would be the proper course. Maps by themselves can give the respondents little help in this matter. Serial No. 1 of list No. 12 is: "A note in Hindi dated b-8-1981 regarding opinion for indemnity". It is difficult to see how an opinion for indemnity can help the respondents in assessment proceedings. Item 8 of list No. 12 is: ''power of attorney in favour of Seth Prithvi Nath. Seth Baikunth Nath and Seth Vishwa Nath written by Seth Prithvi Nath and Dr. Man Mohan Nath......" Mr. Gulati appearing for the Department, was unable to explain the relevancy of this document.

12. In paragraph 56 of the petition it is stated:

"That it appears that the Deputy Director of 'Inspection...ordered a raid for search and seizure of all the account books and papers which could be found."

A number of counter-affidavits have been filed by the respondents. There is one counter-affidavit by Sri A. L. Jha, who was then the Commissioner of Income-tax. His counter-affidavit contains no reference to paragraph 56 of the writ petition. Another counter-affidavit has been filed by Sri Agarwal, respondent No. 4. This counter-affidavit is much more detailed. In paragraph 19 of this counter-affidavit it is stated that the deponent has no knowledge of the averments contained in paragraph 56 of the writ petition Another counter-affidavit has been filed by Sri Mitra, who is Income-tax Officer in charge of Special Investigation, Circte B, Meerut. This counter-

affidavit contains no reference to paragraph 56 of the writ petition. A counter-affidavit has been filed by Sri rUmaswamy, who is the Deputy Director of Inspection (Investigation), New Delhi. In paragraph 6 of this counter affidavit it is merely stated that, paragraph 56 of the writ petition is vague. The deponent denied having ordered any raid or search. It will be seen that no one has expressly denied the allegation contained in paragraph 56 of the writ petition to the effect that there was an order for search and seizure of all account-books and papers. In paragraph 62 of the writ petition it is stated that, Income-tax Officers (respondents No. 3 and 4) were saying on the spot that they had directions to impound everything that they found for the purpose of investigation by the Directorate. Respondent No. 3 in his counter-affidavit makes no relerence to this charge. Paragraph 24 of the counter affidavit of respondent No. 4 deals with paragraph 62 of the writ petition. But there also we do not find any denial of the charge that the Income-tax Officers had instructions to impound everything that they could find. In Writ No. 3380 of 1963 (Nath Brothers) it is stated in paragraph 33 that, the Commissioner issued the order of authorization on receiving a direction from the Director of Investigation, Delhi. The Commissioner did not file any counter-affidavit in this case.

13. On 29-5-1983 Sri A. L. Jha, Commissioner of Income-tax drew up the following note : --

"Sri R. R. Agarwal, I. T. O., D-Ward, Meerut in his reports dated 28.5-1963 request for authorisation under Section 132 of the I. T. Act, 1981 to enter and search the premises of M/s. Seth Brothers (G. I. R. No, 137-S/D) and those of Seth Baikunth Nath Seth (G. I. R. No. 45 b/D) of Shanti Niketan, Civil Lines, Meerut. On the facts stated in I. T. O's reports, I am satisfied about the need for issue of the authorisation under Section 132 of the I. T. Act, 1961.

Warrants of authorisation are therefore issued to the following Income-tax Officers in respect of the premises specified in the warrants.

1. Shri R. R. Agarwal, I. T. O., D-Ward, Meerut.

2. Shri B. Kapur, I. T. O., Spl, Inv. Circle 'A', Meerut."

14. The two letters of authorization (Annexures W-a and W-2) were drawn up in Form No. 45. Annexure W-a ran thus:--

......I have been led to believe that certain books of account and/or documents which are or may be relevant to or useful for proceedings under the above Act in the case of Seth Brothers, G. I. R. No, 137-S have been kept and are to be found at Shanti Niketen.........This is to authorise and require you............

It will be seen that none of these documents drawn up by the Commissioner of Income-tax gives details of the documents that were to be seized. All that was stated in these orders was that, documents useful for proceedings under the Act in the case of Seth Brothers could be seized,

15. According to Sub-section (2) of Section 132 of the Act, the provisions of the Cri. P. C., 1898 relating to searches shall apply, so far as may be, to searches under this section. It wilt, therefore, be useful to examine the provisions of the Cri. P. C. (hereafter referred to as the Code) relating to searches.

16. Ch. VII of the Code deals with searches and allied matters. Under Section 94, Cr. P. C.. a Court may summon a document or thing. Section 96, Cr. P. C., provides for the issue of a search warrant. Section 96, Cr. P. C., states:

(1) Where any Court has reason to believe that a person to whom a summons or order under Section 94 ............has been or might be addressed, will not or would not produce the document or thing......it may issue a search warrant...

Section 98, Cr. P. C., provides for setrch of a house. Section 98, Cr. P. C. states: --

such officer may, after recording in writing the grounds of his belief and specifying in such writing, so' far as possible, the thing for which search is to be made, search, or cause search to be made, for such thing in any place..... "

It will be seen that, under this section, a police officer has to specify in writing the thing for which a search is going to be made.

17. It may be that Sections 96 and 98, Criminal P. C. do not in terms apply to a search under Section 132 of the Act. But the reference to the Criminal P. C. in Sub-section (2) of Section 132 of the Act is an indication that, in conducting searches under S, 132 of the Act, an Income-tax Officer ought to proceed on the lines of Sections 96, 98 and 165, Criminal P. C. Section 132 of the Act does not contemplate a fishing inquiry. Before starting a search the Commissioner and the Income-tax Officer ought to have a fairly clear idea as to which documents have to be seized from a certain place.

18. In para. 80 of the writ petition it is stated that, the petitioner had never in the past refused to produce any account-book required by the Department. On this point, it is stated in para. 42 of the counter-affidavit of respondent No. 9 that, it was the belief of the Department that real books of account and documents revealing the true state of affairs were never produced by the petitioner, and that the books produced by them for certain years were false account books. It may be that the authorities were not satisfied with the returns submitted by the petitioner. But it has not been shown that the petitioner had ever refused to produce any document summoned from it under Section 131 of the Act (or the corresponding provision under the old Act).

19. Police officers accompanied the Income-tax Officers during the raid. According to the counter-affidavit of Satyapal Tyagi, Sub-Inspector, the police party consisted of a Sub-Inspector, two head constables and nine constables. None of them belonged to armed police. They did not carry fire-arms during the search. Two constables were sent away after an hour. The other members of the police party withdrew at 5 p.m. on 7-6-1963. No police man was present during the search on 8-6-1963. It will be seen that the police party accompanying the Income-tax Officers consisted of 12 officials in all. It may be that the strength of the police party was fixed by the Superintendent of Police, Meerut. But he must have consulted the Income-tax Officers in this matter. There is no indication that the partners of the firm were likely to resort to violence, or that any member was a previous convict. The strength of the police party appears excessive.

20. The property examined by the Income-tax Officers included several ornaments. Inventories of these ornaments were prepared. It is true that the ornaments were not taken away by the Income-tax Officers. But the question remains whether it was at all necessary to prepare a list of ornaments. According to Clause (e) of Sub-rule (2) of Rule 112, the Income-tax Officer is authorised ''to make a note or an inventory of any articles or things found in the course of such search which in his opinion will be useful for or relevant to any proceedings under the Act." Under Clause (e), it is permissible to prepare an inventory of articles or things other than documents. In a special case it may become necessary to prepare an inventory of ornaments during a search. But such cases would be rare. It has not been shown that in the present case an inventory of ornaments was useful for a proceeding under the Act. To prepare an inventory of ornaments can cause unnecessary inconvenience and embarrassment to the owner.

21. In para, 62 of the writ petition it was stated that) the Income tax Officers did not place any mark of identification on the documents seized by them. On this point, it is stated in para. 24 of the counter-affidavit of respondent No. 4 that, identification marks were placed on some books and documents wherever it was thought necessary. The respondents thus concede that identification marks were not placed on all the documents, which were seized during the search. According to Annexures W.I and W-2, respondents Nos. 3 and 4 were required by the Commissioner

"to place identification marks on such books and documents as may be found in the course of the search . . . ."

According to those instructions, identification marks ought to have been placed on all the documents) that were seized by the respondents. That instruction was partly ignored.

22. The documents in question were seized on the 7th and the 8th of June, 1963. The present writ petitions were moved in this Court on 22-8-1963. The documents remained in the custody of the respondents till then. On this point, it is stated in para. 30 of the counter-affidavit of respondent No. 5 :

''..... It was the intention of the Department to return to the petitioners their current books of account after scrutiny as early as possible on priority basis, but the petitioners are themselves responsible for thwarting this effort of the Department first by putting their own seals on some of the books and documents at the time of the search and thereafter by not responding to the request of the Department to be present to open the books for the purpose of scrutiny on 13th August 1983, on which date it was proposed to open and arrange the books."

On this point, it is stated in para. 64 of the rejoinder affidavit No. 1 :

".. . .It is not correct to say that the petitioners put their seals on books or documents. The request for opening the books was made as late as in the middle of August only."

It may be that some of the documents seized by the respondents were sealed up by the petitioner. But the respondents have not suggested that all the documents were thus sealed up by the petitioner. Admittedly, several documents were available for inspection and scrutiny. It was not till 13-8-1983 that the petitioner was called upon to open up the books. The documents seized from the petitioner included several current books of account. Detention of these books of account tor over two months must have seriously prejudiced the various petitioners in their business activities.

23. A similar case came up before a Full Bench of Assam High Court in Doongarmal Agency v. K. E. Johnson, AIR 1964 Assam 1 (FB). The Court unanimously held that the search was mala fide.

24. According to the petitioner, Satya Prakasb, respondent No. 7 had enmity with the petitioner. He persuaded respondent No. 9 to assess the petitioner to income-tax highly. It is at the instance of respondent No. 9 that the search was organized. Respondent No. 9 stated in para. 29 of the counter, affidavit that, he did not know Satya Prakash at all. There was no extraneous consideration. Assessment orders were passed on merits. Letters of authorization were issued by the Commissioner of Income-tax. Search was conducted by respondents Nos. 3 and 4. There is no allegation of enmity against respondents Nos. 1, 3 and 4,

25. In Partap Singh v. State of Punjab, AIR 1964 S C 72 it was observed on p. 83 :

"Doubtless, he who seeks to invalidate or nullify any act or order must establish the charge of bad faith and abuse or a misuse by Government of its powers."

That observation shows that it is possible to invalidate a certain action by a Government officer without establishing enmity between the petitioner and the Government officer. Abuse of power may suffice to invalidate or nullify an act.

26. The search and the seizure in this case leave no room for doubt that the Income-tax Officer did not at all apply his mindi and formed no opinion regarding the relevancy or usefulness of the account, books and documents for any proceedings under the Income-tax Act of 1961. Many documents were not examined, or even looked into. It is no excuse for the non-observance of the requirements of law that the number of books and documents was very large, and their examination would have taken considerable time. The correctness or otherwise of the opinion actually formed is not subject to enquiry. But if it is obvious that no opinion was in fact formed, the search and the seizure must be held as having been in excess of the powers conferred upon the Income-tax Officer.

27. On examining the circumstances under which the search was conducted in the present case, we note the following points :

(a) There is reason to believe that there were instructions from the Directorate of Inspection, New Delhi for a general raid and seizure of all account-books and papers which could be found at the petitioner's premises.

(b) More than 500 documents were seized from the premises.

(c) Some of the documents seized by the respondents appear to be irrelevant for the purpose of any proceeding under the Act.

(d) Besides documents belonging to Seth Brothers (G. I. R. No. 137-S), the Income-tax Officers seized documents belonging to another firm and two Companies.

(e) Marks of identification were not put on several documents.

(f) The documents seized on the 7th and the 8th of June, 1963 were detained by the respondents for more than two months before the writ petitions were filed in this Court.

(g) The police force employed during the raid was excessive.

28. In view of all these circurastances, the search does not appear to be bona fide. It is true that there was no ill-will between the four petitioners on one side and respondents Nos. 1, 3 and 4 on the other side. But the extent of the seizure was far beyond the limits of Section 132 of the Act. The action was mala fide in the sense that, there was abuse of power conferred on "income-tax Officers by Section 132 of the Act. The act being mala fide, the proceeding should be quashed by this Court by issuing a writ of mandamus.

29. The letters of authorization dated 29-5-1963 were issued by Sri A. L. Jha, who was then the Commissioner of Income-tax, U. P. He died in December last. It will be open to the new Income-tax Commissioner to initiate a fresh proceeding under Section 132 of the Act, if he is so advised. In case another letter of authorization is issued under Section 132 of the Act, the Income-tax Officer will have to conduct the search in accordance with law as explained in this judgment.

30. In my opinion, the four connected petitions should be allowed with costs. And the respondents should be directed to return the documents to the petitioners.

Gangeshwar Prasad, J.

31. I agree.

BY THE COURT. -- These four connected petitions are allowed with costs. We direct respondents Nos. 3, 4 and 5 to return the documents seized on the 7th and the 8th June, 1963 to the persons from whom they were recovered.

Seth Brothers, Partn... v. The Commissioner Of ...