High Court Of Delhi
Bandel Traders (P) Ltd. vs. Union Of India
Sections 132(1)
S.K. Mahajan, J.
Civil Writ Petn. No. 6392 of 2000
28th April, 2003
Counsel Appeared
Anil Mittal, for the Petitioner : Pandey & Ajay Jha, for the Respondent
JUDGMENT
S.K. MAHAJAN, J. :
Petitioner is a company incorporated under the Companies Act with its registered office in Calcutta. In July, 2000, petitioner-company is alleged to have taken a premises bearing No. C-1/1, Rajouri Garden, New Delhi on rent from S/Shri Nandlal Kothari and Shri Shyam Sunder Kothari who were the owners of the said building, for starting the business of import and export, sale and purchase of marble, granite, stones, marble-chips and marblestone in Delhi; that the lease dt. 26th June, 2000, was, accordingly executed between Shri Nandlal Kothari and Shri Shyam Sunder Kothari on the one hand and petitioner-company on the other, leasing a portion of the aforesaid property to the petitioner-company at a rent of Rs. 6,000 per month. On 7th Sept., 2000, the premises of the petitioner was searched by the officials of the IT Department under s. 132(1)(i) to (v) of the IT Act (in short referred to as the Act) to carry on search and seizure of M/s Kothari Marbles and M/s Kothari Exports and the business concerns of Kothari Group. The officers of the petitioner were stated to have initially raised objections to the search of the petitioner’s premises pursuant to the warrants issued against M/s Kothari Marble and M/s Kothari Exports, however, later on they willingly allowed the search of its premises and seizure of books of account, etc. by the IT Department. After searching the premises, the officers had stated to have seized certain books of account and documents and prepared inventory of the books of account belonging to the petitioner. On 25th Sept., 2000, the petitioner is stated to have received a letter from its bankers informing it that the operation of its accounts with the bank had been stopped because of an order received by the bank from the Dy. Director of Income-tax, Ludhiana. It was on receipt of this order that the petitioner filed the present writ petition for declaring that the search and seizure carried out by the respondents at its premises bearing No. C-1/1, Rajouri Garden, New Delhi on 7th Sept., 2000, was illegal and without any lawful authority and for quashing the order dt. 24th Sept., 2000, passed by the respondent stopping the operation of the bank accounts by the petitioner. The petitioners have also prayed for return of all the documents seized by the IT authorities during the search and seizure of their premises. The contention of learned counsel for the petitioner is that under s. 132(1)(c) the authorised officers had the power to seize only those documents/books/money which relate to the income-tax, which has not been disclosed or would not be disclosed to the IT Department. It is submitted that since it was the first year of the operation of the petitioner-company and the time for filing the return had not yet come, no return of income was filed by the petitioner and it was, therefore, premature to apprehend that the petitioner would not disclose its correct income to the Department and there was no question of the petitioner having not disclosed such income as the return of income was yet to be filed by the petitioner-company and as such the provisions of s. 132 (1)(c) of the Act were not applicable and consequently the premises of the petitioner could not be searched. It is also submitted that the bank account having been disclosed by the petitioner in its book of account, operation of the same could not be stopped by the respondent. It is also the contention of learned counsel for the petitioner that the petitionercompany had no connection whatsoever either with Shri Nandlal Kothari or with any of the two companies viz., M/s Kothari Marbles and M/s Kothari Exports and the premises of the petitioner, therefore, could not be searched and the documents could not be seized pursuant to the search warrants having been issued for search of the premises of M/s Kothari Marbles and M/s Kothari Exports belonging to Shri Nandlal Kothari.
It is not denied that the property bearing No. C-1/1, Rajouri Garden, New Delhi was also shown to be the registered office of the M/s Kothari Marbles and M/s Kothari Exports. It is also not denied that this address was disclosed by both M/s Kothari Marbles and M/s Kothari Exports to be one of their office addresses with the IT Department. The stand of the Department of Income-tax in its counter-affidavit is that while conducting search at the premises of M/s Kothari Marbles and M/s Kothari Exports, the persons who were present at site did not inform that the petitioner was a company different and distinct from the company belonging to Shri Nandlal Kothari or that the petitioner-company was only a tenant in the premises and it had nothing to do with either M/s Kothari Marbles or M/s Kothari Exports. It is also the case of the respondents that during the search of the premises, they found a document relating to the activities of different companies of Kothari Group of Companies and the petitioner was mentioned to be a financial company of the Group recently acquired by the Kothari Group. It is submitted that during the course of the search, the statement of Shri Nandlal Kothari was recorded and in his reply to a question it was stated that the petitioner-company was his valued customers and they had financed M/s Dee Pearls India (P) Ltd., another company of the Kothari Group of Companies and petitioner had paid Rs. 3 crores in advance for supply of marbles to them. It was also stated by Shri Nandlal Kothari while replying to another question that to the best of his memory no share of the petitioner-company was owned by him or by his family members. It is submitted that according to the documents recovered by the Department during search, Shri Nandlal Kothari and his relatives were holding majority shares of the petitioner-company. The photocopies of some of the cheques issued by the Kothari family to the petitioner-company were also recovered and it was written that those cheques were issued for purchase of shares of the petitioner-company. It was also stated in the counter-affidavit by the respondents that Mr. Deepak Baheti who was shown to be a Director of the petitioner- company was merely an employee of Shri Nandlal Kothari and that he was instrumental in transferring crores of rupees from the accounts of the petitioner-company favouring other concerns of the Kothari Group of Companies as signatory of the bank account of the petitioner-company. Mr. Deepak Baheti avoided to make any representation nor did he appeal before the IT authorities despite summons having been issued to him. It was also stated that Mr. Deepak Baheti was signing the bills of not only the petitioner-company but also of M/s Dee Pearls India (P) Ltd. at the same time even though both the concerns were having two independent premises as their offices. It is submitted that if Mr. Deepak Baheti was the Managing Director of the petitioner-company, there was no question of his signing and issuing bills of M/s Dee Pearls India (P) Ltd. which had its office at D-14, Rajouri Garden, New Delhi. Mr. Deepak Baheti had also stated to have sent fax messages on behalf of M/s Dee Pearls India (P) Ltd. and Shri Nandlal Kothari. It is submitted that the lease deed was a fictitious document prepared only to show the existence of two different parties and it did not reflect the true state of affairs.
In reply to the contention of the petitioner that its premises could not be searched under s. 132 (1)(c) of the Act nor the operation of the bank account could be stopped as the same had been disclosed by the petitioner in its books of account, learned counsel for the respondent submits that the search of the premises of the petitioner was in fact a consequential action conducted on the basis of the information given by Mr. Shyam Sunder Kothari in his statement recorded by the IT Department on the date of the search. It is submitted that the search was not carried out under s. 132(1)(c) of the Act but it was a direct result of the information gathered by the Department during the search and seizure of the premises of M/s Kothari Marbles and M/s Kothari Exports and from the statements of Mr. Shyam Sunder Kothari and Shri Nandlal Kothari. It is also submitted that the action to restrain the petitioner from operating the bank account was taken after thorough examination of the material collected during the course of the search to safeguard the interest of the Revenue. It is submitted that the investigations revealed that a sum of Rs. 50,00,000 was withdrawn from the bank account by the petitioner-company on 23rd Sept., 2000 and a sum of Rs. 1 crore was transferred from the bank by the petitioner to the account of M/s Dee Pearls India (P) Ltd. It is submitted that it was in these circumstances that the Department was constrained to take steps to restrain the petitioner from operating its bank accounts. It is submitted that the order retraining the petitioner from operating the bank account was not due to the petitioner having not disclosed the same in its book of account but was in the larger interest of Revenue and with a view to avoid the petitioner from further withdrawing money from the aforesaid accounts. The petitioner in the rejoinder has not denied that Mr. Deepak Baheti, the Managing Director of the petitioner-company was not only signing the bills and vouchers of the petitioner-company but was also signing the bills and vouchers of M/s Dee Pearls India (P) Ltd., which was admittedly a group company of Kotharis. Petitioner has also not denied that large sum of money was transferred from the account of the petitioner to the account of M/s Dee Pearls India (P) Ltd. Petitioner has also not denied in the rejoinder that certain fax messages were sent by the aforesaid Mr. Deepak Baheti for and on behalf of M/s Dee Pearls India (P) Ltd. as well as on behalf of Shri Nandlal Kothari. It is not explained either in the rejoinder or during the course of argument as to in what capacity Mr. Deepak Baheti was acting for and on behalf of M/s Dee Pearls India (P) Ltd. If there was no interlinking between the Kothari Group of Companies and the petitioner-company, there was no occasion for the Managing Director of the petitioner-company to work for and on behalf of M/s Dee Pearls India (P) Ltd. or on behalf of Shri Nandlal Kothari. The very fact that Mr. Deepak Baheti who was the Managing Director of the petitioner-company was very closely connected with Shri Nandlal Kothari and M/s Dee Pearls India (P) Ltd. and was working for the said company as well clearly show that all these companies were interlinked with each other and I am satisfied that there was material before the respondent-authorities to come to a finding that large sum of money was being transferred clandestinely and being frittered from the account of the petitioner-company to M/s Dee Pearls India (P) Ltd. or to some other companies with a view to evade income-tax. Though Mr. Kothari in his statement had stated that to the best of his memory, he or his relatives did not have any share in the petitioner- company, however, the material on record clearly show that quite a large number of cheques were issued to the petitioner-company for purchase of shares in the name of Shri Nandlal Kothari and his relatives. The respondents have filed an additional affidavit to explain as to how the money had changed hands and how it was transferred from the account of one company to the account of another company. On careful study of the profiles of these companies it was found that all these companies were having common addresses and common directors. Back- tracing these accounts, it was found that actually these companies were laundering money. The total amount of cash deposited in 4 to 5 companies exceeded Rs. 90 crores; the source of cash was not explained and cheque entries were given to large number of persons including Mr. Kothari through conduit companies. All these allegations cannot be brushed aside simply on the basis of the averments made in the writ petitions. These are the questions which are required to be examined by the Department. The respondents have disclosed that during the financial year 1999-2000 various concerns of Kothari Groups received a total of Rs. 5,97,00,000 from the petitioner-company. In view of the fact that an elaborate network of companies was created in Calcutta and Delhi in which cash was being deposited and was subsequently transferred to 5 to 6 intermediary companies on the same day, in my opinion it was necessary for the respondents to make further enquiries from the addresses at Delhi and Calcutta to find out the source of cash deposited in the various companies and it was in that context that searches were conducted in some of these companies in Delhi and Calcutta including the petitioner-company and efforts were made to trace the Directors of the companies.
Till date most of the Directors of the respondent-company like Sen Gupta, Dutta Roy, etc. have not been traced and it justifies the search in the premises of the petitioner and the seizure of the documents therefrom. It is not a case where the search has been carried out unauthorisedly or without any material before the authorities to link the Kothari Group of Companies with the petitioner. I am, therefore, of the considered opinion that no infirmity or illegality can be found with the search of the business premises of the petitioner-company or with the seizing of the accounts and restraining the petitioner from operating its bank accounts. The action having been taken by the respondents bona fide strictly in accordance with law, no case is made out for setting aside the same. I, therefore, do not find any merit in the present petition and the petition is, accordingly, dismissed with costs assessed at Rs.5,000.
[Citation : 263 ITR 431]
