High Court Of Karnataka
Rudrachar vs. Director Of Income Tax (Inv.) & Ors.
Sections 132
R.V. Raveendran & N.K. Patil, JJ.
Writ Appeal No. 2434 of 1999
3rd November, 2001
Counsel Appeared
M.R. Shailendra, for the Appellant : E.R. Indra Kumar, for the Respondents
JUDGMENT
R.V. raveendran, J. :
The appellant claims that he is a manufacturer of silver and gold articles carrying on business under the name and style of “Anitha Metal Works” and an assessee under the IT Act, 1961 (“the Act”, for short). He has maintained a locker bearing No. 139 having taken it on hire from Shaswathi Leasing (P) Ltd. at B.V.K. lyengar Road, Bangalore.
2. In pursuance of warrant issued under s. 132 of the IT Act, 1961, in regard to the premises of Shaswathi Leasing (P) Ltd., a search was conducted on 31st March, 1997, at the premises of the said Shaswathi Leasing (P) Ltd. It is stated that as the appellant was maintaining a locker, on request, he voluntarily opened the locker at the time of search conducted in the premises of Shaswathi Leasing (P) Ltd. and the contents of the said locker were inventorised and sealed on 31st March, 1997. Thereafter, a search warrant under s. 132 of the Act was issued authorising search and seizure in regard to locker No. 139 maintained by the petitioner herein in the premises of Shaswathi Leasing (P) Ltd. and in pursuance of the said warrant, the locker was again opened, searched, inventorised and sealed. The appellant is aggrieved. According to him, the contents of the locker were inventorised on 31st March, 1997, when the appellant voluntarily opened the said locker at the request of the IT Department officers and, therefore, there could not have been another search and seizure in regard to the contents of the locker by issue of a fresh warrant under s. 132 on 1st April, 1997. It is also contended that the warrant issued on 1st April, 1997, was also not in accordance with law as the earlier warrant enabled the search/seizure in regard to Shaswathi Leasing (P) Ltd. and not that of the appellant. In the circumstances, the appellant filed W.P. No. 29272/97 for a declaration that the search of locker bearing No. 139 on 31st March, 1997, was invalid and without jurisdiction. He also sought a further declaration that the search warrant dt. 1st April, 1997, was invalid and non est in law and a direction to the respondents to return all the seized materials and documents and treat the further proceedings emanating therefrom as being non est in law.
3. It is not disputed by the Department that on 31st March, 1997, there was no search warrant in regard to the locker No. 139 of the appellant. However, the Revenue contends that while effecting search in pursuance of the warrant issued relating to Shaswathi Leasing (P) Ltd., the officers came across the locker and on the request of the officers, the petitioner voluntarily opened the locker and permitted inventory. It is, therefore, submitted that -what was done on 31st March, 1997, was not a search and seizure but an inventory of the articles which was done with the concurrence of the appellant. In fact, the inventory list makes it clear that there was no seizure of any article on 31st March, 1997. It is not the case of the appellant that the officers of the Department forcibly opened the locker without any warrant for purposes of taking inventory and it is not disputed that the appellant himself voluntarily opened the locker to enable the inventory at the time of executing search warrant issued in regard to Shaswathi Leasing (P) Ltd. The first prayer for a declaration relating to inventory on 31st March, 1997, is liable to be rejected.
4. Insofar as the second prayer, the contention of the appellant is that the Department knew the contents of the locker as an inventory had been prepared on 31st March, 1997, the search warrant is issued only where the location or identity of any movables is not evident or clear and a search is made to bring to light undisclosed income or assets; and in this case as the entire contents of the locker had been inventorised on 31st March, 1997, a warrant could not have been issued on 1st April, 1997. Before examining this aspect it is relevant to bear in mind the principles relating to interference by Courts in regard to search and seizure proceedings. In C. Venkata Reddy vs. ITO (1967) 66 ITR 212 (Mys) a Division Bench of this Court has held as follows : “What the High Court has to examine in such a case would be whether there was in fact information in the possession of the CIT and whether there is a rational connection between the information and the belief entertained by him. As already explained by us, the information itself will have to be of a fairly reliable character—whatever may be the source of it—because, unless the information is of such a character, it cannot furnish a reasonable basis for entertaining the belief that any of the circumstances mentioned in the section exists. Secondly, the information must have a relevant bearing on the formation of the belief and must not be extraneous or irrelevant to the purpose of the section. If the High Court is satisfied on these two matters, the adequacy or sufficiency of the grounds will not be a matter for the High Court to investigate.”
5. A learned Single Judge of the Punjab and Haryana High Court had occasion to consider a somewhat similar situation in Sita Devi vs. CIT (1979) 12 CTR (P&H) 108 : (1980) 122 ITR 105 (P&H). In that case, a search and seizure warrant had been issued to effect the search of the residence of the two sons of the petitioner therein. During the search some hidden jewellery were discovered and the petitioner claimed that the said jewellery belonged to her. The officers who conducted the search thereafter entrusted the jewellery to her and reported the matter to the CIT. Thereafter, the CIT issued search warrants against the petitioner and the discovered items of jewellery and documents were seized from her. In a writ proceeding initiated, the said action was challenged before the Punjab and Haryana High Court, inter alia, on the ground that the assets that were seized from the hands of the petitioner had already been searched out (before the search and seizure warrants in her name) in pursuance of the warrants to search the premises of her sons and since no search was carried out and no discovery was effected in pursuance of the search warrants issued against the petitioner, the assets discovered prior to the issue of search warrants against the petitioner could not be discovered and seized from the hands of the petitioner. The Court upheld the search and seizure. It held that s. 132(1)(b)(iii) nowhere envisages that a search of the premises has to be from the very inception in pursuance of search and seizure warrants against the person in whose hands the discovered items are seized; and that the provision envisages that the search of the premises has to be a valid and authorised search in that there must be a legal and valid search warrant for searching the premises of the persons who, on information, are believed to reside therein or occupy the same, and it is not necessary that the person against whom the warrant is issued should be in exclusive possession of specified portions. The Court further held : “The question that falls for determination is as to whether in law the CIT would be within his right in the circumstances to authorise seizure of such of the assets as had been claimed by the petitioner as owned by her. In my opinion, to deny such an authority to the CIT under s. 132(1) would tantamount to render the provisions of s. 132(1) almost totally ineffective, for, if the contention is accepted, then in a given case where adult members of one family jointly live in the same premises which are searched as a result of a search warrant against the Karta of the said family or any adult member of that family and when as a result of the search huge wealth is discovered within such premises,, one of the adult members of the family on whom there was no search and seizure warrants could claim the entire property thus rendering the search infructuous.” The above observations of the Punjab and Haryana High Court are a complete answer to the second contention raised by the appellant. We agree with the said observations.
6. What was inventoried on 31st March, 1997, cannot be equated to the search and seizure in pursuance of a warrant under s. 132 . The appellant has stated that some of the articles in the locker belonged to him and the other articles belonged to his brother. Neither the petitioner nor his brother clarified which items belonged to each of them. The appellant’s brother was not an income-tax assessee. In the circumstances, if the officers who inventorised the items and the authority authorising the search and seizure had reason to believe that the assets which were found in the locker were not disclosed to the Department, there is no reason why action under s. 132 could not be initiated. In the circumstances, a satisfaction note was put up on 31st March, 1997, giving reasons for the initiation of action under s. 132 by issuing a warrant and this was considered and recommended by the Dy. Director of IT (Inv.). The Director of IT (Inv.) after considering the same recorded his satisfaction that it was a fit case for action under s. 132 of the Act. It is thus seen that the procedure prescribed under s. 132 has been followed and the satisfaction note shows that there was application of mind and a recording of the finding that there was reason to believe that the circumstances mentioned in the section exist. The learned Single Judge has considered all these aspects in detail and has rightly come to the conclusion that there is no irregularity or infirmity in the search warrant issued on 1st April, 1997. Consequently, the appeal is dismissed.
[Citation : 257 ITR 549]
