High Court Of Karnataka
Aswath vs. CIT
Sections 1997FA 64(1), 1997FA 64(2)
Asst. Year 1996-97, 1997-98
R.V. Raveendran & N.K. Patil, JJ.
Writ Appeal No. 5228 of 1999
5th November, 2001
Counsel Appeared
M.R. Shailendra, for the Assessee : E.R. Indra Kumar, for the Revenue
JUDGMENT
R.V. RAVEENDRAN, J. :
The appellant was the petitioner in W.P. No. 9112 of 1998 which was dismissed by the learned Single Judge by order dt. 14th June, 1999.
2. The appellant filed a declaration under s. 64(1) of the Finance Act, 1997 (“the Act” for short), under the Voluntary Disclosure of Income Scheme, 1997 (“the VDI Scheme of 1997” for short). By the said declaration, the appellant disclosed the income of Rs. 32,000 for the asst. yr. 1996-97, Rs. 4,32,000 for the asst. yr. 1997-98 and offered to pay income-tax thereon in terms of the said scheme. The said declaration was filed on 29th Dec., 1997. The asset in regard to which the income was declared was a vacant site for the asst. yr. 1996-97, fixed deposit made on 3rd Nov., 1996, in regard to asst. yr. 1997-98 and eight gold biscuits for the asst. yr. 1997-98. The respondent refused to accept the said declaration as per the communication dt. 30th Dec., 1997, on the ground that action under s. 132 of the IT Act, 1961, had been initiated in the case of the petitioner and therefore he is not eligible to file a declaration having regard to the provisions of s. 64(2)(ii) of the Act. The petitioner is aggrieved.
3. According to the petitioner, there was a search on some lockers which were installed in the premises of Sashwathi Leasing (P) Ltd. under s. 132 of the Act; at the time of search, the IT authorities found that locker No. 139 stood in the name of one Rudrachar, a brother of the appellant; that Rudrachar voluntarily came and opened the locker on 31st March, 1997, and the contents thereof were inventoried; that the said locker contained some valuable belonging to Rudrachar, jewels belonging to the female members of the family and eight gold biscuits belonging to the appellant. The appellant alleges that on 1st April, 1997, the Department conducted a search and seizure in regard to the contents of the said locker, in pursuance of a search warrant issued in regard to the said locker and the validity of such action has been challenged by Rudrachar in W. P. No. 29272 of 1997. The appellant contends that as the contents of the locker were voluntarily disclosed on 31st March, 1997, itself, there was no need for issue of search warrant on 1st April, 1997, and at all events, the search was with reference to Rudrachar and not with reference to him. He therefore contends that his declaration was not affected by s. 64(2)(ii) of the Act.
4. The first contention is already considered by us in a writ petition filed by the appellant’s brother, Rudrachar in W.A. No. 2434 of 1999, decided on 3rd Nov., 2001 [reported as Rudrachar vs. Director of IT (Inv.) (2002) 178 CTR (Kar) 314—Ed.], wherein we have held that the mere fact that Rudrachar opened the locker and permitted inventory on 31st March, 1997, did not come in the way of a search warrant being issued on 1st April, 1997, and the search warrant issued was valid.
5. Insofar as the second contention is concerned, the appellant contended that there was no search in regard to his income under s. 132 of the IT Act prior to the declaration and, therefore s. 64(2)(ii) of the Act did not come in the way of his declaration being accepted.
6. This contention is not supported by the facts. It is seen that on 31st March, 1997, when Rudrachar opened the locker bearing No. 139, inventory was prepared and in the said inventory prepared on 31st March, 1997, it was clearly disclosed that part of the valuables found in the locker belonging to the appellant. On the basis of the said inventory, the concerned ITO has put up a satisfaction note on 1st April, 1997, requesting for issue of a warrant under s. 132 of the IT Act. In the said satisfaction note, the ITO has clearly stated that Rudrachar and the appellant are carrying on business as goldsmiths; that Rudrachar returned small nominal income; that the appellant has not returned income at all and is not assessed to tax; that Rudrachar has taken the locker in his name; that it was disclosed at the time of inventory of the contents of the locker that 8 out of 11 gold biscuits belonged to the appellant and the remaining assets belonged to Rudrachar; that none of the contents of the said locker have been disclosed to the Department and therefore, action under s. 132 of the IT Act may be taken by issuing a warrant in regard to locker No. 139 operated by Rudrachar. This makes it clear that the Department was conscious of the fact that contents of the locker belonged to both Rudrachar and the appellant and that therefore the action was proposed to be taken under s. 132 of the IT Act in regard to all the contents of the locker which included valuables belonging to the appellant also. On the basis of the satisfaction note, the Dy. Director of IT (Inv.) has recommended action on the same day, i.e., 1st April, 1997. The Director of IT (Inv.) has recorded his satisfaction that the case relating to locker No. 139 was a fit case for action under s. 132 of the IT Act which is necessary and justified.
7. It is thus evident that even though search warrant was issued in the name of Rudrachar, it related to not only to the assets of Rudrachar, but the assets of the appellant also. In the search warrant, the name of Rudrachar was mentioned because the locker stood in the name of Rudrachar and not in the name of the appellant. However, a reading of the satisfaction note and the orders passed thereon by the authorised authorities makes it clear that the search was intended to be not only in respect of the valuables belonging to Rudrachar but also in regard to the valuables belonging to the appellant. In fact, when the search warrant was executed on 1st April, 1997, Rudrachar’s statement was recorded on oath under s. 132(4) of the IT Act and in the said statement, Rudrachar has specifically stated that he was ready to pay the income-tax on the unexplained portion of his wealth and income and that his brother was also agreeable to pay income-tax on the unexplained portion of his wealth and income. In pursuance of it, Rudrachar and the appellant made a joint application dt. 16th April, 1997, for release of the gold biscuits to enable them to earn their livelihood. In the said letter the appellant has clearly stated that eight of the gold bars belonged to him. In pursuance of it, Rudrachar and the appellant jointly delivered demand drafts of the value of Rs. 6,22,000 being the value of gold bars for obtaining release of the gold bars.
The above will clearly show that the search and seizure related not only to Rudrachar but also to the appellant. It is therefore not permissible for the appellant to contend at this point of time that the search did not relate to him or that s. 64(2)(ii) was inapplicable to him. We do not therefore find any infirmity in the rejection of the declaration or in the order of the learned Single Judge dismissing the writ petition. The appeal is therefore rejected.
[Citation : 257 ITR 554]
