K.S. Radhakrishnan, J.
1. Petitioners are husband and wife. First petitioner herein was a professor in Pathology of the Calicut Medical College and was running a proprietary concern by name 'Santhosh Clinic'. He is an assessee with P.A. No. 46-007-PX-7697. Second petitioner, wife of the first petitioner, retired as a professor of Dermatology and is a private practitioner and is an assessee with P.A. No. 46-007-PQ-9485.
2. IT Department had received information that one Hamza, proprietor, Hotel Sagar, Mavoor Road, Calicut had purchased the residential house belonging to the petitioners at Mavoor Road, Calicut, for a consideration of Rs. 72 lakhs in the name of his children and the petitioners in turn purchased another residential property at Sathram Road, Calicut, belonging to Dr. N.M. Mathai and his son George Mathai for a sum of Rs. 59 lakhs. Enquiry conducted by the Investigation Wing of the Department revealed that petitioners had sold their residential house with 11.5 cents of land at Mavoor Road for a consideration of Rs. 42 lakhs and in turn purchased the residential house of one Dr. N.M. Mathai and his son for a consideration of Rs. 29 lakhs, but the consideration shown was only Rs. 12 lakhs. Both the transactions were registered on the same day, i.e., 29th July, 1995. Based on the information, a search was organised by the then Asstt. Director of IT (Inv. I), Calicut, as per the warrant of authorisation issued by the Director of IT, Bangalore, under Section 132 of the IT Act. Search operations were conducted on 27th Oct., 1995 at the residence of Sri K.T. Hamza, proprietor of Sagar Hotel at Kunnamangalam, residence of Dr. Balakrishnan Nair and Dr. K. Narayani at Sathram Road, Calicut, and at the residence of Dr. N.M. Mathai, Nedumchalil House at Muvattupuzha. During the course of search on 27th Oct., 1995, a preliminary statement and sworn statement under Section 132(4) were recorded from the petitioners. In the statement recorded, first petitioner stated that the residential house at Mavoor Road with 11.5 cents of land was sold in July, 1995 to one Abdul Razack and his minor brother (both children of Hamza, Hotel Sagar, Calicut) for a consideration of Rs. 12 lakhs. First petitioner also stated that the residence at Sathram Road, Calicut, was purchased in July, 1995 from Dr. N.M. Mathai and his son for a consideration of Rs. 24 lakhs and that there was no written agreement between him and Dr. N.M. Mathai. Registration charges were paid out of his own funds and the total consideration of Rs. 24 lakhs was paid. Rs. 6 lakhs by demand draft on 4th July, 1995, Rs. 2.75 lakhs by demand draft on 10th July, 1995, Rs. 0.25 lakhs by demand draft on 29th July, 1995 and Rs. 15 lakhs by cash on 29th July, 1995, constituting Rs. 24 lakhs. The search team consisted of six officers and 17 other officials assisted them. Search commenced on 27th Oct., 1995 at the residence of the petitioners at 8 a.m. and concluded at 8 p.m. and Panchnama was prepared as per the Departmental procedure in the presence of witnesses. Since search was not completed, books of account and records were put in an almirah and sealed in the presence of witnesses. Since scrutiny could not be completed during the search operations, prohibitory order under Section 132(3) was served on the petitioners on the same day and statement was recorded from them under Section 132(4) on the same day. 28th Oct., 1995 and 29th Oct., 1995 were holidays for the Department and the Asstt. Director of IT (Inv. I), Calicut, along with inspectors went twice to the residence of the petitioners and since they were not present it was not possible to resume the operations. Finally, on 10th Nov., 1995, first petitioner was requested to remain at his house and accordingly search was resumed and concluded on 10th Nov., 1995. In the statement recorded on 10th Nov., 1995 first petitioner had disowned the various statements made on 27th Oct., 1995 in respect of sale and purchase of immovable properties stating that he was in exhausted state of mind. When the search was effected on 10th Nov., 1995 at the residence of Dr. N.M. Mathai, he stated that the residential house at Calicut, Sathram Road was sold to the petitioners for a total consideration of Rs. 22 lakhs for which only Rs. 9 lakhs was shown in the registration deed. It was further stated that out of the amount of Rs. 22 lakhs received he had given 50 per cent to his son George Mathai (joint owner), Rs. 6 lakhs deposited in F.D. with Union Bank of India, Muvattupuzha, and the balance amount of Rs. 5 lakhs was given to his relatives and the Old Age Home at Muvattupuzha. Further, he also confirmed that he and his son had received Rs. 13 lakhs towards unaccounted consideration in the deal.
3. The post-search investigations were conducted by the then Asstt. Director of IT (Inv. I), Calicut, Sri P.N. Devadasan, who organised and executed the search operations and the relevant records were transferred to the Asstt. CIT, Investigation Circle I, Calicut, for further action. Accordingly, notices under Section 158BC were issued by the Asstt. CIT, Investigation Circle I, Calicut, on 16th April, 1996 on the basis of the records and reports received from the concerned Asstt. Director of IT. Petitioners then filed their returns under Section 158BC on 13th June, 1996.
4. Petitioners then preferred OP No. 10564 of 1996 on 2nd July, 1996 challenging the entire search and seizure and the proceedings initiated by the IT Department and sought a writ of certiorari to quash Ext. P1 Panchnama dt. 27th Oct., 1995, Ext. P2 search statement dt. 27th Oct., 1995, Ext. P3 Panchnama dt. 10th Nov., 1995 and to quash the notices Exts. P6(a) and P6(b) issued under Section 158BC of the IT Act, 1961 and also for a writ of mandamus to the first respondent not to allow the second respondent to deal with the assessees and for a direction to the IT Department not to invoke the provisions of the Act under Chapter XIV-B of the Act and also for other consequential reliefs. Personal allegations were raised against the second respondent in the writ petition. So also the manner in which search and seizure was conducted and also the circumstances under which Ext. P2 statement was recorded from the assessee. We may extract the relevant portions of the allegations made in the writ petition, which are as follows :
'The second respondent Shri T. Ravindran is impleaded by name and has a dual capacity and these petitioners seek to bring out the mala fide actions on his part and would attribute bias for facts pleaded hereinafter. The petitioners would also seek equitable relief from the Hon'ble Court against the said officer....
The said officer Sri T. Ravindran was functioning as Asstt. Director of IT (Inv.), Calicut, as on 27th Oct., 1995 and 10th Nov., 1995. He was invested with the power of search and seizure operation, subject to obtaining a warrant of search from a Director of IT (Inv.) or CIT....
If action of the officer issuing the authorisation or the designated officer is challenged the officer concerned must satisfy about the regularity of his action. If the action is maliciously taken, or power under section is taken for collateral purposes, it is liable to be struck down by the Court....
On the basis of a warrant of search, a search party headed by Shri T. Ravindran, Asstt. Director of IT (Inv.) as he then was, searched the petitioners' residential house at 5/2491 Sathram Road, Calicut, on 27th Oct., 1995 and prepared a Panchnama. A true copy of the Panchnama dt. 27th Oct., 1995 is produced herewith and marked as Ext. P1. Before leaving the search premises the said officer Sri Ravindran issued a prohibitory order in respect of an almirah kept in the residential premises and left the place forcefully taking a number of valuable documents without the knowledge or consent of either of the petitioners or the two Panchas present which is per se against the mandatory provision of Section 132(3) read with provision of the Cr.PC. The said officer recorded a statement from the first petitioner. A true copy of the said statement dt. 27th Oct., 1995 is produced herewith and marked as Ext. P2. Ext. P2 was extracted from the petitioner under threat and coercion as would be revealed from this sentence quoted from Ext. P2.
I am aware of the consequence, i.e., penalty and prosecution in case any of the facts proved to be false.'
Further, it is also stated by the writ petitioners as follows :
'The petitioners could not keep the house in order as the search operations were still incomplete. The first petitioner telephoned the officer and requested him to complete the search so that he could set his house once again in order and live there peacefully. It was only on 10th Nov., 1995 that Shri Ravindran and party came for second time to search the petitioners' house. That is two weeks after the first search. To show that the second search was carried out on 10th Nov., 1995, the petitioner is producing herewith the Panchnama dt. 10th Nov., 1995 and the same is marked as Ext. P3.... The petitioner may now bring to the notice of the Hon'ble Court that Shri Ravindran was not authorised to keep the petitioners' almirah locked for two weeks. The CBDT has issued instructions regarding opening of lockers. The lockers should be opened as early as possible but in any case within a week where the lockers sealed cannot be opened within seven days the reason should be intimated to the Director-General. It is up to the said Sri Ravindran to explain to this Hon'ble Court the reason for delaying the opening of the almirah for two weeks.'
Petitioners have also stated as follows :
'On 27th Oct., 1995, after preparing the Panchnama and inventory, the officer Sri Ravindran took away a number of documents belonging to the petitioners without the knowledge or consent of the petitioners or the Panchas present. On 10th Nov., 1995 when the search party headed by Sri Ravindran entered the premises with a box containing several documents, the petitioners required them to open the box and an inventory made before starting the search but the said Sri Ravindran refused to open the box in the presence of the Panchas who were the same Panchas who were present on 27th Oct., 1995. Since the officers refused to list the documents contained in the box brought without the consent or knowledge of the petitioners, petitioners prepared a statement in the presence of the searching party and got it attested by the Pancha witnesses present. A true copy of the said statement dt. 10th Nov., 1995 is produced herewith and is marked Ext. P5. It is beyond the comprehension of the petitioners why the said officer collected unlisted document from the petitioners' premises and tried to put it back at the premises. It is also not known, if he has introduced any papers or documents cooked up by him. It is a clear violation of the provisions providing for searching the raiding party before entering the search premises that a trunkload documents were sought to be inducted into the premises of the petitioners.'
Petitioners also raised various other procedural violations in the conduct of search and seizure which we will deal with in the later part of the judgment.
5. Second respondent filed detailed counter-affidavit on 23rd Oct., 1996. Additional counter-affidavit was filed by the second respondent on 13th Jan., 1998 and also filed an affidavit in the writ appeal on 15th Feb., 1999 to expunge the adverse remarks made in the judgment of the learned single Judge. First respondent filed counter-affidavit on 18th Nov., 1997. Statement was filed by the counsel on behalf of the respondents on 23rd Oct., 1998. Counter-affidavit was filed by the first respondent in the writ petition on 2nd June, 1998. Second respondent also filed additional counter-affidavit in the writ petition on 7th Dec., 1998. Second respondent in the various counter-affidavits refuted the allegations raised and also supported the action of the Department in carrying out the search and seizure. Inspection Wing, it was stated, had followed all the statutory and other procedures laid down in the conduct of search and seizure. Reference was also made to the statements recorded on 27th Oct., 1995 from the first petitioner. Search was conducted on 27th Oct., 1995 at the residence of the petitioners which commenced at 8 a.m. and concluded at 8 p.m. Panchnama was prepared as per the Departmental procedure. The allegation of the petitioners that the authorised officer before leaving the place took forcefully number of documents without the knowledge and consent of the petitioners or Panchas was denied. Books of account, pass books, documents, etc. found at the residential house were put in an almirah and sealed in the presence of witnesses as the scrutiny could not be completed during the search operations and prohibitory order under Section 132(3) was also served on the petitioners on the same day. Statement was also recorded under Section 132(4) of the Act. Allegation that the statement was taken under threat and coercion was denied. Further, it was stated that since the search operations could not be completed on 27th Oct., 1995, the premises and the almirah were sealed. As per paras 9 and 11 of the Panchnamas, the search party had offered themselves for personal search. All the books, pass books, fixed deposit receipts, etc. found at the premises were put in the almirah which was sealed. Respondent submitted that Ext. P5 was not prepared in the presence of the ITO. None of the members of the search party had knowledge about the same as it was not prepared during the operation but subsequently created to suit the case of the petitioners by winning over the Panchas. The second respondent also filed affidavit in the writ appeal on 12th Feb., 1999 for expunging the various adverse remarks made by the learned single Judge. He has denied the various allegations raised against him and stated that he was only acting on the basis of the direction given by the superior officers including the Asstt. Director of IT (Inv. I), Dy. Director of IT, etc. He was one among the twenty-one persons who had conducted search and seizure operations and had no malice towards the petitioners and there is no reason for the same as well. Reply-affidavit was filed by the first respondent on 18th Nov., 1996 refuting the various averments contained in the counter-affidavit filed by the second respondent on 23rd Oct., 1996.
6. Learned single Judge after hearing the counsel on either side and after perusing the various averments contained in the counter-affidavits and reply-affidavit, took the view that the action of the second respondent and members of the investigation team in keeping the seized documents in an almirah in the house of the assessee violated the mandatory requirements and there is no explanation whatsoever as to why books of account, documents, etc. found out during the search on 27th Oct., 1995 could not be seized. Learned single Judge took the view that in the absence of any satisfactory explanation as to why the books of account, pass book and the documents were not practicable to be seized on 27th Oct., 1995 itself, it is a case of contravention of Sub-section (3) of Section 132 of the Act. Learned single Judge also noticed that though search was commenced on 27th Oct., 1995, same could be resumed only on 10th Nov., 1995 and there was no explanation for the delay of fourteen days in resuming the search. Further, learned single Judge found that there is no provision in the Cr.PC or in the IT Act or Rules for postponing the search for such a long period. Learned Judge took the view that unless there is convincing reason for not resuming the search immediately, the proceedings undertaken by the second respondent for a second search would not be legal. Learned single Judge also took the view that the seized documents were retained for more than 15 days'. Further, learned single Judge noticed that under Section 132 of the Act an authorised officer cannot retain the books of account and other documents for a period not exceeding 15 days from the date of seizure.
7. Learned single Judge believed Ext. P5 statement dt. 10th Nov., 1995 produced by the petitioners before him stated to have been signed by the witnesses to the Panchnamas Exts. P1 and P3. Learned Judge extracted the statement in Ext. P5 and took the view that those statements are reliable. Learned Judge made comparison of the signatures of the witnesses to both Panchnamas. Learned single Judge also took the view that summoning of witnesses was unnecessary in the light of the finding on Ext. P5 especially when the signature contained in Ext. P5 tallies with the signatures in Exts. P1 and P3 Panchnamas. Learned Judge also took the view that though no personal motive was established against the second respondent for this action, it is clearly an arbitrary exercise of power and amounts to malice in law. Learned single Judge opined that the conduct of the second respondent is unbecoming, improper and erodes the confidence of the Department. Learned single Judge, therefore, allowed the writ petition and quashed all proceedings initiated under Section 132 of the Act and also the notices issued as per Exts. P6(a) and P6(b) and prohibited the respondents from invoking the provisions of Chapter XIV-B of the Act. Judgment is reported in Dr. C. Balakrishnan Nair v. CIT : [1999]237ITR70(Ker) . Aggrieved by the judgment, the CIT and the officer have come up with this appeal.
8. Senior standing counsel appearing for the Revenue, Sri P.K. Ravindranatha Menon, submitted that there is no violation of the statutory provisions in the conduct of search and seizure made on 27th Oct., 1995 and on 10th Nov., 1995. Counsel submitted that the search was conducted in accordance with the search and seizure guidelines issued by the CBDT. Counsel also submitted that learned single Judge has committed an error in not properly understanding the difference between the wordings in the proviso to Section 132(1) relating to the practicability of seizure and also the wordings in Section 132(3) relating to the procedure where it is not practicable to seize the materials. Counsel also submitted that there are sufficient reasons for resuming the search on 10th Nov., 1995 since it was not complete on 27th Oct., 1995. The finding that the search party had taken away various documents on 27th Oct., 1995 is only a mere surmise and not supported by any evidence. Counsel submitted that learned single Judge is not justified in placing reliance on Ext. P5 which was not proved by the assessee since disputed by the Department. Counsel submitted that burden is entirely on the assessee to prove Ext. P5 and its contents. Comparison of the signature, according to the counsel, would not establish the contents of the documents. Counsel submitted, learned single Judge has committed an error in not properly appreciating the facts and, therefore, came to a wrong conclusion on facts and law. Counsel submitted that the Department has got the right to have block assessment initiated by issuing notice to the assessee. Counsel made reference to the decisions of the apex Court in Central Provinces Manganese Ore Co. Ltd. v. ITO : [1991]191ITR662(SC) , ITO v. Selected Dalurband Coal Co. (P) Ltd. : [1996]217ITR597(SC) , etc.
9. Mr. Vijayan Nair, counsel appearing for the respondents, supported the judgment of the learned single Judge and submitted that the Department had failed to follow the provisions of Section 132 of the IT Act and the entire search and seizure operation have to be rendered invalid. Counsel also submitted that the exercise of search and seizure is vitiated since mandatory provisions of Section 132(13) are not complied with. Counsel also reiterated the various allegations raised against the second respondent in the writ petition. In the original petition it was averred that the second respondent was not authorised to keep the almirah locked for the week. Reference was made to the Instruction No. 1497, dt. 13th Jan., 1986, issued by the CBDT. Referring to the decision in ITO v. Seth Bros. : [1969]74ITR836(SC) it was stated that the second respondent could not give any satisfactory explanation for the delay. Further, it was alleged that the second respondent had forcefully taken away number of valuable documents without the knowledge and consent of the petitioners and the Panchas and planted some documents when the search commenced on 10th Nov., 1995. It was alleged that the second respondent did all these for his career advancement. Counsel submitted that the proceedings initiated under the provisions of Chapter XIV-B are also illegal. Further, it was also stated that even assuming that statement given on 27th Oct., 1995 is true, even then there is no tax liability in view of Section 54 of the IT Act.
10. In support of the various contentions reference was made to the decision of the apex Court in CIT v. Ramkishan Shrikishan Jhaver and Ors. : [1967]66ITR664(SC) , ITO v. Seth Bros. (supra), H.L. Sibal v. CIT and K.V. Krishnaswamy Naidu & Co. v. CIT : [1987]166ITR244(Mad) and CIT v. N.C. John & Sons Ltd. 1998 KLJ 360. Counsel for the petitioner submitted an argument note dt. 24th Feb., 2005.
11. IT Department had information that one Hamza had purchased residential building belonging to the respondents at Mavoor Road and the petitioners in turn had purchased the property from Dr. N.M. Mathai. Enquiry conducted by the Investigation Wing of the Department revealed that the petitioners had sold their residential house with 11.5 cents of land for a consideration of Rs. 42 lakhs. Though the amount admitted in the document was only Rs. 12 lakhs they purchased the residential house from Dr. N.M. Mathai for a consideration of Rs. 29 lakhs as against the recorded price of Rs. 9 lakhs. Both the transactions were registered on the same day, 29th July, 1995. Based on the above information, Asstt. Director of IT (Inv. I), Calicut, organised a search as per the warrant of authorisation issued under Section 132 of the Act by the Director of IT, Bangalore. The second respondent was deputed as the, authorised officer by superior officers. The fact of deputation was made known to the writ petitioners just before the commencement of search. Search operations were conducted not only at the residence of the petitioners but also at the residence of Dr. N.M. Mathai. During the course of search on 27th Oct., 1995, statements were recorded under Section 132(4) of the Act. Search was commenced at 8 a.m. and concluded at 8 p.m. Before starting the search, second respondent authorised officer showed the warrant issued under Section 132 of the Act issued by the Director of IT (Inv.), Bangalore. Panchnama dt. 27th Oct., 1995 reads as follows :
'The search commenced on 27th Oct., 1995 at 8.00 a.m. The proceedings were closed on 27th Oct., 1995 at 8.00 p.m. as temporarily concluded for the day to be commenced subsequently for which purpose seals were placed on the entire place/on almirah in the bedroom in our presence.
An order under Section 132(3) of the IT Act, 1961, in respect of the sealed premises almirah in the bedroom was served on Sri C. Balakrishnan Nair by the said authorised officer.'
An order under the second proviso to Section 132(1) was also served on the petitioner. Panchnama was prepared by the second respondent. Para 8 of the Panchnama would indicate that some of the documents were kept in the almirah in the bedroom after following the statutory procedures. Some documents were taken from the premises and kept in an almirah sealed and the same was done with the permission of the superior officer. We are of the view keeping of those documents either in a room or almirah under seal cannot be said to be irregular procedure. We, therefore, find no infirmity in the action of the Department in keeping the documents in the almirah kept in the premises after issuing an order under Section 132(3) of the IT Act.
12. Counsel appearing for the petitioners contended that while search was conducted on 27th Oct., 1995 some of the relevant documents were taken away by the second respondent without the knowledge or consent of the petitioners or the Panchas. Complaint is that on 10th Nov., 1995, second respondent entered the premises with a box containing several documents but refused to open the same in the presence of Panchas who were the same Panchas present on 27th Oct., 1995. In respect of this, Ext. P5 statement is stated to have been prepared in the presence of the search party and got it attested by the Panchas. We may test whether Ext. P5 is a valid document on the basis of the averments contained in the writ petition as well as the inference to be drawn in the facts and circumstances of the case.
13. We may refer to Ext. P1 Panchnama dt. 27th Oct., 1995 admitted to have been signed by the writ petitioners and the two Panchas. Paragraph 11 of the Panchnamas is extracted below for easy reference.
'Before leaving the abovementioned place of search, the entire search party again offered themselves for personal search which was taken/declined. The above Panchnama has been read by us/explained to us in local language.'
Sri T. Ravindran has put his signature which has been correctly recorded. If there was any attempt to take away any document from the premises of the writ petitioners, they should have objected to the same since the Departmental officials headed by the authorised officer had offered themselves for personal search before and after the search. Search team consisted of 21 persons and not the second respondent alone. No complaint has been raised against the other persons who have all come as a team. Original of the Panchnama has been produced by the second respondent as Ext. R2(c). It has been stated in para 10 of the Panchnama that the search commenced on 10th Nov., 1995 at 11.00 a.m. and the proceedings were closed on the same day at 3.00 p.m. Paragraph 11 of the Panchnama would indicate that the entire search party again offered themselves for personal search which was taken. Ext. R2(c) would also indicate that the same was signed by the same Panchas who had put their signature on 27th Oct., 1995. Ext. P5 statement was produced for the first time before this Court along with the writ petition on 2nd July, 1996. We have no hesitation to say that Ext. P5 has been subsequently procured so as to wriggle out of the proceedings. Petitioners if had got any complaint that on 27th Oct., 1995 search party had taken away any document, they could have objected to the same then and there or brought to the knowledge of the superior officers at the earliest opportunity. In view of Clause (a) of para 1 of the Panchnama, burden is entirely on the petitioners to establish the facts contained in Ext. P5. Mere comparison of the signature in Ext. P5 with that of Exts. P1 and P3 would not advance the case of the petitioners since the signatures would be same. The question is whether Ext. P5 was subsequently procured. Petitioners will have to prove Ext. P5 with reliable evidence. Petitioners though wanted to examine the two Panchas and filed CMP No. 40393 of 1998, they did not pursue the same. Since Ext. P5 has not been proved, we are of the view, contention of the writ petitioners that the inspection team had taken away some documents on 27th Oct., 1995 and introduced some documents on 10th Nov., 1995 cannot be accepted. Learned Judge also committed a mistake in characterising the Panchas as Department's witnesses. In our view learned single Judge, committed an error in placing reliance on Ext. P5 which has not been proved.
14. Learned single Judge also took the view that in the absence of any satisfactory explanation as to why books of account, documents, etc. were not practicable to be seized on 27th Oct., 1995, it is a case of contravention of Sub-section (3) of Section 132 of the Act. Learned single Judge also took the view that the action of the second respondent in keeping the documents seized in the almirah cannot be supported. Reference was made to Rule 112C of the IT Rules. We may point out, so far as this case is concerned search was not over on 27th Oct., 1995. Several documents and records were found out and some of them are relevant documents and the some may be irrelevant but they kept all those documents and records in an almirah and sealed the same for further scrutiny. If it was not practicable to seize all the books of account and records as per the second proviso to Sub-section (1) of Section 132, the authorised officer has to serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with the sub-section. Explanation to Section 132(3) states that serving of an order under Sub-section (3) of Section 132 shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery, etc. Facts would indicate those procedures have been complied with by the search team.
15. The learned Judge, in our view, has completely misunderstood the scope of Sub-section (9A) of Section 132 in holding that the seized materials were not handed over to ITO within fifteen days of the seizure. It may be pointed out that there was no seizure on 27th Oct., 1995 but only a search. Sub-section (9A) of Section 132 speaks of seizure and not search. Search means, hunt, inquire, explore, inspect, scrutiny, etc. Seizure means apprehend, capture, impound, etc. Seizure is not mere taking possession of a thing, but under the IT Act it is an act with authority of law. Search followed by a prohibitory order would not amount to seizure, such a contingency did not occur on 27th Oct., 1995 but only on 10th Nov., 1995. Petitioner has no case of any violation after 10th Nov., 1995. Further, as per Ext. R2(a) the officer himself is having jurisdiction on the assessee and hence there is no violation of Section 132(9A) of the Act. Seized documents were already handed over to the Asstt. Director of IT (Inv.) when he prepared the seizure report and acted in accordance with law.
16. Section 132 of the IT Act empowers search and seizure to be carried out by the Departmental officers and to take away whatever valuable documents, records, etc. during the period of search which are found to be necessary. Search may be sudden and unexpected. Search team would not be able to unearth all documents at a time at one stroke. Party may at times keep the incriminating documents beyond the reach of the search team, if he suspects a search. During the search, search team will have to detect and collect all the records which are necessary to achieve the objective. Relevancy or otherwise of the materials is to be determined by the search team. Documents which are necessary or relevant would normally be seized. The search team will have to separate the wheat from the chaff and would seize only documents which are relevant. It may not be practicable to seize all the documents in a day or two, because they are in an unfamiliar territory, while the assessee would be familiar with each and every item and material kept in the place of search. Attitude of some of the assessees may be helpful, others may not. In this connection reference may be made to the decision of the apex Court in Pooran Mal v. Director of Inspection (Inv.) : [1974]93ITR505(SC) and ITO v. Seth Bros. and Ors. (supra). Petitioners have raised a contention that search was prolonged unreasonably and the reasons stated are not convincing. Search commenced on 27th Oct., 1995 and continued on 10th Nov., 1995 and there is a delay of fourteen days for which Department have given acceptable explanation. In the absence of any time-limit prescribed in the Cr.PC or the IT Act, we are not prepared to say that the delay in conducting the search has vitiated the search and seizure.
17. We are not prepared to say that the procedure adopted by the second respondent and the inspection team is in any way violative of Article 21 of the Constitution of India or discriminatory. The apex Court in Pooran Mal v. Director of Inspection (Inv.) (supra) had elaborately considered the scope of Section 132 of the IT Act and Rules 112 and 112A of the IT Rules, 1962, as well as Articles 14 and 19(1) (f) and (g) of the Constitution of India and held as follows :
'...It is a well-known fact of our economic life that huge sums of unaccounted money are in circulation endangering its very fabric. In a country which has adopted high rates of taxation a major portion of the unaccounted money should normally fill the Government coffers. Instead of doing so it distorts the economy. Therefore, in the interest of the community it is only right that the fiscal authorities should have sufficient powers to prevent tax evasion.
Search and seizure are not a new weapon in the armory of those whose duty it is to maintain social security in its broadest sense. The process is widely recognised in all civilised countries. ...'
The apex Court in M.P. Sharma v. Satish Chandra : 1978(2)ELT287(SC) held as follows :
'A power of search and seizure is in any system of jurisprudence an overriding power of the State for the protection of social security and that power is necessarily regulated by law. When the Constitution makers have thought fit not to subject such regulation to constitutional limitations by recognition of a fundamental right to privacy, analogous to the American Fourth Amendment, we have no justification to import it, into a totally different fundamental right, by some process of strained construction. Nor is it legitimate to assume that the constitutional protection under Article 20(3) would be defeated by the statutory provisions for searches.'
We, therefore, hold that there is no procedural violation or violation of fundamental rights guaranteed under Article 21 of the Constitution of India.
18. We are of the view once search has been validly initiated by authorised officer under the IT Act, such initiation as such cannot be challenged by the writ petitioners. The Supreme Court in ITO v. Seth Bros. and Ors. (supra) held that where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers, any error of judgment on the part of the officers will not vitiate the exercise of the power. Any irregularity in the course of entry, search and seizure committed by an officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken provided the officer has, in executing the authorisation, acted bona fide. The principle laid down in the above decision would fully support the case of the Department.
19. We are of the considered view that the various allegations raised against the second respondent have no legs to stand. On facts also we are convinced that second respondent has not committed any irregularity in the conduct of search and seizure conducted under Section 132 of the IT Act. Further, first writ petitioner had made retraction statement before the CIT on 30th Oct., 1995 and at that time also he had no case that second respondent had taken away any records or documents from his residence on 27th Oct., 1995. The Department has got reliable information to hold that the retraction statement by the writ petitioner is not correct. In the statement of N.M. Mathai, residential house at Calicut was sold to the first writ petitioner for a total consideration of Rs. 22 lakhs; only Rs. 9 lakhs was shown in the registration deed. Detailed information was furnished by Mathai which would disprove the subsequent retraction statement made by the petitioners. Petitioners have not attributed any ill-motive or malice against the second respondent. Learned single Judge after holding so should not have held that action of the second respondent was arbitrary and his conduct was unbecoming of an officer and his action has affected the credibility of the Department. Conclusions of the learned Judge are entirely rested on Ext. P5 which was not proved. The learned Judge, in our view, has completely misdirected in placing reliance on that document which is a subsequent creation. Unwanted and untenable allegations have been raised against the second respondent which is nothing but character assassination which cannot be countenanced by a Court of law. In such circumstances, we have no hesitation to accept the request of the second respondent to expunge the various remarks made against him by the learned single Judge. Objectionable remarks made in the judgment are, therefore, deleted from the judgment.
20. Writ petitioners have also challenged in OP No 5936 of 1999, Exts. P6(a) and P6(b) notices under Section 158BC of the IT Act, 1961, by which the writ petitioners were directed to prepare true and correct return of their total income including the undisclosed income assessable for the block period mentioned in Section 158B(a) of the IT Act. Writ petitioners had filed returns under Section 158BC on 13th June, 1996. Chapter XIV-B consisting of Sections 158B to 158BH was inserted by the Finance Act, 1995, w.e.f. 1st July, 1995. First setting in motion of Chapter XIV-B is to issue notice calling for return setting forth total income including undisclosed income for the block period. Chapter XIV-B came into effect before the search took place. Petitioners' case squarely falls under the second category and, therefore, Chapter XIV-B applies. Consequently, notices issued under Section 158BC are perfectly in order. Petitioners had raised claim for examination under Section 154 [sic-exemption under Section 54] of the Act. We are of the view such a contention could be raised during the course of assessment proceedings under Section 158BC. Because of the stay granted by this Court entire assessment proceedings under Section 158BC are held up. Since we find no infirmity in the conduct of search and that the assessee would fall within Chapter XIV-B, notices issued under Section 158BC are also valid. Learned single Judge while disposing of OP No. 5935 of 1999 has taken the view that once Division Bench sets aside Ext. P1 judgment there would not be any inhibition in proceeding under Section 158BC of the Act. In cases where Section 158BC proceedings are taken, there is no scope for invoking Section 147 of the Act in respect of the same matter. Learned single Judge while disposing of OP 5935 of 1999 had also deferred all proceedings under Exts. P6(a) and P6(b) till a decision is taken by the Division Bench in the writ appeal. We have now held that search and seizure are valid and there is no illegality in the notices issued under Section 158BC of the Act. Consequently, as rightly held by the learned single Judge there is no scope for invoking Section 147 of the Act.
21. In view of the above conclusions, we are inclined to allow WA No. 409 of 1999 and judgment of the learned single Judge in OP No. 10564 of 1996 would stand set aside, consequently WA No. 1374 of 1994 would stand dismissed. Both the writ petitions would, therefore, stand dismissed with costs of Rs. 10,000 to be paid to the second respondent in OP No. 10564 of 1996.