A.R. Lakshmanan J.
1. The appellant filed this appeal only against the findings rendered by the learned single judge in para. 25 of his order dated July 4, 1995, and made in W.P. No. 13646 of 1994 (N. H. Mohnot v. Deputy CIT : [1995]215ITR275(Mad) . The learned single judge by the said order partly allowed the writ petition by directing the respondents to return to the appellant/writ petitioner all the documents removed by the authorities by the conclusion of the survey by the respondents from the place of business or profession of the appellant except the promissory notes which have been attached by the Tax Recovery Officer.
2. The short facts which are relevant from the purpose of disposal of this writ appeal are as under : The appellant filed the writ petition for a mandamus directing the respondents to return the documents/promissory notes more fully described in the Schedule to annexures-1 and 2 to the writ petition and for other suitable orders. On July 26, 1994, the Assistant Commissioner of Income-tax, Central Range-I, came to the place of business of the appellant at about 3.45 p.m. and wanted to conduct a survey under section 133A of the Income-tax Act, 1961, which provides the procedure for survey. The said section provides that the income-tax authorities shall conduct the survey only during business hours and sub-section (4) provides that an income-tax authority acting under the section, shall on no account, remove or cause to be removed from the place wherein he has entered, any cash, any books of account or other documents, stock or other valuable articles or things. In the instant case, the survey was started at 3.45 p.m. on July 26, 1994, and concluded at 5.00 a.m. on July 27, 1994. During the inspection, the Deputy Commissioner of Income-tax, Central Range-I, the first respondent herein was present. During the survey, respondents Nos. 1 to 3 impounded several documents including several pronotes issued in the name of the Hindu undivided family and other partnership firms and took them away. It is contended by Mr. G. Rajagopalan, learned counsel for the appellant/writ petitioner, that in teeth of section 133A(4) taking away the documents during the survey and more particularly the pronotes which are negotiable instruments is illegal and, therefore, respondents Nos. 1 to 3 blatantly violated the provisions of the Act. It is further contended that section 133A of the Act itself defines the income-tax authority for the purpose of the section and in view of that, the presence of the Assistant Commissioner of Income-tax, the second respondent herein, and the Tax Recovery Officer is totally unauthorised. The officials who are conducting a survey under section 133A, are expected to strictly observe the mandate of the said section and cannot overstep their limits and seize the documents and other promissory notes from the possession of the appellant herein. Therefore, the action of the respondents is illegal in the teeth of section 133A(4) of the Act. According to learned counsel for the appellant, the presence of the Assistant Commissioner of Income-tax and the Tax Recovery Officer at the time of survey had no authority to be present during the survey and seize the pronotes. The action of the respondents is prompted by mala fides and the entire survey was conducted at the instance of the fifth respondent herein through the fourth respondent. Therefore, it is contended that when the documents/pronotes are seized in an illegal manner, respondents Nos. 1 to 3 are bound to return the same to the appellant and with the above allegations, the appellant has filed the writ petition for a mandamus directing the respondents to return the documents/pronote more fully described in the schedule to the petition.
3. The writ petition was resisted by all the respondents by filing separate counter-affidavits. The Assistant Commissioner of Income-tax, Central Circle-I(2), Madras-34, the Deputy Commissioner of Income-tax, Central Range-I, Madras-34, the Tax Recovery Officer (Central) Madras-34, the Deputy Commissioner of Income-tax, Madras-34, Mr. H. S. Acharya, and the Commissioner of Income-tax (Appeals-II), Madras, Mr. A. Banerjee, have filed separate counter affidavits denying the allegations contained in the affidavit filed in support of the writ petition and also justifying the action taken by the survey conducted by the respondents and also of the attachment made by the Tax Recovery Officer of the pronotes. According to the respondents, at the time of survey, various books of account and documents were impounded under section 131(3) of the Act and certain pronotes were seized by the Tax Recovery Officer-I (Central) Madras, who came to the place of survey later under rule 30 of the Second Schedule to the Income-tax Act. These books of account, documents and the promissory notes were impounded and seized in accordance with the powers vested under the Act and the rules framed therefor. As such there is no violation of any of the provisions of the Act and the rules. They also deny the allegation to the effect that the Assistant Commissioner of Income-tax and the Tax Recovery Officer, the second and third respondents herein, had no authority to be present during the survey. They also deny the other allegations contained in the affidavit filed in support of the writ petition. The Tax Recovery Officer has stated that he has impounded certain documents and account books including 76 pronotes and seized them under rule 30 of the Second Schedule to the Income-tax Act, 1961, after invoking the provisions of section 131 read with sub-section (6) of section 133A of the Act, as the appellant herein was giving evasive replies about the source for the said promissory notes. According to the said Tax Recovery Officer, he is an Income-tax Officer vested with the necessary powers for recovery of arrears of tax in respect of the assessees who carry on business or profession within his jurisdiction or who have their principal place of business or profession or vocation within his jurisdiction or who have their residence or own movable or immovable properties within his jurisdiction. Accordingly, he submitted that the second and third respondents herein are income-tax authorities under the Income-tax Act, and hence they had the necessary power and authority to be present during the survey operations. Thus, the case of the Tax Recovery Officer, the third respondent herein, is that the books of account and the documents found in the business premises of the appellant herein were seized after invoking the provisions of section 131 read with sub-section (6) of section 133A and that as such there is no over stepping of the limits empowered to the income-tax authorities as alleged by the appellant and the appellant has also filed reply affidavit stating that the authorities have only misused their position as authorities under the Income-tax Act and that in view of the admission made by the respondents in para. 2 of the counter affidavit, the writ petition is liable to be allowed.
4. Jayasimha Babu J., by his order dated July 4, 1995 : [1995]215ITR275(Mad) , on a consideration of the materials placed before him and of the arguments of the respective counsel for the parties, held that section 133A empowers the income-tax authority to enter only a place at which a business or profession is carried on by the assessee; he cannot enter the residential premises of the assessee or the premises of the lawyer or chartered accountant of the assessee. The learned single judge has further held that while making a survey under this section, the income-tax authority has no jurisdiction to seize or impound any books of account or documents, and therefore, the authority may be compelled to return books and documents illegally seized under this section, but the said officer cannot be prevented from taking any appropriate proceedings on the basis of the information gathered from them. Paras. 12 and 13 of the order of the learned single judge can be usefully extracted in the present context (page 283) :
'Section 133A opens with a non-obstante clause. The income-tax authorities may exercise the powers conferred by this section notwithstanding anything contained in any of the other provisions of the Act. The power so conferred is also subject to certain limitations. The power of survey may be exercised only at a place where a business or profession is carried on and the authority may enter any such place of business or profession only during the hours at which such place is kept open for conducting the business or profession, and in case of any other place, i.e., place where the business or profession is deemed to be carried on; only after sunrise and before sunset. After so entering the premises, the income-tax authority may require the proprietor, employee or other person attending to or helping in the carrying on of business or profession at that place to afford him necessary facility to inspect such documents as the authority may require and which may be available at the place; to cheek or verify cash, stock or other valuable article or thing which may be found therein; and to obtain from such person such information as may be required by the authority as to any matter which may be useful for, or relevant to, any proceeding under this Act. The authority acting under this section may place marks of identification on the books of account or other documents inspected and make or cause to be made extracts or copies therefrom; make an inventory of any cash, stock, other valuable article or thing checked or verified, and record the statement of any person which may be useful for, or relevant to any proceeding under this Act.
If any person connected with the business or profession at the time of such survey refuses or evades to provide the required assistance or information to the authority, then the authority is entitled to exercise all the powers conferred by sub-section (1) of section 131 for enforcing compliance with the requirement made by the authority for the purpose of the survey. Such requirement can only be for the purpose of inspection of the books of account or any other document; checking or verifying any cash, stock or valuable article or thing; or furnishing any information or recording of the statement of the persons connected with the business or profession and present at the time of survey. The wide powers so conferred on the income-tax authority for the purpose of carrying out the survey is subject to the limitation expressly spelt out in sub-section (4) of section 133A. The authority acting under this section shall 'on no account' remove or cause to be removed from the place wherein he has entered, any books of account or other documents or any cash, stock or other valuable article or thing.'
5. The learned single judge after considering the arguments of learned senior counsel for the Department held that sub-section (6) of section 133A does not authorise the income-tax authority to impound any of the document found in the course of survey. That sub-section incorporates within itself the provisions of section 131(1) for the limited purpose of enforcing compliance with the requirement made by the authority with regard to the matters enumerated at (i), (ii) and (iii) of section 133A(1) and it is for this limited purpose the powers conferred on the officers referred to in section 131(1), viz., the same powers, as are vested in a court under the Code of Civil Procedure while trying a suit in respect of (a) inspection and discovery, (b) enforcing the attendance of any person and examining him on oath, and (c) compelling the production of books of account and other documents, and (d) issuing of commissions, are also conferred on the income-tax authority while carrying out a survey, if the persons connected with the business or profession present at the time of survey, refuse or evade complying with the requisitions made in respect of the matters referred to in section 133A(1). The learned single judge also held in para. 19 (page 286) of his order that the powers conferred on the authority constituted under the Act are to be exercised having due regard to the nature of the proceeding and all the powers conferred by statute cannot be exercised in all proceedings under the Act. Though section 132 authorises search and seizure and section 131(3) enables the authorities to impound documents produced before them in any proceeding under the Act, those powers cannot be read into the power to carry out survey under section 133A. The object of survey is not the same as of search or seizure under section 132. The power of survey also does not include the power to impound documents as the object of the survey is only to ascertain the existence, nature and contents of documents and valuables kept at the place of survey and to obtain information from the persons connected with the business or profession and present at the time of survey.
6. The learned single judge has also held that section 133A(6) does not empower the authority to proceed further and invoke sub-section (3) of section 131 on the ground that the power conferred under section 131(1) had been exercised. When the authority conducting survey exercises the powers conferred on it under sub-section (6) of section 133A which has incorporated within it, the provisions of sub-section (1) of section 131, the powers so exercised are the powers exercisable in accordance with and for the limited purposes of section 133A and does not extend further. By holding so, the learned single judge held that the impounding of the documents found during the survey by the authority in exercise of the power under section 133 was illegal, being violative of sub-section (4) of section 133A and, therefore, the petitioner is entitled to return of the documents so impounded.
7. However, the learned single judge declined to grant the prayer of the appellant in so far as it relates to the return of the promissory notes that were seized during the survey. The learned single judge while rejecting the arguments of learned counsel for the appellant/petitioner had observed as follows (page 287) :
'As regards the promissory notes that were seized during the survey, the seizure of the promissory notes stand on a different footing. These promissory notes being negotiable instruments had been attached by the Tax Recovery Officer by issuing an order of attachment under rule 30 of the Second Schedule to the Act, pursuant to a certificate for recovery of taxes due from the petitioner. The order of attachment so effected and seizure of the negotiable instruments pursuant to that order of attachment, cannot be interfered with, in these proceedings. The respondents have stated in their counter that the petitioner has filed an appeal to the Commissioner of Income-tax (Appeals) against the recovery of the amount covered by the promissory notes and that such recovery has been stayed in the appeal. It is open to the respondents to pursue other remedies that may be available to him with regard to these promissory notes.'
8. Aggrieved against the finding recorded in para. 25 alone, the appellant herein has come up with the above appeal by invoking clause 15 of the Letters Patent.
9. Mr. G. Rajagopalan, learned counsel for the appellant, submitted that the promissory notes that were seized during the survey stands on a different footing. Therefore, the learned single judge ought to have seen that the promissory notes are also documents and the protection given under section 133A(4) is also available to promissory notes. Explaining further, Mr. Rajagopalan submitted that the words used in sub-section (4) viz., 'books of account or other documents or any cash or any other valuable article or thing', clearly suggest that promissory note will definitely come within any of the clauses mentioned above, and that since the promissory notes have been unauthorisedly removed during the survey, the learned single judge ought to have directed the respondents to return the same.
10. The arguments of learned counsel for the appellant were countered by learned senior standing counsel for the Income-tax Department by taking us through the counter affidavits filed by the respondents. We have gone through the counter affidavits filed by the respective respondents and also the order passed by the learned single judge which is impugned in this writ appeal. It is seen from the counter affidavit filed by the Tax Recovery Officer, the third respondent herein that in the course of the survey conducted in the appellant's premises on July 26, 1994, by the officers of the Central Circle authorised by the Assistant Commissioner of Income tax, Central Circle-I(2), the Assessing Officer and the second respondent in the above writ petition, certain books of account and documents including 76 promissory notes were impounded and seized by him under rule 30 of the Second Schedule to the Income-tax Act, 1961, after invoking the provisions of section 131 read with sub-section (6) of section 133A of the Act. It is further seen from the counter that the survey under section 133A of the Act was validly authorised by the second respondent as the assessing authority and the survey was carried out strictly in accordance with the limits of the statutory powers of the officers who conducted the survey. The books of account and other incriminating documents were impounded by the Assessing Officer after invoking the provisions of section 131 read with sub-section (6) of section 133A of the Act. The promissory notes were seized by the Tax Recovery Officer in his capacity as Tax Recovery Officer in accordance with rule 30 of the Second Schedule to the Act after issue of I.T.C.P. No. 9. Rule 30 to the Second Schedule to the Act reads thus :
11. Where the property is a negotiable instrument not deposited in a court nor in the custody of a public officer, the attachment shall be made by actual seizure, and the instrument shall be brought before the Tax Recovery Officer and held subject to his orders.'
12. In such circumstances, it is submitted by learned senior counsel for the Department that the action of the income-tax authorities acting under the provisions of section 133A of the Act is perfectly legal and justified and not arbitrary and malicious as alleged by the appellant. We see much force in the contention of learned counsel for the respondents.
13. We may also refer to certain other provisions of the Income-tax Act in order to appreciate the contentions of learned counsel for the respondents in a situation like this.
Section 116 of the Act :
'There shall be the following classes of income-tax authorities for the purposes of this Act, namely :-
(a) the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963),
(b) Directors-General of Income-tax or Chief Commissioners of Income-tax,
(c) Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals),
(cc) Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals),
(d) Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals),
(e) Assistant Directors of Income-tax or Assistant Commissioners of Income-tax,
(f) Income-tax Officers,
(g) Tax Recovery Officers,
(h) Inspectors of Income-tax.'
14. 'Section 2(7A) 'Assessing Officer' means the Assistant Commissioner or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provisions of this Act, and the Deputy Commissioner who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act.'
15. It is argued that the Tax Recovery Officer is an Income-tax Officer vested with the necessary powers for recovery of arrears of tax in respect of the assessees who carry on business or profession within his jurisdiction or who have their principal place of business or profession or vocation within his jurisdiction or who have their residence or own movable or immovable properties within his jurisdiction. Therefore, it is submitted that respondents Nos. 2 and 3 are income-tax authorities under the Income-tax Act and hence they had the necessary power and authority to be present during the survey operations. As seen earlier, the books of account and documents found in the business premises of the appellant were seized after invoking the provisions of section 131 read with section 133A and as such there is no overstepping of the limits empowered to the income-tax authorities as alleged by the appellant. We see merit in the above submission. It may be relevant in this context to point out that the appellant is in arrears of tax to the extent of around Rs. 1 crore to the Department. Though it is contended by the Department that the appellant is in huge arrears to the extent of around Rs. 25 crores, we are not inclined to go into that question in this proceedings, since it is not germane for us to consider that question. It was for the purpose of collecting the arrears of tax, the officers are authorised under section 133A of the Act by the Assessing Officer, and the survey was carried out by the officers of the Central range. It is the case of the Department that the survey has unearthed several valuable documents and information regarding the investments of the appellant and also his financial status.
16. In our opinion, the survey under section 133A was validly authorised by the second respondent as the assessing authority and the books of account and the other incriminating documents were impounded by the Assessing Officer after invoking the provisions of section 131 read with sub-section (6) of section 133A of the Act. The promissory notes were seized by the Tax Recovery officer in accordance with rule 30 of the Second Schedule to the Act after issue of I.T.C.P. No. 9, as already noticed. As rightly pointed out by learned counsel for the Department, the promissory notes impounded at the time of search are being used only for the collection of arrears of income-tax due by the appellant to the Department, the proceedings of the Assistant Commissioner of Income-tax Department is fully justified under section 133A, as it is necessary that the authorities empowered to authorise action can also remain present at the spot for supervising and doing all that is necessary for the purpose of the Act. Therefore, the presence of the Tax Recovery Officer, the third respondent herein was also perfectly valid and justified by virtue of the powers vested in him under the Second Schedule to the Income-tax Act, 1961.
17. As rightly pointed out by the learned single judge, the promissory notes were seized during the survey, the seizure of the promissory notes stand on a different footing. Those promissory notes being negotiable instruments had been attached by the Tax Recovery Officer by issuing an order of attachment under rule 30 of the Second Schedule to the Act, pursuant to a certificate for recovery of taxes due from the petitioner/appellant herein. In our opinion, though the Tax Recovery Officer was present at the time of the survey, along with the other officers, it was pursuant to a certificate for recovery of taxes, and he is entitled to issue an order of attachment under rule 30 of the Second Schedule to the Act. Though the third respondent was present along with the other officers at the time of the survey, rule 30 of the Second Schedule to the Act empowers him to pass an order of attachment and to seize the negotiable instruments pursuant to the order of attachment. Such an act on the part of the Tax Recovery Officer, cannot be interfered with as in our opinion, the Tax Recovery Officer has acted only within his limits under the powers given to him under rule 30 of the Second Schedule to the Act. Therefore, though the impounding of other documents by the other Income-tax Officers and the attachment and seizure of the negotiable instruments (the promissory notes) by the Tax Recovery Officer were done at one and the same time, the action initiated by the Tax Recovery Officer invoking his powers under rule 30 of the Second Schedule to the Act is totally unquestionable, though such act was put in action along with the other officers who were present at the time of seizure.
18. We are, therefore, unable to appreciate the contention of Mr. G. Rajagopalan that the promissory notes are also documents and the protection given under section 133A(4) is also available to the promissory notes. The writ appeal, therefore, fails and the findings rendered by the learned single judge in para. 25 of his order which is challenged in this writ appeal are confirmed. The writ appeal is dismissed. No costs. Any observation made by us in this judgment will not affect the rights of the appellant in his appeal pending now before the authorities.