Sinha, C.J.
1. The facts in this case are briefly as follows: Mamchand Agarwalla and Murarilal Agarwalla are two brothers. Krishna Kumar Agarwalla is the son of Mamchand Agarwalla. These three persons carry on a partnership firm under the name and style of Messrs. Mamchand and Company at No. 21-A, Canning Street, Calcutta. It is said that the partnership firm commenced from the year 1937 and its constitution was changed from time to time. The firm of Mamchand and Company is assessed in 'C' Ward District V (I). Mamchand Agarwalla and Murarilal Agarwalla in their individual capacities are assessed in 'D' Ward District V (I). Krishna Kumar Agarwalla has filed his return in his individual capacity in additional Survey, District V (I), Calcutta. Prior to 31st January, 1967 the assessment of the firm of Mamchand and Co. had been completed upto the assessment year 1963-64 and returns had been filed for the assessment years 1964-65 and 1965-66. The assessment in respect of the same has not yet been completed. On the 30th of January, 1967 respondent No. 1 the Commissioner of Income-tax, West Bengal, issued two warrants of authorisation under Section 132 of the Income-tax Act, 1961 read with Rule 112 (1) of the Income-tax Rules, 1962 authorising search at No. 21-A, Canning Street, Calcutta and 22 Mandaville Gardens, where the Agrawallas reside. A third warrant of authorisation was issued, authorising search at No. 22-A Canning Street in respect of 'Ramswarup Mamchand', which is partnership firm between the two brothers Mamchand and Murarilal.
2. We are concerned in this case with Section 132 of the Income-tax Act, 1961 (hereinafter referred to as the 'said Act'), together with the Rules framed under the said Act, (hereinafter referred to as the 'said Rules'), I set out here the relevant part of Section 132.
'132. Search and seizure.-- (1) Where the Director of Inspection or the Commissioner, in consequence of information in ids possession, has reason to believe that-
(a) any person to whom a summons under Sub-section (1) of Section 37 of the Indian Income-tax Act 1922 (11 of 1922) or under Sub-section (1) of Section 131 of this Act, or a notice under Sub-section (4) of Section 22 of the Indian Income-tax Act, 1922, or under Sub-section (1) of Section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in the section referred to as the undisclosed income or property), he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax Officer (hereinafter referred to as the authorised officer) to--
(i) enter and search any building OP place where he has reason to suspect that such books of account, or other documents, money, bullion, jewellery or other valuable article or thing are kept;
(ii) Break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by Clause (i) where the keys thereof are not available;
(iii) seize any such books of account, other documents, money, bullion, jewellery, or other valuable article or thing found as a result of such search;
(iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom;
(v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing.' I shall now set out the brief summary of the three warrants:--
1. This warrant dated 30-1-1967 was issued by the respondent No. 1, Commissioner of Income-tax, West Bengal, addressed to Shri Bibek Banerjee. I. T. O. 'E' Ward District Howrah, (respondent No. 2), S. Das. I. T. O. 'H' Ward District I (2) (respondent No. 3) B. R. Biswas, I. T. O. I Ward District I (2) (respondent No. 4) and Nagendra Nath Sarkar I. T. O. 'K' Ward District I (2) (respondent No. 5) stating (i) that he had reason to believe that if a summons under Sub-section (1) of Section 37 of the Income-tax Act, 1922 or under Sub-section (1) of Section 131 of the Income-tax Act, 1961 or a notice under subsection (4) of Section 22 of the Income-tax Act, 1922 or under Sub-section (1) of Section 142 of the Income-tax Act, 1961 was issued to Messrs. Mamchand and Co. of 22-A, Canning Street, Calcutta to produce or cause to be produced, books of account or other documents which would be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 or under the Income-tax Act, 1961, he would not produce or cause to be produced such books of account or other documents as required by such summons or notice, (ii) That Mamchand and Co. were in possession of money, bullion, jewellery or other valuable articles or things which represented either wholly or partly income or property which had not been disclosed for the purposes of the Income-tax Act, 1922 or the said Act and, (iii) That he had reason to suspect that such books of account, such documents, money, bullion, jewellery or other valuable article or thing had been kept and were to be found at 22-A Canning Street, Calcutta.
The warrant of authority authorised the persons aforesaid to do the following acts;
(a) to enter and search the said premises;
(b) to place identification marks on such books of account and documents as may be found in the course of the search and as you may consider relevant to or useful for the proceedings aforesaid and to make a list thereof together with particulars of the identification marks;
(c) to examine such books of account and documents and make, or cause to be made, copies or extracts from such books of account and documents;
(d) to seize any such books of account, documents, money, bullion, jewellery or other valuable article or thing found as a result of such search and take possession thereof,
(e) to make a note or an inventory of any such money, bullion, jewellery, or other valuable article or thing;
(f) to convey such books of account, documents, money, bullion, jewellery or other valuable article or thing to the office of the Inspecting Assistant Commissioner of Income-tax or any other authority not below the rank of the Income-tax Officer employed in the execution of the Income-tax Act, 1961 and
(g) to exercise all other powers and perform all other functions under Section 132 of the Income-tax Act, 1961 and the rules relating thereto. A copy of this warrant is set out at pages 40-42 of the paper book.
2. A similar warrant was issued In favour of Smt. P. Mahajan, L T. O. 'E' Ward, Comp 1 (respondent No. 6) S.K. Roy, I. T. O, 'B' Ward Comp (IV) (respondent No. 7) A, S. Singal, L T. O. 'D' Ward Comp IV (respondent No. 8) and C. P. Roy, I. T. O. 'J' Ward Comp IV (respondent No. 9) on similar grounds as the first mentioned warrant, but in respect of the residence of Mamchand and Murarilal at 22 Mandaville Gardens, Calcutta. Similar authority was given to them as In the first mentioned warrant. A copy of the said warrant is set out at pages 43-45 of the paper book.
3. A similar warrant was Issued to Bibek Banerjee, I. T. O. 'E' Ward District Howrah, S. Das, I. T. O. 'H' Ward, District I (2) B. R. Biswas, L T. O. 'I' Ward District 1 (2) and Nagendranath Sana, I. T. O. 'E' Ward District 1 (2) in respect of Ramswarup Mamchand, for search at 21-A, Canning Street, Calcutta. The authority given was similar to that contained in the first mentioned warrant On the strength of the warrants Issued as mentioned above, the authorised officers conducted searches and took custody of books of account, documents etc.
3. On the 31st January. 1967 the respondents Nos. 2 and 5 assisted by some Inspectors and clerks entered the office premises of the said firm at No. 21-A, Canning Street and conducted a search. The search report or 'panchnama' as it has been called, is set out at pages 49 to 69 of the paper book. This panchanama shows that books of account and documents shown in schedule 'A' to the same were found and upon which marks of Identification were placed. Articles or things (including money) which were found are set out in schedule 'B' to the same, and the books of account and documents set out in schedule 'C' were taken possession of. The search took place between 10 A. M. and 7. P. M. During the search, one Shri Benarasilal Gupta described as 'officer-incharge' of Ramswarup Mamchand was examined. A copy of his examination is set out at pages 70-71 off the paper book.
4. On 31st January, 1967 there was a search at the residential house of the Agarwallas at No. 22, Mandaville Gardens, The respondents Nos. 6, 7 and 9 conducted the search with the help of Inspectors and clerks. On the 31st January, 1967 the search continued upto 10. p. m. at night and several books of account and documents were seized, A list of these Is set out in annexure 'F' at pages 73 to 78 of the paper book. On the same date, a notice was issued under Section 132(2) of the said Act directing the occupants of Mandaville Gardens not to remove or otherwise deal with jewellery kept in the store-room of Mrs. Mamchand Agarwalla. On the 1st February. 1967 the search again commenced at 9 A. M. While the search was going on, the searching officers were informed that a lady of the house had developed heart trouble and the search was creating inconvenience. At about 5 p. m. it was noticed that there was a locked shed on the back-yard of the bungalow. As Inspectors wanted to inspect the same, they were told that It was a cow-shed, but that it was empty. The officers, however, caused the locks to be opened and it was found that there were a large number of books of account lying therein, inside steel trunks and on racks. The case of the respondents is that, as all the discoveries were made at a late hour of the day, and inventorisation would have taken a long time; It was suggested by the representatives of the appellants that the said books, documents, papers etc. should be taken to the income-tax office where an Inventory would be made. This procedure was agreed to by the authorities and eleven steel trunks and three gunny bags containing books of account, documents, papers etc. were sealed by the Income-tax Officer and on behalf of the assessees and they were packed upon a lorry and brought down to the income-tax office. They were thereafter listed and a copy, of the list was handed over to the assessees. A receipt given on that occasion is very important and is set out below:
'Eleven Steel Trunks and three Gunny bags containing Books of accounts, documents papers etc. found in the east corner room of the outhouse of premises No. 22, Mandaville Gardens, Calcutta-19 which have been sealed with your signets and signatures of Sri Benarasilal Gupta and also by us, are being taken with your consent to the Income-tax Officer for the sake of convenience and for being inventorised In the presence of the witnesses.
ad. S.K. Roy, ad. Mamchand Agarwal1-2-1967 1-2-1967'
The Panchnama in relation to the above is contained at pages 80-81 of the paper book and the inventory is contained at pages 82-101 of the paper book.
In the Panchnama, we find the following entries:
'2 (C) The following books of account and documents were then taken possession of during the course of search;
4. The search could not be completed today and the authorised officers, Sri. S.K. Ray and Mrs. P. Mahajan sealed the following:
1. Eleven Steel Trunks
2. Three Gunny Bags.
3. (Sic).
4. The Jewelleries have been kept in three steel boxes.
5. Which have been sealed both by the assessee and the Department 6. The keys of the boxes have also been sealed in a separate packet as above.'
This panchnama was signed by the representative of the firm. We are informed that the signature is that of Benarasilal Gupta.
5. It is stated on behalf of the appellants that the books of account and documents were 'seized' and it is stated that there are legal flaws in such seizure. It is stated on behalf of the respondents that there was in fact no seizure but that the goods were taken away in sealed trunks and gunny bags by consent of the parties and that the search in respect thereof cannot be said to have been completed. I shall deal with this point later on in detail. In February, 1967 an application was made to the respondent No. 1 by four ladies for return of jewelleries. On 8th February, 1967 an application was made to the Central Board of Direct Taxes, by the firm, for return of the books of account and documents. On the 21st February, 1967 jewelleries and ornaments were returned to the ladies. On the 17th April, 1967 certain books, a list of which is set out at p. 116 of the paper book, were returned. On the 11th May. 1967 an application was made under Article 226 and a Rule was issued by Mitra, J. There was an interim injunction restraining the respondents from examining and looking Into the books of account and documents Until the 18th May, 1967. This interim order has been extended from time to time. On the 9th of November, 1967 the Rule was heard by Mitra, J. and by his order passed on that date, the application was dismissed and the Rule discharged. This appeal is directed against this order of Mitra, J. dated 9th November, 1967-Before I deal with the first point that has been raised, it is necessary to consider more closely the provisions of Section 132 of the said Act It may be stated at once that in the said Act as amended by the Income-tax (Amendment) Act. 1965 there has been a significant departure from the original provisions contained in the Act of 1922. Section 37 (2) of the Act of 1922 was in the following form:
'Subject to any rules made in this behalf, any Income-tax Officer specially authorised by the Commissioner in this behalf may--
(i) enter and search any building or place where he has reason to believe that any books of account or other documents which in his opinion will be useful for, or relevant to, any proceeding under this Act may be found and examine them, if found;
(ii) seize any such books, of account or other documents or place marks of identification thereon or make extracts or copies therefrom;
(iii) make a note or an inventory of any other article or thing found in the course of any search under this section which in his opinion will be useful for, or relevant to, any proceeding under this Act;
And the provisions of the Code of Criminal Procedure, 1898 (V of 1898), relating to searches shall apply so far as may be to searches under this section.'
This section was replaced in the Act of 1961 with Section 132, and was more or less in the same form. The form was substantially changed by an amendment in 1964 and another in 1965. The relevant section as it stands after the 1965 amendment, has been set out above. The first significant departure is on the question as to who should have 'reason to believe'. Under the Act of 1922, the Commissioner's duty was to authorise an Income-tax Officer, but it was specifically stated that it was the Income-tax Officer who should have 'reason to believe' that any books of account or other documents would, in his opinion, be useful or relevant to any income-tax proceeding. From this, the power of seizure followed. In the said Act, as amended in 1965, the emphasis has been shifted from the Income-tax Officer to the Commissioner (or the Director of Inspection as the case may be). Under this provision of law. It is the Commissioner who must have information in his possession and it is he who must have 'reason to believe'. It is, however, not the Commissioner who does the actual search or seizure. This is left to the person whom he authorises to carry out the search. It follows, therefore, that the seizure of books of account, documents, money, bullion, Jewellery or other valuable articles would be dependent on the persons so authorised being of the opinion that the same would be useful in any income-tax proceeding. What is argued on behalf of the appellants is that the said Act as amended in 1965 vests the discretion in the Commissioner and not in the Inspecting officer. Therefore, the Inspecting officers cannot seize documents etc. by themselves but must be guided by the Commissioner. In other words, the things can be seized, only after the Commissioner has seen them and had come to be of the opinion that they were relevant and useful, or else he must set out in the warrant of authority, particulars of such documents, books of account etc.
6. The first thing to consider in this connection is the difference between the wordings of Clauses (a) and (b) of Sub-section (1) of Section 132 of the said Act. Under Clause (a), action may be taken if a person is served with a summons to produce or cause to be produced, specified books of account or other documents and fails to do so. But in Clause (b), the basis is somewhat different. in the latter case, the Commissioner must have reason to believe that the person to whom a summons has been issued under Clause (a) or might be issued, will not produce or cause to be produced any books of account or documents which will be useful and relevant to an income-tax proceeding. Under Clause (b), unless summons under Clause (a) has been Issued, no specification is possible. in such a case the basis is that the assessee will suppress books of account and documents which will be required. The Income-tax Authorities require the power furnished by Clause (b) for the very reason that they do not know what the relevant books of account and, documents are, and are afraid that they will be concealed or suppressed. This interpretation of Clauses (a) and (b) plainly appears from a consideration of the rules made under the said Act. Rule 112 in the Income-tax Rules 1962 (hereinafter referred to as the 'said Rules') provides that the power of seizure under Section 132 shall be exercised in accordance with Sub-rules (2) to (14). Sub-rule (2) provides that the Commissioner must first of all record his reason for issuing a warrant of authority. It then provides as to what should be the form of such warrant in fact, it is done in accordance with Form 45 framed under the said Rules. Form No. 45 shows that it could be in two alternative forms. Where it is under Clause (a), then the word 'specified' is used. in other words, it deals with the situation where books of account or other documents specified in a summons or notice have not been produced or will not be produced. The alternative form is Clause (b) where it is not possible to specify the same. In such a cane, the Commissioner would not know before search as to what he wants. The most important thing to consider under this heading is the affidavit filed by the Commissioner himself, affirmed on the 5th June, 1967 a copy whereof is set out in the paper book at pages 125 to 134. Paragraph 2 of the said affidavit shows that some Information had been received by the Commissioner. The nature of the information will appear from the contents thereof, and for that purpose I set out the relevant part.
'Information was received by me of large scale evasion of income-tax by a section of the members of East India Jute and Hessian Exchange Ltd. Calcutta including the firm of M/s. Mamchand and Co. who are also members of East India, Jute and Hessian Exchange. I also had information in my possession that some of the members of East India Jute and Hessian Exchange (hereinafter referred to as the said Exchange) including the petitioners, in collaboration with some other members pass on their actual profit by creation of artificial losses through fictitious back-dated transactions and thereby have been evading substantial portion of their income-tax liabilities. From the information in my possession it appears that the actual procedure of evasion which is common in every case is to introduce in the books losses due to non-existing speculation transactions with the help of antedated bogus contracts in I. S. D. N. T. S. D. P. D. O. or in ready, goods. These antidated transactions are always Intended to neutralise the quantum of profit they intend to wipe out. The purchaser of the profit is often a person who has losses to set off, if not he passes on the profit by a similar transaction to a third broker in the chain from whom the actual profit is realised by the principal operator that is the beneficiary in cash. Some times even five or more persons are brought in the chain to give the transaction a colour of genuineness. The payments for actual value are often made by cheques operated by the Beneficiary in the names of his collaborators. To put a stop to such malpractices the East India Jute and Hessian Exchange, under instructions from Government, passed a bye-law sometime in August 1960, requiring the members to register all their transactions in T. S. D, contracts with the Exchange on the day following the date of such contracts. But the rule did not have the desired effect. A section of the members started circumventing the rule by forging the official seal and signature of the authorised official, while some passed contracts without any seal or authentication. Thus a large portion of the I. S. D. contracts had remained out of the register of contracts maintained by, the Exchange.'
The Commissioner had further information that in executing the aforesaid acts, these concerns including the appellants, were fabricating and forging documents and seals. A large number of fictitious contracts were entered into between various parties for diverting profits BO that they would not be detected. He further received written complaints that the appellants were acting in collusion and conspiracy with others for diverting earned profits, to avoid tax liability. The Commissioner, upon information received, was also of the belief that the appellants were in possession of jewellery and other valuable articles representing income and property which had not been disclosed. I might mention here that the reasons were reduced into writing and a copy thereof has been produced and put on record, marked as Ext. 1.
7. As stated above, the first point argued is that under the law it is the Commissioner who must have reason to believe that the assessee would not produce certain books of account or documents if called upon to do so, and it is he who must be of the opinion that they are relevant for the purpose of any income-tax proceeding. Firstly, it is said that the assessee had always filed their returns regularly and there was no reason for the Commissioner to believe that they would not produce any document or books of account which they were called upon to produce. It is true that no specific instance has been established which shows deliberate avoidance as to production of documents. But one must look at the question in the background of the reasons which induced the issue of the warrant. The allegations are very serious. The manufacture of forged documents and forged seals have been mentioned, for the purpose of large scale avoidance of income-tax. The learned Judge in the Court below was right in coming to the conclusion that it would be idle to expect that in this background the appellants would readily disclose the real books and documents which would show the actual profits made by them.
8. It is argued next that there must be some foundation for such belief, namely some antecedent conduct on the part of the assessee which will justify such belief. For example, if in the past the assessee had failed to produce books which were wanted that would be a reason for such belief. Our attention has been drawn to the existing materials on this point. The first reference is to paragraphs 5, 6 and 11 of the petition. In para 5 it has been stated that prior to 31st January, 1967 the assessment of the firm of Messrs, Mamchand and Co. had been completed upto the assessment year 1963-64 and returns had been filed for the assessment years 1964-65 and 1965-66-The assessment in respect of the assessment years 1964-65 and 1965-66 have not yet been completed. Paragraph 6 states that at no point of time, ever since the registration of the petitioner firm with the Income-tax Authorities in the year 1941, did the petitioners or any of them fail to produce any books of account, documents, vouchers and papers, when called upon to do so by the Income-tax Authorities. It is stated that all demands of the Income-tax Authorities had been duly paid and no demand was pending or outstanding. In. paragraph 11 it has been stated that there was no material before the Commr. on the basis of which he did hold or could have held any belief that any books of account or documents, useful for or relevant to, any proceeding under the Income-tax Act, would not be produced if they were called for. It is argued that the Commissioner did not at all apply his mind to, the question, but was influenced by collateral and extraneous matters. In answer to these allegations, several instances have been set out in the affidavit affirmed by Bibek Banerjee on the 5th June 1967. In paragraph 5 of the said affidavit, certain instances have been given of non-payment of dues for which penalty proceedings have been taken and in answer to the allegation made in paragraph 11 of the petition instances have been given where the assessee failed to comply with certain requirements of the Income-tax Authorities. In answer, it is said that with regard to the instances of non-payment of penalty put forward by the Income-tax Authorities, it will be found that these related to disputed liabilities and the matters were being contested. With regard to the allegation of non-compliance with certain notices, it is stated that there might have been non-compliance in time, but ultimately all requisitions and notices were complied with. In my opinion, the instances of non-compliance or failure to pay are by no means formidable. But the matter should not be looked at merely from the point of view of these specific examples. It should be looked at in the background of the facts against which the extreme step under Section 132 has been taken.
The two grounds of complaint are that the Commissioner had no reason to believe that certain books of account and documents will not be produced and secondly that if he did believe it to be so, he should have set out a list in the warrant of such books of account and documents. I have already referred to the reasons that have been put forward by the Commissioner which led him to the belief that the books of account and document etc. will not be produced. As I have stated above, in the affidavit filed by the Commissioner affirmed on 5th June 1967, he has stated that information was received by him of a large scale evasion of income-tax by a section of the members the East India Jute and Hessian Exchange Ltd. Calcutta, including the firm of M/s, Mamchand and Co. who are also members of the said Exchange. He had information that some of the members of the said Exchange were wiping out their actual profits by creation of artificial losses, through fictitious back-dated transactions. Information received showed that one method was to introduce in the books, losses due to non-existent specluative transactions with the help of antedated bogus contracts. The antedated transactions were intended to neutralise the true quantum of profit. The transferee of the profit was often a person who had losses to set off. If not, he passed on the profit by a similar transaction to a third party, often in a chain, until the profit was wiped out. Sometimes even five or more persons were brought into the chain to give the transaction a colour of genuineness. To put a stop to such malpractices, the East India Jute and Hessian Exchange, under instructions from Government, passed a Bye-law sometime in August 1960, requiring the members to register all their transactions in T. S. D. contracts with the exchange, on the day following the date of a contract. It is stated that this was being circumvented by forging the official seal and signature of the authorised officials. It has been stated as follows:
'There was further information that in executing the aforesaid acts of diverting profits, these concerns including the petitioners were fabricating and forging documents. A large number of fictitious contracts were entered into by them including the petitioner with various parties (whose names at the moment I am unable to disclose because that would positively hamper further investigation) for diverting profits.
It appeared to me from the examination of records of the Income-tax Officer relating to assessment of the petitioner firm that the books produced by the petitioner at different stages of assessment by the Income-tax Officer were doubtful
I also received written complaint that the petitioner was acting in collusion and in conspiracy with others for diverting profits earned to avoid tax liabilities. I am at this stage unable to disclose the said written complaint because that would frustrate and hamper further investigation. I am still in possession of the said written complaint From the various information in my possession I had reasons to believe and I bona fide believed that the said written complaint is not false or; bogus.'
9. Let us first of all come to Section 132 of the said Act. The first tiling to observe is the distinction between Clause (a) and (b) of Sub-section (1). In Clause (a), the position considered is when a summons is issued -- 'to produce, or cause to be produced, any books of account or other documents', and the assessee had omitted or failed to produce or cause to be produced the same. It is obvious, therefore, that under Clause (a) the particulars of the specific documents, books of account etc. which are required to be produced should be specified. in contrast to Clause (a), Clause (b) envisages the position where the Commissioner has reason to believe that a person to whom a summons under Clause (a) has been issued would not produce or cause to be produced the books of account, documents etc. It also envisages the position where the Commissioner has reason to believe that the person to whom such a summons might be issued but has not been issued, will not produce or cause to be produced any books of account or other documents which will be useful for or relevant to any proceeding under the Income-tax Act in our opinion, in the latter case it is not necessary, and in most cases impractical to specify documents in the warrant of authorisation. Firstly, it cannot be known before inspection as to what books of account or documents will be found and secondly, the law does not require such specification at that stage when the Commissioner is proceeding under Clause (b) and not under Clause (a). Several cases have been cited upon this point which I shall now proceed to consider. The first case cited is Durga Prasad etc. v. H. R, Gomes, AIR 1960 SC 1209. In that case, what fell to be considered was Section 105 of the Customs Act (1962). Under this provision of law, if the Assistant Collector of Customs, or in any area adjoining the land frontier or the coast of India, an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things. The provisions of the Cr. P. C. 1898, relating to searches shall, so far as may be, apply to such searches. In delivering judgment Ramaswami, J. said as follows;
'It was further submitted on behalf of the appellant that the power of search under Section 105 of the Customs Act cannot be exercised unless the authorisation specifies a document for which search is to be made. In other words, it is contended that the power of search under Section 105 of the Customs Act is not of general character. We do not accept this argument as correct. The object of grant of power under Section 105 is not search for a particular document but of documents or things which may be useful or necessary for proceedings either pending or contemplated under the Customs Act. At that stage it is not possible for the officer to predict or even to know in, advance what documents could be found in the search and which of them may be useful or necessary for the proceedings. It is only after the search is made and documents found therein are scrutinised that their relevance or utility can be determined. To require therefore, a specification or description of the documents in advance is to misapprehend the purpose for which the power is granted for effecting a search under Section 105 of the Customs Act. We are therefore, of opinion that the power of search grant ed under Section 105 of the Customs Act is a power of general search. But it is essential that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied, that is, the officer concerned must have reason to believe that any documents or things which in his opinion are relevant for any proceeding under the Act, are secreted in the place searched.'
Similar observations were made in R.S. Seth Gopikisan Agarwal v. R.N. Sen, : 1967CriLJ1194 . In that case also, the Supreme Court was considering the provisions of Section 105 of the Customs Act 1962. Subba Rao, C. J. said as follows:
'The next contention is that on a reasonable construction of the said provision it should be held that the Assistant Collector of Customs should not only give reasons for his belief but also the particulars of the nature of the goods and of documents, for, if the reasons and the particulars are not given, the officer authorised may make a roving search of the house which is not in the contemplation of the said section. This argument may be dealt with in two parts. In terms Section 105 of the Act does not say that the Assistant Collector shall give reasons. The power conferred on him under Section 105 is not subject to any such condition. Though he cannot make a search or authorize any officer to make a search unless he has reason to believe the existence of the facts mentioned in the section, the section does not compel him to give reasons. While it may be advisable, and indeed proper, for him to give reasons, the non-mention of reasons in itself does not vitiate the order. Nor can we agree with the appellant that the particulars of the nature of the goods and of the documents should be given in the authorization. Obviously, no question of giving of particulars arises if he himself makes the search, but if he authorizes any officer to do so, he cannot give the particulars of the documents, for they will be known only after the search is made. Doubtless he has to indicate broadly the nature of the documents and the goods in regard to which the officer authorized by him should make a search, for without that his mandate cannot be obeyed. The authorization Issued by the Assistant Collector of Customs in this case clearly mentioned that on information received it appeared that the appellant was in possession of contraband goods and documents relating thereto and also described the office and the residential premises wherein those goods and documents would be found. In the circumstances of the case we are satisfied that the specifications are sufficient to enable the offices authorized to make the search.'
The provisions of Section 132 of the said Act are similar and these observations are apt. Another -Principle to be borne in mind is that the words 'reason to believe' mean that reasons should exist, but the Court will never go into the adequacy of such reasons. This question has been decided repeatedly in connection with the provisions of the Income-tax Act relating t reopening of assessments. In S. Narayanappa v. Commissioner of Income-tax, Bangalore, : [1967]63ITR219(SC) the position under Section 34 of the Income-tax Act, 1922 was dealt with. Under that provision, if the Income-tax Officer had 'reason to believe' that there has been an under-assessment either by reason of omission or failure on the part of the assessee to make a return of his income or to disclose fully and truly; all the material facts necessary for his assessment, then the assessment can be reopened. Ramaswami. J. said as follows:
But the legal position is that If there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non disclosure as regards any fact, which could have a material bearing on the question of underassessment, that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notice under Section 34. Whether these grounds are adequate or not is not a matter for the Court to investigate. In other words, the sufficiency of the grounds which Induced the Income-tax officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression 'reason to believe' in Section 34 of the Income tax Act does not mean a purely subjective satisfaction on the part of the Income-tax Officer The belief must be held in good faith: it cannot be merely a pretence. To put it differently, it is open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under Section 34 of the Act is open to challenge in a Court of law (see Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District 1 Calcutta : [1961]41ITR191(SC) .'
10. The same position has been reiterated in K.V. Narayana and Sons v. First Additional Income-tax Officer, Rajahmundn : [1967]63ITR638(SC) .
11. The learned Advocate General relies strongly on the case of Barium Chemicals Ltd. v. Company Law Board : [1967]1SCR898 . That was a case under Section 237(b) of the Companies Act, 1956. Under that provision, of law, if in the opinion of the Central Government then, were circumstances suggesting that the business of a company was being conducted with intent to defraud its creditors, members, or any other person, or otherwise, for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose or that persons concerned in the formation of the company or the management of its affair are guilty of fraud, misfeasance etc. then an order might be made for investigation into the affairs of the company. What happened in that case was that an investigation was ordered into the affairs of Barium Chemicals Ltd. This was resisted by the company, which made an application before the Punjab High Court under Article 226 of the Constitution. It was stated that the order was mala fide, that in making the order, extraneous matters had been taken into consideration by the Company Board which was the delegate of the Central Government, for exercising power under Section 237(b), and other points, which arc not relevant for our purposes. In that case, affidavits were filed on behalf of the Board disputing these charges and it was stated that there had been delay, bungling and faulty planning of the project, resulting in double expenditure; that since its floatation, the company had been showing losses and nearly one-third of its share capital had been wiped out; that the shares of the company which started with selling at a premium were being quoted in the Stock Exchange at half their face value and that some eminent persons who had accepted scats in the Board of Directors had severed their connection with it. It was held that these were extraneous circumstances and did not bring the matter within the scope of Section 237(b) of the Companies Act. The faulty administration of the affairs of the company resulting in losses did not establish fraud or any intention to defraud the creditors of the company or the members nor did it amount to misfeasance or other misconduct towards the company or towards any of its members. I do not see how this decision supports the view point of the appellant. Shelat. J. cited the Privy Council case of Nakkuda Ali v. Jayaratne, 1951 AC 66. In that case, the Privy Council construed the words 'where the controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer' occurring in Regulation 62 of the Defence (Control of Textiles) Regulations, 1945. Lord Radcliffe said as follows;
'After all, words such as these are commonly found when a legislature or law making authority confers powers on a minister or official. However, read, they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. But if the question whether the condition has been satisfied is to be conclusively decided by the man who would the power the value of the intended restraint is in effect nothing. No doubt he must not exercise the power in bad faith: but the field in which this kind of question arises is such that the reservation for the case of bad faith is hardly more than a formality.'
The Privy council held that the aforesaid words in Reg. 62 imposed a condition that there must in fact exist such reasonable grounds known to the controller before he could validly exercise the power of cancellation. Therefore, though the belief of the Controller that the dealer was unfit was subjective, existence of reasonable grounds on which the belief could be founded was objective and a limitation on his power. In Ridge v. Baldwin, 1964 AC 73 Lord Reid suggested the same construction of ''similar words occurring now-a-days in several statutes.' Shelat, J. proceeded to say as follows:
'Therefore, the words, 'reason to believe' or 'in the opinion of to not always lead to the construction that the process of entertaining 'reason to believe' or 'the opinion' is an altogether subjective process not lending even to a limited scrutiny by the Court that such 'a reason to believe' or 'opinion' was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative.'
12. In the instant case, it is not suggested that when challenged, there is no duty cast on the respondents to the Court to show that the Commissioner had prima facie 'reason to believe' so as to bring the matter within the four corners of Section 132(1)(b) of the Income-tax Act. The whole question is as to how much of the provision is subjective and how much objective. In other words, upon being challenged, what is the extent to which the Commissioner must satisfy the Court that he had reasons to believe. I think it is fairly well established that he has to show facts which prima facie will convince the Court that a reasonable man could, under the circumstances form a belief which will impel him to take action under the law. The Court will not go into the sufficiency or adequacy of such reasons. On the other hand, if the Commissioner failed to disclose even a prima facie case, or it could be established that there were no reasons at all, or that the reasons were irrelevant or extraneous or if lack of honesty, that is to say mala fides could be established, then the Court would have ample jurisdiction to strike down the proceedings initiated by the Commissioner. Coming now to the facts of the present case, we find that the Commissioner has filed an affidavit showing the kind of information that he had, which led him to form the belief that the investigation should be made. in fact, before he issued the warrant of authority, he gave reasons for his order and communicated it to those who were going to investigate. These reasons have been disclosed and placed before the Court. in our opinion a prima facie case has been made out. in other words, the information received by the Commissioner was such that a reasonable person could form the kind of belief which would justify investigation and search under the provisions of Section 132(1)(b) of the said Act. It was not necessary to state the reasons in the warrant, nor was it necessary to specify the documents or books of account etc. which would be the subject matter of search and seizure. The criticism that the warrant was issued upon conjectures alone and not in good faith accordingly fails. The allegation that the Commissioner had no belief, or had no reason to believe or that he had no information in his possession which could induce him to believe are points of no substance. The test is whether there was reason for the belief for a rational action having a relevant bearing to the formation of the belief. This test has been passed. There was also a point raised in the pleadings that reasons were not communicated to the assessee. The short answer is that there is no provision of law which requires reasons to be communicated to him. See : 1967CriLJ1194 . This decision of the Supreme Court also establishes the proposition that provided the Commissioner of Income-tax indicates broadly the nature of the documents and the goods in regard to which the officer authorised by him should make a search, it was not necessary that he should make the search himself when he authorises such officers to make the search and seizure, obviously, it is the officers who are to decide whether the documents and goods are such as come within the scope of the seizure contemplated under Section 132 of the said Act. But, this must be done on the basis of the reasons communicated to them by the Commissioner and not beyond it. If it is so done, it will be taken to be the act of the Commissioner himself.
13. The next objection taken is that there was excessive search and seizure. With regard to the search and seizure at premises No. 21-A Canning Street, the charges are as follows: (a) that the search and seizure was indiscriminate (b) that the searching officers did not apply their minds and (c) there were two warrants but one panchnama. The charges are contained in Clause (a) of para. 17 of the petition. It is stated there that the authorised officer conducted a general raid and general search in abuse of the power conferred upon him and, thereafter seized books of account, papers and documents of the current year and of the past several years indiscriminately, arbitrarily and without any regard for the usefulness or relevancy thereof for any proceedings under the Income-tax Act. It is said that the officers never cared to open or look into the books, documents and papers and merely conducted a fishing enquiry without applying their minds and seized all books documents and papers which came into their hands, lock, stock and barrel. These charges have been categorically denied. In the affidavit of Bibek Banerjee, Income-tax officer respondent No. 2, it is denied that there was any general raid in abuse of the powers conferred under Section 132 of the said Act. It is denied that there was any fishing enquiry or that the Inspectors did not apply their minds. It has been stated that the Income-tax Officers conducted their search in accordance with law, that they were fully aware of the nature of things they were looking for and they only seized relevant documents according to the instructions given by the Commissioner. In fact, a large number of documents were left behind which were considered to be unnecessary or found necessary for the day to-day use of the assessee in his business. The warrant of authority required the Inspectors to search for the books of account, documents etc. of Messrs. Ramswaroop and Messrs. Mamchand and Co. of 21-A Canning Street Calcutta. The panchnama in respect of this search and seizure appears at pp. 49 to 69 of the paper books. Part I, Schedule A consisted of certain books of account and documents on which marks of identification were placed, but all the books of account and documents were not taken possession of. The books of account and documents which were taken possession of appear in Schedule C, set out at pages 61-69 of the paper book.
The Panchnama shows on the face of it in Schedule C that many items were scored out, which shows that the Inspectors applied their mind. The fact that the books of account and documents and articles in Schedules A and B were not seized, shows that the Inspectors were not seizing things at random, but were doing so after due deliberation. The panchnama was signed by Benarashilal Gupta on behalf of the assessee, and no objection was recorded. On behalf of the appellant, reference is made to pages 89 to 90 which refers to nakal khata of the year 1938-39. It is said that this shows reckless search and seizure. Barring these two books of account, all the books relating to a period within two years before the search were returned. The mere fact that these two books relate to the year 1938-39 does not prove that they were not relevant. The fact that many books and documents were not taken possession of and/or returned but these two documents were not so done, establishes that they were found to be relevant. At this stage it is impossible to come to the conclusion that the mere fact that the books of account relate to an earlier period makes them irrelevant. After all, it has been stated on oath in the Commissioner's affidavit (in paragraph 7) that duplicate sets of books of account for the same year and for the same period had been found to exist. These earlier books may prove this if not anything else. Upon the materials placed before us, we are unable to come to the conclusion that the search has been excessive. So far as excessive search is concerned, the matter necessarily depends on the facts of each case. In the case of Seth Brothers v. Commissioner of Income-tax U. P. : AIR1965All487 it was established as a fact that there were instructions from the Directorate of New Delhi for a general raid and seizure of all account books and papers which could be found at the petitioners' premises. More than 500 documents were seized, some being admittedly irrelevant for the purpose of any proceeding under the Income-tax Act. The police force employed was found to be excessive. It was held that in view of all these circumstances, the search was not a bona fide one and the extent of the seizure was far beyond the limit of Section 132 of the said Act and the action was mala fide in the sense that there was abuse of powers conferred under the said Act and the proceedings were liable to be quashed. We hold that on the facts of the present case charge of indiscriminate search and seizure at premises No. 21-A. Canning Street has not been substantiated.
14. With regard to the search at 21-A Canning Street it is said that there were two warrants in respect at two firms, but there was only one panchnama. It is suggested that this is contrary to law. This objection is set out in Clause (e) paragraph 17 of the petition. It is stated there that two different warrants were issued for searching the premises No. 21-A, Canning Street, Calcutta, one in respect of Mamchand and Co. and another in respect of Ramswaroop Mamchand. In respect of these two businesses separata inventories were not prepared but one joint inventory. That there two authorizations are admitted, one being annexure 'A' to the petition appearing at p. 40 of the paper book and the other being annexure 'C' at p. 46 of the paper book. This objection has been dealt with in paragraph 21 of the affidavit affirmed by Bibek Banerjee on the 5th June 1967.
15. In this connection, the following points may be observed: The two warrants of authorization have authorised the same team of Income-tax Officers. Both the firms have the same office room. Muralidhar Agarwalla and Mamchand Agarwalla are two brothers and they are partners of Ramswaroop Agarwalla. These two brothers and the son of Mamchand are the partners of Mamchand and Co. The two firms are interrelated in their business dealings and it has been stated in paragraph 21 of the affidavit-in- opposition affirmed by Bibek Banerjee, that the books of one are necessary for the purpose of investigation into the affairs of the other. That the firms were acting Jointly appears from the joint application for the release of the documents dated 8th February, 1967 set out at pages 112 to 115 of the paper book. Benarashtlal Gupta is the officer-in-charge of Ramswaroop Mamchand, but he has signed on behalf of both the firms in the panchnama as also in annexure 'C' set out it page 72 of the paper book, on behalf of Mamchand and Co. as well. A 'panchnama' as such is unknown to law. What it signifies is that a list has been prepared in the presence of witnesses in accordance with Section 103 of the Criminal Procedure Code. The search and seizure under Section 132 has to be done in accordance with the provisions of search and seizure as laid down in the Criminal Procedure Code, in so far as it can be made applicable. Section 103 lays down that the search has to be made in the presence of two OB more respectable witnesses who are Inhabitants of the locality and the search shall be made in their presence and a list of all things seized and of the place in which they are respectively found, shall be prepared and signed by such witnesses. This has in substance been accomplished. In any event, even if there is any irregularity in the panchnama, that does not vitiate the search. In a Bombay case, State v. Kuppuswami : AIR1967Bom199 the panchnama was not made out at all.
It was held that the mere fact that a panchnama was not, made would not vitiate the search and seizure if the Magistrate was satisfied that the evidence of the police officer was true. In the Supreme Court decision in Sunder Singh V. State of U. P. : 1956CriLJ801 , a room was searched and a blood-stained shirt and bloodstained pant was recovered therefrom. The only witnesses who were available were two rickshawallas. It was held that although they could not be said to be respectable Inhabitants of the locality as required under Section 103 of the Criminal P. C., the search was not invalidated, At best it would be an irregularity and affect the weight of evidence. In Radha Kishan v. State of U. P. : (1963)IILLJ667SC it was alleged that the search was illegal and the seizure was, therefore, vitiated. It was held that the alleged illegality could not vitiate the search or seizure. It may be that, because of the illegality of the search, the Court will be inclined to examine carefully the evidence regarding the seizure. But beyond this, no other consequence ensues.
16. In the Instant case, there is no allegation that, apart from a technical defect there was in fact no search or that the books of accounts, documents etc. had not been taken possession of from the custody of Mamchand and Co. or Ramswaroop Mamchand. On the contrary, as stated above, both Mamchand and Co. and Ramswaroop Mamchand jointly applied for return of the documents mentioned in the search list. This point accordingly fails.
17. Now we come to the alleged excessive search and seizure at 22 Mandaville Gardens, Calcutta. The case made out in the petition is as follows: At premises No. 22 Mandaville Gardens, Calcutta, search was conducted from 10 O'clock in the morning on 31st January, 1967 till 9 P. M. on 1st February, 1967. It is said that the search and seizure was conducted indiscriminately, arbitrarily and without any regard for relevancy or usefulness of the documents so seized, for the purpose of any proceeding under the Income-tax Act. It is stated that a large number of books, papers and documents belonging to the petitioners as well as their friends and relatives, viz., Benarashilal and Co., Hope Prodhume Co. Ltd, Foddar Brothers etc, for the period commencing from S. Y. 1977 corresponding to English calendar year 1921-22, were seized and retained. It is stated that one of the authorised officers, Mr. S.K. Roy telephoned to some superior officers for instruction as to whether old books belonging to the petitioners and to outriders should be seized or not, and he received necessary Instructions to seize all books, documents and papers lying in the premises and in the godown, irrespective of the fact that they were old books or not, or whether they belonged to the petitioners or not, and that this was done arbitrarily and indiscriminately, without regard to relevancy or usefulness for purposes of any proceeding under the Income-tax Act. The definite case is that on the 1st February, 1967 documents, books and papers were seized and taken away and subsequently an inventory was prepared, which it is alleged, shows by its intrinsic evidence that there was a reckless search and seizure. The allegation in the petition to the effect that the list at pages 73 to 78 of the paper book is a list which was made later on, has now been dropped. It is admitted that this inventory was made on 31st January 1967. This list has not been attacked. The search and seizure which is attacked is the subject matter of the panchnama at pages 80 to 101 of the paper book. In the affidavit-in-opposition affirmed by Bibek Banerjee, these facts have been disputed. As regards the search at No. 22, Mandaville Gardens, it is said that it commenced on 31st January 1967 at 9 A.M. and closed for the day at about 10 p. m. On the next morning, that is to say on 1st February. 1967 it began at 9 A. M. In the morning and closed at 9 p. m. The details of the search at 22 Mandaville Gardens are set out ;n the affidavit-in-opposition affirmed by Subodh Kumar Roy on the 5th June, 3967. He was one of the persons who actually conducted the search. According to his affidavit, the search of Mandaville Gardens commenced on 31st January 1967 at 9 A. M. and closed about 10 P. M. In the night. On 1st February 1967 it again commenced on 9 A. M. and close at 9 P. M. On this day, the second day of the search, a lady of the house complained that she had developed heart trouble and the search was creating great inconvenience. The deponent then proceeds to state as follows:
'At about 5 P. M. we noticed that there was a cow-shed attached to the building in the backyard of the bungalow and we were told by the inhabitants that the said cow-shed was empty. We, however, went to the cowshed and after opening the locks found a large number of books of account in steel trunks and on racks and since it was discovered at a very late hour of the day and the inventorisation of these would have taken a long time, it was suggested by the assessee's representatives that the said books might be taken over to the Income-tax Officer Itself and in that event the Officers conducting the search agreed to carry the documents in sealed covers to the Income-tax Office. This procedure was agreed to in the interest of the assessee, and at their request, only for the purpose of helping the inmates and specially the lady with heart ailment. The books were, therefor packed up in a lorry and brought down to the office and listed. A copy of the list was handed over to the assesee. The actual search is still continuing and will be completed after perusal of the documents and finalisation of the seizure list. On completion of the search a final search list would be prepared as has been done at 21-A. Canning Street their office premises. It would appear from the panchnama given in respect of the 22. Mandaville Gardens that the search is not yet complete and it could be completed only after scrutiny. On completion of the search a final panchnama would be issued to them.'
18. The respective cases of the parties are, therefore, as follows:
According to the appellants, the search was completed at 22, Mandaville Gardens, all the documents were seized and an inventory was made. If this is so, then there does appear some very strong grounds for alleging that the intrinsic evidence of the inventory shows that the 'seizure' was done without sufficient scrutiny and without consideration of the fact as to whether the books of account, documents etc. seized, would be useful or relevant for the purpose of any Income Tax proceeding. The case for the respondents is however that there was search and a large number of books of account and documents were discovered in an alleged cow-shed but the search was not allowed to be completed. A complaint was made that a lady of the house had developed heart trouble and it was at the instance of the assessees that the Income Tax Officers agreed to put all the materials inside 11 steel trunks and 3 gunny bags and to carry them to the Income Tax Office. Accordingly, books of account and documents etc, were put in 11 steel trunks and 3 gunny bags, sealed with the seals and signature of the Income Tax authorities as well as the assessees and taken away to the Income Tax Office where they were to be scrutinised and a proper inventory prepared. Thus, according to the respondents, the search has not yet been completed and there has been no 'seizure' according to the technical meaning of that expression. The inventory is not a complete inventory, but only a list of the goods that were taken to the Income Tax Office. Let us now proceed to see whether the evidence placed before us, supports the one story or the other. A great point is made by the appellants of the word 'seized' used in the inventory, as it appears at page 82 of the paper book. It speaks about the 'inventory of the account books of Mamchand Muralidhar seized from the premises of Mamchand Agarwal at 22, Mandaville Gardens, Calcutta 19 on 1-2-1967 and kept in trunk No. 1/14.' Similar expressions are contained at pages 84, 87, 90, 91, 94, 95, 96,, 97, 98, 99 and 101 of the paper book. As against this, the following reasons have been advanced on behalf of the respondents to show that the search had not been completed on that day and there has not been any seizure yet, according to the technical sense of the term. The first and most important evidence is the statement in the panchnama itself. Paragraph 4 of the panchnama clearly shows that the search was not complete. It runs as follows:
'4. The search could not be completed today and the authorised Officers, Sri. S.K. Ray and Mrs. P. Mahajan sealed the following.
1. Eleven Steel Trunks.
2. Three Gunny Bags.
3. (Sic).
4. The jewelleries have been kept in three steel boxes.
5. Which have been sealed both by the assessee and the Department.
6. The keys of the boxes have also been sealed in a separate packet as above,'
In paragraph 2 of the panchnama appearing at page 80, we have a statement of what was searched and what was found. Clause (c) refers to books of account and documents which were taken possession of during the course of the search. Against this column, the entry is merely a cross mark. This should be compared with the entry against Clause (c) in the inventory of 21-A, Canning Street, Calcutta which is at page 49 of the paper book. Against this column the entry is--'as per schedule 'C' ..................'. The schedule 'C' is a list of the documents which were seized. The panchnama in question was signed on behalf of the Income-tax Officer as well as the assessee. I do not see how the assessee can get over the clear statement in para 4 (page 81} that the search had not been completed. The matter, however, seems to be placed beyond doubt by the document which is annexure 'E', at page 72 of the paper book. This document was signed on behalf of the Income-tax Officer concerned and by the assessee when the books of account, documents etc. were taken away to the Income-tax Office. This document is in the following terms:
'Eleven Steel Trunks and three Gunny Bags containing Books of accounts, documents papers etc. found in the east corner room of the outhouse of premises No. 22, Mandaville Gardens, Calcutta 19 which have been sealed with your signets and signatures of Sri Benarsilal Gupta and also by us, are being taken with your consent to the Income-tax Officer for the sake of convenience and for being inventorised in the presence of the witnesses,' Annexure 'E' to the petition shows on the face of it that on the 1st February, 1967 when the books of account, documents etc. had been taken away in 11 steel trunks and 3 Runny bags, the search had not been completed and no 'seizure' after scrutiny of the books and documents had taken place. If such had been the case, and there was 'seizure' in the real sense of the term, then there was no necessity of taking the consent of the assessees for such removal. Secondly, if there was such seizure, then there was no necessity of the assessees putting their seals and signatures on the containers. Thirdly, if it was seized and taken away, there could be no question of subsequent inventorisation. The very tenor of the document which is annexure 'E', shows that it was the record of an act done by consent of parties. When the search would be completed the question of the Income-tax Officers applying their minds to the question as to which books and documents should be seized and which returned to the parties will arise. If the search had been concluded, there is no reason why the boxes and bags were sealed with the seal of both the Income-tax Authorities and the assessees. The document itself says that the goods had been removed with the consent of the assessee and 'for the sake of convenience.' Next comes the question as to the use of the word 'seized' appearing in the inventory as mentioned above. There is no doubt that this expression has been used, but it is explained by saying that it was a mistake. in a case like this, one must not encourage mistakes, but taking all the facts and circumstances into consideration, there can be no doubt that some sort of an error has been committed. Although the word 'seized' has been used, it has not been used in the sense that there has been inspection made of all the books and documents, which were seized after being satisfied that the same were relevant for any Income-tax proceeding. in our opinion, the expression 'seized' has been used in the larger sense, which means no more than that certain books of account and documents had been taken possession of, from the assesses. It must be remembered that the assessees did not readily co-operate in the search. They tried to conceal certain books etc., in the so-called cow-shed, and upon this being discovered, quite suddenly a lady of the house developed heart trouble. It was only when it was found that the scrutiny of the books and documents would take a long time, that the assessees requested that the documents should be taken away. Bearing all the facts and circumstances in mind, I have no hesitation in accepting the case upon this point presented by the respondents. It is obvious to me that so far as the happenings of 1st February, 1967 are concerned, at Mandaville Gardens, the search had not concluded and the books of account and the documents had not been scrutinised. At the request of the assessees, they were put into 11 steel trunks and 3 gunny bags, sealed with the seal of the parties and taken to the Income-tax Office. There, an inventory was made, but it was merely a list of documents which have been carted away. It was not an inventory that was made after the search and the scrutiny were completed. I might mention here that if we are wrong upon this point and the search be taken to have been concluded and goods seized in terms of the provisions of Section 132, then there are substantial grounds for complaint. The list as made out, does contain books of account and documents the relevancy of which have not yet been prima facie established. However, since we accept the explanation of the respondents we must hold that this point on behalf of the appellants must fail.
19. I will now deal with some authorities cited on behalf of the parties. in Jagannath Misra v. Stats of Orissa : 1966CriLJ817 the Court was dealing with the provisions of the Defence of India Act, 1962 and the Rules made thereunder. It was stated that there was detention made under the Act, and it was held that the authority ordering the detention should act with a full sense of responsibility and that the order of detention itself should show that it acted with due care and caution. It was pointed out by Wanchoo, J. that out of seven possible grounds, the order set out six, but it was quite clear that the authority concerned did not apply its mind to these grounds before passing the order. in the affidavit filed in Court, there was only mention of two of these grounds. This showed casualness in passing the order of detention and the order was struck down. Another case cited is State of Bombay v. Atmaram Baidya : 1951CriLJ373 . This was a case which dealt with the Preventive Detention Act. It was held that though the satisfaction necessary under the Act was that of the Central or the State Govt., and the question of satisfaction could not be challenged except on the ground of mala fides, the ground of satisfaction must have a rational connection with the objects which were sought to be attained. It is argued before us that a mere recital in the warrants of authorisation that the Commissioner of Income-tax was satisfied, could not justify the search and seizure of the petitioners' office and residence. The respondents must satisfy the Court that the ground existed for the belief that the books and documents would not be produced by the petitioners, if and when called upon to do so. in my opinion, nothing has been shown in the present case which goes against the principles laid down in either of these two Supreme Court decisions. Undoubtedly, a mere statement of the grounds, which the later conduct of the parties showed up as nonexistent, or which have no relevancy to the objects which were sought to be attained by the relevant legislation, will certainly not justify the search and seizure, which is a very extreme act on behalf of the executive authority. The facts of the instant case are, however, different. The information that the Commissioner had was of an extremely serious nature. Large scale evasion of taxes was said to have taken place, by following a course of conduct which involved falsification of books of account, forging of false documents, bringing into existence fabricated contracts and so forth. These grounds cannot be said to be irrelevant or extraneous, or demonstrative of the fact that the Commissioner did not apply his mind at all. The letters of authorisation have to be read with the reasons given by the Commissioner and as contained in the instructions which had been given to the Income-tax Officers. If the information was correct, then it is but commonsense that the assessees will not produce or cause to be produced the relevant books of account or other documents which will be useful in respect of any Income-tax proceeding. The learned Advocate General has argued that one of the reasons given is self-destructive. He says that, if it was true the assessees had falsified their books in order to show fictitious debits against real credits, then it is all the more reason why such books and documents should be produced rather than withheld. in my opinion this is not strictly correct. It is reasonable to expect that when fictitious debits had been introduced to wash away the real credits, some kind of false books will be produced. But the falsification of books is not a simple process. If the object is to suppress the true information as to income, it can be achieved in many diverse ways. It is impossible to state what particular procedure will be adopted in a given case. There may be duplicate books, that is to say, a genuine set of books and a false set of books. What may be disclosed may be partly true and partly falsa It is improbable under the circumstances that the assessee will completely disclose his hands. On the other hand, if the information is correct then It follows that a great deal of secrecy will be maintained. We might mention here that the learned Standing Counsel offered to produce for our inspection certain duplicate set of accounts kept by the assessees but learned Counsel for the appellants did not agree to this. In our; opinion, the challenge to the vires of Section 132 of the said Act and the rules made thereunder have failed.
20. For the reason mentioned above, we think that the decision of the learned Judge in the Court below was correct and this appeal should be dismissed with cost. The interim orders are vacated,
21. The operation of this order is stayed till one week after vacation as the appellant says that some time will be taken to get certified copies of the order.
Arun K. Mukherjea, J.
22. I agree.