Ruma Pal, J.
1. The writ petitioner carries on business as a proprietor of M/s. Arun Automobilies. The facts briefly stated are as follows :-
2. On 21st July, 1989, the Customs Authorities conducted a search and seizure at the petitioner's business premises, where automobile parts and Indian currency of Rs. 3,10,000/- were seized. The petitioner was arrested and subsequently released on bail. A copy of a seizure report was forwarded to the Income Tax Authorities. On 28th July, 1989, the Directors (Investigation) of Income Tax Authorities issued notice under Section 131 of the Income-tax Act, 1961 (hereinafter referred to the Act) to the petitioner directing him to produce books of account for the year 1989-90, Bank's statement, Income Tax File number.
3. It appears from the records produced by the respondent authorities that pursuant to the notice under Section 131, the petitioner in fact produced the books of account and documents as directed before the Income Tax authorities. It also appears that the Income Tax authorities made enquiries as to the source of amounts standing in the books of account of the petitioner. The extract of the accounts in the records of the Income Tax authorities show for the year 1989 the following entry: -
By cash with Customs Authorities Rs. 3,10,000.00
(Being cash seized by the Customs
Authorities)
4. This entry has been in fact underlined in red in the copy available in the Income Tax authority's records.
5. While this investigation by the Income Tax authorities was continuing on 18th September, 1989, the Income Tax Department issued a notice to the Customs Authorities under Section 132A(1) to deliver the sum of Rs. 3,10,000/- seized by the Customs Authorities to the Income Tax Authorities. The notice under Section 132A(1) is dated 14th September, 1989.
6. The Additional Collector of Customs (Preventive), West Bengal, passed an order on 20th December, 1989, directing the goods and currency seized from the petitioner to be released to the petitioner unconditionally. This order has not been appealed from by the Customs Department. Inspite of the order dated 20th December, 1989, the Customs Authorities did not refund either the goods seized or the cash taken into custody.
7. On 29th June, 1990, the petitioner filed his return before the Income Tax Officer. The Balance Sheet as at 31st March, 1990 has been annexed with the return for the Assessment year 1990-91. On the Asset side the petitioner has disclosed as follows :-
Cash with Customs Authorities ... Rs. 3,10,000/-
The petitioner's income for the assessment year 1990-91 has been assessed by the Income Tax Officer and a final assessment order was passed under Section 143 on 19th March, 1991.
8. As far as the Customs Authorities are concerned, the criminal proceeding which had been started by the Customs Authorities against the petitioner was dismissed against the petitioner. The goods seized were released to the petitioner on 9th January, 1991. The money, however, was not released. The petitioner accordingly filed this writ application for, inter alia, a direction on the respondents who were originally only the Customs Authorities to release the amount of Rs. 3,10,000/- to him.
9. By an order dated 9th January, 1991 K.M. Yusuf, J. directed the Customs Authorities to release at least Rs. 1,50,000/- to the petitioner. At this stage the Income-tax Authorities intervened in the proceedings and on 22nd February, 1991 the Assistant Director (Investigation), Income-tax Department was made a party-respondent.
10. By an order dated 25th July, 1991 K.M. Yusuf, J. directed the Customs Department to hand over a sum of Rs. 3,10,000/- to the Assistant Director (Investigation), Income-tax who was appointed Special Officer for this purpose and was directed to keep the same invested in a Fixed Deposit. The writ petition was disposed of initially on 4th October, 1991. In the order disposing of the writ petition the respondents were directed to return the sum of Rs. 3,10,000/- together with all accrued interest thereon to the petitioner within 6 weeks from the date of service of the said order. This period of 6 weeks was extended at the instance of the Income-tax Authorities. Instead of returning the amount, on 6th January, 1992 an application was moved by the Income-tax Authorities for recalling the order dated 4th October, 1991 which was allowed. The writ petition was heard again. Nobody appeared on behalf of the Income-tax Authorities. By an order dated 6th July, 1992 the respondent-Authorities were again directed to return the amount of Rs. 3,10,000/- to the petitioner together with all accrued interest thereon. On 14th August, 1992 the Income-tax Department filed the second application for recalling the order dated 6th July, 1992. That too was allowed and the matter has since been placed before this Court for hearing.
11. The Income-tax Authorities have filed an affidavit-in-opposition. No affidavit-in-opposition has been filed by the Customs Authorities.
12. At the hearing the petitioner has contended that there was no justification for the Customs Authorities to continue to retain the sum of Rs. 3,10,000/- after the order of the Additional Collector of Customs (Preventive) on 20th December, 1989. As far as the Income-tax Authorities are concerned, the petitioner has submitted that the pre-condition for exercise of power under Section 132A(1) of the Act was absent. The petitioner had, in fact, disclosed the amount of Rs. 3,10,000/- in his books of account which had been checked by the Income-tax Authorities at the time of assessing the petitioner for the Assessment Year 1990-91.
13. The Customs Authorities have submitted that they have nothing to say on the merit but only argued that the Court should not make the Customs Authorities liable for payment of any interest. It is stated that there is no provision of law under which the Customs Authorities could be made to pay interest.
14. As far as the Income-tax Authorities are concerned, they have submitted -
(1) that the petition was liable to be dismissed in limine, as the petitioner had not disclosed the fact that Notice under Section 132A(1) had been issued in respect of the amount of Rs. 3,10,000/-. The petitioner had deliberately not made the Income-tax Authorities party to the proceeding although the petitioner knew about the Notice under Section 132A(1) at least one year prior to the filing of the writ petition.
(2) Secondly, it is contended that the Notice itself had not been challenged by the writ petitioner in the writ proceeding and, therefore, the same could not be set aside or quashed.
(3) Thirdly, it is contended that the Income-tax Authorities had ample jurisdiction to issue Notice under Section 132A(1) because as on the date when the Notice was issued, namely in August 1989, the petitioner had, in fact, not disclosed the amount of Rs. 3,10,000/-.
(4) Finally, it is submitted that even assuming that the disclosure made in the Return could be taken into consideration, such a disclosure was not sufficiently clear so as to deprive the Income-tax Officer of the jurisdiction to issue a Notice under Section 132A(1).
15. In my view, the writ petitioner is entitled to succeed in this writ petition. This conclusion is based on the following reasons:-
16. There cannot be any question of suppression, if the fact is not a material one. In other words, if the Court would have in any event, irrespective of the Notice under Section 132A(1), passed the order prayed for, the fact of not mentioning of the Notice would not be fatal to the writ petition. The language of Section 132A of the Act, in so far as it is relevant, reads as follows :-
'132A. (1) Where the (Director General or Director) or the (Chief Commissioner or Commissioner) in consequence of information in his possession, has reason to believe that -
**** **** ** ****(c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purpose of the Indian Income-tax Act, 1922 (II of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the (Director General or Director) or the (Chief Commissioner or Commissioner) may authorise any (Deputy Director), (Deputy) Commissioner, (Assistant Director), (Assistant Commissioner or Income-tax Officer) (hereafter in this section and in Sub-section (2) of Section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer.'
17. The Income-tax Officer is, therefore, required to at least, prima fade, believe that the amount of money in the custody of the Customs represented income which was not disclosed or which would not be disclosed. Immediately after receiving the Notice of Seizure by the Customs Authorities, the Income-tax Officer had issued Notice under Section 131 of the Act. The relevant Assessment Year in question was, therefore, 1990-91. The impugned notice was issued in August 1989. The previous year ended only on 31st March, 1990. The mere fact that there was a large amount of money available with the petitioner would not by itself mean that the petitioner would not disclose the amount. There must have been some other factor which should have induced the Income-tax Officer to at least believe that the petitioner would not, in fact, disclose the amount. As it happens, the petitioner did disclose the amount. In the Return for the Assessment Year 1990-91 the petitioner has specifically referred to the amount on the Assets side. The notice under Section 132A is issued for the purpose of ensuring that the moneys which could have been secreted are, in fact, brought to light. This is followed by a summary estimation of income under Section 132(5) culminating in a final order of assessment. The Notice under Section 132A in this case achieved its purpose. The amount of Rs. 3,10,000/- was, in fact, disclosed by the petitioner. It cannot be argued that in spite of the fact that a regular assessment was made for the Assessment Year in question under Section 143 of the Act, it was still open to the Income-tax Authorities to form an estimation of income for the very same Assessment Year under Section 132(5) of the Act.
18. It may be noted that the final order of assessment was passed on 19th March, 1991 not only 3 months after the writ petition was filed but also after the Income-tax Authorities had intervened in the proceedings and filed their affidavit-in-opposition.
19. It is not a case of setting aside the Notice under Section 132A(1). On the other hand, it is more a question of Notice under Section 132A(1) becoming infructuous having served its purpose. There is no question of setting aside the Notice under Section 132A(1) of the Act as it has served its purpose. The object of Notice under Section 132A(1) being to force disclosure of secreted amounts and the petitioner having, in fact, disclosed the amount in the Return prior to the filing of the writ petition, there was no question of either the notice under Section 132A being mentioned or the Income-tax Authorities being made parties.
20. It is not necessary for me to come to any conclusion as to whether the Income-tax Officer had jurisdiction to issue Notice under Section 132A(1) as I am proceeding on the assumption that he did have such jurisdiction when the Notice was, in fact, issued.
21. The last contention of the respondents that disclosure made by the petitioner was not adequate may be relevant to a proceeding under Section 147(148) of the Act but cannot be considered at this stage after the final order of assessment has been made on the basis of the Return as filed.
22. The Notice under Section 132A(1) has spent its force. There can be no warrant for the Income-tax Authorities to hold on to the amount of Rs. 3,10,000/- anymore. The Special Officer appointed pursuant to the order of this Court is, therefore, directed to hand over the amount of Rs. 3,10,000/- to the petitioner within a period of one week from the date of service of the xerox copy of the operative portion of this Judgment and Order upon him.
23. Having held against the respondent-Authorities, I am not inclined to accept the submission of the petitioner that the respondent-Authorities should be made to pay interest. It is well established that interest is payable either by way of penalty or by way of an agreement or under specific statute. There is no agreement, nor any statute covering the situation, nor am I persuaded to penalise the respondents for not having made over the amount of Rs. 3,10,000/- to the petitioner in the circumstances of the case.
24. However, in making over the sum of Rs. 3,10,000/- to the petitioner, the Special Officer will make over all the interest which has accrued thereon after the same was invested pursuant to the order of this Court.
25. The writ petition is accordingly allowed on the terms stated hereinbefore.
26. There will be no order as to costs.
27. The Learned Counsel appearing for the respondents prays for stay of operation of this Judgment and Order. Such prayer is allowed. There will be a stay of operation of this Judgment and Order for a period of 2 weeks from date.
28. All parties concerned including the Special Officer are to act on a xerox copy of this Judgment and Order, duly signed by the Assistant Registrar of this Court, to be given to them upon their undertaking to apply for certified copy of the judgment on payment of usual charges.