Vipan Kumar JaIn and ors. Vs. Union of India and ors. - Court Judgment

V.S. Aggarwal, J.

1. Some concepts of legal jurisprudence are of perennial interest. Discussion about these is always refreshing. The rule about 'natural justice' is one such concept. Its basic tenets are impartial adjudication and fair hearing. The abovementioned two principles of natural justice, viz., audi alteram partem and nemo judex in causa sua potest, have been used in common law. The first is used to denote the principle that both sides in a case must be heard. The second concept suggests that no one can be a judge of his own case. This precludes bias of any kind. In other words, it is necessary that his case is heard by a judge who is free from bias. Bias disqualifies an individual from acting as an adjudicator.

2. In the case of A. K. Kraipak v. Union of India : [1970]1SCR457 , the Supreme Court observed (page 155) : 'The real questionis not whether he was biased. It is difficult to prove the state of mind of a person. Therefore, what we have to see is whether there is reasonable ground for believing that he was likely to be biased--a mere suspicion of bias is not sufficient. There must be a reasonable likelihood of bias.'

3. Therefore, one can revert to the facts. Vipan Kumar Jain and Chandcr Deep Jain are two brothers (petitioner No. 1 and petitioner No. 2). Mrs. Sneh Rani Jain, petitioner No. 3, is the wife of Vipan Kumar Jain while Mrs. Dolly Jain, petitioner No. 4, is the wife of Chander Deep Jain. Besides, S. K. and Company and Classic Cutlery (India), petitioners Nos. 5 and 6, respectively, are two partnership concerns of the abovesaid petitioners.

4. By virtue of the present writ petition, the petitioners have invoked Articles 226/227 of the Constitution of India for declaring the search dated September 30, 1998, effected on the premises of the petitioners illegal, arbitrary, mala fide and without jurisdiction and also declaring the panch-namas dated September 30, 1998, prepared by Dr. Navaljit Kapoor, respondent No. 4, and Sh. Harinder Kumar, respondent No. 5, to be false and fabricated. It is also prayed that in the absence of any legal and valid service of a legal notice under Section 158BC(a) of the Income-tax Act, 1961 (for short 'the Act'), the assessment proceedings are void ab initio and mala fide. It is prayed that the respondents should be directed to return the documents seized during the search dated September 30, 1998, and further that the assessment proceedings pending with respondent No. 5 should be transferred. It is also, lastly, contended and prayed that the practice of appointing the investigating officer of the search as the assessing authority is violative of Article 14 of the Constitution of India.

5. The facts alleged are that petitioners Nos. 1 and 2 had entered into an agreement dated September 25, 1996, with one Banarsi Dass Vij and his wife, Smt. Sheela Wati Vij, who were the shareholders of B. D. Vij and Sons Private Limited and running a cinema Suraj at Panckula. According to that agreement, the petitioners had agreed to purchase the land and the shares of Shri Banarsi Dass Vij and his wife, belonging to B. D. Vij and Sons Private Limited for a consideration of Rs. 2.15 crores. The petitioners gave the details of the agreement and the payments made with which we are not presently concerned.

6. Respondent No. 2--Director of Investigation--exercising the powers under Section 132 of the Act issued warrants of authorisation in favour of respondents Nos. 4 to 7 to conduct a search upon the premises of the petitioners. Respondent No. 4, Dr. Navaljit Kapoor, was authorised to conduct the search upon the premises of petitioner No. 1, Sh. Vipan Kumar Jain, and his wife, petitioner No. 3, Mrs. Sneh Rani Jain, while respondent No. 4, Sh. Harinder Kumar, was given the charge to conduct the search on the premises of Chander Deep Jain, respondent No. 2, and his wife, Mrs. Dolly Jain. Shri Bharat Bhushan, respondent No. 6, was deputed to search thepremises of the partners of S. K. and Company, i.e., business premises at plot No. 90, Industrial Area, Phase-I, Chandigarh. Respondent No. 7, Shri Narinder Kumar, was entrusted the job of effecting search on the business premises of Classic Cutlery (India) at Plot No. 88, Industrial Area, Phase-I, Chandigarh. It is asserted that petitioners Nos. 1 and 2 on the relevant date were not present at the residence at the time of search and had left for Delhi. On the telephonic message received, they returned to their houses. It was at the direction of respondent No. 5, that the panchnama was prepared and it is asserted that in the panchnama prepared by Dr. Navaljit Kapoor, respondent No. 4, it was recited that he entered the premises at 7.45 a.m. on September 30, 1998, and called two panchas. Vipan Kumar Jain and his wife were present and even the statement of Vipan Kumar Jain was recorded under oath. Though they were not present in their house, it was not correctly recorded that they were present. In fact, it is asserted that even warrants of authorisation was not shown. Respondent No. 6 had conducted the search at the premises of S. K. and Company, a partnership concern, and even there in the panchnama it is stated that warrants of authorisation had been shown to Vipan Kumar Jain and Budhi Bahadur. It did not depict the true picture. In fact, there was no warrant of authorisation to search the premises of the partnership.

7. The plea of the petitioners further is that during the course of investigation, petitioners Nos. 1 to 4 were time and again reminded and threatened by the officers that in case they did not hand over Rs. 1 crore concealed money, they would face dire consequences. They were not even allowed to consult their lawyers. The petitioners did as desired by the investigating officer. Even the lockers of the petitioners were opened and a panchnama was prepared. The petitioners had made an application to the Director of Income-tax with a prayer that they should be supplied the copies of the warrants of authorisation which, in fact, were not supplied.

8. It is further asserted that on October 6, 2000, the petitioners acquired the knowledge that some persons from the Income-tax Department had come to serve the summons. Petitioner No. 1 appeared before respondent No. 5 and filed three applications in order to inspect the files. Respondent No. 5 handed over to petitioner No. 1 notice under Section 142 of the Act. A questionnaire was also given by respondent No. 5. One questionnaire relating to petitioner No. 2 was also given. Respondent No. 5 handed over two letters relating to partnership concerns of the petitioners mentioning further that notices were wrongly issued to the firms as no warrants were issued against the firms. Simultaneously, respondent No. 5 served summons relating to Classic Cutlery (India) and S. K. and Company for furnishing returns for the block period from April 1, 1998, to September 30, 1998. The same were accepted by petitioner No. 1.

9. While the writ petition was filed, proceedings for assessment were pending before respondent No. 5. During the pendency of the writ petition, assessment proceedings had been completed. This led to the petitioners amending their writ petition. It is not in controversy that an appeal even against the assessment proceedings had been filed.

10. The petitioners seek the abovesaid reliefs alleging that the Director of Investigation had no reasonable information upon which a reasonable person can form a belief in order to exercise the jurisdiction under Section 132 of the Act. Respondent No. 2, Director of Investigation, issued orders of search on the complaint of one Vijay Kumar Palecha, one of the proprietors of K. C. Theatre, Panchkula. He did not satisfy himself regarding the sufficient material. The information was speculative in nature. No reasonable person could have formed an opinion and, therefore, the very search is stated to be illegal. It is also asserted that the Director of Investigation was under obligation to record the reasons and specify whether the case was under Clause (a), (b) or (c) of Section 132(1) of the Act. The reasons had to be tangible in law. There is no reasonable nexus between the information and reason. Furthermore, it is claimed that there were no search warrants against Classic Cutlery (India) and S. K. and Co., still the search was conducted and appraisal reports were prepared. Even it is alleged that the facts were not correctly recorded because Dr. Navaljit Kapoor, who had recorded the statement of petitioner No. 1, appended a note that petitioner No. 1 was on his way to Delhi. Thus, the panchnama in which the presence of petitioners Nos. 1 and 2 was recorded must be stated to be forged and fabricated. Even respondent No. 5 is stated to have satisfied himself regarding Rs. 3,51,600 in the house of petitioner No, 2. The abovesaid reliefs are further claimed on the ground that the notices issued were invalid and above all alleged that the practice of appointing the investigating officer as an Assessing Officer is violative of Article 14 of the Constitution of India. An Investigating Officer cannot become the judge to decide whether the investigation carried out by him is correct or not.

11. In the written statement filed to the amended writ petition, respondents Nos. 1 to 6 took the preliminary objection that the search action commenced on September 30, 1998, and concluded on October 15, 1998. The writ petition has been filed after two years and is highly belated. It has also been asserted that during the pendency of the writ petition, assessment orders had been passed which have not been impugned and, therefore, the writ petition is liable to fail. The writ petition is also stated to be bad for misjoinder of parties.

12. On the merits of the matter, the respondents denied the assertion of the petitioners. It has been urged that petitioners Nos. 1 and 2 had invested Rs. 19.6 lakhs up to September 30, 1998, when they purchased the shares of B. D. Vij and Sons Pvt. Limited. The matter as such is stated to havebeen discussed in the assessment orders passed. The warrants of authorisation were issued, as per the answering respondents, by the Director of Income-tax (Investigation), Chandigarh, to search the residences of petitioners Nos. 1 and 2. They were partners in two partnership concerns, i.e., petitioners Nos. 5 and 6. When the search party reached house No. 2218, Sector 15-C, Chandigarh, two sons and a nephew of petitioner No. 1 were present in the house. The warrants of authorisation were signed by Nitin Jain, one of the sons of petitioner No. 1. He informed that his father had gone to Delhi and his mother had gone to the temple. On a request made by Nitin Jain, he was allowed to contact his mother who had gone to the temple. So far as petitioner No. 2 is concerned, it has been pointed out that petitioner No. 4 had made a request to respondent No. 5 to allow her to make a call to petitioner No. 2. She was allowed to use the cellular phone that some persons from the Income-tax Department had come to their house. It is denied that the warrants of authorisation were not shown to the petitioners or that the panchnama was not correctly prepared. A plea has been raised that by mistake the name of Vipan Jain was mentioned in the panchnama instead of Nitin Jain. Even before the search was concluded, petitioner No. 1 was given the copies of the panchnama. The statement of petitioner No. 1 was recorded. It is reiterated that the petitioners were given copies of their statements that were recorded at the time of search. Similarly, with respect to petitioner No. 2, it has been pointed out that petitioner No. 2 was, admittedly, shown the search warrants and also to petitioner No. 4. It was admitted that there was no search warrant with respect to two partnership concerns and thereupon it has been detailed that petitioner No. 1 had promised to examine the seized goods in the presence of the chartered accountant but he never turned up. Petitioners Nos. 1 and 2 had promised that they would bring the photocopier machine to get the photocopies of the seized documents but they did not do so despite repeated opportunities granted. It is denied that the assessment proceedings are invalid or that the notices were also invalid. The contention raised that the officer who was involved in the search cannot be the Assessing Officer was also controverted.

13. Respondents Nos. 4 to 6 had even filed short separate written statements denying the assertions qua them.

14. The first and the foremost question agitated has been that there was no tangible information before respondent No. 2 before he issued the warrants of authorisation. No such reasonable person could arrive at such a conclusion on such an information and, therefore, the same is liable to be quashed.

15. Sub-section (1) of Section 132 of the Act reads as under :

'132. (1) Where the Director-General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board, in consequence of information in his 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 32 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, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,--

(A) the Director-General or Director or the Chief Commissioner or Commissioner, as the case may he, may authorise any joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or

(B) such Joint Director or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer,

(the officer so authorised in all cases being hereinafter referred to as the authorised officer) to-

(i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, 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 ;

(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing ;

(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 : . . .'

16. It clearly shows that the Commissioner of Income-tax before issuing the search and seizure warrants must have some information. The information should be relevant to the requisite belief of the Income-tax Commissioner and this information should be entertained for a statutory purpose mentioned in Sub-section (1) of Section 132 of the Act.

17. The Supreme Court considered this controversy in the case of ITO v. Seth Brothers : [1969]74ITR836(SC) . In the cited case, the Supreme Court held that exercise of the power under Section 132 of the Act is a serious invasion upon the rights, privacy and freedom of the taxpayer and, therefore, it must be exercised strictly in accordance with the law. It was further held that Section 132 of the Act does not confer any arbitrary authority upon the revenue officer and he must have a reason to believe that the statutory conditions for the exercise of the power exists. The findings recorded by the Supreme Court were as under (page 843) :

'The section does not confer any arbitrary authority upon the revenue officers. The Commissioner or the Director of Inspection must have, in consequence of information, reason to believe that the statutory conditions for the exercise of the power to order search exist. He must record reasons for the belief and he must issue an authorization in favour of a designated officer to search the premises and exercise the powers set out therein. The condition for entry into and making search of any building or place is the reason to believe that any books of account or other documents which will be useful for, or relevant to, any proceeding under the Act may be found. If the officer has reason to believe that any books of account or other documents would be useful for, or relevant to, any proceedings under the Act, he is authorised by law to seize those books of account or other documents, and to place marks of identification therein, to make extracts or copies therefrom and also to make a note or an inventory of any articles or other things found in the course of the search. Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be exercised strictly in accordance with the law and only for the purposes for which the law authorizes it to be exercised. If the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateralpurpose, it is liable to be struck down by the court. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed ...'

18. The same question was again considered by a Division Bench of this court in the case of H. L. Sibal v. CIT . The house of Shri H. L. Sibal, advocate, was searched at 7.30 a.m. while he was in his office. It was held that the burden lies on the Commissioner who issued the warrants to satisfy the court that he had taken action on proper and relevant material. The facts of that case need not be looked into for the purposes of the present petition because they were little different but this court certainly added that there has to be reasonable information and if search warrants had been issued not in conformity with Section 132 of the Act, they were liable to be quashed. The precise findings of the court were as under (page 131):

'The word 'information' has been defined in the Shorter Oxford Dictionary as 'that of which one is apprised or told'. The word 'reason' has been defined as 'a statement of fact employed as an argument to justify or condemn some act'. On the other hand, the word 'conclusion' is defined as 'a judgment arrived at by reasoning ; an inference ; deduction, etc.'. In other words, when the information received or the basic facts are harnessed in support of an argument, the resultant effect assumes the shape of a reason and when a number of reasons are considered in relation to each other, the final result of this consideration assumes the shape of a conclusion. A necessary concomitant of this approach is that the facts constituting the information must be relevant to the enquiry. They must be such from which a reasonable and prudent man can come to the requisite belief or conclusion. If either of the afore-mentioned elements is missing, the action of the authority shall be regarded as lying outside the ambit and scope of the Act. Such an action would be liable to be struck down on the basis of what is commonly known as 'legal malice'.'

19. Our attention was further drawn towards the decision of the Division Bench of the Allahabad High Court in the case of Lit Light and Co. v. CIT : [1982]136ITR513(All) . In the cited case, the Allahabad High Court held that the issue of search warrant by the Commissioner is not a judicial or a quasi-judicial act and even if the Commissioner is enjoined to issue a warrant when the facts are brought to his notice, ordinarily it would not be the subject-matter of controversy before the court. The precise findings of the Allahabad High Court are as under (page 518) :

'It is well settled that the issue of a search warrant by the Commissioner is not a judicial or a quasi-judicial act and even if the Commissioner is enjoined to issue a warrant only when in fact there is information in his possession in consequence of which he may form the necessary belief, the matter is not thereby subject to scrutiny by the court (see ITO v. FirmMadan Mohan Damma Mal : [1968]70ITR293(All) ). It is not necessary before effecting the search and seizure under Section 132 of the Act, that the officials of the Income-tax Department should have given to the person whose account books and documents are sought to be seized, a notice to produce whatever account books or other documents are needed and that the person should have failed to comply with such a notice. As laid down in Clause (b) of Sub-section (1) of Section 132 if the Commissioner is satisfied that the person 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 Act he is empowered to direct a search and seizure without giving to the person concerned, a notice to produce the account books or other documents needed.'

20. The Calcutta High Court in the case of Dwarka Prosad Agarwalla v. Director of Inspection : [1982]137ITR456(Cal) , also rendered a similar decision that there has to be reason to believe that factors mentioned in Section 132(1) of the Income-tax Act were satisfied. Reason to believe must be in consequence of information in possession of the said officer. When there was no mention as to what the specific information was, the court had quashed the said order. The said court held as under (page 466) :

'It is, however, necessary to consider the other-contentions of the petitioner on this aspect. It was contended on behalf of the petitioner that three conditions must be satisfied before the Director of Inspection could take action under Section 132(1), and the conditions were as follows : (i) There must be a proceeding pending or completed concerning the assessee under the Act, (ii) there must be information in the possession of the Director of Inspection and in consequence of such information he had reason to believe that the assessee was in possession of money, jewellery, valuable thing, etc., which represented either wholly or partly his income and such income was not disclosed by him or would not be disclosed by him and such thing is necessary for the purpose of assessment, and (iii) the Director of Inspection must record the reasons for his belief and specify the things noted. Unless these conditions were fulfilled, there could not be a valid exercise of the power under Section 132(1) of the Income-tax Act, 1961, and if the conditions precedent for the said exercise of power were not fulfilled, the exercise of the power was not valid.'

21. The Supreme Court in the case of Pooran Mal v. Director of Inspection (Investigation) : [1974]93ITR505(SC) , held that the provisions of search and seizure are not ultra vires or discriminatory. It was further held that even though a search and seizure may be in contravention of Section 132 of the Income-tax Act, still the material obtained is liable to be used subject to law before the income-tax authorities. The findings in this regard recorded by the Supreme Court were as under (page 528) :

'In that view, even assuming, as was done by the High Court, that the search and seizure were in contravention of the provisions of Section 132 of the Income-tax Act, still the material seized was liable to be used subject to law before the income-tax authorities against the person from whose custody it was seized and, therefore, no writ of prohibition in restraint of such use could be granted. It must be, therefore, held that the High Court was right in dismissing the two writ petitions. The appeals must also fail and are dismissed with costs.'

22. Our attention was further drawn towards the decision of the Division Bench of the Delhi High Court in the case of L. R. Gupta v. Union of India : [1992]194ITR32(Delhi) . In the cited case, compensation had been awarded to Shri L. R. Gupta, senior advocate, in a land acquisition matter. It is unnecessary to ponder with other details of that case but suffice to say that the Division Bench of the Delhi High Court also concluded that the provisions of Section 132 of the Act have to be strictly construed. It was held as under (page 45) :

'The expression 'information' must be something more than a mere rumour or a gossip or a hunch. There must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe that action under Section 132 is called for for any of the reasons mentioned in Clauses (a), (b) or (c). When the action of issuance of an authorisation under Section 132 is challenged in a court, it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under Section 132 was called for. The opinion which has to be formed is subjective and, therefore, the jurisdiction of the court to interfere is very limited. A court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under Section 132 is called for. But the court would be acting within its jurisdiction in seeing whether the act of issuance of an authorisation under Section 132 is arbitrary or mala fide or whether the satisfaction which is recorded is such which shows lack of application of mind of the appropriate authority. The reason to believe must be tangible in law and if the information or the reason has no nexus with the belief or there is no material or tangible information for the formation of the belief, then, in such a case, action taken under Section 132 would be regarded as bad in law.'

23. It is abundantly clear from the aforesaid that there has to be a specific information rather than vague information. The opinion has to be formed in a subjective manner on which a reasonable and prudent person could act. If there is no reason or tangible reason to believe, the said order would only be set aside. This court would not act as an appellate authority because it is for the said authority to act on the information and consequently judicial review in this regard to the administrative decision would only be interfered within accordance with well recognised principle in this regard.

24. In the present case, the income-tax authorities had made available to us the original order recorded by respondent No. 2 before issuing the said authorisation. It requires to be mentioned that there are no mala fides attributed in this regard. A perusal of the same shows that respondent No. 2 had the information available. It is not necessary that if on such reasonable information action is taken, the search must yield the same result. It cannot be termed in these circumstances that there was no application of mind. We are not expressing any opinion on the merits about the assessment at this stage but suffice to say that respondent No. 2 had reasonable information. It was recorded and, therefore, in the absence of any other cogent material, the search warrants are not required to be quashed.

25. As mentioned above, during the pendency of the present writ petition, assessment proceedings against the petitioners had been finalised. It is not in controversy, because it was admitted at either end, that appeals against the assessment orders are pending. Taking this fact into consideration, on behalf of the Department, it had been vehemently urged that once the appeal is pending, the petitioners can take all these pleas, which are being' urged before this court, before the competent authority where the appeal is pending.

26. The law is well-settled that when alternative remedy is available or is being availed of, then the High Court in exercise of its extraordinary writ jurisdiction under Article 226/227 of the Constitution of India would ordinarily restrain itself from exercising the said jurisdiction. However, there are certain exceptions to this general rule. We, however, hasten to add that this is a self-imposed restriction.

27. The Supreme Court in the case of Calcutta Discount Co. Ltd. v. ITO : [1961]41ITR191(SC) , considered this controversy and held that if the income-tax authority or officer was acting without jurisdiction, the existence of alternative remedy is not always a sufficient reason for refusing a party quick relief by a writ petition or prohibiting the authority acting without jurisdiction from continuing such action. The same question came up for consideration in the same year before the Supreme Court in the case of A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani : 1983ECR2151D(SC) . The question for consideration was identical with that with which we are presently faced. It was emphatically concluded by the Supreme Court that the general rule is that the party who applies for the issue of a high prerogative writ should, before he approaches the court, exhaust other legal remedies but it does not bar the jurisdiction of the High Court to entertain the petition in the peculiar facts of the case. Inparagraph 8 of the judgment, the Supreme Court concluded the principle of law as under (page 1508) :

'The only point, therefore, requiring to be considered is whether the High Court should have rejected the writ petition of the respondent in limine because he had not exhausted all the statutory remedies open to him for having his grievance redressed. The contention of the learned Solicitor-General was that the existence of an alternative remedy was a bar to the entertainment of a petition under Article 226 of the Constitution unless (1) there was a complete lack of jurisdiction in the officer or authority to take the action impugned, or (2) where the order prejudicial to the writ petitioner has been passed in violation of the principles of natural justice and could, therefore, be treated as void or non est. In all other cases, he submitted, courts should not entertain petitions under Article 226, or in any event not grant any relief to such petitioners. In the present case, he urged, the High Court in appeal had expressly dissented from the reasoning of the learned single judge as regards the lack of jurisdiction of the Customs Officers to adjudicate regarding the item under which the article imported fell and the duty leviable thereon. Nor was there any complaint in this case that the order had been passed without an opportunity to the importer to be heard, so as to be in violation of the principles of natural justice. The learned Solicitor-General questioned the correctness of the reasoning of the learned Chief Justice in condoning the conduct of the respondent in not moving the Government in revision by taking into account the time that had elapsed between the date of the impugned order and that on which the appeal was heard. The submission was that if this were a proper test, the rule as to the petitioner under Article 226 having to exhaust his remedies before he approached the court would be practically a dead letter because in most cases by the date the petition comes on for hearing, the time for appealing or for applying in revision to the departmental authorities would have lapsed.'

28. Thereafter, it was held further that there are two exceptions to this rule that was urged by the Solicitor-General. One such exception was that if the principles of natural justice have been violated, the court can certainly exercise under Articles 226 and 227 of the Constitution of India. However, it depends upon the facts of each case. In paragraph 10 of the judgment the Supreme Court held as under (page 1509) :

'The passages in the judgments of this court we have extracted would indicate (1) that the two exceptions which the learned Solicitor-General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad linesof the general principles on which the court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the court.'

29. More recently, in the decision rendered by the Supreme Court in the case of Whirlpool Corporation v. Registrar of Trade Marks : AIR1999SC22 , the question as to when alternative remedy would bar the court from exercising the extraordinary jurisdiction was considered. Once again the Supreme Court held that where the principles of natural justice have been violated, the court, despite the alternative remedy being available, can exercise the extraordinary writ jurisdiction. In paragraph 15 of the judgment, the said principle was enunciated in the following words (page 26) :

'Under Article 226 of the Constitution, the High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point put to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.'

30. Therefore, necessarily the restriction which is self-imposed, when alternative remedy is being availed of, has to be confined to the controversy as to if any of the fundamental rights has been violated, if there is violation of the principle of natural justice or the vires of the Act have been challenged.

31. As has been noticed above, the assertions of the petitioners that certain facts have not been correctly recorded in different documents when the raid was conducted : the notice served by the Income-tax Officer/authorities was not valid : copies of certain documents applied or required were not supplied etc., need not be gone into this writ petition. If the petitioners have any such grievance, necessarily it must be raised where the appeal is pending which can be dealt with in accordance with law by thesaid authority. We are, therefore, not delving into the said controversy nor expressing any opinion in that regard.

32. On behalf of the petitioners great reliance was placed on the plea of judicial bias and contended that as respondent No. 5 was heading one of the search parties, therefore, he could not be a judge of his own cause and in that process act as Assessing Officer also. On the strength of these facts, it was contended that it causes a prejudice and a reasonable apprehension in the minds of the petitioners. The said contention was controverted arguing that the Income-tax Officer is the Investigating as well as the Assessing Officer and, therefore, this plea must fail. In addition to that, the respondents contended that the petitioners had submitted to the jurisdiction of respondent No. 5 and, therefore, they cannot raise such a plea. It was also urged that there is inordinate delay in filing of the writ petition and this contention, therefore, cannot be permitted to be raised.

33. Before travelling into the plea of judicial bias in the minds of the petitioners, necessarily the first contention, which being preliminary in nature, raised by the respondents must be looked into.

34. Indeed, if a person submits to the jurisdiction of an authority, he cannot, in normal circumstances, be allowed to retrace the steps and challenge the said jurisdiction of the authority.

35. Whether the petitioners had submitted to the jurisdiction of respondent No. 5, necessarily has to be gathered on the basis of the available facts. A perusal of the petition as such reveals that petitioner No. 1 appeared before respondent No. 5 some time in October, 2000. He filed returns before respondent No. 5 during that period only. The present writ petition had also been filed at that very time. Earlier to that, it appears that certain notices were being issued by respondent No. 5 which were not answered and the net result it appears from the aforesaid is that it was only in the later part of the year 2000 that petitioner No. 1 appeared before respondent No. 5. If at that very moment, the writ petition had been filed within a few days, it cannot be termed that the petitioners had voluntarily submitted to the jurisdiction of respondent No. 5. In paragraph 17 of the writ petition, it had been asserted that the petitioners had acquired the knowledge from the employees of the factory that some persons from the Income-tax Department had come to serve the summons and petitioner No. 1 voluntarily appeared before respondent No. 5. It is obviously at that time that effective hearing started. On October 11, 2000, it has been pleaded, an application even was filed for transfer of the assessment proceedings. It is, therefore, apparent that it cannot be taken that it was a submission to the jurisdiction of respondent No. 5 and was voluntary to the extent that they are debarred from raising the contention about the competence of respondent No. 5 to pass the order of assessment.

36. As regards delay, as referred to above, the argument advanced has been that search was conducted in the year 1998 and the writ petition has been filed after two years and, therefore, it must fail on this short ground. In support of their arguments, the respondents referred to the decision rendered by a Division Bench of the Gujarat High Court in the case of Arti Ship Breaking v. Director of Income-tax (Investigation) : [2000]244ITR333(Guj) . In the cited case, the said court held that as the petitioner had approached the court after more than a year, thus, there was a delay in filing of the petition. In the cited case, pursuant to an authorisation granted by the Director of Income-tax (Investigation) under Section 132(1) of the Act, a search was conducted at the premises of the petitioner-firm at Bhavnagar. The officer conducting the search had seized books of account and had also recorded statements of several persons. Ultimately, notices were issued under Sections 142(1) and 158BC of the Act. The writ petition was filed on February 11, 2000. It was in that backdrop, it was held that the writ petition was belated.

37. The facts of the present case are a little different. As noted above, so far as authorisation with respect to search is concerned, the same is valid. The other aspects regarding the return of the documents, etc., this court is not going into the controversy. The petitioners challenged the right of respondent No. 5 to pass an order of assessment. As referred to above, the effective hearing with this regard started in the later part of the year 2000, Therefore, when the writ petition was filed simultaneously, it cannot be termed that there is inordinate delay to permit this court in refusing to exercise the extraordinary jurisdiction.

38. With this backdrop, we can conveniently revert back to the main question which was agitated as to whether respondent No. 5 could be the Assessing Officer despite heading the party which conducted the search. On behalf of the petitioners, as referred to above, it was highlighted that he could not be a witness to the search as well as the Assessing Officer and, therefore, the petitioners have the necessary apprehension of bias on the part of respondent No. 5. According to the petitioners, in this process respondent No. 5 could not be a judge regarding which he was a witness also.

39. As against this, learned counsel for the Income-tax Department urged that the Income-tax Officer is the investigator as well as the assessor and, therefore, there is nothing illegal in the facts of the case. He urged that the question of bias does not arise because respondent No. 5 acted honestly and diligently. At this stage, we deem it necessary to mention that we are presently concerned with the concept of legal bias on the facts of the case. This court is not expressing any opinion about the work and conduct of respondent No. 5. We also deem it necessary to mention that it is not the case of the Income-tax Department that there was no other officer avail-able to whom the assessment proceedings could be handed over or that the doctrine of necessity would come into play.

40. As referred to in the opening paragraph of this judgment, the principle of nemo judex in causa sua potest is well known and has made deep roots in our jurisprudence. The court has to see whether there are reasonable grounds for believing that there could be reasonable bias with respondent No. 5 or suspicion in the minds of the petitioners. A person who has a judicial or quasi judicial duty to perform is disqualified from performing it if he has bias which renders him a partial person. It may also make him ineligible if it creates in the mind of a reasonable man a suspicion that he has some such bias.

41. The Supreme Court considered this aspect in the case of Manak Lal v. Prem Chand Singhvi : [1957]1SCR575 . In the cited case, Sh. Manak Lal, the appellant before the Supreme Court, was an advocate. A complaint was filed against him under Section 13 of the Legal Practitioners Act for professional misconduct. The enquiry was sent to the Tribunal nominated by the Chief Justice of the High Court of Rajasthan. The Tribunal held the enquiry and recorded the evidence. The Supreme Court, while considering the facts, held that it has to be seen if there is reasonable ground for assuming the possibility of bias and whether it would produce in the rninds of the litigant such a reasonable doubt. The Supreme Court held as under (page 429) :

'But where pecuniary interest is not attributed but instead a bias is suggested, it often becomes necessary to consider whether there is a reasonable ground for assuming the possibility of a bias and whether it is likely to produce in the minds of the litigant or the public at large a reasonable doubt about the fairness of the administration of justice. It would always be a question of fact to be decided in each case.'

42. As years rolled, a landmark judgment was delivered in A. K. Kraipak v. Union of India : [1970]1SCR457 . The Supreme Court in the first instance gave a call for new problems and new solutions. In paragraph 14 of the judgment, it was held as under (page 155):

'To prevent the abuse of that power and to see that it does not become a new despotism, courts are gradually evolving the principles to be observed while exercising such powers. In matters like these public good is not advanced by a rigid adherence to precedents. New problems call for new solutions. It is neither possible nor desirable to fix the limits . . .'

43. Thereafter, the principles of natural justice were enunciated and it was reiterated that no one shall be a judge of his own cause and fairness should become the hallmark of all decisions. In paragraph 20 of the judgment, the Supreme Court held as under (page 156) :

'The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words, they do notsupplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past, it was thought that it included just two rules, namely, (1) no one shall be a judge in his own case (nemo debet esse judex propria causa), and (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application of the rules of natural justice. The validity of that limitation is not in question. If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries. Enquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries . . .'

44. It is true that the facts of the case were different but as it always happens no two cases are ever alike. It is the principles of law which have to prevail and the said principles of law have already been referred to above and from the paragraphs that have been reproduced above.

45. Similarly, in the case of Institute of Chartered Accountants of India v. L. K. Ratna : [1987]164ITR1(SC) the same principle was again the subject-matter of consideration. Therein, the subordinate body under the Chartered Accountants Act comprises the members of superior body. The superior body has to take the decision after considering the report of the subordinate body. The Supreme Court held that the members constituting the subordinate body were disqualified from participating in the deliberations of the superior body. It was reiterated that the test is not whether in fact a bias has affected the judgment but the test is whether a litigant could reasonably apprehend that bias attributable to a member might operate against him. In paragraph 25 of the judgment, the Supreme Court concluded as under (page 279) :

'We must remember that the President and the Vice-President of the Council and three members of the Council compose the Disciplinary Committee. The President and the Vice-President do certainly hold significant status in the meetings of the Council. A member whose conduct has been the subject of enquiry by the Disciplinary Committee ending in conclusions adverse to him can legitimately entertain an apprehension that the President and the Vice-President of the council and the other membersof the Disciplinary Committee would maintain the opinion expressed by them in their report and would press for the acceptance of the report by the Council. To the member whose conduct has been investigated by the Committee, the possibility of the Council disagreeing with the report in the presence of the President and the Vice-President and the other members of the Committee would seem rather remote. His fears would be aggravated by the circumstances that the President would preside over the meeting of the Council, and would thus be in a position to control and possibly dominate the proceedings during the meeting. We do not doubt that the President and the Vice-President, and also the three other members of the Disciplinary Committee, should find it possible to act objectively during the decision-making process of the Council. But to the member accused of misconduct, the danger of partisan consideration being accorded to the report would seem very real indeed.'

46. In the case of Ranjit Thakur v. Union of India : 1988CriLJ158 , the same principle was restated and we take liberty to reproduce paragraphs 15 and 17 (page 617) of the judgment which read as under (page 2390) :

'15. The second limb of the contention is as to the effect of the alleged bias on the part of respondent No. 4. The test of real likelihood of bias is whether a reasonable person, in possession of relevant information, would have thought that bias was likely and is whether respondent No. 4 was likely to be disposed to decide the matter only in a particular way.

17. As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the judge is not to look at his own mind and ask himself, however, honestly. 'Am I biased ?'; but to look at the mind of the party before him.'

47. Our attention has further been drawn even to the decision of the Supreme Court in the case of Megha Singh v. State of Haryana : 1995CriLJ3988 . In the cited case, the head constable had arrested the accused and alleged to have recovered the pistol and cartridges from him. A formal first information report was lodged on his complaint. The Supreme Court held that since he was the complainant, he should not have proceeded further with the investigation. Similar findings were returned by the Supreme Court in the case of State of West Bengal v. Shivananda Pathak : [1998]1SCR811 . In the cited case, the controversy pertaining to judicial bias or apprehension in the minds of the others was considered and in paragraph 25 of the judgment it was concluded as under (page 2056) :

'Bias may be defined as a preconceived opinion or a predisposition or predetermination to decide a case or an issue in a particular manner, so much so that such predisposition does not leave the mind open to conviction. It is, in fact, a condition of mind, which sways judgments and renders the judge unable to exercise impartiality in a particular case.'

48. In fact, a Division Bench of this court in the case of Punjab Salt Peter Refineries Ltd. v. B. M. Bhargav [1995] 2Tax 511 in a short judgment held as under :

'After hearing counsel for the parties and perusing the record, we find that there is merit in this petition. Admittedly, Sh. B. M. Bhargav, Excise and Taxation Officer-cum-Assessing Authority, Ambala City, respondent, had been a member of the raiding party on the premises of the petitioner. He has also framed the assessments in the case of the petitioner for the relevant period, vide his orders, annexures P-2 and P-3. This is not permissible in law.

We allow the writ petition, quash the impugned orders, annexures P-2 and P-3, and the notice, annexure P-4, passed by the respondent and direct the Deputy Excise and Taxation Commissioner, Ambala, to entrust these proceedings to some other officer of competent jurisdiction for disposing of the same in accordance with law.'

49. The conclusions are obvious that in normal circumstances a person should not be permitted to be the judge of his own cause. Admittedly, in the search that was effected by respondent No. 5 in the house of Chander Deep Jain, petitioner No. 2, and his wife, Mrs. Dolly Jain, petitioner No. 4, he was heading the raiding party. It is he who had prepared the necessary documents at the spot. These documents were very much taken into consideration and necessarily also were the subject-matter of the assessment order. As referred to above, respondent No. 5 might discharge his duties to the best of his capability honestly and diligently, but when petitioners Nos. 2 and 4 complain of bias and form a reasonable apprehension of prejudice to them or that respondent No. 5 would not act fairly, the court has to see from their point of view. The court has to see the impression which would be given in this regard. When there is a ground to believe that such unconscious feeling can operate in the ultimate judgment, the petitioners can certainly complain that respondent No. 5 could not be the Assessing Officer. They had brought it to the notice by filing a petition for transfer which has since been dismissed. Keeping in view these facts, we are of the considered opinion that qua petitioners Nos. 2 and 4, they have a ground to believe that respondent No. 5 could not be the Assessing Officer, just as was noticed by the Supreme Court in Megha Singh's case : 1995CriLJ3988 , the complainant could not be the investigating officer. Herein the witness who had headed the raiding party for search in the house of petitioners Nos. 2 and 4 acted not only as the investigating officer but a quasi-judicial officer determining the liability to pay the income-tax. To that extent, we are convinced that the assessment order qua petitioners Nos. 2 and 4 and proceedings of assessment are liable to be quashed.

50. As regards other petitioners, the said argument will not hold good. Respondent No. 5 is not a witness to any such recovery or search directly. Consequently, the abovesaid principle cannot be made applicable. If he considers the other material placed before him and passes an assessment order that by itself will not vitiate the assessment. If the other petitioners have any such apprehension, they are totally unfounded. Necessarily, they can only take recourse under the law, particularly when their appeal is pending, if any.

51. For these reasons, we only quash the assessment orders passed and proceedings of assessment qua petitioners Nos. 2 and 4 making it clear that it would not debar the Revenue authorities from getting fresh assessment made, if permitted in law. As qua other petitioners, subject to aforesaid, the writ petition must fail and is accordingly dismissed.