Commissioner of Income Tax Vs. Vindhya Metal Corporation and ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/674514
SubjectDirect Taxation
CourtSupreme Court of India
Decided OnMar-05-1997
Case NumberCivil Appeal No. 5526 of 1983 (From the judgment and order dt. 4th May, 1983 of the Allahabad High C
Reported in(1997)139CTR(SC)495
AppellantCommissioner of Income Tax
RespondentVindhya Metal Corporation and ors.
Excerpt:
- - it was also directed that the action of the appellants in seizing the books and documents, as well as the sum of rs. 132a(1) of the act on the ground that the condition precedent for the exercise of the powers under the said provision was not satisfied.by the court :this appeal is directed against the judgment of the allahabad high court, dt. 4th may, 1983, whereby civil misc. writ petn. no. 99 of 1982, filed by the respondents was allowed and the authorisation made by the cit under s. 132a of the it act, 1961 (hereinafter referred to as 'the act'), and the proceedings in consequence thereof were quashed. it was also directed that the action of the appellants in seizing the books and documents, as well as the sum of rs. 17,353 on 30th dec., 1981, was contrary to law and the same be returned to the respondents.2. on 25th dec., 1981, one vinod kumar jaiswal, while he was travelling from mirzapur to calcutta by the kalka mail, was detained at moghal sarai railway station by the government railway police and an attaches case containing a sum of rs. 4,63,000 was seized from him on the suspicion that the money was stolen property or had been obtained through some other offence. a case under s. 411 of the ipc, r/w s. 41 and 102 of the cr. pc, was registered against him. an intimation about the seizure of money was sent to the it authorities at varanasi on 26th dec., 1981. on 29th dec., 1981, the iac, varanasi, sent an intimation about it to the cit about the fact of possession of the aforesaid amount by vinod kumar jaiswal and also that he did not have any papers and documents regarding the ownership or possession of the amount and that no person in the name of vinod kumar jaiswal was borne on the general index register of the ito at mirzapur. the cit issued a warrant of authorisation under s. 132a(1) of the act on the basis of which the ito sent a letter of requisition to the station officer incharge, government railway police, moghal sarai, requiring the station officer to hand over the seized sum of money to him (the ito) who had been authorised by a warrant of authorisation to receive it. the iac, varanasi, in exercise of his power under s. 132 of the act, authorised search of the residential premises of rajendra kumar pandey, respondent no. 2 a partner of vindhya metal corporation, imamganj, mirzapur, respondent no. 1. the it inspector visited the premises of respondent no. 1 on 29th dec., 1981, and found entered in the books of account that the aforesaid amount of rs. 4,63,000 had been handed over to vinod kumar jaiswal, who was the nephew of santosh kumar gupta (jaiswal), respondent no. 3, for being carried to calcutta in connection with the business of the said firm. on 30th dec., 1981, the search party which searched the premises of respondent no. 1 carried away the sum of rs. 17,353 found as total balance and the books of account. after completing the investigation, the railway police submitted the final report on 21st jan., 1982, wherein it was stated that the money found in the possession of vinod kumar jaiswal did not represent stolen property or property acquired from any offence and the said sum belonged to respondent no. 1. prior to that, on 1st jan., 1982, rajendra kumar pandey had filed an application before the judicial magistrate (railway), varanasi, praying that the amount which belonged to the respondents and was being carried by vinod kumar, who was serving as a munim with respondent no. 1, be released to the applicant or in favour of vinod kumar. on 4th jan., 1982, the ito requisitioned the said amount and on 13th jan., 1982, he filed an objection to the application submitted by rajendra kumar pandey. the judicial magistrate, by his order dt. 3rd feb., 1982, rejected the said objection of the it department and directed the return of money to rajendra kumar pandey. the said order of the magistrate was assailed by it department by filing a revision before the allahabad high court which was allowed by the high court by order dt. 19th april, 1982, and the it department was permitted to take possession of the sum of rs. 4,63,000.in these circumstances, the writ petition, which has given rise to this appeal, was filed by the respondents before the allahabad high court wherein they assailed the validity of the warrant of authorisation issued by the cit under s. 132a(1) of the act on the ground that the condition precedent for the exercise of the powers under the said provision was not satisfied. before the high court an affidavit was filed by shri hari singh, cit, who had issued the warrant of authorisation. after examining the file containing the order passed by the cit the high court has observed that the information on the basis of which the cit had issued the warrant of authorisation was as follows :'(a) a sum of rs. 4,63,000 had been seized by the government railway police from the possession of one vinod kumar jaiswal, resident of imamganj, durga devi, mirzapur;(b) at the time of the seizure by the railway police, no papers or documents in regard to the ownership or possession of the amount were in possession of vinod kumar jaiswal, and(c) no person by the name of vinod kumar jaiswal was borne on the general index register of income-tax assessee of the ito at mirzapur.'3. the high court, after considering the material on which reliance was placed by the cit, has held that on the information in the possession of the cit no reasonable person could have entertained a belief that the amount in the possession of vinod kumar jaiswal represented income which would not have been disclosed by him for purposes of the act. the high court has observed :'vinod kumar jaiswal, according to the information in the possession of the cit, was not borne on the general index register of income-tax assessees of the ito at mirzapur to which place he belonged. obviously, therefore, there was no occasion for him to have disclosed the amount as his income in any assessment proceedings under the act. without anything more than what was actually there before the cit, how could it have been assumed that he would not have disclosed it for purposes of any proceedings under the act. there was nothing before the cit to suggest that it was, in fact, wholly or in part, income of any person connected with vinod kumar jaiswal so as to induce a belief that, if called upon, vinod kumar jaiswal would not have disclosed it for the purpose of the act. the mere fact that vinod kumar jaiswal was in possession of this amount and did not have any documents with him regarding its ownership or possession could not be treated as appears to have been done by the cit as information relatable to a conclusion that it represented income which would not have been disclosed by vinod kumar jaiswal for purposes of the act. mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the acts.'4. we have heard learned counsel for the appellant in support of the appeal and we have perused the impugned judgment of the high court. having considered the facts and circumstances of the case, we do not find any ground to interfere with the impugned judgment of the high court. the appeal is, therefore, dismissed. no order as to costs.
Judgment:

BY THE COURT :

This appeal is directed against the judgment of the Allahabad High Court, dt. 4th May, 1983, whereby Civil Misc. Writ Petn. No. 99 of 1982, filed by the respondents was allowed and the authorisation made by the CIT under s. 132A of the IT Act, 1961 (hereinafter referred to as 'the Act'), and the proceedings in consequence thereof were quashed. It was also directed that the action of the appellants in seizing the books and documents, as well as the sum of Rs. 17,353 on 30th Dec., 1981, was contrary to law and the same be returned to the respondents.

2. On 25th Dec., 1981, one Vinod Kumar Jaiswal, while he was travelling from Mirzapur to Calcutta by the Kalka Mail, was detained at Moghal Sarai Railway Station by the Government Railway Police and an attaches case containing a sum of Rs. 4,63,000 was seized from him on the suspicion that the money was stolen property or had been obtained through some other offence. A case under s. 411 of the IPC, r/w s. 41 and 102 of the Cr. PC, was registered against him. An intimation about the seizure of money was sent to the IT authorities at Varanasi on 26th Dec., 1981. On 29th Dec., 1981, the IAC, Varanasi, sent an intimation about it to the CIT about the fact of possession of the aforesaid amount by Vinod Kumar Jaiswal and also that he did not have any papers and documents regarding the ownership or possession of the amount and that no person in the name of Vinod Kumar Jaiswal was borne on the General Index Register of the ITO at Mirzapur. The CIT issued a warrant of authorisation under s. 132A(1) of the Act on the basis of which the ITO sent a letter of requisition to the station officer incharge, Government railway police, Moghal Sarai, requiring the station officer to hand over the seized sum of money to him (the ITO) who had been authorised by a warrant of authorisation to receive it. The IAC, Varanasi, in exercise of his power under s. 132 of the Act, authorised search of the residential premises of Rajendra Kumar Pandey, respondent No. 2 a partner of Vindhya Metal Corporation, Imamganj, Mirzapur, respondent No. 1. The IT Inspector visited the premises of respondent No. 1 on 29th Dec., 1981, and found entered in the books of account that the aforesaid amount of Rs. 4,63,000 had been handed over to Vinod Kumar Jaiswal, who was the nephew of Santosh Kumar Gupta (Jaiswal), respondent No. 3, for being carried to Calcutta in connection with the business of the said firm. On 30th Dec., 1981, the search party which searched the premises of respondent No. 1 carried away the sum of Rs. 17,353 found as total balance and the books of account. After completing the investigation, the railway police submitted the final report on 21st Jan., 1982, wherein it was stated that the money found in the possession of Vinod Kumar Jaiswal did not represent stolen property or property acquired from any offence and the said sum belonged to respondent No. 1. Prior to that, on 1st Jan., 1982, Rajendra Kumar Pandey had filed an application before the Judicial Magistrate (Railway), Varanasi, praying that the amount which belonged to the respondents and was being carried by Vinod Kumar, who was serving as a munim with respondent No. 1, be released to the applicant or in favour of Vinod Kumar. On 4th Jan., 1982, the ITO requisitioned the said amount and on 13th Jan., 1982, he filed an objection to the application submitted by Rajendra Kumar Pandey. The Judicial Magistrate, by his order dt. 3rd Feb., 1982, rejected the said objection of the IT Department and directed the return of money to Rajendra Kumar Pandey. The said order of the Magistrate was assailed by IT Department by filing a revision before the Allahabad High Court which was allowed by the High Court by order dt. 19th April, 1982, and the IT Department was permitted to take possession of the sum of Rs. 4,63,000.

In these circumstances, the writ petition, which has given rise to this appeal, was filed by the respondents before the Allahabad High Court wherein they assailed the validity of the warrant of authorisation issued by the CIT under s. 132A(1) of the Act on the ground that the condition precedent for the exercise of the powers under the said provision was not satisfied. Before the High Court an affidavit was filed by Shri Hari Singh, CIT, who had issued the warrant of authorisation. After examining the file containing the order passed by the CIT the High Court has observed that the information on the basis of which the CIT had issued the warrant of authorisation was as follows :

'(a) a sum of Rs. 4,63,000 had been seized by the Government railway police from the possession of one Vinod Kumar Jaiswal, resident of Imamganj, Durga Devi, Mirzapur;

(b) at the time of the seizure by the railway police, no papers or documents in regard to the ownership or possession of the amount were in possession of Vinod Kumar Jaiswal, and

(c) no person by the name of Vinod Kumar Jaiswal was borne on the General Index Register of income-tax assessee of the ITO at Mirzapur.'

3. The High Court, after considering the material on which reliance was placed by the CIT, has held that on the information in the possession of the CIT no reasonable person could have entertained a belief that the amount in the possession of Vinod Kumar Jaiswal represented income which would not have been disclosed by him for purposes of the Act. The High Court has observed :

'Vinod Kumar Jaiswal, according to the information in the possession of the CIT, was not borne on the General Index Register of income-tax assessees of the ITO at Mirzapur to which place he belonged. Obviously, therefore, there was no occasion for him to have disclosed the amount as his income in any assessment proceedings under the Act. Without anything more than what was actually there before the CIT, how could it have been assumed that he would not have disclosed it for purposes of any proceedings under the Act. There was nothing before the CIT to suggest that it was, in fact, wholly or in part, income of any person connected with Vinod Kumar Jaiswal so as to induce a belief that, if called upon, Vinod Kumar Jaiswal would not have disclosed it for the purpose of the Act. The mere fact that Vinod Kumar Jaiswal was in possession of this amount and did not have any documents with him regarding its ownership or possession could not be treated as appears to have been done by the CIT as information relatable to a conclusion that it represented income which would not have been disclosed by Vinod Kumar Jaiswal for purposes of the Act. Mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the Acts.'

4. We have heard learned counsel for the appellant in support of the appeal and we have perused the impugned judgment of the High Court. Having considered the facts and circumstances of the case, we do not find any ground to interfere with the impugned judgment of the High Court. The appeal is, therefore, dismissed. No order as to costs.