LexPOORAN MAL ETC versus DIRECTOR OF INSPECTION (INVESTIGATION) OF INCOME-TAX MAYUR BHAVAN, NEW DELHI & OTHERS.
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POORAN MAL ETC. ~. DIRECTOR OF INSPECTION (INVESTIGATION) OF INCOME- TAX MAYUR BHAVAN, NEW DELHI & OTHERS. December 14, 1973 '[A. N. RAY, C.J., D. G. PALE~AR, Y. V. CHANl>R,ACHUD, A. ALAGIRI- SWAMI .AND P. N. BHAGWATI, JJ.] . Income Tax Act (1961)--cSectlons 132, 132.A and Rules 112, 112A-Search and seizure-Whether violate Art. 19(1) (f) and (g) of the Constitution. · A B Income Tax Act 1961, Sec. 132(S)-8elzztre of money, bullion, ttc.-Whether provision confiscatory. · C income Tax Act, 1961, Sec. 132(1) and (S)-Search and seizure-Whether provisions hit by Art. 14 of the Coiistitution for following different procedure /Or the evaders of tax, who are believed to be in possession of undl.rclo1ed ,,,... come or property and evaders against whom no such belief is entertained by the lluthorities. . · Income Tax Act 1961, Sec. 132-/Vhether evidence gathered f*1m the illegal seizure of documents is excluded at the trial-Whether a writ of prohibition· to D restrain the use of such ev.idence can be granted, Income Tax Act 1961, sec. 132-"Reason to believe"-WMther Director of . Inspection can entertain reasonable belief as not being directly connected with the assessment-Whether the DireCttJr can entertain necessary belief for ordering searCh and seizure where· the asstisnunt was already complet~d. Income Tax Act, 1961, Sec. 132--Selzure of irrelevant- documents-Whether renders .the search invalid .. In the proceedings before the Supreme Court tWo of them being writ petitions under Art. 32. of the Constitution and two others being appeals from tjle orders of the Delhi High Court Jn writ petitions under Art. 22&-relief was claimed in respect of. the search 6f certain premises and seizure of account books, documents, cash, jewellery and other valuables by Incom! tax authori- ties purporting to act. u/s 132 of the Income Tax Act, 1961. The_ petitioners/ . appellants challenged the validity of Sec. 132(1) and (S) of Rule 112(A) on tho ground that they .violate Art. 14, Article 19(1) (f) and (g) and 31 of the Constitution. It was also contended that a writ of prohibition to restrain the authorities from Using the information gathered . from the documents seized should be issued.· In the writ petitions. the actual search and seizure were challenged on the ground that they were carried out in ·contravention of the provisions of Sec. 132 and Rule 112-A. The Court negatived all the conten- tions. . Dismissing the writ petitions and appeals, HELD: (I) When one has to consider the reasonableness of the restric- tions or curbs placed on the freedoms mentioned in Art. 19(1) (fl and (g). one cannot possibly ignore how such evasions cat into the vitals of the economic life of the community. Therefore, in the interest of the community, it is only right that the fiscal authorities should have sufficient powers to prevent tax evasion. As a broad _proposition, it can be stated that if the s"ferruards while carryin2 out search and seizure are generally on the Jines adopted by the Criminal Procedur,. Code tb~v . would be regarded as adcauate and render the t;emporary restrictions imposed by these measure~ as reasonable. On dcta:ted examination of the provisions of Sec. 132 and Rule 112, it is clear that the E F G H • ' ·~ v. l>IRECTOR OF !NSP P./CTION (Palekar, J,) 7 0 5 A safeauards are adequate to rendor the provisiOJ;lS·. of seatch and seizure ns less onerous and restrictive u ia pouible under the circumstances. The provisions, therefore, relatinJ lo oearch and sel%ure in sec; 132 and Rule 112 cannot be reprded as violative of Arts. 190)(!) and (g), [714F, 717C] B c D E F 'G H Jn the course of hia duti01, the Director of Inspection h .. ample opportunl· ties to follow the courso of inveatigation and auessment carried on by the Income Tax Officers and. to check the information received from his sources with the actual material produced or not produced before the asael8ing authori· ties. It is not. therefore. correct to argue that the Director- of Inspection could not entertain honeet and rouonable belief before ordering search and seizure under, section 132(1)(a)(b) and (c). The second proviso to sub·section (5) of sec. 132 shoWB that the ass01see can get a release of all the aasets seized if be can make satisfactory arranaements for the payment of the estimated dues. So also, the exceaa collection ia refundable u/s 132-A with intereat after the regular enquiry
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