JUDGMENT
1. Heard learned counsel for the petitioners and also the learned counsel for the Revenue.
2. In view of the exchange of affidavits and in accordance with the rules of the court, these petitions are being disposed of finally at the stage of admission.
3. The aforesaid four petitions raised a common question relating to search and seizure made on January 23/24, 1992.
4. The petitioners seek mandamus directing the respondents to return/ release the books of account, records, papers and documents seized from the petitioners during the search and seizure operations on the aforesaid dates. The short facts are that the office premises of the petitioners were searched on January 23/24, 1992, by the Income-tax Officers under the provisions of Section 132 of the Income-tax Act, 1961/Section 37A of the Wealth-tax Act, 1957. According to the petitioners, the said seizure is made indiscriminately and large number of documents were seized, which include the original documents' of title, power of attorneys in favour of the petitioners, original papers, original maps and the plans of construction, which had been approved by the Allahabad Development Authority, including the accounts of all the members of the petitioner-society.
5. The only question involved in these cases is whether retention of the said books of account or other documents seized under Sub-section (1) of Section 132 of the Act can be justified for a period exceeding 180 days from the date of seizure. On the facts and circumstances of the case, the contention is that the said retention beyond the said period is without any order passed by the authority as provided under Section 132(8) of the Act. For ready reference, Section 132(8) of the Act is quoted hereunder ;
"The books of account or other documents seized under Sub-section (1) or Sub-section (1A) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Chief Commissioner or Commissioner for such retention is obtained :
Provided that the Chief Commissioner or Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed."
6. It is also contended that since the seizure was on January-23/24, 1992, therefore, retention of the said seized books from July 23/24, 1992, which is beyond the period of 180 days is illegal. Before the said documents could be retained under Sub-section (8) of Section 132 of the Act, referred to above, the authorised officer has to record reasons for retaining the same for a period exceeding 180 days and, secondly, approval has to be obtained from the Chief Commissioner or Commissioner for such retention. The proviso provides that the Chief Commissioner or Commissioner shall not authorise the retention of the books of account for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922, are completed.
7. In the counter filed on behalf of the respondent the only relevant paragraph is 15 wherein it is averred that : "The record regarding the communication of the approval of the Commissioner of Income-tax to return the seized books, etc., beyond 180 days to the petitioner from time to time is not traceable." We having perused the entire counter and having heard counsel for the respondents came to the conclusion that no reason has been disclosed and the only stand taken is that the approval and the communication by the officer concerned is not traceable.
8. The law pertaining to seizure and retention of the books of account is now well-settled with a catena of decisions of this court and the Supreme Court.
9. In CIT v. Oriental Rubber Works [1984] 145 ITR 477 (SC), it was held (at page 483) :
"In other words, two conditions must be fulfilled before such extended retention becomes permissible in law : (a) reasons in writing must be recorded by the authorised officer or the concerned Income-tax Officer seeking the Commissioner's approval, and (b) obtaining of the Commissioner's approval for such extended retention and if either of these conditions is not 'fulfilled, such extended retention will become unlawful and the concerned person (i.e., the person from whose custody such books or documents have been seized or the person to whom those belong) acquires a right to the return of the same forthwith. It is true that Sub-section (8) does not in terms provide that the Commissioner's approval of the recorded reasons on which it might be based should be communicated to the concerned person but in our view since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfilment of either of the conditibns, it is obligatory upon the Revenue to communicate the Commissioner's approval as also the recorded reasons to the person concerned. In the absence of such communication the Commissioner's decision according his approval will not become effective."
10. This authority not only holds the retention of the books of account beyond 180 days without approval of the Commissioner or, in the absence of reasons recorded, bad but even non-communication to the petitioner of the same makes the retention illegal.
11. To similar effect is the case of Survir Enterprises v. CIT [1986] 157 ITR 206 in which the Delhi High Court has held as under (at page 210) :
"It has been stated before us and this appears from the record also that this order was really passed under Section 132(8), i.e., this is an order purporting to extend the period of retention. The question of extending the period of retention would arise only if the period had already been extended up to October 5, 1983. There cannot be a gap of a single day because Section 132(8) only allows extension of the time and not a fresh retention. This means that on a plain reading of the section, the retention is invalid."
12. This authority holds that not only the retention becomes illegal beyond the said period without approval but further holds that there cannot be a gap of even a single day without the approval of the Commissioner.
13. In the case of Swastik Gear Ltd. v. ITO [1989] 175 ITR 384 (All), on a difference of opinion referred to the third judge, speaks for itself holding the same principle as above. It was held (at page 407) :
"I agree with brother R. M. Sahai J., expressing his anguish for the serious lapse of the Department. The averment of inadvertent mistake made in the counter-affidavit of the Revenue does hot inspire confidence.
It has been argued before me that there has been tax evasion of crores of rupees, but it is strange that even this case escaped notice and the necessary approval was not obtained within one hundred and eighty days. A case of a raid made at the premises of a businessman should not be taken lightly and if there has been evasion and papers are found to prove it the same should be taken seriously and no lapse should occur. If the Revenue has been able to collect material showing tax evasion, it was its duty to have obtained the Commissioner's approval within one hundred and eighty days. This is a mandatory requirement and every one is supposed to know the law."
14. Learned counsel for the petitioner relied on the case of Prasadamal Saktumal v. State of U. P. [1983] UPTC 1091 ; [1982] Tax LR 3277 (All), which was a case under Section 13(3A) of the U. P. Sales Tax Act, 1948. Section 13(3A) provides as under (at page 3278 of [1982] Tax LR) :
"(3A). Notwithstanding anything contained in Sub-section (3), the officer seizing any account, register or other document under that Sub-section may, for reasons to be recorded by him in writing and with the prior approval of the Commissioner of Sales Tax, retain such account, register or document for such period not extending beyond thirty days from the date of completion of all the proceedings under this Act in respect of the years for which they are relevant as he deems necessary."
15. This also provides that the Officer seizing any such document has to record reasons with the prior approval of the Commissioner for retention of such document when such retention is beyond the period of thirty days. It was held in this case as under (at page 3279 of [1982] Tax LR):
"In the present case, the books and documents were seized on October 6, 1980, and the respondent No. 2 was bound to return them to the petitioner by January 4, 1981. For the retention of the books and documents beyond that period, it was necessary for the officer to record the reasons in writing and to have obtained prior approval of the Commissioner of Sales Tax. In the instant case, the officer neither recorded any reasons in writing for retaining the seized material beyond the period of ninety days and the prior approval of the Commissioner of Sales Tax as well was not obtained before the expiry of ninety days. Such approval was obtained for the first time on January 6, 1981, i.e., after the expiry of the period of ninety days from the seizure. The retention, of the books after the expiry of ninety days from the seizure having become illegal would not become valid on account of approval obtained on January 6, 1981. Apart from this the officer did not record any reasons in writing for retaining the seized material beyond the period of ninety days."
16. Lastly, the case Jhurjhunwala Oil Mills v. State of U. P. [1994] UPTC 172 (All) is again a case of sales tax which follows the same principle of law as laid down in Prasadamal Saktumal v. State of U. P. [1983] UPTC 1091 ; [1982] Tax LR 3277 (All).
17. Learned counsel for the petitioners placed reliance on paragraph 33 of the writ petition wherein a request was made that the Department can keep photostat copies of the originals and the originals may be returned to the petitioners, The Department may be permitted to take photostat copies before returning the documents seized. Though this question was gone into in the case of Prasadamal Saktumal [1983] UPTC 1091 ; [1982] Tax LR 3277 (All), and it was held to the contrary in the said decision to the request made by learned counsel for the Revenue, we would not like to express any opinion in this regard as there is no pleading raised in this regard.
18. From the aforesaid facts, it is clear that retention of seized documents beyond the period of 180 days which expired in July, 1992, as aforesaid and admittedly till this date the seized records not having been returned, and in the absence of any reason on record or approval by the Commissioner and the untenable stand that the relevant orders not traceable, we hold the retention to be illegal. A similar stand was taken by the Revenue in Survir Enterprises v. CIT [1986] 157 ITR 206 (Delhi), which was repelled. Even in that case orders not traceable was averred. Law in this regard is very clear : for retention beyond the period of 180 days, firstly, there has to be a reasoned order of the authority concerned, secondly, it must have the approval by the Commissioner and, finally, it must be communicated to the assessee.
19. Before parting with this case we would quote the following portion of the judgment in the case of Swastik Gear Ltd. v. ITO [1989] 175 ITR 384 (All) (headnote) :
"When assets, articles or books of account are seized, a trust, constructive in nature, is brought about. The authority becomes the trustee/ custodian of the goods or articles seized. So, a solemn duty is cast upon such authority to restore the goods to the person concerned on the fulfilment of conditions. Thus, so long as the books of account or documents remain in the custody of the Department and till they are returned to their lawful owner, the Department continues to have custody thereof notwithstanding the expiry of one hundred and eighty days. On the expiry of one hundred and eighty days, the Department loses the right to retain the hooks of account and documents. But, nevertheless, the Department is under a duty to ensure the safety of the books of account and documents till the owner gets hack their possession. Thus, under law, it cannot be said that custody of the books of account and other documents by the Department is unlawful."
20. Hence, we hold that the retention of the seized documents by the respondents is illegal.
21. In the present case, the search took place and seizure was made on January 23/24, 1992, retention of the documents beyond July 23/24, 1992, is held to be illegal. Accordingly, we direct the respondent authority to return all the documents seized to the petitioner forthwith in accordance with law. The petition is allowed with costs.