Banke Bihari Lal Agarwal v. Union of India — 1995 DIGILAW 455 (RAJ)

Honble SINGHAL, J. – The only dispute in the present writ petition is with regard to the seizure of 23 books of accounts by the Authorised Officer of the Income Tax Department on 20th September, 1989. Panchnama (Anx- A-1) was prepared and is signed by the authorized officer, the witnesses and the petitioner. (2). According to the list of inventory of account books attached with the Pachnama against the description of the accounts books seized the period to which they pertain have been written in most of the cases and in few cases it is not mentioned as to for which period they pertain to. The period mentioned started from 1.4.1981 and the said books are upto 31.12.1986. The books are as bulky as containing 193 pages (Nakkalbahi) as thin as containing 9 pages of (hathbahi). (3). The facts of the case are that the residential premises of the petitioner were searched on 14th September, 1989 and the list of books were prepared. The said books were left in the premises searched and it was sealed. The search was resumed on 20th September 1989 and the Janchnama was prepared, which was signed by the authorised officers as well as the witnesses Shri Surendra Kumar and Arjun Singh. The respondents have stated in the reply that the Panchaname of 14th September, 1989 was prepared by the authorised officers and the signatures of Surendra Kumar Sharma and Ramesh Chand Sharma as witnesses were obtained. (4). The claim of the petitioner is that the books of account which were seized on 20th September, 1989 for which Panchanama was prepared on 20th September, 1989 and a copy of which was delivered to the petitioner, the said books of accounts have not been made available for inspection, so that the petitioner could have explained in respect of the various entries for which notices have been issued and for which the direction of inspection were given by this Court. The file of the Income Tax Department was called for in which there is a Panchnama of 14th September 1989 with the list of inventory of accounts books seized numbering 11(eleven) for the period from 18.11.1982 to 12.11.1985. The file of the Income Tax Department was called for in which there is a Panchnama of 14th September 1989 with the list of inventory of accounts books seized numbering 11(eleven) for the period from 18.11.1982 to 12.11.1985. The Panchnama of these 23 books of accounts dated 14th September, 1989 was not available on file though the list of inventory of account books found/seized is dated 14th September, 1989 and the Panchnama was prepared on 20th September, 1989. In the reply it has been stated by the respondent, it appears that annexure A/1 showing seizure of books of accounts, inventory and Panchnama of which were prepared on 14.9.89 and books were left with the petitioner were utilised for preparing seizure memo on 20.9.89 without physically verifying the books of accounts which were taken away/remo- ved by the petitioner, may be in collusion with any member of raiding parties, whereas the other Panchnamas and seizure memos were prepared on 20.9.1989 itself. Thus, it appears that the books of accounts mentioned in Annexure-A/1 were missing right from that time and that was the reason that the Assessing Officer at Alwar reported to the Dy. C.I.T. Alwar on 19.12.89 that the seized mentioned in Annexure A/1 was not handed over to him by the A.D.I.T. staff concern though the then A.D.I.T. (Investigation)- 11, who was incharge of search operation, who prepared appraisal report and handed over the same alongwith the other seized material to the Assessing Officer at Alwar on 8.2.1989. The D.C.I.T., Alwar Range, Alwar in turn reported the matter to C.I.T. as well as D.D.I.T. Late Shri. A.K. Fotedar was then acting as D.D.I.T. (Investigation) Jaipur, as the regular incumbent was on earned leave. (3A). It is pertinent to mention here that the alleged seizure and dis-appearance of books of accounts mentioned in Annexure-A/1 of Panchnama dated 14.9.1989 is a matter of vigilance scrutiny and the Directorate of Income Tax (Inv.) Ahmedabad and Directorate of I.T. (Vigilance.), New Delhi are seized of the matter as it was already referred and subjected to a through vigilance enquiry. (4). The respondent recorded the statement on 22.4.1991 and in reply to question No. 10 & 11 it was stated that 23 books of accounts were seized and those books were carried by the Income Tax Department on 20h September, 1989 with them. (4). The respondent recorded the statement on 22.4.1991 and in reply to question No. 10 & 11 it was stated that 23 books of accounts were seized and those books were carried by the Income Tax Department on 20h September, 1989 with them. The statement of Surender Sharma were recorded on 18th July, 1991 and he has given the reply of question No. 6 that the 23 books of accounts were found on 14th September, 1989 and were sealed in a room. The said room was opened in their presence on 20th September, 1989 and the officers of the Income Tax Department have taken the seized record with them. The statements of Arjun Singh were recorded on 6th August, 1991 and he has stated that he has gone to the house of Banke Bihari Lal Agarwal after the proceedings were started and is not having the full knowledge of the search and seizure. It was further stated that because he has reached late on 20th September, 1989 he cannot say as to whether the 23 books seized were carried by the department or not. It was further stated that he remembers that the Income Tax Department has carried one bundle containing the books. He cannot say whether it contained the 23 books seized as per Annexure A/1 or other books or how many books were there. The witness of 14th September, 1989-Ramesh Chand Sharma has stated that the jewellary, cash, books of accounts, note books etc. were sealed in a room and he has put his signature on the seal dated 14th September, 1989. The said items were not carried by the departmental officials on 14th September, 1989 and were put in a room after sealing it. (5). The submission on behalf of the respondent is that the assessment have been framed for the assessment years 1988-89, 89- 90 and 90-91 against which even the appeals have been preferred and decided. It is submitted that the books of accounts seized under Panchnama A/1 has no relevance to the year of assessments and that it may be the petitioner himself who is responsible for removing the books even on the day of seizure. (6). I have considered over the matter. It is submitted that the books of accounts seized under Panchnama A/1 has no relevance to the year of assessments and that it may be the petitioner himself who is responsible for removing the books even on the day of seizure. (6). I have considered over the matter. From the perusal of the file produced by the respondent it is evident that the Inspector of the Department who has taken delivery of the seized record have put a note on the Panchnama on 8.12.1989 that accounts books as per Annexure A/1 were not received. This makes it clear that the accounts books were not handed over to the Assessing Officer (A.C.I.T., Alwar). This fact is further corroborated by the order passed u/s. 132(5) of the Income Tax Act dated 17.1.1990 in which in para-5 it is mentioned- ``as per Panchnama dated 20th September, 1989, 23 items of the books of accounts have been shown seized from the residence of Shri Banke Bihari Lal Agarwal as per (Annx-A/1). However no such books of accounts from serial No. 1 to 23 as per Annexure-A/1 have been handed over to me by the Assistant Director Income Tax(Investigation)-II, for scrutiny. I am therefore passing the order without considering the books of accounts mentioned in Annexure-A/1. (7). The question of the petitioner being involved in removing the books of accounts on 20th September, 1989 or subsequently till 8.12.1989 if the officers who were having the custody of the books of responsible for it have filed an FIR, or take any steps during that time, or immediately on 8.12.1989, could have been considered, but no such action has been taken. The evidence which has come on record including the Panchnama itself shows that there was seizure of 23 books of accounts on 20th September, 1989 and those books seized were carried by the au- thorised officer. The books were so bulky containing voluminous pages so that they could not have been mixed with other books nor there was any possibility of leaving those books after its seizure. (8). The power of search and seizure conferred by the Act have been tested with reference to the fundamental rights granted under Chapter III of the Constitu- tion with particular reference to Articles-14, 19 and 21 of the Constitution. The provisions have been held valid because sufficient safe-guards have been provided by the Act and Rules made there under. (8). The power of search and seizure conferred by the Act have been tested with reference to the fundamental rights granted under Chapter III of the Constitu- tion with particular reference to Articles-14, 19 and 21 of the Constitution. The provisions have been held valid because sufficient safe-guards have been provided by the Act and Rules made there under. The Act of search and seizure is no doubt is an invasion on the rights of the subjects and cannot indiscriminately be used. Proper care has to be taken at all stages so as to justify even the act of seizure. The contention of the respondent that the books of accounts from serial No. 1 to 23 has no relevance as per Annexure A/1 have no substance. If the books of accounts were not relevant then whey they were seized? The seizure itself shows that the books of accounts were relevant and the authorised officer at the time of seizure was of the view that the books searched and seized will be useful and relevant for the purpose of proceedings under the Act. (9). Rule-112 of the Income Tax Rules provides the procedure for search and seizure. It has been provided under sub-rule-6 of the said Rule that before making a search the authorised officer shall (i) where a building or place is to be searched, call upon two or more respectable inhabitants of the locality in which the building or place to be searched is situate. Sub-rule-7 provides that the search shall be made in the presence of the witnesses aforesaid and a list of all things seized in the course of such search and of the places in which they were respectively found shall be prepared by the authorised officer and signed by such witnesses. The copy of the list prepared u/sub-rule-7 is required to be delivered u/sub-rule-8 to the person or occupant and copy have to be forwarded to the Commissioner. Under Rule-112(11) the authorised officer may convey the books of account and other documents, if any, seized by him in the course of the search made by him and the package or packages, if any, referred to in sub- rule-(10) to the office of any authority not below the rank of Income Tax Officer (hereinafter referred to as the Custodian). Under Rule-112(11) the authorised officer may convey the books of account and other documents, if any, seized by him in the course of the search made by him and the package or packages, if any, referred to in sub- rule-(10) to the office of any authority not below the rank of Income Tax Officer (hereinafter referred to as the Custodian). Belated provisions have been made in the Act for exercise of power u/s. 132 and also in the Rule-112 made thereunder. A. period of more than 5 years have lapsed and it is stated that the Directorate of Income Tax (I & G), Ahmedabad and Directorate of I.T. (Vigilance), New Delhi are seized of the matter. It is really surprising that even after lapse of 5 years they are still seized and no effective steps have been taken and brought to the notice of this Court. Whenever a search is made and the books of accounts are seized by the authorised officer, he is responsible for the safe custody of those seized record. If the said record has been handed over to some other officer/custodian then the other officer or custodian is responsible for it. The protection u/s. 293 of the I.T. Act is not available to an officer who has lost the books of accounts so seized because such an action cannot be said to be done in good fath. The books of accounts after the seizure could be removed beside the other in the following circumstances. (i) The person from whose possession the books of accounts have been seized may be interested in removing the same so as to escape his liability of tax/ prosecution etc. This could be in connivance with the staff of the Officer in whose possession the books of accounts are. If the respondents were of the view that it is the petitioner who is res- ponsible for the removal of the books, then they could have been filed an FIR/complaint during the period from 20th September, 1989 to 8.12.1989 or immediately thereafter, but no such steps have been taken. No FIR/Complaint has been filed. (ii) The Officer in order to harm the assessee may remove the books of accounts so that, he may not be in a position to explain the disputed entries. No FIR/Complaint has been filed. (ii) The Officer in order to harm the assessee may remove the books of accounts so that, he may not be in a position to explain the disputed entries. This is not the position here nor any such allegations have been made against any of the officer having pre-judice against the petitioner. (iii) The officer or his staff in connivance with the assessee may remo- ve the books of accounts. It may be either to help the assessee or to cause loss to the revenue or to get the monetary consideration for such an act. (iv) There may be gross-negligence on the part of the officer seizing the books of accounts and not taking it with him. It could have been understandable where the seized record is very small in quantity but even for that purpose the authorised officer had to be careful otherwise the act could fall with the category of gross-negligence. (10). The books of accounts were seized and it prima facie shows that the authorised office were satisfied at the time of seizure that the said books are relevant for detecting or one thing the concealed income. The limitation for framing reassessment had not expired at that time and now the books are not available. It can only be presumed that the said books contain such income which were not disclosed and a loss has been caused to the revenue. The Government officer, who has duty to perform the particular act has a personal responsibility to see that the State revenue is not lost for any act of his. If the loss of revenue is caused by the inaction, he can be made personally responsible. (11). The officers responsible could have taken to task by the department by taking the disciplinary action which could have been taken beside filing the prosecution/criminal complaint and make them personally responsible for the loss of revenue. (12). If an officer is interested to do a particular duty and if the duty is not performed with due care and caution, the protection u/s.293 is not available to him. The Income-tax Department could have taken affective steps for prosecution for such an officer who is responsible for the loss of the books of accounts seized u/s 132. (12). If an officer is interested to do a particular duty and if the duty is not performed with due care and caution, the protection u/s.293 is not available to him. The Income-tax Department could have taken affective steps for prosecution for such an officer who is responsible for the loss of the books of accounts seized u/s 132. The loss of revenue in the absence of books cannot easily be determined but, if it is possible to determine such loss, then he can be made responsible for the loss of revenue as well. The personal responsibility cannot be absolved in the garb that the act performed was during the course of official duty. The assessee who has lost his books of accounts can also claim the damages for the loss of the books of accounts from the officers who has seized the said books of accounts. The question of determining the loss or compensation to the petitioner cannot be determined in the proceedings under Article 226 of the Constitution. The proper remedy for the petitioner is to file a suit in respect thereof. A copy of this order may be sent to the Chairman, Central Board of Direct Taxes for taking immediate action against the officers who were responsible for the loss of books of accounts and submit the compliance report within a period of four months from the date of receipt of this order. (12). The writ petition stands disposed of in accordance with the directions given above.