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2007 DIGILAW 73 (KAR)

Income Tax Officer v. Raj and Raj Investments

2007-01-31

H.BILLAPPA, V.GOPALA GOWDA

body2007
JUDGMENT V. Gopala Gowda, J.— The appellants are IT authorities. On the basis of the authorisation issued by the Jt. CIT Range-II, the first appellant surveyed the premises of the respondent and voluminous documents, books of account and other incriminating material had been impounded. Being aggrieved by the same, the respondent filed a writ petition and the learned single Judge quashed the authorisation, impounding order and all other actions of the appellants and imposed cost of Rs. 5,000 on the appellants. The impounded documents have been directed to be returned to the respondent by retaining the copies thereof authenticated by the respondent. Liberty was also given to the appellants to take action in accordance with law. In this appeal the appellants have challenged the said order of the learned single Judge. 2. Mr. K.V. Aravind, learned Counsel for the appellants, submitted that the order of the learned single Judge is liable to be set aside as otherwise public interest would be affected. He further submitted that since the partner of the respondent-firm has not furnished the names and addresses of the persons whose documents are said to have been impounded, it will be very difficult for the authorities to proceed further in the matter. It is contended that the order under appeal is contrary to Section 133A of the IT Act, 1961 and it has defeated the very object of the said provision. The counsel relied upon Section 133A(1), (3)(ia) and (b) of the Act. It is further contended that if there is any procedural irregularity, the same is curable under Section 292B of the Act. 3. Mr. K.S. Hanumantha Rao, learned Counsel for the respondent, justified the order of the learned single Judge. By placing reliance upon Annex. R-l, the admission of the appellants in paras 5 and 14 of the objections filed to the writ petition, it is contended that the officer who issued the authorisation to conduct survey has no jurisdiction, as he was not competent to issue the same. The action is not an irregularity but an illegality and the same cannot be cured. In support of this contention, learned Counsel relied upon two decisions in P.N. Sasikumar and Others Vs. Commissioner of Income Tax, (1988) 170 ITR 80 Ker and Commissioner of Income Tax Vs. Smt. Phoolmati Devi, (1983) 144 ITR 954 All. The action is not an irregularity but an illegality and the same cannot be cured. In support of this contention, learned Counsel relied upon two decisions in P.N. Sasikumar and Others Vs. Commissioner of Income Tax, (1988) 170 ITR 80 Ker and Commissioner of Income Tax Vs. Smt. Phoolmati Devi, (1983) 144 ITR 954 All. Lastly, learned Counsel submitted that the learned single Judge granted relief to the respondent without affecting the right of the appellants to proceed further in accordance with law on the basis of the authenticated copies of the documents and therefore prays to dismiss the appeal. 4. On our direction, the Department has produced the files and we have perused the same. We have also perused Annex. R.-1 and the admission made by the appellants in para 15. Section 133A of the Act confers power upon the ITO to survey the business premises and to impound documents for further course of action. Certain statutory protections are provided mandating the officer to exercise such power and to do certain acts keeping in view the rights of a citizen under the provisions of the Act. In that view of the matter, we are in full agreement with the view taken by the learned single Judge allowing to retain the authenticated copies of impounded documents. 5. The learned single Judge rightly accepted the contention of the respondent that no reasons are assigned for retention of the documents impounded. The learned Counsel for the respondent is justified in relying upon the Allahabad High Court decision in CIT v. Smt. Phoolmati Devi (supra). The relevant para is extracted hereunder: When a statute requires that something shall be done in a particular manner or form, without expressly declaring what shall be the consequence of non-compliance, the omission of not doing that in the manner prescribed in some case has been held fatal to its validity. In the present case, the omission to serve notice on Jagdish Mohan appears to us to have vitiated the entire proceedings and would result in rendering the acquisition to be invalid in its entirety. The use of the expression 'shall' does not (give) us any information (sic) of the legislature that the compliance of serving the person against whom action is proposed to be taken is a must. 6. The use of the expression 'shall' does not (give) us any information (sic) of the legislature that the compliance of serving the person against whom action is proposed to be taken is a must. 6. The apprehension of the Department that public interest would be affected and the officers cannot function effectively in the absence of original documents cannot be brushed aside. Since the learned single Judge has granted liberty to proceed further on the basis of the authenticated copies, keeping in view the apprehension expressed, without disturbing the order of the learned single Judge, we issue further clarifications and directions as under: (a) The respondent shall furnish to the first appellant the full names, addresses and telephone numbers of persons whose documents are impounded within two weeks from the date of receipt of a copy of this order. (b) On furnishing the details mentioned at (a), the appellants, shall return the original documents by retaining the copies duly authenticated by the respondent. The return of original documents shall be subject to the following conditions: (i) As and when the respondent enters into any transaction pertaining to the impounded documents, the respondent shall obtain the telephone numbers and an undertaking from the person entering into such transaction to the effect that the original documents will be produced before the IT authorities as and when called for. The same shall be furnished along with a copy of the transaction to the first respondent. 7. With the above clarifications and directions the writ appeal is disposed of.