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2008 DIGILAW 260 (GAU)

Nandita Acharjee v. Union of India

2008-04-03

I.A.ANSARI

body2008
JUDGMENT I.A. Ansari, J. 1. The petitioner, Smt. Nandita Acharjee, carries on a business of money-lending under the name and style of Hindustan Mortgage Institution. The petitioner's husband, Parima Acharjee, is lecturer in Lumding College. The petitioner and also her husband are assessees under the Income Tax Office, Nagaon. Having completed the assessment of Income Tax payable by the petitioner in respect of the assessment years 2000-01, 2001-02, 2002-03 and 2003-04, demand notices were issued to the petitioner on March 31, 2006. In terms of the demand notices, the petitioner was to make payment within a period of 30 days from the date of service of the notice. As the petitioner had not paid the assessed tax till May 16, 2006, a letter was issued, on May 16, 2006, by the Department concerned requesting the petitioner to pay the assessed Income Tax within ten days of the receipt of the said letter. Responding to this letter, the petitioner submitted a representation, on May 29, 2006, to the Income Tax Office at Nagaon, stating, inter alia, that she had preferred an appeal against the orders of assessments aforementioned. By a letter issued, on June 30, 2006, the Income Tax Office, Nagaon, informed the petitioner that filing of appeal is not in itself a bar for realization of the Income Tax. The petitioner was accordingly requested to make payment of the assessed Income Tax within seven days of the receipt of the letter, dated June 30, 2006, aforementioned. The petitioner did not, however, make payment of the assessed tax. On September 26, 2006, a search operation was conducted not only at the residence-cum-business premises of the petitioner and her husband, but also at the residence of the petitioner's employee, Rajib Acharjee, and also her former employee, namely, Tapash Chanda. During the search, prohibitory orders under Section 132(3) of the Income Tax Act, 1961 (in short, "the Act") were served on two banks, namely, Punjab National Bank, Lumding Branch, Lumding, and United Bank of India, AT Road Branch, Guwahati. During the course of the search, at the residence-cum-business premises aforementioned, books of account and several other documents were seized by the Income Tax authorities. Though jewellery were found at the said premises, the same were not seized, nor was any cash seized. For the books of account/and other documents so seized, inventories were prepared. During the course of the search, at the residence-cum-business premises aforementioned, books of account and several other documents were seized by the Income Tax authorities. Though jewellery were found at the said premises, the same were not seized, nor was any cash seized. For the books of account/and other documents so seized, inventories were prepared. After revoking prohibitory orders aforementioned, bank lockers at the said two banks, maintained in the name of the petitioner, were also searched and several documents and valuable securities including KVPs and NSCs, found in the said lockers, were seized. From the lockers maintained at the United Bank of India, several KVPs, NSCs and other valuable securities, in the form of bond, held by the petitioner and her husband were seized. Following such search and seizure, the statements of the petitioner and her husband were recorded. In the statements, so recorded, it was admitted by the petitioner's husband that the assets held and maintained in the name of Minu Acharjee, Nibeta Acharjee and Minakshi Acharjee belong to the same person, namely, Smt. Nandita Acharjee, i.e., the writ petitioner. Rest of the assets found, at the said lockers, were either held in the name of the petitioner or in the name of the petitioner's husband, who is the constituted attorney of the petitioner in respect of her said business, which is carried on under the name and style of Hindustan Mortgage Institution. 2. The petitioner, then, made representations to the authorities concerned informing them that some of the KVPs and NSCs were held by her as security for the loan advanced by her to people, who had obtained loans from her proprietary concern, namely, Hindustan Mortgage Institution, and since the payments had been made by the loanees, she was required to return the said KVPs and NSCs to those loanees, who had pledged the KVPs and NSCs with her said proprietary concern for the purpose of securing loans. During the course of the search and seizure, the petitioner declared Rs. 25,00,000 as her undisclosed income. The petitioner did not, however, make payment of Income Tax for the voluntarily made disclosure of her undisclosed income. 3. During the course of the search and seizure, the petitioner declared Rs. 25,00,000 as her undisclosed income. The petitioner did not, however, make payment of Income Tax for the voluntarily made disclosure of her undisclosed income. 3. Contending that some of the KVPs and NSCs, which were seized, belong to the persons, whom the petitioner had advanced loan and had kept the said KVPs and NSCs as pledged articles, the petitioner came to this Court with the help of the present writ application, made under Article 226 of the Constitution of India, challenging the legality of the refusal of the respondents to release the KVPs and NSCs, which they had seized, and sought for issuance of appropriate writ(s) declaring that the seizure made by the respondents is illegal, without jurisdiction and also commanding the respondents to release the seized KVPs, NSCs, etc. 4. While the writ petition was pending, the petitioner applied to the Joint Commissioner of Income Tax seeking release of some of the KVPs and NSCs on the ground that those were pledged articles and as the loanees had repaid their loans, the securities, lying in the form of KVPs and NSCs, were required to be returned to the loanees. By a letter, dated May 25, 2007, the Department concerned informed the petitioner that the Department is not in a position to release the materials as these materials were required for correctly making the assessment. By this letter, dated May 25, 2007, the respondents also contended that in terms of Section 132(4A)(i) of the Act, where any books of account or other documents are found in the possession or control of any person in the course of search, it may be presumed that such documents, money, valuable articles, etc., belong to the person with whom the same were found and, consequently, when the books of account and other documents, including the KVPs, NSCs, etc. seized, either from the residence of the petitioner and her husband or from the bank lockers maintained by her and her husband jointly the Department was justified in presuming that the KVPs as well as NSCs aforementioned belong to the petitioner and her husband, though the said KVPs and NSCs may be in the name of the persons other than the petitioner and her husband. Though an additional affidavit was filed by the writ petitioner bringing on record the order, dated May 25, 2007, aforementioned, the fact remains that the writ petition was not amended. Thus, the reasons, assigned by the letter, dated May 25, 2007, declining to release the KVPs and NSCs, in question, have not been specifically impugned in the writ petition. 5. The respondents' case is, in brief, thus: The searches, conducted in the present case, revealed several assets held by the petitioner in the name of the persons other than the petitioner. This apart, the petitioner had, admittedly, not disclosed some of her income. The assets held in the names of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar, were found in the possession and control of the petitioner and, hence, a presumption, in terms of Section 132(4A)(i) of the Act, has been drawn that the assets, held in the name of the persons aforementioned, too belong to the present petitioner and none else. All these assets are required to be verified and examined by the respondents and till the above exercise is completed, it would be premature to conclude that the KVPs and NSCs, in question, belong to the customers as contended by the petitioner. The further case of the respondents is that the Assessing Officer is authorized to hold the seized materials till the date not exceeding 30 days from the date of the assessment order for the block period as prescribed in the Act. The last date for completion of the assessment, in the present case, is December 31, 2008. In case there is reason to retain the searched materials beyond the period as stated hereinbefore, the Assessing Officer may do so after obtaining necessary approval from the concerned authority as prescribed under Section 132(8) of the Act after recording the reasons, in writing, therefor. In case of any objection to the approval given by such authority, the person aggrieved may approach the Central Board of Direct Taxes under Section 132(10) of the Act for the release of such documents. 6. I have heard Mr. D. Mazumdar, learned Counsel for the petitioner and Mr. U Bhuyan, learned Counsel appearing on behalf of the respondents. 7. In case of any objection to the approval given by such authority, the person aggrieved may approach the Central Board of Direct Taxes under Section 132(10) of the Act for the release of such documents. 6. I have heard Mr. D. Mazumdar, learned Counsel for the petitioner and Mr. U Bhuyan, learned Counsel appearing on behalf of the respondents. 7. While considering the present writ petition, what needs to be pointed out, at the very outset, is that it is not in dispute that at the time of search, which were conducted in the present case, as indicated hereinbefore, money, valuable assets, such as, KVPs, NSCs, etc., were found in the possession or control of the petitioner and some of these valuable assets, though apparently in the names of the persons other than the petitioner, the same, admittedly, belonged to the petitioner. Though the petitioner contends that the KVPs and NSCs, which have been found in the name of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar, are pledged articles against the loans, which the petitioner had advanced and the payments, having been made by the loanees, the same are to be required to be returned to the loanees. The fact of the matter remains that Section132(4A)(i) reads as under: (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person. 8. From a bare reading of Section 132(4A)(i), what clearly transpires is that any books of account, other documents, money, bullion, jewellery or other valuable article is found in the possession and control of any person in the course of search, it may be presumed that the valuable articles belong to such person. In the present case, when the KVPs and NSCs were recovered from the possession and control of the petitioner, the respondents acted justifiably and within the ambit of law in raising the presumption that all such assets belong to the petitioner. In such a situation, it is immaterial that some of the KVPs and NSCs are in the name of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar. In such a situation, it is immaterial that some of the KVPs and NSCs are in the name of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar. Whether the KVPs and NSCs, in question, which the petitioner seeks to get released, belong to, or do not belong to, the petitioner is a question of fact and it can be ascertained only upon proper and effective examination. It is not in dispute that in the present case, the last date for completion of assessment is, in the light of the provisions of Section 153B of the Act, December 31, 2008. 9. Though the petitioner has contended that while the appeal against assessments made in respect of the assessment years 2000-01, 2001-02, 2002-03 and 2003-04 were pending, the conduct of search was illegal, suffice it to mention here that there is no bar under the law to conduct such a search even when the appeal against the assessed income is pending, particularly, when the search, so conducted, has, admittedly, brought to surface the undisclosed income of the petitioner. At the time of hearing of this writ petition, Mr. Mazumdar has placed reliance on the case of Alleppey Financial Enterprises v. Asst. Dir. of I.T. (Investigations) reported in [1999] 236 ITR 562 (Ker), in order to contend that the respondents have no authority to seize the KVPs and NSCs, which stand in the name of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar. 10. While considering the decision in Alleppey Financial Enterprises [1999] 236 ITR 562 (Ker), what needs to be pointed out is that in Alleppey Financial Enterprises [1999] 236 ITR 562 (Ker), the assets, in question, admittedly, belonged to persons other than the one, who was being proceeded against for not disclosing complete income. As against the facts of the case of Alleppey Financial Enterprises [1999] 236 ITR 562 (Ker), the respondents do not admit, in the present case, that the KVPs and NSCs, which are in the name of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar, belong to the persons in whose name the KVPs and NSCs stand ; rather, the respondents' case is that though the KVPs and NSCs stand in the name of Smt. Sima Dhar, Dipika Dhar, Supriya Mishra and Uma Mazumdar, these valuable securities belong to the petitioner. In such circumstances, the decision in Alleppey Financial Enterprises [1999] 236 ITR 562 (Ker) has no application. 11. In the context of the facts of the present case, the respondents were wholly justified in raising the presumption under Section 132(4A)(i) and in treating the KVPs and NSCs, in question, recovered from the possession and control of the petitioner, as the undisclosed assets of the petitioner. The respondents are also entitled to retain the same for the purpose of examination and making complete assessment of the tax, which the petitioner may be held liable to pay. 12. Because of what have been discussed and pointed out above, I find absolutely no infirmity either in the seizure made or refusal by the respondents to release the KVPs and NSCs, in question. This writ petition is, thus, wholly without merit and must fail. 13. In the result and for the foregoing reasons, this writ petition is dismissed. No order as to costs.