Bhupendra Ratila Thakkar And Anr v. Commissioner Of Income Tax, Gujarat & Ors

891 BHUPENDRA RATILA THAKKAR AND ANR. COMMISSIONER OF INCOME TAX, GUJARAT & ORS December 5, 1975 [A. N. RAY, C. J., M. H. BEG, R. S. SARKARIA AND P. N. SHINGHAL JJ.] Income Tax Act Sec. 132, I32A-lncome Tax Rules 1962, rules 112, 112A, 112B, 112C--Co11;;itufi(lnal validity of-Co11stitution of India, Articles 14, 19(1 )(f) & (g) and 31 (I). The petitioners carry on business as Shroffs and Bankers. The Income-tax Department searched various premises of the petitioners and seized a sum of Rs. 12 lakhs in cash from the petitioners, under section 132 and 132A of the Income-tax Act. The petitioners contended that the said amount represented the stock-in-trade of the petitioners. The petitioners also contended !Ii.at the provisions of section 132 and J 32A of the Income-tax Act, 1961, as well as mies 112, 112A, 112B and 112C of the Income-Tax Rules, 1962, were uncon-stitutii>nal as violative of Articles 14, 19(1)(f) and (g) and 31(1) of the Constitution. Section 132 and 132A were further challenged on the ground of conferring naked, abitrary, unguided, discriminatory and uncanalised power on the executive authority. Dismissin~ the petition, HELD: (!) This Court has already upheld in Poora11 Mal's case the validity of section 132 and 132A as well as rules 112 and J l2A. [893 A & C] (2) Rules 112B and 112C relate to the release of the articles seized and are therefore benefici"I rules and as such cannot be challenged. [893D] ORIGINAL JURISDICTION : Writ Petition No. 96 of 1972. Under Article 32 of the Constitution of India. I. N. Shroff for the appellant/petitioner. B. B. Ahuja and S. P. Nayar for respondents. The Judgment of the Court was delivered by SHINGHAL J. This is a petition under article 32 of the Constitution. Bhupendra Ratilal Thakkar, petitioner No. 1, is the managing part-. ner of the other petitioner M/s Rajnikant Nareshchandra Shroff, which is a partnership firm carrying on the business of "shrofis and . bankers". Its principal place of business is said to be at Mehmada-· _ bad, with branches at Surat and Bombay. The petitioners applied for registration of the firm on April 7, 1971, and had time to file their return of income upto June 30, 1972. It has been claimed that the' firm had large sums of money in cash as well as 'hundis' and other bills of excha•age which formed its stock-in-trade and that there was no justification for thinking that it wocid not do what was required to be done under the law relating to income-tax. The firm had a ·sum of Rs. 12,00,000/- as cash on January 10, 1972, which is said to have been duly entered in its books of account in the Bombay branch office. The grievance of the petitioners 1s that some of the 2-L277SCf/76 atterTeT BART GT CH eT ATETT aT ATG, TATATE (Bhupendra Ratilal Thakkar and Another. Commissioner of Income-Tax, Gujarat-1BOand Others) (8. Fearaz, 1975) (qe saranferetit Uo Udo %, Ato THo To amt, ATTo Taoavatfcat site To Gato. frat) gree fra, 1962—faar 112d ate 112-8t— —.faafsrarrae. fafa,1961—aTeT132(5)° ae328} Hafanggte sega at fasiten—afaert & WAGE1adat A geefraeitoat \faferrerat at aatetfen sat-—sigaafratis H orrarre soarall eTaefacefsatat 8, wa: wae afarWAST 14 BT AT RAT frdtaatt 3 7 WHat, 1971 FY oH F efrediacn F fagarian frat att sah Tr 30 Fa, 1972 TH ara A faactRET HA FT AAT TT| ea GAH TTA 10 TAT, 197212,00,000 wre a uf amar ate oe at fea gaat Tae wrat & aratarat Fear afeatFaery et a sfae Prat.mar att frétardt at omar ae 3 fe wala FA FoF|grax afar, 1961[at][ art][ 132][ ee][ wfaaat][ mt][ Tease][ aT]ea gy10 waa, 1972.a1 et ofaet F sae fan weBen afeat site wea cearraall afea an uf at afaryela we fratwat Wa AST aatar at ara ay vt aarsit at 7e WIR|aaa afargia ax fre wei fadterti A ag wer feat fF 92. Terr arava feria ofast =[1976]4 BA fro qo fesa aft wt ar emareeere at ate a& fort ax adi veraratemT 9a: va Ut od aaa F afer.Fe fae ae agt ati welt ae eee fearfeomafeereasemrret frm, 1962 % frre 112, 112%, 112-8, 1127 wedf112-9arr sea otfaare ar sate fear war ar ate a faa F west14 a afar at @\ fedora aria *“afatratfer—frra ize ofsfr atare 132(5) aia oferta agai ® friifa fe wet &watadt {at sat wa ae srr 2 fe wat va are ®aqFate aferat aaa seer arr fralfar fat ora &7a HART afar se va safesst ofea Stfreadfaa—®& we afargtfer varrya fre.2a 8 ae afer¢fraifaa fae ot ar gear feat gar cic ag ca are aTat fe vat afangta fac mt oe oe oafafam sara 1325 grave (1) % que (i) ¥ fafee afaeat a gatfar att* Tea sa safes st 2 fear maar aaa we fear sem fratatren & eg afer fear war ar) wa: a Sat dt oraarsefaaog at afaart F masz14 R dad Fgaatfafraraat at aatit aafae ars ameaye aro at awat gt (47 5)|| ato axe 704=[1974]1 axe 704=[1974]1 704=[1974]11 [1974] (1974) 2 Waoato axe 704=[1974]1 axe 704=[1974]1 704=[1974]11AoftoTo1150:|qermet Tq father fates, arewe (aaa), [Pooran Mal Vs. Director of Inspection .(Inves-tigation) of Income-tax, New Delhi and Others].4.5 fo.y' AIAAA Fo AARC AAT [rato faa]293 arefern wfaatfcat: 1972 at fee fadtat Aer96. ara & dfnna® wees 32% mete wet Peay TaFre faetert|jsreterrelt /Facterre at BIT AAt ago To ATFAIC Tao Hosafer at aireadeft ato doEAT afar wiraaat fadteraz Bt WIT Aseafacit at site & ataTgo To Ah|sit amo[to][ ATA] soarrarag at fret etrarfizaft dro ato fawa ft fear~aratfearata fraa— mg frcrr afar ® wqese 32 8 mete feat TarSy aie witera sees, fide dort 1 gat fretare aecater ater ae ain at, at “oreet ate aad!FT ATLATTeat are ue aniard ot 2, sare anitere @| ae Fe TT2 fe qq area a yer ea aeaarare H @ faaat Wareat ate aad HZ1 fader 7 7 BH, 1971 FY BH Ffrien % fae araet feat ae TAF TA 30 FT, 1972ax gr at faraget wea aT ame at ag cat fearmat & fe od ® oe aga ast arafsat ate art gt gfesatsic wu fafrar ca & GT gaat sae eerH HT A Teag drat ® fac até arifaer at % fe araee 8 wahtfafa & aia ot ge frat svar wafaa ar saw fag ag Tatewal oti gt GH F oA10 Trae,1972 FT12,00,000ead at ule aeet ® ate ae ot fram art FH ae wer wT egfe sa vest aag % wer water at sar afeat # aeaat:sfacz fear aat ar. fadtaatt at ear ag & fe seafaat% ee F “are 132 are gad alma Fi areafaa Tat HTgu” arta 10 Fae, 1972 Ht et Tfead F waa feat atxsar afgai wix aa aealasil afer 12,00,000 ert at ute respondents entered these premises on January 10, 1972, "in purport-ed exercise of the powers conferred by section 13 2", and seized the sum of Rs. 12,00,000/- along with the books of account and other documents. Searches are also said to have been carried out in Meh-medabad office and the branch office at Surat, and some more books of account, papers and documents are said to have been seized there. The petitioners have_ stated that as the sum of R~. 12,00,000/-was the stock-in-trade of the firm, and it had not been secreted, there was no justification for the seizure of the money or the books and the other documents. They have accordingly stated that the seizure was an abuse of the authority conferred by ss. 132 and 132-A of the Income-tax Act, 1961, herein.after referred to as the Act, and rules 112, 112-A, 112-B, 112-C and 112-D of the Income-tax Rules, 1962, hereinafter referred to as the Rules. The petitioners !rave con-tended that ss. 132 and 132-A of the Act are unconstitutional be-cause they are violative of articles 14, 19 ( 1 )(f) and (g) and 31 (1) of the Constitution. It has also been urged that the aforesaid rules are illegal as they are not backed by any legal authority. The afore-said provisions have also qeen challenged on the ground that they are violative of article 14. In regard to ss. 132 a:id 132-A of the Act, the petitioners have further stated that they should be struck down as they confer naked, arbitrary, unguided, discriminatory and uncanalised power on the executive authority. The petitioners have also prayed for the restoration of the property wl1ich has been seized by the income-tax authorities. It has been pointed out in the peti-tion that three similar writ petitions were pending in this Court, in-cluding writ petition No. 446 of 1971. Pooran Mal vs. Director of Inspection Investigation. ([1]). The respondents have admitted the search anJ the seizure of the property, but have stated that this was done because the Commis-sioner of Income-tax, Gujarat-I, respondent No. 1, had reasons to be-lieve that the petitioners would not produce their books of account etc. even though th~y would be useful to the department for taking proceedings under the Act. It has also been stated that there was enough materij:ll before the Commissioner for exercising the power under s. 132(1) of the Act. The respondents have made specific averments in this connection including the averment that books o~ account were unreliable, and that the claim that the sum of Rs. 12,00,000/- was shown as balance in the books of account was incorrect. They have also denied the allegation that any search was carried on in the Mehmedabad head office of fae petitioner fir.m or that the sum of Rs. 12,00,000/ was kept •as the firm's stock-in-trade or that the firm was left with no other money whatsoever. The peti-tioners' co~1tention against the legality of ss. 132 and 132-A of the Act and the Rules has also been controverted. It will be recalled that in their writ petition the petitioners have made a specific reference to Pooran Mal's writ petition No. 446 of 1971. That case has been heard and decided by this Court on De-cember 14, 1973 and the decision has been reported in Pooran Mal -·(1)[i974]Ts.c-.-R. 104:- 294SAAR aaafauiea ofeat[1976]4 SA0 fo qoaieqela ee at 1 ag at ser ma8 fe veneer aia FYa sak oper antag, qa at at aait at ae ake gsat ger afeat, amar ah cada afanata fee ac2. felt A ae aor frat & fF af 12,00,000eGTATat oft ata aren at at ga foray aa warAt Ad: Se at F gear aft gh wey aaasy >afmefat @ & fe far agasfm att sea Tet afsfro, AT | aaa1961, Vel fat ae gaz HAAwae cere afafae wer qa 8, at ata 132 we 1305aT WR array fa,1962, fade vad sak grata frreeer was,& fra 112, 112%, 1123, 1127 WR 112-4art Feet ofeare ar geri a| fadtmai A ag walla A@. fe afefirr at ara 132 ak 132-5 gatfaartrar & aatheFATST 14,19(1) (4) ae (6) warafaarael% maeoe 31(1) afar wet &1 aeat fader featwat feyatesMay waa & alte we feet fafiee atc ar anda wet et@gate coat st car rare at At aatit a ag 2 fe FWT 14 aT afr ay FEmafia at art 132 ak132% % art F fedtoard F sak alates ae wat feat2fe we te fear om afar aiife 3 arias oriceatQe, wart, aqat, fateart ak oftatar ae sea act€1 fader 3 ga arf& ame fear aa at tt oaratHoag ¢ fae srree orfrarfolt & afaadte.aefrat ar1 faderfrétaa at ata fear var 2 fe ca eamaa # 4% A da feaaa aftaa & fart 1971 ar fee fadtaa der 446 qvqaa fattert fata,arrat(aeaeot) af fret atx sag!arat ftz aftafra 2|.So| —3.eeafaat tara at cenit atx aftoen at etter_feat @ frg ag war for 2 fe ag safae fear aa aifeWAL BATH, TUA-1, Tet Fe1 F ae ae favara He"aren a fe fadeae sar aft aris te ag ati wa &4 afer & ada aciadt wa & feu feat ® fau soa.1(1974) 2 tao to HIto 704=[1974]1 SHo fo go 1150 maly.x at.ag at aaa feat war 2 fe afefaer at ara 132(1)* meta ate ar sat wet % far am B® amet gat amitat1 seafaat + za araer # fafafzcr sata fe 2 fad qewerd afeafaa @ fe car afeat afaraatia 2 ateae arafe 12,00,000 wa at ufa at aarafeal * afta * eqH afaa feat wat at, wat fst za fanaa a a carzfrofe fadtaae oa oF agreeyer aaias HaETarat at we ft saat ae fe 12,00,000 aaa at ute cH ®areas F BT Aal we oft aaat ag fe at F ga garyo Mt at aat we wat¢1 afafram a ara 132 AR 130mat faraat at dear 4 fase fadtoad at ata at ot after 4. ageH Vaart dim fe fadara F wat fee fetes4H germa % 1971 % fee feetrt de 446 % of fatateneer @ free fear arsa may at ga arraa §} gaaréat @ at sa14 fearae,1973 at fafefeaa ax fear ea ag falreaa qeamet sary fatteror fader, eae (atedq),ag fact att oma’ 3 sfeafea. fear mat 81 oft aig & eqer & ag edtare Prar g fe ga factor H ot AF gore aCewT Tt sa aaa F faare feat wat 2 ai ag fe se aferat are 132 at 132%ate frat & fra112, 1109at saat ga ara H fadet FF geet a fetaeat F go ad HET Tl FT: GRANT ATA aay F xqarava Tt ag affair feat ¢ fe “ae afetiatf acwaraa 3 fe oratfia wer wqeSz14,19WaaT31 aTatta aa gi" at ais TT Ze Ht TH fear Zagagafeqetaa at area! F fraat & fam 1i2z@ ak 1ied atfafaaraat wan at faraaeg aét at atx ae fe afaar %Wee 14 8 sora F ula fata we eu afaare # ya arm atTUaT SAT, Gat A ak wa Cat Heat wate gt, ea emgrar& far arasrp gta| (1974)2 Bho Go Mo 704—=[1974]1 THO fo Fo 1159. «6 eae warareefoie ofearat [1976] 4 eHo fro go 296 og aad frat ® from rise ate 1iem at ofaitaa awe frat 1 fray i12@ afatay at arm 132(5) * wet.afaigta ae* fraifaa fac amt & aratar& akaa ag soar& feat va araHF waacT A sRwe sa cafe st ofa atm fraat afaeat a oefeuafareta oma aTfeat STaeT vat ati we frre owe 112 ae we ag ame arfeat aT es& fe fraifad satafarda far art 1 se afta at art i328 a starva sais® aoe BT (1)Ft feat A faf waace dea ariat Fe fear at tied arom fast eet F afaeer TET& oe ofeadta fear war at iowa: & aat et werafray= ae afar3 aqrer 14 F aad F saat fafaait 2 F fag aly arse aren al Bt THAT slTT WGI AMAT TARA ata aaa’ Afra adhgs at za fadtaaH are ar ad&1 ea Uagara afer fear wear Zt fgad * art FH ag aren aval fear sat & 2 Wate do mIXe 704=[1974] 1 THe fo To 1150, etc. vs. Director of Inspection (Investigation) Of Income Tax, New Delhi und others(1). Mr. Shroff has frankly conceded that the points which h•ave been raised in this petition have been considered in that case, and that he has nothing to say in regard to the validity ( [1]f ss. 132 and 132-A of the Act and rules li2 and 112-A of the Rules or the averments ill the petition in that connection. In fact it ·has been held by this Court in Pooran Mal's case that "it was im-possible to hold that the impugned provisions were violative of arti-cles 14, 19 or 31." - All that Mr. Shroff has argued is that the validity ' of rules 112-B and 112-C of the. Rules was net the subject matter of examination in Pooran Mal's case und that it would be necessary ~ for this Court to examine that part of the controversy, as a[1]nd when it is permissible to do so, with reference to the provisions of article ' 14 ef the Constitution. We have gone through rules 112-B and 112-C of the Rules. Rule 112-B relates to the release of the articles seized nnder s. 132(5) of the Act, and merely provides that where, in pursuance of that section, any a:osets or part thereof have to be released, the Income-tax Officer shall forthwith deliver the same to the person from whom custody they were seized. Rule 112-C provides for the release of the remain~ ing assets, and it is to the effect that they shall be made out or paid to the perso[1],1 from whose custody they were seized, •after the discharge of the liabilities referred to in cl. (i) of sub-section (1) of S. 132-A t>f the Act. Both these are therefore beneficial rules, and there can be no satisfactory reason for challenging their val\dity with reference to article 14 of the Constitution. So when the present case is not different from Pooran Mal's case, there is no merit in this writ peti-ticm. It is hereby dismissed. There will however ce no order as to costs. P.H.P. Petition dismissed. (1) [1974] 2 S.C.R. 704.