M/S Bawa Gurmukh Singh & Co v. The Income Tax Officer & Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. C.W.P. No.16024 of 2010 & connected case being CWP No.16027 of 2010Date of decision: 21.9.2010 M/s Bawa Gurmukh Singh & Co. Vs. The Income Tax Officer & another. -----Petitioner. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. K.L. Goyal, Sr. Advocate withMr. Sandeep Goyal, Advocatefor the petitioner. Mr. Sukant Gupta, Advocatefor the respondents. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of C.W.P. Nos.16024 and16027 of 2010, as both the petitions involve common question.2. C.W.P. No.16024 of 2010 seeks a direction for returnof books of account and other documents impounded on17.3.2010 during survey of premises of the petitioner under theprovisions of Section 133A of the Income Tax Act, 1961 (forshort, “the Act”). 3. Case of the petitioner is that the Income Tax Officerconducted survey in the premises of the petitioner under Section133A of the Act and impounded certain documents and books ofaccount. Section 133A(3)(ia) provides for return of books ofaccount after 10 days unless permission to retain the samebeyond the said period is granted by the Chief Commissioner ofIncome Tax. Under Section 44AB of the Act, the assessee isrequired to get books of account audited before filing of thereturn, in absence of which the assessee is liable to penaltyunder Section 271B of the Act. In these circumstances, retentionof books of account for a long period was not justified. 4. In the reply filed by the Income Tax Officer, standtaken is that though the books of account and other documentswere impounded, the assessee was given a choice to obtaincopies of the said books of account and documents. The originalbooks of account and documents were still required for furtherinvestigation and completion of assessment. Requisite approvalof the Chief Commissioner had been duly granted on 26.3.2010.On 13.9.2010, photocopies of the documents were given to theassessee. Requirement of recording reasons was applicable atthe time of impounding, which had been duly complied with andthere was no requirement to record reasons for retaining thebooks of account and other documents. 5. We have heard learned counsel for the parties andperused the record. 6. Learned counsel for the petitioner submitted that eventhough photocopies of the books of account and other documentshave been made available, the same not being legible, auditcould not be conducted on the basis thereof. The respondentsalready having retained the books of account and otherdocuments for more than six months, in absence of any validreason, the same could not be retained for unreasonably longperiod unless there existed reasons to justify such a course.Reliance has been placed on judgment of the Orissa High Courtin U.K. Mahapatra and co. & othersv. I.T.O. & others[2009]308 ITR 133 to submit that approval granted by the ChiefCommissioner should be communicated to the assessee.Alternatively, books of account and documents be returned onappropriate conditions for some period as was the courseadopted in Spring Dale Educational Societyv. Union of India& others[2001] 247 ITR 409. 7. Learned counsel for the revenue submits that onlystatutory requirement was to record reasons at the time ofimpounding and to seek approval for retention beyond 10 days,but there was no requirement to convey the reasons for theapproval of the assessee. Reliance has been placed onjudgment of the Hon’ble Supreme Court inAsstt. Commissionerof Commercial Taxes & othersv. Ruchi Soya Industries &othersb(2008) 11 SCC 49. It was also submitted that approval for retention of books of account has been granted upto31.3.2011. 7. Learned counsel for the revenue submits that onlystatutory requirement was to record reasons at the time ofimpounding and to seek approval for retention beyond 10 days,but there was no requirement to convey the reasons for theapproval of the assessee. Reliance has been placed onjudgment of the Hon’ble Supreme Court inAsstt. Commissionerof Commercial Taxes & othersv. Ruchi Soya Industries &othersb(2008) 11 SCC 49. It was also submitted that approval for retention of books of account has been granted upto31.3.2011. 8. Question for consideration is whether mere recordingof reasons and approval by Chief Commissioner was enough toretain the impounded documents for long period even when itresults in prejudice to the assessee. 9. We are of the view that even though the officerconducting survey could impound the books of account or otherdocuments and retain the same beyond 10 days after approval ofthe Chief Commissioner, the said power is not an absolute power.It is subject to judicial review like any other discretionary power ofan administrative authority. 10. Learned counsel for the petitioner submits that sincephotocopies are not legible and books of account and documentshave already been retained for more than six months, thepetitioner should not be denied opportunity to get the auditconducted and file the return. 11.We find merit in the contention. In Educational Society, this Court gave following direction:- We find merit in the contention. In Spring Dale “.....The concerned authority of the Income-taxDepartment is directed to release the books ofaccount and other documents seized on May 21,1998, from the premises of the school of the petitionerwithin one month of the presentation of a certifiedcopy of this order. It will be open to such authority toretain photostat copies of the documents after gettingthem signed by the representative of the petitioner,Department is directed to release the books ofaccount and other documents seized on May 21,1998, from the premises of the school of the petitionerwithin one month of the presentation of a certifiedcopy of this order. It will be open to such authority toretain photostat copies of the documents after gettingthem signed by the representative of the petitioner, who shall certify the same to be true copies. Thepetitioner shall make available the original documentsas and when required by the competent authority orany court.” 12. We are of the view that similar direction is called for in the present case. 13. Accordingly, we direct respondent No.1 to release thebooks of account and other documents within 15 days from thedate of receipt of a copy of this order. Respondent No.1 will be atliberty to retain photocopies of the documents after getting thesame signed by the representative of the petitioner who will certifythe same to be true copies. The petitioner will return the originaldocuments within two months thereafter. Period of filing returnand audit will stand extended by two months from the date ofavailability of the original books of account and other documents. 14. A photocopy of this order be placed on the file of otherconnected case. (ADARSH KUMAR GOEL) JUDGE September 21, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE