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PETITIONER: POORAN MAL  ETC.

       Vs.

RESPONDENT: DIRECTOR  OF INSPECTION (INVESTIGATION) OF INCOME-TAX  MAYUR

DATE OF JUDGMENT14/12/1973

BENCH: PALEKAR, D.G. BENCH: PALEKAR, D.G. RAY, A.N. (CJ) CHANDRACHUD, Y.V. ALAGIRISWAMI, A. BHAGWATI, P.N.

CITATION:  1974 AIR  348            1974 SCR  (2) 704  1974 SCC  (1) 345  CITATOR INFO :  RF         1975 SC  67  (1)  R          1976 SC 636  (2,4,6)  F          1985 SC 989  (15,16)  F          1987 SC1748  (20)

ACT: Income  Tax  Act (1961)-Sections 132, 132A  and  Rules  112, 112A-Search  and seizure-Whether violate Art.  19(1)(f)  and (g) of the Constitution. Income Tax Act 1961, Sec. 132(5)-Seizure of money,  bullion, etc.-Whether provision confiscatory. Income  Tax  Act,  1961,  Sec.  132(1)  and  (5)-Search  and seizure-Whether   provisions   hit  by  Art.   14   of   the Constitution  for  following  different  procedure  for  the evaders  of  tax, who are believed to be  in  possession  of undisclosed  income or property and evaders against whom  no such belief is entertained by the authorities. Income Tax Act 1961, Sec. 132-Whether evidence gathered from the  illegal seizure of documents is excluded at the  trial- Whether  a writ of prohibition to restrain the use  of  such evidence can be granted. Income  Tax Act 1961, sec. 132--"Reason to  believe"-Whether Director  of Inspection can entertain reasonable  belief  as not being directly connected with the assessment-Whether the Director can entertain necessary belief for ordering  search and seizure where the assessment was already completed. Income  Tax  Act,  1961,  Sec.  132-Seizure  of   irrelevant documents-Whether renders the search invalid.

HEADNOTE: In  the  proceedings before the Supreme Court  two  of  them being  writ petitions under Art. 32 of the Constitution  and two  others being appeals from the orders of the Delhi  High Court in writ petitions under Art. 226-relief was claimed in respect  of  the search of certain premises and  seizure  of account books, documents, cash, jewelry and other  valuables by  Income-tax authorities purporting to act u/s 132 of  the Income   Tax   Act,  1961.   The   petitioners/   appellants challenged  the  validity  of Sec. 132(1) and  (5)  of  Rule

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112(A)  on  the ground that they violate  Art.  14,  Article 19(1)(f)  and (g) and 31 of the Constitution.  It  was  also contended  that  a  writ  of  prohibition  to  restrain  the authorities  from using the ’information gathered  from  the documents  seized should be issued.  In the writ  petitions, the actual search and seizure were challenged on the  ground that   they  were  carried  out  in  contravention  of   the provisions of Sec. 132 and Rule 112-A.  The Court  negatived all the contentions. Dismissing the writ petitions and appeals, HELD:     (1) When one has to consider the reasonableness of the  restrictions or curbs placed on the freedoms  mentioned in  Art. 19(i) (f) and (g), one cannot possibly  ignore  how such  evasions eat into the vitals of the economic  life  of the community.  Therefore, in the interest of the community, it  is  only right that the fiscal authorities  should  have sufficient  powers  to  prevent tax  evasion.   As  a  broad proposition,  it can be stated that if the safeguards  while ’carrying out search and seizure are generally on the  lines adopted  by  the  Criminal  Procedure  Code  they  would  be regarded  as adequate and render the temporary  restrictions imposed  by  these  measures  as  reasonable.   On  detailed examination of the provisions of Sec. 132, and Rule 112,  it is clear that the 705 Safeguards  are adequate to render the provisions of  search and  seizure as less onerous and restrictive as is  possible under   the  circumstances.   The   provisions,   therefore, relating  to  search and seizure in Sec. 132  and  Rule  112 cannot  be regarded as violative of Arts. 19(1)(f) and  (g). [714F, 717C] In the course of his duties, the Director of inspection  has ample  opportunities to follow the course  of  investigation and assessment carried on by the income Tax Officers and  to check  the  information received from his sources  with  the actual   material  produced  or  not  produced  before   the assessing  authorities.   It is not, therefore,  correct  to argue  that the Director of Inspection could  not  entertain honest  and  reasonable belief before  ordering  search  and seizure  under  Section 132(1)(a)(b) and  (c).   The  second proviso  to  sub-section  (5) of Sec.  132  shows  that  the assessee  can get a release of all the assets seized  if  he can  make satisfactory arrangements for the payment  of  the estimated   dues.   So  also,  the  excess   collection   is refundable  u/s  132-A  with  interest  after  the   regular enquiry.    The  provisions  of  Section  132(5)   are   not confiscatory in nature. [717F] M.   P.  Sharma  v. Satish Chandra [1954]  S.C.R.  1077  and Commissioner  of  Commercial Taxes v. R. S.  Jhaver  [1968]1 S.C.R. 148 followed. (II) The  provisions  of Section 132(1) and  (5)  cannot  be challenged   on   the   ground   that   they   make   unjust discrimination between two sets of tax evaders in  .ordering search  and  seizure or retention of the seized  wealth  for recovering the tax, in some cases and not ordering the  same in  other  cases.   All evaders of taxes  can  be  proceeded against  u/s  132.  Only in some cases, the  search  may  be useful  because  of the information  about  the  undisclosed income  and  wealth.  Where there is  no  such  information, search and seizure would be futile.  Therefore, there is  no substance  in the contention that two  different  procedures for assessment are adopted an hence there is  discrimination under Art. 14. [720C] C.   Venkata  Reddy  and  Another  v.  Income-tax   Officer, (Central)  1, Bangalore, and others, 66 Income-tax  Reports,

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212 and Ramjibhai Kalidas V.I. G. Desai, Income-tax Officer, and others, 80 Income-tax Reports, 721, cited with approval. (III)     The Income-tax authorities can use as evidence any information  gathered from the search of the  documents  and accounts  and  articles  seized.  Neither  by  invoking  the spirit  of our Constitution nor by strained construction  of the  fundamental  rights can we spell out the  exclusion  of evidence obtained on an illegal search.  U23F], A.   K. Gopalan v. State of Madras, [1950] S.C.R. 88 and  M. P. Sharma v. Satish Chandra [1954] S.C.R. 1077. Courts in India and in England have consistently refused  to exclude  relevant evidence merely on the ground that  it  is obtained  by  illegal search or seizure. Where the  test  of admissibility of evidence lies in relevancy, unless there is an  express  or implied prohibition in the  Constitution  or other law, evidence obtained  as a result of illegal  search or seizure is not liable to be shut out.  [723G] (IV) In writ petition No. 446171, on facts it was found that the   allegations  of  mala  fide  and  oppressiveness   and highhandedness  in search and seizure were not  proved.   On examining the records, held that the petitioner was not  co- operating with the Director of Inspection. (V)  Held  further,  that seizure of books  of  account  and other  documents  which  were afterwards  found  to  be  not relevant, along with the documents relevant for the enquiry, does not make the search and seizure illegal.  It may at the most  be  an irregularity.  On the material on  record,  the Director  of inspection had proper grounds for a belief  for ordering search and seizure under sub-clauses (b) and (c) of sub-section (1) of Sec. 132.  Merely because the  assessment for  the  relevant year was already completed, it  does  not mean  that  on  the information in  the  possession  of  the Director of Inspection, he cannot 706 entertain  the necessary belief. On facts, in Writ  Petition No.  86/72  held  the   search  and  seizure  were   neither oppressive nor excessive.

JUDGMENT: ORIGINAL/CIVIL APPELLATE JURISDICTION: Writ Petition Nos 446 of 1971 and 86  of 1972. (Under  Art. 32 of the Constitution for the  enforcement  of fundamental rights). Civil Appeals Nos. 1319 and 1320 of 1968. From  the Judgment and Order dated the 22nd March,  1968  of the Delhi High Court in Writ Petitions Nos. 798-D and  800-D of 1966. N.D.  Karkhanis  and Ram Lal, for the  petitioner  (in  W.P. 446/71 N.   D. Karkhanis, Balram Sanghai, A. T. M. Sampath, M. M. L Srivastava  and E. C. Agarwala, for the petitioner (in  W.P. 86/72). F.   S.  Nariman, Additional Solicitor General of India,  B. B.  Ahuja  and  S. P. Nayar, for the  respondents  (in  both W.Ps.) M.C.  Chagla, L. M. Singvi, S. Sadhu Singh, Jagmohan  Khanna R.   N.  Kapoor, Nirmala Gupta and Mohinder Kaur  and  Veena Dev Talwar, for the respondents (in appeals). F.S.  Nariman, Additional Solicitor General of India, S.  T. Desai. B.B. Ahuja and S. P. Nayar, for the respondents.  (in appeals) The Judgment of the Court was delivered by PALEKAR,  J.-In these proceedings-two of them Writ  Petition

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under  Article 32 of the Constitution and two  others  which are appeal from orders passed by the Delhi High Court  under Article  226relief  is claimed in respect  of  action  taken under section 132 of the Income-tax, Act, 1961  (hereinafter called  the  Act) by way of search and  seizure  of  certain premises on the ground that the authorisation for the search as also the search and seizure were illegal.  The  challenge was  based on constitutional and non-constitutional  grounds For the appreciation of the constitutional grounds it is not necessary to give here the detailed facts of the four cases. It  is sufficient to state that in all these cases  articles consisting  of account books and documents and in  the  Writ Petitions,  also  cash, jewelry and  other  valuables,  were seized by the Income-tax authorities purporting to act under the,  authorisation  for  search and  seizure  issued  under section 132 of the Act.  Broadly speaking the constitutional challenge  is directed against sub-sections (1)  and,(5)  of section  132 of the Act and incidentally also  against  rule 112A  on the ground that these provisions are  violative  of the fundamental rights guaranteed by Articles 14, 19(1)  (f) (g)  and  31 of the  Constitution.   The  non-constitutional grounds  of  challenge are based up on  allegations  to  the effect  that the search and seizure were not  in  accordance with  section 132 read with Rule 112.  This  challenge  will have to be considered in the background of the facts of  the individual cases. 707 Chapter XIII of the Act deals with Income,-tax  authorities. their   ,powers   and  jurisdictions.   The   heirarchy   of authorities as given in section 116 shows that the class  of authorities  designated as Director of Inspection  is  shown below the Central Board of Direct Taxes and above the  class of  authorities  known as Commissioner of  Income-tax.   The other  authorities mentioned are Assistant Commissioners  of Income-tax.  Income-tax Officers, and Inspectors of  Income- tax.   Section 117 shows by whom these  various  authorities are  to be appointed. Section 118 deals  with  subordination and  control.   Section  119 deals with the  powers  of  the higher  authorities to give instructions and  directions  to subordinate  authorities.   Under section 120  Directors  of Inspection  have  to  perform such functions  of  any  other Income-tax  authority  as  may be assigned to  them  by  the Board.  The Board, it is clear, might assign to the Director of Inspection the functions of any other authority under the Act. We,  may then turn to part ’C’ of this Chapter  which  deals with the powers.  Section 131 says that the authorities from the  Commissioner down to the Income-tax Officer shall  have the  same powers as are vested in a court under the Code  of Civil Procedure in respect of several matters including  the enforcing  of  attendance of any person  or  compelling  the production of books of account and other documents.  Section 132 provides for search and seizure.  It appears that under section 37(2) of the Income-tax Act, 1922 a limited Power of search  and seizure had been first given to  the  Income-tax authorities  in 1966.  The present Income-tax Act  initially gave  that power under section 132 on the same lines as  the old  section  37(2).  But there were further  amendments  in section 132 in 1964 and 1965.  Under the amendment of  1965, two  sections namely sections 132 and 132A were  substituted for  the original section 132.  We are concerned with  these sections  and it will be therefore, necessary in  the  first instance to reproduce the same               "132. (1) Where the Director of Inspection  or               the    Commissioner.   in    consequence    of

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             information  in his possession, has reason  to               believe that-                (a)  any  person to whom a summon under  sub-               section (1)     of  section 37 of  the  Indian               Income-tax  Act,  1922 (XI of 1922)  or  under               sub-section (1) of section 131 of this Act, or               a  notice under sub-section (4) of section  22               of  the Indian Income-tax Act, 1922, or  under               sub-section (1) of section 142 of this Act was               issued  to produce, or cause to  be  produced,               any  books of account or other  documents  has               omitted  or failed to produce, or cause to  be               produced,  such  books  of  account  or  other               documents  as  required  by  such  summons  or               notice, or               (b)   any person to whom a "summons" or notice               as aforesaid has been or might be issued  will               not, or would               708               not,  produce  or cause to  be  produced,  any               books of account or other.documents which will               be useful for, or relevant to, any proceedings               under  the Indian Income-tax Act, 1922 (XI  of               1922) or under this Act, or               (c)   any  person  is  in  possession  of  any               money,  bullion  jewelry  or  other   valuable               article  or  thing and  such  money,  bullion,               jewelry  or  other valuable article  or  thing                             represents  either wholly or partly in come  or               property which has not been disclosed for  the               purposes  of the Indian income-tax  Act,  1922               (XI of 1922), or this Act (hereinafter in this               section referred to as the undisclosed  income               or property). he  may authorise any Deputy Director. of  Inspection,  Ins- pecting  Assistant Commissioner, Assistant Director of  Ins- pection  or Income-tax Officer (hereinafter referred  to  as the authorised officer) to-                (i)  enter  and search any building or  place               where he has reason to suspect that such books               of  account, other documents, money,  bullion,               jewelry  or other valuable article  or  things               are kept;                 (ii)     break  open the lock of  any  door,               box, locker, safe, almirah or other receptacle               for exercising the powers conferred by  clause               (i), where the keys thereof are not available.               (iii) seize  any such books of account,  other               documents,  money, bullion, jewelry  or  other               valuable.  article or thing found as a  result               of such search;               (iv)  Place  marks  of identification  on  any               books of account or other documents or make or               cause to be made extracts or copies therefrom;               (v)   make a note on an inventory of any  such               money.  bullion,  jewelry  or  other  valuable               article or thing. (2)  The authorised officer may requisition the services  of any  police  officer  or of any  officer  of  the.   Central Government, or of both, to assist him for all or any of  the purposes  specified in sub-section (1) and it shall  be  the duty of every such officer to comply with such requisition. (3)  The authorised officer may, where it is not practicable to  seize  any  such  books  of  account,  other   document,

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money,,bullion, jewelry or other valuable article or  thing, serve  an order on the owner, or the person who is in  imme- diate  possession  or  control thereof  that  he  shall  not remove, part with or otherwise deal with it except with  the previous  permission  of such officer and such  officer  may take such steps as may be necessary for ensuring  compliance with this sub-section,.  709 (4)  The  authorised officer may, during the course  of  the search  or seizure, examine on oath any person who is  found to  be  in possession or control of any  books  of  account, documents,  money,  bullion,  jewelry  or  other   valuable, article  or  thing  and any statement made  by  such  person during  such examination may thereafter be used in  evidence in any proceedings under the Indian Income-tax Act, 1922 (XI of 1922), or under this Act. (5)  Where  any money, bullion, jewelry or other article  or thing (hereinafter in this section and section 132A referred to  as  the  assets) is seized under  sub-section  (1),  the Income tax Officer, after affording a reasonable opportunity to  the  person concerned for being heard  and  making  such enquiry  as may be prescribed, shall, within ninety days  of the  seizure, make an order, with the previous  approval  of the Commissioner               (i)   estimating   the   undisclosed    income               (including  the  income from  the  undisclosed               property)  in a summary manner to the best  of               his judgment on the basis of such materials as               are available with him;               (ii)  calculating  the  amount of tax  on  the               income  so  estimated in accordance  with  the               provisions of the Indian Income-tax Act,  1922               (XI of 1922) or this Act;                (iii)   Specifying   the amount that will  be               required  to  satisfy any  existing  liability               under this Act and any one or more of the Acts               specified  in clause (a) of subsection (1)  of               section  230A in respect of which such  person               is in default or’ is deemed to be in  default,               and retain in his custody such assets or  part               thereof  as are in his opinion  sufficient  to               satisfy the aggregate of the amounts  referred               to  in  clauses (ii) and (iii)  and  forthwith               release the remaining portion, if any, of  the               assets  to the person from whose custody  they               were seized; Provided  that if, after taking into account  the  materials available  with him, the Income-tax Officer is of  the  view that  it  is not possible to ascertain to  which  particular previous  year  or  years such income or  any  part  thereof relates, he may calculate,the tax on such income or part, as the  case may be, as if such income or part were  the  total income  chargeable  to  tax at the rates  in  force  in  the financial year in which the assets were seized; Provided  further  that  where a person  has  paid  or  made satisfactory  arrangements for payment of all-  the  amounts referred  to in clause (ii) and (iii) or any  part  thereof, the  Income-tax Officer may, with the previous  approval  of the Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. 710 (6)  The assets retained under sub-section (5) may be  dealt with in accordance with the provisions of section 132A. (7)  If the Income-tax Officer is satisfied that the seized assets  or any part thereof were held by such person for  or

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on  behalf of any other person, the Income-tax  Officer  may proceed under sub-section (5) against such other person  and all the provisions of this section shall apply accordingly. (8)  The  books of account or other documents  seized  under sub-section  (1)  shall not be retained  by  the  authorised officer  for a period exceeding one hundred and eighty  days from  the  date  of  the  seizure  unless  the  reasons  for retaining  the same are recorded by him in writing  and  the approval of the Commissioner for such retention is  obtained : Provided  that  the  Commissioner shall  not  authorise  the retention of the books of account and other documents for  a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (XI of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. (9)  The  person from whose custody any books of account  or other  documents are seized under sub-section (1)  may  make copies thereof, or take extracts therefrom, in the  presence of  the authorised officer or any other person empowered  by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (10) If  a person legally entitled to the books  of  account or, other documents seized under sub-section (1) objects for any  reason to the approval given by the Commissioner  under sub-section  (8),  he may make an application to  the  Board stating  therein  the  reasons for such  objection  and  re- questing  for  the return of the books of account  or  other documents. (11) If  any person objects for any reason to an order  made under  sub-section  (5), he may, within thirty days  of  the date  of such order, make an application to such  authority, as may be notified in this behalf by the, Central Government in  the  Official  Gazette  (hereinafter  in  this   section referred  to as the notified authority, stating therein  the reasons  for such objection and requesting  for  appropriate relief in the matter. (12) On receipt of the application under subsection (10) the Board, or on receipt of the application under  sub- section  (11) the notified authority, may after  giving  the applicant an opportunity of being heard, pass such orders as it thinks fit. 711 (13) The provisions of the Code of Criminal Procedure,  1898 (V  of 1898), relating to searches and seizure shall  apply, so far as may be, to searches and seizure under  sub-section (1). (14) The Board may make: rules in relation to any search  or seizure  under  this  section; in  particular,  and  without prejudice  to (the generality of the foregoing  power,  such rules  may provide for the procedure to be followed  by  the authorised officer. (i)  for obtaining ingress into such building or place to be searched where free ingress thereto is not available; (ii) for  ensuring safe custody of any books of  account  or other documents or assets seized. Explanation  1.-In computing the period of ninety  days  for the purposes of sub-section (5), any period during which any proceeding  under  this  section is stayed by  an  order  or injunction of any Court shall be excluded. Explanation 2.-In this section, the word "proceeding"  means any  proceeding  in respect of any year, whether  under  the Indian Income-tax Act. 1922 (XI of 1922) or this Act,  which may  be pending on the date on which a search is  authorised under  this section or which may have been completed  on  or

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before  such  date and includes also all  proceedings  under this  Act which may be commenced after such date in  respect of any year. Sec. 132A.               (1)   The  assets retained  under  sub-section               (5)  of’ section 132 may be dealt with in  the               following manner, namely                (i)  The  amount  of the  existing  liability               referred  to in clause (iii) of the said  sub-               section  and  the  amount  of  the   liability               determined   on  completion  of  the   regular               assessment   or  reassessment  for   all   the               assessment  years  relevant  to  the  previous               years  to  which  the income  referred  to  in               clause (i) of that sub-section relates, and in               respect of which he is in default or is deemed               to be in default may be recovered out of such               assets’               (ii)  If  the assets consist solely of  money,               or partly of money and Partly of other assets,               the income-tax Officer may apply such money in               the  discharge of the liabilities referred  to               in  clause  (i)  and  the  assessee  shall  be               discharged of such liability to the extent  of               the money so applied.                (iii)     The  assets  other than  money  may               also be applied for the discharge of any  such               liability referred to in clause (i) as remains               undischarged and for this purpose such ’assets               shall be deemed to be under dist-               712               raint as if such distraint was effected by the               Income-tax,  Officer under authorisation  from               the  Commissioner  under  sub-section  (5)  of               section  226  and the Income-tax  Officer  may               recover the amount of such liabilities by  the               sale  of  such assets and such sale  shall  be               effected in the manner laid down in the  Third               Schedule.               (2)   Nothing  contained  in  sub-section  (1)               shall  preclude the recovery of the amount  of               liabilities aforesaid, by any other mode  laid               down in this Act.                (3)  Any  assets  or proceeds  thereof  which               remain  after the liabilities referred  to  in               clause  (i) of sub-section (1) are  discharged               shall- be forthwith made, over or paid to  the               persons    from whose custody the assets  were               seized.                (4)  (a)  The  Central Government  shall  pay               simple interest at  the rate of nine per  cent               per annum on the amount   by     which     the               aggregate of money retained under section  132               and  of  the Proceeds, if any, of  the  assets               sold  towards  the discharge of  the  existing               liability referred to in clause (iii) of  sub-               section  (5)  of  that  section  exceeds   the               aggregate of the amounts required to meet  the               liabilities referred to in clause (i) of  sub-               section (1) of this section.               (b)   Such  interest shall run from  the  date               immediately following the expiry of the period               of six months from the date of the order under               sub-section (5) of section 132 to the date  of               the   regular   assessment   or   reassessment

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             referred  to in clause (i) of sub-section  (1)               or as the case may be, to the date of last  of               such assessments or reassessments.               Rule  112  A which is also  challenged  as  it               prescribes the procedure for the enquiry under               section 132(5) is as follows "112A.   Inquiry  under  section  132(1)  where  any  money, bullion,   jewelry  or  other  valuable  article  or   thing (hereinafter referred to as assets) are seized, the  Income- tax  Officer shall within fifteen days of the seizure  issue to  the person in respect of whom enquiry  under  subsection (5)  of section 132 is to be made requiring him on the  date to  be,  specified therein (not being earlier  than  fifteen days  from  the date of service of such  notice)  either  to attend at the office of the Income-tax Officer to explain or to  produce or cause to be there produced evidence on  which such  person  may  rely for explaining  the  nature  of  the possession and the source of the acquisition of the assets. (2)  The Income-tax Officer may issue a notice to the person referred  to  in  sub-rule  (1)  requiring  him  on  a  date specified therein to produce or cause to be produced at such time and at such place as the Income-tax Officer may specify such  accounts  or documents or evidence as  the  Income-tax Officer may require and may from time to time issue  further notices  requiring  production of such further  accounts  or documents or other evidence as he may require. 713 (3)  The, income,-tax Officer may examine on oath any  other person or make such other inquiry as he may deem fit. (4)  Before  any  material  gathered in the  course  of  the examination  or  inquiry under sub-rule (3) is used  by  the Income-tax  Officer against the person referred to  in  sub- rule  (1)  the Income-tax Officer shall  give  a  reasonable notice to that person to show cause why such material should be used against, him. It will be seen in the first place that the power to  direct a search and seizure is given to the Director of  Inspection or the Commissioner.  Secondly, the  authorisation for  such search  and seizure must be in favour of officers not  below the  grade of an Income-tax Officer.  Thirdly the  power  to authorise search and seizure can be exercised only when  the Director  of  Inspection or the Commissioner has  reason  to believe  (1)  that in spite of the  requisitions  under  the relevant  provisions  mentioned in section 132(1)  (a)  the required  books  and documents have not been  produced;  (2) that  any  person,  whether  requisition  under  the   above provisions  is made or not, will not, or would not,  produce or  cause,  to be produced, any books of account  and  other documents.  which  will be useful for, or relevant  to,  any proceeding under the Income-tax Act; or (3) that any  person is in possession of any money, bullion, jewelry or any other valuable  article  or thing representing  either  wholly  or partly   undisclosed   income   or   property.    When   the authorisation is given by the Director of Inspection or  the Commissioner, as the case may be, it must be limited to  the five,  purposes mentioned in sub-clauses (i) to (v) of  sub- section  (1).  Sub-section (14) provides for the  making  of rules  in relation to any search or  seizure.   Accordingly, rule  112  has  been framed which says that  the  powers  of search  and seizure under section 132 shall be exercised  in accordance with sub-rules (2) to (14) under rule 112.  These are detailed rules setting out the procedure for making  the search  and  seizure and for the custody of  what  has  been seized. Sub-section (5) of section 132 deals with the special  cases

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where,   on  search,  money,  bullion,  jewelry  and   other valuables believed to be undisclosed income or property  are seize d.  What is seized cannot be kept by the  departmental authorities   with  them  indefinitely.    Sub-section   (5) requires  that a summary enquiry must be made by  Income-tax Officer  with  a view to ascertain how much  of  the  seized valuable  should be retained against unpaid tax  dues.   The balance  must be forthwith released. the second  proviso  to sub-section  (5) further shows that the money and  valuables may  not also be retained by the Income-tax Officer  if  the person, concerned has paid or made satisfactory arrangements for  payment of all the income-tax dues which are  summarily estimated under sub-section (5).  The summary enquiry  under sub-section  (5)  must  be finished within 90  days  of  the seizure and the order which is made thereunder is subject to the  previous  approval  of the  Commissioner.   Under  sub- section  (6) of section 132 the assets retained ’under  sub- section  (5)  are to be dealt with in  accordance  with  the provi sions of section 132-A 714  which  clearly  goes to show that  the  Income-tax  Officer shall  proceed with the regular assessment  or  reassessment of  the tax payable by the person concerned and  after  such assessment  the  amount  of tax :so held payable  is  to  be recouped  from  the assets retained under  subsection  5  of section  132.  The balance, if any, is to be  returned  with interest   at  the  rate  of  9%  if  the   assessment   and reassessment is not completed within six months of the  date of the retention order made under sub-section (5) of section 132.   Even  in  regard to the books of  account  and  other documents  which  are seized the authorised officer  is  not entitled to retain the same for. a period exceeding 180 days unless  he records his reasons in writing for retaining  the same  and the Commissioner approves of the  retention.   The person  from  whose custody the books of account  and  other documents  are seized, is, however,  entitled  to  receive copies or take extracts therefrom.  Any person aggrieved  by the  retention  of  the  documents is  entitled  to  make  a representation  to the Board which is also the authority  to which a representation could be made under sub-section  (11) by  any  person  objecting to the order  passed  under  sub- section (5)    retaining  the  assets.  Broadly it  will  be seen  that  section 132 and rules 112 and  112A  deal.  with search and seizure and the disposal of articles seized after search.  The challenge under Articles 19 and 14 is  directed against  sub-sections  (1) and (5) of section 132  and  rule 112A. Dealing first with the challenge under article 19(1)(f)  and (g) ,of the Constitution it is to be noted that the impugned provisions  are evidently directed against persons  who  are believed  on  good  grounds to  have  illegally  evaded  the payment  of  tax on their income and  property.:  Therefore, drastic  measures to get at such income and property with  a view to recover the government dues would stand justified in themselves.  When one has to consider the reasonableness  of the  restrictions or curbs placed on the freedoms  mentioned in  article  19(f) and (g), one cannot possibly  ignore  how such  evasions eat into the vitals of,the economic life  of the community.  It is a well-known fact of our economic life that  huge  sums  of unaccounted money  are  in  circulation endangering its very fabric.  In a country which has adopted high  rates, of taxation a major portion of the  unaccounted money should normally fill the Government coffers.   Instead of  doing  so it distorts the economy.   Therefore,  in  the interest  of the community it is only right that the  fiscal

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authorities  should have sufficient Powers to  prevent  tax evasion. Search  and  seizure are not a new weapon in the  armory  of those  whose duty it is to maintain social security  in  its broadest  sense.   The Process is widely recognised  in  all civilized  countries  Our  own ’Criminal  Law  accepted  its necessity  and usefulness in sections 96 to 103 and  section 165  of  the Criminal Procedure, Code.  In M. P.  Sharma  v. Satish  Chandra(.) the challenge to the power of  issuing  a search warrant under section 96 (1) as violative of  Article 19 (1) (f) was repelled on the ground that a power of search and seizure is in (1)  [1954] S.C.R. 1077. 715 any  system  of jurisprudence an over-riding  power  of  the State  for the protection of social security and that  power is  necessarily  regulated by law.  As pointed out  in  that case a search by itself is not a restriction on the right to hold and enjoy property though a seizure is a restriction on the  right  of  possession and  enjoyment  of  the  property seized.  That however, is only temporary and for the limited purpose of investigation.  Then the Court proceeds to say "A search   and  seizure  is,  therefore,  only   a   temporary interference  with the right to hold the  premises  searched and  the  articles  seized.  Statutory  regulation  in  this behalf  is necessary and reasonable restriction  cannot  per se.  be considered to be unconstitutional.  The  damage,  if any, caused by such temporary interference if found to be in excess  of legal authority is a matter for redress in  other proceedings.   We  are  unable to see how  any  question  of violation  of article 19(1)(f) is involved in this  case  in respect  of  the warrants in question which  purport  to  be under the first alternative of section 96(1) of the Criminal Procedure Code-" p. 1081. Similar  powers  entrusted  to those whose duty  it  was  to enforce  taxation  laws  were upheld by this  Court  in  The Commissioner of Commercial Taxes and others v. R. S.  Jhaver and  others(1).   In  that case section  41  of  the  Madras General Sales Tax Act of 1969 was. under challenge.  It  was held  by  this  Court  that  an  officer  empowered  by  the Government under sub-section (1) of section 41 was  entitled to effect a search and seize goods and articles as  provided in  that section.  Dealing with the question of  search  and seizure in a taxing statute the court observed at page 158 : "Now it has not been and cannot be disputed that the entries in  the various Lists of the Seventh Schedule must be  given the widest possible interpretation.  It is also not in doubt that  while making a law under any entry in the Schedule  it is competent to the legislature to make all such  incidental and  ancillary provisions as may be necessary to  effectuate the law; particularly it cannot be disputed that in the case of  a taxing statute it is open to the legislature to  enact provisions  which would check evasion of tax.  It  is  under this  power to check evasion that provision for  search  and seizure is made in many taxing statutes.  It must  therefore be held that the legislature has power to provide for search and seizure in connection with taxation laws in order  that evasion  may be checked." It is, now too late in the day  to challenge  the measure of search and seizure when it is  en- trusted  to  income-tax authorities with a view  to  prevent large sale tax evasion. Indeed  the measure would be objectionable if its  implement is  not  accompanied  by safeguards against  its  undue  and improper  exercise.   As  a  broad  proposition  it  is  now possible  to state that if the safeguards are  generally  on

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the  lines  adopted by the , Criminal  Procedure  Code  they would  be  regarded  as adequate and  render  the  temporary restrictions imposed by the measure reasonable.  In the case just cited there was a proviso to sub-section (2) of section 41 (1)  (19681 (1) S.C.R. 148 716 which  prescribed  that all searches  under  the  subsection shall,  so  far  as  may be, made  in  accordance  with  the provisions  of  the  Code  of  Criminal  Procedure.    After pointing out that section 165 of the Criminal Procedure Code would  apply  mutatis mutandis to searches made  under  sub- section  (2), this Court observed : "We are,  therefore,  of opinion  that  safeguards provided in S. 165 also  apply  to searches  made under sub-s. (2).  These  safeguards  are-(i) the  empowered  officer  must have  reasonable  grounds  for believing  that  anything  necessary  for  the  purpose   of recovery  of  tax  may be found in  any   place  within  his jurisdiction (ii) he must be of the opinion that such  thing cannot  be otherwise got without undue delay, (iii) he  must record  in  writing the grounds of his belief, and  (iv)  he must  specify in such writing so far as possible  the  thing for  which search is to be made,.  After he has  done  these things, he can make the search.  These safeguards, which  in our opinion apply to searches under sub-s. (2) also  clearly show  that  the  power to search under  sub-s.  (2)  is  not arbitrary.  In view of these safeguards and other safeguards provided  in Chapter VII of the Code of Criminal  Procedure, which  also  apply so far as may be to searches  made  under sub-s.  (2),  we  can  see  no  reason  to  hold  that   the restriction,  if any, on the right to hold property  and  to carry on trade, by the search provided in sub-s. (2) is  not a  reasonable restriction keeping in view the object of  the search, namely, prevention of evasion of tax." We are, therefore, to see what are the inbuilt safeguards in section  132 of the Income-tax Act.  In the first place,  it must be noted that the power to order search and seizure  is vested in the highest officers of the department.   Secondly the  exercise  of this power can only  follow  a  reasonable belief  entertained  by such officer that any of  the  three conditions  mentioned  in section 132(1) (a), (b)  and  (c), exists.   In this connection it may be further  pointed  out that  under  sub-rule  (2)  of rule  112,  the  Director  of Inspection  or the Commissioner, as the case may be, has  to record his reasons before the authorisation is issued to the officers   mentioned  in  subsection  (1).    Thirdly,   the authorisation  for  the search cannot be in  favour  of  any officer below the rank of an Income-tax Officer.   Fourthly, the authorisation is for specific purposes enumerated in (i) to (v) in sub-section (1) all of which are. strictly limited to  the object of the search.  Fifthly when  money,  bullion etc.  is seized the Income-tax Officer is to make a  summary enquiry with a view to determine how much of what is  seized will be retained by him to cover the estimated tax liability and how much will have to be returned forthwith.  The object of the enquiry under subsection (5) is to reduce the, incon- venience to the assessee as much as possible so that  within a  reasonable time what is estimated due to  the  Government may be retained and what should be returned to the  assessee may  be  immediately returned to him.  Even with  regard  to the, books of account and documents seized, their return  is guaranteed  after  a reasonable time.  In the  meantime  the person  from whose custody they are seized is  permitted  to make  copies  and  take  extracts.   Sixthly,  where  money, bullion etc. is seized, it can also be. immediately returned

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to the person concerned after he makes appropriate provision for the pay- 717 ment  of  the estimated tax dues under sub-section  (5)  and lastly,  and this is most important, the provisions  of  the Criminal  Procedure  Code  relating to  search  and  seizure apply,  as far as they may be, to all searches and  seizures under section 132.  Rule 112 provides for the actual  search and  seizure being made after observing normal decencies  of behavior.  The person in charge of the premises searched  is immediately  given  a copy of the list of  articles  seized. One copy is forwarded to the authorising officer.  Provision for  the safe custody of the articles after seizure is  also made  in  rule  112.  In our  opinion,  the  safeguards  are adequate  to render the provisions of search and seizure  as less  onerous and restrictive as is possible under the  cir- cumstances.   The provisions, therefore, relating to  search and seizure in section 132 and rule 12 cannot be regarded as violative of articles 19(f) ’and (g). A  minor point was urged in support of the above  contention that  section  132 contains provisions which are  likely  to affect   even  innocent  persons.   For  example,   it   was submitted,  an innocent person who is merely in  custody  of cash,  bullion or other valuables etc. not knowing  that  it was concealed income is likely to be harassed by a raid  for the purposes of search and seizure.  That cannot be  helped. Since  the  object  of the search is  to  get  at  concealed incomes,  any  person, who is in custody  without  enquiring about  its  true nature, exposes himself  to  search.   Sub- section  (4)  of  section  132 shows the  way  how  such  an innocent  person can make the impact of the (search  on  him bearable.   All that he has to do is to tell the   facts  to the searching officer explaining on whose behalf he held the custody  of the valuables.  It will be then for the  Income- tax  Officer  to ascertain the person concerned  under  sub- section (5). It was next argued that the power for directing a search  is given  to an authority like the Director of Inspection  who, it is submitted, is, in the very nature of things, incapable of  forming  any  reasonable  belief  with  regard  to   the requirements   of  section  132(1)  (a)  (b)  &  (c).    The contention  was  that  the assessee has no  contact  in  the matter  of assessment with the Director and,  therefore,  he can  hardly entertain any belief, reasonable  or  otherwise. It is conceded that the Income-tax Officer or his  superiors in   the   direct  line,  like  the   Inspecting   Assistant Commissioner  or the Commissioner, may be in a  position  to entertain  the requisite belief on account of  their  having direct   and   first  hand  knowledge   of   the   financial circumstances of the assessee, the defaults he has committed or is likely to commit, etc.  But the Director of Inspection has  no opportunity and is, therefore, thoroughly unable  to form  any  opinion.  This would only mean  that  any  belief entertained  by him would be an arbitrary belief and  legis- lation investing such an officer with the power to direct  a search  is per se unreasonable. in our opinions there is  no substance in this argument.  The Director of Inspection,  as already  seen  in section 116 of the Income-tax Act,  is  an officer in the Income-tax Department next only in  authority to  the Board of Direct Taxes.  Section 118 shows  that  all Inspecting Assistant Commissioners and Income-tax  officers, besides  being  subordinate to the Commissioners,  are  also subordinate  to the Director of Inspection.   Under  section 119(2) 718

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every  income-tax officer employed in the execution  of  the Act  is required to observe and follow such instructions  as May  be  issued to him for, his guidance  by  the  concerned Director  of  Inspection.  Moreover under  section  120  the Director of Inspection is required to perform such functions of any other income-tax authority, apparently, including the Income-tax  Officers  and his direct superiors, as  may,  be assigned to Mm by the Board.  Under section 135 the Director of Inspection is competent to make any enquiry under the Act and  for  that purpose he is invested with all  the Powers that an income,-tax Officer has under the Act in relation to the  making of enquiries.  It would, therefore, follow  that in  the course of his duties the Director of Inspection  has ample  opportunities to follow the course  of  Investigation and  assessment carried on by the Incometax Officers and  to check  the  information received from his sources  with  the actual   material  produced  or  not  produced  before   the assessing  authorities.   It is not, therefore,  correct  to argue  that  the  Director of  Inspection  could  hardly  be expected  to entertain, honestly, any reasonable belief  for the purposes of scetion 132(1) (a) (b) &(c). A   subsidiary  point  relating  to  the  entertainment   of reasonable  belief under section 132 was also raised by  Mr. Karkhanis.   He submitted that it was possible to  say  that the Director of Inspection or the Commissioner, as the  case may  be,  could, in conceivable cases, entertain  reason  to believe  the  existence of conditions referred  to  in  sub- clauses (a) and (c) of sub-section (1).  For example,  where the  necessary requisition is made under sub-clause (a)  the authority  concerned may from the record  ascertain  whether the person to whom the requisition is issued has omitted  or failed  to  produce  or cause to be  Produced  the  required documents.  Similarly under sub-clause (c) if the authority, has received any secret information ,which, in its  opinion, was  reliable, it may be possible for it to have  reason  to believe  that  any person is in possession  ’of  any  money, bullion,  jewellery  etc.  which is  undisclosed  income  or property  and such property is secreted in some place.   But Mr.  Karkhanis  submitted that so far as sub-clause  (b)  is concemed,  it  win  be impossible for one to  say  that  the authority  can  reasonably entertain the belief  that  if  a requisition  is made the person concerned will not or  would not produce or cause to be produced the required  documents. In his submission, the authority, can entertain that belief only  when a requisition is made and within reasonable  time given the document is not produced.  That is provided for in sub-clause  (a).   But to say. that the authority  can  also have  reason  to believe that if a requisition is  made  the person concerned will not in future produce the document is, according to Mr. Karkhanis, a conclusion which is impossible to  draw on any conceivable facts.  We must say that if  Mr. Karkhanis  really  thinks that there is  substance  in  this argument,  than he must be blissfully unaware of the  manner in  which  income-tax  is  evaded.   It  is  impossible   to enumerate  all  the  circumstances in  which  the  necessary reasonable  belief may be entertained under  subclause  (b). As  an illustration, however, we may point out a case  which fans completely under sub-clause (b).  An assessee may be 719 filing  his  returns  from year to year  regularly  and  his Assessments may be also completed in due course over  years. Ms  books  of account and documents have been  duly  checked from  year  to  year  and  the  assessing  officer  is  also completely  satisfied that the returns are correct.  But  it might  so  happen that this apparently  honest  assessee-has

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invested  large  funds  in properties  and  other  financial deals, reliable information about which finds its way to the Director of Inspection.  In such a case no oracle is  needed to tell the Director of Inspection that if a requisition  is made on the assessee to produce his documents in  connection with  these  financial deals and investments,  the  assessee will most certainly omit to produce or cause to be  produced such documents.  On the other hand, there is danger that all these documents may be destroyed because the very fact  that a  requisition is made with a view to investigate  concealed deals would put the assessee, on his guard and the  relevant documents may either disappear or be destroyed. . Indeed, it is  possible  that an assessee may, after knowing  that  the game  is  up, produce the requisite documents.  But  in  the nature  of  things  such an assessee  would  be  rare.   The question  for us to consider is whether the authority  under section  132(1) may entertain the reasonable belief that  in such  circumstances  the  assessee will  not  or  would  not produce the documents.  In our opinion though in a very rare case  a  tax  evader  may comply  with  a  requisition,  the Director of Inspection who has reliable information that the assessee has consistently concealed his income derived  from certain financial deals may be justified in entertaining the reasonable  belief  that  the assessee, if  called  upon  to produce the necessary documents, will not produce the  same. There  is  no substance, therefore, in the  contention  that sub-clause (b) has over-reached itself. The  argument  that section 132(5) is  confiscatory  in  its effect  has also no force.  It must be remembered  that  the object  of this provision is to expedite the return  of  the seized  assets after retaining what is due by way of tax  to Government  and  has been illegally withheld by  the  person concerned.   The seizure of the assets has been made in  the belief, honestly   held,  that  the   assets   represents undisclosed income or property.  But the Income tax  Officer cannot  merely rest on this belief.  He must take a  summary enquiry after notice to the person concerned and the  latter has  an opportunity to show that he bad duly disclosed  this income.   If  he cannot do this the officer is  entitled  to proceed  on the basis that it is undisclosed income  and  on the  relevant  material  make a broad estimate  of  the  tax withheld  The  amount  of such tax which  truly  belongs  to Government  is  retained by the Income-tax Officer  and  the balance  forthwith, released We do not see how this  can  be described  as confiscation.  In fact, the second proviso  to sub-section (5) shows that the assessee can get a release of all  the assets seized if he can make satisfactory  arrange- ments  for the payment of the estimated dues.   Moreover  it must  be noted that the enquiry under sub-section (5) is  no substitute,  for  regular Assessment or  reassessment.   The Income-tax  Officer, having jurisdiction, will proceed  with the  assessment  in  due course and  determine  the  correct amount of tax payable.  In the meantime the assets  retained are only by way of sequestration to meet the tax dues 6-784 Sup Cl/74 720 found to be eventually payable. if by reason of the  enquiry under section 132(5), which is admittedly a summary enquiry, an  amount  in excess of the dues is retained, the  same  is liable  to  be returned with interest at 9  per  cent  under section 132A. We   are   not,  therefore,  inclined  to  hold   that   the restrictions placed by any of the provisions of section 132, 132A  or  rule  112A are unreasonable  restrictions  on  the freedoms under section 19(1) (f) & (g) .

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It  was  next  argued  that sections  132(1),  and  (5)  are violative  of the fundamental right under Article 14 on  the ground  (1)  that they make  unjust  discrimination  between evaders of tax, distinguishing those who are believed to be, in  possession of undisclosed income or property from  those evaders of tax who are not believed to be in possession, and (2)  that  although all evaders are liable to  be  proceeded against under section 147 of the Act, yet only some of  them who  are  found  in  possession  of  undisclosed  income  or property are .liable to be subjected to the procedure  under section 132(5).  We find no substance in this argument.  All evaders  of tax can be proceeded against under section  132. Only  in some cases the, search may be useful; in others  it may  not  be.   If the Director of  Inspection  gets  timely information about the undisclosed income. and its  location, he can direct a search and seizure.  Otherwise, it is futile to  direct a search and seizure because the whole  maneouvre will  be fruitless.  The provision for seizure  is  designed with  the  object of getting at the ’income which  has  been concealed  illegally  by  the, assessee.  Only  when  he  is honestly satisfied that some undisclosed income of a  person is likely to come to his hands if a search is directed,  he, will be in a position to issue the necessary  authorisation.   He  cannot,  however, direct a search in  respect  of  an evader of tax who is astute, enough to spend all his  income or  otherwise  make  it impossible to be  traced.   For  the purposes  of section 147 of the Act all evaders of  tax  are subject  to  the  same  procedure  for  assessment  of   tax including  those against whom action is taken under  section 132.   Assessees  whose  assets  could  be  seized  for  the recovery  of  their  tax  liabilities  do  not  stand  in  a different class, as such, but stand in a different situation from  those  others  against whom  the  search  and  seizure process, though available, is futile.  The finding of undis- closed  income  in the form of cash, jewelry  and  the  like makes  the  provision of sub-section  (5)  imperative.   The taxing   authorities  cannot  keep  the  valuables  with   = indefinitely  without,trying to see how much of what is  now seized will go to the Government by way of tax.   Therefore, in  fairness  to  the assessee,  sub-section  (5)  has  been deliberately  introduced.  In the nature of things  such  an enquiry  is impossible in the case of tax evaders from  whom nothing is or could be seized on a search. Sub-section  (5)  of  section 132  does  not  contemplate  a different  procedure  in the matter of  regular  assessment. See  section  132A which shows that those who are  found  in possession of undisclosed income on a seizure are liable  to be  regularly assessed or reassessed.  Sub-section (5)  only contemplates a provisional summary enquiry 721 with  a view to determine how much of the seized wealth  can be  legitimately  and reasonably retained to cover  the  tax liability  already  incurred.   Regular  assessment  follows under  the  law  in the same manner as in the  case  of  tax evaders who are not found in possession of concealed income. The utmost that can be said is that by reason of the seizure the  Government  is  in a position to secure  its  tax  dues before  the regular assessment is concluded.  But that  does not  introduce  any  different  procedure  for  the  regular assessment  of such an assessee’s income which  remains  the same  for all tax evaders.  In one set of cases  the  fiscal authorities make sure of recoveries, in the other, they  are unable to do so-not because the provisions of section 132 do not  operate on them, but because action under that  section by  search and seizure is- futile.  Therefore, there  is  no

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substance  in the contention that two  different  procedures for   assessment   are  adopted  and  hence   there   is   a discrimination under Article 14.  The plea on behalf of  the assessees, in effect, only amounts to this "It is true  that we are tax evaders.  But if other evaders successfully dodge the collection of the tax by causing their concealed  income to disappear, why should we not get the same facility." Some  points  of  lesser substance  were  mentioned  in  the petition memos in support of the challenge under Articles 14 and 19(1)(f) and (g).  They were,, however, not urged at the time  of the hearing, as no the other grounds urged, it  was impossible  to  hold  that  the  impugned  provisions   were violative of either Articles 14, 19 or 31.  We may  however, mention in this context that these points had been raised in C. Venkata Reddy and Another v. Income-tax Officer (Central) 1, Bangalore, and others(1) and in Ramjibhai Kalidas v. I G. Desai,  Income-tax  Officer, and others(2) where  they  have been- quite adequately dealt with and rejected. Apart  from  the constitutional challenge there was  also  a further  challenge on the ground that the actual search  and seizure  in all these cases, being in contravention  of  the requirements  of  section  132 and  rule  112  was  illegal. Several  allegations  have  been made  of  malafides,  high- handedness,  oppressive behavior and the like and  we  shall have  to deal with them on the facts of each case.   But  so far as the two Civil Appeals are concerned, it appears to us that  it is not necessary to enter into the question of  the alleged illegalities.  The High Court has not done so.   The relief claimed in those petitions in the High Court was  for the,  return  of the account books and documents  which  had been seized and it would appear from the record that  before the  High Court disposed of that matters, the account  books and documents had been already returned.  However, there was another  relief claimed in the petitions and that was for  a Writ  of Prohibition restraining the  Income-tax  Department from  using  as evidence any information gathered  from  the search  of  the articles seized.  It would appear  from  the record  that the High Court was prepared to assume  for  the purposes  of  those cases that the search  and  seizure  was illegal.   Even  so  the  question  remained  whether  these victims of illegal search (1) 66 Income-tax Reports, 212. (2) 80 Income-tax Reports, 721. 722 were-entitled  to a Writ of Prohibition that the  Income-tax authorities shall not use any information gathered from  the documents  which had been seized.  The High Court held  that they were not, and proceeded to pass the following identical order in the two cases.  It is as follows               "In  this  case all the  documents  seized  in               pursuance  of  the search  warrant  have  been               returned  to  the  petitioners  and  the  only               question  is whether the information  gathered               as  a result of such search and seizure  could               be  used  in evidence if it be held  that  the               search  and seizure was illegal.   In  Balwant               Singh  and others v.  Director of  Inspection               (Civil  Writ  No. 750-D  of  1966),  announced               today, we have held that such information  can               be  uses.   It is unnecessary,  therefore,  to               pronounce upon the validity of the search  and               seizure.  This petition, therefore, fails  and               is ,dismissed with no order as to costs." Balwant Singh’s case referred to above is reported in 71 In- come-tax  Reports,  550.  We understand that an  appeal  had

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been  filed  to  this Court but was  not  prosecuted.   That decision  not only upheld the constitutionality  of  section 132  of  the  Income-tax Act but also held  that  there  was nothing in Article 19 of the Constitution which forbids  the use  of evidence obtained as a result of an illegal  search. Consistently  with  that  view  the relief  for  a  Writ  of Prohibition.  was rejected and hence the two  Civil  Appeals before us. Dr. Singhvi who appeared on behalf of the appellants in  the two  appeals  frankly conceded that there  was  no  specific Article  of  the Constitution prohibiting the  admission  of evidence obtained in an illegal search and seizure.  But  he submitted that to admit such evidence is against the  spirit of the Constitution which has made our liberties inviolable. In this connection he referred to some American cases  which seem to recognize the validity of his submission. As   to   the  argument  based  on  "the   spirit   of   our Constitution",  we  can  do no better than  quote  from  the judgment  of  Kania, C. J. in A. K.Gopalan v. The  State  of Madras(1).    "There  is  considerable  authority  for   the statement  that the Courts are not at liberty to declare  an Act void because in their opinion it is opposed to a  spirit supposed  to pervade the Constitution but not  expressed  in words.  Where the fundamental law has not limited, either in terms  or  by  necessary  implication,  the  general  powers conferred   upon  the  Legislature  we  cannot   declare   a limitation  under the notion of having discovered  something in  the  spirit  of  the  Constitution  which  is  not  even mentioned  in  the  instrument.  It is  difficult  upon  any general principles to limit the omnipotence of the sovereign legislative  power by judicial.interposition, except so  far as  the  express words of a written Constitution  give  that authority."  Now,  if the Evidence Act 1871 which is  a  law ’Consolidating,  defining and amending the law of  evidence, no  provision  of  which  is  challenged  as  violating  the Constitu- (1)  [1950] S.C.R. 88 at p. 120, 723 tion permits relevancy as the only test of admissibility  of evidence (See section 5 of the Act) and, secondly, that  Act or any other similar law in force does not exclude  relevant evidence,  on  the  ground that it  was  obtained  under  an illegal  search or seizure, it will be wrong to  invoke  the supposed spirit of our Constitution for excluding such  evi- dence.  Nor is it open to us to strain the language  of  the Constitution,  because some American Judges of the  American Supreme   Court  have  spelt  out   certain   constitutional protections   from   the   provisions   of   the    American Constitution.   In M. P. Sharma v. Satish  Chander,  already referred  to, a search and seizure made under  the  Criminal Procedure  Code was challenged as illegal on the  ground  of violation of the fundamental right under Article 20(3),  the argument  being  that  the  evidence  was  no  better   than illegally compelled evidence.  In support of that contention reference was made to the Fourth and Fifth amendments of the American Constitution and also to some American cases  which seemed to hold that the obtaining of incriminating  evidence by  illegal seizure and search tantamounts to the  violation of the Fifth amendment.  The Fourth amendment does not place any  embargo  on.  reasonable searches  and  seizures.   It. provides that the right of the people to be secure in  their persons,  papers and effects against  unreasonable  searches and  seizures shall not be violated. .Thus the privacy of  a citizen’s  home  was  specifically  safeguarded  under  the- Constitution,  although reasonable  searches  and  seizures

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were  not  taboo.   Repelling  the  submission,  this  Court observed at page 1096.  "A power of search and seizure is in any system of jurisprudence in overriding power of the State for  the  protection of social security and  that  power  is necessarily regulated by law.  When the Constitution  makers have   thought  fit  not  to  subject  such  regulation   to constitutional  limitations by recognition of a  fundamental right   to  privacy,.  analogous  to  the  American   Fourth Amendment,  we  have no justification to import it,  into  a totally  different  fundamental right, by  some  process  of strained construction.  Nor is it legitimate to assume  that the  constitutional protection under article 20(3) would  be defeated  by  the statutory provisions  for  searches."  It, therefore,  follows that neither by invoking the  spirit  of our  Constitution nor by a strained construction of  any  of the  fundamental  rights can we spell out the  exclusion  of evidence obtained on an illegal search. So far as India is concerned its law of evidence is  modeled on  the rules of evidence, which prevailed in  English  law, and courts in India and in England have consistently refused to exclude relevant evidence merely on the ground that it is obtained  by illegal search or seizure.  In  Barindra  Kumar Ghose and others v. Emperor(1) the learned Chief Justice Sir Lawrence Jenkins says at page, 500 : "Mr.  Das has  attacked the  searches  and  has  urged  that,  even  if  there   was jurisdiction  to direct the issue of search warrants,  as  I hold  there  was,  still  the  provisions  of  the  Criminal Procedure  Code have been completely disregarded.   On  this assumption he has contended that the evidence discovered  by the  searches is not admissible, but to this view  I  cannot accede.  For without in any way countenancing disregard of (1)  I.L.R. 37 Calcutta 467. 724 the  provisions  prescribed by the Code, I  hold  that  what would  otherwise  be  relevant does  not  become  irrelevant because it was discovered in the course of a search in which those provisions were disregarded.  As Jimutavahana with his shrewd  common-sense observes-"a tact cannot be  altered  by 100 texts," and as his commentator quaintly remarks : "If  a Brahmana  be slain, the precept ’slay not a  Branmana’  does not  annul the murder." But the absence of  the  precautions designed.  by the legislature lends support to the  argument that the alleged discovery should be carefully-scrutinized." In Emperor v. Allahdad Khan(1) the Superintendent of  Police and a Sub-Inspector searched the house of a person suspected of  being  in illicit possession of excisable  articles  and such articles were found in the house searched.  It was held that the conviction of the owner of the house under  section 63  of  the  United  Provinces Excise  Act,  1910,  was  not rendered invalid by the fact that no warrant had been issued for the search, although it was presumably the intention  of the  legislature that in a case under section 63,  where  it was necessary to search a house, a search warrant should  be obtained  beforehand.  In Kuruma v. The Queen(2)  where  the Privy Council had to consider the English Law of Evidence in its   application   to  Eastern  Africa,   their   Lordships propounded the rule thus : "The test to be applied, both  in civil and in criminal cases, in considering whether evidence is  admissible is whether it is relevant to the  matters  in issue.   If  it is, it is admissible and the  court  is  not concerned  with  how it was obtained." Some  American  cases were  also cited before the Privy Council.  Their  Lordships observed  at p. 204 thus "Certain decisions of  the  Supreme Court  of  the United States of America were also  cited  in argument.   Their  Lordships do not think  it  necessary  to

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examine  them  in  detail.  Suffice it  to  say  that  there appears  to be considerable difference of opinion among  the judges both in the State and Federal courts as to whether or not  the  rejection of evidence obtained  by  illegal  means depends  on certain articles in the  American  Constitution. At  any  rate, in Olmstead v. United State (1828)  277  U.S. 438,  the  majority  of the Supreme Court  were  clearly  of opinion that the common law did not reject relevant evidence on  that ground." In Kuruma’s case, Kuruma was  searched  by two Police Officers who were not authorised under the law to carry  out a search and, in the search, some ammunition  was found  in the unlawful possession of Kuruma.   The  question was  whether the evidence with regard to the finding of  the ammunition on the person of Kuruma could be shut out on  the ground  that the evidence had been obtained by  an  unlawful search.  It was held it could not be so shut out because the finding of ammunition was a relevant piece of evidence on  a charge for unlawful possession.  In a later case before  the Privy  Council in Herman King v. The Queen(3) which came  on appeal  from a Court of Appeal of Jamaica, the law  as  laid down  in  Kuruma’s case was applied  although  the  Jamaican Constitution guaranteed the constitutional right against (1) 35 Allahabad, 358. (2) [1955] A.C. 197. (3)  [1969] (1) A.C. 304. 725 search and seizure in the following provision of the Jamalca (Constitution)  Order  in Council 1962, Sch. 2, s.  19  "(1) Except with his own consent, no person shall be subjected to the  search  of his person or his property or the  entry  by others  on his premises.  "(2) Nothing contained in or  done under  the  authority  of  any  law  shall  be  held  to  be inconsistent with or in contravention of this section to the extent  that  the law in question makes provision  which  is reasonably  required .... for the purpose of  preventing  or detecting  crime. . . ." In other words, search and  seizure for the purposes of preventing or detecting crime reasonably enforced  was  not  inconsistent  with  the   constitutional guarantee  against search and seizure.  It was held in  that case  that the search of the appellant by a  Police  Officer was  not  justified by the warrant nor was it  open  to  the Officer to search the person of the appellant without taking him before a Justice of the Peace.  Nevertheless it was held that  the  Court  had a discretion  to  admit  the  evidence obtained  as  a  result  of  the  illegal  search  and   the constitutional  protection  against  search  of  person   or property without consent did not take away the discretion of the  court.   Following Kuruma v. The Queen the  court  held that  it  was open to the court not to  admit  the  evidence against  the accused if the court was of the view  that  the evidence  had been obtained by conduct of which  the  prose- cution ought not to take advantage.  But that was not a rule of evidence but a rule of prudence and fair play.  It  would thus be seen that in India, as in England, where the test of admissibility of evidence lies in relevancy, unless there is an  express  or  necessarily  implied  prohibition  in   the Constitution  or other law evidence obtained as a result  of illegal search or seizure is not liable to be shut out. In that view, even assuming, as was done by the High  Court, that  the  search and seizure were in contravention  of  the provisions  of section 132 of the Income Tax Act, still  the material seized was liable to be used subject to law  before the  Income-tax  authorities against the person  from  whose custody it was seized and, therefore, no Writ of Prohibition in  restraint  of  such use could be granted.   It  must  be

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therefore, held that the High Court was right ’in dismissing the two Writ Petitions.  The appeals must also fail and  are dismissed with costs. The  two Writ Petitions filed in this Court now  remain  for consideration and what is to be considered is whether  there has been any illegality in the search and seizure because of the  alleged contravention of the provisions of section  132 of the Act or rule 112.                Writ Petition No. 446 of 1971 The petitioner Pooran Mal is a partner in a number of firms- some  of  them doing business in Bombay and some  in  Delhi. His  permanent  residence is 12A Kamla  Nagar,  Delhi.   His business  premises in Delhi are A.14/16 Jamuna Bhavan,  Asaf Ali   Road,  New  Delhi.   It  would  appear  that   on   an authorisation  issued  by the Director  of  Inspection,  his residence  and business premises in Delhi were  searched  on 15th and 16th October, 1971.  On the 15th his 726 premises  in Bombay were also searched and at that  time  it appears.  the  petitioner was present in Bombay.   When  his residence  was searched on 15th and 16th, there were in  his house the petitioners wife, two or three adult sons and  his father  who is said to have been ailing.  It was alleged  on behalf of the petitioner that the search in the  residential premises was malafide, oppressive, excessive, indiscriminate and  vexatious.   The grounds for making  these  allegations ,seem  to be (1) that the search and seizure, in  the  house took  place in spite of the wife’s request to  postpone  the search;  (2) it was Dhanteras day which is a  festival  day; (3)  petitioner’s wife was not informed that there  was  any authorisation;  (4)  her father-in-law  was  suffering  from paralysis; (5) even children’s small boxes containing  their pocket money were seized; (6) jewelry including that of  the mother-in-law  of the petitioner,, Kailashbai, who had  died six years earlier was seized; (7) the panchas who helped  in the search were unknown to the petitioner or the members  of his  family; (8) the search went on from 8.00 A.M. on  15.10 till  the  early  hours of 16.10 and the  search  was  again resumed  on the evening of 16.10. The grounds on  which  the wild allegations of malafides, oppression etc. had been made do  not  appear to be of any substance.  It  is  undoubtedly true  that  search and seizure is a drastic process  and  is bound  to  be associated with some amount  of  unsavory  and inconvenient  results.   A  sudden search  and  seizure  may unnerve  the inmates of the place where the search is  made. But  this is to be expected.  When oppression and  malafides are  alleged, we should have, more substantial grounds  than these.    On   the   other   hand,   the   allegations    of highhandedness,  malafides,etc.  are wholly  denied  in  the affidavit filed on behalf of the Department.  That it was  a Dhanteras  day is denied.  But assuming it was there  is  no law  which says that a search and seizure cannot take  place on that day.  It may be that the wife had requested that the search  may  be  postponed till her  husband’s-  return  but obviously  the  officers concerned could not agree  to  this request  because the whole purpose of the search would  have been  defeated.   It  is denied that the  inmates  were  not informed of the authorisation, , In fact it is alleged  that the  petitioner’s  wife  Smt.  Sharda  Devi  was  shown  the authorisation  and  in token of the same, she  had  put  her signature   thereon.   That  the  petitioner’s  father   was suffering  from paralysis might be unfortunate but  it  does not appear that the officers concerned caused him the  least inconvenience.   All throughout the search, it  is  alleged, Sharda Devi and her two educated sons Dinesh and Vinod, were

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present  at the time of the search.  It is not  denied  that considerable jewelry was seized.  The jewelry seized in  the house  was  worth  Rs. 37,043/- and though it  is  the  case of,the petitioner that part of it belonged to his mother-in- law, Smt.  Kailashbai, who is now dead, it is stated on oath on behalf of the Department that in the statements  recorded on 15th and 16th October, 1971 Smt.  Sharda Devi had claimed the  whole  of the jewelry as her own, though  in  the  last Wealth Tax Return she had valued her jewelry at Rs.  5,0001- only.   So, far as the Panchas are concerned, ’it is  denied that  they were not known to the inmates of the  house.   In fact, it is alleged by the Department that Pancha Mathuradas was a resident in the same house and had been called 727 at the suggestion of Sharda Devi. it is not denied that’ the search went on for a long time because a number of documents and  account books were seized in the course of  the  search and  so also a lot of jewelry and cash, The allegation  that the  small  boxes of the children  containing  their  pocket money was seized is denied.  We may say, therefore,, on  the whole  that there is nothing in the petition inducing us  to take  the  view  that the search in  the  house  was  either malafide, oppressive or excessive etc. etc. The  search in the business premises was made when a  number of persons who usually worked there were present.  Books  of account, documents, some jewelry and a large amount of  cash amounting to about Rs. 61,000/- were seized. On  16.10 there was a search in the Branch Offices of  Laxmi Commercial Bank and the Punjab National Bank. 84 Silver bars were  seized from Laxmi Commercial Bank and 30  silver  bars were  seized  from the Punjab National Bank.  The  value  of these silver bars comes to nearly 18 lakhs.  It is the  case of the petitioner that these bars belongs to M/s Pooran  mal and  Sons  of  Bombay who sent the same  to  the  Motor  and General Finance Company of which the petitioner is a partner and  this  Finance Company, it is alleged, kept  these  bars with the two banks. 84 bars were kept in the account of  M/s Udey  Chand Pooranmal for an alleged overdraft  limit  while the  30  silver bars were pledged with the  Punjab  National Bank  in the account of the Finance Company.  In  all  these aforesaid  firms the petitioner is a partner and it  is  the Department’s  case that all these bars are  the  undisclosed assets  of the petitioner.  It appears that  the  Income-tax Officer made a summary enquiry as required by section 132(5) after  issuing notice to the petitioner and his order  dated 12-1-1972 shows, of course prima facie, that all the  assets which  had been seized in the house, the  business  premises and  the  banks,  except  for the  value  of  the  ornaments declared  by Mrs. Sharda Devi in her Wealth Tax Return,  had to be retained for being appropriated against tax dues  from 1969 onwards which amounted to nearly 42 lakhs.  Indeed this prima facie liability was subject to regular assessment  and reassessment. Mr.  Karkhanis submitted that the petitioner bad  been  very cooperative  with the department before and, therefore,  the Director  of  Inspection could have no possible  reason  to. believe  that if any requisition for documents  and  account books  were  made  the same would not.  be  produced.   This allegation about cooperation is denied by the Department and in  this connection the Department has produced a  chart  at Annexure  RI showing how the petitioner has been  throughout noncooperative.   Assessment for the year 1967-68  is  still pending and no return has been filed for the year  1968-69 or  for later years.  We are not at all satisfied  that  the petitioner was cooperative, and, therefore, the Director of,

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Inspection would have no possible ground for entertaining  a reasonable: belief as required by sub-clauses (a) (b) &  (c) of subsection (1) ’of section 132.  To satisfy ourselves  we called for 728 the   grounds   recorded   by  the   Director   before   the authorisation  was  issued and we are quite  satisfied  that there were grounds for him to entertain reasonable belief as required under the sub-clauses.  As already pointed out  the summary  enquiry  made under sub-clause (5) of  section  132 discloses  that  the assets seized were for  the  most  part undisclosed  income and property.  Indeed the accident  that undisclosed  property  is  found on a search may  not  be  a justification for the authorisation of a search if, in  fact there  had  been  no  grounds  for  entertaining  reasonable belief.   But finding of assets as expected by the  Director of  Inspection on, the information received by him would  at least  support  the view that the  authority  concerned  bad reliable  information  on  which  he  could  entertain   the necessary belief. On  the whole, therefore, we are not inclined to  hold  that the search and seizure in this Writ Petition was vitiated by any illegality.                 Writ Petition No. 96 of 1972 The  position in this Writ Petition is not  different.   The petitioner Ganeriwala is a businessman.  His residence is 1, Raj  Narain  Road, Civil Lines, Delhi and he runs  a  family business  in  Automobile  parts in the  name  of  Ganeriwala Trading  Company.  The business is at no.  1  Krishna  Motor Market,  Kashimiri  Gate, Delhi.  The family seems to  be  a partner  in  the  firm  of M/s  Bisheshwar  Lal  Bijr  Natin Barielly,  and  is. supposed to have income  from  ancestral agricultural lands in Haryana State.  It is alleged by  the, petitioner that his assessment of income had been  completed upto the year 1970-71 and of Wealth Tax upto 1969-1970.  The Return for 1970-71 was also filed.  Even so, it is  alleged, on  8-101971  his residential house and  also  the  business premises  were searched and documents and books  of  account were  seized.   The  search was started  at  8.00  A.M.  and continued  till  the evening and, thereafter,  the  business premises  were searched.  The petitioner stated that  though the raiding party made a very detailed search, they did. not come  across any concealed incomemash of bullion,  ornaments or jewelry.  General allegations regarding the search  being oppressive  and  excessive  are  made.   But  there  is   no substance in them.  Objection was taken to the search on the ground  that  the  authorities  had  deliberately   selected Panchas  who  were  inimical to  the  petitioner.   This  is denied.   It  is stated in the affidavit on  behalf  of  the Department that one of the pancha witnesses namely Lt.  Col. Raj  Behari  Lal was actually sitting in the  house  of  the petitioner   even  before  the  search  party  entered   the premises.   It  is  also stated that both  the  panchas  are responsible  persons  of  the  locality  and  the  immediate neighbors of the petitioner-one of them being a  responsible officer  in the Army.  The petitioner says that he had  told the  authorities  that he.had been on  inimical  terms  with these panchas.  But that is denied.  There is, therefore, no reason to think that respectable panchas were not taken  for the search.  Another objection was made that two cash  books relating  to the years 1970-71 and 1971-72 were  removed  by the Income-tax authorities but they were not duly entered in the  inventory.  This allegation also is denied, In para  21 of   the   counter-affidavit  the  Assistant   Director   of Inspection  has  stated  that  during  the  course  of   the

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petitioners 729 examination and the recording of his statement on October 8, 1971 the petitioner had stated that his Roker-Bahis for  the accounting  year  1970-71 and 1971-72 did  not  contain  any entries regarding the expenditure on the construction of the godown,  and as such those Roker-Bahis were not seized  from the  custody of the petitioner.  The other reason  was  that the petitioner had requested that they may not be seized  as otherwise the petitioner would face difficulties in carrying on his business.  It must be remembered that the search  and seizure had been ordered because the petitioner had recently constructed a huge godown near his residential premises with the  floor  area of approximately 6700 sq.. ft. on  which  a large investment was estimated to have been made from income which  had  not  been  disclosed in  the  books  of  account produced  or  returns filed by the  petitioner.   Since  the petitioner himself told the authorities that the Roker-Bahis for the two years did not contain any entries regarding  the expenditure  on the construction, the authorities  inspected the Roker-Bahis for the year 1971-72 and finding that it did not  contain  ,any  entries  for the past  30  days  it  was considered by the authorities not proper to take  Possession of  the same.  We are inclined to think that this  objection by  the petitioner is an afterthought with a view to  malign the  departmental  authorities.  It is not denied  that  the petitioner  had  been given a copy of the inventory  of  the documents seized from his custody on that very day.  He, did not  raise  the objection regarding the account  books  till November   5,  1971  i.e.  nearly  after  one  month.    The petitioner is a businessman.  He could not have been unaware that  his Roker-Bahis for the current year and the  previous year were missing for such a long time. It  was next alleged that a very large number  of  documents were  seized which were really irrelevant.   The  authorised officer  has to seize books of account and  other  documents which  will  be useful for and relevant  to  any  proceeding under  the Income-tax Act.  When in the course of  a  search voluminous documents and books of account are to be examined with  a  view  to judge whether they  would  be  relevant  a certain amount of latitude must be permitted to the authori- ties.  It is true that when particularly documents are asked to be seized unnecessary examination of other documents  may conceivably   make  the  search-excessive.   But  when   the documents,  pieces of paper, exercise books, account  books, small memos etc. have all to be examined with a view to  see how far they are relevant for the proceeding under the  Act, an  error  of judgment is not unlikely.  At  the  most  this would be an irregularity not an illegality.  Nor can it be a valid objection to the search that it continued for about 16 hours.  By their very nature the search and seizure as shown above, would consume a lot of time. In  this petition also it was alleged that the  Director  of Inspection  could  possibly have no reason  to  believe  the existence of circumstances required by sub-clauses (b) & (c) of sub-section (1) ’of’ section 132 because the petitioner’s assessment  for the year 1970-71 had been already  completed and so also the Wealth Tax assessment for the year  1969-70. But this does not mean that on the information, 730 in  the possession of the Director of Inspection  he  cannot entertain  the necessary belief. The grounds for the  belief recorded   by   the   Director   of   Inspectionbefore   the authorisation were shown to us and we do not the that  on the  material the authority could not have  entertained  the

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belief.   A  big godown has been newly  constructed  by  the petitioner  but  his books of account did  not  reflect  the expenditure on account of this construction.  It is  alleged on  behalf  of  the  Department  that,  on  search,  certain documents  in  the  nature of maps etc.  were  seized  which showed  that the petitioner had constructed the building  in the  month preceding the date of search and the  money  with which  the  said building was  constructed  was  unaccounted money.  There is, therefore, no substance in the  contention that  the  incometax  authorities could  not  have  possibly entertained  the required belief.  The search  and  seizure, therefore, impugned in this Writ Petition cannot be regarded as illegal. In the result the two Writ Petitions and the two appeals are dismissed with costs. S.B.W.                  Petitions and appeals dismissed. 731