IT: Assessing Officer/Commissioner does not have authority and jurisdiction to open his camp office in residence of assessee and call assessee's attendance in connection with proceedings under Income-tax Act
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[2013] 40 taxmann.com 16 (Karnataka)
HIGH COURT OF KARNATAKA
Prakesh V. Sanghvi
v.
Ramesh G., Deputy Director of Income-tax (Investigation)*
RAM MOHAN REDDY, J.
WRIT PETITION NO. 8423 OF 2012
MARCH 20, 2013
Section 131, read with section 132, of the Income-tax Act, 1961 - Discovery, production of evidence, power regarding [Scope of provision] - Whether Assessing Officer/Commissioner does not have authority and jurisdiction to open his camp office in residence of assessee and call assessee's attendance in connection with proceedings under Income-tax Act - Held, yes [Para 8] [In favour of assessee]
FACTS
| ■ | The assessee challenged the proceedings initiation under section 132 against him. It was the case of assessee that the first respondent claiming to be a salesman, gained entry into the assessee's home and illegally opened his camp office inside the house, sans authority, and issued the summons invoking section 131 summoning the assessee to appear before him in the camp officer in the assessee's home for giving evidence, producing books of account and other documents. | |
| ■ | On writ petition: |
HELD
| ■ | A bare perusal of the provisions of section 131 discloses investing a jurisdiction in the Assessing Officer, Deputy Commissioner, Joint Commissioner, Commissioner (Appeals) and Chief Commissioner or Commissioner and the DRP, referred to in clause (a) of sub-section (15) of section 144C over power regarding discovery, production of evidence, etc., as are powers vested in the Court under the CPC, 1908 (5 of 1908), while trying the suit in matter of discovery and inspection, amongst other matters. [Para 7] | |
| ■ | A perusal of order XI, CPC under the nomenclature 'Discovery and inspection' and rules 1 to 23 thereunder, do not indicate that the Court can issue notice to a party and open a Court in the house of the party and call upon that party to give statement in his house. If that is so, then the IT Act does not invest in the first respondent, the power to have a camp office at the residence of the assessee and call the assessee's attendance in connection with proceedings under the IT Act. Thus, the notice issued by the first respondent requiring the attendance of the assessee in connection with the proceedings under the IT Act in a case, at the camp office in the residence of the assessee to give evidence or to produce either personally or through Authorized Representative, the books of account and other documents, is one without authority of law. It is not the case of the first respondent that such a notice was issued on the basis of any other provisions under the IT Act empowering the authority to open his camp office in the residence of the assessee. It will be too incongruous to accept the submission of the respondent-revenue that the first respondent had the authority and jurisdiction to open his camp office in the residence of the assessee on 19-1-2012. [Para 8] | |
| ■ | There is yet another dimension to the notice. The allegation that the first respondent trespassed into the house of the assessee and thereafter issued the notice to him, is not controverted. There is no reason to disbelieve the statement of the assessee, more so, when the allegation is not countered. If that is so, then the first respondent, without authority of law, having trespassed into the house of the assessee deserves to be prosecuted before a competent criminal Court, if so advised. [Para 10] |
CASE REVIEW
Rajendran Chingaravelu v. R.K. Mishra, Addl. CIT [2010] 320 ITR 1/186 Taxman 305 (SC) (para 9) distinguished.
CASES REFERRED TO
Rajendran Chingaravelu v. R.K. Mishra, Addl. CIT [2010] 320 ITR 1/186 Taxman 305 (SC) (para 5).
Kiran Kumar K. for the Petitioner. K.V. Aravind for the Respondent.
ORDER
Ram Mohan Reddy, J. - Petitioner aggrieved by the summons dt. 19th Jan., 2012-Annex. A issued by the first respondent followed by the Panchanama dt. 19th Jan., 2012-Annex. B and the proceedings initiated under s. 132 of the IT Act, 1961, has presented this petition.
2. Petition is not opposed by filing statement of objections.
3. It is the case of the petitioner that the first respondent claiming to be a salesman, gained entry into the petitioner's home in the morning hours of 19th Jan., 2004 and illegally opened his camp office inside the house, sans authority, and issued the summons Annex. A invoking s. 131 of the IT Act, for short 'IT Act' summoning, the petitioner to Appear before him in the camp office in the petitioner's home at 10.15 a.m., on 19th Jan., 2012 for giving evidence, producing books of account and other documents. It is the further allegation of the petitioner that the first respondent checked nook and corner of the petitioner's home without sensitivity to the privacy of the women present in the house and found one folder containing copies of agreement and other papers and cash of Rs. 40,00,000 and Rs. 44,29,250. While in the petitioner's home, it is alleged, first respondent obtained a warrant of authorization under s. 132 of the IT Act-Annex. B. On obtaining the said warrant, the first respondent is said to have seized some copies of agreements and other documents as disclosed in the inventory-Annex. C, including cash of Rs. 40,00,000. According to the petitioner, he had no undisclosed income and that Rs. 40,00,000 was received as sale consideration for the sale of the immovable property bearing R.S. No. 1259-A1A. T.S. No. 250-II-5-1A1P2, Kasaba Bazar Village, Mangalore City, Navayat Ward, Mangalore City Corporation, which was to be shared with other co-sharers. Petitioner claims that he was ready and willing to offer the said sum of Rs. 40,00,000 towards capital gain insofar as his share is concerned, but did not done so, since the due date for filing advance tax was 15th March, 2012 while being entitled to tax exemptions under s. 54 of the IT Act for having purchased another immovable property from out of the sale consideration.
4. learned counsel for the petitioner points to s. 131 of the IT Act to submit that a notice under s. 131(l)(a) for discovery and inspection ought to be strictly in accordance with the provisions of Order XI of CPC and therefore the first respondent had no authority under law to step into the house of the petitioner and issue him a notice-Annex. A, which in other words tantamounts to trespassing without authority of law.
5. In opposition, learned counsel for the respondent-Revenue submits that under s. 131(l)(a), the power of discovery and inspection as is vested in a Court under the CPC, 1908 (5 of 1908), was invoked and the notice- Annex. A issued to the petitioner and therefore it cannot be said that the notice suffers from lack of authority or jurisdiction. Learned counsel submits that there was no trespass into the house of the petitioner, but that the notice indicating the camping of the officer in the premises of the petitioner was only for the purpose of recording his statement which the IT Act authorizes and places reliance upon the decision of the Apex Court in Rajendran Chingaravelu v. R.K. Mishra, Addl. CIT [2010] 320 ITR 1/186 Taxman 305Learned counsel points to paras 8, 9, 10 and 11 in support of his submission.
6. In order to appreciate the submission of the learned counsel for the parties, it will be useful to extract s. 131(l)(a) of the IT Act, which reads I thus :
"Sec. 131. Power regarding discovery, production of evidence, etc.—(1) The AO, Dy. CIT(A), Jt. CIT, CIT(A), Chief CIT or CIT and the DRP referred to in cl. (a) of sub-s. (15) of s. 144C shall, for the purposes of this Act, have the same powers as are vested in a Court under the CPC, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely :
| (a) | discovery and inspection." |
7. A bare perusal of the provisions discloses investing a jurisdiction in the AO, Dy. CIT(A), Jt. CIT, CIT(A) and Chief CIT or CIT and the DRP, referred to in cl. (a) of sub-s. (15) of s. 144C over power regarding discovery, production of evidence, etc., as are powers vested in the Court under the CPC, 1908 (5 of 1908), while trying the suit in matter of discovery and inspection, amongst other matters.
8. A perusal of order XI, CPC under the nomenclature 'Discovery and inspection', and rr. 1 to 23 thereunder, do not indicate that the Court can issue notice to a party and open a Court in the house of the party and call upon that party to give statement in his house. If that is so. then the IT Act does not invest in the first respondent, the power to have a camp office at the residence of the petitioner and call the petitioner's attendance in connection with proceedings under the IT Act. Thus the notice Annex A issued by the first respondent requiring the attendance of the petitioner in connection with the proceedings under the IT Act in a case, at the camp office in the residence of the petitioner at "Deepa Sunny" on 19th Jan., 2012 at 10.45 a.m. to give evidence or to produce either personally or through Authorized Representative, the books of account and other documents, is one without authority of law. It is not the case of the first respondent that such a notice was issued on the basis of any other provisions under the IT Act empowering the authority to open his camp office in the residence of the petitioner. It will be too incongruous to accept the submission of the learned counsel for the respondent-Revenue that the first respondent had the authority and jurisdiction to open his camp office in the residence of the petitioner on 19th Jan., 2012.
9. The decision of the Apex Court in Rajendran Chingarvelu's case (supra). is inapplicable to the facts of this case for the simple reason that the facts obtaining therein are that a computer engineer who was lucratively employed in the USA for more than 10 years, returned to India with his earnings and took up employment in Hyderabad in the year 2006 and wanted to buy a property at Chennai which attempts were not fruitful and when advised that he wanted to buy a good plot, he must be ready to pay the sale consideration in cash as advance to the prospective seller and wanted to go to Chennai with large sum of money and finalize the deal. Having contacted the RBI, ICIC1 Bank and airport authorities to find out whether he can carry large sum of money, in cash, while travelling, was informed that there was no prohibition and therefore he withdrew Rs. 65,00,000 in cash travelled by air from Hyderabad to Chennai on 15th June, 2007 carrying the cash. At the Hyderabad airport, he disclosed to the security personnel who checked his bag and found cash of Rs. 65.00,000 along with bank certificates certifying the source and withdrawals, whereafter he was allowed to board the aircraft without any objection. But when the flight reached Chennai. some police officials and others (who later identified themselves as Income-tax Investigating Wing) rushed in, loudly called out his name and when he identified himself, was virtually pulled out from the aircraft and taken to an office in the first floor of the airport and questioned about the money he was carrying. It is in this backdrop of facts, a question arose as to whether the Andhra Pradesh High Court was justified in holding that a seizure that took place at Chennai (Tamil Nadu), the writ petition was maintainable before it. In addition, certain other contentions having been put forth, the Apex Court having noticed the circular dt. 18th Nov., 2009, issued by the CBDT, Minister of Finance, setting out guidelines to be followed by Air Intelligence Units or investigation units while dealing with air passengers with valuables at the airports of embarkation or destination, to avoid any undue inconvenience to them, recorded findings. In the facts of this ease, the petitioner was not an air traveller and had not boarded any aeroplane and was not proceeding to any other destination and therefore, on facts, that judgment is inapplicable.
10. There is yet another dimension to the notice Annex. A. The allegation that the first respondent trespassed into the house of the petitioner and thereafter issued the notice Annex. A to him, is not controverted. There is no reason to disbelieve the statement of the petitioner, more so, when the allegation is not countered. If that is so, then the first respondent, without authority of law, having trespassed into the house of the petitioner on 19th Jan., 2012, deserves to be prosecuted before a competent Criminal Court, if so advised.
11. There is force in the submission of the learned counsel for the respondent-Revenue that it was only after surveillance that a detection was made of the unaccounted cash in possession of the petitioner and therefore proceedings under the IT Act were initiated. The question is, whether such proceedings did have the authority of law. A perusal of s. 131 indicates that a notice must be issued calling upon the petitioner to furnish all relevant material particulars and documents in the matter of allegation of being in possession of unaccounted cash and if the petitioner fails to respond to that notice, then s. 132(1) comes into play by which the CIT, Director General or Director or the Chief CIT or the CIT or Addl. Director or Dy. CIT or Jt. Director or Jt. CIT may issue warrant for search and seizure. The record made available by the respondent-Revenue discloses, the Director of IT (Inv.) on perusal of the information received approved the issue of warrant for search and seizure on 19th Jan., 2012, though the time is not mentioned therein. It is not known as to what time of the day that order was issued. Indeed, the first respondent armed with a warrant for search and seizure, entered the house of the petitioner on 19th Jan., 2012 at 6:25 p.m. along with Panchas and conducted a search, whence, documents and cash of Rs. 40,00,000 were seized from the premises of the petitioner, as indicated in the Panchanama Annex. 'B'. Therefore, the submission of the learned counsel for the petitioner that the search and seizure was not preceded by a warrant under s. 132 of the IT Act is prima facie unacceptable.
12. It may be that the petitioner had time upto 15th March, 2012 to pay the advance tax and thereafter, time to file his return for the previous year 2011-12 asst. yr. 2012-13, but that by itself does not mean that the respondent authorities did not have the jurisdiction to issue a warrant and effect search and seizure under s. 132 of the IT Act. However, without going into the merit or demerit of the claim of the petitioner over accounting of the said Rs. 40.00,000 since a return filed is pending consideration, and reserving liberty to the petitioner to question the order of assessment that may be passed over the return for the aforesaid year, if aggrieved, this petition is limited, to the validity of the notice Annex. 'A'.
13. In the view taken supra, the answer to the first relief is that the first respondent did neither have the authority nor the jurisdiction to enter into the house of the petitioner on 19th Jan., 2012 and set up a camp office therein for recording the statement of the petitioner by invoking s. 131(1) of the IT Act.
In the result, petition is allowed in part. Notice dt. 19th Jan., 2012 Annex. A' is quashed. The reliefs of quashing the Panchanama and the warrant of search and seizure are kept open for consideration in an appropriate proceeding.
IA Nos. 1 to 4 of 2013 are rejected.
USPRegards
Prarthana Jalan
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