Bhupendra Ratila Thakkar & ANR Vs.
Commissioner of Income Tax, Gujarat & Ors  INSC 302 (5 December 1975)
RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA,
CITATION: 1976 AIR 636 1976 SCR (2) 891 1976
SCC (1) 381
Income Tax Act Sec. 132, 132A-Income Tax
Rules 1962, rules 112, 112A, 112B,112C-Constitutional validity of -
Constitution of India, Articles 14, 19(1)(f) & (g) and 31(1).
The petitioners carry on business as Shroffs
and Bankers. The Income-tax Department searched various premises of the
petitioners and seized a sum of Rs. 12 lakhs in cash from the petitioners,
under section 132 and 132A of the Income-tax Act. The petitioners contended
that the said amount represented the stock-in-trade of the petitioners.
The petitioners also contended that the
provisions of section 132 and 132A of the Income-tax Act, 1961, as well as
rules 112, 112A, 112B and 112C of the Income-Tax Rules, 1962, were
unconstitutional as violative of Article 14, 19(1)(f) and (g) and 31(1) of the
Constitutional. Section 132 and 132A were further challenged on the ground of
conferring naked, abitrary, unguided, discriminatory and uncanalised power on
the executive authority.
Dismissing the petition,
HELD: (1) This Court has already upheld in
Pooran Mal's case the validity of section 132 and 132A as well as rules 112 and
112A. [893 A & C] (2) Rules 112B and 112C relate to the release of the
articles seized and are therefore beneficial rules and as such cannot be challenged.
ORIGINAL JURISDICTION: Writ Petition No. 96
Under Article 32 of the Constitution of
I. N. Shroff for the appellant/petitioner.
B. B. Ahuja and S. P. Nayar for respondents.
The Judgment of the Court was delivered by
SHINGHAL J. This is a petition under article 32 of the Constitution. Bhupendra
Ratilal Thakkar, petitioner No. 1, is the managing partner of the other
petitioner M/s Rajnikant Nareshchandra Shroff, which is a partnership firm
carrying on the business of "shroffs and bankers". Its principal
place of business is said to be at Mehmadabad, with branches at Surat and
Bombay. The petitioners applied for registration of the firm on April 7, 1971,
and had time to file their return of income upto June 30, 1972. It has been claimed
that the firm had large sums of money in cash as well as 'hundis' and other
bills of exchange which formed its stock-in-trade and that there was no
justification for thinking that it would not do what was required to be done
under the law relating to income-tax. The firm had a sum of Rs. 12,00,000/- as
cash on January 10, 1972, which is said to have been duly entered in its books
of account in the Bombay branch office. The grievance of the petitioners is
that some of the 892 respondents entered these premises on January 10, 1972,
"in purported exercise of the powers conferred by section 132", and
seized the sum of Rs. 12,00,000/- along with the books of account and other
documents. Searches are also said to have been carried out in Mohamedabad
office and the branch office at Surat, and some more books of account, papers
and documents are said to have been seized there.
The petitioners have stated that as the sum
of Rs. 12,00,000/- was the stock-in-trade of the firm, and it had not been
secreted, there was no justification for the seizure of the money or the books
and the other documents.
They have accordingly stated that the seizure
was an abuse of the authority conferred by ss. 132 and 132-A of the Income-tax
Act, 1961, hereinafter referred to as the Act, and rules 112, 112-A, 112-B,
112-C and 112-D of the Income- tax Rules, 1962, hereinafter referred to as the
Rules. The petitioners have contended that ss. 132 and 132-A of the Act are
unconstitutional because they are violative of articles 14, 19(1)(f) and (g)
and 31(1) of the Constitution. It has also been urged that the aforesaid rules
are illegal as they are not backed by any legal authority. The aforesaid
provisions have also been challenged on the ground that they are violative of
article 14. In regard to ss. 132 and 132-A of the Act, the petitioners have
further stated that they should be struck down as they confer naked, arbitrary,
unguided, discriminatory and uncanalised power on the executive authority. The
petitioners have also prayed for the restoration of the property which has been
seized by the income-tax authorities. It has been pointed out in the petition
that three similar writ petitions were pending in this Court, including writ
petition No. 446 of 1971. Pooran Mal vs. Director of Inspection Investigation.
The respondents have admitted the search and
the seizure of the property, but have stated that this was done because the
Commissioner of Income-tax, Gujarat-I, respondent No. 1, had reasons to believe
that the petitioners would not produce their books of account etc.
even though they would be useful to the
department for taking proceedings under the Act. It has also been stated that
there was enough material before the Commissioner for exercising the power
under s. 132(1) of the Act. The respondents have made specific averments in
this connection including the averment that books of account were unreliable,
and that the claim that the sum of Rs. 12,00,000/- was shown as balance in the
books of account was incorrect. They have also denied the allegation that any
search was carried on in the Mehmedabad head office of the petitioner firm or
that the sum of Rs. 12,00,000/ was kept as the firm's stock-in-trade or that
the firm was left with no other money whatsoever. The petitioners' contention
against the legality of ss. 132 and 132-A of the Act and the Rules has also
It will be recalled that in their writ
petition the petitioners have made a specific reference to Pooran Mal's writ
petition No. 446 of 1971. That case has been heard and decided by this Court on
December 14, 1973 and the decision has been reported in Pooran Mal 893 etc. vs.
Director of Inspection (Investigation) of Income Tax, New A Delhi and others
Mr. Shroff has frankly conceded that the points which have been raised in this
petition have been considered in that case, and that he has nothing to say in
regard to the validity of ss. 132 and 132-A of the Act and rules 112 and 112-A
of the Rules or the averments in the petition in that connection. In fact it has
been held by this Court in Pooran Mal's case that "it was impossible to
hold that the impugned provisions were violative of articles 14, 19 or
31." All that Mr. Shroff has argued is that the validity of rules 112-B
and 112-C of the Rules was not the subject matter of examination in Pooran
Mal's case and that it would be necessary for this Court to examine that part
of the controversy, as and when it is permissible to do so, with reference to
the provisions of article 14 of the Constitution.
We have gone through rules 112-B and 112-C of
the Rules. Rule 112-B relates to the release of the articles seized under s.
132(5) of the Act, and merely provides that where, in pursuance of that
section, any assets or part thereof have to be released, the Income-tax officer
shall forthwith deliver the same to the person from whom custody they were
seized. Rule 112-C provides for the release of the remaining assets, and it is
to the effect that they shall be made out or paid to the person from whose
custody they were seized, after the discharge of the liabilities referred to in
cl (i) of sub-section (1) of S. 132-A of the Act. Both these are therefore
beneficial rules, and there can be no satisfactory reason for challenging their
validity with reference to article 14 of the Constitution. So when the present
case is not different from Pooran Mal's case, there is no merit in this writ
petition. It is hereby dismissed.
There will however be no order as to costs.
P.H.P. Petition dismissed.