Commissioner of Income Tax and Another vs Subha and Prabha Builders Ltd.

N. Kumar, J.—The Revenue has preferred this writ appeal against the order of the learned single Judge, who has held that s. 131(3) of the IT Act (hereinafter, referred to as the Act'', for brevity) does not enable the Chief CIT or other authority who has the power to extend the period and supplement it to an outer limit of 15 days to keep extending the period repeatedly. The IT authorities conducted a survey of the premises of the respondent on 20th Sept., 2005 and in the course of the said survey, they examined the general activities of the respondent, various books of accounts and other documents maintained at the office premises of the respondent and as a follow up, issued a notice on the same day summoning the respondent to appear before the AO with ledgers, cash books, vouchers and bank passbooks and its details. An inventory of the books of accounts, documents and such other papers available was made and the papers and documents contained in as many as 30 files was seized. It is thereafter, they issued summons on 20th Sept., 2005, calling upon the assessee to produce the ledger, cash book, etc. The assessee appeared before the first respondent-officer the next day along with the remaining books of accounts which they had summoned and handed over the same to them. The said books were not returned to the assessee as contemplated under law within 15 days. The assessee requested for return of books, which was not granted. In reply to the same, the petitioner was furnished with an order dt. 27th Oct., 2005 as per Annex. ''C passed by the CIT, Bangalore, which indicated that he has granted permission to the ITO to retain the books of accounts and documents impounded by him for the period upto 31st March, 3006. After the said retention, a request was made by the petitioner for return of documents. Several letters were written by him in this regard. In reply, what was furnished to him was orders passed by the CIT with the periodic extension of time for retaining the books of accounts and documents. It is in these circumstances that the assessee was constrained to file the writ petition.

The learned Judge on careful consideration of the statutory provisions and the judgments relied on, held the wordings of s. 131 make it clear that the AO can retain the books of accounts only for 15 days. The outer limit can be crossed with the prior approval of the higher authority and for relevant reasons and for reasonable period and not for indefinite period. The reasonable period that can constitute on outer limit is 15 days and therefore the extended period can supplement the normal 15 days period statutorily fixed by a few more days and not by few more months or few more years. Permitting the proviso to enable the authorities to retain the documents for few more months or years is nothing but doing violence to the statutory provision. Therefore, he came to the conclusion that the authorities had misused the power of retaining the books and directed them to pay damages of Rs. 25,000. Aggrieved by the said order, the Revenue is in appeal.

The learned counsel for the Revenue submitted, as is clear from s. 132(A) of the Act, the period prescribed for retention of books is 30 days and further extension is also permitted with the prior approval of the higher authority and it could be retained till the assessment is over. The said provision has to be kept in mind while interpreting s. 131(3) and if that is done, the order passed by the learned Single Judge is erroneous and requires to be interfered with. From the facts set out above, it is clear that the survey was conducted on 20th Sept., 2005. On 21st Sept., 2005, in terms of the notice, the assessee handed over all the books of accounts. During the course of the survey, it is the Department, which had taken away the books of accounts and other documents after making survey. It is unfortunate, even after five long years, the Revenue did not complete the assessment. Still, they want to continue to retain the books by abusing the provisions contained in s. 131(3)(b) of the Act, wherein the higher authorities are empowered to make orders for extension of time enabling the AO to retain the books of accounts and other documents. Therefore, in the facts of the case, we are satisfied that it is a clear case of abuse of aforesaid statutory provisions and, therefore, the learned Single Judge was justified in entertaining the writ petition, issuing a direction to return the books of accounts and impose damages of Rs. 25,000. We do not see any justification to interfere with the said order, which is just and proper, in the facts of the case. In that view of the matter, we do not see any merit in the case and accordingly, the appeal is dismissed.