Pooran Sugar Works vs Assistant Commissioner of Income Tax and Another

M. Katju, J.—This writ petition has been filed against the impugned orders dated June 30, 1995, and July 3, 1995, passed by the Commissioner of Income Tax, Lucknow, and the Assistant Commissioner of Income Tax, Circle-I, Bareilly, respectively.

The petitioner is a firm doing the business of manufacture of khandsari sugar and rab, etc. A raid was made on the business and residential premises of the partners on April 4, 1995, by the Income Tax Department and cash amounting to Rs. 10 lacs was seized as well as the entire books of the petitioner were seized. Subsequently, the Income Tax Officer passed a restraint order u/s 132(1) of the Income Tax Act, 1961 (annexure-2 to the writ petition). It is alleged that on account of that restraint order, the petitioner was not able to lift the aforesaid goods, which according to the petitioner belong to some other persons. Earlier, the petitioner filed Writ Petition No. 761 of 1995, in which this court directed respondent No. 2 to pass appropriate orders for releasing the goods. In pursuance of the aforesaid order of this court, respondent No. 1 passed an order requiring the petitioner to furnish a bank guarantee of Rs. 63,85,000 in favour of the Department to get the release of the stock of sugar. This order has been challenged in this petition on the ground that the order had been passed arbitrarily.

We have heard learned counsel for the parties. It appears that an order u/s 132(5) of the Income Tax Act has been passed in which it has been held by the Assistant Commissioner of Income Tax that the total tax liability against the petitioner is Rs. 1,64,84,223 which exceeds the amount of assets seized and were ordered to be retained. In this view of the matter, we are of the view that the petitioner has an alternative remedy to challenge the impugned order before the authority concerned u/s 132(11) of the Income Tax Act. In Sudhir Kumar Gupta and Others Vs. Director of Investigation, Income Tax and Others, , this court has held that the petitioner has an alternative remedy by way of proceedings u/s 132(5) or Section 132(11) of the Act as there are disputed questions of fact and could not be properly scrutinised in proceedings under Article 226 of the Constitution.

Learned counsel for the petitioner relied upon a decision of this court in the case of Sriram Jaiswal Vs. Union of India (UOI) and Others, for the proposition that the proceeding u/s 132(5) is an independent proceeding and u/s 132(5) the proceeding'' is a different proceeding. That may be so, but we are of the opinion that where it is found u/s 132(5) that the lax liability is more than the value of the goods seized, then it is open to the Department to retain those goods so seized. In the present case in the proceeding u/s 132(5) of the Income Tax Act, the tax liability against the petitioner was found to the tune of Rs. 1,64,84,223 which is much more than the value of the goods so seized. Hence, there is no illegality in requiring the petitioner to furnish a bank guarantee of Rs. 33,85,000 in favour of the Department to gel the release of the stock of sugar. This order is of course subject to the order passed u/s 132(12) of the Act.

With these observations, the petition is dismissed.