Rajesh Sharma vs Assistant Commissioner of Income Tax and Another

The issue under judicial scrutiny in this application under Article 226 of the Constitution pertains to the non-release of the seized assets which were found to have been properly explained u/s 132(5) of the Income Tax Act, 1961, hereinafter referred to as the act.

I have heard Dr. Ashok Saraf, learned Sr. counsel assisted by Mr. S. Mitra, representing the petitioner. Also heard Mr. U.Bhuyan, learned counsel appearing for the Income Tax Department.

Unfurling the factual matrix of the case, the petitioner has narrated that pursuant to the warrant of authorisation issued by the Director of Income Tax (Investigation), Ahmadabad, a search and seizure operation was conducted in the residential premises of one Sri S.S. Sharma at Shyamkunj, Khandala house on 29.4.1992. Simultaneously searches were also conducted at the Farm house at Heetapura Ajmir Road, Jaipur as well as Industry premises of M/s RCS Vanaspati Industries Ltd., 164/81, Industrial Area, Khotwara, Jaipur.

During the course of search, many incriminating documents, accounts, cash/valuable etc. were found and seized by the Department. The operation was conducted u/s 132 of the Act. Proceeding u/s 132(5) of the Act reads with section 112 of the I.T. Rules, 1962 were initiated in respect of the petitioner and thereafter the impugned order dated 28.8.1992 was passed by the Assessing Authority, respondent No.1. The respondent No.1 in the said impugned order found the jewelleries worth of Rs. 2,62,354.00 has been properly explained but instead of releasing, the said seized assets had been retained by the Department. Hence, this Writ petition.

Arguing on behalf of the petitioner Dr. Saraf adverts to paragraphs 6 and 9 of the writ petition which are as follows:-

"6. That respondent No.1 accepted explanation in respect of jewellery worth of Rs. 2,62,354 out of seized jewellery worth of Rs. 2,70,031 vide last para page 2 of the impugned order which reads as under:-

After due examination I treat the jewellery worth of Rs. 2,62,354 belonged to Smt. Jaya Sharma and the same were properly explained by her."

That respondent No. 1, vide page 3 of the impugned order, held as under:

"As the liability of the assessee exceeds assests seized, the same will be retained by the Department."

Elaborating his arguments on the basis of the above referred paragraphs in the writ petition, the learned Sr. counsel states that as per the provisions of law laid down under sub-section (5) of section 132 of the Act the assests for which the proper explanation has been given is required to be released forthwith. In the instant case the authority failed to perform the statutory obligation by not releasing the said properly explained seized assets which were retained by the revenue. It is stated that such retention of the properly explained seized assets is a clear violation of the statutory provisions of law and the respondent No.1 shall be directed to release the same forthwith.

Short point involves in this case in relating to the interpretation of section 132(5) of the Act. Section 132(5) is quoted below:-

"132(5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in section 132A and 132B referred to as assets) is seized under sub-section (1) or subsection (1A) (as a result of a search initiated or requisition made before the 1st day of July, 1995) the Income Tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry as may be prescribed, shall within (one hundred and twenty) days of the seizure, make an order, with the previous approval of the (Jt. 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, 1992 (II 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 sub-section (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 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.

A bare perusal of the said provisions of law laid down u/s 132(5) clearly shows that the seized assets for which proper explanation has been given shall be released forthwith. Dr. Saraf., learned counsel for the petitioner, relying on the above statutory provisions, had cited a decision on this Court in Manik Criand Soni v. Asstt. Commissioner of Income Tax, reported in (1994) 1 GLR 199 and fairly submits that the petitioner''s case is squarely covered by the ratio of the said decision. I do subscribe to the said submission of the learned counsel for the petitioner and accordingly I am inclined to accept the applicability of the ratio of Manik Chand Soni''s case (supra) to the case in hand.

Countering the contentions made by Dr. Saraf, learned Sr. counsel for the petitioner, Mr. U. Bhuyan, learned counsel appearing for the Income Tax Department raises some objection as regards to the maintainability of this petition under Article 226 of the Constitution on the ground of having alternative remedy. Dwelling on the paragraph 15 of the Writ Petition as well as the affidavit-in- opposition filed by the Department, Mr. Bhuyan, learned counsel states that as evident from the paragraph 15 of the writ petition, the petitioner had already availed alternative remedy by filing a petition to the respondent No. 2 of 10.9.1992 against the impugned order and the same being pending before the competent authority for disposal, the present writ petition is not maintainable. Further he submits that the impugned order not being passed in a judicial or quasi judicial proceeding, the writ petition is not maintainable against the same. He has referred to a decision of Narayan R. Bandekar Vs. Second Income Tax Officer and others, in support of his contention. In the said case it was held that the proceedings u/s 132(5) of the Act is not a judicial or quasi judicial one and as such, the same does not come under Writ jurisdiction of Article 226 of the Constitution of India.

The submissions advanced by Mr. Bhuyan, learned counsel for the Revenue do not convince me as wee-bit. As regards the maintainability of this petition for having an alternative remedy, I safely agree to differ with his submission for the reasons below.

It is settled position of law that availing of an alternative statutory remedy cannot be a bar for invoking the jurisdiction under Article 226 of the Constitution unless the same is adequate and efficacious. Moreover, when a question of interpretation of provisions of law involves, a Writ petition is maintainable in spite of having an alternative remedy. In this regard, Apex Court''s decision in Paradip Port Trust Vs. Sales Tax Officer and Others, may be looked into. In the case in hand though the petitioner has approached the respondent No. 2 on 10.9.1992 u/s 132(11) of the Act against the impugned order, the date of hearing of the same was fixed only on 31.3.1994, on that day the matter was heard but the respondent No. 2 did not pass any order till the date of filing this petition and seized assets have been retained in violation of the provisions of law. Further I do not find reason as to why impugned order cannot be challenged under Article 226 of the Constitution invoking the writ jurisdiction of this Court on the ground that the same is not being a judicial or quasi judicial orders. It appears on the face of the impugned order itself that the Revenue has retained the seized assets for which proper explanation has been given in clear violation of section 132(5) of the Act.

Having regard to the provisions of law u/s 132(5) of the Act as well as the decision in the Manik Chand Soni''s case (supra) and having gone through the entire materials available on record and upon hearing the learned counsel for the parties, I have no hesitation to issue a direction to the respondent NO.1 - Asstt. Commissioner of Income Tax (Investigation Circle), Dibrugarh to release the seized assests forthwith for which proper explanation has been given. Accordingly, I direct the said authority to release the seized assets forthwith.

In the result, this writ petition is allowed to the extent indicated above.

However, there shall be no order as to costs.