Tin Box Co. vs Income-Tax Appellate Tribunal ...
1990 Latest Caselaw 211 Del

JUDGMENT

KIRPAL J. - Rule D.B. As the question involved is covered by a Full Bench decision of this court [See [1990] 182 ITR 384], we are disposing of the writ petition immediately.

An order as to section 132 was issued where after the business premises of the petitioner were searched. In respect of the assessment year 1984-85, an assessment order was passed on March 31, 1987. The same was challenged in appeal, but the appeal was dismissed on January 5, 1988. A second appeal was filed to the Income-tax Appellate Tribunal (respondent No. 1). The petitioner also filed applications for adducing additional evidence. Vide an order dated August 30, 1988, the said appeal was, however, dismissed. We are informed that an application under section 256 (1) has been filed pursuant to the said order dated August 30, 1988. The petitioner then filed an application under section 254 (2) for recalling or rectifying the order dated August 30, 1988. Vide an order dated February 2, 1989, this application was rejected. Another miscellaneous application under section 254 (2) was filed on March 13, 1989, and this was dismissed by an order dated March 29, 1989.

In the present writ petition, the aforesaid orders passed by the various authorities have been challenged before us.

As far as the assessment order and the order of the Commissioner of Income-tax (Appeals) and the order dated August 30, 1988, are concerned, there is no question of our interfering with them in these proceedings under article 226 of the Constitution. The assessment order has merged in the appellate order of the Commissioner of Income-tax (Appeals) and that order has merged in the order dated August 30, 1988, of the Income-tax Appellate Tribunal. There is an alternative remedy provided to the petitioner under the provisions of the Income-tax Act and the petitioner has availed of the same by filing an application under section 256(1) of the Act.

As far as the order dated February 2, 1989, and March 29, 1989, are concerned, the contention of the petitioner is that the said orders have been passed without affording any opportunity to be heard in person and without any reasons being indicated in the impugned orders.

This court in Smart Pvt. Ltd. v. ITAT [1990] 182 ITR 384 [FB], has held that, when an application under section 254(2) is filed, the applicant has to be heard before the èapplication is disposed of and, secondly, the reasons for dismissal should be given.

In the present case, admittedly, the applicant was not heard when the said applications were disposed of, nor do the impugned contain any reasons.

The other contention which is raised in this petition is that the books of account and other documents which were seized by the respondents pursuant to the raid which was conducted under section 132 of the Act on July 23, 1985, have not yet been returned. The contention of the petitioner is that no notice was ever served on the petitioner to the effect that any order under section 132(2) had been passed for continued retention of the books; nor were any reasons communicated.

Mr. Rajendra has placed before us a copy of the letter dated April 23, 1990, informing the petitioner that an order dated December 19, 1989, had been passed by the Commissioner of Income-tax for continued retention of the books. It is further stated in this letter that earlier approval of the Commissioner for retention of the books, etc., up to December 31, 1989, had been accorded, but learned counsel is unable to bring to our notice a copy of any earlier letter written to the petitioner prior to April 23, 1990.

Under sub-section (8) of section 132, the appropriate authority, namely, the Commissioner of Income-tax, can order the retention of books, etc., for reasons to be recorded in writing. Against such an order which is passed, the assessed has a right to file an application to the Central Board of Direct Taxes under section 132(10). This right would become meaningless if the passing of the order under section 132(8) is not made known to the assessed within a reasonable time and, what is more important is that the reasons for continued retention of the books are not communicated to the petitioners. Merely sending intimation to the petitioner that an order for continued retention of the books had been passed cannot give the petitioner adequate opportunity to exercise his right under section 132(10). Unless and until the petitioner knows what are the reasons which have weighed for passing an order under section 132(8) he cannot file a meaningful application seeking to challenge the said reasons which may have weighed with the Commissioner of Income-tax. In our opinion, therefore, when an order under section 132(8) is passed, it is imperative that the assessed should be communicated the order itself containing the reasons on which the said order has been passed. Furthermore, this order should be communicated to the petitioner within a reasonable time and as expeditiously as possible so as to enable the assessed to exercise his right under section 132(10).

In view of the fact that there has been a failure on the part of the respondents in informing the petitioner, within a reasonable time, of the passing of the orders under section 132(8) and, furthermore, because no reasons have been communicated to the petitioner, the continued retention of the books of account and the other documents is, in our opinion, not warranted.

For the aforesaid reasons, we allow this writ petition. We quash the orders dated February 2, 1989, and March 29, 1989, and issue a writ of mandamus directing respondent èNo. 1 to hear and dispose of the two applications under section 254(2) on merits and in accordance with law. We further issue a writ mandamus to respondent No. 3 to return to the petitioner, within three weeks from today, the books of account and other documents which had been seized from the petitioners premises. Before returning the books and other documents, the Department will be at liberty, at their own cost, to obtain photo copies of the relevant entries and the documents and they should be attested by the petitioners representative as true copies. The petitioner will produce the returned documents and account books, etc., as and when he is required to do so in accordance with law, the petitioner will keep the documents and other returned material in safe custody.

It is not necessary to decide the validity of rule 46A for the view which we have taken.

There will be no orders as to costs.

Petition allowed.