Kishore Jagjivandas Tanna vs K. Rangrajan, Deputy Director of Inspection (Investigation) and Others

R.S. Mohite, J.—This writ petition is filed by Kishore Jagjivandas Tanna (hereinafter referred to as the "petitioner") impugning an order dt. 22nd Dec., 1987 passed by the respondent No. 2 u/s 132(5) of the IT Act, 1961 (as it then stood).

The brief relevant facts of the case were as under:

(a) In pursuance of authorisation u/s 132 of the IT Act issued by the Dy. Director of Inspection (Inv.) Unit-I, New Delhi, a search was carried out on 25th Aug., 1987 at room No. 2214 at Maurya Sheraton Hotel, Delhi, which was then occupied by the petitioner. During the course of search, cash amount of Rs. 4,99,900 out of the total cash amount of Rs. 5,00,000 came to be seized. A single note of Rs. 100 was not seized as the same was found in damaged condition.

(b) It was the allegation of the authority that the petitioner had come to Delhi from Bombay on 25th Aug., 1987 by the morning flight of Indian Airlines and checked in Maurya Sheraton Hotel at 3.30 p.m. At the time of commencement of operation u/s 132 one Mr. Navin Chopra was found to be with him in the hotel premises and an amount of Rs. 5 lakhs was also found on the person of Navin Chopra. On seeing the search party, the present petitioner had however, run away from the hotel and had returned back only at 10.30 p.m. The IT authorities thereafter recorded the following statements:

(i) Statements of the petitioner dt. 25th Aug., 1987, 9th Dec, 1987 and 10th Dec, 1987.

(ii) The statement of one Mr. Anoop Gupta recorded on 26th Aug., 1987.

(c) That thereafter on 9th Sept., 1987, the IT authorities issued a notice under Rule 112A of the IT Rules, 1962, calling upon the petitioner to explain the source of the acquisition of the cash seized from room No. 2214 where the petitioner was staying.

(d) In reply thereto, the petitioner addressed a letter dt. 10th Sept., 1987 to the IT authorities. It was inter alia the contention of the petitioner that he has negotiated the sale of rice with M/s Khushiram Beharilal and the said amount of Rs. 5 lakhs has been handed over as an advance payment by them against the sale of rice. The petitioner requested for withdrawal of the notice. Ultimately, after few dates of hearing, the impugned order came to be passed by respondent No. 2 on 22nd Dec, 1987.

(e) The first contention raised on behalf of the petitioner was that the 1st respondent could have issued the warrant only when, in consequence of information in his possession, he had reason to believe that the petitioner was in possession of any cash. It was contended that the 1st respondent has nothing to do with the assessment of the petitioner and he could (not) have any reason to believe that the petitioner was in possession of such cash. In reply to this contention, Counsel appearing for the respondents has drawn our attention to the averments made in para 12 of the affidavit-in-reply dt. 29th Sept., 1997 affirmed by the Dy. CIT, Aaykar Bhavan. It is asserted in the said reply that respondent No. 1 had authorised the search on the basis of material available with him and he had reasonable belief that the petitioner was in possession of undisclosed money and had satisfied himself before authorising the search. Though the petitioner has filed an affidavit in rejoinder dt. 30th Aug., 2002 he has not specifically denied the aforesaid assertion made in affidavit-in-reply. As regards para 12 of the reply, in his rejoinder the petitioner has restricted himself to repeating what is stated in para 21 of the petition and denying all allegations which are contrary or inconsistent. This being the position, we find no substance in the first contention raised on behalf of the petitioner.

The 2nd contention raised on behalf of the petitioner is that the impugned order u/s 132(5) has been passed without following the mandatory rules of natural justice. Our attention has been drawn to the fact that the said order is based upon 3 statements said to have been made by the petitioner and the statement of Mr. Anoop K. Gupta who was the partner in M/s Kushiram Biharilal. Counsel for Revenue fairly conceded that the order has been passed without handing over a copy of these statements to the petitioner. A perusal of Section 132(5), as it then stood, indicates that the final order should be passed after affording a reasonable opportunity to the affected person of being heard. If statements recorded were to be made the basis for passing the final order, then in our view, copies thereof ought to have been given to the petitioner in order to afford him a reasonable opportunity to meet the allegations. This, not having been done, the impugned order will have to be quashed and set aside and the matter would have to be remanded to respondent No. 2 for passing a proper order after complying the rules of natural justice.

In the circumstances, rule is made absolute in terms of prayer Clause (a) and respondent No. 1 is directed to issue a fresh show-cause notice to the petitioner under Rule 112A of the IT Rules, 1962 within 12 weeks from today. Along with the said notice the petitioner will also be furnished copies of all statements/documents which the IT authorities would like to rely upon. Thereafter a final order u/s 132(5), as it then stood, will be passed within a further period of 8 weeks of the first date of hearing, after rehearing the petitioner in accordance with law. It is made clear that if no notice under Rule 112A of the IT Rules, 1962 is issued within 12 weeks from today as directed, then the amount seized will be refunded to the petitioner with 6 per cent simple interest from the date of the seizure till the date of return

Petition stands disposed of in the aforesaid terms.