IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.721 OF 1988 WRIT PETITION NO.721 OF 1988 WRIT PETITION NO.721 OF 1988 Kishore Jagjivandas Tanna ) residing at 9-A, Ratnakar Narayan ) Dabholkar Road, Bombay-400 006. )..Petitioner Versus 1. Shri K.Rangrajan, ) Dy. Director of Inspection ) (Investigation) Unit I, New ) Delhi, having his office at ) 6th Floor, Mayur Bhavan, ) Cannaught Place, New Delhi ) 2. Shri S.H.Soni ) 1st Income-tax officer, A-II ) Ward, Bombay, having his ) office at Aayakar Bhavan, ) Maharshi Karve Road, Bombay-20 ) 3. Union of India )..Respondents ---- Mr.P.J.Pardiwala with Mr.B.D.Damodar i/by Kanga & Co. for the appellant. Mr.A.S.Rao with Mr.P.S.Sahadevan for the respondents. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Coram : F.I.Rebello & R.S.Mohite,JJ Coram : F.I.Rebello & R.S.Mohite,JJ Date : 25.03.2008. Oral Judgment : ( Per : R.S.Mohite,J) Oral Judgment : ( Per : R.S.Mohite,J) Oral Judgment : ( Per : R.S.Mohite,J) 1. This Writ petition is filed by Kishore Jagjivandas Tanna (hereinafter referred to as the "petitioner") impugning an order dated 22nd December 1987 passed by the respondent no.2 under Section 132(5) of the Income Tax Act 1961 (as it then : 2 : stood). 2. The brief relevant facts of the case were as under :- (a) In pursuance of authorisation under Section 132 of the Income Tax Act issued by the Deputy Director of Inspection (Inv.) Unit-I, New Delhi, a search was carried out on 25.8.1987 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 25.8.1987 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 under Section 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 Income-tax authorities thereafter recorded the following : 3 : statements :- (i) Statements of the petitioner dated 25.8.1987, 9.12.1987 and 10.12.1987. (ii) The statement of one Mr.Anoop Gupta recorded on 26.8.1987. (c) That thereafter on 9.9.1987, the Income-tax authorities issued a notice under Section 112-A of the Income Tax 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 dated 10.9.1987 to the Income-tax 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 22.12.1987. : 4 : (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 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 paragraph-12 of the affidavit in reply dated 29.9.1997 affirmed by the Deputy Commissioner of Income-tax, Aaykar Bhavan. It is asserted in the said reply that respondent no.1 was 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 dated 30.8.2002 he has not specifically denied the aforesaid assertion made in affidavit in reply. As regards paragraph-12 of the reply, in his rejoinder the petitioner has restricted himself to repeating what is stated in paragraph-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 : 5 : of the petitioner. 3. The 2nd contention raised on behalf of the petitioner is that the impugned order under Section 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. : 6 : 4. 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 112-A of the Income Tax Rules 1962 within 12 weeks from today. Alongwith the said notice the petitioner will also be furnished copies of all statements/documents which the income tax authorities would like to rely upon. Thereafter a final order under Section 132(5), as it then stood, will be passed within a further period of 8 weeks of the first date of hearing, after re-hearing the petitioner in accordance with law. It is made clear that if no notice under rule 112-A of the Income-tax Rules 1962 is issued within 12 weeks from today as directed, then the amount seized will be refunded to the petitioner with 6% simple interest from the date of the seizure till the date of return. Petition stands disposed off in the aforesaid terms. (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J)