IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.16312 of 2003 Date of decision: 5.12.2008 M/s Self Knitting Works, Ludhiana and others -----Petitioners Vs. Union of India and Others --Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE L.N.MITTAL Present: Mr. Pankaj Jain, Advocate for the petitioners. Mr. S.K.Garg Narwana, Sr. Standing Counsel for the revenue. Adarsh Kumar Goel,J. 1. This petition seeks declaration that search conducted on 7.10.2003 at 7.15 AM under Section 132 of the Income Tax Act, 1961 (in short, ‘the Act’) at different premises of the petitioners, was illegal. 2. Case of the petitioners is that they are 100% export oriented units or partners/directors of the Units. Respondent No.5 who was at relevant time Assistant Director of Income Tax (Investigation) III Ludhiana, was hostile to the petitioners CWP No.16312 of 2003 on account of a complaint made by petitioner No.1 on 6.3.2003 and search was on account of the said hostility and not on account of any material, which may lead to recording of statutory satisfaction prior to search. Subsequently, material was collected to justify search, which could not be relevant for the satisfaction requisite for conducting the search. It has been pointed out, in the course of hearing, that a criminal case was registered against respondent No.5 and investigation having been carried out by the CBI, respondent No.5 has been sent up for trial, which is pending in the CBI Court at Patiala. 3. In the reply filed jointly by respondent Nos. 3 to 5, reference is made to an earlier search in the case of S.K.Bhatia Group on 5.2.2003, which linked the petitioners to the material recovered. Enquiries revealed that the petitioners were involved in large scale exports to Russia. They were reducing taxable profits by showing bogus purchases from dummy firms floated in the names of their low paid employees. Respondent No.3 recorded satisfaction before issuing search warrants on 6.10.2003. Reference is also made to other material which was found during enquiries by the department against the petitioners before the search was ordered. 2 CWP No.16312 of 2003 4. Notice was issued initially to examine whether necessary satisfaction was arrived at before conducting the search and whether allegation of the petitioners that Shri Y.K.Saxena was responsible for the search on account of his hostility. The respondents, including respondent No.5, have denied the allegations made in the petition. 5. Vide order dated 7.3.2006, passing of final assessment order was stayed. 6. We have heard learned counsel for the parties. 7. Learned counsel for the petitioners mainly submitted that there was no material to justify recording of satisfaction and the material which may have been collected subsequently, was not relevant for the issue of validity of search. It was also submitted that search was a result of malice of respondent No.5. 8. We are of the view that though, there are serious allegations, it will not be appropriate at this stage to go into the issue of validity of search, particularly when formal satisfaction has been duly recorded and for going into the contentions raised, we have to go into the disputed questions. We also find that the Central Bureau of Investigation has 3 CWP No.16312 of 2003 already investigated the matter, inter-alia, against respondent No.5 and filed its report before the appropriate CBI Court, where trial is pending. 9. In view of above, we dispose of this petition leaving the question of validity of search to be looked into in appropriate departmental proceedings. 10. The assessment is said to have almost been completed. Final order has not been passed on account of stay granted. With the disposal of this writ petition, the stay granted will stand vacated. The Assessing Officer will be at liberty to pass the final order. 11. Learned counsel for the petitioners made a prayer that on account of allegations and counter allegations, it will be fair if the appeal filed by the petitioners against the assessment order is considered outside Ludhiana, where formal assessment is taking place. We direct that the appeal filed by the petitioners be transferred to appropriate appellate authority at Chandigarh, to be dealt with in accordance with law. 12. Learned counsel for the petitioners also submitted that there is material of illegal acts of some officers of the Income Tax Department, who collected illegitimate money in 4 CWP No.16312 of 2003 the name of “Mother India Trust”, which issue has been investigated by the CBI against respondent No.5. We give liberty to the petitioners to furnish the said material to the Chairman, Central Board of Direct Taxes, who may look into the same himself or have the same examined from any officer to be nominated by him of appropriate level for such action as he may consider appropriate. 13. The record which was put in a sealed covered, has been opened and seen and handed over to the learned counsel for the respondents. 14. The petition is disposed of. (Adarsh Kumar Goel) Judge December 5, 2008 (L.N.Mittal) ‘gs’ Judge 5