DIRECTOR OF INSPECTION OF INCOME TAX (INVESTIGATION) NEW DELHI AND ANOTHER vs. POORAN MAL & SONS & ANOTHER

CIVIL APPEAL No. 1118/1974Supreme Court[1975] 2 S.C.R. 10420 September 1974Bench: 2 JudgesAuthor: P. JAGANMOHAN REDDY, A. ALAGIRISWAMI DIRECTOR OF INSPECTION OF11 pages
AI SummaryAllowed

What were the facts?

During searches in October 1971, 84 silver bars were attached from Lumi Commercial Bank and 30 from Punjab National Bank under Section 132(3) of the Income-Tax Act, 1961. Following Supreme Court upholding the validity of Section 132, the firm Pooran Mal & Sons and a partner filed a writ petition challenging an Income-Tax Officer's order dated January 12, 1972. This petition was disposed of by consent on April 6, 1972, quashing the order and allowing the Department to re-enquire, giving the petitioner an opportunity to argue the bars belonged to the firm, not Pooran Mal individually. An Income-Tax Officer's subsequent order on June 5, 1972, held the silver bars belonged to Pooran Mal individually. The firm and partner filed another writ petition, contending the bars belonged to the firm and the Income-Tax Officer's order was illegal, particularly as it was passed beyond the 90-day period prescribed by Section 132(5). The High Court found favour with the latter contention.

What did the Supreme Court hold?

The Tribunal held that the 90-day period prescribed in Section 132(5) is for the benefit of the person whose property is seized and can be waived. The respondents waived this benefit by agreeing to a fresh disposal of the case by the Income-Tax Officer, which revived his jurisdiction. The Tribunal clarified that this was not parties conferring jurisdiction but agreeing to a mode of exercising existing jurisdiction. Regarding the second issue, the Tribunal held that if an initial order was passed within 90 days, subsequent directions under Section 132(12) or by a court do not make the fresh order subject to the original 90-day limitation. Such a restriction would render sub-sections (11) and (12) of Section 132 ineffective. The Tribunal further held that the silver bars were attached under Section 132(3), not seized under Section 132(1), and therefore, the firm could not question the Income-Tax Officer's order on the ground of the time limit in Section 132(5). Consequently, the High Court was not competent to order the return of the silver bars without deciding the ownership. The appeal was allowed, and the High Court's order was set aside.

What were the issues?

1. Whether Section 132(5) of the Income-Tax Act, 1961, which prescribes a period of 90 days for the Income-Tax Officer to pass an order regarding seized property, is mandatory or can be waived by the assessee. The Assessee argued that the period is for their benefit and can be waived, which they did through the consent order and by participating in the fresh inquiry. The Revenue contended that the period is mandatory and cannot be waived. 2. Whether the 90-day period under Section 132(5) applies only to the initial order or also to subsequent orders passed pursuant to directions under Section 132(12) or by a court in writ proceedings. The Assessee argued that the period applies only to the initial order. The Revenue contended that subsequent orders, especially those directed by a court, are not subject to the original time limit. 3. Whether the High Court was justified in ordering the return of the silver bars when it had not adjudicated on the ownership of the silver bars, and whether the attachment under Section 132(3) rather than seizure under Section 132(1) affects the applicability of Section 132(5). The Assessee argued the order was illegal due to the time bar. The Revenue argued that the High Court should not have ordered the return without deciding ownership and that attachment under 132(3) has different implications.

Which sections of the Income-tax Act were involved?

Section 132(5),Section 132(3),Section 132(12),Section 132(11),Section 132(1)

AI-generated summary — verify with the full judgment below

104 DIRECTOR OF INSPECTION OF INCOME TAX (INVESTIGATION) NEW DELHI AND ANOTHER v. POORAN MAL & SONS & ANOTHER September 20, 1974 [P. JAGANMOHAN REDDY AND A, ALAGIRISWAMI, JJ.J I11<·ume-Tax AU, 1961, Si•ction 132(5):._Altachment of Ji/ver bars in 1he banks-Writ proceedings ending in a consent order--Frtsh enquiry by the Income-Tax 0/fi<'er-Respondents c/w//enging (he order as or.e passed beyond the period of ninety days-Respondents deriving benefit under sec, 132(5), if could waive the bencfii.r. lllcome-Tax Acr, 1961, Sub-sectiom (5), (II) and (12) of Sc£'1ion 132-· Income-Tax Officer tleciding to whom property seized' belongs-Initial order and ,,µbsequent order in comequem:e of direcrion.I' from High Co11rt-lf should he within 11i11ety days. lllcome-Tax Act, 1961, Section 132(3 )-Order a11avlti11g the sifrer bars in ti,. banks-Income Tax Officer deciding to whdm they belong--01der, if can be que•li011ed under sec. 132(5)-When ca11 Hixh Court order return of thr .~ilrf'r frar.t.

On an authorisation issued by the Director of Inspection, Pooran Mal's residence and business premises in Delhi were searched in October 1971. His premises in Bombay were also searche

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 132(5)

All 35 judgments and leading authorities on Section 132(5) →

Recent GST High Court judgments

Search GST case law →