UNIVERSAL EMPIRE EDUCATIONAL SOCIETY vs. CHIEF COMMISSIONER OF INCOME TAX AND ANR
What did the High Court hold?
The High Court held that the writ petition could be disposed of with a direction to the respondents to release the original sale deed to the petitioner. This release would be conditional upon the petitioner furnishing a bank guarantee for the sum of Rs. 10,50,368/- to the satisfaction of the Additional Third Respondent. The respondents were permitted to retain a photostat copy of the sale deed for official purposes. The court directed that this be done on the same day the bank guarantee is furnished. Furthermore, if the order of the Commissioner of Income Tax (Appeals) is sustained and the Revenue's Second Appeal is dismissed, the respondents are to forthwith return the bank guarantee to the petitioner. The court did not explicitly leave any issue undecided, but the ultimate fate of the bank guarantee is contingent on the outcome of the pending appeal.
What were the facts?
The petitioner, Universal Empire Educational Society, an assessee under the Income Tax Act, 1961, had its premises searched under Section 132 on June 11, 2002. During the search, a sale deed dated October 8, 2001, executed in favor of the petitioner, was seized from the premises of a member of the society. Proceedings were initiated against the petitioner under Sections 158-BC, 158-BD, and 143(3). An order dated May 26, 2006, by the Deputy Commissioner of Income Tax levied tax and surcharge of Rs. 10,50,368/-. The Commissioner of Income Tax (Appeals) set aside this order on September 25, 2006. The petitioner then requested the return of the seized sale deed, which was not acceded to, leading to the filing of this writ petition.
What were the issues?
1. Whether the respondents are bound to return the original sale deed seized during the search operation, given that the assessment order has been set aside by the Commissioner of Income Tax (Appeals)? (Question of law and fact, concerning the custody of seized documents and the effect of an order setting aside an assessment). Assessee's Contention: The petitioner argued that the claim of the Revenue pertains only to the tax payable and that even if the appellate order is set aside, it would only lead to the restoration of the original assessment order. The petitioner was willing to furnish a bank guarantee for the amount of Rs. 10,50,368/- covered by the original assessment order, in exchange for the return of the sale deed. Revenue's Contention: The respondents stated that a Second Appeal against the order of the Commissioner of Income Tax (Appeals) has been filed before the Income Tax Appellate Tribunal and is pending. Therefore, the document cannot be released at this stage.
Which sections of the Income-tax Act were involved?
Section 132,Section 158-BC,Section 158-BD,Section 143(3)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
J U D G M E N T The petitioner, a Society registered under the Travancore Cochin Literary Scientific and Charitable Societies Registration Act, 1955, is an assessee under the Income Tax Act,1961. On 11.6.2002, a search operation under Section 132 of the Income Tax Act was conducted in the premises of Universal Institute of Advanced Studies and Research Private Limited, an educational institution run by the petitioner society. In the search, many documents and files were seized. One among them was the original of sale deed dated 8.10.2001 registered as document No.3634 of 2001 of Sub Registrar's Office, Puthencruz, executed by Rev.Fr.Joseph Puthussery, a non resident Indian in favour of Universal Empire Educational Society. The document was, however, seized from the premises of Sri. Sudheer Gopi, one among the members of the petitioner society. Pursuant to the search conducted on 11.6.2002, proceedings were initiated against the petitioner society under Section 158- BC read with Section 158-BD and Section 143 (3) of the Income Tax Act,1961. By Exhibit-P2 order passed on 26.5.2006, the Deputy Commissioner of Income Tax, Central Circle-1, Ernakulam levied income tax and surcharge aggregating to Rs.10,50,368/- on the petitioner. The petitioner carried the matter in appeal. By Exhibit-P3 order passed on 25.9.2006, the Commissioner of Income Tax (Appeals)-1, Kochi set aside Exhibit-P2. The petitioner thereupon moved the second respondent who seized the documents to return the original of sale deed No.3634 of 2001. When that request was not attended to, this writ petition was filed for a direction to the respondents to return the said document.
The learned standing counsel appearing for the respondents has filed a statement incorporating the instructions received from the additional third respondent. It is stated that against Exhibit-P3, a Second Appeal has been filed before the Income Tax Appellate Tribunal and as the appeal is pending, the document cannot be released at this stage.
I have heard Sri.V.G.Arun, the learned counsel appearing for the petitioner and Sri.George K. George, the learned standing counsel appearing for the respondents. The fact that Exhibit-P2 order has been set aside in Exhibit-P3 is not in dispute. It is also not disputed that the sale deed in question is in custody of the respondents. The only ground put forward for not returning the document is that a Second Appeal filed by the Revenue from Exhibit-P3 is pending before the Income Tax Appellate Tribunal. The learned counsel for the petitioner submitted that the claim of the Revenue can only be for the tax, if any, payable by the petitioner and that even if Exhibit-P3 is set aside, it can only lead to restoration of Exhibit-P2. The learned counsel for the petitioner further submitted that the petitioner is prepared to furnish bank guarantee for the amount covered by Exhibit-P2 and that on such bank guarantee being furnished, the respondents may be directed to release the sale deed referred to in prayer (i) of the writ petition. Sri.George K.George, the learned standing counsel appearing for the respondents did not seriously dispute the said submission. Having heard the learned counsel appearing on either side, I am of the opinion that the writ petition can be disposed of with a direction to the respondents to release the original of the sale deed referred to in prayer (i) of the writ petition to the petitioner (after retaining a photostat copy for official purposes) on the petitioner furnishing bank guarantee for the sum of Rs.10,50,368/- to the satisfaction of the additional third respondent. This shall be done on the date on which the petitioner furnishes the bank guarantee. If Exhibit-P3 is sustained and the Second Appeal filed by the Revenue from Exhibit-P3 is dismissed, the respondents shall forthwith return the bank guarantee to the petitioner. (P.N.RAVINDRAN, JUDGE) ma
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