Holding

Section 132 of the Income‑Tax Act cannot be used to search and seize property that is already in the legal custody of another department when its location is known, rendering the Income‑Tax warrant invalid.

Summary

Tarsem Kumar was intercepted by Customs in 1970, and Rs.93,500 in cash, gold sovereigns and his car were seized and placed under the custody of the Customs department. After the Customs seizure was quashed, the Income Tax Department issued a warrant under section 132 of the Income‑Tax Act to seize the cash from the Customs authorities. The High Court held the warrant illegal and ordered the money returned to Customs. The Revenue appealed to the Supreme Court, which examined the meaning of "search", "seizure" and "possession" in section 132 and whether a department can exercise its power against property already in the legal custody of another department. The Court concluded that when the location of the property is known and it is in the physical possession of another government department, section 132 cannot be invoked, making the Income‑Tax warrant invalid. Consequently, the money must be returned and the revenue’s appeal was dismissed.

Issues considered

Can section 132 of the Income‑Tax Act be used to search and seize property already in the custody of another government department?
How should "search", "seizure" and "possession" be interpreted under section 132?
Does the Income‑Tax warrant contravene section 110 of the Customs Act?
Is an order under section 132(3) valid when the exact location of the property is known?

Legislation cited

Customs Act, 1962s. 110, s. 110(2), s. 124
Income Tax Act, 1961s. 132, s. 132(1), s. 132(3), s. 132(5)
Income Tax Rules, 1962s. 112(11)

Subjects

search and seizureincome taxcustomspossessionsection 132inter‑departmental authorityconstitutional writArticle 226Customs Actinterpretation of statutes

Judgment

A

COMMISSIONER OF INCOME TAX, HARYANA, r·
HIMACHAL PRADESH & DELHI & ORS.
v.
B TARSEM KUMAR & ANR.

JULY 17, 1986

[R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.] !
~

c
Search and Seizure-Seizure amount in custody of customs
authorities-Court directing the customs authoriti£s to return the
i
amount to the respondent-Whether the said amount could be seized by
the Income-tax authoriti£s under section 132 of the Income tax Act, 1961
read with Rule 112(11) of the Income Tax Act, 1962 from the customs
authorities-Whether it militates the provisions of section llO(II) of the )
D Customs Act, 1962-Words and phrases-Meaning of"Search'', "Sei-
zure'' and ''Possession'', explained.

On 23rd Augnst, 1970, when the respondent was travelling by
car, alleged to be belonging to his brother, from Ambala to Batala, the
Customs Officer intercepted him near the Beas river and forcibly taken
E along with the driver, Gurunam Singh to the Customs House at Am-
ritsar. The respondent along with the driver was searched and the
cnstoms authorities t.ook into possession Rs.93,500 in Indian currency,
+
JO gold sovereigns and the car in which he travelled. The Customs
authorities, thereupon initiated departmental proceedings under sec-
tion 1 JO(II) of the Cnstoms Act, 1962 and extended the period of aing of
F the show-cause notice under section 124 of the Customs Act, 1962.
These proceedings were quashed by an order of the Learned Single
Judge of the High Court of Punjab on 24th April, 1972 following an
earlier decision of that Court. After the said judgment, the respondent ~

approached the customs authorities for the return of the money and the
car on 11.5.1972. The gold sovereigns were not demanded because ac-
G cording to the respondent thes" did not belong to him. He had been
directed to come on the following day to get back the currency notes and
the car. On the next day, however the Income Tax Officer served the
warrant of authorisation dated 10th May, 1972 issued under section 132
of the Income Tax Act, read with Role 1U(Il) of the Rules on the
respondent as well as on the customs department with the result the 'r
H cash was taken possession of by the Income Tax authorities. Thereafter
294
C.l.T. v. TARSEM KUMAR 295

the respondent filed another writ petition under Article 226 and 227 of A
the Constitution. The customs authorities also filed an appeal against
the decision of the Single Judge dated 24th April, 1972. The writ peti-
tion and the appeal were heard together by a Division Bench of the
Punjab High Court. Dismissing the appeal and allowing the writ peti-
tion the High Court held that where the amount was seized by the B
customs authorities and the seizure was held illegal by the Court,
customs authorities were bound to return the money to the person
entitled to it under the relevant provisions of section 110 of the Customs
Act, 1962; that the Income Tax authorities could not seize such an
amount from the customs authorities under section 132 of the Income
Tax Act arid authorisation of search and seizure was illegal if issued in
the name of the persm who did mt have possession of the Article in respect C
of which it was issued. Hence this appeal by the revenue by special leave.

Dismissing the appeal, the Court,

HELD: 1.1 On a coustruction of section 132 of Income Tax Act, D
1961 and the context, in which the words "search", "possession", and
"seizure" have been used in the said section and the rules indicate that
there cannot be any order in respect of goods or moneys or papers
which are in .the custody of another department under legal authority
where the location of the property was known to the Government, one
government department could not search another department and seize E
them. [301E-F]

1.2 Sub-Section (3) of section 132 of the Act uses the expression
''who is in innnediate possession or control there0f''. ''Possession'' is a
word of ambiguous meaning and its legal senses do not always coincide
with the popular sense. Possession again may not always he synonymous F
with manual detention or physical retention of the goods or moneys.
When the physical custody of the moneys and goods were with the
customs authorities, and that too by a· legal sanction and authority to
have that custody, it cannot be said that possession as used in section
132 of the Act was still with the respondent Tarsem Kumar. [30 lF-H]
G
1.3 Reading the expressions "retention" and "custody" in some
of the sub-sections of section 132 in the context these have been used, it
cannot be said, that where an authority or a person has retention and
custody with the legal sanction behind it, it was not the intention of the
legislature to say that he was not in possession as contemplated in
section 132 of the Income Tax Act, 1961. [302A-B] H
296 SUPREME COURT REPORTS [1986] 3 S.C.R.

A The, Commissioner of Income Tax v. Ramesh Chander & Ors .• 93
ITR 450 :Punjab; Tarsem Kumar & Anr. v. The Commissioner of
Income Tax, Haryana, Himachal Pradesh & Delhi & Ors., 94 ITR 567;
Laxmipat Chororia v. K.K. Ganl(Uli & Ors., 82 ITR 306 Calcutta,
approved:
B
Motilal and Ors. v. Preventive Intelligence Officer, Central Excise
and Customs, Agra & Ors., 80 ITR 418 Allahabad, distinguished and
partly overruled.

Noor Mohd. Rahimatulla Gillani v. The Commissioner of
Income-tax Vidrabha and Marathwada, Nagpur and Anr., [1976] Taxa-
c tion Law Reports, 688, Bombay; Pannalal v. Income Tax Officer, B-
Ward. Chhindwara and Ors., 9:i ITR p. 480 Madhya Pradesh; Guiab
and Company and Anr. v. Superintendent of Central Excise (Preven-
tive) Trichy, and Ors., 98 ITR 581 Madras; Assainar and Anr. v.
Income-tax Officer, Calicut and Ors., 101 ITR 854 Kerala, overruled.
D
1.4 It is true that in the instant case, the title was not transferred
to the Customs authorities by seizure under the Customs Act. But in the
context, in which the expressions "possession" and "seizure" have
been used, it cannot be considered to mean that the possession was
where the legal title was, physical possession was with the Customs
E authorities, title was with the respondent herein. In this context, the
physical posses..ion having regard to the language used is relevant and
material. Phjsical possession was with the Customs authorities when
the seizure authorisation was passed. Therefore, where the exact loca-
tion of the property was known and there was no need to seize the
money, the Income tax departmE,nt could direct handing over the
F money to the ':Income-tax authorities or take steps for such dirc-ction
through appropriate authorities and not by resort to section 132 of the
Income Tax Act. This is so because if the location was certain then r,
there was nothing to search or look for. [304G-H; 305A-B]

t.5 The lacuna in the law having been subsequently filled in by
G introducing section 132A of the Act with effect from October, 1975, it
will be open to the income tax authorities to approach the appropriate
authorities to realise any amount of money or to recover any books of
account or documents in accordance with the law. [3070-E]

CIVIL APPELLATE JURISDICTION: Civil Appeal No.1666
H (NT) of 1974.

'
C.I.T. v. TARSEM KUMAR (MUKHARJI, J.] 297

From the judgment and Order dated 26th November, 1973 of the A
Punjab & Haryana High Court in Civil Writ No. 3355 of 1972.

S.C. Manchanda, M.B. Rai and Ms. A. Subhashini for the
Appellants.
B
Harbans Singh for the Respondents.

The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. This appeal is by special leave
from a judgment and order of Punjab and Haryana High Court in an
application under article 226 of the Constitution. The judgment in c
question is reported in 94 I.T.R. 567. By a petition under articles226
and 227 of the Constitution the order of the Income Tax Department
dat~d 10th May, 1972,. passed under section 132 of the Income-tax Act,
1961 (hereinafter called the 'Act') and Rule 112(11) of the Income-tax
Rules, 1962 (hereinafter called the 'Rules') was challenged. The divi- D
sion bench by the impugned judgment allowed the petition, quashed
the search and seizure warrants and directed the Income-Tax Depart-
ment to return the moneys to the Customs authorities and gave certain
consequential directions. In order to appreciate the points involved, it
is necessary to refer to certain facts as found by the High Court. On
23rd August, 1970 the petitioner before the High Court, who is the E
respondent here, was travelling by car, alleged to be belonging to his
brother from Ambala to Batala. He was intercepted near the Beas
river by the Customs Officer and was forcibly taken along with the
driver, Gumam Singh, to the Customs House at Amritsar. The said
petitioner in that application was searched along with his driver and the
Customs authorities took into possesion Rs.93,500 in Indian currency, F
10 gold sovereigns and the car. On the 24th August, 1970, the peti-
tioner was produced before a Duty Magistrate at Amritsar and was
granted bail. In the meantime, the Customs department took proceed-
ings under section 110(2) of the Customs Act, 1962 and extended the
period of issuing of the show cause notice under section 124 of the
Customs Act, 1962. These proceedings were challenged in the High G
Court by Writ Petition and the order of the Customs authority under
section 110(2) was quashed by an order of the learned single judge of
the High Court on 24th April, 1972. The appeal against that decision
was dismissed by the division bench along with this petition by the
High Court. After the said judgment of the learned single judge, the
respondent had approached the Customs authorities for the return of H
298 SUPREME COURT REPORTS [1986] 3 S.C.R.

A the money and the car. The gold sovereigns were not demanded be- }-
cause according to the said petitioner, these did not belong to him. He
had been directed to come on the following day to get back the cur-
rency notes and the car. In the meantime on 12th May, 1972 the
Income-tax Officer, had served the warrant of authorisation dated
B 10th May, 1972 issued under section 132 of the Act and rule 112(11) of
the Rules on the respondent as well as on the Customs department,
with the result that only the cash was taken possession of by the income-
tax authorities. Thereafter, the respondent filed the petition under
t
articles 226 and 227 of the Constitution before the High Court m
respect of which the judgment impugned here was rendered.
-'f
c It was submitted that the authorisation warrant was illegal, be-
cause the money was not in his possession but was in the possession of
the Customs authorities. It was secondly urged that the action taken by
the Income-tax 'authorities under section 132 of the Act militated the
provisions of section 110(2) of the Customs Act. The High Court felt ""
;;
D that so far as'.the first contention was concerned, it was concluded by
the decision of the said High Court in The Commissioner of Income-tax
v. Ramesh Chander & Ors., 93 l.T.R. 450 (Pb). The High Court relied
on the following observations at pages 478-479 of the report:

"I have come to the conclusion that the search and seizure ~"'-
E warrants issued under sub-section (1) of section 132 of the
Income-tax Act were illegal, firstly, because the search and
seizure warrants were issued in the name of Ramesh Chan-
der and he was in fact not in possession of either the cur-
rency notes or account books, and secondly, the income-
tax authorities could not seize the currency notes and
F account books from the police officer who is duty bound to
proceed with the .case property in accordance with the pro-
visions of the Code of Crin1inal Procedure."

The High Court held that where the amount was seized by the
Customs authorities and the seizure was held illegal by the Court,
Customs authorities were bound to return the money to the person
G
entitled to it under the relevant provisions of section 110 of the
Customs Act, 1962. The Income-tax authorities could not seize such an
amount from the Customs authorities under section 132 of the Act. )-
Moreover, the authorisation was illegal if issued in the name of the
person who did not have possession of the article, in respect of which it
H was issued. The High Court further held that in the facts and circum-
C.I.T. v. TARSEM KUMAR [MUKHARJl,J.[ 299

stances of the case the order under section 132 of the Act was not A
JUst1t1cd. Therefore, the High Court he)d that the search and seizure
warrants were liable to be quashed and the money returned to the
customs department. The judgment of the High Court is reported in 94
J.T.R. 567. The validity of the judgment is impugned in this appeal.

It is necessary in order to appreciate the contentions urged in this B
case to refer to the relevant provisions of section 132 of the Act.
Sub-section (I) of section 132 provides as follows:

"Search and Seizure- ( 1) Where the Director of Inspec-
tion or the Commissioner [or any such Deputy Director of
Inspection or Inspecting Assistant Commissioner as may be C
empowered in this behalf by the Board,] in consequence of
inforn1ation in his possession, has reason to believe that
(a) any .person to whom a summons under sub-
section ( 1) of section 37 of the Indian Income-tax
Act, 1922 (XI of 1922), or under sub-section (1) D
of section 131 of this Act, or a notice under sub-
section (4) of section 22 of the Indian Income
Tax Act, 1922, or under sub-section ( 1) of section
142 of this Act was issued to produce or cause to
be produced any books of account or other docu-
ments has omitted or failed to produce, or cause E
to be produced, such books of account or other
documents as required by such summons or
notice, or
(b) any person to whom a summons or notice as
aforesaid has been or might be issued will not, or
F
would not, produce or cause to be produced, any
books of account or other documents which will
be useful for, or relevant to any proceeding un-
der the Indian Income-tax Act, 1922 (XI of
1922), or under this Act, or
(c) any person is in possession of any money, bullion, G
jewellery or othc· r valuahle article or thing and
such money, bullion, jewellery or other valuable
article or thing represents either wholly or partly
income or property [which has not been, or would
not be, disclosed] for the purposes of the Indian
Income-tax Act, 1922 (XI of 1922), or this Act H
300 SUPREME COURT REPORTS [1986] 3 S.C.R.

A (hereinafter in this section referred to as the un-
disclosed income or property),
[then,-
(A) the Director of Inspection or the Commissioner,
B as the case may be, may authorise any Deputy
Director of Inspection, Inspecting Assistant
Commissioner, Assistant Director of Inspection
or Income-tax Officer, or
(B) such Deputy Director of Inspection or Inspecting
Assistant Corr1missioner, as the case may be,
c may authorise any Assistant Director of Inspec-
tion or Income-tax Officer,

(the officer so authorised in all cases being hereinafter referred 'f.
to as the authorised officer to-)

D (i) enter and search any [building, place, vessel, veh-
icle or aircraft] where he has reason to suspect
that such books of account, other documents,
money, bullion, jewellery or other valuable arti-
cle or thing are kept;
(ii) break open the lock of any door, box, locker, ~··
E safe, almirah or other receptacle for exercising
the powers conferred by clause (i) where the keys
thereof are not available;
[iia) search any person who has got out of, or is about
to get into, or is in, the building, place, vessel,
F vehicle or aircraft, if the authorised officer has
reason to suspect that such person has secreted
'about his person any such books of account, other
documents, money, bullion, jewellery or other
valuable article or thing;]
(iii) seize any such books of account, other
G documents, money, bullion, jewellery or other
valuable article or thing found as a result of such
search;
(iv) place mark of identification on any books of ac-
count or other documents or make or cause to be
H made extracts or copies therefrom;
C.l.T. v. TARSEM KUMAR !MUKHARJJ,J.) 301

(v) make a note or an inventory of any such money, A
bullion. jewellery or other valuable article or
thing;"

The only other sub-section to which reference need be made is
sub-section (3) which is as follows:- B

"The authorised officer may, where it is not practicable to
seize any such books of account, other document, money
bullion, jewellery or other valuable article or thing, serve
an order on the owner or the person who is in immediate
possession or control thereof that he shall not remove, part
with or otherwise deal with it except with the previous c
permission of such officer and such officer may take such
steps as may be necessary for ensuring compliance with this
sub-section.''

D
It is not necessary to refer to the other provisions for the present
purpose. But the procedure indicated that if necessary, force may be
used for search seizure. Rule 112 of the said Rules provides the man-
ner in which such search and seizure should be conducted.

+ On a construction of the section; and the context, in which the E
words "search", "possession" and "seizure" have been used in the
said section and the rules indicate that there cannot be any order in
respect of goods or moneys or papers which are in the custody of
another department under legal authority. It is important to note that
the expression "possession" has not been defined in the Act.
F
It may be noted that sub-section (3) of section 132 of the Act uses
the expression "who is in immedie.te possession or control thereof".
"Possession" is a word of ambiguous meaning and its legal senses do
not always coincide with the popular sense. Reference may be made to
Halsbury's Laws of England, Vol. 35, 4th Edn. articles 1111-1126,
pages 617-627. Possession again may not always be synonymous with
manual detention or physical retention of the goods or moneys. It
appears to us that when the physical custody of the moneys and goods
were with the customs authorities, and that too by a legal sanction and
authority to have that custody, it would be improper to contend that
possession as used in section 132 of the Act was still with the respon-
dent. The use of the expressio'l "immediate possession" in sub-section H
302 SUPREME COURT REPORTS [1986] 3 S.C.R.

A (3) of section 132 does not detract from the meaning of possession in
the popular sense. This construction is not unmindful of the fact that in
some of the sub-sections of section 132 the expressions "retention"
and "custody" have been used, but reading these expressions in the
context these have been used, it cannot be said that where an authority
or a person has retention and custody with the legal sanction behind it,
B
it was not the intention of the legislature to say that he was not in
possession as contemplated in section 132 of the Income-tax Act, 1961.
In this connection, reference may be made to Burrows Words &
Phrases Judicial Dictionary, 4th Edn. page 306. All these aspects were
discussed by the Calcutta High Court (by one of us, Sabyasachi
Mukharji, J singly) in Laxmipat Chororia v. K.K. Ganguli & Ors., 82
c l.T.R. 306 (Cal). This decision was affirmed on appeal and the bench
decision of the said Court is reported in 931.T'.R. at p. 489. This aspect
of the matter has been clearly dealt with by a judgment of the division
bench of the Allahabad High Court in Motilal and Ors. v. Preventive
Intelligence Officer, Central Excise and Customs, Agra and Others, 80
I.T.R. 418. (Allah.) where the judgment was delivered by one of us
D
(R.S. Pathak, J.). There the Court held that the power conferred
under section 132( 1) of the Act was contemplated in relation to those
cases where the precise location of the article or thing was not known
to the Income-tax department and therefore, a search was .necessary
for it, and where it would not be ordinarily yielded over by the person
having possession of it. The view that section 132(3) of the Act would
E
include a case where the location of the article or thing was known and
where ordinarily the person holding custody of it would readily deliver
it up to the Income-tax department was not correct, it was so held by
the division bench of the Allahabad High Court.

It was further held that consequently goods in the custody of the
F
Assistant Collector of Customs and Central Excise were not things
which could be the subject of an order under seciion 132(3) of the Act.
Pathak, J. spoke for the division bench there at p. 422 of the report
thus:

"In my op1n1on, the power conferred under section
G
132(1) is rontemplated in relation to those cases where the
precise location of the article or thing is not known to the
income-tax department and, therefore, a search must be )-
made for it, and where it will not be ordinarily yielded over
by the person having possession of it and, therefore it is
H necessary to seize it. If it is only such article or thing which
C.I.T. v. TARSEM KUMAR (MVKHARJI,J.J 303

is contemplated by section 132( 1) then itis such article or A
thing alone which can be the subject of an order under
section 132(3). I am unable to accept the contention on
behalf of the Income-tax department that section 132(3)
will include a case where the location of the article or thing
is known and where ordinarily the person holding custody B
of it will readily deliver it up to the Income-tax department.
Such article or thing, I think, requires neither search nor
seizure.''

Mr. S.C. Manchanda, learned advocate for the revenue, drew
our attention to several decisions including the decision in Noor
Mohd. Rahimatulla Gillani, v. The Commissioner of Income-tax C
Vidrabha and Marathwada, Nagpur and another., 1976 Taxation Law
Reports 688 (Born bay).

In that case, after refering to the views expressed by the division
bench of Allahabad High Court and division bench of Punjab and 0
Haryana High Court in the judgment under appeal and the Calcutta
High Court, as indicated before, Chandurkar J. of the Bombay High
Court observed as follows:

"We are not inclined to accept the submission that no valid
+ authorisation to seize the amount lying with the Collector- E
of Central Excise and Customs, Nagpur could have been
issued under Section 132(1). The relevant provision in the
instant case is to be found in Section 132(1) (c) of the Act
and all that is required in order to issue an authorisation
under Section 132(1) is that either the Director of Inspec-
tion or the Commissioner must have reason to believe F
that any person is in possession of any money, bullion,
jewellery or other valuable article or thing and such
money, bullion, jewellery or other valuable article or
thing represents either wholly or partly income or pro-
perty which has not been disclosed for the purposes of the
Act or the Income-tax Act of 1922. It is the character of
G
money or assets as undisclosed income or property and
their possession that gives jurisdiction to issue the autho-
risation. Merely because some authority has seized that
money or property, its character which is believed to be
that of undisclosed income or property does not change.
The seizure of the cash amount of Rs.3,05,530 by the H
Ji1
"

304 SUPREME COURT REPORTS 11986] 3 S.C.R.

A Central Excise Authorities in the instant case no doubt
transferred physical possession of that amount from the
petitioner to the Central Excise Department, but the legal
ownership of that money still continued to be with the
petitioner. As long as that amount was not confiscated or
B did not become the property of the Central Excise De-
partment by virtue of an order passed under the relevant
provision of law if at all any order could be so passed the
property or the money did not cease to be that of the
petitioner. Though the Collector of Central Excise and
Customs was in possession of the money, since its alleged
character of being undisclosed income or property re-
c mained unattended the Collector satisfied the description
of ... any person" being in possession of undisclosed
income or property though the property represented the
undisclosed income or property of the petitioner himself.
The words used in s. 132( 1) (c) are "any person". Such a
D person may be a person who is in possession of his own
undisclosed income or property or a person who is in
possession of somebody else's undisclosed income or
property. The fact that the Collector of Central Excise
and Customs happened to be an officer of the Govern-
ment of India was not relevant because the Income-tax
E Authorities and the Central Excise Authorities were func-
tioning under two separate enactments which created two
different liabilities the enforcement of which was entrus-
ted to independent authorities under the Jaw. Disagree-
ing, therefore, with the authorities relied upon by the
petitioner, we must hold that the authorisation issued
F even against the Collector of Central Excise and Customs
enabling the Income-tax Officer to seize that amount was
a valid authorisation. In any case, in the instant case, a
subsequent order under s. 132(3) was already made and
even by the order unde: s. 132(5) that amount was di-
rected to be released."
G
It is true that the title was not transferred to the Customs ~u
thorities by seizure under the Customs Act. But in the context, in
which the expressions "possession" and "seizure" have been used, it
cannot be considered to mean that the possession was where the legal
title was, physical possession was with the Customs authorities, title
H was with the respondent herein. In this context, the physical posses-
C.I.T. v. TARSEM KUMAR IMUKHARJI,J.} 305

sion having regard fo the language used is relevent and material. Phys- A
~ ical possession was with the Customs authorities when the seizure
authorisation was passed. Therefore, where the exact location of the
property was known and there was no need to seize the money, the
Income-tax department could direct handing over the money to the
Income-tax authorities or take steps for such direction through ap- B
propriate authorities. In that view of the matter we are unable to
sustain the view of Chandurkar, J. as the learned Chief Justice then
-1. was of the Bombay High Court.

Mr. Manchanda also drew our attention to the case of Pannalal
~ v. Income-Tax Officer, B-Ward, Chhindwara and Ors., 93 I.T.R.
p.480 (M.P.) where the division bench of the Madhya Pradesh High c
Court was of the view that an order under section 132(3) could only be
passed after an authorisation for search and seizure had been made
under section 132(1) of the Act. The thing in respect of which the
~ order is made must be one regarding which the conditions mentioned
in clauses (a), (b) and (c) of section 132 are satisfied. But there was D
nothing in the requirements of section 132 to support the view that if
the Commissioner has definite knowledge that the books of account,
documents, money, bullion, etc., sought to be searched and seized are
in the possession of a particular person he cannot issue an authnrisa-
tion for search and seizure of the same. In our opinion, it may be
+ mentioned that if the location was certain, then there was nothing to
search or look for. Madhya Pradesh High Court, however, observed
E
that the expression "has reason to believe" signified that the Commis-
sioner has reason to be satisfied that the things to be searched are in
the possession of a particular person. The object of section 132 was
according to the High Court, not merely to get information of the
undisclosed income but also to seize the money, bullion, etc. repre- F
senting the undisclosed income and to retain them for purposes
.(
mentioned in section 132(5). Section 132(l)(c) of the Act did not
contain a condition either expressly or impliedly that the thing to be
seized should not be in the possession of a person who may willingly
part with his possession. There is no obligation on any one, not even
on Government officers of other department, to deliver anything to G
the income-tax authorities except when the.law requires them to do so.
The person authorised by the Commissioner could enter and search
any building, break open the lock of any door etc. But that did not
i mean that in every case the person authorised by the warrant would
have to exercise all those powers in making the search and seizing the
thing, according to the High Court. It was not necessary that an actual H
306 SUPREME COURT REPORTS [1986] 3 S.C.R.

A search must precede an order under section 132(3) directing a person
not to part with articles In his possession. Section 132( 1)( c) did not
contemplate that the person who has not disclosed his income or prop-
erty for the purposes of the Income-tax Act should himself be in pos-
session of money, bullion, etc. representing such income. Clause (c)
B spoke of "any person who is in possession" and it did not specifically
refer to possession by the person who had not disclosed his income. All
that the clause required was that the money, bullion etc. should be
such which represents either wholly or partly income or property
which had not been disclosed for purposes of the Income-tax Act and
such money, bullion, etc. should be in the possession of a person. This
construction was supported by the use of words "immediate posses-
c sion" in section 132(3) of the Act. This was the view of the High Court.

There an order under section 132(3) was passed by the Commis-
sioner of Income-tax on the Collector of Customs and Cenfral Excise
in respect of currency notes of the value of Rs.2,02.500 belonging to a
D firm, which the Collector was holding under the Gold Control Act and
which, as no offence was committed under that Act, the Collector had
ordered to be released . .It was also held by the High Court that the
Collector was under a legal obligation to return the currency notes to
the firm after the proceedings under the Gold Control Act had been
finalised. The power of the Collector was only to retain the currency
E notes for a limited period. It could be held that the currency notes
were held by the Collector for and on behalf of the firm and the order
passed under section 132 was valid.

For the reasons mentioned hereinbefore, we are unable to sus-
tain that view of the High Court. As mentioned before though legal
F title might have been with the person whose income was sought to be
taxed the physical possession was with the Customs authorities. Our
attention was drawn to a bench decision of the Madras High Court
where similar view was taken in Guiab and Company and Anr. v.
Superintendent of Central Excise (Preventive) Trichy, and Ors .. 98
I.T.R. 581 (Mad.). For the reasons we have indicated hereinbefore.
G
we are also unable to sustain this view. The Kerala High Court in the
case of Assainar and Anr. v. Income-tax Officer, Calicut and Ors., 101
l.T.R. 854 (Kerala) also accepted this view. We are, for the aforesaid
reasons, unable to sustain this view with respect The High Court
observed that the word "search" has varied meanings and it should be
given the general meanings "to look for" or "seek" which are also well
H known. But in the context the expression "seizure" and in the context
C.l.T. v. TARSEM KUMAR IMUKHARJI, J.] 307

the expression "search" where the location of the property was known A
to the Government, we are of the opinion that it could not be said that
one government department could search any other government de-
partment, and seize those documents.

Relying on the decision of the Allahabad High Court in Motil al' s B
case (supra) as well as the decision of the Calcutta High Court in
Laxmipat's case (supra), the learned single judge of the Punjab and
Haryana High ·Court in Ramesh Chander v. Commissioner of Income
Tax (supra) held that the word "seizure" implied forcibly taking from
the owner or who has the possession and who was unwilling to part
with the possession. In that case custody was with the police and it
would be inappropriate to accept the position that the income tax c
department which was another department of the Union of India had
to be armed with authority to seize from the unwilling persons. We are
in agreement with these views of the learned single judge. This view of
the learned single judge has been confirmed in the judgment of the
division bench, already referred to hereinbefore (reported in 93 LT. R. D
p. ·450). The lacuna in law has subsequently been filled in by 132A of
the Act with effect from October, 1975.

In the view of the law as it stood at the relevant time, we are
unable to sustain the challenge to the order, impugned in this appeal.
+ The appeal, therefore, fails and is accordingly dismissed with the
observations that it will be open to the Income-tax authorities to
E

approach the appropriate authorities to realise any amount of money
or to recover any books of account or documents in accordance with
law. In the facts and the circumstances of the case, parties will pay and
bear their respective costs.

·S.R. Appeal dismissed.