JUDGMENT
1. By this petition under Article 226 of the Constitution of India, the petitioners seek the following reliefs :
“(i) to issue a writ, order or direction, restraining respondent No. 1 from taking any action with regard to the seized documents and assets.
(ii) to issue a writ, order or direction, restraining respondent No. 1 from encashing various F.D.Rs. standing in the names of the petitioners and standing in the names of the other persons which were seized from the premises of the petitioner at the time of search dated January 12, 1995, by the income-tax authority.
(iii) to issue a writ, order or direction, directing respondent No. 1 to return a sum of Rs. 45,500 which was withdrawn from savings bank account No. 19538 of the Punjab National Bank, Eastern Kutchery Road, Meerut, on January 16, 1995.
(iv) to issue a writ, order or direction directing the respondent No. 1 to hand over the entire seized assets and documents to the assessing authority, Income-tax Officer, Ward-6, Meerut.
(v) to issue a writ, order or direction which this court may deem fit and proper in the circumstances of the case ; and
(v) to award the costs of the petition to the petitioners.”
2. The petitioners’ case is that a search under Section 132 of the Income-tax Act, 1961 (hereinafter referred to us “the Act”), was conducted by the respondents on their premises on January 12, 1995. Several bank deposit receipts belonging to the petitioners were seized. A copy of the seizure memo has been annexed with the writ petition as annexure “2”. It has been stated in the writ petition that no order under Section 132 has since been made. It is alleged that respondent No. 1 has illegally withdrawn a sum of Rs. 45,500 from the Savings Bank Account No. 19538 standing in the joint names of the petitioners with the Punjab National Bank, Eastern Kutchery Road, Meerut, after threatening the bank manager and that respondent No. 1 was also trying to encash the fixed deposits standing in the names of the petitioners, either individually or in the joint names. For this purpose, a letter dated March 2, 1995, a copy of which is annexure “4” to the writ petition, is said to have been addressed by respondent No. 1 to the bank. The bank has informed the petitioners that it is under acute pressure from the Income-tax Department to make the payment of the deposit receipt certificates. A copy of the bank’s letter has been annexed as annexure “6” to the writ petition. According to the petitioners, respondent No. 1 has no jurisdiction to withdraw the amount from the savings bank account or encash the deposit receipts. Therefore, this writ petition has been filed for the reliefs aforesaid.
3. By an interim order dated March 29, 1995, the petitioners as well as respondent No. 1, namely, the Assistant Director of Income-tax (Investigation), Meerut, were restrained from encashing various fixed deposit receipts standing in the names of the petitioners as well as in the names of other persons, which were seized from the premises of the petitioners at the time of the search on January 12, 1995.
4. In the rejoinder affidavit filed by the petitioners, it has been stated that in spite of the interim order aforesaid, respondent No. 1, by exercising pressure on the bank got a Pay Order No. 026912 dated March 29, 1995, for Rs. 2,66,734 prepared by the bank manager in favour of the Commissioner of Income-tax, Meerut, towards encashment of various fixed deposit receipts. However, because of the interim order of this court, the pay order was not delivered to the income-tax authorities and is still lying with the bank. Learned counsel for the petitioners informs that since the fixed deposit receipts have been converted into a pay order, the money is not earning any interest since then.
5. In the counter-affidavit filed on behalf of respondents Nos. 1 and 2, it has been admitted that the respondents attempted to get the fixed deposit receipts encashed, but did not pursue their attempts after the interim order of this court. In para 19 of the counter-affidavit, it is stated that the money lying in the form of FDRs and in other bank accounts was to be cashed in pursuance of the search warrant issued by the Deputy Director of Income-tax (Investigation), but the same is not being encashed in compliance with the interim order of this court dated March 29, 1995, and that a bank draft No. 026912 dated March 29, 1995, for Rs. 2,66,734 issued by the Union Bank of India, Delhi Road, Meerut, in favour of the Commissioner of Income-tax, Meerut, was not honoured by the bank.
6. The Union Bank of India, Meerut, as well as the Punjab National Bank have also been arrayed as respondents Nos. 3 and 4 to the writ petition and having been served, but they have not chosen to put in appearance.
7. We have heard Sri V.B. Singh, senior advocate, assisted by Sri Rajesh Kumar, advocate, for the petitioner, and Sri Rajesh Kumar Agarwal, learned standing counsel for respondents Nos. 1 and 2.
8. The petitioners now restrict the reliefs claimed by them only to the extent that a sum of Rs. 45,500 withdrawn from the Savings Bank Account No. 19538 with the Punjab National Bank, Eastern Kutchery Road, Meerut, on January 16, 1995, be directed to be redeposited by the respondents in the said bank and, similarly, the sum of Rs. 2,66,734 for which the Union Bank of India, Delhi Road, Meerut, issued a bank draft/pay order dated March 29, 1995, in the name of the Commissioner of Income-tax, Meerut, in respect of the various fixed deposit receipts in the names of the petitioners, individually or jointly, be reinvested in the fixed deposit receipts and that the respondents be restrained from encashing other fixed deposit receipts.
9. Under Sub-section (5) of Section 132 of the Act, the Income-tax Officer has to deal with the assets seized in the manner specified therein. The said Sub-section (5) stands as under :
“(5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in Sections 132A and 132B referred to as the assets) is seized under Sub-section (1) or Sub-section (1A), as a result of a search initiated or requisition made before the first day of July, 1995, the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry as may be prescribed shall, within one hundred and twenty days of the seizure, make an order, with the previous approval of the Deputy Commissioner,–
(i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him ;
(ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act ;
(iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment ;
(iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in Clause (a) of Sub-section (1) of Section 230A in respect of which such person is in default or is deemed to be in default,
and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in Clause (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized :
Provided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized and may also determine the interest or penalty, if any, payable or imposable accordingly :
Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in Clauses (ii), (iia) and (iii) or any part thereof, the Income-tax Officer may, with the previous approval of the Chief Commissioner or Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case.”
10. The aforesaid provision clearly indicates that till the tax liability is finally quantified by making an assessment, the Assessing Officer can only retain in his custody such asset or part thereof as are, in his opinion, sufficient to satisfy the aggregate of the amounts referred to in Clauses (ii), (iia) and (iii). Section 132 does not confer any authority on the Income-tax Officer to realise the assets and convert them into cash. That could be possible only when the demand is finally quantified and the assets have to be realised in discharge of that liability. That stage has not yet come and Sri Rajesh Kumar Agarwal, learned standing counsel for the respondents, could not point out to us any provision of law under which the Income-tax Officer could realise the fixed deposit receipts or withdraw the money from the savings bank account. The action of the authorities in doing so was, in our view, wholly unauthorised.
11. This writ petition is, therefore, partly allowed and it is directed–
(i) that respondents Nos. 1 and 2 are directed to deposit back a sum of Rs. 45,500 withdrawn from the petitioner’s Savings Bank Account No. 19538 with the Punjab National Bank, Eastern Kutchery Road, Meerut. This shall be done within 15 days from the date a certified copy of this order is presented by the petitioners before respondent No. 2 ;
(ii) respondents Nos. 1 and 2 are directed to take steps to inform the Union Bank of India, Delhi Road, Meerut, that the bank draft/pay order issued in favour of the Commissioner of Income-tax, Meerut, for a sum of Rs. 2,66,734 may be cancelled and the respective deposit receipts in respect of which this pay order/bank draft was issued be restored. This shall be done within a week from the date a certified copy of this order is presented before respondent No. 1 by the petitioners, and as soon as the bank, respondent No. 3, receives such communication from respondent No. 1, it shall revive the concerned fixed deposit receipts. In case any of them has since matured, it will be open to the petitioners and the respondents to get them renewed for a further term as they may consider necessary ;
(iii) that in respect of the other fixed deposit receipts, if any, seized by the respondents from the petitioners, the respondents are restrained from encashing them except for the purpose of discharge of the liability arising from assessments of the petitioners and are directed to get them renewed on the request made by the petitioners to that effect for such period as may be considered necessary. It is made clear that the seizure made under Section 132 of the Act will continue in accordance with law in respect of the original deposits as well as the renewed deposits, if any.
12. A certified copy of this order may be furnished to learned counsel on payment of usual charges within three days.