The Kerala High Court held that Authorised officer conducting search, seizure cannot retain documents beyond 15 days, so officers cannot encash the (IVP).
The appellant, Dr. R.P.Patel was denied the benefit under the Kar Vivad Samadhan Scheme, 1998, (KVS), wholly for the assessment years 1994-95, 1995-96, and partially for the years 1992-93 and 1993-94. The reason for denying the benefit was stated as the non-existence of tax liability for the said years on the date of application under the scheme. Appellant however claimed in the writ petition that, tax arrears existed on the date of application and the encashments of the seized Indira Vikas Patras of the appellant were without authority and illegally adjusted against the tax liabilities of the appellant. Thus, the application of the appellant was rejected stating that there were no existing tax arrears. The Single Judge held that the encashment was valid and disposed of the writ petition with directions most of which were contrary to the appellant’s claim.
The scheme of section 132 as well as from the decisions stated above that the authorised officer who conducted the search and seizure cannot retain the documents or assets beyond 15 days. If the authorised officer cannot retain the assets or the documents, it is ineluctable that the said officer could not have encashed the IVP’s. The authorised officer could not have been in de facto or de jure possession of the assets or documents seized under section 132(1) of the Act after 15 days of seizure.
The division bench of Justice S.V.Thomas and Justice Bechu Kurian Thomas held that all encashments were done by the respondent without authority or jurisdiction and that too after he had become functus officio.
The court held that the encashments of the IVP’s were contrary to law and were void as having been carried out by a person without authority.
The court relied on a decision of the Supreme Court in the case of Commissioner of Income Tax and Others v. K.V.Krishnaswamy Naidu & Co. wherein it was observed that the authorised officer could not pass an order under section 132(5) and he cannot retain the documents beyond 15 days and hence such officer could not have mooted a proposal under section 132(8) for further retention.
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