Judgment Intelligence
Petition Dismissed- Court
- Supreme Court of India
- Date of Decision
- 14 December 1973
- Bench
- Chief Justice A.N. Ray and Justices D.G. Palekar, Y.V. Chandrachud, A. Alagiriswami and P.N. Bhagwati
- Relevant Acts & Sections
- Constitution of India — Articles 14, 19(1)(f), 19(1)(g), 20(3), 31, 32 and 226; Income-tax Act, 1961 — Sections 132 and 132A; Income-tax Rules — Rules 112 and 112A; Indian Evidence Act — Section 5
Writ petitions and appeals dismissed with costs: Writ Petition Nos. 446 of 1971 and 86 of 1972 failed on the constitutional and factual challenges, and Civil Appeal Nos. 1319 and 1320 of 1968 failed as the Delhi High Court rightly refused the writ of prohibition (paras 23, 29, 32-33).
Source Supreme Court of India, judgment dated 14 December 1973 · Court's copy
Key holdings
- Evidence from an illegal search or seizure is not shut out where relevancy is the test, unless a law expressly or impliedly prohibits it (para 22).
- Neither the spirit of the Constitution nor a strained reading of fundamental rights excludes such evidence (para 21).
- Material seized in breach of section 132 may be used, subject to law, before the tax authorities; no writ of prohibition lies (para 23).
- Section 132 and rule 112 are reasonable restrictions under Article 19(1)(f) and (g), given their safeguards (paras 9-10, 15).
- Section 132(5) is not confiscatory, and section 132 does not offend Article 14 (paras 14, 16-17).
- The Director of Inspection can form the reasonable belief section 132(1) requires (paras 12-13).
- Seizing documents later found irrelevant is at most an irregularity, not an illegality (para 31).
Case explainer by NyayVidhan: an account of this judgment and the law it laid down, not the court's text. The judgment itself is the authoritative version.
Brief Facts
Questions before the Court (framed by NyayVidhan)
- Do sections 132(1) and (5) and rule 112A impose unreasonable restrictions on the freedoms in Article 19(1)(f) and (g)?
- Is section 132(5) confiscatory, and does section 132 discriminate between tax evaders in breach of Article 14?
- Can the Director of Inspection form the reasonable belief that section 132(1) requires?
- Can material seized in an illegal search be used against the person searched, or must a writ of prohibition issue?
- Were the searches in the two writ petitions illegal, mala fide or excessive?
Submissions
For the petitioners and appellants. Sections 132(1) and (5) and rule 112A offended Articles 14, 19(1)(f) and (g) and 31 (para 1), and could harass an innocent custodian of another's valuables (para 11). The Director of Inspection, having no contact with the assessee, could not form a reasonable belief, least of all under clause (b) that a person would not produce documents if asked (paras 12-13). Section 132(5) was confiscatory (para 14) and discriminated between evaders found with undisclosed assets and others (para 16). Conceding that no Article bars evidence from an illegal search, the appellants said its use offends the spirit of the Constitution, relying on American cases (para 20). The searches were called mala fide, oppressive and excessive: a festival day, an ailing father in the house, unknown or hostile panchas, irrelevant documents seized and a search of about 16 hours (paras 25, 30-31).
For the Department. Its affidavits denied these allegations: the authorisation was shown and signed for, the panchas were residents or neighbours, and the first petitioner had been non-cooperative, with returns not filed (paras 25, 28, 30). The judgment records no separate argument for the Department on the constitutional points.
Court's Findings
Article 19: reasonable restrictions
The provisions are aimed at persons believed on good grounds to have evaded tax, and evasion eats into the vitals of the economic life of the community, so the fiscal authorities need sufficient powers (para 6). Following M. P. Sharma and R. S. Jhaver, a search and seizure is a temporary interference, and safeguards on the lines of the Criminal Procedure Code make it a reasonable restriction (paras 7-9). Section 132 has them: the power rests with the highest officers, needs a reasonable belief on one of three grounds with reasons recorded under rule 112, is limited to specified purposes and officers not below an Income-tax Officer, and is followed by a summary enquiry and release, with the Code's search provisions applying (para 10). An innocent custodian can explain under sub-section (4) whose valuables he holds (para 11).
Section 132(5) and Article 14
Sub-section (5) is not confiscatory: the officer retains only what a summary enquiry estimates as tax due, releases the rest, may release everything on satisfactory arrangements for payment, and any excess is refunded with interest after regular assessment (para 14). Nor is there discrimination: all evaders can be proceeded against under section 132, a search is useful only where there is information about undisclosed income, and regular assessment is the same for all (paras 16-17).
The Director of Inspection's belief
The Director is next only to the Board, Income-tax Officers are subordinate to him, and he may make enquiries under the Act, so he has ample opportunity to form a reasonable belief (para 12). Even under clause (b), reliable information that an assessee has consistently concealed income from financial deals may justify a belief that he will not produce his documents if asked (para 13).
Evidence from an illegal search
No Article bars such evidence, and the Court would not exclude it by invoking a spirit of the Constitution or by a strained construction of fundamental rights, relying on A. K. Gopalan and on M. P. Sharma, which declined to import the American Fourth Amendment (para 21). Indian evidence law follows English law: Barindra Kumar Ghose, Allahdad Khan, Kuruma and Herman King show that relevant evidence is not excluded because of an illegal search, and the discretion to exclude unfairly obtained evidence is a rule of prudence and fair play, not of evidence. Unless the Constitution or another law expressly or by necessary implication prohibits it, such evidence is not shut out (para 22). Even assuming the searches broke section 132, the seized material could be used, subject to law, before the Income-tax authorities, so no writ of prohibition could issue (para 23).
The searches in the two writ petitions
Search and seizure is a drastic process that may unnerve the inmates, but oppression and mala fides need more substantial grounds; the allegations were not made out, and the Director's recorded grounds, which the Court called for, supported his belief (paras 25, 28-29). Seizing documents later found irrelevant is at most an irregularity, not an illegality, and a long search is no objection; a completed assessment does not stop a belief based on new information, here a new godown not reflected in the books (paras 31-32).
What Changes
Legal Principle
NyayVidhan's view · Practice note
Why It Matters
The ruling's core is a test of relevancy: evidence is not shut out because the search that produced it was illegal, unless the Constitution or another law expressly or by necessary implication prohibits its use (para 22). Read it with its limits. It arose from income-tax searches, and the Court held only that material seized in breach of section 132 could be used, subject to law, before the tax authorities (para 23). It did not approve illegal searches: it tested each search against section 132 and rule 112 on the facts (paras 25-32), and it noted the Privy Council's view that a court may still decline evidence obtained by conduct of which the prosecution ought not to take advantage, as a rule of prudence and fair play (para 22). The exception it stated, a prohibition in another law, is where later statutory safeguards come in. For NDPS searches, see Khet Singh v. Union of India and State of Punjab v. Baldev Singh.
Editorial comment by the NyayVidhan Editorial Desk. It is not part of the Court's judgment and is not legal advice.
Precedents Relied Upon
- M. P. Sharma v. Satish Chandra [1954] S.C.R. 1077
A power of search and seizure is an overriding power of the State for the protection of social security, regulated by law; a search and seizure is only a temporary interference with the right to hold property, so statutory regulation is a reasonable restriction. Also relied on (as Satish Chander) for declining to import the American Fourth Amendment into a different fundamental right by strained construction.
- The Commissioner of Commercial Taxes and others v. R. S. Jhaver and others [1968] (1) S.C.R. 148
Search and seizure powers in a taxing statute to check evasion were upheld; with the safeguards of section 165 of the Criminal Procedure Code applied, the power to search was not arbitrary and was a reasonable restriction.
- C. Venkata Reddy and Another v. Income-tax Officer (Central) 1, Bangalore, and others 66 Income-tax Reports, 212
The lesser points against section 132 under Articles 14 and 19(1)(f) and (g), not pressed at the hearing, had been adequately dealt with and rejected in this decision.
View all precedents (10)
- Ramjibhai Kalidas v. I G. Desai, Income-tax Officer, and others 80 Income-tax Reports, 721
The lesser points against section 132 under Articles 14 and 19(1)(f) and (g), not pressed at the hearing, had been adequately dealt with and rejected in this decision.
- Balwant Singh and others v. Director of Inspection 71 Income-tax Reports, 550
The Delhi High Court decision on which the orders under appeal rested: it upheld section 132 and held that nothing in Article 19 forbids the use of evidence obtained in an illegal search; an appeal to the Supreme Court was not prosecuted. The Court held the High Court right to refuse a writ of prohibition.
- A. K.Gopalan v. The State of Madras [1950] S.C.R. 88 at p. 120
Kania C.J.: courts cannot declare an Act void as opposed to a spirit supposed to pervade the Constitution but not expressed in words; quoted to reject the argument that admitting illegally obtained evidence offends the spirit of the Constitution.
- Barindra Kumar Ghose and others v. Emperor I.L.R. 37 Calcutta 467
What would otherwise be relevant does not become irrelevant because it was discovered in a search that disregarded the Criminal Procedure Code, though the absence of the precautions calls for careful scrutiny.
- Emperor v. Allahdad Khan 35 Allahabad, 358
A conviction under the United Provinces Excise Act was not rendered invalid because the house was searched without a warrant.
- Kuruma v. The Queen [1955] A.C. 197
The Privy Council: the test of admissibility is relevance, and the court is not concerned with how relevant evidence was obtained; ammunition found in an unauthorised search was admissible.
- Herman King v. The Queen [1969] (1) A.C. 304
The Privy Council applied Kuruma despite a constitutional guarantee against search; the court has a discretion to exclude evidence obtained by conduct of which the prosecution ought not to take advantage, which the Court described as a rule of prudence and fair play, not a rule of evidence.