IT Dept Not Obliged To Furnish Documents Seized Pursuant To Authorized Search To Any Public Servant: Karnataka High Court

Justice M Nagaprasanna said that,

"On a conjoint reading of Sections 132 and 138(2) of the Income Tax Act, would lead to an unmistakable conclusion that once such seizure proceedings are undertaken by the officials of the Department under authorisation, they are not obliged to furnish any document to any public servant in respect of such matters relating to the assessee against whom search and seizure is taken up."

It therefore quashed a Section 91 CrPC notice issued by the Police to the IT Department officials, to hand over a diary that was seized during the raid conducted on the residence of the complainant.

The court also reiterated that Section 293 of the Income Tax Act mandates bars prosecution against Government or its officers for any act done in good faith under the Act.

The Court was dealing with a writ petition filed by the IT Department officials challenging a FIR alleging that there was gross violation of the procedure adopted in the search and seizure process at the complainant's premises.

Background:

On 15.03.2016, search and seizure proceedings were initiated by the Director General Of Income Tax (Investigation) and others on the residential premises of the then Member of the Legislative Assembly, K.Govindaraj, and several incriminating documents including a diary that was found during the search were seized.

Following which on 28.02.2017, the MLA registered a complaint with the Indiranagar Police Station, alleging that there was gross violation of the procedure adopted in the search and certain documents that were seized and particularly, the diary that belongs to the Complainant. Based on this, the police registered an FIR against the senior Income Tax officials.

Later the police issued a notice on April 13, 2017, under section 91 of the Criminal Procedure Code calling upon the petitioners to hand over the diary that was seized during the raid conducted on the residence of the complainant.

Following which the petitioners approached the court questioning the entire proceedings registered by the police against them. Advocate K.V.Aravind, appearing for the petitioners submitted that, registration of FIR against the petitioners is not maintainable as there is protection to the act of the petitioners under Section 293 of the IT Act and under Section 138 of the IT Act any document or incriminating material seized in a search and seizure proceedings under Section 132 of the Act, cannot be handed over or divulged as Section 138 of the Act begins with a non-obstante clause. Section 91 of the Cr.P.C. cannot override the provisions of either under Sections 132, 138 or under Section 293 of the Act, it was submitted.

Senior Advocate K.Shashikiran Shetty, appearing for the MLA opposed the plea saying that the writ petition itself is not maintainable as the petitioners are not even named in the FIR and what is called in question is only a notice issued under Section 91 of the Cr.P.C. to which the petitioners would be at liberty to file reply and justify their stand that they would not be in a position to release the diary.

Court findings:

The Court on going through the facts of the case and the various provisions of the Income Tax Act and the complaint filed by the MLA said, "A perusal at the complaint would in unmistakable terms indicate that what the complainant ultimately wanted is, the diary that was seized as according to the complainant, the Department would be using the diary for development of certain incriminating investigation."

It further added that a perusal at the (police) notice would clearly indicate that what the Police wanted was also the diary, which was allegedly seized during the raid.

In this backdrop it observed,

"Admittedly, search and seizure is performed by the petitioners under the Act. The bar of divulging any information or any document taken into custody during the seizure is available under Section 138(2) of the Act. In the teeth of the said provision in the Act, the notice issued by the Police, on the face of it, would be contrary to law."

The court opined that, "The notice that the Police issued on 13.04.2017, is on the strength of the FIR for the alleged offences as aforesaid. Since the notice emanates pursuant to registration of the FIR, the registration of the FIR itself was bad in law, as recording of FIR against the petitioners, who are officers of Government and have performed certain acts of search and seizure under Section 132 of the Act, cannot be brought to prosecution particularly, for the offences alleged in the FIR. The complaint ought not to have been entertained by the 3rd respondent/Police and registration of FIR ought not to have been done in the light of the aforesaid provisions of the Act."

The court also noted that it is rather shocking that what the complainant wants in the complaint is the diary and what the Police want to secure from the petitioners is the diary and no other document is required by the Police for investigation of the allegations of offences.

In this regard it remarked, "It cannot but be held that the 3rd respondent (police) was acting at the behest of the complainant to secure the diary by invoking Section 91 of the Cr.P.C., thereby summoning the diary."

Accordingly, the court quashed the FIR dated 28.02.2017, and all further proceedings taken up pursuant thereto against the petitioners.

Case Title: Director General Of Income Tax (Investigation) v. State Of Karnataka

Case No: Writ Petition No.29697 Of 2017

Date Of Order: 25th Day Of November, 2021

Appearance: Advocate K V Aravind, for petitioners; Advocate B.G.Namitha Mahesh, for R1 and R3; Senior Advocate K.Shashikiran Shetty, a/w Advocate Sandeep for R2

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