Introduction

Search is one of the most potent weapons in the armory of the revenue department to detect tax evasion. In exercise of the powers of search u/s. 132 the authorized officer has power to search as well as seize any asset and evidences which represent unaccounted income. Occasionally, search action is held to be illegal on challenge by person searched. Issue arises in such cases as to whether material or evidence seized in pursuance of search held to be illegal can be used in any proceedings under the Act.

Search illegal – whether evidence found can be used

If a search is held to be illegal on the ground that same was not authorized in accordance with law or for any other reason, issue arises as to whether material found during such illegal search action can be used as evidence. Contention has been raised in various cases that once search is held to be illegal, assessee has to be restored to pre-search position. The issue has been considered in various cases and it has been held that though material seized has to be returned to the person searched, the department is not barred from calling for such papers and documents and use it as evidence. Some of the judgments on the issue are discussed hereinafter.

In the case Balwant Singh vs. R. D. Shah (1969) 71 ITR 550 (Del) it was contended that search without authority of law is in violation of fundamental rights of the citizen and therefore if evidence found in pursuance of illegal search is allowed to be used, it would amount to violation of fundamental rights. Rejecting the argument, the Hon’ble Court held that:

“Though in Ohio’s case the Supreme Court of the United States said that the rule which excludes unconstitutional evidence from being admitted is an essential part both of the Fourth and Fourteenth Amendments, Mr. Veda Vyasa suggested that the said rule as developed in the United States was not only a command of the Fourth Amendment but also a judicially created rule of evidence and there was no reason why the same rule of evidence should not be created by the courts in India because article 19 in our Constitution is intended also to serve the same purpose as the Fourth Amendment in the United States.

There are two ways of looking at the American decisions. One way of looking at those decisions may be, as suggested by Mr. Veda Vyasa, that the exclusionary rule is a judicially created rule of evidence. If that be so, then it would be open to the Legislature to override that rule and permit use of evidence illegally obtained. In that situation the matter will depend on the provisions of the Indian Evidence Act. Of course, it would be a different matter as to what value should be attached to an evidence illegally seized. No provision of the Evidence Act has been shown to us by Mr. Veda Vyasa which excluded such evidence. It is the other angle which creates difficulty. If it be held that the exclusionary rule is based on the Fourth Amendment, then an illegal seizure would be in as much violation of article 19 in India as it would be in violation of the Fourth Amendment in the United States. Even so, article 19 does not, in my opinion, forbid the use of evidence obtained as a result of an illegal search. It may be argued in support of the exclusionary rule that article 19 makes the right to acquire and hold completely restored. There is no restoration unless the parties are placed in a position in which they stood before the seizure and that, unless such evidence is completely excluded, there will not be any perfect restitution.

It is true that in appropriate cases the court may order restoration of the property illegally seized, but, so far as the use of information gathered as a result of such seizure is concerned, the court, or the appropriate authority, has, in any case, acting within the law, the power to call for such information and property and use the same in evidence. If it is done in accordance with law, no violation of article 19 arises. The information gathered, therefore, can otherwise be reached by the courts or other concerned authorities. The information gathered serves as a check on the person subjected to search and seizure that he will not destroy the records or conceal the information. If he produces it in pursuance of summons or notice, it can undoubtedly be used. If, on the other hand, he withholds it, it cannot be said that article 19 will exclude such evidence because he has no fundamental right to withhold the records and information. My conclusion, therefore, is that information gathered as a result of illegal search and seizure can be used subject to the value to be attached to it or its admissibility in accordance with the law relating to evidence. I will take an extreme case where documents are illegally seized and not only is the information kept in the minds of the concerned authorities but complete copies thereof are kept.

On the one hand, article 19 may be construed to mean that complete restitution of property would require restitution of those copies as well. On the other hand, it may be said that, since the court or the authority has still the power to call for the information, the authority may use those copies if the information or the documents are not produced. In that situation it cannot be argued that article 19 forbids the use of such copies completely. What will be the situation if there is no power in law in the authority concerned to call for such information or documents does not arise before us and I need not consider that. I would like to make it clear that I am expressing no opinion on the impact of article 20 on the use of such information.”

The above judgment was affirmed by Hon’ble Supreme Court in Pooran Mal vs. Director of Inspection (1974) 93 ITR 505 (SC) and it was held as follows:

“It would thus be seen that in India, as in England, where the test of admissibility of evidence lies in relevancy, unless there is an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out.”

The Hon’ble Court referred to following passage in Babindra Kumar Ghose vs. Emperor:

“Mr. Das has attacked the searches and has urged that, even if there was jurisdiction to direct the issue of search warrants, as IL hold there was, still the provisions of the Criminals Procedure Code have been completely disregarded. On this assumption he has contended that the evidence discovered by the searches is not admissible, but to this view I cannot accede. For, without in any way countenancing disregard of the provisions prescribed by the Code, I hold that what would otherwise be relevant does not become irrelevant because it was discovered in the course of a search in which those provisions were disregarded. As Jimutavahana with his shrewd common sense observes – 'a fact cannot be altered by 100 texts’ and as his commentator quietly remarked: ‘If a Brahmana be slain, the precept “Slay not a Brahamana” does not annul the murder.’ But the absence of the precautions designed by the legislature lends support to the argument that the alleged discovery should be carefully scrutinized.”

The issue of admissibility of evidence seized during search has also been tested in terms of Article 20 of Constitution in Dwarka Prasad Agarwalla vs. Director of Inspection (1982) 137 ITR 456 (Cal) and it was held

that: “In view of the decision of the Supreme Court in the case of Ramesh Chandra Mehta vs. State of West Bengal, AIR 1970 SC 940, and the observations of the court at p. 946, it is clear that a person whose house is being searched for gathering the materials as contemplated under sub-s. (1) of s. 132 is not an accused and, therefore, no question of testamentary compulsion arises.”

Therefore, even if search is held to be illegal and whatever is seized is directed to be returned, the evidence collected can be used in proceedings under the Act.

Such evidence has to be carefully scrutinized

However, such evidence has to be carefully scrutinized. In Dr. Pratap Singh vs. Director of Enforcement, (1985) 155 ITR 166 (SC), the Hon’ble Supreme Court held that though such evidence is not excluded, the same has to be carefully scrutinized:

“It has been often held that the illegality in the method, manner or initiation of a search does not necessarily mean that anything seized during the search has to be returned. After all, in the course of a search, things or documents are required to be seized and such things and documents when seized may furnish evidence. Illegality of the search does not vitiate the evidence collected during such illegal search. The only requirement is that the court or the authority before which such material or evidence seized during the search shown to be illegal is placed has to be cautious and circumspect in dealing with such evidence or material. This is too well-established to necessitate its substantiation by a precedent. However, one can profitably refer to Radhakishan vs. State of U.P. [1963] Supp 1 SCR 408; AIR 1963 SC 822, wherein the court held that assuming that the search was illegal, the seizure of the articles is not vitiated. It may be that because of the illegality of the search, the court may be inclined to examine carefully the evidence regarding seizure, but no other consequence ensues. (See State of Maharashtra vs. Natwarlal Damodardas Soni [1980] 4 SCC 669; AIR 1980 SC 593.)”

Even where a search is held to be illegal, evidence collected during search can be utilized in any proceedings under the Act though such evidence has to be carefully scrutinized before being used as evidence.

Article by CA Chetan Karia