Case Law Details
RELEVANT PARAGRAPH
6. Section 132(1) (b) & (c) of the Act to the extent relevant to the present case reads thus:-
132. (1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner] [or any such (Joint Director) or (Joint Commissioner) as may be empowered in this behalf by the Board], in consequence of information in his possession, has reason to believe that-(a) any person to whom a summons under sub-section
(1) of section 37 of the Indian Income-Tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the India Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income of property [which has not [which has not been, or would not be, disclosed] for the purposes of the Indian Income-tax Act, 1922 (11 of 1992), or this Act (hereinafter in this section referred to as the undisclosed income of property). then,–
(A) the Director General or Director…. …. or
(B) ………. as the case may be, may authorize any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner to
(i) enter and search any [building, place vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;
Thus, search and seizure action can be initiated under section 132 of the Act only if the designated authority forms a reasonable belief on the basis of the information already in possession that (one) a person to whom summons was issued to produce books of account or other documents has failed to produce the said books of account or documents specified in the summons, or (two) any person to whom a summons might be issued, will not produce any books of accounts or other documents which may be useful for or relevant to any proceedings under the Act, or (three) any person in possession of any money, bullion, jewellery or other valuable articles which partly or wholly represents the income which is not disclosed or would not be disclosed.
7. The first contention of the assessee is that in the present case, there was neither information received nor any reason to believe formed by the designated authority that any one or more conditions set out in clauses (a), (b) & (c) of section 132(1) of the Act existed before issuing the warrant of authorisation and, therefore, the entire search and seizure action is ab initio void.
8. There is no merit in the above contention because, the revenue has produced before us the confidential information received by the designated authority as well as the satisfaction note recorded by the designated authority before issuing the warrant of authorisation. The revenue has declined to furnish a copy of the satisfaction note to the assessee on the ground that the said note contains the name of the informer and disclosing the name of the informer would seriously prejudice the investigation. It is not the mandate of section 132 or any other provision in the Act that the reasonable belief recorded by the designated authority before issuing the warrant of authorisation must be disclosed to the assessee. Therefore, the fact that a copy of the information received or the satisfaction note recorded has not been furnished to the assessee cannot be a ground to hold that the search and seizure is bad in law. However, on the basis of the material placed before us, it is clear that in the present case, specific information was received on 16/4/2008 and after holding preliminary enquiry, the designated authority recorded its reasons on 13/5/2005 as to why search and seizure action is necessary and thereafter issued the warrant of authorisation on 14/15-5-2008.
12. Where the information is that the tax due to the revenue has been evaded by furnishing fake or exaggerated bills, it would be reasonable to believe that the assessee would not disclose the actual modus operandi adopted for such tax evasion. Similarly, if the information received is that the assessee has received undisclosed income, then it would be reasonable to believe that the assessee would not disclose details of the undisclosed income received. In the present case, the information received was that the assessee has been manufacturing fake / exaggerated invoices and, therefore, the designated authority was justified in forming a belief that conditions set out in clause (b) of section 132(1) of the Act is satisfied. Similarly, the information received was that the investments made out of the funds brought to India represented the undisclosed income of the petitioner No.2 and, therefore, the designated authority was justified in forming a belief that conditions set out in clause (c) of section 132(1) of the Act are satisfied.
