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of <h1>Court upholds legality of search & seizure under Income-tax Act, dismisses petitioners' claims.</h1> <h3>Kamal Khosla And Another Versus Director of Income-Tax (Investigation) And Others.</h3> Kamal Khosla And Another Versus Director of Income-Tax (Investigation) And Others. - [2002] 258 ITR 43, 176 CTR 251, 123 TAXMANN 1102 Issues:1. Legality of search and seizure proceedings under section 132 of the Income-tax Act.2. Release of seized material and cash.3. Allegations against Central Bureau of Investigation.4. Connection of petitioners with the business of other parties.5. Seizure of cash not concealed income.6. Adequacy of evidence regarding the accounted sum.7. Dismissal of the writ petition.Analysis:1. The main issue in this judgment was the legality of the search and seizure proceedings initiated under section 132 of the Income-tax Act. The petitioners sought to declare these proceedings as illegal and invalid. However, the court found no justification for such a declaration as the petitioners were inherently within the contemplation of the respondents even prior to the search, as their activities were considered connected with the business of other parties.2. The petitioners requested the release of the seized material, including cash amounts. The court examined the evidence presented and concluded that the seized cash of Rs. 1,40,000 was not concealed income and was reflected in the books of account. The petitioners failed to provide adequate evidence to prove the legitimacy of this sum, and hence, the court dismissed this request.3. Additional prayers were made to involve the Central Bureau of Investigation (CBI) in the investigation and to monitor their activities. The court rejected these requests, stating that there were no allegations against the CBI in the petition. The CBI was left to conduct its investigation without interference from the court.4. The argument was raised regarding the connection of the petitioners with the business of other parties involved in the search and seizure operation. The court found that the petitioners were indeed connected with the business activities of the other parties, as evidenced by the original files presented during the proceedings.5. Another issue raised was the alleged bribe of Rs. 2,80,000 demanded by inspectors during the search. The court noted that even if these events were true, they would not directly affect the legality of the search and seizure proceedings under section 132 of the Income-tax Act. The allegations of bribery were considered an attempt to prejudice the search operation.6. The adequacy of evidence regarding the accounted sum of Rs. 1,40,000 was also contested. The court examined the evidence presented by both parties, including statements and accounts, and found that the petitioners failed to conclusively prove the legitimacy of the sum. The court could not grant the relief claimed by the petitioners at that stage.7. Ultimately, the court found the writ petition to be without merit and dismissed it. The detailed analysis of each issue led to the conclusion that the petitioners' claims were not substantiated, and the legality of the search and seizure proceedings was upheld.
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