Reasoned belief for requisition of seized cash under tax law must rest on relevant information; unsupported authorisation is invalid.

An authorisation under section 132A of the Income-tax Act is valid only if the authorising officer has relevant information and a rational reason to believe that the seized assets represent undisclosed income or property. That jurisdictional belief is subject to judicial scrutiny, though not the sufficiency of the material. On the stated facts, the cash was traced to another source, the petitioner's explanation was corroborated by contemporaneous material, and the record did not support a belief that the amount would not be disclosed for tax purposes. The warrant of authorisation and requisition under section 132A were therefore invalid.

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Issues: Whether the warrant of authorisation issued under section 132A of the Income-tax Act, 1961, and the consequent requisition of the seized cash were valid in law.

Analysis: The power under section 132A can be exercised only when the authorising officer, on the basis of information in his possession, has reason to believe that the assets represent income or property not or not likely to be disclosed for income-tax purposes. The existence of such information and the formation of the requisite belief are open to judicial scrutiny, though not the sufficiency of the material. On the facts, the cash was found in the petitioner's possession, but the petitioner's explanation was corroborated by the statement of Rajan Shah and by the contemporaneous material relating to cheque discounting and cash withdrawal. The material also showed that the source of the cash traced back to J.J. Shroff, and without verification from that source there was no rational basis to conclude that the amount represented undisclosed income of the petitioner. The record did not support a reasonable belief that the cash would not be disclosed for tax purposes, and the authorisation was issued without satisfaction of the jurisdictional condition required by section 132A.

Conclusion: The warrant of authorisation and the order under section 132A were invalid and liable to be quashed; the petitioner was entitled to return of the seized amount with appropriate interest.

Final Conclusion: The requisition proceedings were held unsustainable for want of the statutory precondition of reasoned belief based on relevant information, and the petitioner succeeded in obtaining release of the seized cash.

Ratio Decidendi: An authorisation under section 132A is valid only if the authorising officer has, on relevant information, a rational reason to believe that the seized assets are undisclosed income or property of the person concerned; absent that jurisdictional foundation, the authorisation fails.

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