2014 (11) TMI 590 - HC - Income Tax

Delhi High Court quashes unauthorized search warrant under Income Tax Act, stressing the need for accurate identification

OM Fincap Pvt. Ltd., Pawan Kumar Dhingra Versus Commissioner of Income Tax-III, & Others

The Delhi High Court, in a judgment by Justice Badar Durrez Ahmed, allowed multiple writ petitions seeking the quashing of a warrant of authorization and ... Validity of warrant of authorization u/s 132 – Order u/s 127 – Confusion because of name of assessee - Held that:- The original Form No. 45, which is the warrant of authorization under Section 132 of the said Act has been seen - the warrant has been issued in the name of “Shri Om Prakash” and the address given is – “J-6/15, DLF City-II, Gurgaon. Mr Madan has also handed over a letter dated 10.11.2014 which has been issued to him by the Assistant Commissioner of Income Tax, Central Circle, Noida in connection with WP(C) 7639/2014 titled Om Fincap Private Limited v. CIT and Others - the search was conducted essentially in respect of the Premia Group and its group companies - The confusion has arisen because one of the directors in Elevate Real Estate Services Private Limited was also one Mr Om Prakash, whose full name was Om Prakash Duggal - Coincidently, the Mr Om Prakash Duggal was earlier also a resident of J-6/15, DLF City-II, and Gurgaon - the warrant of authorization dated 15.05.2013 did not, in fact, relate to Mr. Om Prakash Dhingra - the search operations conducted in the aforesaid locations would be without the authority of law – the warrant of authorization stands clarified that it does not relate to Mr. Om Prakash Dhingra but to Mr. Om Prakash Duggal - insofar as Mr. Om Prakash Dhingra and the other petitioners are concerned, the search operations are held as non est and all subsequent events pursuant thereto are also declared as non est - The order passed under Section 127 of the Income Tax Act on 18.09.2013 is also set aside – Decided in favour of assessee. Issues:1. Quashing of warrant of authorization under Section 132 of the Income Tax Act, 19612. Alleged mistaken identity leading to search operations3. Clarification of identity based on PAN numbers and parentage4. Declaration of search operations as non est and subsequent eventsAnalysis:The judgment by the Delhi High Court, delivered by Justice Badar Durrez Ahmed, pertains to multiple writ petitions arising from a common sequence of events. The main petition, WP(C) 7642/2014, involves a prayer for quashing the warrant of authorization dated 15.05.2013 and subsequent search operations under Section 132 of the Income Tax Act, 1961. Similar prayers were made in two other writ petitions. The petitioners contended that the searches conducted were based on mistaken identity, as Mr. Om Prakash Dhingra, a director in Om Fincap Private Limited, was not the intended target of the Income Tax Department. The confusion arose due to another individual, Mr. Om Prakash Duggal, who was associated with Elevate Real Estate Services Private Limited. The court noted that both individuals had different parentage and PAN numbers, establishing them as distinct persons.The judgment clarified that Mr. Om Prakash Dhingra had no connection with Elevate Real Estate Services Private Limited or the Premia Group, indicating a bona fide mistake of identity by the Income Tax Authorities. Consequently, the search operations conducted at the premises of Mr. Om Prakash Dhingra, Om Fincap Private Limited, and Mr. Pawan Kumar Dhingra were deemed unauthorized. The court ruled that the warrant of authorization dated 15.05.2013 did not pertain to Mr. Om Prakash Dhingra but to Mr. Om Prakash Duggal. Therefore, the search operations were declared as non est for Mr. Om Prakash Dhingra and other petitioners, along with setting aside subsequent events, including the order under Section 127 of the Income Tax Act on 18.09.2013.In conclusion, the writ petitions were allowed, with no order as to costs. The judgment emphasizes the importance of establishing the correct identity in search operations under the Income Tax Act and upholding the rights of individuals in such legal proceedings.