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of <h1>Court quashes search warrant under Section 132(5) of Income-tax Act, orders return of documents</h1> The court quashed the search warrant and proceedings under Section 132(5) of the Income-tax Act against the petitioner. It ordered the return of seized ... Burden Of Proof, Fresh Information, Income Tax Act, Reason To Believe, Search And Seizure Issues Involved:1. Legality of the search warrant issued under Section 132 of the Income-tax Act, 1961.2. Validity of the seizure of Rs. 10,000.3. Conduct and procedure followed during the search operation.4. Adequacy of the information and reasons for the search warrant.5. Allegations of fabrication of evidence and procedural impropriety.Detailed Analysis:1. Legality of the Search Warrant Issued Under Section 132 of the Income-tax Act, 1961The petitioner, a prominent advocate, challenged the search warrant issued under Section 132 of the Income-tax Act, 1961, on the grounds that it was issued without proper information and that the Commissioner did not apply his mind before issuing it. The court noted that the Commissioner must have some information, the information should be relevant, and the belief should be for a statutory purpose under Section 132(1)(a), (b), or (c). The court found that the Commissioner acted on conclusions arrived at by his subordinates rather than on his own assessment of information. The note recorded by the Commissioner indicated a policy decision rather than an individual assessment, which is not permissible under the law.2. Validity of the Seizure of Rs. 10,000The court scrutinized the seizure of Rs. 10,000 from the petitioner's premises. It was found that the authorized officer did not apply his mind before seizing the amount and did so under the extraneous orders of respondent No. 2. The court held that since the seizure was not legal, no inquiry could be held against the petitioner under Section 132(5) of the Act. The authorized officer's action was influenced by instructions from superior officers, which is against the statutory requirement of independent judgment.3. Conduct and Procedure Followed During the Search OperationThe court examined the procedure followed during the search operation and found several irregularities. The petitioner and his family were not allowed to leave the premises, and the search extended to the luggage of a guest, Shri Gurdial Singh Mann, without proper authorization initially. The court noted that the search warrant against Shri Mann was issued in a hurried and improper manner, indicating procedural impropriety. The court also found that the respondents fabricated evidence to justify their actions post facto, which is a serious procedural lapse.4. Adequacy of the Information and Reasons for the Search WarrantThe court emphasized that the Commissioner must have adequate information to form a reasonable belief before issuing a search warrant. The information must be relevant and substantial, not based on suspicion or conjecture. The court found that the information relied upon was derived from existing records and not from any new material. This reliance on old records without new information does not justify the issuance of a search warrant. The court concluded that the Commissioner acted on a policy decision rather than on specific information, which is not permissible.5. Allegations of Fabrication of Evidence and Procedural ImproprietyThe court found that the respondents fabricated evidence to justify the search and seizure. The note purportedly recorded by respondent No. 2 on October 7, 1974, was actually recorded after the search on October 14, 1974. The court also found that respondent No. 3 changed the order sheet of the file in the proceedings under Section 132(5) of the Act, which constitutes an offense under Section 193 of the Indian Penal Code. The court decided to issue notices to the respondents and the Assistant Director of Intelligence to show cause why a complaint under Section 193, IPC, should not be filed against them.ConclusionThe court quashed the search warrant dated October 8, 1974, and the proceedings under Section 132(5) of the Act against the petitioner. The court ordered the return of the seized documents and Rs. 10,000 to the petitioner. The court also directed the issuance of notices to the respondents to show cause for the alleged fabrication of evidence. The judgment underscores the importance of adhering to statutory safeguards and the need for independent application of mind by the authorities before taking drastic measures like search and seizure.
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