Special Bearer Bond immunity does not protect cash seized under income-tax search powers; seizure upheld.

Cash seized by the Income-tax Department under section 132(1) was not entitled to release merely because the assessee claimed it was meant for investment in Special Bearer Bonds. The Supreme Court held that the immunity under the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 applies only to moneys already invested in bearer bonds, where the Department cannot inquire into the source of acquisition. That immunity does not cover cash found and seized under the ordinary seizure powers of the Income-tax Act, and the bond scheme operates independently of those statutory powers. The claim to immunity therefore failed, and the seizure was upheld.

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Issues: Whether money seized by the Income-tax Department under section 132(1) of the Income-tax Act, 1961 could be released merely because the assessee claimed it was intended for investment in Special Bearer Bonds.

Analysis: The immunity under the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 was held to be limited to moneys already invested in bearer bonds, in which case the Department cannot question the source of acquisition. The immunity did not extend to cash discovered and seized under the normal provisions of the Income-tax Act, and the bond scheme was treated as independent of the Department's statutory powers of seizure.

Conclusion: The claim to immunity failed and the seizure under section 132(1) was upheld.

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