Search and seizure under income-tax law remains valid despite prior customs possession of the currency notes.

Section 132 of the Income-tax Act permits authorisation for search, seizure and restraint where the Commissioner has reason to believe that money or other valuables representing undisclosed income are in a person's possession. The power is not defeated because the currency notes were already seized by customs, and it is wide enough to cover a person holding property on behalf of the true owner. An actual search need not precede an order under section 132(3), and the subsequent retention order under section 132(5) was not vitiated on the facts. The challenge to the search and retention action therefore failed.

---

---

Issues: Whether the authorisation for search and seizure under section 132 of the Income-tax Act, 1961, and the consequential order under section 132(3) were invalid because the currency notes had already been seized by the customs authorities and were in their possession.

Analysis: The statutory scheme of section 132 permits authorisation where the Commissioner has reason to believe that money, bullion, jewellery or other valuable articles representing undisclosed income are in the possession of any person. The power is not confined to cases where the exact location is unknown, nor does it depend on the possessor's unwillingness to cooperate. The existence of a prior seizure by another authority does not exclude the operation of section 132, because the Act authorises search, seizure and, where seizure is not practicable, restraint under sub-section (3). The expression "any person" in clause (c) is wide enough to include a person holding the property for another, and the property may be retained on behalf of the true owner. The Court also held that an actual search need not precede an order under section 132(3), and that the subsequent order under section 132(5) was not vitiated on the facts.

Conclusion: The authorisation, the order under section 132(3), and the order under section 132(5) were valid, and the challenge failed.

Final Conclusion: The petitioner's challenge to the income-tax search and retention action was rejected, and the seizure was upheld under the statutory scheme.

Ratio Decidendi: Section 132 authorises search, seizure, and restraint of assets representing undisclosed income whenever the statutory conditions are satisfied, even if the assets are already in the possession of another authority or of a person holding them on behalf of the owner.

---