TaxTMI 
TaxTMI 
2010 (11) TMI 403
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....ilver weighing 54.078 kgs. with pure silver content of 33.738 kgs. and cash of Rs. 16,50,000 in an Indica car bearing registration number M.P.-13/T-5331. The police authorities submitted intimation to the Income-tax Department. On the basis of the information given by the police authorities a warrant of authorization dated December 5, 2008, under section 132A of the Income-tax Act, 1961, was issued. The authorised officer executed the warrant under section 132A of the Act. He was informed by the G. R. P., Katni, that the assets were in the possession of the C. J. M., Katni, and, therefore, the G. R. P., Katni, was not in a position to hand over the assets to the income-tax authorities. The petitioner submitted an application (annexure P/5), dated December 2, 2008, for release of the assets before the C. J. M., Katni. The Income-tax Department also made an application for release of the assets in its favour. Both the applications were decided by the C. J. M., vide order dated January 24, 2009. The application preferred by the petitioner was rejected. However, the application preferred by the Department was allowed and it was directed that the assets be handed over to the Income-tax ....
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....refore, taking of the possession of the trading stock in exercise of power under section 132A of the Income-tax Act is illegal and the same constitutes violation of the fundamental right contained in article 19(1)(g) of the Constitution of India. Learned senior counsel in support of the above submissions has relied on the decisions in Dwarka Prosad Agarwalla v. Director of Inspection [1982] 137 ITR 456 (Cal), Ganga Prasad Maheshwari v. CIT [1983] 139 ITR 1043 (All), L. R. Gupta v. Union of India [1992] 194 ITR 32 (Delhi), Ajit Jain v. Union of India [2000] 242 ITR 302 (Delhi), Union of India v. Ajit Jain [2003] 260 ITR 80 (SC), CIT v. Vindhya Metal Corporation [1997] 224 ITR 614 (SC), Amar Agrawal v. Director of Income-tax (Investigation) [2005] 276 ITR 182 (MP), ITO v. Seth Brothers [1969] 74 ITR 836 (SC), Naraindas v. CIT [1984] 148 ITR 567 (MP), Biaora Constructions P. Ltd. v. Director of Income-tax (Investigation) [2006] 281 ITR 247 (MP) and ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). He lastly submitted that the action of issuance of the impugned warrant of authorization suffers from the vice of non-application of mind inasmuch as there was no reason to believe that cas....
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.... or Director or the Chief Commissioner or Commissioner may authorize any joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer." 10. At this stage we deem it appropriate to deal with the scope and ambit of powers under section 132A of the Income-tax Act with regard to search and seizure. In Seth Brothers [1969] 74 ITR 836 (SC), the Supreme Court, while dealing with the provisions of section 132 of the Income-tax Act relating to search and seizure which is in pari materia with section 132A of the Income-tax Act, has held that the section does not confer any arbitrary power on Revenue officers. It was further observed that if the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity....
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....ion of India [2000] 242 ITR 302 (Delhi) held that the expression "reason to believe" mean that a reasonable man, under the circumstances, would form a belief which would impel him to take action under the law. The formation of opinion has to be in good faith and not on mere pretence. For the purpose of section 132 of the Act, there has to be a rational connection between the information or material and the belief about undisclosed income which is not likely to be disclosed by the person concerned. The aforesaid decision was affirmed by the Supreme Court in Union of India v. Ajit Jain [2003] 260 ITR 80 (SC). 14. The learned single judge of this court in Biaora Constructions P. Ltd. v. Director of Income-tax (Investigation) [2006] 281 ITR 247 (MP) has held that it is only when the assessee fails to explain its source when called upon to do so or when the source to acquire the assets is found to be not legal or when it could not be explained satisfactorily that formation of belief is made out in favour of the Revenue resulting in attracting the rigour of section 132A. 15. Keeping in view the above well-settled principles of law, we may now advert to the facts of th....
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....s satisfaction under section 132A as under : "I have perused the notes of the Additional DIT (Inv), Jabalpur, and the ITO (Inv), Jabalpur. I have also discussed the details of the case with both of them.In this case, after the receipt of information regarding seizure of cash and silver by the police, subsequent enquiries were conducted by the Income-tax Department to establish the nature of cash and silver. As per the details given in the notice of the ITO (Inv), investigation and enquiry have been carried out from the persons carrying cash and silver and also at place, i.e., Ujjain, where the claim of carrying business was stated. The contradictions in statement, in the challan and the actual measurement of silver, non-existence of working business as pointed out in the above notes along with the absence of supporting documents regarding cash and silver clearly indicate that the assets are unaccounted and they would not be disclosed for the purpose of the Income-tax Act. Therefore, I have reason to believe that this is a fit case for issue of authorization under section 132A." 17. It is worth mentioning here that neither there is any allegation of malice agains....