TaxTMI 
TaxTMI 
2012 (4) TMI 250
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....2. The partnership firm constituted by the deed of partnership was to be known by the name and style of M/s. Sriram Warehousing Corporation. The business of the partnership consisted inter alia of providing security guards,valuation, verification, inspection of stocks, fixed assets, book debts, warehousing etc. A deed of rectification was entered into thereafter on 17 November, 1993. On 19 April 2004 a deed of dissolution was entered into by which the partnership firm was dissolved with effect from 31 March 2004. The petitioner was to continue the business of the firm as sole proprietor. According to the petitioner, the fact of the dissolution of the firm was intimated to the Income Tax Officer, Ward No. 16(1)(4), Mumbai by a letter dated 29 September 2005. 2. Warrants of authorization were issued under Section 132 by the Director of Income Tax (Investigation). Search and seizure proceedings were conducted in pursuance of the warrants of authorization, inter alia at the business premises and at the residential premises of the petitioner and his wife. A notice was issued on 28 May, 2007 under Section 153(a) calling for the returns of Income for the Assessment Years 2001-02 to 200....
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.... to enter and carry out a search of premises for books of account and documents relevant to proceedings under the Act, the Court will not substitute its own judgment or opinion on the question as to whether the order authorizing the search should have been issued; (ii) The Income Tax Act, 1961 makes specific provisions in Section 189 for assessment of a dissolved firm and by a deeming provision all the provisions of the Act are attracted as if the firm had not been dissolved. (iii) As a matter of fact, in the present case, the warrants of authorization have been issued also in the individual names of the petitioner and his spouse and covered not only the business but the residential premises as well; and (iv) An order has been passed under Section 132(8) extending the period for the retention of the documents seized untill 31 March 2013 or until pending the proceedings are disposed of, whichever is earlier. 5. Section 132(1) empowers inter alia the Commissioner and the Director to issue a warrant of authorization to an authorized officer to enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that books of account, other docum....
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.... be quashed. But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the Officers will not vitiate the exercise of the power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated Officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the Officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the Officer has in executing the authorisation acted bona fide." These principles where thereafter reiterated in a subsequent decision in Commissioner of Income Tax U.P. and Others Vs. Jawahar Lal Rastogi (197) ITR 78 486 (SC). In Pooran Mal Versus Director of Inspection (1974) 93 ITR 505 (SC) a Constitution Bench of the Supreme Court, while considering the ambit of Section 132 (1)(b) noted ....
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....ioner, we proceed to cull out the gist. In Southern Herbals Ltd. Vs. Director of Income Tax (Investigation) (1994) 207 ITR 55 , a learned Single Judge of the Karnataka High Court held that the scope of the writ jurisdiction while examining the validity of an authorization under Section 142(1) is limited to determine whether the belief formed by the authority issuing the authorization was reasonable, in the sense whether the belief was formed on the basis of relevant material or information. In Mahesh Kumar Agarwal Vs. Deputy Director of Income Tax and others (2003) 260 ITR 67, a learned Single Judge of Calcutta High Court held that the mere fact that the assessee had changed his residence would not form a reason to believe. In Dr. Sushil Rastogi Vs. Director of Investigations, Income Tax Department (2003 260 ITR 249, the Allahabad High Court emphasized that an authorization under section 132 cannot be founded merely on generalities. In a judgment in Ajit Jain Vs. Union of India and Others (2000) 242 ITR 302, the Delhi High Court held that the mere providing of information of a general nature by the Central Bureau of Investigation that the petitioner was in possession of cash amount....
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....ks of account are therefore, not a correct estimate of what is actually realized. To deflate the profits, bogus expenses (wages to non existent security guards) are entered in the books of account. The money so siphoned off is reintroduced as advances from the employees. The money is withdrawn form the bank in cash for bogus expenses. But the same is transfered to the personal account of the petitioner or is used for taking fixed deposits from various banks located in Mumbai, Palghar, Panvel, Lonavala, Pune etc. The fixed deposits, the satisfaction note states, have not been disclosed to the Income Tax Department. Such fixed deposits would be kept either in the individual names of the petitioner and his spouse or in the joint names. A Trust had been created by the petitioner. It was alleged that the fixed deposits were to the tune of Rs. 25 to Rs. 35 Crores. The satisfaction note records a reference to the banks in which the Group maintains accounts, fixed deposits and lockers. The places where incriminating documents may be found and the persons whose custody they are likely to be are mentioned. On the basis of the satisfaction note recorded by the Assistant Director of Income Tax....
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....proceedings and participated in the assessment. In the present proceedings, the ambit and jurisdiction of this Court is limited to a determination of whether the Director of Income Tax (Investigation) had a reason to believe within the meaning of Section 132(1). In our view, the circumstances which are set out in the satisfaction note provided adequate material on the basis of which the Director of Income Tax (Investigation) has formed a reason to believe within the meaning of Section 132(1)(b). Applying the test, that was laid down by the Supreme Court in Seth Brothers and in Pooran Mal (supra) the power in the present case has been exercised in furtherance of the statutory duties cast upon the Director of Income Tax. The Director of Income Tax (Investigation) has entertained the requisite belief for bona fide reasons which fall within the ambit and purview of Section 132(1)(b). The sufficiency of these reasons cannot be questioned by this Court in exercise of the writ jurisdiction under Article 226 of the Constitution. The satisfaction has been arrived at on the basis of relevant and material circumstances which are recorded. As regards the return of the documents, Section 132(a)....