TaxTMI 
TaxTMI 
2014 (1) TMI 1188
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...., the petitioners seek appropriate writs of mandamus, prohibition and certiorari to arrest the effect of what the petitioners perceive to be an illegal process initiated under Section 132 of the Income Tax Act, 1961. Ordinarily, the filing of the petition itself would have served the purpose for which the petitioners carried it to court; for the challenge to the propriety of the search and seizure under Section 132 of the Act would require affidavits to be called for and push the matter to hearing. It is now common knowledge that hearing matters are not taken up in a hurry as courts and judges are not afforded the kind of time that is necessary for hearing matters to be taken up after tackling the weight of the motions that are traditionally placed ahead in the cause list. Unfortunately for these petitioners, the hearing was expedited and taken up, whereupon an application has been filed in which notices issued under Section 131 of the Act subsequent to the institution of the petition have been sought to be challenged. Strictly speaking, the challenge to the notices under Section 131 of the Act may not fall within the limited scope of the petition, which is confined to the propri....
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....) the Director General or Director or the Chief Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer. ..." It is evident from the plain language of the provision that there has to be information possessed by such high officer as named in the opening limb of the sub-section; and, that such information in the possession of the relevant officer should be the basis for the officer to believe that any of the three situations as recognised in clauses (a), (b) or (c) of the sub-section had arisen or was likely to arise, before such high officer can authorise one of the named subordinate officers to conduct a search and seizure operation in the manner provided. Clause (a) deals with a person who has failed to produce such material as was req....
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....he reasonableness of authorising a search and seizure operation under Section 132(1) of the Act. In the earliest of the judgments, reported at 194 ITR 32 (L.R. Gupta v. Union of India), a Division Bench of the Delhi High Court observed that the "information" had to be "something more than a mere rumour or a gossip or a hunch." It went on to add that when the action of issuance of an authorisation under Section 132 was challenged in court, "it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under Section 132 was called for." The Division Bench emphasised that the "opinion which has to be formed is subjective and, therefore, the jurisdiction of the court to interfere is very limited" as the court will not "act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under section 132 is called for." In the judgments reported at 215 ITR 234 [Janak Raj Sharma v. Director of Inspection (Investigation)] and 242 ITR 302 (Ajit Jain v. Union of India), the "information" was received from the Central Bureau of Investigation wh....
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....olled by the petitioners; that the directors of the four companies could not be traced out and appeared to be "dummy directors" which led to an inference of the four companies being used for "booking bogus expenses" by EMTA Coal Limited at the behest of the petitioners since the petitioners had acted as authorised representatives of two of the four companies in respect of the assessment records for two of the three financial years. Paragraph 22 of the department's affidavit says that there was "clear evidence to believe that the ... chain for siphoning the income of EMTA Group by showing bogus expenses had been ... masterminded by the petitioners" and the investigation has not been completed. Paragraph 23 of the affidavit refers to "fraud on revenue on a massive scale ... designed, executed and implemented" by the petitioners. This is the quality of the "information" that the Director of Income Tax (Investigation), Kolkata, had and on which he founded the "reason to believe" that a situation covered by either clause (b) or clause (c) of Section 132(1) of the Act, or both, could arise. In the light of the facts covering the gamut of "information" in the possession of the authorisin....
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.... to (v) of that sub-section". It is the petitioners' submission that such clause governs the exercise of the authority to take any step under Section 131(1A) of the Act irrespective of the designation of the official exercising the authority. The alternative argument - the second limb - is that since the officer who issued the notices under Section 131(1A) of the Act in this case was also the authorised officer under Section 132(1) of the Act, the disability envisaged by the relevant expression attached to such officer to render him incompetent to issue the notice. Neither limb of submission on such aspect of the matter is of any merit. Grammatically, it would make a mockery of the expression "or the authorised officer referred to in sub-section (1) of Section 132 before he takes action under clauses (i) to (v) of that sub-section", which has parenthetical commas at either end to suggest such expression being a whole unto itself and an alternative to the cases of the authority under the provision being exercised by the Director General or a Director or a Joint Director or an Assistant Director or a Deputy Director by virtue of the opening lines of the sub-section preceding the rel....
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....of the Act. Such sub-section authorises the officers referred to in sub-sections (1), (1A) and (2) to impound and retain books of account or other documents produced in course of any proceedings under the Act. The proviso to Section 131(3) of the Act makes a distinction in the procedure to be adopted for impounding such material and the period for which such material may be retained by the authority, based on the designation of the authority. Two judgments have been placed by the petitioners on Section 131(1A) of the Act. The Division Bench judgment of the Allahabad High Court reported at 266 ITR 597 [Anita Sahai v. Director of Income-Tax (Investigation)] broadly accepted the submission made on behalf of the petitioner in that case that Section 131(1A) of the Act could be invoked prior to action being taken under Section 132(1)(i) to (v) of the Act, though the issue in that matter did not turn on the acceptance of such submission. A Single Bench judgment of the Madhya Pradesh High Court reported at 246 ITR 363 [Arjun Singh v. Assistant Director of Income-Tax (Investigation)] merely held that the power under Section 131(1A) "cannot be said to be an independent power in itself but i....