TaxTMI 
TaxTMI 
2015 (7) TMI 696
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....ourse of survey seized cash amounting to Rs. 64,56,970/- and also impounded the books of account in the absence of any Panchas. The petitioner's contended that the respondents deposited the cash in the petitioner's bank account on 28th April, 2015 at 5.00 pm and thereafter, got a demand draft made in their names. It is alleged that initially a survey was conducted under Section 133A of the Act but the same was converted into a search under Section 132 of the Act without there being any warrant or authorisation to search the premises under Section 132 of the Act. It was further alleged that the search started on 28th April, 2015 and concluded on 29th April, 2015 at 7.00 am and that the Panchanama was issued on 29th April, 2015. In the light of the aforesaid factual position, we have heard Sri Shubham Agarwal, the learned counsel for the petitioner and Sri Ashok Kumar, the learned counsel for the income tax department at length. By an earlier order of the Court, the income tax department was directed to produce the original records relating to the recording of the satisfaction for the purpose of conducting a search under Section 132. The said record was produced, which the....
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....fiable. The learned counsel submitted that in the facts and circumstances it became necessary that the survey was required to be converted into a search in order to secure the evidence, which was not likely to be made available by issue of summons and, therefore, the tax authorities had to resort to search and seizure in order to secure the evidence of undisclosed income, which would not have been disclosed in ordinary course. The learned counsel consequently, justified the action of the department in conducting the survey at the premises in question. In the light of the aforesaid, the Court directed the department to produce the original records in order to find out as to whether there was information available on the file and satisfaction was recorded for taking action under Section 132 of the Act. For this purpose, we have perused the original file produced by the department. Upon perusal of the file, we find that the Director of Income Tax (Investigation), Kanpur had given information regarding huge amount of cash being deposited in the petitioner's bank account no.6636 and approval was sought for getting a survey operation conducted under Section 133A of the Act at t....
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....e premises of the petitioner and other companies. We find from the record that the administrative approval was obtained from the Director General of Income Tax (Investigation), Lucknow by fax at 4.17 pm on 28th April, 2015 and, thereafter, the warrant of search under Section 132 of the Act was prepared and was shown to Gaya Prasad Gupta, who acknowledged it by putting his signatures on the warrant at 5.00 pm on 28th April, 2015. Therefore, the cash was deposited in the Bank at 5.15 pm and a bank draft was obtained. According to the Panchanama, a copy of which has been annexed to the writ petition, before commencing the search, two independent witnesses were called to become witnesses. Having heard the learned counsel for the parties, we find that a search is required under the Act in order to secure evidence, which is not likely to be made available by issuance of a summon. The tax authorities have to resort to search and seizure when there is evidence of undisclosed documents or assets, which have not been and would not be disclosed in ordinary course. Section 132 of the Act read with Rule 112 of the Income Tax Rules is intended to achieve this purpose, namely, to get hold o....
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....an have "reason to believe" that an action under Section 132 of the Act is called for any of the reasons mentioned in clause (a), (b) and (c). The words "has reasons to believe" as provided in Section 132(1) of the Act postulates a belief and existence of reasons for that belief. The belief must be held in good faith: it cannot be a mere pretence. Such belief should not be based on mere suspicion but must be based on information which is in the possession of the authorising authority. The formation of the belief within the meaning of Section 132(1) is a condition precedent to the authorisation of search and seizure. It is basically a subjective step essentially to make up one's mind as to whether on the basis of information available he had or had not formed the reasons to believe. This belief, cannot be a mere pretence nor can it be a mere doubt or suspicion but has to be something more than that. From perusal of the record, we find that the warrant of authorisation was issued after according approval from the competent authority. The contention of the petitioner that the search was conducted without recording satisfaction since it was only a survey conducted under Secti....
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....rity in consequence of which the authority had reasons to believe that the petitioner was in possession of money, bullion, jewellery, etc., which represented undisclosed income was existing and was also proved during the course of search. Similarly, reliance upon the decision in Dr. Nand Lal Tahiliani (supra) that the satisfaction was not arrived at on the basis of material is patently erroneous. We have perused the record and we find that the information was based on certain valid information and that the satisfaction recorded was based upon consideration of the material placed before it. We also find from the original record that administrative approval was taken from the Director General of Income Tax (Investigation), Lucknow and, therefore, the contention that no such approval was taken is patently erroneous. The contention that the mere fact that cash was found could have been utilized in assessment proceedings and that the same cannot be a ground to convert the survey into a search operation under Section 132 of the Act cannot be accepted. We find that the petitioner's had not brought on record the statement of the Director, who was examined during the course of sea....