TaxTMI 
TaxTMI 
TaxTMI 
2005 (3) TMI 34
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.... enable the firm to participate in the auction for allotment of the privilege of selling country made liquor in certain parts of the State of Madhya Pradesh. The said CDRs/banker cheques etc., had been seized by the income-tax authorities on March 20, 1999. Hence, the present petition. Shri S.K. Garg, learned counsel for the petitioner firm, has submitted that the CDRs/banker cheques belong to the firm and one Shri Babu Lal, a partner of the firm, had been authorized under the partnership deed itself to participate in the auction for grant of licence for dealing in liquor. The said CDRs/banker cheques/demand drafts, etc., worth Rs. 3,06,00,000 had been seized by the income-tax authorities on March 20, 1999 in flagrant violation of the provisions of the Act. The search and seizure was illegal, not being in consonance of the provisions of the Act; warrant of authorisation had been issued in the name of "S/Shri Babu Lal Jaiswal, Sheo Kumar Jaiswal, Rajiv Jaiswal and Shishir Jaiswal"; the authorisation to search the office of the District Excise Officer, Rewa, was not permissible; the said warrant of authorisation dated March 15, 1999, had been issued without there being any informati....
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....n 132(1) of the Act reads as under: "132.(1) Where the Director General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner, as may be empowered in this behalf by the Board, in consequence of information in his possession, has reason to believe that-... (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property),... (the officer so authorized in all cases being hereinafter referred to as the authorised officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;... (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result o....
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....or the time being in force the designated officer, on such authorisation may requisition the same. The question is whether the search and seizure in this case has been conducted in consonance with the provisions of the Act and, if not, to what relief the petitioner is entitled? The issues involved herein are no more res integra. A Constitution Bench of the hon'ble Supreme Court in M. Ct. Muthiah v. CIT [1956] 29 ITR 390; AIR 1956 SC 269, considered the expressions "reason to believe" and distinguished the same from "reason to suspect" comparing the provisions with the unamended provisions of section 34(1) of the Indian Income-tax Act, 1922 and held that after amendment, the expressions "reason to believe" had to be based as a consequence of "definite information" which came into the possession of the Revenue. However, there must be some material in the possession of the Revenue on the basis of which an objective opinion can be formed that the person concerned has undisclosed amount for the purpose of the Act. In ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC); AIR 1976 SC 1753, the hon'ble Supreme Court held as under: "As stated earlier, the reasons for the formation of the b....
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....cer concerned must satisfy the court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the court. If the conditions for exercise of the power are not satisfied the proceeding is liable to 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... An error committed by the off....
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.... the authorizing officer can have reason to believe that action under section 132 is called for. The court further observed as under: "An assessee is under no obligation to disclose in his return of income all the moneys which are received by him which do not partake of the character of income or income liable to tax. If an assessee receives, admittedly, a gift from a relation or earns agricultural income, which is not subject to tax, then he would not be liable to show receipt of that money in his income-tax return. Non-disclosure of the same would not attract the provisions of section 132(1)(c). It may be that the opinion of the assessee that the receipt of such amount is not taxable may be incorrect and, in law, the same may be taxable, but where the Department is aware of the existence of such an asset or the receipt of such an income by the assessee, then the Department may be fully justified in issuing a notice under section 148 of the Act, but no action can be taken under section 132(1)(c)..." Similarly, the Delhi High Court in Apt Jain v. Union of India [2000] 242 ITR 302, considered the scope of the provisions of section 132 and Chapter XIV-B of the Act, explaining that ....
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....ndlal Tahiliani v. CIT [1988] 170 ITR 592; Dr. Sushil Rastogi v. Director of Investigation, Income-tax Department [2003] 260 ITR 249; Ravi Iron Industries v. Director of Investigation [2003] 264 ITR 28; Smt. Kavita Agarwal v. Director of Income-tax (Investigation) [2003] 264 ITR 472 and Dr. (Mrs.) Anita Sahai v. Director of Income-tax (Investigation) [2004] 266 ITR 597. There must be relevant material/information with the authorised officer upon which he must reasonably and rationally form the requisite belief. The material/information, referred to herein, means information or knowledge derived from an external source concerning facts or particulars in this regard (vide ITO v. Saradbhai M. Lakhani [2000] 243 ITR 1 (SC); Sri Krishna P. Ltd. v. ITO [1996] 221 ITR 538 (SC); ITO v. Selected Dalurband Coal Co. P. Ltd. [1996] 217 ITR 597 (SC); Ganga Saran and Sons P. Ltd. v. ITO [1981] 130 ITR 1 (SC); AIR 1981 SC 1363; CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC); AIR 1968 SC 49 and Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC); AIR 1961 SC 372). It is not necessary that the reasons be supplied to the person concerned, but the same should exist on record (vide S. Narayanapp....
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....the court but it should not be a fundamental procedural defect. Power should be exercised only to further the object of the Act. Authorisation should be by the competent authority, issued objectively on the basis of the material in its possession after having the requisite belief. The court cannot examine the adequacy or sufficiency of such information but the existence of information and its relevance for formation of belief is always subject to judicial review. The case requires to be examined in the light of the aforesaid settled legal propositions. In the writ petition, quashing of warrant of authorisation dated March 20, 1999, (annexure 6) is sought. In fact, it (annexure 6) is a panchnama dated March 20, 1999, not an authorisation dated March 15, 1999. As neither the said authorisation has been filed along with the pleadings nor its quashing has been prayed for, the said warrant of authorisation cannot be quashed. It is a settled proposition of law that unless the order sought to be quashed is filed and placed on record, the court has no power to quash the same. In Surinder Singh v. Central Government, AIR 1986 SC 2166, the hon'ble Supreme Court has held as under: "In the....
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....f the existence of the partnership firm is dependant on the procurement of the licence and not otherwise. The inference which can be drawn therefrom is that since the licence was never granted, the firm did not come into existence. The question, therefore, arises as to whether the petitioner-firm is in existence or not and as to whether the said firm is entitled as a juristic person to maintain the instant petition. Writ is a remedy sought for redressal of personal injury unless it is a writ of quo warranto or habeas corpus. A perusal of the aforesaid facts and the admitted position in the partnership deed would leave no room for doubt that the partnership firm never came into existence as the contingency contemplated therein for the existence of the partnership firm did not happen at all. In view of this position, it can be safely assumed that no partnership firm in the shape of the petitioner is in existence. If the aforesaid assumption is correct, then the present writ petition would not be maintainable on behalf of a non-existent partnership firm. Accordingly, we hold that since the partnership firm did not come into existence at all, the present writ petition cannot be maint....
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....ction for liquor sale. As their bid had not been accepted, the same CDRs, etc., were deposited for participating in another bid in this case. In reply to the supplementary affidavit filed by the petitioner, it has clearly been stated by the Revenue that the cheques/bank draft numbers deposited by those persons earlier tallied with the number of the bank drafts and cheques, etc., deposited in this case. Its details have been furnished in paragraph 12 of the said affidavit explaining that the Banker Cheque Nos. 943869/69 for Rs. 45,000; 943868/69 for Rs. 1,45,000; 943864/64 to 943866/64 for a sum of Rs. 1,50,000 had earlier been deposited for participating in the bid, in the name of Dharmendra Kumar Jaiswal and as he could not succeed, those securities have been submitted in this case which have been seized by the Department and Rs. 1,78,00,000 remained unexplained. There was sufficient material before the authority concerned for forming a reasonable belief in this respect, particularly, deposit of the same securities which had earlier been deposited in the case of Dharmendra Kumar Jaiswal, which reflected the modus operandi wherein the identity of the persons concerned was sought to....
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....ms or things which had not been disclosed for the purposes of the Act and that he has reason to believe that such articles would be found in the possession of the District Excise Officer, Rewa, and, therefore, he has authorized the Joint Director to enter and search the said office. In this connection, we have also examined the original records of the case which have been placed before us by Shri Bharat Ji Agrawal, learned senior counsel appearing for the Revenue. A perusal of the note clearly indicates that there was sufficient material before the Director of Income-tax (Investigation), Kanpur, to form the requisite opinion having reason to believe that there had been unaccounted money which had been deposited in the form of the banker cheques, etc., with the Excise Department so as to invoke the provisions of section 132(1) of the Act. After considering the entire record, we are of the candid view that the authority has proceeded in accordance with law as the order of search and seizure by the competent authority has been issued strictly in consonance with the statutory provisions, and there was sufficient material before the authority concerned to reasonably believe, on the ba....
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....r Lordships in the said judgment itself have observed that they were dealing with the case arising out of the proceedings initiated prior to the amendment in 1975 and the said judgment does not lay down the law of universal application and does not apply to cases which have arisen subsequent to the amendment dated October 1, 1975. When a person approaches a court of equity in exercise of its extraordinary jurisdiction under article 226/227 of the Constitution, he should approach the court not only with clean hands but also with clean mind, clean heart and clean objective (vide Ramjas Foundation v. Union of India, AIR 1993 SC 852; K.R. Srinivas v. R.M. Premchand [1994] 6 SCC 620). Thus, he who seeks equity must do equity. The legal maxim "jure naturae aequum est neminem cum alterius detrimento et injuria fieri locuple-tiorem", means that it is a law of nature that one should not be enriched by the loss or injury to another. In Nooruddin v. Dr. K.L. Anand [1995] 1 SCC 242, the hon'ble Supreme Court observed as under: "Equally the judicial process should never become an instrument of oppression or abuse or a means in the process of the court to subvert justice." Similarly, in Ramn....
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....; AIR 1994 SC 2151; Ramniklal N. Bhutta v. State of Maharashtra [1997] 1 SCC 134; Chimajirao Kanhojirao Shirke v. Oriental Fire and General Insurance Co. Ltd. [2000] 102 Comp Cas 9; AIR 2000 SC 2532; Shama Prashant Raje v. Ganpatrao [2000] AIR 2000 SC 3094; LIC of India v. Smt. Asha Goel [2001] 104 Comp Cas 79; AIR 2001 SC 549; Roshan Deen v. Preeti Lal [2001] 99 FJR 653 ; AIR 2002 SC 33 ; Haryana Financial Corporation v. Jagadamba Oil Mills [2002] 110 Comp Cas 20; AIR 2002 SC 834; S.D.S. Shipping Pvt. Ltd. v. Jay Container Services Co. Pvt. Ltd. [2003] 4 Supreme 44; AIR 2003 SC 2186 and Chandra Singh v. State of Rajasthan [2003] 6 SCC 545; [2003] 6 JT SC 20). In A.M. Allison and H.P. Brigg v. B.L. Sen [1956-57] 11 FJR 466; AIR 1957 SC 227, the apex court held that the writ court can refuse to exercise its jurisdiction as the writ proceedings cannot "of course", if it is satisfied that there has been no failure of justice. In Dal Singh v. King Emperor of India, AIR 1917 PC 25, the Privy Council held that in case the authority/court has done substantial justice, the court may not interfere even if the order was passed without jurisdiction or suffers from some kind of illegality. T....