TaxTMI 
TaxTMI 
2004 (2) TMI 55
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.... dated October 26, 2002, under section 142(1) of the Act. The facts of the case are that on March 19, 2002, at about 8.00 a.m. the respondents authorities their officers, servants and agents in purported exercise of the powers under section 132(1) of the Income-tax Act started search at the aforesaid premises of the petitioners as stated in paragraph 7 of the petition. It is alleged in paragraph 7 of the petition that the aforesaid premises have been disclosed in the returns of the petitioners year after year. In paragraph 8 of the petition it is mentioned that during the course of simultaneous search operation at the aforesaid premises the following valuables were found: (a) Household jewellery valued at Rs. 1.15 lakhs; (b) Cash amounting Rs. 2.19 lakhs. A panchnama was prepared for the same by the authorised officers at the conclusion of the search on March 20, 2002, at 3.00 a.m. In terms of the panchnama cash of Rs. 1.50 lakhs was seized. No valuables were seized from the premises B-237, Sector 19, Noida, as nothing was found there except certain documents and patients records which were seized, in terms of the second panchnama. True copies of the panchnama are annexure 4 a....
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.... the Act on March 19,2002. The said locker was opened on March 23,2002, and cash amounting to Rs. 5 lakhs and some household jewellery was seized, vide panchnama dated March 23, 2002, annexure VI, to the writ petition. It is alleged in paragraph 12 of the petition that the cash found in the locker was part of the withdrawals made by the petitioner Dr. Mrs. Anita Sahai to the extent of Rs. 1.50 lakhs and of Dr. Sharad B. Sahai to the extent of Rs. 3.50 lakhs from their professional receipts. It is alleged that the same being disclosed assets no seizure could have been done in respect of them. It is alleged in paragraph 13 of the petition that with the commencement of search operation on March 19, 2002, the authorised officer issued prohibitory orders under section 132(3) in relation to various bank accounts belonging to Dr. Mrs. Anita Sahai as mentioned in paragraph 13 of the petition. It is alleged in paragraph 14.01 that at the conclusion of the search the authorised officers in a most unusual behaviour called some person purporting to be the Valuation Officer who made a wild estimate of Rs. 25 lakhs in relation to the property at A-759, Sector 19, Noida. It is alleged that the ....
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....da to Meerut. The petitioners have also challenged the continuation of the block assessment proceedings and the notice dated October 26, 2002, issued by respondent No.5 under section 142(1) of the Act. The respondents have filed a counter affidavit. In paragraph 3 of the same it has been stated that a valid warrant of authorisation under section 132(1) was issued by respondents Nos. 1 and 3 and block assessment proceedings were validly initiated. In paragraph 5 of the same it is stated that the petitioner had not fully disclosed her income from the medical profession. In this connection a letter of the Joint Director of Income-tax, Meerut, to the Director of Income-tax, Kanpur, dated June 11, 2002, is annexure 1 to the counter affidavit. It is alleged that the statement on oath of the petitioner was recorded at the time of the search and she admitted that two OPD registers are being maintained in respect of the patients for the same period. In one register on the same date the numbers of patients are more while on the same date in the other register the number of patients has been shown less. On April 2, 2001, the receipts of OPD patients in one register was shown as Rs. 2,350 wh....
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.... will without any force or compulsion by the search party. The search and seizure operation was legal and valid. In paragraph 16 it is denied that there existed no information on the basis of which the warrant could be issued. In paragraph 20 of the counter affidavit it is stated that the original warrants of authorisation were issued by the Director of Income-tax (Investigation), Kanpur, in respect of premises No. A-759, Sector 19, Noida, and B237, Sector 19, Noida. The Joint Director of Income-tax (Investigation), Meerut, has issued consequential warrant of authorisation only in respect of two lockers as per law. It is settled that the Central Board of Direct Taxes vide Notification, dated October 11, 1990, has empowered all the Deputy Directors of Income-tax (Investigation) to perform the function of the Director. The Deputy Directors of Income-tax (Investigation) have been designated as Joint Director of Income-tax (Investigation) with effect from October 1, 1998. Hence, the Joint Director has power to issue the warrant of authorisation. It is alleged by the respondents that as per his preliminary statement, Dr. Sharad B. Sahai in reply to question No.8 stated that only cas....
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.... a higher footing than reason to suspect, as held by the Constitution Bench of the Supreme Court in M. Ct. Muthiah v. CIT [1956] 29 ITR 390. Similarly in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437; [1976] 3 SCC 757, the Supreme Court held that the words used in section 147/148 of the Income-tax Act are reason to believe and not reason to suspect. We are of the opinion that the submission of learned counsel for the petitioner is correct. The respondents in their counter affidavit have stated that it was respondent No.4 who had sent the material to respondent No.1 on the basis of which respondent No.1 had recorded his satisfaction under section 132(1). It is respondent No.4 himself who had issued summons under section 131(1A) of the Act after the search. As such there could not possibly be any material, which can be the basis of having reason to believe in respondent No. 1. The very fact that the respondents issued notices under section 131(1A) after the search and seizure operation under section 132 of the Act goes to show that there was neither reason to believe nor material before the authorising officer on the basis of which he could issue a warrant under section 132 of the A....
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....he balance-sheet, income-tax returns, patient case records which are required for medico-legal cases purposes, computers and other professionally related documents and articles have been seized by the Department. The respondents are trying to justify the seizure on the basis of post search materials, which in our opinion cannot be legally done. It is a well-established law as laid down by the Supreme Court of India that the order originally passed cannot be improved by way of affidavits vide Mohinder Singh Gill v. Chief Election Commissioner [1978] 1 SCC 405. Learned counsel for the petitioner has relied on several decisions of the Supreme Court and this court in support of his submission that the action of the respondents was illegal. In CIT v. Vindhya Metal Corporation [1997] 224 ITR 614, the Supreme Court observed: "Mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the Acts." In Dr. Nand Lal Tahiliani v. CIT [1988] 170 ITR 592, th....
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.... view, without something more, did not constitute information within the meaning of section 132 so as to induce a belief that the cash represented the petitioner's income which has not been or would not be disclosed. A bare intimation by the police or for that matter by any person, without something more, cannot be considered sufficient for action under section 132 of the Act, for it would be giving naked powers to the authorities to order search against any person and prone to be abused. This cannot be permitted in a society governed by rule of law. Even assuming that the said amount was not reflected in the books of account of the company, as claimed by the petitioner, the mere possession of the said amount by the petitioner could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which had not been or would not have been disclosed by him for the purposes of the Act, particularly when the petitioner as well as the company, of which he was claiming to be the managing director, were regular assessees with the Income-tax Department" In our opinion these decisions squarely apply to the fa....