TaxTMI 
TaxTMI 
2003 (10) TMI 42
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....e names of the partners are mentioned in para. 9 of the petition. It is alleged that petitioner No.1 is not a partner of the firm. It is alleged in para. 12 of the petition that the family of petitioner No.2 consists of three units which reside in their respective separate portions in residential house No. 16/309, Gali No. 10, Joshi Road, Karol Bagh, New Delhi. These three units are: (i) Petitioner No.2 his wife and their children, (ii) Father of petitioner No.2, namely, Ramesh Kumar Agarwal, and his wife, Madhu Agarwal, and (iii) Mukul Agarwal (brother of petitioner No.2), his wife Smt. Ritu Agarwal, and their children. On April 27, 2000, a search was made by the income-tax authorities at the business premises of the firm at its head office at No.1, Ram Bagh, Allahabad, as well as its other offices and godowns under section 132(1) of the Income-tax Act, 1961. Simultaneously, on April 27, 2000, a search was also conducted at all the aforesaid residential premises of house No. 16/309, Gali No. 10, Joshi Road, Karol Bagh, New Delhi, wherein petitioner No.2, his parents, and his brother were separately residing in their respective portions. It is alleged in para. 15 of the....
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.... the restraint order is annexure 2. In para. 25 of the petition it is alleged that it was only from the contents of the panchanama and the restraint order that the petitioners learnt that the warrant of authorisation was only in the name of petitioner No.2 and it was dated March 28, 2000. On June 22, 2000, a representation was made to respondent No.2 wherein a complaint was made to respondent No.1 regarding the infirmities and illegalities of the aforesaid search dated April 27, 2000. A copy of the representation dated June 22,2000, is annexure 3. An oral request praying for certain papers was made but the same were not supplied. It is alleged in para. 28 of the petition that the restraint order had ceased to be in force after the expiry of a period of 60 days from April 27, 2000, in view of the provisions of section 132(8A) of the Act. On October 11, 2001, petitioner No.2 applied to respondent No.3 in writing for the revocation of the restraint order and for release of the keys of the locker vide annexure 4. The application was sent to all the three authorities mentioned in it. Respondent No.3 issued three letters dated October 16, 2001, asking them to be present in the bank on No....
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....2(8A) of the Act. After the expiry of a period of 60 days the restraint order was wholly illegal and without jurisdiction. A counter affidavit has been filed and we have carefully perused the same. On the facts of the case we are of the opinion that this writ petition deserves to be allowed. The law is well settled that a warrant of search and seizure under section 132(1) can only be issued on the basis of some material or information on which the Commissioner/Director has reason to believe that any person is in possession of money, jewellery or other valuable articles representing wholly or partly income or property which has not been or would not be disclosed, under the Income-tax Act. In the present case, the respondents have not disclosed what was the material or information on the basis of which the Director/Commissioner entertained the belief that the lockers contained valuable jewellery or other articles representing undisclosed income. It is well settled that the satisfaction of the authorities under section 132 must be on the basis of relevant material or information. The words used in section 132(1) are "reason to believe" and not "reason to suspect". In the counter....
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....t 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, tl}en 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)." In Ajit Jain v. Union of India [2000] 242 ITR 302 (Delhi), it was observed that: "The mere fact that the petitioner was in possession of the said amount could not straightaway lead to the inference that it was his undisclosed income. . . the intimation simpliciter by the Central Bureau of Investigation, that the money was found in the possession of the petitioner, which, according to the Central Bureau of Investigation, was undisclosed, in our 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 und....
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....specially when the petitioner is an old assessee. The standard of living maintained by him (petitioner) appears to have been added in the report more, as a recital to add gloss to the recommendation than with any sense of responsibility. What led to this inference is not stated. Not a word has been mentioned in the report, nor could any record, be shown to demonstrate that the standard of living was out of proportion so as to warrant the conclusion that the petitioner was concealing income. Even if the recommending authority had some notions of his own either on personal knowledge or on any inquiry, it should have been made available to the Director to draw the inference, as the action was to be taken by him. The requirement of 'reason to believe' is not an empty formality. The Director and the Commissioner have been authorised to take action as they, being the senior officers of the Department, are expected to project their experience while invoking power under this section. The Director failed to live up to this expectation. He appears to have surrendered his reason to the report made by his Deputy/Assistant Director, which was an attempt to initiate a fishing and roving inquiry ....