TaxTMI 
TaxTMI 
2000 (1) TMI 41
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..... 5 herein, on the same date and finally the block assessment order, dated January 31, 1997, passed under section 158BC/144 of the Act by the Deputy Commissioner, Special Range-31, New Delhi-respondent No. 2 herein. 3. According to the petitioner, he and the company, of which he is the managing director, are regular assessees at Delhi with permanent account numbers ; the company is carrying on business of imports in PU synthetic linings along with other items from Taiwan and Korea; on January 7, 1996, the petitioner was informed by his customs clearing agent at Chennai that four consignments imported by his company had arrived at Chennai port and a sum of approximately Rs. 25 lakhs was required for payment of customs duty and allied expenses for getting the goods cleared from the Customs Department ; at that point of time, in its current account with the Corporation Bank, Mint Street branch, Chennai, the company was having approximately Rs. 17 lakhs to its credit and, therefore, a further sum of Rs. 8.5 lakhs was required to be arranged for the aforesaid purpose ; on January 9, 1996, the petitioner went to Chennai with a sum of Rs. 8.60 lakhs, duly reflected in the company's....
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....ice under section 158BC of the Act calling upon the petitioner, in his status as individual, to explain the source of said amount, of Rs. 8.5 lakhs, found in his possession at the time of search on January 11, 1996. In response thereto, the petitioner filed the return in his individual capacity declaring nil income. There after, the petitioner received the block assessment order passed by respondent No. 2 in respect of the assessment years 1986-87 to 1996-97 dated January 31, 1997, in the status of "individual" whereby a demand of Rs. 50,13,204 was raised against the petitioner. 4. The action of respondent No. 4 in issuing the authorisation under section 132(1) of the Act and seizure of Rs. 8.5 lakhs is challenged on the ground that there was no "information" on record on the basis whereof respondent No. 4 could form the belief that the said amount recovered from the petitioner represented wholly or partly income which had not been or would not have been disclosed for the purpose of the Act, a condition precedent for exercise of power under section 132(1) of the Act. The contention is that since the authorisation itself was illegal and void ab initio, all proceedings taken conse....
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....nst the petitioner, were made out and, therefore, the entire action under section 132 of the Act was illegal. On the other hand, it is contended by Mr. Jolly that the information furnished by the CBI provided the foundation for the belief that the amount in question represented undisclosed income of the petitioner and in any case, since the information was coining from the CBI, the action based on it was bona fide. 8. Section 132 of the Act clothes the Director General or the Chief Commissioner and some other officers, in the circumstances mentioned therein, with the power to authorise entry into and search on any building, place, etc., and seizure of any books of account, documents, money, etc., found therein, and prescribes the procedure to be adopted consequent upon such seizures or acquisition. It also specifies the manner in which the documents and the money seized is to be dealt with. Section 132 of the Act has undergone various amendments. The provisions of section 132(1)(c), relied upon by the respondents and material for our purpose, read as follows : "132. (1) Where the Director-General or Director or the Chief Commissioner or Commissioner or any such joint Di....
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....f receipt of information by the authorising officer that the person is in possession of money, etc., which represents undisclosed income. "Information", in consequence of which the Director-General or the Chief Commissioner, etc., as the case may be, has to form his belief is not only to be authentic but capable of giving rise to the inference that a person is in possession of money, etc., which has not been or would not be disclosed for the purpose of the Act. In other words, it must necessarily be linked with the ingredients mentioned in the section. 10. In L. R. Gupta's case [1992] 194 ITR 52 (Delhi), speaking for the court, B.N. Kirpal J. (as his Lordship then was), explained the scope of the expression "information" as under : "The expression 'information' must be something more than a mere rumour or a gossip or a hunch. There must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe that action under section 132 is called for any of the reasons mentioned in clause (a), (b) or (c). When the action of issuance of an authorisation under section ....
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....various decisions by the apex court and High Courts while dealing with sections 132 and 148 of the Act. It has been held that the word "reason to believe" means that a reasonable man, under the circumstances, would form a belief which will impel him to take action under the law. The formation of opinion has to be in good faith and not on mere pretence. For the purpose of section 132 of the Act, there has to be a rational connection between the information or material and the belief about undisclosed income, which has not been and is not likely to be disclosed by the person concerned. 14. It is in the light of the above principles of law that we take up the question whether the intimation given by the CBI to respondent No. 5 would constitute "information" and could it be said to be relevant for formation of the belief that the money found in the possession of the petitioner had not been or would not be disclosed for the purpose of the Act. We called for the file containing the reasons recorded and the order passed by respondent No. 4 authorising the search in the room occupied by the petitioner. A xerox copy of the file containing the information and the orders passed by the said....
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....authorities on January 12, 1996, in order to avoid demurrage, detention charges and penalties but apparently his request was turned down and the cash was seized. It is also pertinent to note, as admitted in the reply-affidavit of the respondents, that on the directions of respondents Nos. 4 and 5 from Chennai, a survey was also conducted under section 153A of the Act on the company by the Assistant Director of Income-tax (Investigation), New Delhi, to verify whether the cash of Rs. 8.6 lakhs was reflected in the accounts of the company, but, for reasons best known to the respondents, the outcome of the action has not been disclosed. It can, thus, safely be assumed that nothing adverse was noticed in the books Of account. The normal presumption is that the cash was duly reflected in the books of account. Be that as it may, the intimation simpliciter by the CBI, that the money was found in the possession of the petitioner, which, according to the CBI, 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 dis....
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....d in section 113 as to income of the block period irrespective of the previous year or years to which such income relates and irrespective of the fact whether regular assessment for any one or more of the relevant assessment years is pending or not, as provided under section 158BA of the Act. 19. Since the search in the present case had taken place on January 11, 1996, in accordance with the said provisions, an ex parte block assessment for the assessment years 1986-87 to 1996-97 was made on January 31, 1997, creating a total demand of Rs. 50,13,204 on the petitioner in his status as individual. As the title of the said Chapter suggests these are special procedure for assessment of search cases and, therefore, a search under section 132 is a pre-requisite for invoking the provisions of the said Chapter. It is axiomatic that search under section 132, as contemplated in the Chapter has to be a valid search. An illegal search is no search and as a necessary corollary in such a case Chapter XIV-B would have no application. Since, in the instant case, we have come to the conclusion that the search conducted on January 11, 1996, was without jurisdiction and was thus void ab initio, th....