TaxTMI 
TaxTMI 
2019 (9) TMI 6
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....vice by Police Inspector Shri M.V. Kikani, Songadh Police Station, Songadh, District Tapi by passing writ of mandamus, certiorari or any other writ or direction." 3.00. The case of the writ applicant in his own words as pleaded in the writ application is as follows :- "(2). The petitioners by way of this petition beg to challenge, the illegal and the arbitrary action of the respondent no.1 Income Tax Department to claim the amount of the petitioner, which is seized by the respondent no.2 in casual checking and also challenging the warrant of authorization dated 30/10/2018 issued by the respondent Income Tax Department, Surat under Section 132A (1) of the Income Tax Act, 1961, whereby respondent no.1 requisitioned the amount of Rs. 2,45,50,000/- seized from two persons of the Angadiya Courier Services by Police Inspector Shri M.V.Kikani, Songadh Police Station, Songadh, District Tapi. (3). The brief fact of the present petition is such that the present petitioner is doing business in the name and style of S.K.Traders. The petitioner is dealing mainly with the selling of vegetable fruits and agricultural products, milk and post harvesting crop activity. It is sub....
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....given to the income tax department. It is submitted that after hearing as the statement was made by department that proceedings under Section 132A of the Act has been initiated. The application of the petitioner is rejected by order dated 05/01/2019 and the application of the IT Department is allowed by the same order. (6). It is submitted that against the said order, the petitioner has tiled Revision Application being Criminal Revision Application before the learned Sessions Court, Tapi and same is pending. However, stay is granted. (7). It is submitted that the Income tax department has issued a summons to the petitioner on 11/09/2018 calling the petitioner on 14/09/2018 at 11:00 am. It is submitted that the petitioner appeared before the Income Tax Department and recorded his statement. (8). It is submitted that again the petitioner was called upon by the respondent No.1 department on 11/10/2018. It is stated in the summons that the petitioner has to remain present on 18/10/2018 and has to give explanation regarding cash amount as specified in the notice. It is submitted that the appeared before the department and explain each and every thing with docu....
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....iramji Vagghela. Both these persons were travelling on 30/8/2018 from Nagpur to Ahmedabad via Surat in a bus of Srinath Travels. Upon physical search of the Bus, two bags containing seven packets of cash aggregating Rs. 2,45,50,000/- were recovered by the Songadh Police, Tapi. The police took the possession of the entire cash. Upon interrogation of Surajbhai and Rajendrasinh, it was revealed that they were employees of the Angadiya Company running in the name of M/s.V.P. Angadiya and Courier Service. In their statements, which came to be recorded, they disclosed that as employees of the courier company, they were asked to deliver the cash at Ahmedabad. The police also the recorded the statement of one Hitendrabhai Babubhai Patel, an employee of the Angadiya Company at Surat Branch. 4.03. Summons under section 131(1) of the Act were issued to Mr.Surajbhai Mehta and Mr.Rajendrasinh Vaghela asking them to attend the office of the DDIT (Investigation-III), Surat along with the necessary details as regards the cash recovered from their possession. The statements of Mr.Suraj and Mr.Rajendrasinh were recorded on oath under section 131 of the Act on dated 7/9/2018. Both made themselves ....
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.... In the said Criminal Revision Application, an application Ex.5 was preferred by the writ applicant praying for the stay of the operation of the order passed by the Magistrate to handover the cash to the Income Tax department. The application Ex.5 came to be allowed by the Principal District and Sessions Judge, Tapi at Vyara vide order dated 10/1/2019. The operation of the order passed by the Judicial Magistrate came to be stayed till the final disposal of the Revision Application. 4.07. We are informed that the Criminal Revision Application, referred to above, is yet to be heard finally. 4.08. Ultimately, the impugned Warrant of Authorization under sub-section (1) of section 132A of the Act came to be issued by the Principal director of Income Tax (Investigation), Surat in Form No.45C in accordance with the Rule 112D(1) of the Rules. The same reads as under :- "FORM NO. 45C V (SEE RULE 112D(1)) Warrant of authorization under subsection (1) of section 132A of the Income Tax Act, 1961 No.000451 To, The Deputy Director, Abhishak Gramin The Deputy Commissioner, The Assistant Director, Aditya Bikram The Assistan....
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.... Income which he would be filing for the current year during which the case has been seized. Mr.Shah submitted that the date of seizure is 30/8/2018 and therefore, the Assessment Year would be 2019-20. For the A.Y. 2019-20, return is yet to be filed and as the cash has been withdrawn from the bank accounts and cash book, the writ applicant would have definitely disclosed the same in his Return of Income. In such circumstances, according to Mr.Shah, the Warrant of Authorization is not justified and the cash should be ordered to be handed over to the writ applicant. 5.04. Mr.Shah, took us through few documents more particularly, bank accounts etc. This exercise was undertaken by Mr.Shah to demonstrate that the writ applicant is in the business of fruits, vegetables and flowers and that too on large scale. According to Mr.Shah, the amount which has been seized in cash, is to be paid to the farmers from whom the writ applicant purchased the goods to be sold to the retailers. Mr.Shah laid much emphasize on the fact that in the bank accounts, huge amount has been shown which would indicate that the cash was, in fact, withdrawn from the bank accounts as well as from the cash book. 5....
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....ower to order search and seizure is vested in the highest officers of the department. The exercise of this power can only follow a reasonable belief entertained by such officer that any of the three conditions mentioned in section 132A(1)(a), (b) and (c) exists. 6.04. Mr.Bhatt thereafter invited our attention to the following averments made in the Affidavit-in-reply filed on "I. With reference to paragraphs 1 to 7, the contents of the extents it does not form part of the record are denied. I submit that the information was received on 30/08/2018 from Shri V. R. Bhawad, Police Inspector, Songadh Police Station, Tapi regarding interception of cash of Rs. 2,45,50,000/- from Surajbhai Pravinchandra Mehta and Rajendrasinh Viramji Vaghela. Cash was intercepted from a Shreenath Travels bus on 30.08.2018, in which above persons were travelling from Nagpur to Ahmedabad via Surat. Upon physical search of bus, two bags containing 7 packets of cash totalling Rs. 2,45,50,000/- was found by Songadh Police, Tapi. When enquiries were made from these two persons, no legitimate documentary evidence was produced by them before the police. Therefore, information in this regard was passed o....
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.... to appear on 11.09.2018 before respondent no. 1. The Petitioner was again contacted over his phone no. 9376186864 on 11.09.2018 and was asked why he did not appear before the investigating officer on 11.09.2018. In reply, the Petitioner requested for one more opportunity to be given to him to appear before the investigating Officer (respondent no. 1) on 14.09.2018 along with all relevant documents to explain the sources of cash worth Rs. 2,45,50,000/- seized by Songadh police. The Petitioner appeared before the investigation officer on 14.09.2018 when his statement on oath was recorded u/s 131 of the Act. The above facts that he did not appear on 11.09.2018 despite being informed about it were again confirmed by him in Statement recorded u/s 131 of the Act. I submit that when asked about the source of Rs. 2,45,50,000/- cash seized by Songadh Police, the Petitioner stated that he had withdrawn amount from his bank accounts as well as from his wife's bank accounts. The Petitioner further stated that some amount was also taken from his cash book. However, when asked to submit bank account-wise and date-wise cash withdrawals along with details about cash withdrawal from his w....
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....rtunities to furnish documentary evidence, the Petitioner has not submitted satisfactory explanation about the source of cash seized. After perusing and applying mind on the above information and inquires, warrant of authorization u/s 132A of the Act was issued by the Pr. Director of Income Tax (Investigation), Surat on 30.10.2018. Thus, it becomes clear that that information about cash seizure was passed on to Income tax authority by Songadh Police on 30.08.2018. Further, about two months time was consumed in procuring warrant u/s 132A of the Act because enquiries had to be conducted about the source of cash seized. I submit that in due compliance of principles of natural justice, sufficient opportunities were provided to the Petitioner to submit evidence in support of his claim and thereafter in the absence of any satisfactory explanation, reason to believe had to be formed that prima facie the cash seized was unexplained and unaccounted for. I submit that the warrant of authorization was issued after following the laid down procedures. II. With reference to paragraph 8, the contentions therein are denied. I submit that the following submissions were made by the....
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....cash seized. It cannot be argued that since the investigating officer i.e. DDIT(Inv.), Ajmer was satisfied with the explanation offered related to cash seizure of Rs. 62,82,000/-, the same explanation is sufficient to justify the source of cash seizure of Rs. 2,45,50,000/-. In the instant case, the petitioner has failed to offer a satisfactory explanation about the source of cash seized even after providing multiple opportunities. Thus, the report of DDIT(Inv.), Ajmer dated 05.02.2019 has no relevance to this proceedings. V. With reference to paragraph 11, the contentions therein are denied. I submit that there are laid down rules and procedure to be followed while enquiring about cash seizure information which was passed on to investigation officer by Songadh police. The information was received by the investigating officer on 30.08.2018 and the enquiry into the case began thereafter. Two months time was consumed in procuring warrant u/s 132A of the Act because enquiries had to be conducted about the source of cash seized and as per principles of natural justice, sufficient opportunities had to be provided to the Petitioner to submit evidence in support of his claim and t....
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....ner to submit documentary evidences on 11.09.2018, 14.09.2018, 18.10.2018 etc. The petitioner stated on oath in his statement u/s 131 of the Income Tax Act, 1961 that the source of cash seized are (1) withdrawals from his bank accounts (2) withdrawals from his wife's bank accounts and (3) cash book. The petitioner was asked to submit date-wise and bank account-wise withdrawals in support of his claim. However, no such required details have been submitted by the petitioner before the respondent till date. Thus, the contention of the petitioner that no opportunity to be heard was given to him is totally false, incorrect and misleading. X. With reference to para 12(G) and 12(H), the Petitioner has reiterated that the cash seized is accounted amount and warrant of authorization is illegal. XI. The said contention is denied. I reiterate that no satisfactory explanation has been provided by the petitioner to explain the source of cash seized. Reasons to believe has been recorded in writing based on the information in possession of the Pr. DIT(Inv.), Surat in this case. Warrant of authorisation under section 132A has been issued as per law and after following du....
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....or Income-tax Officer (hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. (2) On a requisition being made under sub-section [1], the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. [2] Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of subsections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b)....
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....32A was called for although the formation of opinion under the said section is subjective. It is well to remember that the jurisdiction under Article 226 of the Constitution of India of this Court is very limited. In fact, this Court should not act as an appellate or revisional court and as such, has no justification to examine meticulously the information in order to decide for itself as to whether the action under section 132A was called for or not. Suffice it to say that in exercise of the extraordinary jurisdictions this Court can examine whether the act or issuance of an authorization under section 132A is arbitrary or malafide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate authority. According to us, the reason to believe must be based on definable material or materials and if the information or the reason to believe has no nexus with the belief or there is no definable material or tangible information for formation of such belief, then, in such a case, action taken under section 132A of the Act would be treated as illegal. 7.05. In the case of Shalini Verma (supra) this Court (wherein one o....
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....ation issued under Section 132A of the Act, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may in such a proceeding, in exercise of its powers, ascertain whether the authority issuing such authorization is the appropriate authority who in consequence of information in his possession, had reason to believe that the conditions mentioned in either of the sub-sections (a) or (b) or (c) of the Section 132A (1) were present. The Court may also decide whether from the circumstances of the case, the appropriate authority might have reason to believe that any of those conditions existed. However, the jurisdiction of the Court extends no further. Whether on the information in his possession, the said authority should exercise his power under Section 132A, must be decided by the said authority and not by the High Court. The concerned authority under Section 132A alone is entrusted with the power to administer the same. If from the materials disclosed it may be prima facie said that he had reason to believe that any of those conditions existed, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside the w....
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....ssment for the Block Period from April 1, 1991 to June 3, 2000 under section 158 BD of the Act were initiated. The explanation of the assessee before the Assessing Officer was that his employee had gone to Amritsar to make some purchase of gold but the transaction did not materialize. The Assessing Officer was of the view that the amount represented the sale of goods made by the assessee on the earlier occasions and the sale proceedings were being carried back to Delhi. After considering the statements of various persons and other materials on record, the authorities came to the conclusion that it was concealed income and assessed the assessee to tax. It was argued before the Assessee that the proceedings initiated under section 132 of the Act itself were invalid for the reason that it could not have been based on a search conducted on a train by the police authority and therefore, the proceedings initiated for the Block Assessment for the relevant period were without jurisdiction. Such contention raised before the Supreme Court came to be negatived by the Supreme Court by observing as under :- "This plea was not raised by the appellant before any of the authorities. Furth....
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....h has to be formed being subjective, the jurisdiction of the court to interfere is very limited. The court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether the action under section 132 is called for. But the court would be acting within its jurisdiction in seeing whether the act of issuance of authorization under section 132 is arbitrary or malafide or whether the satisfaction recorded is such which shows lack of application of mind on the part of the appropriate authority. The reason to believe must be tangible in law and if the information or reason has no nexus with the belief or there is no material or tangible information for the formation of the belief, action taken under section 132 would be bad in law. If reasons have been recorded and the concerned officer is satisfied that there is reason to believe, the court cannot sit in appeal over the decision of the said officer regarding the existence of the reason to believe nor can the court examine the adequacy of the grounds on which the reason to believe entertained by such officer is based. But there is a limited area within which such reason to believ....
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....well as the material on record and has discussed the same with concerned officials. While recording satisfaction, the respondent No.2 has discussed the relevant facts on record and has recorded satisfaction that this is a fit case for issue of warrant of authorization under section 132(1) of the Act. In the affidavit-in-reply filed by the respondent No.2, it has been asserted that the satisfaction note produced for the perusal of the Court shows that pre-search inquiries clearly indicated that the assessee group was in possession of documents which would not be produced by issuance of summons or other notice in terms of provisions of section 132(1)(b) of the Act as also assets as contemplated under clause (c) of section 132(1). It has been categorically averred that the pre-search inquiries formed reason for believing the aspect enumerated in clauses (b) and (c) of section 132(1) and that the satisfaction recorded has been vindicated even from the findings in the search. The record indicates that exhaustive inquiries have been made and it is on the basis of the material collected during the course of such inquiries, that the satisfaction has been recorded. On a perusal of the mater....
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....mmissioner no reasonable person could have entertained a belief that the amount in possession of Vinod Kumar Jaiswal represented income which would not have been disclosed by him for purpose of the Acts. The High Court has observed :- "Vinod Kumar Jaiswal, according to the information in possession of the Commissioner, was not borne on the General Index Register of Income-tax assessee of the Income- Tax Offices at Mirzapur to which place he belonged. Obviously, therefore, there was not occasion for him to have disclosed the amount as his income in any assessment proceedings under the Act. Without anything more than what was actually there before the Commissioner, how could it have been assumed that he would not have disclosed it for purposes of any proceedings under the Act. There was nothing before the Commissioner to suggest that it was, in fact, wholly or in part, income of any person connected with Vinod Kumar Jaiswal so as to induce a belief that, if called upon, Vinod Kumar Jaiswal would not have disclosed it for the purpose of the Act. The mere fact this amount and did not have any documents with him regarding its ownership or possession could not be treated as appe....
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....d was detained by the police authorities and the cash of Rs. 11,00,000 was seized by the police authorities under section 102 of the Code of Criminal Procedure. Later, the Police Officer informed the Income Tax department to record the statement of the petitioner therein, thereafter the Dy.Director prepared a Satisfaction Note and placed the same along with the statement and other documents before the respondent No.1 therein who recorded the satisfaction and issued the Warrant of Authorization under section 132A of the Act. Again having regard to the facts of that case and evidence on record, this Court, by relying on the decision in the case of Vindhya Metal Corporation (supra) took the view that no reasonable person could have come to the conclusion that the amount of Rs. 11 Lac belonged to the petitioner or that the petitioner would not have disclosed the same to the Income Tax Authority under the provisions of the Act. This decision also, in our opinion, does not help the writ application in any manner. 7.11. At this stage, our attention has been invited by Mr.Bhatt, the learned counsel appearing for the revenue to the decision of the Supreme Court in the Case of Director Ge....
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.... the law and only for the purposes for which the law authorizes it to be exercised. If the action of the officer issuing the authorization, or of the designated officer is challenged the officer 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 authorizes 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....
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.... reasons in support of the 'reasonable belief' contemplated by Section 132, nowhere, in either of the decisions any view had been expressed that the reasons recorded prior to authorizing the search needs to be disclosed or communicated to the person against whom the warrant of authorization is issued. The same is the view expressed by this Court in Dr. Pratap Singh vs. Director of Enforcement3 while considering a para material provision in the Foreign Exchange Regulation Act. "The material on which the officer has reasons to believe that any documents will be useful for or relevant to any investigation need not be disclosed in the search warrant; such material may be secret, may have been obtained through intelligence, or even conveyed orally by informants. In the said case, the petitioner contended that, if the court is going to look into the file produced on behalf of the officer who authorized the search, it must be disclosed to the petitioner so that the petitioner "can controvert any false or wholly unreasonable material set out in the file", but the Supreme Court did not accept this submission. The Supreme Court also referred to an earlier decision in S. Narayanappa ....
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....ially the writ applicant declared that he had withdrawn the amount from his bank accounts as well as from the accounts of his wife. He also declared that some amount was also taken from his cash book. However, when asked to submit the bank account details and cash withdrawals so far as the account of his wife is concerned, the writ applicant declined to submit the details and prayed for some more time to produce the relevant documents. The writ applicant was also asked to submit confirmation from the parties with respect to cash payment along with the relevant cash as well as bills. However, the information provided by the writ applicant was not found convincing. The authority found the statement of the writ applicant recorded periodically quite contrary to each other. 7.13. In the overall view of the matter, we are convinced that we should not interfere in the present matter. We do not find any palpable error or gross illegality going to the root of the matter in the issue of Warrant of Authorization under subsection (1) of section 132A of the Act. 7.14. Mr.Shah, the learned Senior Counsel appearing for the writ applicant vehemently submitted that the amount which has been s....