AI Drafter 
TaxTMI 
TaxTMI 
2020 (12) TMI 481
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....l and valuables seized under the search action; and (iv) quashing of the notices issued under Sections 153A/143(3) of the Income Tax Act, 1961 [hereinafter referred to as the "Act"]. Considering that in both the petitions the factual narrative, nature of reliefs sought and the grounds of challenge are nearly identical, the same are being decided by way of this common judgment. Facts in W.P.(C) 5213/2020 2. The facts of the case, shorn off unnecessary detail, are as follows:- 2.1. On 05.02.2019, WoA were issued under Section 132(1) of the Act in the case of the 'Kochar Group', comprising of Sh. Avtar Singh Kochar, Sh. Gyandeep Singh Kochar, Sh. Hari Singh Kochar and M/s HL Impex (P.) Ltd. [hereinafter collectively referred to as "Primary Persons"]. Of the above WoAs, one in relation to Sh. Avtar Singh Kochar pertained to the residence-cum-office of the Petitioner - Shri Vikas Chowdhary at E-12/3, Vasant Vihar, New Delhi [hereinafter referred to as "Petitioner's Premises"]. 2.2. On 06.02.2019, a search and seizure operation was carried out at Petitioner's Premises pursuant to the above WoA dated 05.02.2019. The said search commenced at 12:30 PM and was temporarily conclud....
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....P.(C) 5207/2020 3. Shilpa Chowdhary, the other Petitioner, is similarly aggrieved with the WoA u/s. 132(1) of the Act issued against her and her husband in respect of the Locker referred to above. She also faces the assessment proceedings pursuant to notice issued u/S. 153A/143(3) of the Act. The facts are identical to what has been stated above in W.P.(C) 5213/2020, except that the search and seizure operation carried out on 06.02.2019 at the Petitioner's Premises was in pursuance to the WoA addressed as "residence-cum-office of Sh. Vikas Chowdhary bearing No.E-12/3, Vasant Vihar, New Delhi" dated 05.02.2019 issued under Section 132(1) of the Act in the case of Primary Persons. Contentions of the Petitioners 4. Mr. Srivastava learned counsel for the Petitioners raised several contentions to assail the WoA. The same are summarized as follows:- 4.1. The search and seizure action is entirely arbitrary and mala fide. The Competent Authority did not apply its mind while issuing the impugned WoA against the Petitioners or in conducting the search. The sequence of events and the actions of the search party reveal that Respondents conducted a general search on the Petitioner w....
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....rovided under these clauses of Section 132(1) were examined in respect of the Primary Persons and not qua the Petitioner. (ii) An authorization u/s 132(1) must fulfil a higher threshold of the test of "reason to believe", and such reasoning has to be based on, and "in consequence of" information, which is already "in possession" of the competent authority. (iii) The existence of locker, its key or its contents was not known prior to search conducted on 06.02.2019, and came to be recorded only in the Panchnama dated 09.02.2019 drawn during search. Thus, the competent authority had no material in its possession to harbour any reasons to believe that the locker contains any jewellery or undisclosed income belonging to the Petitioner. (iv) During the entire search action conducted on 06.02.2019, the Petitioners were not questioned about the locker's key, contents, or the source of acquisition of the contents, until the issuance of the impugned WoA dated 12.02.2019. (v) The process of questioning or recording statements of persons covered u/s 132(1A) must be restricted to the extent the same pertains to the material found/seized in relation to the Primary Persons. (vi) No....
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....e of the petitions is misconceived. The Petitioners have wrongly perceived that the search and seizure action against them has originated under Section 132(1A) of the Act, whereas search was conducted under Section 132(1) of the Act. This understanding forms the basis of the misguided grounds of challenge raised in the Petition. Elaborating on this aspect, Mr. Singh explained that the scope of Section 132(1) and 132(1A) is entirely different. Further, he elucidated that in the present facts, two separate search proceedings took place. He submitted that amongst the WoA dated 05.02.2019 under Section 132(1) issued in the case of the Kochar Group, one WoA pertained to the Petitioner's Premises, because the Issuing Authority had reason to believe that undisclosed income/books of accounts/documents of the Kochar Group were to be found there. The said reason to believe, as noted in the Satisfaction Note alongwith the other relevant material, have been placed by Respondents before the Court in a sealed cover. Thus, the initial search and seizure action, initiated at the Petitioner's Premises on 06.02.2019, was in the case of the Kochar Group. During said search, material and information w....
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....sion, has reason to believe that - (a) any person to whom a summons under sub-Section (1) of Section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-Section (1) of Section 131 of this Act, or a notice under sub-Section (4) of Section 22 of the Indian Income-tax Act, 1922, or under sub-Section (1) of Section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (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 ....
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....icial to the interests of the revenue. (1A) Where any Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Director of Inspection or any other Commissioner or any such Deputy Director of Inspection or Inspecting Assistant Commissioner as may be empowered in this behalf by the Board to take action under clauses (i) to (v) of subSection (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under subsection (1), such Commissioner may, notwithstanding anything contained in Section 121, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. X ... X ... X" 8. The foundation of the petition, indeed, is based on the premise that the search action against the Petitioners is under Section 132(1A) of the Act, as is evident from the grounds of challenge, wherein it was urged that "it can be undoubtedly inferred that the s....
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....es revealed that the Kochar Group kept undisclosed income and unaccounted assets at multiple locations including houses and lockers. (vii) It was also discovered that one of the affiliates of Kochar Group that was facilitating the hawala transactions in South Delhi was the Petitioner. On physical surveillance movement of cash was observed from the Petitioner's premises by motorcycle borne couriers. (viii) On the basis of technical surveillance, it was also discovered that the Kochar Group was involved in illegal betting business. (ix) The reasons to believe identified the key locations where undisclosed income/ assets/ documents and other incriminating evidence is likely to be found. One of the 11 premises was residence cum office of the Petitioner at E12/3, Vasant Vihar, New Delhi." [Emphasis added] 10. The Revenue thus suspected that the Petitioner's Premises was a location where undisclosed income/assets/documents/other incriminating evidence relating to the Kochar Group was likely to be found. Thus, amongst the various WoA dated 05.02.2019 in the case of Kochar Group, one was issued pertaining to the Petitioner's Premises. 11. Let's no....
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....on of the revenue authorities, i.e. it was suspected that books of account / other document etc. were kept in the Petitioner's Premises, the said property was searched. This search action was thus under Section 132(1) against the Primary Persons. The Petitioners have erroneously assumed that the search action at their Premises, between 06.02.2019 and 09.02.2019 was conducted under Section132(1A) of the Act, as a premises suspected to have material belonging to the Primary Persons. As demonstrated from the material placed on record, this is palpably incorrect. The Respondents in their Counter Affidavit have categorically stated that the search was never conducted under Section 132(1A) of the Act. Having perused the WoA, we are inclined to agree. As we have noticed above, the Act distinguishes between search actions under sub Sections (1) and (1A) of Section 132, however the distinction is not of relevance in the facts of the case. Although the Petitioners are correct is submitting that the threshold requirement to determine the validity of the authorisation for such search under Section 132(1A) qua the premises is based on 'reason to suspect', but they have ignored the vital fact th....
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....e initiated. As shown to us, both have been issued in Form No. 45, under Section 132 r/w Rule 112(1) of the Income Tax Rules 1962. WoA No. 7257 dated 05.02.2019 was issued to the Primary Persons i.e. the Kochar Group, and was in respect of the Petitioner's Premises. WoA No. 7275 dated 12.02.2019 was issued to the Petitioners Shilpa and Vikas Chowdhary, and was in respect of their Locker No. 150F. Thus, the distinction sought to be drawn by Mr. Shrivastava is wholly irrelevant. Further the assumption and contention that, since Vikas Chowdhary was not the searched person under the WoA dated 05.02.2019, his premises could only be searched under Section 132(1A) of the Act, is entirely misconceived and is rejected. VALIDITY OF SEARCH CARRIED OUT ON 06.09.2019 ON PETITIONER'S PREMISES 13. We do not find any merit in the challenge raised by the Petitioners to the search carried out at the Petitioner's Premises. Firstly, the Petitioners have asserted that they are not challenging the WoA for search conducted on 06.02.2019. Secondly, no prayer has been made in this regard. Besides, as noted above, this search action in relation to the Petitioner's Premises was under the WoA against th....
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....02.2019 14. Next, we shall deal with the search conducted on 03.04.2019, pursuant to WoA dated 12.02.2019. As noted above, the precursor to this WoA is the WoA dated 05.02.2019 that was solely against the Kochar Group and at that stage no search was proposed to be initiated under Section 132(1) of the Act, in the case of the Petitioners or their family members. However, during the search of the Petitioner's Premises, material as well as information was discovered, which constituted "reason to believe" for the Revenue to proceed against the Petitioners. This material comprises of a key to a bank locker which was held in the name of the Petitioners and the statements recorded under Section 132(4) of the Act. 15. At this stage, it would also be relevant to note the Petitioners' contention regarding their statements. Mr. G.C. Srivastava, during the course of the argument had contended that the Petitioners were not questioned about the locker key, the contents of the locker or the source of acquisition of these contents. This contention appears to be incorrect in view of the statements recorded by the Respondents which have been shown to us. Specific queries were put to the Petiti....
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....ntained any articles/cash/jewellery/other materials which represented the undisclosed income of the Petitioner. The satisfaction arrived at by the authority meets the conditions stipulated in Clauses (b) / (c) of Section 132(1) of the Act. The factual background noted above demonstrates that the impugned WoA against the Petitioners has been issued not merely on the ground of recovery of locker key, as Mr. Srivastava has sought to project. The formation of belief by the authorities is also based on the statements of the Petitioners. The officers made an attempt to ascertain and verify the facts, post the discovery of the locker key. The satisfaction note also records that Petitioners were asked to furnish details of the contents of the locker, but did not provide satisfactory explanation. In these circumstances, we believe that the Revenue was well within its right to proceed to search the Petitioner's locker under section 132(1) of the Act. COURT TO NOT EVALUATE THE ADEQUACY OF "REASON TO BELIEVE" 18. A perusal of the satisfaction note reveals that there is foundation for having reasons to believe in terms of the statute. The principle, as reiterated time and again by the Cou....
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....d, which belonged to the Petitioner in that case. On the same day, a team visited the said locker, and a restraint order under Section 132(3) was passed, based upon the search warrant in the case of KMJ. Consequential search warrants under Section 132(1A) dated 27.06.2014 were subsequently issued for search of the three lockers, in the name of the Petitioners therein. The lockers were forced open on the same day, and statement on oath recorded. The court had noted (in para 14) that for establishing the validity of these search warrants, the lower parameters for "reasons to suspect" was sufficient and parties were not required to meet the higher threshold for "reason to believe". 21. In the present factual matrix too, the initial search proceedings in the residential premises of the present Petitioner were conducted in relation to Section 132(1) proceedings in respect of the Primary Persons. However, this is where the similarity ends between the two cases. In the present case, when the locker key was recovered, and Vikas and Shilpa Chowdhary were questioned in relation to it, they were unable to give satisfactory answers. On this basis, a fresh WoA dated 12.02.2019 was issued u/s....
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....us between the petitioners and the primary person. Thus, the impugned warrants are completely dissimilar and on this basis alone the Shah-E-Naaz Judge judgment is not applicable to the present case. 23. Besides, in the Shah-E-Naaz Judge judgment, heavy reliance was placed upon the satisfaction note, wherein unsatisfactory grounds were given by the Officer, which in the eyes of the court did not tantamount to either "reason to believe" or "reason to suspect". On this point, the court had noted in paragraph 17 of the judgment that the satisfaction note was found lacking even "a single shred of evidence and material to justify the inference", and that "no attempt was made to verify and ascertain when and who had operated the said locker and who was paying rent for the said locker." It then goes on to say that: "The satisfaction note is precipitously silent on any business connection, link and association between the petitioners and the Jaiswal Group or Karamjit Singh Jaiswal, who had been subject to search and seizure operations. Lockers were not subjected to search to unearth undisclosed and concealed assets of Jaiswal Group or Karamjit Singh Jaiswal. Accordingly, we have....
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....¤•à¥‡ समय बचà¥à¤šà¥‡ के जनà¥à¤® के समय तथा अनà¥à¤¯ सामाजिक और धारà¥à¤®à¤¿à¤• अवसरों पर पà¥à¤°à¤¾à¤ªà¥à¤¤ हà¥à¤ है? हीरो के गहनों के मामले में उसका कचà¥à¤šà¤¾ विवरण दें। How much jewellery (to be given approximately in tolas or grams) did you receive at the time of marriage, birth of children & other social & religious occassions from your parents side? In case of diamond jewellery, please give rough description of the same. I don't remember. कà¥à¤¯à¤¾ आपके अपने नाम या संयà¥à¤•à¥à¤¤ नामों से देश ....
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....f minor children? If so, please furnish details. No आज की तिथि तक आपके पास निजी गहने कितने है? (तोले में अनà¥à¤®à¤¾à¤¨à¤¿à¤¤ मातà¥à¤°à¤¾ बताà¤) यह à¤à¥€ बताà¤à¤‚ कि आपने तथा आपके परिवार के सदसà¥à¤¯à¥‹à¤‚ ने कà¥à¤¯à¤¾-कà¥à¤¯à¤¾ गहने पहन रखे है? बैंक लॉकर सहित आपके घर में तथा किसी अनà¥à¤¯ सà¥à¤¥à¤¾à¤¨ पर रखे गहनों का à¤à¥€ बà¥à¤¯....
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....¤® बैंक का नाम व पता à¤à¤«.डी.आर. नंबर/ दिनांक Sr. No. Name/Name of Name & address F.D.R. holders of the bank F.D.R. No./Date à¤à¤«.डी.आर. का निवेश मूलà¥à¤¯ Investment Value of F.D.R No 16) आपके दà¥à¤µà¤¾à¤°à¤¾ या आपके परिवार के सदसà¥à¤¯à¥‹à¤‚ दà¥à¤µà¤¾à¤°à¤¾ किसी à¤à¤¾à¤°à¤¤à¥€à¤¯ या विदेश बैंक अथवा किसी अनà¥à¤¯ à¤à¤œà¥‡à¤‚सी में अपने नाम से, संयà¥à¤•à¥à¤¤ नाम से या तीसरी पाà¤....
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....ों के पास रखी गई परिसंपतà¥à¤¤à¤¿à¤¯à¥‹à¤‚ à¤à¤µà¤‚ कागजातों का विवरण Description of assets and documents kept with person/ s as per col. No. 1 Sr. No. पारà¥à¤Ÿà¥€ का नाम-बैंक अथवा किसी à¤à¤œà¥‡à¤‚सी सेफ कसà¥à¤Ÿà¤¡à¥€ सà¥à¤µà¤¿à¤§à¤¾ का नाम Name of the party/safe custody facility of bank or agency जिस तिथि को परिसंतà¥à¤¤à¤¿à¤¯à¥‹à¤‚ रखी गई Date on which such assets kept NO Document 3 कà¥à¤¯à¤¾ आपके पास या आपके परिवार के सदसà¥à¤¯à....