TaxTMI 
TaxTMI 
2026 (2) TMI 96
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....thered from the writ petition are as follows:- a) On June 21, 2022 and on other dates subsequent thereto a search operation under Section 132 of the said Act of 1961 was conducted at the residence and office of the petitioner as well as at the bank lockers of the petitioner and the petitioner's family members. b) In course of the search and seizure operation, the entire jewellery/bullion (hereafter "the seized assets") were seized upon being inspected, measured, serially numbered and valued by the valuers approved by the Income Tax Department in accordance with the prescribed search and seizure procedure and the Search and Seizure Manual issued by the Central Board of Direct Taxes. c) Subsequently, the petitioner filed its Return of Income (hereafter "ITR") for the assessment year 2023-24. The same was processed under Section 143(1) of the said Act of 1961 on September 17, 2023. d) The said ITR was thereafter selected for compulsory assessment and notices dated October 04, 2023 were issued under Sections 143 (2) and 142(1) of the said Act of 1961 thereby calling upon the petitioner to reconcile the seized assets with his books of accounts and wea....
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....1st Floor, P-7, Chowringee Square, Kolkata-700069, at 12 P.M. on the said date. j) The petitioner replied to the said notice by a letter October 28, 2025 thereby indicating his inability to be present during the inspection on account of "a medical condition" as result whereof the petitioner was "bleeding from his legs, arms and other parts of the body". k) On October 29, 2025 another letter was issued to the petitioner thereby re-fixing the date of inspection on November 04, 2025. By the said letter two more alternative dates i.e. November 06, 2025 and November 07, 2025 were suggested to the petitioner with a request to be present for inspection either personally or through authorised representative. l) On November 04, 2025 the petitioner once again pleaded inability to attend inspection on any of the scheduled dates for medical reasons and reminded the department that the seized assets had been lying in the custody of the Income Tax Department for thirty eight months by then and that in such view of the matter there was no such urgency that could not await the petitioner's recovery and ability to participate in the process meaningfully. The petitioner fu....
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....ter of appeal. It was further put across to the petitioner that the PCIT was "competent to make or cause to be made any inquiry as it deemed necessary" before passing an order under Section 263 of the said Act of 1961 and that the department was in possession of certain information for which inspection of the seized assets kept in the strong room was required. It was further asserted that such exercise was relevant and useful for the purpose of Income Tax Act. p) Feeling aggrieved by the aforesaid notices the petitioner has approached this Court by filing the instant writ petition. 3. On the first day when the matter was taken up, Mr. Dudhoria, learned Advocate appearing for the revenue had submitted that the inspection was sought to be conducted on the basis of certain confidential information that had been obtained by the revenue and that such inspection was relevant for the purpose of a proceeding under Section 263 of the said Act of 1961. This Court had then directed the respondent revenue authorities to file a report bringing on record the reason/purpose of the inspection sought to be conducted. 4. During the next hearing, a report was sought to be tendered to C....
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....any inquiry that he deems necessary and pass such order thereon as the circumstances of the case may justify. b) For the purpose of passing an order the revising authority has power to examine the record of any proceeding under the Act. c) The articles that had been seized during the course of search and seizure operation also form part of the records and that for the purpose of inspection of the record, it is not incumbent on the revenue authorities to indicate any reason. In support of the contention that reasons for inspection are not required to be supplied prior to inspection a judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Mumbai vs. Amitabh Bachchan (2016) 11 SCC 748 was pressed into service. d) Another judgement of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Bangalore vs. Shree Majunatheaware Packing Products & Camphor Works (1998) 1 SCC 598 and a judgment of the Hon'ble High Court of Gujarat in the case of Commissioner of Income-Tax vs. Vallabhdas Vithaldas & Anr. (2002) 253 ITR 543 were cited for to demonstrate that seized assets also form the part of the records. e) It was next....
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.... the said Rules and it was submitted that inspection should not be made a regular affair. h) It was further submitted that if the information and reasons are not indicated in the notice, the same would be rendered arbitrary. ANALYSIS & DECISION: 9. Two questions fall for consideration by this Court. Firstly, as to whether the information or the reason that have prompted the inspection of seized assets should be supplied to the petitioner and secondly whether the impugned notices informing the petitioner about the inspection intended to be conducted have been issued for "any of the purposes of the Act". 10. It is the petitioner's case that the information and reasons that have induced the inspection must be supplied to the petitioner. It was submitted that while non-furnishing of information at the stage of search and seizure is understandable since the same involves an element of surprise, the same cannot be justified in the present case where the revenue seeks to inspect the seized assets kept inside sealed packages. The argument is attractive but its appeal gets tempered by the clear statutory provisions. 11. A search under Section 132 of the said Act of 1961....
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.... the presence of two respectable witnesses after giving a reasonable notice to the person from whose custody the contents were seized to be present. (ii) Such person shall be permitted to be present till all or any of the contents of such package are placed in a fresh package or packages and sealed in the manner specified in sub-rule (1) or delivered to such person or the Custodian, as the case may be." 14. A meaningful reading of Rule 112(13) of the said Rules would indicate that a sealed package can always be reopened "for any of the purposes of the Act" and that the same can be done "in the presence of two respectable witnesses after giving a reasonable notice to the person from whose custody the contents were seized to be present". Evidently, the power of reopening a sealed package is not predicated on any information in possession of the revenue and/or any "reason to believe" that might trigger an inspection. Such power can be exercised even in absence of any information provided the same is required "for any of the purposes of the Act". 15. Indeed, while the surprise element that is there at the stage of search and seizure is not there at the stage of a subsequ....
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....1 that any information and/or reason based on which the requirement for reopening the sealed package may have been felt or may have arisen would be required to be communicated to the person "from whose custody the contents were seized" (hereafter "the person concerned"). All that the person concerned is required to be communicated is a "reasonable notice... to be present". 20. It is true that none of the notices has stated, with the desired specificity, that the inspection of the seized assets is required for the purpose of the pending proceeding under Section 263 of the said Act of 1961 but on a careful reading of the notice dated November 07, 2025 issued by the revenue in the light of the pleadings in the writ petition (i.e. paragraphs 26 and 30 thereof) and the submissions made on behalf of the respective parties it is almost clear that the impugned inspection is sought to be conducted for the purpose of pending Section 263 proceeding only. This Court is cognizant of the fact that the petitioner has questioned the nexus of the proposed inspection with the pending 263 proceeding in the writ petition especially in the pleadings in paragraphs 26 and 30 thereof but the very asser....
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....n this context the observations of the Hon'ble Supreme Court in the judgment in the case of Amitabh Bachchan (supra) at paragraph 12 thereof deserve notice:- "12. It may be that in a given case and in most cases it is so done a notice proposing the revisional exercise is given to the assessee indicating therein broadly or even specifically the grounds on which the exercise is felt necessary. But there is nothing in the section (Section 263) to raise the said notice to the status of a mandatory show-cause notice affecting the initiation of the exercise in the absence thereof or to require CIT to confine himself to the terms of the notice and foreclosing consideration of any other issue or question of fact. This is not the purport of Section 263. Of course, there can be no dispute that while CIT is free to exercise his jurisdiction on consideration of all relevant facts, a full opportunity to controvert the same and to explain the circumstances surrounding such facts, as may be considered relevant by the assessee, must be afforded to him by CIT prior to the finalisation of the decision." 26. In the light of the said observations a notice of inspection like the one at hand....
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....t order dated 30-3-2004 was erroneous and prejudicial to the interests of the Revenue was recorded by the learned CIT. At each stage of the revisional proceeding the authorised representative of the assessee had appeared and had full opportunity to contest the basis on which the revisional authority was proceeding/had proceeded in the matter. If the revisional authority had come to its conclusions in the matter on the basis of the record of the assessment proceedings which was open for scrutiny by the assessee and available to his authorised representative at all times it is difficult to see as to how the requirement of giving of a reasonable opportunity of being heard as contemplated by Section 263 of the Act had been breached in the present case. The order of the learned Tribunal insofar as the first issue i.e. the revisional order going beyond the show-cause notice is concerned, therefore, cannot have our acceptance. The High Court having failed to fully deal with the matter in its cryptic order dated 7-8-2008 [CIT v. Amitabh Bachchan, 2008 SCC OnLine Bom 1544] we are of the view that the said orders are not tenable and are liable to be interfered with." 28. In the case at ha....