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2004 (5) TMI 43 - HC - Income TaxSearch and seizure validity reason to believe - authorities cannot rely on material found during the search for taking the plea that this was the basis of the reason to believe - There existed no material which could lead to the formation of reasons to believe under section 132(1) that the petitioner had cash or assets which represented undisclosed income. - No material has been disclosed in the counter affidavit to show that there were reasons to believe in the authority concerned for issuing the warrant of authorization - impugned warrant of authorisation is quashed and the entire search and seizure is declared illegal
Issues:
Challenge to warrant of authorisation under section 132 of the Income-tax Act, 1961 and restoration of seized cash and valuables. Analysis: The petitioner, engaged in the business of manufacturing perfumed supari, challenged the search operation and seizure of cash and valuables from his residence and bank locker. The petitioner maintained proper records for his business activities and complied with statutory requirements, including tax audits and filing income tax returns. Despite explanations for the seized cash and valuables, the authorities did not return the items. The petitioner's wife's jewellery and the cash in the bank locker were also seized without proper justification. The court noted that the petitioner and his wife were regular income tax payers with a history of filing returns. The court found no valid reasons to believe that the petitioner possessed undisclosed income or assets, as required under section 132(1) for issuing a warrant of authorisation. The court referenced various legal precedents to support its decision, emphasizing the importance of pre-search knowledge in forming reasons to believe. In light of the above analysis, the court allowed the writ petition, quashed the warrant of authorisation, and declared the search and seizure as illegal. The respondents were directed to release all seized cash, articles, and documents to the petitioner and his wife promptly.
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