2004 (1) TMI 54 - HC - Income Tax

Second writ petition contentions urged in this second petition petitioners questioned the legality or otherwise of the proceedings initiated by the respondent authorities under section 132(1) petitioner also sought quashing of notice issued by the respondent authorities under section 158BC -No arguments were advanced with regard to these questions in the earlier proceedings Held that in the second writ petition, it is open to the petitioner to urge the contentions which have not been raised in the earlier proceedings (writ petition)

Issues:
1. Legality of search and seizure under section 132(1) of the Income-tax Act, 1961.
2. Challenge to block assessment orders issued under Chapter XIV-B of the Act.
3. Validity of notice under section 158BC of the Act.
4. Claim of cash seized belonging to the petitioners.
5. Arguments regarding the conduct of the Income-tax Department personnel.
6. Applicability of earlier court orders on the present petitioners' case.

Analysis:
1. The petitioners challenged the legality of the search and seizure conducted under section 132(1) of the Income-tax Act, 1961. The cash amount seized from the petitioners was claimed to belong to them. The petitioners argued that the proceedings were contrary to the provisions of section 132 of the Act. However, the court observed that the police found the petitioners with bags containing cash, which they claimed did not belong to them. The Income-tax Department conducted an inquiry and seized the cash, leading to block assessment orders being challenged by the petitioners.

2. The petitioners contested the block assessment orders issued under Chapter XIV-B of the Act. They filed writ petitions challenging the orders, which were subsequently rejected by the Commissioner of Income-tax. The revisional authority upheld the validity of the notice under section 158BC and the order under section 143(3) of the Act. The petitioners' counsel raised concerns about the procedure followed by the respondents and questioned the authorization of the warrant.

3. The court addressed the validity of the notice issued under section 158BC of the Act. The petitioners sought the return of the seized cash after the completion of proceedings under Chapter XIV-B of the Act. However, the court noted that the petitioners did not raise arguments on this issue in earlier proceedings, which limited their ability to challenge the legality of the search and seizure in the present petition.

4. The petitioners claimed that the cash seized belonged to them, but during the inquiry, they denied ownership of the cash found in their possession. The court considered the facts presented and the previous court orders, which restricted the petitioners from raising new contentions not previously advanced in the proceedings.

5. The petitioners raised concerns about the conduct of the Income-tax Department personnel during the search and seizure process. However, the court found no merit in the arguments presented by the petitioners' counsel, as the earlier court orders and limitations on new contentions hindered the petitioners' ability to challenge the proceedings.

6. The court highlighted that the petitioners were bound by the earlier court orders and could not introduce new arguments that were not raised in previous proceedings. Despite the petitioners' counsel's efforts to revive contentions given up in earlier proceedings, the court found no grounds to interfere with the orders passed by the revisional authority. Consequently, the petitions were rejected, and the orders passed by the revisional authority were confirmed.

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