2001 (11) TMI 30 - HC - Income Tax

Search Of Locker - It is thus evident that even though search warrant was issued in the name of Rudrachar, it related to not only to the assets of Rudrachar, but the assets of the appellant also. In the search warrant, the name of Rudrachar was mentioned because the locker stood in the name of Rudrachar and not in the name of the appellant. - the search and seizure related not only to Rudrachar but also to the appellant. It is therefore not permissible for the appellant to contend at this point of time that the search did not relate to him or that section 64(2)(ii) was inapplicable to him. We do not therefore find any infirmity in the rejection of the declaration or in the order of the learned single judge dismissing the writ petition. The appeal is therefore rejected.

Issues:
1. Rejection of declaration under the Voluntary Disclosure of Income Scheme, 1997.
2. Applicability of section 64(2)(ii) of the Finance Act, 1997.
3. Validity of search warrant under section 132 of the Income-tax Act.
4. Search and seizure related to the appellant.

Analysis:

1. The appellant filed a declaration under the Voluntary Disclosure of Income Scheme, 1997, disclosing income for two assessment years. However, the respondent refused to accept the declaration citing section 64(2)(ii) of the Finance Act, 1997, due to the initiation of action under section 132 of the Income-tax Act in the appellant's case. The appellant challenged this rejection, claiming that the search and seizure were related to his brother, not him. The court noted the refusal to accept the declaration based on the search initiated under the Income-tax Act.

2. The appellant argued that section 64(2)(ii) did not apply to him as there was no search conducted regarding his income before the declaration. However, the court found that during the search, inventory revealed assets belonging to both the appellant and his brother. The Income-tax Officer's satisfaction note indicated that action under section 132 was proposed for all contents of the locker, including assets of the appellant. The court held that the search warrant, though issued in the brother's name, encompassed assets of both individuals.

3. The court clarified that the search and seizure were not limited to the appellant's brother but also included the appellant's assets. Despite the search warrant being in the brother's name, the authorities intended to search for assets belonging to both individuals. The joint application by the appellant and his brother for the release of gold bars, along with the appellant's admission of ownership of eight gold bars, further established the search's relevance to the appellant. The court concluded that the search and seizure were applicable to the appellant, upholding the rejection of the declaration.

4. In light of the comprehensive analysis of the search, seizure, and ownership of assets during the search operation, the court found no merit in the appellant's contention that the search did not pertain to him. The court affirmed the rejection of the declaration under the Voluntary Disclosure of Income Scheme, 1997, and upheld the single judge's order. Consequently, the appeal was dismissed based on the search's relevance to the appellant and the application of section 64(2)(ii) of the Finance Act, 1997.

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