1997 (10) TMI 61 - HC - Income Tax

Summary

Issues:
- Declaration of searches as illegal and void under the Income-tax Act
- Interpretation of provisions of the Voluntary Disclosure of Income Scheme
- Suspension of power to search and seize under section 132 of the Act
- Discrimination and violation of rights under Article 14 of the Constitution

Analysis:
The petitioner sought a declaration that searches conducted by the respondent on their business and residential premises were illegal and void. The petitioner argued that the Voluntary Disclosure of Income Scheme impliedly suspended the power to search premises until the scheme's expiry on December 31, 1997. The court rejected this argument, stating that the scheme is an enabling provision for voluntary disclosure, not a suspension of search powers under section 132 of the Act. The court emphasized that compliance with the scheme's conditions is necessary to avail of its benefits, and the power to search is independent of the scheme.

The court further addressed the contention that allowing searches would result in discrimination and violate the petitioner's rights under Article 14 of the Constitution. It held that the introduction of the scheme does not affect the authorities' independent power to search under section 132. The court highlighted that preventing searches based on the scheme would enable tax evaders to evade consequences and contravene tax laws with impunity, undermining the Act's provisions and justice. Therefore, the court rejected the petitioner's arguments regarding discrimination and violation of rights under Article 14.

In conclusion, the court found no merit in the petition and rejected it without issuing a rule. The judgment emphasized the independence of the power to search and seize under section 132 of the Act, stating that the Voluntary Disclosure of Income Scheme does not suspend or affect this power. The court's decision upheld the importance of compliance with tax laws and preventing tax evasion, emphasizing the need to uphold the provisions of the Act without discrimination or suspension of enforcement powers.