2010 (5) TMI 581 - HC - Income Tax

Search and seizure - Block assessment - Undisclosed income - The petitioners have nowhere averred in the writ petition that the Department was not possessed with any such information or material or that on the basis of such information or material no opinion with regard to undisclosed income could have been formed. In the absence of such pleadings the submission advanced on behalf of the petitioners cannot be appreciated - It is not even the case of the petitioners that the aforesaid two witnesses were not known to them or that they were not respectable persons summoned on their request - Search and seizure operation cannot be held to be, on the facts and circumstances, without jurisdiction or in contra-vention of any provision of the Act or the Rules so as to occasion this court to interfere in the matter - Decided in favour of the assessee

Summary

Issues:
Challenge to notices under section 158BC of the Income-tax Act, 1961 and quashing of panchnamas related to search and seizure. Jurisdictional challenge regarding the authorization of search and seizure. Requirement of information and reason to believe for issuance of search and seizure warrant. Validity of search and seizure operation without summoning two witnesses of the locality.

Analysis:
The petitioners sought to quash notices under section 158BC of the Income-tax Act, 1961, and panchnamas related to a search and seizure operation. They challenged the jurisdiction of the authorization of search and seizure, arguing that the Additional Director of Income-tax lacked the authority to sign the authorization. However, the court noted that the Finance Act of 2009 had amended the relevant provision, allowing the Additional Director to issue and sign such authorizations retrospectively from June 1, 1994. Therefore, the authorization issued by the Additional Commissioner of Income-tax was deemed valid despite not being explicitly mentioned in the prescribed Form 45.

Regarding the requirement of information and reason to believe for a search and seizure warrant, the court emphasized that while these are mandatory pre-requisites, the petitioners failed to provide clear pleadings in this regard. Without specific allegations that the Department lacked relevant information or grounds to suspect undisclosed income, the court could not entertain this argument. The absence of such pleadings rendered the submission ineffective.

Lastly, the petitioners contended that the search and seizure operation was flawed as two witnesses from the locality were not summoned. However, the Department clarified that the witnesses were summoned at the petitioners' request. The court noted that the absence of local witnesses did not automatically invalidate the operation, especially when there was no claim of prejudice or misconduct due to their absence. As the petitioners failed to demonstrate any harm resulting from the lack of local witnesses, the court found no grounds to interfere with the search and seizure operation.

In conclusion, as no other points were raised, the court declined to exercise its discretionary jurisdiction under article 226 of the Constitution of India. The writ petition was dismissed for lacking merit, with no order as to costs.