2012 (7) TMI 517 - HC - Income Tax

Writ petition cash seized - It is stated in the petition that petitioner No. 1 is engaged in the business of rendering Courier Services to its clients - said was handed over to be transferred to its Head Office, which was being carried by petitioner No. 2, who was an employee of the petitioner s firm - respondent No. 1 issued a warrant of authorization in exercise of its powers under Section 132A(1) of the IT Act Held that - Amount in question was arranged and sent to Indore by Head Office by effecting withdrawals from the firm s bank account, no particulars of the bank account are described in the writ petition - statement of account of the petitioner firm s bank account is also not annexed to the writ petition to substantiate that money in question was withdrawn from any known sources - explanation furnished by Amish Kumar Patel from whose possession the money was seized was not found satisfactory by the department and the aforesaid material was in possession of the authority - warrant of authorization was issued - sufficient information in possession of the authority in order to enable him to form an opinion/reason to believe that the amount in question has not been or would not have been disclosed for the purpose of IT Act - writ petition fails and is hereby dismissed

Issues Involved:
1. Legality of the warrant of authorization under Section 132A(1) of the Income Tax Act, 1961.
2. Existence and sufficiency of information for forming a reason to believe under Section 132A.
3. Scope and ambit of powers under Section 132A of the Income Tax Act.
4. Validity of the petitioners' claims and evidence regarding the seized money.

Detailed Analysis:

1. Legality of the Warrant of Authorization under Section 132A(1) of the Income Tax Act, 1961:
The petition challenged the warrant of authorization dated 11.06.2007 issued under Section 132A(1) of the Income Tax Act, 1961, which requisitioned Rs. 26,00,000/- seized from petitioner No. 2 by the Police Station In-charge, Chandan Nagar Police Station, Indore. The petitioners argued that the authority lacked the necessary information to form a reason to believe that the money seized had not been or would not have been disclosed for the purposes of the IT Act. The court examined whether the warrant was issued with proper jurisdiction and satisfaction of the conditions precedent under Section 132A.

2. Existence and Sufficiency of Information for Forming a Reason to Believe under Section 132A:
The court reiterated that the existence of information having a nexus with the reason to believe that assets have not been or would not have been disclosed for the purpose of the Act is sufficient. The sufficiency of the information is not to be scrutinized by the court, which cannot substitute its opinion for that of the Commissioner. The court found that the Income Tax Department had sufficient information, including the statement of Amish Kumar Patel recorded under Section 131 of the IT Act, to form a reason to believe that the money in question had not been or would not have been disclosed for tax purposes.

3. Scope and Ambit of Powers under Section 132A of the Income Tax Act:
The court referred to several precedents to clarify the scope and ambit of powers under Section 132A. It cited the Supreme Court's ruling in Pooran Mal v. Director of Inspection (Investigation) IT AIR 1974 SC 348, which upheld the constitutional validity of Section 132A, and the case of Smt. Suman Singhai v. DIT (Investigation) [2012] 20 taxmann.com 835, which emphasized that the power exercised by the Commissioner under Section 132 is not judicial or quasi-judicial and that the court cannot substitute its own opinion for that of the Commissioner. The court also referenced Union of India v. Ajit Jain [2003] 260 ITR 80/129 Taxman 74, which held that mere intimation by CBI does not constitute "information" within the meaning of Section 132.

4. Validity of the Petitioners' Claims and Evidence Regarding the Seized Money:
The court scrutinized the petitioners' claims and evidence, noting inconsistencies in the statements and lack of documentary support. The petitioners claimed that the seized money belonged to their firm and was being transferred from their Indore branch to the head office in Ahmedabad. However, the statement of Amish Kumar Patel under Section 131 of the IT Act did not corroborate this claim, as he did not mention that the money belonged to the petitioner's firm or was to be delivered to it. Instead, he stated that the money was handed over to him by Praveen Bhai for delivery to Govind Bhai Patel at the Ahmedabad office, and no documents were provided to substantiate the source of the money. The court found that the explanation furnished by Amish Kumar Patel was unsatisfactory and that the authority had sufficient information to issue the warrant of authorization.

In conclusion, the court dismissed the writ petition, upholding the legality of the warrant of authorization and finding that the authority had sufficient information to form a reason to believe that the money in question had not been or would not have been disclosed for tax purposes. The court emphasized that its jurisdiction under Article 226 of the Constitution is limited and does not extend to questioning the sufficiency of the reasons for belief held by the tax authorities.

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