2015 (4) TMI 14 - HC - Income Tax

Validity of Search and seizure operations - warrant not issued in the name of petitioners - Held that - The jurisdiction to assess the undisclosed income, if any, of the petitioners on the basis of the search vests in the assessing officer by virtue of the provisions of Section 158BA of the Act in case where a search under Section 132 of the Act is initiated. Such assessment is to be carried out in respect of undisclosed income of a person, who was not issued a warrant of authorisation by invoking the provisions of Section 158BD. We are of the opinion that even though no warrant of authorisation was issued against the petitioners under Section 132 of the Act, nonetheless, the search conducted against them was wholly valid for the reasons stated aforesaid. Pursuant to the search conducted on the first day, the respondents found various bank accounts and lockers of the petitioners and, based on the search, fresh warrant of authorisation for searching the lockers was obtained on 1st February, 2012. The contention of the petitioners that there was no material or information with the authorising authority to believe that there was money, jewellery, etc. in the lockers and, therefore, the action of the respondents was wholly illegal is bereft of merit. It may be noted here that only a bald assertion has been made in para 59 of the writ petition which paragraph has been sworn on legal advice. Such assertion based on legal advice without making the foundational assertion cannot be investigated. Making such allegation without corroborative support is by itself not sufficient to challenge the action taken by the authority under Section 132 of the Act, nor can the Court call upon the authority to disclose the information on the basis of an allegation made on legal advice. Since the petitioners did not furnish adequate and cogent material, we are not inclined to call the respondents to disclose the information. We are also of the opinion, that in the given circumstances, information received on the first date of the search by itself caused a reasonable belief for issuance of the warrant of authorisation against the petitioners for search of their lockers. Such search conducted and the lockers seized on 2nd February, 2012, on the basis of the search conducted on 1st February, 2012 was perfectly valid. - Decided against assessee.

Issues Involved:
1. Legality of the search and seizure operations under Section 132 of the Income Tax Act.
2. Validity of the warrant of authorization not issued in the petitioners' names.
3. Legality of the seizure of bank accounts and lockers based on the search.

Detailed Analysis:

1. Legality of the search and seizure operations under Section 132 of the Income Tax Act:
The court emphasized that a search under Section 132 of the Income Tax Act is a serious invasion into the privacy of a citizen and must be strictly construed. The formation of the opinion or reason to believe by the Authorising Officer must be apparent from the note recorded by him and must clearly show whether the belief falls under clause (a), (b), or (c) of Section 132(1) of the Act. The court stated that "the satisfaction note should itself show the application of mind and the formation of the opinion by the officer ordering the search." The court cited the case of L.R. Gupta and others Vs. Union of India and others, 194 ITR 32, to support this view. The court held that the search would be valid if the authorising authority had reasonable grounds for believing that a search was necessary and that the required object could not otherwise be obtained without undue delay.

2. Validity of the warrant of authorization not issued in the petitioners' names:
The petitioners contended that the warrant of authorization was not issued in their names, and therefore, the search conducted at their premises was illegal. However, the court found that the warrant of authorization was issued in the names of Gurdeep Singh Chaddha (Ponty) and others, who were co-owners of the premises at 455, Civil Lines, Moradabad. The court held that the petitioners could not question the validity or legality of the issuance of the warrant of authorization in the names of these individuals. The court stated, "the petitioners cannot allege that there was no 'information' or 'reasons to believe' warranting the issuance of the warrant of authorization under Section 132 of the Act since the petitioners' name was not mentioned in the warrant of authorization." The court also noted that the property was still joint and had not been partitioned by metes and bounds, and therefore, the search conducted at the premises was valid and proper.

3. Legality of the seizure of bank accounts and lockers based on the search:
The petitioners argued that their bank accounts and lockers were seized or attached illegally, as no search warrant was served relating to the lockers. The court found that the search conducted on 1st February 2012 revealed various bank accounts and lockers of the petitioners, leading to a fresh warrant of authorization for searching the lockers on 1st February 2012. The court held that the search conducted on 2nd February 2012, based on the search conducted on 1st February 2012, was valid. The court stated, "the contention of the petitioners that there was no material or information with the authorising authority to believe that there was money, jewellery, etc. in the lockers and, therefore, the action of the respondents was wholly illegal is bereft of merit." The court concluded that the information received on the first date of the search caused a reasonable belief for the issuance of the warrant of authorization against the petitioners for the search of their lockers.

Conclusion:
The court dismissed the writ petition, holding that the search and seizure operations conducted under Section 132 of the Income Tax Act were valid. The court found that the warrant of authorization, though not issued in the petitioners' names, was valid as it was issued in the names of the co-owners of the premises. The seizure of the bank accounts and lockers was also upheld as valid, based on the information obtained during the initial search. The court concluded that the petitioners' challenges were devoid of merit.

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