1983 (4) TMI 18 - HC - Income Tax

Summary

Issues involved: Challenge to search and seizure u/s 132 of the Income Tax Act, 1961 based on validity of warrants of authorization, belief of Commissioner, legality of search and seizure process.

Validity of Warrants of Authorization:
The petitioners challenged the warrants of authorization, contending they did not conform to the requirements of s. 132(1)(b) and (c), and that the reasons recorded by the Commissioner did not demonstrate his satisfaction with these provisions. The Commissioner's reasons were based on a detailed report indicating clandestine coal business by the group of assessees, leading to the belief of unaccounted wealth in cash and jewellery. The Court found the authorizations in Form No. 45, signed by the Commissioner, to be valid as they were based on credible information and met the statutory requirements.

Belief of Commissioner and Necessity for Search:
The petitioners argued that the Commissioner could not have reasonably believed that the firm not dealing in coal was involved in such transactions. However, the Court held that the composition of the firms, all being sister concerns, justified the search. Additionally, the belief that the books of account related to coal transactions would not be produced if summoned was deemed reasonable given the nature of clandestine activities. Citing precedents, the Court upheld the validity of the authorizations issued by the Commissioner u/s 132(1)(b) and (c).

Legality of Search and Seizure Process:
The petitioners raised objections to the search and seizure process, including the absence of local witnesses, lack of inventory, unsealed boxes, and seizure of ornaments from family members. The Court dismissed these objections, noting that the petitioners themselves requested certain procedures, such as keeping seized items in locked boxes due to health concerns. The Court emphasized that irregularities, if any, did not vitiate the search and seizure action conducted in good faith by the authorized officers.

Conclusion:
The petitions challenging the search and seizure u/s 132 of the Income Tax Act, 1961 were dismissed by the High Court of Madhya Pradesh. The Court found the warrants of authorization valid, upheld the Commissioner's belief in the necessity of search, and deemed the search and seizure process legal despite objections raised by the petitioners. The judgment awarded costs to the respondents and ordered the refund of the security deposit to the petitioners.