2013 (5) TMI 1025 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the Warrant of Authorization u/s 132 of the Income Tax Act, 1961.
2. Compliance with the requirements of section 132 of the Act.
3. Scope of judicial interference under Article 226 of the Constitution of India.

Summary:

1. Validity of the Warrant of Authorization u/s 132 of the Income Tax Act, 1961:
The petitioner challenged the issuance of the Warrant of Authorization dated 5-3-2010 by the first respondent u/s 132 of the Income Tax Act, 1961. The petitioner argued that the warrant was issued without any valid information or reason to believe that the petitioner had not disclosed or would not disclose relevant documents. The court found that the warrant was issued based on information related to another group (K.S Oil Group) and not the petitioner. The court concluded that there was no information or formation of opinion against the petitioner, making the authorization for search and seizure invalid.

2. Compliance with the requirements of section 132 of the Act:
The court examined whether the requirements of section 132 about information and formation of opinion were complied with. It was found that the Assistant Director of Income-tax (Investigation), Gwalior, considered information related to the K.S Oil Group but did not have any specific information about the petitioner. The court noted that the mere mention of the petitioner supplying electrical goods to K.S Oils Ltd. did not constitute valid information for issuing the warrant. The court held that the issuance of the authorization without proper information and formation of opinion was not in compliance with section 132 of the Act.

3. Scope of judicial interference under Article 226 of the Constitution of India:
The court reiterated that the power of search and seizure u/s 132 and the scope of interference in a writ petition under Article 226 have been examined by various courts. It was emphasized that the authority must have relevant material to form an opinion that action u/s 132 is justifiable. The court can interfere if there is no relevant material or if the authority acted in excess of its powers. In this case, the court found that there was no relevant material or formation of opinion against the petitioner, justifying interference under Article 226.

Conclusion:
The court allowed the petition, quashed the authorization for search and seizure, and directed the authorities to return the seized property to the petitioner. The court emphasized that the facts recorded did not constitute any information with a rational connection to the petitioner for forming a belief, which is a condition precedent for issuing a Warrant of Authorization for search and seizure.