2019 (9) TMI 6 - HC - Income Tax

Requisition of amount u/s 132A - Cash was seized from two persons of the Angadiya Courier Service by the police inspector - Seeking quashing the Warrant of Authorization issued by the Principal Director of Income Tax (Investigation) u/s 132A(1) - HELD THAT - the scope of interference with the Warrant of Authorization in a writ application under Article 226 of the Constitution is very limited. As held by this Court in the case of Shalini Verma 2012 (5) TMI 20 - GUJARAT HIGH COURT , whether on the information the authority concerned should have exercised his power under section 132A must be decided by the said authority and not by this Court. The concerned authority under section 132A alone is entrusted with the power to demonstrate the same. If from the materials disclosed, it must be prima facie said that the authority had reason to believe that any of those conditions existed, then, it is not open for this Court while exercising power under Article 226 of the Constitution to set aside the Warrant of Authorization on a reappraisal of the evidence. The Affidavit-in-reply filed on behalf of the respondent speaks for itself. Initially the writ applicant declared that he had withdrawn the amount from his bank accounts as well as from the accounts of his wife. He also declared that some amount was also taken from his cash book. - When asked to submit the bank account details and cash withdrawals so far as the account of his wife is concerned, the writ applicant declined to submit the details and prayed for some more time to produce the relevant documents. The writ applicant was also asked to submit confirmation from the parties with respect to cash payment along with the relevant cash as well as bills. However, the information provided by the writ applicant was not found convincing. The authority found the statement of the writ applicant recorded periodically quite contrary to each other. In the overall view of the matter, we are convinced that we should not interfere in the present matter. We do not find any palpable error or gross illegality going to the root of the matter in the issue of Warrant of Authorization under subsection (1) of section 132A

Issues Involved:
1. Legality of the Warrant of Authorization under Section 132A(1) of the Income Tax Act, 1961.
2. Justification for the requisition of the cash amount seized by the police.
3. Adequacy of the information and satisfaction for issuing the Warrant of Authorization.
4. Compliance with procedural requirements and principles of natural justice.

Issue-wise Analysis:

1. Legality of the Warrant of Authorization under Section 132A(1) of the Income Tax Act, 1961:
The writ applicant challenged the Warrant of Authorization dated 30/10/2018 issued by the Principal Director of Income Tax (Investigation), Surat, under Section 132A(1) of the Income Tax Act, 1961. The petitioner argued that the warrant was issued with malafide intention and without proper justification. The court examined whether the authority concerned committed any error in issuing the Warrant of Authorization and found that the satisfaction note and the material on record justified the issuance of the warrant. The court emphasized that the scope of interference under Article 226 is limited and should not act as an appellate authority to reappraise the evidence.

2. Justification for the requisition of the cash amount seized by the police:
The petitioner contended that the cash amount of ?2,45,50,000/- seized by the police was legitimate and accounted for in his cash book. The Income Tax Department, however, argued that the petitioner failed to provide satisfactory evidence regarding the source of the cash despite multiple opportunities. The court noted that the petitioner initially claimed the cash was withdrawn from his bank accounts and his wife's accounts but did not provide the necessary details to substantiate this claim. The court found that the Department's requisition of the cash was justified based on the information and inquiries conducted.

3. Adequacy of the information and satisfaction for issuing the Warrant of Authorization:
The court examined the satisfaction note and the material based on which the satisfaction was recorded for issuing the Warrant of Authorization. The court found that the detailed proposal and satisfaction note prepared by the DDIT (Investigation) and considered by the Principal DIT (Investigation) provided a prima facie case for issuing the warrant. The court reiterated that the reason to believe must be based on definable material and tangible information, and if the information has no nexus with the belief, the action under Section 132A would be illegal. However, in this case, the court found that the satisfaction recorded was adequate and justified.

4. Compliance with procedural requirements and principles of natural justice:
The petitioner argued that the Warrant of Authorization was issued without following due procedure and principles of natural justice. The Department countered that sufficient opportunities were provided to the petitioner to submit evidence, but the petitioner failed to provide satisfactory explanations. The court noted that the petitioner was given multiple opportunities to furnish documentary evidence and that the satisfaction note indicated due compliance with procedural requirements. The court concluded that the Warrant of Authorization was issued after following the laid down procedures and principles of natural justice.

Conclusion:
The court rejected the writ application, finding no error or illegality in the issuance of the Warrant of Authorization under Section 132A(1) of the Income Tax Act, 1961. The court held that the requisition of the cash amount seized by the police was justified based on the information and inquiries conducted by the Income Tax Department. The court emphasized the limited scope of interference under Article 226 and upheld the procedural compliance and satisfaction recorded by the authorities.

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