2019 (9) TMI 637 - HC - Income Tax

Review petition - unexplained cash - disclosure about the source of the cash seized by the police - Warrant of Authorization under Sub-section (1) of Section 132A - HELD THAT - None of grounds raised for the purpose of review are tenable in law. For the purpose of review, the error should be palpable or to put in other words, it should be apparent on the face of the record. Mr. Shah, the learned senior counsel has virtually argued the whole matter. The same is not permissible in law. It is not in dispute that cash worth ₹ 2,45,00,000/- came to be seized from the two employees of the courier company and it is also not in dispute that the cash belongs to the writ applicant. In the course of the hearing of the writ application, it has been admitted that although it was asserted before the authority that the cash was withdrawn from the Bank Account of the wife of the writ applicant, but later, the writ applicant clarified that no cash was withdrawn from the Bank Account of his wife. The matter is still at the stage of investigation by the respondent authority. The picture is quite hazy. The procedure under section 132B of the Act will make the picture clear. We are not convinced with the submission of Mr. Shah, that there is no clarity in the Warrant of Authorization issued under section 132A whether the case is one in which the income could be said to be not disclosed or would not have been disclosed. We had also called for the original file and after perusing the same, we were convinced that the satisfaction has been recorded based on cogent materials on record. No case is made out for review of the judgement

Issues:
1. Review of judgment and order passed by the Court in Special Civil Application No.3347 of 2019 challenging Warrant of Authorization under Section 132A of the Income Tax Act, 1961.
2. Grounds for review raised by the petitioner's counsel.
3. Examination of the reasons for rejection of the writ application.
4. Analysis of the authority's actions and the satisfaction recorded for issuing the Warrant of Authorization.
5. Consideration of the evidence and explanations provided by the writ applicant during the investigation.
6. Interpretation of phrases "has not been" and "would not have been" in Section 132(A)(C) of the Act.
7. Application of legal principles regarding the regularity of actions by the Tax Officer and the exercise of power under Section 132A of the Act.
8. Reference to the judgment in Commissioner of Income-tax Vs. Vindhya Metal Corporation and another (1997) 224 ITR 614 (SC).

Analysis:

1. The application for review sought to challenge the judgment and order passed by the Court in Special Civil Application No.3347 of 2019, which contested the issuance of a Warrant of Authorization under Section 132A of the Income Tax Act, 1961. The Court, while rejecting the writ application, emphasized the need for the officer issuing the warrant to justify the regularity of their action and distinguish between malicious intent and bona fide exercise of statutory duties.

2. The petitioner's counsel raised three grounds for review. Firstly, they highlighted the phrases "has not been" and "would not have been" in Section 132(A)(C) of the Act, arguing that the circumstances did not fall within these criteria. Secondly, they pointed out discrepancies in the consideration of evidence by the Court, specifically regarding cash withdrawals from bank accounts. Lastly, they contended that the warrant of authorization lacked specificity, rendering it invalid due to ambiguity.

3. The Court examined the reasons for rejecting the writ application, emphasizing the importance of palpable errors for review. It was noted that the seized cash belonged to the writ applicant, and discrepancies in explanations provided during the investigation raised doubts about the source of the funds. The Court highlighted the ongoing investigation by the respondent authority to clarify the situation.

4. Regarding the authority's actions and the satisfaction recorded for issuing the Warrant of Authorization, the Court reiterated the need for a bona fide exercise of power by tax officers. It was emphasized that the Court should not substitute its opinion for that of the authority if the conditions for exercising the power were met.

5. The Court considered the evidence and explanations provided by the writ applicant during the investigation, including responses to questions about the source of the seized cash. The authority issued summons for further details, indicating a lack of clarity regarding the true source of the funds.

6. The interpretation of phrases "has not been" and "would not have been" in Section 132(A)(C) of the Act was scrutinized. The Court found that the satisfaction recorded for the Warrant of Authorization was based on cogent materials, dismissing the petitioner's argument of ambiguity in the warrant.

7. Legal principles regarding the regularity of actions by the Tax Officer and the exercise of power under Section 132A of the Act were discussed. The Court emphasized the distinction between malicious intent and bona fide statutory duties, highlighting that errors of judgment alone would not invalidate the exercise of power if done in good faith.

8. Reference was made to the judgment in Commissioner of Income-tax Vs. Vindhya Metal Corporation and another (1997) 224 ITR 614 (SC) to distinguish the present case based on the specific facts and circumstances. The Court concluded that no grounds for review were tenable, suggesting that the petitioner could challenge the judgment before the Supreme Court if dissatisfied.

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