2020 (1) TMI 297 - HC - Income Tax

Assessment u/s 153A - sufficient information available in the record of the department forming basis of reason to believe - HELD THAT - Shri Muneesh Kumar, DDIT (Inv) II, Raipur, has mentioned that Shri Subhash Sharma of Raipur is known to be a close associate of Amolak Singh Bhatia group and therefore, he is proposed to be included in the search. Similar observation in respect of other liquor contractors of the State is also mentioned in the note sheet concluding that in the light of above, on the basis of information gathered during discrete enquiries, it is apparent that the Shri Amolak Singh group and his associates and Shri Manjeet Singh Bhatia and associates are concealing their true income and are in possession of substantial amount of money, bullion, jewellery and other valuable assets representing income which has not been and shall not be disclosed for the purposes of taxation. The officer thereafter proposed issuance of warrant of authorisation u/s 132 in respect of premises of Shri Amolak Singh Bhatia and family, Shri Surjeet Singh Bhatia and family, Shri Manjeet Singh, Shri Subhash Sharma, Shri Santosh Kumar, Shri Gurmeet Singh Bhatia and family and Shri Manjeet Singh at different locations. This Court is satisfied that the authority was possessed of information on the basis of which a reasonable belief was founded that the petitioner has omitted or failed to produce books of accounts or other documents and that such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed. This Court is further satisfied that before issuance of warrant and the notice under Section 153A of the IT Act the authority applied its mind to the material and the formation of opinion is honest and bona fide and further that it is not based on any extraneous or irrelevant material. Having examined the papers, this Court is also satisfied that the reasons for formation of belief are relevant to the subject matter at hand and since this Court is not required to go into the sufficiency or adequacy of the information nor can the Court sit in appeal over the satisfaction of the authority, this Court does not find any illegality or infirmity in the entire process based on which the warrant under Section 132 and the notice under Section 153A of the IT Act was issued against the petitioner.

Summary

Issues:
Challenge to legality and validity of notice under Section 153A of the Income Tax Act and search of premises.

Analysis:
The petitioner contested the notice issued under Section 153A of the Income Tax Act, claiming the search warrant under Section 132 was unfounded due to lack of "reason to believe." The petitioner argued that the warrant was issued in the name of another individual, not against him, and that Section 153A did not apply since the search was deemed illegal. Legal precedents were cited to support the petitioner's stance.

The respondent, representing the Revenue, countered by referencing legal precedents to assert that the search warrant was lawful, based on substantial material forming the reason to believe. It was argued that the information available was relevant, justifying the notice under Section 153A, and no interference was warranted.

In a previous case, the High Court had annulled a notice under Section 153A by challenging the warrant issued under Section 132. However, the Supreme Court overturned this decision, citing earlier judgments and summarizing key legal principles regarding the formation of belief by the authorities.

The Supreme Court emphasized the importance of recording reasons for decisions to ensure accountability and facilitate judicial review. It clarified that the Assessee was not entitled to inspect documents or reasons during the authorization stage but only after completion of assessment proceedings post-search and seizure.

Upon reviewing the department's records, the Court found that the authority had sufficient information to form a reasonable belief justifying the search and notice under Sections 132 and 153A. The Court affirmed that the reasons for belief were relevant and genuine, dismissing the petitioner's claims of illegality.

In conclusion, the Court dismissed the writ petition, finding no grounds for challenge. No costs were awarded in the matter.