1972 (3) TMI 11 - HC - Income Tax

Whether any proceedings need to be pending to issue summons held that no proceedings need be pending for issuing summons under section 132 in view of Explanation 2 to section 132, such summons may be issued in connection with any proceedings which may be commenced further it is held that Act or the Rules do not require that documents to be seized should be specified in the warrant of authorisation

Summary

Issues: Challenge to search and seizure under Article 226 of the Constitution based on Section 132 of the Income-tax Act, 1961.

Analysis:
The appeal before the High Court of Calcutta involved the challenge of search and seizure conducted under Section 132 of the Income-tax Act, 1961 by Messrs. Bharati Private Ltd., a private limited company engaged in various businesses. The search was carried out on multiple premises of the appellant, resulting in the seizure of books, documents, and papers. The key contention raised was the legality of the search and seizure under the provisions of the Income-tax Act.

The appellant argued that the search and seizure were unauthorized as there were no pending proceedings at the time. However, it was established that assessments for the relevant years were pending, satisfying the requirement under Section 132 of the Act. Additionally, it was clarified that the issuance of summons or notice under Section 132 does not mandate pending proceedings but includes future proceedings as well.

Reference was made to a Supreme Court decision in a similar case where it was held that the issuance of a search warrant by the Commissioner under Section 132 is not a judicial act. The Court emphasized that irregularities during the search and seizure process do not invalidate the action if conducted in good faith. The Act does not necessitate specifying particulars of documents in the warrant, allowing for a general authorization to search for relevant materials.

Moreover, the Court highlighted that the powers under Section 132 have inherent limitations and must not be used for a roving inquiry. The search and seizure should be bona fide and supported by materials justifying the summons or notices. Allegations of indiscriminate search must be substantiated with specific details of irrelevant documents seized, which was lacking in the present case.

Lastly, the appellant contended that there was no authorization for the search of a specific premise, but the Court confirmed the existence of the authorization based on the records. Consequently, the appeal was dismissed, and no costs were awarded, with both judges concurring on the decision.

In conclusion, the judgment upheld the legality of the search and seizure conducted under Section 132 of the Income-tax Act, emphasizing compliance with statutory requirements and the need for valid reasons to believe in undisclosed income or property to authorize such actions.