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TMI Blog2014 (1) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act - With respect, the provision admits of no other construction or interpretation. Since the notices under Section 131(1A) of the Act were issued in this case by a Deputy Director, he had due authority therefor - such officer possessed the treasure trove of information pertaining to the aforesaid four companies connected with the EMTA group and the petitioners’ nexus therewith, he had enough reason to suspect that income had been concealed or was likely to be concealed by the petitioners who were subject to his jurisdiction - There is no requirement, far less any statutory fiat, for the reasons to suspect or the basis for the suspicion to be disclosed in any notice issued under Section 131(1A) of the Act - In any event, the first of such notices that the petitioners assail, the one dated October 28, 2013, refers to a previous notice under Section 131(1A) of the Act that required the petitioners to appear before the Deputy Director on August 2, 2013 - The factum of such previous notice having been issued has been ignored by the petitioners - the petitioners have not been able to demonstrate any averment in the subsequent application filed in court that the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the limited scope of the petition, which is confined to the propriety of the search and seizure process conducted on August 1, 2013 and August 22, 2013. However, the refusal to entertain the challenge to the subsequent notices may entail multiplicity of proceedings; and, thus, such aspect of the matter is also dealt with. Section 132 of the Act permits certain high officers of the Income Tax Department to authorise certain specified classes of officers to conduct search and seizure operations as indicated in the Section, upon the high officer, in consequence of information in his possession, having reason to believe that any of the three conditions enumerated in clauses (a), (b) or (c) of sub-section (1) had arisen. The relevant part of Section 132(1) is set out for convenience, without indicating the nature of the search that may be conducted, since such aspect is irrelevant in the present context: 132. (1) Where the Director General or Director or the Chief Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that (a) any person to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (a) deals with a person who has failed to produce such material as was required of him pursuant to a summons issued under some specified provisions of the Act. The expression in consequence of information in his possession, has reason to believe that governs all three clauses. In respect of clause (a) there must be information that a summons under any of the specified provisions has been dishonoured. However, in respect of clauses (b) and (c) of the sub-section, the expression in consequence of information in his possession, has reason to believe that would imply that there is such information available with the high official that would prompt a prudent person to apprehend that there was a likelihood of either situation covered by the last two clauses arising. The reason to believe has to be based on the information available with the high official for a reasonable person in the position of the high official to anticipate a breach or apprehend non-compliance of the kind envisaged in clause (b) or clause (c) of the sub-section. The reason to believe has, thus, to point towards a likelihood of either situation envisaged in clause (b) or clause (c) of the sub-section and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia), the information was received from the Central Bureau of Investigation which the courts regarded as not being enough material on facts for any reason to believe to be founded thereon for initiating action under Section 132(1) of the Act. It is now necessary to dwell awhile on the affidavit that has been filed by the department to ascertain as to whether the warrant of authorisation issued by the Director of Income Tax (Investigation) could reasonably have been issued on the basis of the information in the possession of such official. The satisfaction note has been produced in court and it is evident therefrom that the matters referred to in paragraphs 6 to 25 of the affidavit filed by the department are substantially reflected in the note-sheet on the basis of which the official formed his opinion and authorised the search and seizure operation to be undertaken. According to the affidavit, in course of the investigation by the revenue authorities into the affairs of a company by the name of EMTA Coal Limited, which is engaged in, inter alia, the development and operation of coal mines allotted to power utilities owned by the State and Central Governments, it was disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts covering the gamut of information in the possession of the authorising official in this case, it can scarcely be said that the reason to believe could not have been founded thereon to apprehend either a situation under clause (b) or clause (c) of the sub-section. Indeed, the wealth of the information that was available with the authorising official was so overwhelming that no reasonable person could have held any belief to not authorise the search and seizure operation. And, as they say, the proof of the pudding is in the eating: the petitioners were not available at the time of the search and seizure operation. There is a minor matter of Section 132(4) of the Act that the petitioners may have overlooked. Such provision recognises that the authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing Any statement obtained during such examination may thereafter be used in evidence in any proceedings under the Act. The explanation to the sub-section provides that the examination of any person und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Director by virtue of the opening lines of the sub-section preceding the relevant clause. In other words, the Director General or the four other designated officers have authority to exercise the powers conferred under Section 131(1) of the Act, provided such officer has reason to suspect that any of the situations as envisaged in sub-section 131(1A) has arisen. On the other hand, if it is the authorised officer referred to in Section 132(1) of the Act who exercises the authority under Section 131(1A) of the Act, such officer is competent to exercise such authority only prior to taking action under clauses (i) to (v) of Section 132(1) of the Act. It is elementary on any reading of Section 131(1A) of the Act that the five categories of officers, other than the authorised officer referred to in Section 132(1) of the Act, may exercise the authority under such provision, subject to meeting the other statutory requisites but without being impaired by the search and seizure process having been conducted under Section 132(1) of the Act. With respect, the provision admits of no other construction or interpretation. The word he in the expression before he takes action under clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 131(1A) cannot be said to be an independent power in itself but is the power for the purpose of making enquiry and investigation relating to any income which has been concealed or is likely to be concealed Neither decision can bring much cheer to the hopeless cause that the petitioners espouse in the present case. Since the notices under Section 131(1A) of the Act were issued in this case by a Deputy Director, he had due authority therefor. Given that such officer possessed the treasure trove of information pertaining to the aforesaid four companies connected with the EMTA group and the petitioners nexus therewith, he had enough reason to suspect that income had been concealed or was likely to be concealed by the petitioners who were subject to his jurisdiction. There is no requirement, far less any statutory fiat, for the reasons to suspect or the basis for the suspicion to be disclosed in any notice issued under Section 131(1A) of the Act. In any event, the first of such notices that the petitioners assail, the one dated October 28, 2013, refers to a previous notice under Section 131(1A) of the Act that required the petitioners to appear before the Deputy Di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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