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TMI Blog2015 (7) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act was issued. In this regard, we find that the Central Board of Direct Taxes has issued Instructions dated 30th September, 2014 indicating that where cash amounting to more than ₹ 10 lacs is found at the premises during the survey under Section 133A of the Act, the Director of Income Tax (Investigation) having territorial jurisdiction over the survey should be intimated to examine the facts for taking recourse to Section 132(1) of the Act. In the light of this instruction, we have no hesitation in holding that pursuant to the survey and the undisclosed cash and unexplained entries found, steps to convert the survey into a search was rightly taken. We are consequently, of the opinion that in the facts and circumstances of the case, the authorities had information based upon material which led to a valid survey being conducted under Section 133A of the Act. Based on further incriminating evidence that came forward during the course of survey, a satisfactory note was placed before the competent authority, who after considering the material recorded his satisfaction. Such satisfaction recorded was in accordance with the provision of Section 132 of the Act.- Decided agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y illegal and without jurisdiction. According to the petitioner, the condition precedent for initiating action under Section 132 of the Act was lacking. The petitioner contended that there was no information in the possession of the authority, which could lead to have a reason to believe that the petitioner was in possession of any money, bullion or jewellery or other articles, which represented undisclosed income. The learned counsel contended that the conditions mentioned in Section 132 of the Act must exist and is a mandatory requirement for a valid search. The learned counsel further submitted that merely because some cash was found would not entitle the authorities to convert the survey into a search operation. The learned counsel submitted that the cash so found, at best, could be utilized in the assessment proceedings but could not become a ground to convert the survey into a search operation. In support of his submission, the learned counsel for the petitioner has placed reliance upon the following decisions, namely, Harbhajan Singh Chadha and others Vs. Director of Income Tax and others in Writ Tax No.451 of 2012 decided on 27th March, 2015, Vindhya Metal Corporation and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he premises and commenced the survey action under Section 133A of the Act at around 12.00 noon on 28th April, 2015 after showing the authorisation under Section 133A of the Act, which was duly acknowledged by the petitioner's Director. During the course of the survey, a sum of ₹ 64,56,970/- was found from the premises along with incriminating documents showing huge cash transactions. The statement of the Director of the petitioner Gaya Prasad Gupta was recorded under Section 131(IA) of the Act, who was asked to explain the source of cash. The statement indicates that he failed to explain the source of cash. The statement of Sri Gupta further indicates that he was asked to furnish the books of accounts of all the companies allegedly doing business from the premises in question, which he failed to produce. Sri Gupta was also asked to explain various entries in the documents where the assessee was taking cash from various parties and returning the money by cheque to the same parties. There were also entries, which showed that assessee was taking payment in cheque and returning the money after taking his commission in cash. These facts were confronted to Sri Gupta and he f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve by the Authorising Officer must be apparent from the note recorded by him. The opinion so recorded must clearly show whether the belief falls under clause (a), (b) or (c) of Section 132(1) of the Act. No search can be ordered except for any of the reasons contained in clause (a), (b) or (c). The satisfaction note should itself show the application of mind and the formation of the opinion by the officer ordering the search. If the reasons, which are recorded, do not fall under clause (a), (b) or (c), in that event, the authorisation issued under Section 132(1) will become illegal and will have to be quashed as held in L.R. Gupta and others Vs. Union of India and others, 194 ITR 32. In order to attract clause (c) of Section 132(1) of the Act, there must be information with the authorising authority relating to two matters, namely, that any person is in possession of money, etc. and secondly, that such money, etc. represents either wholly or partly income or property, which has not been or would not be disclosed for the purposes of the Act. The search would be valid if the authorising authority had reasonable ground for believing that a search was necessary and that he furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and upon recording a satisfactory note permission was accorded from the competent authority for a survey under Section 133A of the Act. Based on this permission, a survey was made and incriminating evidence was found. The statement of one of the Directors' were recorded in which the said Director failed to provide any explanation with regard to the cash found at the premises in question and also failed to explain various entries in the documents, which indicated that the petitioner was taking cash from various parties and returning the money via cheque to the same parties. This unexplained cash and dubious entries in the documents fortified the belief and gave reasons to believe that there was undisclosed income, which would not have been disclosed in ordinary course and accordingly, a satisfactory note was prepared upon an application of mind and requesting a search to be conducted. We also find that the competent authority, after considering the matter, recorded its satisfaction and issued authorization for conducting a search under Section 132 of the Act. The contention of the petitioner that merely because the Director failed to explain the possession of the cash was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to explain the entries, which showed that the petitioner was taking cash from various parties and returning the money via cheque to the same parties and vice-versa, the authorities had reasons to believe that the petitioner's would not produce or cause it to produce the books of accounts or documents evidencing true state of affairs, even if summons under Section 131 or notice under Section 142 of the Act was issued. In this regard, we find that the Central Board of Direct Taxes has issued Instructions dated 30th September, 2014 indicating that where cash amounting to more than ₹ 10 lacs is found at the premises during the survey under Section 133A of the Act, the Director of Income Tax (Investigation) having territorial jurisdiction over the survey should be intimated to examine the facts for taking recourse to Section 132(1) of the Act. In the light of this instruction, we have no hesitation in holding that pursuant to the survey and the undisclosed cash and unexplained entries found, steps to convert the survey into a search was rightly taken. We are consequently, of the opinion that in the facts and circumstances of the case, the authorities had inform ..... X X X X Extracts X X X X X X X X Extracts X X X X
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