9911796707
TMI Blog2004 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... "Swarna Sambandh" was organised by M/s. Sercon India Pvt. Ltd., New Delhi to be held at Taj Hotel, Lucknow, for three days from January 13, 2001 to January 15, 2001, for which the first petitioner sent its three employees, i.e., Mr. Parimal Patel, Mr. Manish Jhaveri and petitioner No. 3 to Lucknow. Mr. Patel and Mr. Jhaveri went to Lucknow by train and they reached there on January 12, 2001, petitioner No. 3 proceeded to leave Mumbai on January 12, 2001, to Lucknow by Flight No. S2907 of Sahara Air Lines which was to depart from Santacruz Airport at 4 p.m. He was carrying with him gold, diamonds, jewellery and ornaments having an estimated sale value of Rs. 84.68 lakhs. It appears that petitioner No. 3 was intercepted at the airport at Mumbai when he was about to board the flight to Lucknow by the officers of the Income-tax Investigation Department, Mumbai. It is the case of the petitioners that petitioner No. 3 answered all the queries and produced various documents in his possession like invitation from M/s. Sercon India Pvt. Ltd., introductory letter from Bank of India, Mumbai, to its branch in Lucknow for opening of account for depositing the sale proceeds of the exhibition an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed for the purpose of the Act, a condition precedent for exercise of powers under section 132(1) of the Act. The contention is that since the authorisation itself was illegal and void ab initio, all proceedings taken consequent thereto are also rendered illegal and void. In the affidavit in reply filed on behalf of respondents Nos. 1 and 2, a preliminary objection has been raised as to the maintainability of the petition on the ground that the petition is premature and the petitioners have got efficacious alternate remedy of raising these contentions in proceedings under section 158BC of the Act. On the merits it is stated that the authorisation was given on the basis of the fax communication from the Investigating Unit, Mumbai, and there is no illegality or infirmity in the action of warrant and seizure. Mr. Jhaveri, learned counsel appearing for the petitioners, submitted that mere intimation by the investigating unit that petitioner No. 3 was possessing gold, diamonds, and jewellery, etc., could not constitute information within the meaning of section 132 of the Act particularly when the sales representative of the first petitioner from whom gold, diamonds, jewellery, etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner or Income-tax Officer, or (B) such Joint Director or Joint Commissioner, as the case may be, may authorize any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, (the officer so authorized in all cases being hereinafter referred to as the authorized officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept..." It is well-settled that the existence or otherwise of the condition precedent to exercise of power under these provisions is open to judicial scrutiny. The absence of the condition precedent would naturally have the effect of vitiating the authorisation made under section 132 and the proceedings consequent thereto. While the sufficiency or otherwise of the information cannot be examined by the court, the existence of information and its relevance to the formation of the belief can undoubtedly be gone into. Also, whether on the material available with the Director/Commissioner, any reasonable person could have arrived at the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not validated or nor does it change character from its success. It would not, therefore, be asking too much from the authorities to comply with the basic requirements of the section before they are permitted to invade the secrecy of one's home." The special leave petition filed against this judgment was dismissed by the Supreme Court. In L.R. Gupta v. Union of India [1992] 194 ITR 32, it was held by the Delhi High Court that the expression "information" must be something more than a mere rumour or a gossip or a hunch. There must be some material which can be regarded as information which must exist on the file on the basis of which the authorizing officer can have reason to believe that action under section 132 is called for any of the reasons mentioned in clause (a), (b) or (c). When the action of issuance of an authorization under section 132 is challenged in a court, it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under section 132 was called for. B.N. Kirpal, J. (as his Lordship then was) explained the scope of the expression "information" as under: "The expression 'i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vindhya Metal Corporation [1997] 224 ITR 614 (SC), a resident of Mirzapur was detained while travelling to Calcutta by train, and cash of Rs. 4.63 lakhs was seized from him by the police on the suspicion that the money was stolen property or had been obtained through some other offence. The Commissioner issued a warrant of authorization under section 132A(1) of the Income-tax Act. A search was conducted under section 132 of the Act on the premises of the respondent firm. The respondent firm filed a writ petition questioning the validity of the warrant of authorization issued by the Commissioner under section 132A(1) of the Act. The High Court held that on the information in the possession of the Commissioner, no reasonable person could have entertained a belief that the amount in his possession represented undisclosed income. Upholding the judgment of the High Court the Supreme Court observed as under: "Mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc., in the possession of the sales manager of petitioner No. 1 represented income which had not been or would not be disclosed by the company for the purpose of the Act. The fax sent by the Addl. Director of Income-tax, Mumbai, was general in nature. The mere fact that petitioner No. 3 was in possession of gold, diamonds and jewellery, etc., would not lead to the inference that it was undisclosed income. There was nothing before the respondents to suggest that in fact the gold, diamonds, and jewellery, etc., represents wholly or in part undisclosed income for the purposes of the Act. The fact that petitioner No. 3 was in possession of jewellery ornaments, etc., could not be treated as appears to have been done by respondent No. 1 as information relatable to the conclusion that it represented income which would not have been disclosed for the purposes of the Act. There is no doubt, in our mind, that on the information in possession of respondent No. 1, no reasonable man could have entertained a belief that the gold, diamonds and jewellery, etc., in possession of petitioner No. 3 represented income which would not have been disclosed for the purposes of the Act. Thus, the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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