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TMI Blog2003 (2) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003] 260 ITR 67), quashing the notice. Challenging the said order passed in Writ Petition No. 2506 of 2001, the present appeal has since been filed. Mr. Pronab Pal, learned senior counsel for the Revenue/appellant, pointed out the materials on which the opinion as to the existence of reason to believe was formulated, as is appearing from the paper book. He pointed out that it satisfies the pre-conditions provided in section 132(1). According to him, the enquiry was conducted by an officer of the rank of the Deputy Director. He had made discreet enquiries, as is recorded in the notes prepared by him. He had given details of the reasons. These were considered by the Director and the Director-General who had authorised the search and seizure. According to him, the materials available on the note were sufficient for the formation of an opinion that there were reasons to believe. A reasonable man could very well form such an opinion on the basis of the materials available. He had relied on the decision in Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456, 477 (SC), in support of his contention. He had also relied on the decision in ITO v. Seth Brothers [1969] 74 ITR 836, 847 (SC), fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt authorisation in respect of Pratik Food Products seems to be an afterthought, which is apparent from the fact that in the seizure list, the name of Pratik Food Products does not appear. He referred to page 136 of the paper book and pointed out that there was no reason to form an opinion that there existed any reason to believe that if notices were issued, the said documents would not be produced. Inasmuch as the assessee had been a regular assessee and used to respond to any notice that might have been issued to him. There was no occasion when he did not respond to any notice. Therefore, there was no scope of forming such an opinion with regard thereto. He also pointed out that the expansion of business or improvement in lifestyle of the assessee or the members of his family would not be material for the purpose of exercising power under section 132. In any event, there is nothing to show that Pratik Food Products or Mahesh Kumar Agarwal was expanding his business. The improvement of lifestyle is not a matter to contribute to the formation of the opinion that there are reasons to believe as contemplated in section 132(1). Mr. Bhattacharya had relied the decision in Dr. Nand Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at has to be communicated to the a as was held in CIT v. Oriental Rubber Works [1984] 145 ITR 477, 483 (SC). According to him, the approval of the Commissioner is required to be unicated to the assessee in view of section 132(10) of the said Act. Therefore, according to him, the appeal should be dismissed and the order of the learned single judge should be affirmed. We have heard the respective counsel at length. Both of them had made elaborate and erudite arguments on the question. The law is well settled as has been held in different decisions so cited. Section 132(1) requires satisfaction of the condition precedent for exercising the power as provided therein. The power can be exercised by any of the officers mentioned therein only, when, in consequence of information in his possession, he has reason to believe that any person to whom summon or notice has been or might be issued, will not or would not produce or cause to be produced any books of account or other documents useful or relevant to any proceeding under the Act, or any person is in possession of any money, bullion or other valuable article or thing that represents either wholly or partly income or property, which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aptness or sufficiency of the grounds upon which the satisfaction, which is subjective, is based. if the belief is bona fide and is cogently supported, the court will not interfere with or sit in appeal over it. What would be the extent of the information has since been already settled and laid down. In H. L. Sibal's case [1975] 101 ITR 112, the Punjab High Court had laid down that the information is something of which one is apprised or told and the word "reason" is a statement of fact employed as an argument to justify or condem some act. The word "conclusion" is a judgment arrived at by reasoning; or an information; deduction, etc. In other words, when an information is received or the basic facts are harnessed in support of an argument, the resultant fact assumes the shape of a reason and when the number of reasons are considered in relation to each other, the final result to this consideration assumes the shape of a belief. A necessary concomitant of this approach is that the fact constituting an information must be relevant to an enquiry. They must be such from which a reasonable and prudent man can come to the requisite belief or conclusion. If either of the aforementio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of Inspection [1982] 137 ITR 456, 469 (Cal), this court had held that if the materials led to a suspicion but not to a belief, even if such suspicion came to be true by subsequent discovery of materials after search and seizure, such suspicion would not suffice to undertake the exercise of the jurisdiction to issue notice under section 132(1). Relying on this decision, Mr. Bhattacharya had contended that in this case the materials disclosed were merely rumours, gossip and suspicions, which did not form materials that could provide reason to believe. To support his contention he relied upon L.R. Gupta v. Union of India [1992] 194 ITR 32 (Delhi), and contended that search and secure were a serious invasion of the privacy of the assessee. Therefore, it required an application of mind for the purpose of formation of opinion and the information on which such opinion was to be formed and there must be something more than rumours or gossip. In Ganga Prasad Maheshwari v. CIT [1983] 139 ITR 1043, 1050 (All), relied on by Mr. Bhattacharya, the Allahabad High Court had dealt with the expression "reason to believe" and had held that this has a salubrious safeguard to protect the privac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information must have direct bearing on the question involved. In Pooran Mal's case [1974] 93 ITR 505, the apex court had answered the question raised that the Director of Inspection or the Commissioner might not entertain any reason to believe since the enquiry was not made by him but by someone else, in the negative, that the materials placed before such officers by the officers authorised to make the enquiry or dealing with the enquiry, would be sufficient to enable them to possess the information in this respect. Having regard to the above proposition, we may now examine the materials in order to find out as to whether there exist sufficient materials for the purpose of establishing that there were informations for the formation of an opinion that there existed reasons to believe. One of the grounds mentioned was that the family of the assessee had improved their lifestyle. But, simply because the lifestyle of a person has undergone a change towards improvement will not be a material for the purpose of formation of opinion that there are reasons to believe. In fact, so far as the books of account are concerned, the reason to believe would be related to the fact that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Food Products and M.K. Agarwal were mentioned in the report, at page 425 of the paper book, at items Nos. 1 and 8, respectively, and it is mentioned that the first seven were controlled and supervised by Prabhu Sankar Agarwal whereas the factory and sale and office at No. 58, J.L. Nehru Road were controlled and supervised by Mahesh Kumar Agarwal and it was also mentioned that it was gathered that both of them were generating huge cash out of the business. The report also speaks of making discreet on the spot enquiries and also receipt of estimate slips instead of cash memos without mentioning the names of the group, etc. It also points out that the business involves huge cash transactions, which might be used for cash purchase of raw materials. It speaks of personal visit to the shops and reference to non-issuance of cash memos to the customers except on demand and that too by estimate slips without mentioning the name of the concern or shop. Reference was made to one of the returns for the assessment year 1993-94 of Haldiram Bhujiawala with a gross turnover of Rs. 1.51 crore and gross profit of Rs. 23.59 lakhs showing net profit of Rs. 10,240. There is also an estimate about the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income about Rs. 2 lakhs and which were not scrutinised in the process. Therefore, they had reason to believe that the books of account had not been shown with regard to the cash sales when admittedly there were huge cash sales. These are definitely materials, which hint at the existence of reason to believe. How far it is adequate or sufficient is not a question to be gone into. Now we may deal with the aspect that Pratik Food Products was not dragged in the net. It was only at 7.10 a.m. on September 24, 2001, Pratik Food Products came into the picture. Mr. Bhattacharya pointed out that despite the name being Pratik Food Products, the seizure list was prepared in the name of Pratik Food Products Pvt. Ltd. But these are questions, which are not necessary to be gone into because that was something, which was discovered after the decision was taken to proceed to search the premises and seize the materials. It seems that the entire gamut of the report was in respect of Prabhu Sankar Agarwal and Mahesh Kumar Agarwal and their groups. Therefore, it is immaterial that the name of one of the enterprises was or is wrongly mentioned. But then it will not make any difference when Pratik ..... X X X X Extracts X X X X X X X X Extracts X X X X
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