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TMI Blog2023 (8) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... action note we have to and we hereby hold that the search action u/s 132(1) and, consequently, the block assessment order dated 31.12.1999 passed u/s 158BC, the order dated 04.10.2001 levying penalty u/s 158BFA and the Criminal Case filed by the Revenue before the 4th Court of the Additional Chief Metropolitan Magistrate at Esplanade Mumbai, which is now pending as renumbered Criminal Case before 38th Court of Additional Chief Metropolitan Magistrate cannot survive as they are all predicated on the existence of a valid search. The complaint being Criminal Case before 38th Court of Additional Chief Metropolitan Magistrate is quashed. Undoubtedly the contention of the Revenue that, even assuming that the search is to be held invalid the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before the Court of Additional Chief Metropolitan Magistrate for offences allegedly committed under section 276C and 277 read with section 278B of the Act. 2. The assessee had objected to the passing of the block assessment order by filing an additional ground in the appeal filed by it before the CIT(A) from the block assessment order. In the said additional ground raised on 20.11.2000, it was urged that the jurisdictional pre-conditions in section 132(1) viz., clauses (a) to (c) thereof had not been fulfilled and that there ought to have been a valid satisfaction note justifying the fulfilment of the requirement of the said section before the search was initiated. A copy of the said satisfaction note was sought from the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minal Case No.28/SW/2004 filed by the Revenue before the 4th Court of the Additional Chief Metropolitan Magistrate at Esplanade Mumbai, which is now pending as renumbered Criminal Case No. 28/SW/2013 before 38th Court of Additional Chief Metropolitan Magistrate. 4. On 30.06.2023, this Court, after hearing both the parties, was pleased to direct the Revenue to file, in a sealed envelope, the reason to believe recorded before the search action was carried out. Therein, it has also been clarified that non production of the same will invite an adverse inference being drawn. Paragraph 5 of the said order dated 30th June 2023 reads as under :- 5. Before we proceed further, we direct the Revenue to file in a sealed envelope the reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The exercise of power under Section 132 of the Act is a serious invasion upon the rights, privacy and freedom of the tax-payer. The courts have held that this power must be exercised strictly in accordance with law and only for the purposes for which law authorizes it to be exercised. The courts, after scrutiny, can decide on the correctness of the opinion formed by the Income Tax Officer where the action of the officer issuing authorization or of the Designated officer is challenged. The officer concerned must satisfy the Court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the Court. If the conditions for exercise o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to satisfy the judicial conscience of the Court. ( Principal Director of Income-tax (investigation) Vs. Laljibhai Kanjibhai Mandalia) (2022) 140 taxmann.com 282 (SC). 7. In view of the above, since the satisfaction note which formed the very basis for issuance and authorisation of the search warrant under section 132(1) of the Act has not been made available in spite of a specific direction given by the Tribunal way back on 17.06.2002 and repeated by this Hon ble Court on 30.06.2023 an adverse inference needs to be drawn in respect of the same especially having regard to the circumstances set out hereinbefore. 8. Since, the Revenue has failed to produce the satisfaction note we have to and we hereby hold that the search action u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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