9911796707
TMI Blog2024 (10) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... the same in due course. The petitioners, as noticed, received appreciation certificates for their prompt payment of the taxes. The satisfaction cannot be recorded merely because the authority is of the opinion that the true financial affairs will never be revealed unless search seizure operation is carried out. Apex Court opined that reasons to believe cannot be equated with reasons to suspect . Thus, the competent authority must be equipped with some cogent incriminating material prior to the seizure on the strength of which a satisfaction can be recorded. The said satisfaction neither can be tested on suspicion nor can be justified on the basis of unexplained possession of amount. In the instant case, we are constrained to observe that satisfaction note is based on suspicion and is not pregnant with any cogent incriminating material which can form basis for an action u/s 132 of the Act - See INDIAN OIL CORPORATION [ 1986 (5) TMI 1 - SUPREME COURT] and M/S. PASARI CASTING AND ROLLING MILLS PRIVATE LTD [ 2024 (2) TMI 280 - JHARKHAND HIGH COURT] The impugned action of the respondents in seizing and withholding cannot be countenanced. Resultantly, the impugned search and seizure is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranch of the bank. The distance between Asifabad and Mancherial is approximately is 70 kilometers. 4. In view of foregoing difficulties and prospect of being cash strapped in the peak season, the petitioners make arrangement to meet any possible shortage of cash during the closure of the bank. Thus, the petitioners utilised their overdraft facility during 14th November, 2023 to 16th November, 2023 and withdrew substantial amount (by self-cheques) with interest rate and other charges adding upto 12% per annum. On that basis, the petitioners made purchases by paying cash amounts to the farmers and made necessary expenditures. As on 20.11.2023, the petitioners were left with cash amount of Rs. 6,51,70,000/-. The copies of the receipts showing payments to farmers are cumulatively filed as Annexures-P.11 and P.12. 5. In the early morning of 21.11.2023, the respondents conducted search proceedings at the residence of Managing Partner of petitioner No.1 and at the offices of M/s. R.S. Agrotech and M/s. Heena Industries, the petitioners herein. The search exercises were conducted pursuant to separate warrants of authorisation issued under Section 132 of the Act, dated 20.11.2020. It is sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which runs contrary to law laid down by various High Courts. 10. By relying upon the judgments of Delhi High Court in L.R. Gupta v. Union of India (1992) 194 2 ITR 32, Ajit Jain v. Union of India 2000 SCC OnLine Del. 92 and Khem Chand Mukim v. PDIT 2020 SCC OnLine Del. 424, he submitted that the condition precedent for exercising power under Section 132 (1) of the Act, (i) the information must be in the possession of the named authority and (ii) in consequence of which, he may have reason to believe that the person concerned is in possession of money, bullion, etc. If either of these conditions are missing, the power under Section 132 of the Act cannot be invoked. Mere possession of any amount by the petitioners could hardly be said to constitute an information which could be treated as sufficient by a reasonable person. Even if sole ground for search is an information gathered from investigation wing of Income Tax Department founded upon mere repetition of words and without clear basis, conclusion or satisfaction note does not fall within the ambit of reasonable belief . 11. For the same purpose, the learned Senior Counsel placed reliance on the judgment of the Allahabad High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve need not be disclosed to any person or any authorities, even to the appellate authority. Interestingly, she also placed reliance on the judgment of the Apex Court in the case of Laljibhai Kanjibhai Mandalia (supra). By placing reliance on the recent Coordinate Bench order dated 21.06.2024, it is argued that the assessee in that case was habitual violator and in the facts of that case, the Court declined interference. It is urged that no case is made out for interference. 15. During the hearing, in obedience of previous orders of this Court satisfaction note is placed before us in a sealed cover. Findings: 16. It is apt to refer to relevant part of Section 132 (1) of the Act which reads as under: 132. Search and seizure. (1) Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal 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 whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d seizure can be tested. The relevant portion reads as under: 8. The principles that can be deduced from the aforesaid decisions of this Court which continue to hold the field without any departure may be authorized as follows: 8.1. The authority must have information in its possession on the basis of which a reasonable belief can be founded that (a) the person concerned has omitted or failed to produce books of account or other documents for production of which summons or notice had been issued Or such person will not produce such books of account or other documents even if summons or notice is issued to him Or (b) such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed. 8.2. Such information must be in possession of the authorized official before the opinion is formed. 8.3. There must be application of mind to the material and the formation of opinion must be honest and bona fide. Consideration of any extraneous or irrelevant material will vitiate the belief/satisfaction. 8.4. Though Rule 112 (2) of the Income Tax Rules which specifically prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrelevant material has been considered; vi) Such reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order; vii) The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds which induced the competent authority to act is not a justiciable issue; viii) The relevance of the reasons for the formation of the belief is to be tested by the judicial restraint as in administrative action as the Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. The Court shall not examine the sufficiency or adequacy thereof; ix) In terms of the explanation inserted by the Finance Act, 2017 with retrospective effect from 1.4.1962, such reasons to believe as recorded by income tax authorities are not required to be disclosed to any person or any authority or the Appellate Tribunal. (Emphasis Supplied) 22. In view of litmus test laid down in the aforesaid judgments, satisfaction note is to be tested. In view of element of confidentiality involved, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
