Appeal Details
Counselvise Citation
[2012] 124 COUNSELVISE.COM (IT) 7785 (ITAT-JODHPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 year(s) 4 month(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
19-01-2012
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
13-12-2011
Assessment Year
misc
Appeal Filed On
18-09-2006
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH,JODHPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITSSA NO.55/JP/2006 BLOCK PERIOD 1.4.96 TO 6.2.2003 SHRI BADRI RAM CHOUDHARY VS. ASSISTANT COMMISSI ONER OF B-6, SHRAMIKPURA CENTRAL CIRCLE-1, JODHPUR. JODHPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI U.C. JAIN RESPONDENT BY : SHRI SUBHASH CHAN DRA DATE OF HEARING: 13.12.2011 DATE OF PRONOUNCEMENT : 19.01.2012 ORDER PER BENCH 1. THE ASSESSEE FILED AN APPEAL AGAINST ORDER OF LD . CIT (A) CENTRAL JAIPUR DATED 11.09.2006. THIS APPEAL WAS DECIDED VIDE ORDER DATED 25.10.2007 . THE ASSESSEE FILED MISCELLANEOUS APPLICATION IN WHICH IT WAS SUBMITTED THAT THE FOLL OWING TWO LEGAL GROUNDS RAISED IN THE MEMO OF APPEAL WERE NOT DECIDED. GROUND OF APPEAL NO.1(A) THE CONVERSION OF SURVEY INTO SEARCH WITHOUT FULFI LLING THE PRECONDITIONS PRESCRIBED IN SECTION 132 PROVES THE APPARENT INVAL IDITY OF SEARCH AND CONSEQUENTLY ALL FURTHER PROCEEDINGS INCLUDING THE IMPUGNED ASSESSMENT ORDER IS NULL AND VOID GROUND OF APPEAL NO.14. 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E AUTHORITIES BELOW ERRED IN MAKING ADDITION TO THE INCOME FOR BLOCK PERIOD ON T HE BASIS OF DOCUMENTS AND TWO CPU FOUND AT THE TIME OF SURVEY WHICH WERE IN THE C USTODY OF AUTHORIZED OFFICER CONDUCTING SURVEY AND LATER ON SEIZED U/S 132(1). 2. THIS MISC. APPLICATION WAS DISPOSED VIDE ORDER D ATED 28.05.2008. THE TRIBUNAL VIDE THIS ORDER HELD AS UNDER: AFTER CONSIDERING THE RIVAL SUBMISSION AND PURSUIN G THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE SAID GROUND NO.1(A) WAS LE FT UNADJUDICATED AND THE PETITION FILED FOR PERMISSION TO PLEAD THE ADDITION AL GROUND MENTIONED AS GROUND NO.14 IS LEFT UNDISPOSED OF BY THE TRIBUNAL WHILE A DJUDICATING THE APPEAL. THEREFORE, WE FIND IT JUST TO POST THE APPEAL IN IT SSA NO.55/JU/2006 FOR HEARING OF THESE TWO GROUNDS ONLY INCLUDING THE PETITION FO R PERMISSION TO PLEAD THE GROUND NO.14 AS ADDITIONAL GROUND 12.8.2008. ON THA T DAY, NO ADJUSTMENT WILL BE GIVEN TO EITHER PARTY ON ANY GROUND. 3. THE TRIBUNAL PASSED AN ORDER ON 19.9.2008 VIDE W HICH THE ADDITIONAL GROUND MENTIONED AS GROUND OF APPEAL NO.14 WAS NOT ADMITTED. THE REL EVANT PORTION OF THE ORDER OF TRIBUNAL IS AS UNDER: WE HAVE HEARD THE PARTIES AND HAVE CAREFULLY PERUSE D THE MATERIAL ON RECORD AND CASE LAWS RELIED BY THE APPELLANTS COUNSEL. WE DO NOT FIND ANY REASON TO ADMIT THE AFORESAID ADDITIONAL GROUND IN AS MUCH AS THE G ROUND SOUGHT TO BE RAISED NEITHER RAISES A QUESTION OF LAW ARISING FROM THE F ACTS ON RECORD IN THIS ASPECT. THERE IS NOTHING ON RECORD TO SHOW THAT THE BOOKS O F ACCOUNT OR DOCUMENTS AND THAT TWO CPUS THAT WERE FOUND AND INVENTORIZED AS A RESULT OF SURVEY WERE IMPOUNDED AND RETAINED IN THE CUSTODY OF THE INCOME TAX AUTHORITIES BEFORE CONVERTING SURVEY PROCEEDINGS INTO AN ACTION U/S 13 2 OF THE ACT. THE APPELLATE TRIBUNAL HAS ALREADY SET ASIDE THE ASSESSMENT OF EN TIRE UNDISCLOSED INCOME OF RS.13,13,31,267/- AND RESTORED THE MATTER TO THE FI LE OF THE ASSESSING OFFICER FOR A 3 FRESH DECISION ON MERITS AS PER LAW AS VOLUMINOUS M ATERIAL IS REQUIRED TO BE EXAMINED IN THIS CASE FOR THE PURPOSE OF MAKING BLO CK ASSESSMENT. THE GROUND RAISED AS ADDITIONAL GROUND AND NOW SOUGHT TO BE AD MITTED IS THUS NEITHER BONAFIDE NOR CAN IT BE ALLOWED TO BE RAISED WHEN SU CH A QUESTION RESTS FOR CONSIDERATION OF THE ASSESSING AUTHORITY IN ORDER T O CORRECTLY ASSESS THE TAX LIABILITY OF THE ASSESSEE WITH REFERENCE TO MATERIA L OR EVIDENCE FOUND AS A RESULT OF SEARCH. SINCE THE AFORESAID VIEW CONFORMS TO THE PR INCIPLES LAID DOWN BY THE APEX COURT IN NATIONAL THERMAL POWER CORPORATION LIMITED VS. CIT [SUPRA], WE REFUSE TO EXAMINE THE QUESTION FOR WHICH NEW FACTS HAVE TO BE FOUND. WE, THEREFORE, REJECT THE APPLICATION. 4. SINCE GROUND OF APPEAL NO.1(A) WAS STILL TO BE D ISPOSED AND HENCE THE APPEAL WAS AGAIN FIXED ON VARIOUS DATES AS PER THE ORDERSHEET ENTRIE S. ON 20.11.2008, THE TRIBUNAL DIRECTED THE REVENUE TO PRODUCE THE SATISFACTION NOTE FOR TAKING ACTION U/S 132 OF THE I.T. ACT. THE MATTER WAS DECIDED VIDE ORDER DATED 29.1.2009. IN THIS ORDER T HE TRIBUNAL NOTICED THAT THE ISSUE RAISED IN GROUND OF APPEAL NO.1(A) HAS BEEN CHALLENGED IN WRI T PROCEEDINGS BEFORE THE HONBLE HIGH COURT AND THEREFORE IT IS NOT PROPER AND JUSTIFIABL E TO CONSIDER THE SAME QUESTION IN THE ALTERNATIVE REMEDY. UNDER ARTICLE 227 OF THE CONSTITUTION, THE HONBLE HIGH COURT EXERCISES THE POWER OF SUPERINTENDENCE AS WELL AS CONTROL, WHICH IS BOTH A DMINISTRATIVE AND JUDICIAL IN NATURE OVER ALL COURTS INCLUDING THE TRIBUNAL AND AS SUCH, WHEN THE MATTER IS ALREADY SEIZED WITH THE HIGH COURT, THERE CAN NOT BE A DECISION BY THE TRIBUNAL. ACCORD INGLY GROUND NO.1(A) WAS DISPOSED OFF BY HOLDING THAT THIS CAN NOT BE ENTERTAINED. 5. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER O F TRIBUNAL DATED 29.1.2009 BEFORE THE HONBLE HIGH COURT AND THE HONBLE JURISDICTIONAL H IGH COURT IN ITA NO.161/2011 VIDE ORDER DT. 23.7.2011 HAS MENTIONED THAT APPEAL IS ADMITTED ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW. WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT IT CAN NOT EXAMINE THE LEGALITY AND CORRECTNESS OF THE RAID CONDUCTED UNDER SECTION 132 OF THE ACT BECAUSE THE VERY ISSUE IS PENDING BEFORE THE HIGH COURT IN W.P. NO.5626/2005. 6. BEFORE THE HONBLE HIGH COURT, THE COUNSEL OF TH E ASSESSEE SUBMITTED THAT THEY DO NOT WISH TO PROSECUTE THE WRIT PETITION IN THE HIGH COU RT AND THEY BE ALLOWED TO WITHDRAW THE WRIT 4 PETITION WITH A LIBERTY TO RAISE AND CHALLENGE THE LEGALITY AND PROPRIETY OF THE RAID BEFORE TRIBUNAL IN THE APPEAL OUT OF WHICH THIS APPEAL ARISES BY RE MANDING THE APPEAL TO THE TRIBUNAL. THE HONBLE HIGH COURT DIRECTED AS UNDER: IN OUR VIEW, ONCE THE APPELLANT SEEKS WITHDRAWAL OF THE WRIT PETITION FILED BY THE APPELLANT WHEREIN THE CHALLENGE WAS LAID TO THE LEG ALITY AND PROPRIETY OF THE RAID, THEN THEY CAN BE PERMITTED TO RAISE AND CHALLENGE T HE LEGALITY OF HE RAID BEFORE THE TRIBUNAL BECAUSE THE PURPOSE IS TO INVITE FINDING F ROM COMPETENT COURT OF LAW ON THE ISSUE AS TO WHETHER THE RAID IS LEGAL OR NOT? T HOUGH TRIBUNAL RIGHTLY RECORDED A FINDING THAT IT CANNOT GO INTO THE QUESTION BECAU SE THE ISSUE IS PENDING BEFORE THE HIGH COURT BUT NOW IN THE LIGHT OF THE SUBMISSI ONS MADE BY THE APPELLANTS COUNSEL SEEKING WITHDRAWAL OF THE WRIT PETITION, TH E TRIBUNAL IS NOW ENTITLED AND COMPETENT TO EXAMINE THE LEGALITY AND PROPRIETY OF THE RAID IN AN APPEAL FILED BY THE APPELLANT OUT OF WHICH THIS APPEAL ARISES. THIS BEING A QUESTION PARTLY RELATING TO FACTS AND LAW CANNOT BE EXAMINED FOR THE FIRST T IME BY THIS COURT UNDER SECTION 260A IBID IN THIS APPEAL AND IT IS FOR THIS REASON THAT APPEAL HAS TO BE SENT BACK TO THE TRIBUNAL FOR ITS DECISION ON MERITS ALONGWITH O THER ISSUES. AS STATED SUPRA, THE LEGAL POSITION VIZ. WHETHER TH E TRIBUNAL DOES HAVE A POWER TO DECIDE THE LEGALITY AND PROPRIETY OF THE RAID UNDER SECTION 132 OF THE ACT REMAINS NO LONGER RES INTEGRA IN THE LIGHT OF THE JUDGMENT RENDERED IN CHITRA DEVIS CASE WHICH IS UPHELD BY THE SUPREME COURT WHERE S.L. P. FILED BY THE DEPARTMENT WAS DISMISSED AGAINST THE ORDER OF HIGH COURT (SEE 2009 ) 313 I.T.R.(ST.)-28. ACCORDINGLY AND IN THE LIGHT OF AFORESAID DISCUSSIO N, WE ALLOW THIS APPEAL, SET ASIDE THE IMPUGNED JUDGMENT AND REMAND THE APPEAL T O THE TRIBUNAL FOR DECIDING THE SAME AFRESH ON MERITS STRICTLY IN ACCORDANCE WI TH LAW. WHILE SO DECIDING, THE TRIBUNAL WOULD NOT ONLY DECIDE ALL THE ISSUES ARISI NG IN THE APPEAL ON MERITS BUT WOULD ALSO BE FREE TO DECIDE THE ISSUE RELATING TO LEGALITY AND VALIDITY OF THE RAID CHALLENGED BY THE APPELLANT AFTER GIVING DUE OPPORT UNITY TO THE DEPARTMENT TO JUSTIFY THE RAID PROCEEDINGS CONDUCTED UNDER SECTIO N 132 IBID. LET THE APPEAL BE NOW DECIDED BY THE TRIBUNAL WITHI N A PERIOD OF SIX MONTHS. PARTIES ARE DIRECTED TO FILE COPY OF THE ORDER BEFO RE THE TRIBUNAL WITHIN A PERIOD OF TWO WEEKS TO ENABLE THE TRIBUNAL TO FIX THE DATE OF HEARING OF THE APPEAL. 7. AS PER ORDERSHEET ENTRY DATED 17.10.2011 MADE BY A/R, THE APPEAL WAS FIXED FOR HEARING ON 28.11.11. THE ORDER SHEET ENTRY DATED 17.10.2011 IS AS UNDER: AS PER DIRECTIONS OF HONBLE HIGH COURT DT. 25.7.2 011, THE CASE IS TO BE DISPOSED OF WITHIN 6 MONTHS. FIX FOR HEARING ON 28.11.11. 5 8. ON 28.11.11, THE LD. D/R MOVED AN APPLICATION FO R ADJOURNMENT FOR ONE MONTH, THE LD. D/R WAS INFORMED THAT THE APPEAL IS TO BE DISPOSED OFF WITHIN 6 MONTHS OF THE ORDER OF HONBLE HIGH COURT. THE LD. D/R SUBMITTED THAT THE DEPARTME NT MAY MOVE HONBLE SUPREME COURT AGAINST DECISION OF HONBLE HIGH COURT AND WILL ALS O FILE AN APPLICATION BEFORE HONBLE RAJASTHAN HIGH COURT FOR SEEKING EXTENSION OF TIME FOR PASSING THE ORDER. THE HEARING APPEAL WAS ADJOURNED TO 12.12.11. ON 12.12.2011, THE LD. D /R MADE A REQUEST FOR ADJOURNMENT AND HEARING WAS ADJOURNED TO 13.12.2011. IT IS TO BE NO TED THAT THERE WAS NO REGULAR BENCH IN JODHPUR AND THE TOURING BENCH IN JODHPUR WAS REQUIRED TO CA MP UPTO 16.12.2011. 9. THE APPEAL WAS HEARD ON 13.12.2011. ON 15.12.201 1 THE REVENUE FILED A LETTER IN WHICH WE WERE INTIMATED THAT HONBLE RAJASTHAN HIGH COURT HAS EXTENDED THE PERIOD FOR FURTHER SIX MONTHS. THE REVENUE HAS ALSO FILED S.L.P. BEFORE TH E HONBLE APEX COURT AGAINST THE ORDER OF HONBLE RAJASTHAN HIGH COURT AND A REQUEST WAS ALSO MADE BEFORE HONBLE APEX COURT TO STAY THE ORDER OF RAJASTHAN HIGH COURT. 10. OUR ATTENTION WAS DRAWN TO THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF J.R. TANTIA CHARITABLE TRUST V DCIT & ORS 62 DTR (R AJ) 313. IN THIS CASE THE ASSESSEE CHALLENGED THE VALIDITY OF NOTICE U/S 153A THROUGH WRIT PETITION BESIDES OTHER ISSUES. ON THE ISSUE OF VALIDITY OF NOTICE U/S 153A, THE HONBLE J URISDICTIONAL HIGH COURT OBSERVED AS UNDER: THE LEGAL POSITION IN THIS REGARD SETTLED BY THE HO NBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC) IN RELATION TO REASSESSMENT PROCEEDINGS AND POWERS UNDER SS. 147 AND 148 OF THE ACT WHICH APPLY MUTATIS MUTANDIS TO SEARCH AND CONSEQUENTIAL ASSESSMENT PROCEEDINGS ALSO IS IN THE FOLLOWING TER MS: WHEN A NOTICE UNDER S. 148 OF THE IT ACT, 1961, IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE THE RETURN AND, IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING THE NOTICES. THE AO IS BOUND TO FURNISH REA SONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICE IS ENTITLED TO FI LE OBJECTIONS TO ISSUANCE OF NOTICE AND THE AO IS BOUND TO DISPOSE OF THE SAME BY PASSI NG A SPEAKING ORDER. 6 ON RECEIVING NOTICES UNDER S.148 THE APPELLANT FILE D THE RETURNS. THE APPELLANT ALSO RECEIVED NOTICES UNDER S.143(2) CALLING FOR FU RTHER INFORMATION ON CERTAIN POINTS IN CONNECTION WITH THE RETURNS. THEREUPON TH E APPELLANT FILED WRIT PETITIONS CHALLENGING THE NOTICES. THE HIGH COURT DISMISSED T HE WRIT PETITIONS HOLDING THAT THE PETITIONS WERE PREMATURE AND THE APPELLANT COUL D RAISE ITS OBJECTIONS TO THE NOTICES BY FILING REPLY TO THE NOTICES BEFORE THE A O [SEE, E.G. GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 179 CTR (DEL) 13 : (200 2) 257 ITR 702 (DEL)]. THE APPELLANT PREFERRED APPEALS AND THE SUPREME COURT D ISMISSED THE APPEALS, OBSERVING THAT SINCE THE REASONS FOR REOPENING OF A SSESSMENTS UNDER S. 148 HAD BEEN DISCLOSED IN RESPECT OF FIVE ASSESSMENT YEARS, THE AO HAD TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER B EFORE PROCEEDING WITH THE ASSESSMENTS FOR THOSE YEARS. THE LEGAL POSITION IS THAT THE TRIBUNAL CAN ALSO LO OK INTO THE VALIDITY AND PROPRIETY OF THE SEARCH UNDER S.132 OF THE ACT AND, THEREFORE , THE ASSESSEE-TRUST DOES HAVE EFFECTIVE ALTERNATIVE REMEDY IN THIS REGARD, IS ALS O SETTLED BY THE DIVISION BENCH OF THIS COURT IN D.B. IT APPEAL NO.161 OF 2011-BADRI R AM CHOUDHARY VS. ASSTT. CIT, DECIDED ON 25 TH JULY, 2011 RELYING UPON PREVIOUS DECISION OF DIVIS ION BENCH IN THE CASE OF CIT VS. SMT. CHITRA DEVI SONI (2008) 214 CTR (RAJ) 118: (2008) 1 DTR (RAJ) 98: (2009) 313 ITR 174 (RAJ), WHICH HAS A LSO BEEN AFFIRMED BY THE HONBLE SUPREME COURT ALSO BY DISMISSAL OF SLP OF R EVENUE IN THAT CASE. THE RELEVANT PORTION OF THE AFORESAID JUDGMENT IS REPRO DUCED HEREINBELOW FOR READY REFERENCE: AS STATED SUPRA, THE LEGAL POSITION VIZ. WHETHER T HE TRIBUNAL DOES HAVE POWER TO DECIDE THE LEGALITY AND PROPRIETY OF THE RAID UNDER S.132 OF THE ACT REMAINS NO LONGER RES INTEGRA IN THE LIGHT OF THE JUDGMENT REN DERED IN CIT VS. SMT. CHITRA DEVI SONI (2008) 214 CTR (RAJ) 118 : (2008) 1 DTR ( RAJ) 98 : (2009) 313 ITR 174 (RAJ) WHICH IS UPHELD BY THE SUPREME COURT WHER E SLP FILED BY THE DEPARTMENT WAS DISMISSED AGAINST THE ORDER OF HIGH COURT [SEE (2009) 313 ITR 9ST.) 28]. ACCORDINGLY AND IN THE LIGHT OF AFORESAID DISCUSSIO N. WE ALLOW THIS APPEAL SET ASIDE THE IMPUGNED JUDGMENT AND REMAND THE APPEAL T O THE TRIBUNAL, FOR DECIDING THE SAME AFRESH ON MERITS STRICTLY IN ACCORDANCE WI TH LAW. WHILE SO DECIDING, THE TRIBUNAL WOULD NOT ONLY DECIDE ALL THE ISSUES ARISI NG IN THE APPEAL ON MERITS BUT WOULD ALSO BE FREE TO DECIDE THE ISSUE RELATING TO LEGALITY AND VALIDITY OF THE RAID CHALLENGED BY THE APPELLANT AFTER GIVING DUE OPPORT UNITY TO THE DEPARTMENT TO JUSTIFY THE RAID PROCEEDINGS CONDUCTED UNDER S. 132 IBID. 11. SINCE S.L.P. IN THE CASE OF CHITRA SONI WAS DIS MISSED BY THE HONBLE APEX COURT AND IN ABSENCE OF FILING OF ANY STAY ORDER FROM THE HONBL E APEX COURT WE THINK IT PROPER TO DECIDE THE APPEAL AS THE SAME STOOD HEARD ON 13.12.2011. 7 12. DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LD. D/R PROVIDED A COPY OF THE SATISFACTION NOTE IN THE ENVELOPE AND IT WAS REQUES TED THAT COPY OF SUCH SATISFACTION NOTE BE NOT PROVIDED TO THE ASSESSEE. THE BENCH CAN LOOK INTO T HE SATISFACTION NOTE. WE HAVE PERUSED THE SATISFACTION NOTE AND WE DID NOT THOUGHT IT PROPER TO GIVE A COPY TO THE COUNSEL OF THE ASSESSEE AND THE REASONS WILL BECOME APPARENT FROM OUR FINDI NG TO BE RECORDED SUBSEQUENTLY. 13. DURING THE COURSE OF PROCEEDINGS BEFORE US THE LD. A/R HAS FILED THE FOLLOWING SUBMISSIONS. THAT WHILE DECIDING THE APPEAL FILED BY THE ASSESSE E BEARING ITSSA NO.55/JU/2006 ON 25.10.2007 THE FOLLOWING GROUNDS O F APPEAL REMAINED UNDECIDED BY THE HONBLE TRIBUNAL. GROUND OF APPEAL NO.1(A) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT (A) OUGHT TO HAVE ANNULLED THE ORDER PASSED BY LD. AO. AS: (A) THE CONVERSION OF SURVEY INTO SEARCH WITHOUT F ULFILLING THE PRECONDITIONS PRESCRIBED IN SEC. 132 PROVES THE APPARENT INVALIDI TY OF SEARCH AND CONSEQUENTLY ALL FURTHER PROCEEDINGS INCLUDING THE IMPUGNED ASSESSMENT ORDER IS NULL AND VOID. THE FACTS LEADING TO G.A. NO. 1 (A) ARE AS UNDER: - SR. NO. DATE EVENTS PAGE NO. 1 06.02.2003 THE J.C.I.T., RANGE- 3, JODHPUR DIRECTED SHRI V.K. GEOGE, I.T.O., WARD -3(2), JODHPUR TO CONDUCT A SURVEY U/S 133A AT THE BUSINESS PREMISES OF THE ASSESSEE SITUATED NEAR KALPATRU CINEMA, SHASTRI NAGAR, JODHPUR. 1-3 8 2 06.02.2003 THE AUTHORIZED OFFICER ON THE BASIS OF DIRECTION ISSUED BY THE LD JCIT, RANGE 3, JODHPUR CARRIED OUT A SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE AND TOOK IN THEIR POSSESSION LOOSE PAPERS, DOCUMENTS AND TWO CPU ETC FOUND AT THE TIME OF SURVEY AND PREPARED A DETAILED INVENTORY OF SUCH DOCUMENTS. NO ALLEGATION OF ANY SORT WAS LEVELED BY THE SURVEY PARTY AGAINST THE ASSESSEE OR ANY OF THE EMPLOYEE WITH REGARD TO ANY OBSTRUCTION OR MISHANDLING DURING THE SURVEY PROCEEDING. THE SURVEY WAS CONDUCTED AND COMPLETED IN CORDIAL AND PEACEFUL MANNER. ALL THE DOCUMENTS AS PER INVENTORY PREPARED WHILE CONDUCTING THE SURVEY WAS IN THE POSSESSION OF AUTHORIZED OFFICER CONDUCTING THE SURVEY. THE SURVEY PARTY COMPLETED THE SURVEY AT OR BEFORE 4 PM ON 06- 02-2003 BUT WAS KEPT SITTING THERE BY TELEPHONIC INSTRUCTION FROM THE OFFICE OF CIT - 2, JODHPUR. 1, 2, 4, 5, 6, 7 3 06.02.2003 THAT FROM THE COPY OF FIR LODGED AT THE POLICE STATION, PIPAR CITY BY SHRI RAJENDRA SISODIA INSPECTOR IN INCOME TAX DEPARTMENT AND THE MEMBER OF SURVEY PARTY TO SURVEY THE OFFICE OF TRUCK UNION SITUATED AT VILLAGE KHARIA KHANGAR THE APPELLANT CAME TO KNOW THAT ON 06.02.2003 THE ADDITIONAL CIT, RANGE -3, JODHPUR AUTHORIZED ITS OFFICIALS TO CONDUCT SURVEY AT THE THREE PREMISES AT VILLAGE KHARIA KHANGAR DISTT. JODHPUR: - A. AT THE RESIDENCE OF SHRI RAMESH CHOUDHARY B. AT THE SHOP & OFFICE OF SHRI RAMESH CHOUDHARY C. AT THE OFFICE OF TRUCK UNION. NOTE : - SHRI RAMESH CHOUDHARY IS NOT A FAMILY MEMBER OR A RELATIVE OF THE ASSESSEE. THE ASSESSEE HAS NO INTEREST IN THE BUSINESS CARRIED BY SHRI RAMESH CHOUDHARY OR BY THE TRUCK UNION. THE OFFICE OF TRUCK UNION DID NOT BELONGED TO THE ASSESSEE. THE TRUCK UNION IS A ASSOCIATION OF DRIVERS ETC AND IS AN 8 - 10 9 INDEPENDENT BODY. 4 06.02.2003 IT IS ALSO GATHERED FROM THE SAME FIR LODGED AT THE POLICE STATION, PIPAR CITY ON 06-02- 2003 AT ABOUT 3.30 PM THAT SOME INCIDENT WAS OCCURRED IN THE OFFICE OF TRUCK UNION AT VILLAGE KHARIYA KHANGAR WHERE THE SURVEY WAS AUTHORIZED U/S 133A. DUE TO THE SAID INCIDENT A FIR WAS LODGED. THE MAIN CONTENTS OF THE FIR IS BEING REPRODUCED FOR SHAKE OF CONVENIENCE: - ------ FD LOSZ DH DK;ZOKGH ESA VF/KDKFJ;KSA DS LKFK TKDJ LG;KSX DJSA LOSZ DH VHE TKS/KIQJ LS ,D FEUH CL U- RJ 01P 1841 O ,D VKVK LQEKS RJ22 0684 ES CSBDJ LKFK ESA IKWP IQFYL FLIKFG;KS DKS YSDJ [KKFJ;K [KAXKJ DS FY;S JOKUK GQ;S A JKLRS ESA PWWAFD GESA RHU FOFHKUU LFKKUKSA DKS LOSZ DS FY, COVER DJUK FKK VR% RHU NYKSA DK XBU FD;K X;K A VHE U- 1 JES' K PKS/KJH DS ?KJ DS FY, DKXTKR ?KJ IJ GKSUS DH TKAP DS FY, LNL; & OH- MH- NOS VK;DJ VF/KDKJH DS- LH LKSYADH FUJH{KD ,D FLIKGH PUNZ 'KS[KJ FLAG VHE U- 2 JES' K PKS/KJH FD NQDKU O VKWFQL] [KKFJ;K LNL; JH DS- ,L- JKTIQJKSFGR VK;- VF/KDKJH DS LH ESGRK FUFJ{KD ,D FLIKGH 8- 10 10 VHE U- 3 VD ;WFU;U VKWFQL [KKFJ;K LNL; JH VKS- IH- PKS/KJH VK;- VF/KDKJH JKTSUNZ FLLKSFN;K FUFJ{KD] JKEEKSVOKUH FUFJ{KD] MH- DS- UOY UDC , UOJRU 'KEKZ PEON RHU FLIKGHA MIJKSDR RHUKS NY VIUS VIUS IKBAV IJ IGQP DJ DK;ZOKGH DJUS YXS- VHE U- 3 TC VD ;QFU;U VKFQL IGQPH RC VKFQL DS DQN DEZPKJH;KS DKS ;WFU;U VKWFQL DS FINS [KSRKS ES NKS CKSJKS ES DQN QSADRS GQOS NS[KK- GEUS MUDK IHNK DJ MU CKSJKS DKS RECOVER DJ FY;K] FTUES FDR KCS] OKMPJ O VU; NLRKOST FKSA ;S YSDJ GE ;WFU;U DS VKWFQL ESA VK X;SA ML LE; ;WFU;U DS OFFICE ESA DKSBZ UGH FKKA DQN NSJ I' PKR NKS O;FDR ;QFU;U VKFQL ESA VK;S OS ;WFU;U DS INKF/KDKJH FKS MUESA LS ,D ;WFU;U VKWFQL DK ESUSTJ FKK YKSX MLS PQU TH DG DJ IQDKJ J GS FKS A OG O;FDR 6 DS YXHKX FKK EWANS FKH O MEZ YXHKX 45 LS 50 O'KZ DH FKH BRUS ESA DS- ,L- JKTIQJKSFGR HKH ;WFU;U DS NQRJ IGWAP X;KA VKS- IH- PKS/KJH OGK LS TKS/KIQJ MPP VF/KDKFJ;KSA LS CKR DJUS DS FY, QKSU DJUS YXS] QKSU ;WFU;U VKWFQL LS UGH YX JGK FKK NKSUKS VF/KDKJH VKS- IH- PKS/KJH O DS- ,L- JKTIQJKSFGR EQ>S O JKE EKSVOKUH DKS OGK IJ NKSM+ DJ OG ;G FUNSZ' K NSDJ PYS X;S FD IK;S X;S NLRKOSTKS FD INVENTORY RS;KJ DJ YKS GE QKSU DJDS 11 VKRS GS] ESA CSB DJ INVENTORY RS;KJ DJUS YXK- JKE EKSVOKUH ;QFU;U VKWFQ L DS CKGJ VKDJ OGK ,DF=R GKS JGH HKHM+ DKS TKUS DS FY, LE>KUS YXK RHKH ,D VSYHQKSU VK;K VUNJ TKS O;FDR EKSTQN FKK OKS FDLH LS CKR DJDS DQN FUNSZK YS JGK FKKA MLUS YKSDY HKK'KK ESA DGK VKI FPURK ER DJKS GE ;GK LS BUGS DQN HKH UGH YS TKUS NSAXSA QKSU LQUUS DS I' PKR OKS O;FDR MLS LKEUS VKUS IJ ES IGPKU YQAXK CKGJ HKHM+ DS CHP X;K MLUS HKHM+ DKS MDLK;K- HKHM+ TKSJ TKSJ LS FPYYKUS YXH] DQN O;FDR DQN DJ VUNJ NKF[KY GKS X;S DQN O;FDR;KS US CKGJ [KM+S FLIKGH DKS IHVUK 'KQ: DJ FN;K VU; YKSX JKE EKSVOKU H O EQ>S ?KLHV DJ CKGJ YS X;S O IHVUK 'KQ: DJ FN;K GE NKSUKS FDLH RJG OGK LS TKU CPKDJ HKKXS- HKHM+ LS DQN YKSXKS US GEKJH CL O VKVK LQEKS DKS IRFKJKS O LFJ;KS LS DKWP RKSM+ FN;S CL ESA CSBS CA' KHYKY O UOJRU 'KEKZ DKS CQJH RJG IHVK] UOJRU 'KEKZ YGQYQGKU GK S X;S OKS YKSX HKH FDLH RJG TKU CPKDJ HKKXSA EGKSN; LS FUOSNU GS FD LJDKJH DK;Z ES CK/KK IGQPKUS O VF/KDKFJ;KS @ DEZPKFJ;KS LS EKJFIV DJUS O TKU YSOK GEYK DJUS DS NKSF'K YKSXKS DKS VKJKSFIR DJ N.M FNYKUS DK D'V DJSA HKOFN; JKTSUNZ FLLKSFN;K FUFJ{KD 5 06.02.2003 THAT AS A RESULT OF INCIDENT OCCURRED AT THE OFFICE PREMISES OF THE TRUCK UNION AT VILLAGE KHARIA KHANGAR THE WORTHY CIT -2, JODHPUR ON ACCOUNT OF ANGER, MALICE AND WITH A SOLE OBJECT TO TEACH A LESSON ORDERED A SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE SITUATED NEAR KALPATRU CINEMA, SHASTRI NAGAR, 14 -20 12 JODHPUR AND AT THE RESIDENCE OF THE ASSESSEE AT JODHPUR EVEN THOUGH THE SURVEY PROCEEDINGS AT THE BUSINESS PREMISES OF THE ASSESSEE WAS PEACEFUL AND THERE WAS NO ALLEGATION OF ANY ATTEMPT TO SNATCHED THE DOCUMENTS FOUND DURING THE COURSE OF SURVEY AND RETAINED IN THE CUSTODY BY THE AUTHORIZED OFFICERS OR ANY ATTEMPT TO DESTROY ANY BOOKS OR DOCUMENTS FOUND AT THE TIME OF SURVEY AND WAS IN POSSESSION OF THE AUTHORIZED OFFICER FOR WHICH THEY HAD ALREADY DRAWN A INVENTORY RUNNING INTO FOUR PAGES. 6 06.02.2003 THAT VARIOUS FACTORS NOTED IN THE REPORT REGARDING SATISFACTION DATED 10-07-2008 WRITTEN BY ADDL. DIRECTOR OF INCOME TAX (INV), JODHPUR TO THE CIT , DR A COPY OF WHICH WAS PLACED ON THE RECORD OF THE HONBLE TRIBUNAL AND A CERTIFIED COPY OF THE SAME WAS OBTAINED BY THE ASSESSEE FROM THE OFFICE OF HONBLE TRIBUNAL SHOWS THAT VARIOUS ALLEGATION MADE AGAINST THE ASSESSEE IN THE NOTE RELATING TO THE SATISFACTION RECORDED BEFORE AUTHORIZING THE SEARCH ARE IRRELEVANT AND HAS NO LIVE LINK WITH THE MATERIAL AND FORMATION OF OPINION ABOUT THE BUSINESS AND THE RESIDENTIAL PREMISES OF THE ASSESSEE WHERE THE SURVEY WAS CARRIED IN PEACEFUL MANNER. THE REPORT ON THE SATISFACTION NOTE FORWARDED TO THE HONBLE TRIBUNAL BY THE LD CIT DR NO WHERE SUGGEST THAT ANY OF THE CONDITIONS LAID DOWN UNDER SECTION 132 OF THE ACT WERE EXISTED. THE SEARCH WARRANT ISSUED AGAINST THE ASSESSEES BUSINESS PREMISES AND RESIDENTIAL PREMISES WAS WITHOUT EXISTENCE OF ANY OF THE CONDITION LAID DOWN U/S 132. IT WILL FURTHER BE IMPORTANT TO NOTE THAT NO SEARCH WARRANT WAS ISSUED IN RESPECT OF TRUCK UNION OFFICE WHERE THE UNPLEASANT INCIDENT WAS ALLEGED TO HAVE OCCURRED. 11-13 7 06.02.2003 THAT IN THE REPORT ATTACHED TO THE SATISFACTION NOTE DATED 10-07-2008 THE ADDL. DIRECTOR (INV) INCOME TAX, JODHPUR EXPLAINED THE FOLLOWING CIRCUMSTANCES DUE TO WHICH THE SEARCH WAS ORDERED AGAINST THE ASSESSEE IN RESPECT OF HIS BUSINESS PREMISES AND 14-20 13 RESIDENTIAL HOUSE: - IT IS SUBMITTED THAT ON THE BASIS OF AUTHORIZATIONS ISSUED U/S 133A OF THE IT ACT, 1961, VIDE DATED 5 TH FEBRUARY 2003, BY THE THEN ADDL. CIT, RANGE -3, JODHPUR TO CONDUCT SURVEY IN THE CASES OF SHRI BADRI RAM CHOUDHARY AND HISFAMILY MEMBERS. ACCORDINGLY SURVEY OPERATIONS WERE STARTED ON 6 TH FEBRUARY 2003 DURING THE COURSE OF SURVEY OPERATIONS, THE PEOPLE ASSOCIATED TO THE ABOVE ASSESSEE TURNED HOSTILE AND SNATCHED THE INCRIMINATING DOCUMENTS AND STARTED TO DESTROY THE SAME. FURTHERMORE, SOME OF THE OFFICERS AND OFFICIALS OF THE SURVEY TEAMS WERE ALSO BEEN HURT BY THESE PEOPLES AND LOCAL RESIDENTS. SHRI RAJENDRA SISODIA, INSPECTOR, ONE OF THE MEMBERS OF THE SURVEY TEAMS, HAS FILED AN FIR IN THE PIPAR CITY POLICE STATION ON 06.02.2003. IN THE ATMOSPHERE REPORTED ABOVE, IT WAS NOT POSSIBLE FOR THE SURVEY TEAMS TO CONCLUDE SURVEY OPERATIONS AT THE ABOVE PLACES. SOON THEREAFTER, REASONS WERE RECORDED AND SATISFACTORY NOTE WAS PREPARED AND DECISION OF CONVERTING THE SURVEYS INTO THE SEARCH WAS TAKEN BY THE THEN HONBLE CIT II, JODHPU AFTER PROPERLY ANALYLYSING THE SITUATION. AS SUCH, WARRANTS OF AUTHORIZATION U/S 132(1) WERE ISSUED BY THE THEN HONBLE CIT II, JODHPUR ON 6 TH FEBRUARY 2003 ITSELF IN THE FOLLOWING CASES: - A. RESIDENTIAL HOUSE NO. B-6, SHRIMIKPURA, MASURIA, JODHPUR B. RESIDENTIAL HOUSE OF SHRI RAMESH CHOUDHARY, (SABHARWAL BHAWAN), KHARIA KHANGAR. C. BUSINESS PREMISES OF M/S MAHADEV TRAVEL AGENCY, NEAR KALPATRU CINEMA, JODHPUR. DURING THE COURSE OF SEARCH OPERATIONS, IN ADDITION TO VALUABLES ETC. CERTAIN BOOKS OF ACCOUNTS, INCRIMINATING PAPERS ETC, WERE FOUND AND THE INVENTORIES OF THE SAME WERE 11-13 14 PREPARED. FURTHER THE DETAILS OF DATA PRINTED OUT FROM THE CPUS WHICH WERE SEIZED FROM THE BUSINESS PREMISES OF SHRI BADRI RAM CHOUDHARY HAVE ALSO BEEN INVENTORIZED. AS HAS BEEN SUBMITTED ABOVE, IT IS REQUESTED THAT THE SURVEYS WERE RIGHTLY CONVERTED INTO SEARCHES UNDER THE EXISTENCE OF CIRCUMSTANCES AS CONTEMPLATED BY SECTION 132(1) OF THE I.T. ACT. 1961 I AM ENCLOSING HEREWITH THE SATISFACTION NOTE IN ORIGINAL FOR AUTHORIZING SURVEYS U/S 133A BY THE THEN ADDL. CIT, RANGE -3, JODHPUR, SATISFACTION NOTE IN ORIGINAL THE BASIS OF WHICH WARRANTS FOR AUTHORIZATION ISSUED BY THE THEN CIT II, JODHPUR FOR CONVERTING THE SURVEY ACTIONS U/S 133A INTO SEARCH ACTIONS U/S 132(1), COPIES OF INVENTORIES OF BOOKS OF ACCOUNT, COPY OF FIR FILED AND OTHER INCRIMINATING DOCUMENTS FOR YOUR HONOURS KIND PERUSAL. SD ADDL. DIRECTOR OF INCOME TAX (INV.) JODHPUR 8 06.02.2003 THAT FROM THE PERUSAL OF THE REPORT ON THE SATISFACTION NOTE AS PRODUCED BEFORE HONBLE BENCH BY THE LD CIT DR IT IS CLEAR THAT SEARCH WAS AUTHORIZED BY THE LD CIT-2, JODHPUR TO SEARCH THE BUSINESS & RESIDENTIAL PREMISES OF THE ASSESSEE FOR THE FOLLOWING REASONS: - A. DURING THE COURSE OF SURVEY OPERATION (IN THE OFFICE OF TRUCK UNION AT KHARIA) THE PEOPLE ASSOCIATED TO THE ASSESSEE TURNED HOSTILE AND SNATCHED THE INCRIMINATORY DOCUMENTS AND STARTED TO DESTROY THE SAME. [NO SUCH ALLEGATION IN THE FIR] B. SOME OF THE OFFICERS AND OFFICIALS OF THE SURVEY TEAM WERE ALSO HURT BY THESE PEOPLE AND LOCAL RESIDENT. [IN THE FIR THERE IS NO MENTION THAT EITHER THE ASSESSEE OR ANY OF HIS ASSOCIATE WAS INVOLVED IN THE INCIDENT OCCURRED AT THE OFFICE OF TRUCK UNION AT 11- 13 15 KHARIA KHANGAR] C. SHRI RAJENDRA SISODIA (INSPECTOR) ONE OF THE MEMBER OF THE SURVEY TEAM HAS FILED AN FIR IN THE PIPAR CITY, POLICE STATION IN 06-02-2003. D. IN SUCH ATMOSPHERE IT WAS NOT POSSIBLE FOR SURVEY TEAM FOR CONCLUDE SURVEY OPERATION AT THE ABOVE PLACES. [SURVEY WAS ALREADY CONCLUDED AT THE BUSINESS PREMISES OF THE ASSESSEE IN PEACEFUL MANNER AND THERE WAS NO ALLEGATION FROM THE SURVEY PARTY PRESENT IN THE BUSINESS PREMISES OF THE ASSESSEE OF ANY SORT.] NOTE: - 1. NO COPY OF SATISFACTION NOTE WAS PROVIDED TO THE ASSESSEE EVEN AFTER SPECIFIC DEMAND. 2. THAT NEITHER THE ASSESSEE WAS PRESENT AT VILLAGE KHARIA WHERE THE INCIDENT WAS OCCURRED NOR THE BUSINESS PREMISES WHERE INCIDENT WAS OCCURRED BELONGS TO THE ASSESSEE OR THE ASSESSEE HAD ANY INTEREST IN IT. THE ALLEGATION OF PRESENCE OF ASSOCIATE OF THE ASSESSEE IN THE OFFICE OF TRUCK UNION WAS A WILD ALLEGATION WITHOUT ANY BASIS OR ANY IOTA OF EVIDENCE. 9 06.02.2003 THE CIRCUMSTANCES ON THE BASIS OF WHICH REASONS WERE RECORDED HAS NO LIVE LINK OR BEARING WITH THE ASSESSEE AND CANNOT BE MADE A BASIS FOR AUTHORIZING THE SEARCH AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE AS: - A. THAT SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE WAS PEACEFUL. ALL THE RECORD WAS IN POSSESSION OF THE SURVEY TEAM AND A DETAILED INVENTORY WAS DRAWN. THERE IS NO ALLEGATION FROM ANY OF THE OFFICIAL CONDUCTING THE SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE THAT ANY ATTEMPT BY ANY PERSON WAS MADE TO SNATCH THE DOCUMENTS OR ANY DOCUMENTS TAKEN IN THE CUSTODY DURING THE SURVEY OR WERE DESTROYED OR ANY SUCH ATTEMPT WAS MADE. THE INVENTORY PREPARED AT THE CONCLUSION OF THE SURVEY AT THE 11- 13 16 BUSINESS PREMISES OF THE ASSESSEE IS THE EVIDENCE THAT NO SUCH ATTEMPT WAS MADE EITHER BY THE ASSESSEE OR BY ANY PERSON AT THE PLACE OF BUSINESS OF THE ASSESSEE AND AS SUCH THE ALLEGATION MADE IN THE SATISFACTION NOTE ABOUT THE SNATCHING OF RECORD OR ATTEMPT TO DESTROY THE RECORD HAS NOTING TO DO OR RELEVANT OR HAS ANY BEARING SO FAR AS THE ASSESSEE IS CONCERN. B. THAT NO SURVEY OTHER THAN AT THE BUSINESS PREMISES WAS AUTHORIZED U/S 133A IN RESPECT OF ANY FAMILY MEMBER OF THE ASSESSEE ON 06- 02-2003. C. THAT THE SURVEY AUTHORIZED U/S 133A IN RESPECT OF THREE PLACES AT KHARIA KHANGAR HAS NOTING TO DO WITH THE ASSESSEE AS SHRI RAMESH CHOUDHARY IS NEITHER A FAMILY MEMBER NOR A RELATIVE OF THE ASSESSEE. THE OFFICE OF TRUCK UNION WAS NEITHER OWNED NOR POSSESSED OR BELONGED TO THE ASSESSEE AND AS SUCH FOR ANY INCIDENT HAPPENED AT THE OFFICE OF TRUCK UNION THE SAME CANNOT BE ATTRIBUTED TO THE ASSESSEE. D. THE ALLEGATION THAT THE SURVEY OPERATION COULD NOT BE COMPLETED IN THE ATMOSPHERE WITH REGARD TO THE ASSESSEES BUSINESS PREMISES IS TOTALLY IRRELEVANT AND ERRONEOUS AS THERE IS NO ALLEGATION SO FAR AS ASSESSEES BUSINESS PREMISES IS CONCERN. E. THAT THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR THE ACTS OR INCIDENT OCCURRED AT THE OFFICE OF THE TRUCK UNION AT KHARIA KHANGAR. 10 06.02.2003 THE DEPARTMENT IS EMPOWERED TO CARRY OUT A SEARCH IF ANY OF THE CONDITION LAID DOWN U/S 132 EXIST. THE SEARCH CANNOT BE ORDERED TO TAKE REVENGE OR TO PUNISH A CITIZEN. THE CONDITION LAID DOWN U/S 132 ARE BEING REPRODUCED FOR SAKE OF CONVENIENCE: - (A) ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1) OF SECTION 37 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SECTION (1) OF SECTION 131 OF THIS ACT, OR A 17 NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX, 1922, OR UNDER SUB- SECTION (1) OF SECTION 142 OF THIS ACT WAS ISSUED TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAS OMITTED OR FAILED TO PRODUCE, OR CAUSE TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMMONS OR NOTICE, OR (B) ANY PERSON TO WHOM A SUMMONS OR NOTICE AS AFORESAID HAS BEEN OR MIGHT BE ISSUED WILL NOT, OR WOULD NOT, PRODUCE OR CAUSE TO BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT, OR (C) ANY PERSON IS IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY [WHICH HAS NOT BEEN, OR WOULD NOT BE, DISCLOSED] FOR THE PURPOSES OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR THIS ACT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY), 11 06.02.2003 THAT FROM THE FIR IT IS CLEAR THAT: - A. THE ACT OF THROWING SOME THING IN THE TWO BAGS AT THE TRUCK UNION OFFICE WAS PRIOR TO THE ARRIVAL OF SURVEY TEAM AT THE OFFICE OF TRUCK UNION. B. HOW THE OFFICIAL OF THE SURVEY TEAM BELIEVED THAT SOME PERSONS TO WHOM THEY SAW THROWING SOME THING IN THE TWO BAGS ARE THE EMPLOYEES OF TRUCK UNION PARTICULARLY WHEN THERE WAS A VAST GROUND BEYOND THE OFFICE OF THE TRUCK UNION. C. THAT THE OFFICE OF THE TRUCK UNION IS SURROUNDED BY A WALL AND SOME THING WHICH HAS ALREADY BEEN THROWN BEYOND THE WALL CANNOT BE RECOVERED WITHOUT JUMPING THE WALL AND THERE IS NO MENTION IN THE FIR THAT THE OFFICIALS AUTHORIZED FOR CONDUCTING THE SURVEY 8-10 18 JUMPED THE WALL AND RECOVERED TWO BAGS. D. THAT THE SURVEY PARTY DID NOT PUT ANY QUESTION TO THE PERSONS TO WHOM THEY SAW THROWING THE TWO BAGS AS TO WHOM THE SAME BELONG OR WHO DIRECTED THEM TO THROW THE SAME AND IN ABSENCE OF ANY SUCH ENQUIRY HOW THE OFFICIALS OF SURVEY PARTY PRESUMED THE SAME AS BELONGING TO THE TRUCK UNION. E. THAT THERE IS NO MENTION IN THE FIR ABOUT THE SNATCHING OF THE RECORD OR ANY ATTEMPT TO DESTROY THE SAME WHERE AS IN THE FORWARDING REPORT TO THE SATISFACTION NOTE PLACED ON THE FILE OF THE HONBLE TRIBUNAL THE VARY BASIS OF ISSUE OF SEARCH WARRANT WAS THE ACT OF SNATCHING AND DESTROYING OF THE RECORD. F. THAT AS PER FIR NO PERSON WAS AVAILABLE IN THE OFFICE OF TRUCK UNION WHEN THE SURVEY PARTY ENTERED IN THE OFFICE AND THERE IS NO MENTION ABOUT THE SERVICE OF AUTHORIZATION ON ANY PERSON TO CONDUCT THE SURVEY. THIS SHOWS THAT THERE WAS NO AUTHORIZATION AT ALL TO SURVEY THE OFFICE PREMISES OF THE TRUCK UNION PARTICULARLY WHEN NO COPY OF SUCH AUTHORIZATION WAS FILED ALONG WITH THE FIR WITH THE POLICE STATION, PIPAR CITY. G. THAT FROM THE FIR IT IS GATHERED THAT SHRI K.S. RAJPUROHIT ITO WAS AUTHORIZED TO CONDUCT SURVEY AT THE BUSINESS PREMISES OF SHRI RAMESH CHOUDHARY THAN HOW HE ARRIVED AT THE OFFICE OF THE TRUCK UNION. FURTHER WHEN SHRI O.P. CHOUDHARY, ITO WAS AUTHORIZED TO CONDUCT THE SURVEY AT THE BUSINESS PREMISES OF TRUCK UNION THAN FOR WHAT REASONS HE LEFT THE OFFICE OF THE TRUCK UNION EVEN BEFORE THE SERVICE OF AUTHORIZATION ON ANY PERSON. H. THAT WHEN SHRI O.P. CHOUDHARY WAS AUTHORIZED FOR CONDUCTING THE SURVEY AT THE OFFICE PREMISES OF THE TRUCK UNION THAN WHY HE HAD NOT APPEARED AT THE SITE WHERE THE INCIDENT ALLEGED TO HAVE OCCURRED. 12 06.02.2003 THAT IN THE REPORT ATTACHED WITH SATISFACTION NOTE IT IS NO WHERE MENTIONED THAT ANY OF THE 11-13 19 CONDITIONS LAID DOWN U/S 132 IN THE CASE OF THE APPELLANT WERE EXISTED BEFORE AUTHORIZING THE SEARCH. IN ABSENCE OF FULFILLMENT OF SUCH CONDITIONS SEARCH AUTHORIZED BY THE LD CIT -2, JODHPUR AT THE BUSINESS PREMISES AND THE RESIDENTIAL PREMISES WAS VOID AB- INITIO AND IS LIABLE TO BE STRUCK DOWN SO ALSO THE CONSEQUENTIAL ASSESSMENT ORDER PASSED UNDER CHAPTER XIVB ON THE BASIS OF SUCH SEARCH AS THE AUTHORIZATION OF THE SEARCH IN THE CASE OF THE APPELLANT IS NOT ONLY BAD IN LAW BUT AMOUNTS TO ABUSE OF POWERS CONFERRED UNDER THE ACT. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS TO SUPPORT THE CONTENTION: - BALWANT SINGH & OTHERS V/S R.D. SHAH, 71 ITR 550 (D EL) IN THIS CASE THEIR LORDSHIP OF DELHI HIGH COURT LAI D DOWN AS UNDER: - THE EXISTENCE OF 'REASON TO BELIEVE' IN S. 132 IS SUBJECT ONLY TO A LIMITED SCRUTINY AND THE COURTS CANNOT SUBSTITUTE THEIR OWN OPINION FOR THAT OF THE DIRECTOR OF INSPECTION. OF COURSE, THE DIRECTOR OF INSPECTION MUST NOT LIGHTLY OR ARBITRARILY INVADE THE PRIVACY OF A SUBJECT. BEFORE HE ACTS, HE MUST BE REASONABLY SATI SFIED THAT IT IS NECESSARY TO DO SO BUT THE DECISION MUST STILL REMAIN HIS AND NOT THAT OF THE COURTS. IF THE GROUNDS ON WHICH REASON TO BELIEVE IS FOUNDED ARE NON-EXISTENT OR AR E IRRELEVANT OR ARE SUCH ON WHICH NO REASONABLE PERSON CAN COME TO THAT BELIEF, THE EXER CISE OF POWER WOULD BE BAD; BUT SHORT OF THAT, THE COURTS CANNOT INTERFERE WITH THE REASO N TO BELIEVE BONA FIDE ARRIVED AT BY THE DIRECTOR OF INSPECTION. IT IS ALSO OPEN TO THE COUR TS TO EXAMINE WHETHER THE REASONS FOR THE BELIEF HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING TO THE FORMATION OF THE BELIEF. ITO V/S SETH BROS., 74 ITR 836 (SC) IN THIS CASE THEIR LORDSHIP OF THE HONBLE SUPREME COURT LAID DOWN AS UNDER:- SEARCH AND SEIZURESCOPE AND VALIDITYSEC. 132 DOE S NOT CONFER ANY ARBITRARY AUTHORITY ON THE REVENUE OFFICERSPOWER MUST BE EXE RCISED STRICTLY IN ACCORDANCE WITH THE LAW AND ONLY FOR THE PURPOSE FOR WHICH THE LAW AUTHORISES ITS EXERCISEIF THE ACTION OF THE OFFICER ISSUING THE AUTHORIZATION OR OF THE DESIGNATED OFFICER IS CHALLENGED, THE OFFICER CONCERNED MUST SATISFY THE COURT ABOUT THE REGULARITY OF HIS ACTIONIF THE ACTION IN TAKEN MALICIOUSLY OR POWER IS EXERCISED FOR COLL ATERAL PURPOSE, THE SAME IS LIABLE TO BE STRUCK DOWN BY THE COURT MOTILAL & OTHERS V/S PREVENTIVE INTELLIGENCE OFFICE R, 80 ITR 418 (ALL) IN THIS CASE THEIR LORDSHIP OF THE HONBLE ALLAHABA D HIGH COURT LAID DOWN AS UNDER:- THE POWER CONFERRED UNDER S. 132(1) IS CONTEMPLATE D IN RELATION TO THOSE CASES WHERE THE PRECISE LOCATION OF THE ARTICLE OR THING IS NOT KNOWN IAC HAVING REPORTED TO THE DEPARTMENT THAT A CERTAIN QUANTITY OF SILVER BELONG ING TO THE ASSESSEE WAS TAKEN INTO 20 CUSTODY BY THE CENTRAL CUSTOMS AND EXCISE DEPARTMEN T AND WAS LYING WITH A CERTAIN OFFICER OF THAT DEPARTMENT, AND ORDER UNDER S. 132( 3) WAS WITHOUT AUTHORITY OF LAW H.L. SIBBAL V/S CIT, 101 ITR 112 (P&H) IN THIS CASE THEIR LORDSHIP OF THE HONBLE PUNJAB & HARIYANA HIGH COURT LAID DOWN AS UNDER:- THE FACTS CONSTITUTING THE INFORMATION MUST BE REL EVANT TO THE ENQUIRY. THEY MUST BE SUCH FROM WHICH A REASONABLE AND PRUDENT MAN CAN CO ME TO THE REQUISITE BELIEF OR CONCLUSION. IF EITHER OF THE AFOREMENTIONED ELEMENT S IS MISSING, THE ACTION OF THE AUTHORITY SHALL BE REGARDED AS LYING OUTSIDE THE AMBIT AND SC OPE OF THE ACT. SUCH AN ACTION WOULD BE LIABLE TO BE STRUCK DOWN ON THE BASIS OF WHAT IS COMMONLY KNOWN AS LEGAL MALICE. ITO V/S LAKHMANI MEWALDAS, 103 ITR 437 (SC). IN THIS CASE THEIR LORDSHIP OF THE HONBLE SUPREME COURT LAID DOWN AS UNDER:- EXPRESSION 'REASON TO BELIEVE' DOES NOT MEAN A PUR ELY SUBJECTIVE SATISFACTION ON THE PART OF ITOIT MUST BE HELD IN GOOD FAITHPOWERS OF ITO TO REOPEN ASSESSMENT, THOUGH WIDE, ARE NOT PLENARY. THE LIVE LINK OR CLOSE NEXUS BETWEEN MATERIAL BEFOR E ITO AND BELIEF HE WAS TO FORM REGARDING ESCAPEMENT OF INCOME WAS MISSINGSAID MAT ERIAL COULD NOT HAVE LED TO FORMATION OF THE BELIEF THAT INCOME ESCAPED ASSESSM ENT BECAUSE OF ASSESSEE'S FAILURE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTSPRE-CONDITIONS FOR EXERCISE OF JURISDICTION UNDER S. 147 WERE NOT FULFILLED MANJU TANDAN & OTHERS V/S T.N. KAPOOR, 115 ITR 473 (ALL) IN THIS CASE THEIR LORDSHIP OF THE HONBLE ALLAHABA D HIGH COURT LAID DOWN AS UNDER:- SEARCH AND SEIZUREREQUISITION UNDER S. 132ACONDI TION PRECEDENTCIT MUST HAVE IN HIS POSSESSION INFORMATION LEADING TO BELIEF THA T THE ASSETS REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT BE DISCLOSED FOR PURPOSES OF IT ACT SEARCH AND SEIZUREREQUISITIONING UNDER S. 132ASCO PE AND VALIDITYTHE JURISDICTION TO AUTHORISE REQUISITION UNDER S. 132A ARISES ONLY WHERE THE CIT HAS, IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, REASON TO BELIEVE TH AT SUCH ASSETS REPRESENT EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT BE DISCLOSED FOR THE PURPOSES OF THE IT ACT, 1922, OR THE IT ACT, 1961, BY ANY PERSON FROM WHOSE POSSESSION OR CONTROL SUCH ASSETS HAD BEEN TAKEN INTO CUSTODY BY THE OFFICER OR AUTHORITY FROM WHOM IT WAS TO BE REQUISITIONEDTHE MATERIAL AVAILABLE W ITH CIT AT THE TIME OF AUTHORISATION UNDER S. 132A NOT BEING SUCH ON THE BASIS OF WHICH HE OR ANY OTHER PERSON COULD HAVE REASON TO BELIEVE AS CONTEMPLATED BY THAT SECTION T HE CONDITION PRECEDENT FOR AUTHORISATION DID NOT EXIST AND HENCE, THE ORDER UN DER S. 132(5) AND RETENTION OF ORNAMENTS REQUISITIONED UNDER S. 132A WERE ILLEGAL. GANGA SARAN & SONS (P) LTD. V/S ITO, 130 ITR 1 (SC) IN THIS CASE THEIR LORDSHIP OF THE HONBLE SUPREME COURT LAID DOWN AS UNDER:- 21 THE IMPORTANT WORDS UNDER S. 147(A) ARE HAS REASO N TO BELIEVE AND THESE WORDS ARE STRONGER THAN THE WORDS IS SATISFIED. THE BELIEF ENTERTAINED BY THE ITO MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR I N OTHER WORDS IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. B.P. ABDUL GAFOOR V/S CIT, 142 ITR 108 (KER). IN THIS CASE THEIR LORDSHIP OF THE HONBLE KERALA H IGH COURT LAID DOWN AS UNDER:- SEARCH AND SEIZUREREASON TO BELIEVEINFORMATIONW ORDS 'HAS REASON TO BELIEVE' EXPRESS IDEA OR OBJECTIVITY IN THE MATTER OF SATISF ACTION MORE EMPHATICALLY THAN THE WORDS 'IS SATISFIED'BELIEF MUST NOT BE BLIND OR IRRATION ALSHOULD BE ONE BASED ON REASONS WHICH ARE MATERIAL AND RELEVANTINFORMATION VINDHYA METAL CORPORATION V/S CIT, 156 ITR 233 (ALL ) IN THIS CASE THEIR LORDSHIP OF THE HONBLE ALLAHABA D HIGH COURT LAID DOWN AS UNDER:- SEARCH AND SEIZUREAUTHORISATION UNDER S. 132AUNE XPLAINED POSSESSION OF MONEY EXISTENCE OR OTHERWISE OF THE CONDITION PRECEDENT F OR EXERCISE OF POWERS UNDER SS. 132 AND 132A IS OPEN TO JUDICIAL SCRUTINYABSENCE OF TH E CONDITION PRECEDENT WOULD HAVE THE EFFECT OF VITIATING THE AUTHORISATION MADE BY C IT UNDER THESE PROVISIONSSUFFICIENCY OR OTHERWISE OF INFORMATION, THOUGH CANNOT BE EXAMI NED BY COURT, EXISTENCE OF INFORMATION AND ITS RELEVANCE TO FORMATION OF BELIE F CAN HOWEVER BE GONE INTO UNEXPLAINED POSSESSION OF AMOUNT ALONE WITHOUT ANYT HING MORE WOULD HARDLY CONSTITUTE INFORMATION SUFFICIENT FOR LEADING TO AN INFERENCE THAT IT WAS INCOME WHICH WOULD NOT HAVE BEEN DISCLOSED BY PERSONS IN POSSESSION THEREO FBELIEF, FOR PURPOSES OF S. 132A, SHOULD BE BELIEF ENTERTAINABLE BY A REASONABLE MAN AND NOT THE BELIEF ARBITRARILY ENTERTAINED ON MATERIAL WHICH WOULD NOT LEAD A REAS ONABLE MAN TO THAT BELIEF. CIT V/S TARSEM KUMAR, 161 ITR 505 (SC). IN THIS CASE THEIR LORDSHIP OF THE HONBLE SUPREME COURT LAID DOWN AS UNDER:- THERE CANNOT BE ANY ORDER UNDER S. 132 IN RESPECT OF GOODS OR MONEY ETC. WHICH ARE IN THE CUSTODY OF ANOTHER DEPARTMENT UNDER LEGAL AUTHO RITYWHEN THE PHYSICAL CUSTODY OF MONEY WAS WITH THE CUSTOMS DEPARTMENT, IT COULD NOT BE CONTENDED THAT THE POSSESSION AS USED IN S. 132 WAS WITH THE RESPONDENTIN THE CO NTEXT OF S. 132, THE WORDS POSSESSION AND SEIZURE CANNOT BE CONSIDERED TO MEAN WHERE THE LEGAL TITLE WAS BUT IT SHOULD REFER TO THE PHYSICAL POSSESSION. PAWAN SOLVENT & CHEMICALS V/S CIT, 166 ITR 67 (PAT) IN THIS CASE THEIR LORDSHIP OF THE HONBLE PATANA H IGH COURT LAID DOWN AS UNDER:- SEARCH AND SEIZUREREASON TO BELIEVESECRET ENQUIR YWHERE THE CIT IS NOT ABLE TO SHOW THAT CAUSE OF HIS REASONABLE BELIEF, THE SEARC H IS ILLEGAL AND WITHOUT JURISDICTION DEPARTMENT ON THE BASIS OF CERTAIN INFORMATIONS RAI DED THE PREMISES OF THE PETITIONER AND SEIZED CERTAIN CASH, JEWELLERY AND BOOKS OF ACCOUNT SPETITIONER HOWEVER MADE AN APPLICATION UNDER ART. 226 SEEKING THE ISSUANCE OF WRIT OF MANDAMUS CONTENDING THAT POWERS OF SEARCH AND SEIZURE WERE EXERCISED BY THE DEPARTMENT WITHOUT REASONABLE 22 CAUSESAME HELD MAINTAINABLEREASONABLE BELIEF IS A CONDITION PRECEDENT FOR SEARCH AND SEIZURE. DR. NANDLAL TAHILIANI V/S CIT, 170 ITR 592 (ALL) IN THIS CASE THEIR LORDSHIP OF THE HONBLE ALLAHABA D HIGH COURT LAID DOWN AS UNDER:- INFORMATION IN CONSEQUENCE OF WHICH THE DIRECTOR O R CIT HAS REASON TO BELIEVE IS THE FOUNDATION FOR ACTION UNDER S. 132. IT SETS THE MAC HINERY IN MOTION. THEREFORE, IT HAS NOT ONLY TO BE AUTHENTIC BUT CAPABLE OF GIVING RISE TO INFERENCE THAT THE PERSON WAS IN POSSESSION OF UNDISCLOSED INCOME, WHICH HAS NOT BEE N OR WOULD NOT BE DISCLOSED. SATISFACTION OF THE AUTHORITIES MAY BE SUBJECTIVE B UT IT MUST BE ARRIVED OBJECTIVELY ON MATERIAL. NOT ONE COULD BE FOUND ON RECORD. ANY COM PLAINT MADE BY PERSON INTERESTED OR DISINTERESTED SHOULD NOT BE JUMPED UPON AND MADE AN EXCUSE TO INITIATE PROCEEDINGS UNLESS IT IS THOROUGHLY EXAMINED AND THE AUTHORITIE S ARE SATISFIED ABOUT ITS VERACITY AND AUTHENTICITY. THERE MUST BE RATIONAL CONNECTION BET WEEN THE INFORMATION OR MATERIAL AND THE BELIEF ABOUT UNDISCLOSED INCOME. KUSUM LATA V/S CIT, 180 ITR 365 (RAJASTHAN) IN THIS CASE THEIR LORDSHIP OF THE HONBLE RAJASTHA N HIGH COURT LAID DOWN AS UNDER:- THE SEARCH AND SEIZURE UNDER S. 132 COULD BE LEGAL ONLY IF THE DIRECTOR OF INSPECTION, IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS R EASON TO BELIEVE THAT ANY PERSON IS IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY OR OTHE R VALUABLE ARTICLE OR THING AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH IS UNDISCLOSED. THE RE WAS NO INFORMATION OR THAT IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, THE C OMPETENT AUTHORITY COULD HAVE HAD A REASON TO BELIEVE THAT THE PETITIONER IS IN POSSESS ION OF MONEY AND JEWELLERY, ETC., WHICH WAS UNDISCLOSED INCOME OR PROPERTY. THE WORDS 'INFO RMATION IN POSSESSION' SHOULD BE CONSTRUED AS SOME VALID DEFINITE INFORMATION IN POS SESSION AND NOT ANY IMAGINARY OR INVALID INFORMATION. THE INFORMATION SHOULD BE CRED IBLE. IT IS NOT POSSIBLE TO SAY THAT THERE WAS ANY REASONABLE INFORMATION ON WHICH THE D IRECTOR OF INSPECTION COULD HAVE ANY BONA FIDE BELIEF TO ISSUE THE AUTHORISATION UND ER S. 132(1). IT MAY BE STATED THAT ALL THAT HAS BEEN STATED IN THE INFORMATION IS THAT MAN UFACTURERS OF 'BABA' BRAND CHEWING TOBACCO, PANMASALA, ETC., ARE SELLING IT AT HIGH PR EMIUM WHICH IS THE RESULT OF ARTIFICIAL SCARCITY CREATED BY THE DEALERS. IT IS NOT POSSIBLE TO SAY THAT IT WAS IN CONSEQUENCE OF THE INFORMATION THAT THE DIRECTOR OF INSPECTION COULD H AVE A BONA FIDE BELIEF THAT HE HAS REASON TO BELIEVE THAT ANY PERSON TO WHOM A SUMMONS UNDER SUB-S. (1) OF S. 37 OF THE INDIAN IT ACT, 1922 (11 OF 1922), OR UNDER SUB-S. ( 1) OF S. 132 OF THE IT ACT, 1961, WAS ISSUED, WOULD NOT PRODUCE OR CAUSE TO BE PRODUCED S UCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED OR ANY PERSON IS IN POSSESSIO N OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY, BUL LION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OF PARTLY OF INCOME OR PROPERTY, WHICH HAS NOT BEEN OR WOULD NOT BE DISCLOSED FOR THE PURPOSES OF THE IT ACT. THE EXPRESSION 'HAS REASON TO BELIEVE' IN SUB-S. (1) OF S. 132 MEANS THE BONA FIDE BELIEF BASED ON SOME REASONABLE OR CREDIBLE INFORMATION AND NOT ON THE INFORMATION WHI CH MAY BE IMAGINARY. THE AUTHORISATION FOR SEARCH IN THE INSTANT CASE UNDER S. 132(1) CANNOT BE HELD TO BE VALID OR LEGAL.OM PARKASH JINDAL VS. UNION OF INDIA 1976 CT R (P&H) 316 : (1976) 104 ITR 389, (P&H) : TC60R.273, POORAN MAL VS. DIRECTOR OF INSPECTION (INVESTIGATION), INCOME- 23 TAX 1974 CTR (SC) 25 : (1974) 93 ITR 505 (SC) : TC6 0R.357, JAIN & JAIN VS. UNION OF INDIA (1981) 22 CTR (BOM) 17 : (1981) 134 ITR 655 ( BOM) : TC61R.121, DR. PARTAP SINGH VS. DIRECTOR OF ENFORCEMENT (1985) 46 CTR (SC ) 319 : (1985) 155 ITR 166 (SC) : TC61R.94 AND S. NARAYANAPPA VS. CIT (1967) 63 ITR 2 19 (SC) : TC51R.651#1 RELIED ON. L.R. GUPTA & OTHERS V/S UNION OF INDIA, 194 ITR 32 (DEL) IN THIS CASE THEIR LORDSHIP OF THE HONBLE DELHI HI GH COURT LAID DOWN AS UNDER:- THE BASIS OF THE EXERCISE OF THE JURISDICTION UNDE R S. 132(1) HAS TO BE THE FORMATION OF A BELIEF AND THE BELIEF IS TO BE FORMED ON THE BASIS OF RECEIPT OF INFORMATION BY THE AUTHORIZING OFFICER. THE EXPRESSION 'INFORMATION' M UST BE SOMETHING MORE THAN A MERE RUMOUR OR A GOSSIP OR A HUNCH. THERE MUST BE SOME M ATERIAL, WHICH CAN BE REGARDED AS INFORMATION, WHICH MUST EXIST ON THE FILE ON THE BA SIS OF WHICH THE AUTHORISING OFFICER CAN HAVE REASON TO BELIEVE THAT ACTION UNDER S. 132 IS CALLED FOR ANY OF THE REASONS MENTIONED IN CLS. (A), (B) OR (C). WHEN AN ACTION OF THE ISSU ANCE OF AUTHORISATION UNDER S. 132 IS CHALLENGED IN A COURT IT WILL BE OPEN TO THE PETITI ONER TO CONTEND THAT ON THE FACTS OR INFORMATION DISCLOSED, NO REASONABLE PERSON COULD H AVE COME TO THE CONCLUSION THAT ACTION UNDER S. 132 WAS CALLED FOR. THE OPINION WHI CH HAS TO BE FORMED IS SUBJECTIVE AND, THEREFORE, THE JURISDICTION OF THE COURT TO INTERFE RE IS VERY LIMITED. A COURT WILL NOT ACT AS AN APPELLATE AUTHORITY AND EXAMINE, METICULOUSLY, T HE INFORMATION IN ORDER TO DECIDE, FOR ITSELF, WHETHER AN ACTION UNDER S. 132 IS CALLED FO R. BUT THE COURT WOULD BE ACTING WITHIN JURISDICTION IN SEEING WHETHER THE ACT OF ISSUANCE OF AN AUTHORISATION UNDER S. 132 IS ARBITRARY OR MALA FIDE, OR WHETHER, THE SATISFACTIO N WHICH IS RECORDED IS SUCH WHICH SHOWS LACK OF APPLICATION OF MIND BY THE APPROPRIATE AUTH ORITY. THE REASON TO BELIEVE MUST BE TANGIBLE IN LAW AND IF THE INFORMATION OR THE REASO N HAS NO NEXUS WITH THE BELIEF OR THERE IS NO MATERIAL OR TANGIBLE INFORMATION FOR THE FORM ATION OF THE BELIEF, THEN ACTION TAKEN UNDER S. 132 WOULD BE REGARDED AS BAD IN LAW. A SEA RCH WHICH IS CONDUCTED UNDER S. 132 IS A SERIOUS INVASION INTO THE PRIVACY OF A CITIZEN . SEC. 132(1) HAS TO BE STRICTLY CONSTRUED AND THE FORMATION OF THE OPINION OR REASON TO BELIE VE BY THE AUTHORISING OFFICER MUST BE APPARENT FROM THE NOTE RECORDED BY HIM. THE OPINION OR THE BELIEF SO RECORDED MUST CLEARLY SHOW WHETHER THE BELIEF FALLS UNDER SUB-CLS .(A), (B) OR (C) OF S. 132(1). NO SEARCH CAN BE ORDERED EXCEPT FOR ANY OF THE REASONS CONTAI NED IN SUB-CLS. (A), (B) OR (C). THE SATISFACTION NOTE SHOULD ITSELF SHOW THE APPLICATIO N OF MIND AND THE FORMATION OF THE OPINION BY THE OFFICER ORDERING THE SEARCH. IF THE REASONS WHICH ARE RECORDED DO NOT FALL UNDER CLS. (A), (B) OR (C) THEN AN AUTHORISATION UN DER S. 132(1) WILL HAVE TO BE QUASHED. C. VENKATA REDDY & ANR. VS. ITO (1967) 66 ITR 212 ( MYS) : TC60R.313, V.K. JAIN VS. UNION OF INDIA 1975 CTR (DEL) 84 : (1975) 98 ITR 46 9 (DEL) : TC60R.633 AND CHIRANJI LAL & ANR. VS. CIT (1982) 135 ITR 530 (DEL) : TC61R .187 RELIED ON. CIT V/S VINDHYA METAL CORPORATION, 224 ITR 614 (SC) . IN THIS CASE THEIR LORDSHIP OF THE HONBLE SUPREME COURT LAID DOWN AS UNDER:- SEARCH AND SEIZUREAUTHORISATION UNDER S. 132AVAL IDITYMERE UNEXPLAINED POSSESSION OF AN AMOUNT, WITHOUT ANYTHING MORE, COU LD NOT 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 B EEN DISCLOSED BY THE PERSON IN POSSESSION FOR PURPOSES OF S. 132AMONEY FOUND IN P OSSESSION OF A PERSON NOT BORNE ON 24 THE GIR OF JURISDICTIONAL ITO, WITHOUT ANYTHING MOR E, COULD NOT BE SUBJECTED TO PROCEEDINGS UNDER S. 132AVINDHYA METAL CORPN. VS. CIT (1983) 36 CTR (ALL) 238 : (1985) 156 ITR 233 (ALL) AFFIRMED. DR. NALINI MAHAJAN V/S DI (INVESTIGATION), 257 ITR 123 (DELHI) IN THIS CASE THEIR LORDSHIP OF THE HONBLE DELHI HI GH COURT LAID DOWN AS UNDER:- THERE HAS BEEN NO INDEPENDENT APPLICATION OF MIND. NO REASON HAS BEEN ASSIGNED AS TO WHY THE SURVEY OPERATION WOULD NOT SERVE THE PURPOS E AND THE SAME WAS REQUIRED TO BE CONVERTED INTO A SEIZURE. NO REASON TO BELIEVE HAS BEEN RECORDED THAT IF THE ASSESSEE IS CALLED UPON TO PRODUCE ANY DOCUMENT RELEVANT TO THE PROCEEDINGS UNDER THE ACT, THE SAME COULD NOT BE COMPLIED WITH. SUCH A FINDING WAS REQU IRED TO BE ARRIVED AT. NOTHING HAS BEEN INDICATED AS TO WHICH SUB-CLAUSE OF S. 132 WOU LD BE ATTRACTED IN THE MATTER. ALTHOUGH IT WAS CONTENDED ON BEHALF OF THE DEPARTME NT THAT, DURING THE COURSE OF SURVEY, CERTAIN INCRIMINATING DOCUMENTS HAD BEEN FOUND LEAD ING TO ISSUANCE OF THE AUTHORIZATION FOR SEARCH OF THE PREMISES ON THE GROUND THAT IT W AS FOUND NECESSARY TO SEIZE THE DOCUMENTS, OTHERWISE THOSE WOULD NOT HAVE BEEN PROD UCED AND DESTROYED NEITHER ANY SUCH APPREHENSION HAD BEEN DISCLOSED BY THE AUTHORI ZING OFFICER TO THE ADDL. DIRECTOR NOR SUCH REASON TO BELIEVE HAVE BEEN RECORDED. CLAUSE ( B) OR (C) OF SUB-S. (1) OF S. 132 COULD BE TAKEN RECOURSE TO ONLY IF SUFFICIENT MATERIALS E XISTED THEREFOR E . A SEARCH OR SEIZURE CANNOT BE SUSTAINED UNLESS IT IS CLEARLY SHOWN THAT IT WAS DONE BY AN AUTHORITY DULY AUTHORISED THEREFOR E AND ALL CONDITIONS PRECEDENT IN RELATION THERETO E XIST. A SEARCH CONDUCTED UNDER S. 132 INVADES THE PRIVACY OF A CIT IZEN. THUS, FORMATION OF THE OPINION OR REASON TO BELIEVE BY THE AUTHORIZING OFFICER MUST B E APPARENT FROM THE RECORDS OF THE CASE. THE OPINION OR THE BELIEF SO RECORDED SHOULD CLEARLY DEMONSTRATE THAT THE CASE FALLS WITHIN ANY ONE OR MORE CLAUSES CONTAINED IN CLS. (A ), (B) AND (C) OF SUB-S. (1) OF S. 132. L.R. GUPTA VS. UNION OF INDIA (1992) 101 CTR (DEL) 179 : (1992) 194 ITR 32 (DEL) : TC 60R.461, AJIT JAIN VS. UNION OF INDIA (2000) 159 CT R (DEL) 204 : (2000) 242 ITR 302 (DEL), VINDHYA METAL CORPN. & ORS. VS. CIT (1983) 3 6 CTR (ALL) 238 : (1985) 156 ITR 233 (ALL) : TC 62R.288 AND CIT VS. VINDHYA METAL CO RPN. & ORS. (1997) 139 CTR (SC) 495 : (1997) 224 ITR 614 (SC) : TC 62R.286 RELIED O N; BALWANT SINGH VS. R.D. SHAH, DIRECTOR OF INSPECTION (1969) 71 ITR 550 (DEL) : TC 60R.554 AND ITO VS. SETH BROS. (1969) 74 ITR 836 (SC) : TC 61R.191 DISTINGUISHED. MAHESH KUMAR V/S DDIT, 260 ITR 67 (CAL) IN THIS CASE THEIR LORDSHIP OF THE HONBLE CALCUTTA HIGH COURT LAID DOWN AS UNDER:- THE CONDITION PRECEDENT OF SEARCH AND SEIZURE IS ' REASON TO BELIEVE' UNDER S. 132 WHICH CANNOT BE EQUATED WITH 'REASON TO SUSPECT'. THE EXP RESSION 'REASON TO BELIEVE' POSTULATES BELIEF AND THE EXISTENCE OF REASONS FOR THAT BELIEF. THE BELIEF MUST BE HELD IN GOOD FAITH. IT CANNOT BE MERELY A PRETENCE. IT IS T RUE TO SAY THAT THE EXPRESSION 'REASON TO BELIEVE' DOES NOT MEAN PURELY SUBJECTIVE SATISFACTI ON ON THE PART OF THE AUTHORITY IN MAKING THE SEIZURE BUT THE REASONS FOR THE BELIEF M UST HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING FOR THE FORMATION OF THE BELIEF, N OT EXTRANEOUS OR IRRELEVANT FOR THE SAID PURPOSE. AS AND WHEN PLACES OF PERSONS OF DIVERSE A CTIVITIES AND UNCONNECTED WITH EACH OTHER ARE SEARCHED AND THEIR BANK A/CS ARE FREEZED BY THE AUTHORITY TO GET OR GATHER MATERIALS AND INFORMATION TO FORM A BELIEF THAT THE ASSESSEE IS AVOIDING TAX IS WHOLLY OUTSIDE THE SCOPE OF THE SEARCH AND SEIZURE UNDER T HE ACT. 25 PEARLESS GENERAL FINANCE AND INVESTMENT CO. LTD. V/ S DCIT, 273 ITR 16 (PAGE 30 OF REPORT) IN THIS CASE THEIR LORDSHIP OF THE HONBLE CALCUTTA HIGH COURT LAID DOWN AS UNDER:- BUT WE HAVE POINTED OUT IN OUR DISCUSSION ABOVE, T HAT THERE WAS NOTHING IN THE AUDITORS REPORT TO COME TO SUCH A CONCLUSION. THE LEARNED JU DGE WAS OF THE OPINION THAT FROM THE DISCREPANCY, AS APPEARED IN THE AUDITORS REPORT, I T WOULD BE 'ANYBODYS GUESS' AS TO SINCE WHEN SUCH DISCREPANCIES CONTINUED. BUT WE HAV E ALREADY HELD THAT THERE IS NO MATERIAL WHICH HAVE A RATIONAL CONNECTION OR A LIVE LINK OR A DIRECT NEXUS WITH THE FORMATION OF THE REQUISITE BELIEF UNDER S. 147(A) O F THE IT ACT AS LAID DOWN IN THE DECISION REPORTED IN CALCUTTA DISCOUNT CO. LTD. VS. ITO (SUP RA). THE LEARNED JUDGE WAS OF THE OPINION THAT IT WOULD BE SUFFICIENT FOR THE AO IF H E WAS PRIMA FACIE SATISFIED ABOUT THE ALLEGED SUPPRESSION OF MATERIAL FACT BY AN ASSESSEE . IN THIS RESPECT HE PREFERRED TO RELY UPON THE AUDITORS REPORT AND WAS OF THE OPINION TH AT AS THE AO WAS PRIMA FACIE SATISFIED ABOUT THE SUPPRESSION OF THE MATERIAL FACT SO HE WA S JUSTIFIED IN ISSUING SUCH NOTICE FOR THE PURPOSE OF REOPENING THE ASSESSMENT. WE REGRET WE CANNOT AGREE WITH THIS OBSERVATION. THE LAW IS NOW WELL-SETTLED BY THE HON BLE APEX COURT, AS DISCUSSED ABOVE, THAT THE REASON FOR THE FORMATION OF THE BELIEF MUS T HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING WITH THE INFORMATION RECEIVED. RAT IONAL CONNECTION, POSTULATES THAT THERE MUST BE DIRECT NEXUS OR LIVE LINK BETWEEN THE MATER IAL COMING TO THE NOTICE OF THE ITO AND THE FORMATION OF THE BELIEF THAT THERE HAS BEEN ESC APEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF H IS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS TO BE BORNE IN MIND THAT IT I S NOT ANY AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT REMOTE AND FAR-FETC HED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF T HE INCOME OF THE ASSESSEE FROM ASSESSMENT. THE REASON IN THE FORMATION OF THE BELI EF MUST BE HELD IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE. THE POWERS OF THE IT O TO REOPEN ASSESSMENT, THOUGH WIDE, ARE NOT PLENARY. THE WORDS AS USED IN THE STATUTE A RE 'REASON TO BELIEVE' AND NOT 'REASON TO SUSPECT'. BUT FROM OUR DISCUSSION ABOVE, WE ARE OF THE OPINION THAT THERE WAS NO REASON TO BELIEVE ON THE PART OF THE AO TO HOLD THA T THERE WAS ESCAPEMENT OF INCOME OF THE ASSESSEE IN A PARTICULAR YEAR AND AS SUCH IT MU ST BE HELD THAT THE AO WAS NOT JUSTIFIED IN ISSUING THE NOTICE IN QUESTION. M.S. ASSOCIATES V/S UOI & ORS. (2005) 275 ITR 502 ( GAU) IN THIS CASE THEIR LORDSHIP OF THE HONBLE GAUHATI HIGH COURT LAID DOWN AS UNDER:- 'REASON TO BELIEVE' IS A COMMON FEATURE IN TAXING S TATUTES. IT HAS BEEN CONSIDERED TO BE THE MOST SALUTARY SAFEGUARD ON THE EXERCISE OF POWE RS BY THE AUTHORITIES CONCERNED. IT IS MADE OF TWO COMPONENTS, NAMELY, 'REASON' AND 'TO BE LIEVE'. THE WORD 'REASON' MEANS CAUSE OR JUSTIFICATION AND THE WORD 'BELIEF' MEANS TO ACCEPT AS TRUE OR TO HAVE FAITH IN IT. BEFORE AN OFFICER ATTRIBUTES FAITH OR ACCEPTS THE F ACT TO EXIST, THERE MUST BE A JUSTIFICATION FOR IT. THE 'BELIEF' MAY NOT BE OPEN TO SCRUTINY, F OR 'BELIEF' IS THE FINAL CONCLUSION ARRIVED AT BY THE OFFICER CONCERNED AS A RESULT OF THE MENT AL EXERCISE MADE BY HIM ON THE BASIS OF THE INFORMATION RECEIVED BY HIM, BUT THE 'REASON' D UE TO WHICH THE DECISION IS REACHED CAN ALWAYS BE EXAMINED. 'BELIEF' MAY BE SUBJECTIVE, BUT 'REASON' IS OBJECTIVE. THE 'BELIEF' OF THE OFFICER SHOULD NOT BE A PRODUCT OF IMAGINATION OR SPECULATION. THERE MUST BE 'REASON' TO INDUCE THE 'BELIEF'. THE 'BELIEF' MU ST BE OF AN HONEST, PRUDENT AND 26 REASONABLE PERSON AND THE SAME MUST BE BASED ON REA SONABLE GROUNDS. THE OFFICER MAY ACT UPON DIRECT OR CIRCUMSTANTIAL EVIDENCE, BUT HIS 'BELIEF' MUST NOT BE BASED ON MERE SUSPICION, GOSSIP OR RUMOUR. DASS FRIENDS BUILDERS (P) LTD. DCIT, 280 ITR 77 (AL L). IN THIS CASE THEIR LORDSHIP OF THE HONBLE ALLAHABA D HIGH COURT LAID DOWN AS UNDER:- UNDER S. 147, THE WORDS ARE HAS REASON TO BELIEVE AND NOT REASON TO SUSPECT.. THE BELIEF ENTERTAINED BY THE AO MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE AND BASED ON REASONS, WHICH ARE RELEVANT. IT MUST B E IN GOOD FAITH AND NOT IN MERE PRETENCE, SHOULD HAVE A RATIONAL CONNECTION AND REL EVANT BEARING ON THE FORMATION OF THE BELIEF, AND SHOULD NOT BE EXTRANEOUS OR IRRELEVANT. THE MATERIAL SHOULD BE RELATING TO THE PARTICULAR YEAR FOR WHICH THE ASSESSMENT IS SOUGHT TO BE REOPENED. IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT , REMOTE AND FAR-FETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESC APEMENT OF INCOME. VISA COMTRADE LTD V/S UNION OF INDIA & OTHERS, 60 D TR (ORI) 81. 338 ITR 343 (PARA 29 TO 33 PAGE 360 -61 & PARA 61) IN THIS CASE THEIR LORDSHIP OF THE HONBLE ORISSA H IGH COURT LAID DOWN AS UNDER:- SEC. 132 PRESCRIBES THAT THE COMPETENT AUTHORITIES ARE EMPOWERED TO PERMIT THE AUTHORIZED OFFICERS TO ENTER, SEARCH, BREAK OPEN, S EIZE, PLACE MARKS OF IDENTIFICATION AND TAKE OTHER STEPS AS CONTEMPLATED UNDER SUB-CLS. (I) TO (V) OF SUB SECTION (1). HOWEVER, SUCH POWERS CAN BE EXERCISED AGAINST A PERSON UPON FULFILLMENT OF CERTAIN CONDITIONS. FIRSTLY, THE COMPETENT AUTHORITY MUST HAVE THE INFO RMATION IN ITS POSSESSION AND, SECONDLY, ON THE BASIS OF SUCH INFORMATION IT MUST HAVE THE REASON TO BELIEVE THAT THE CONDITION AS STIPULATED IN SUB-CL. (A) OR (B) OR (C ) OF S. 132(1) EXISTS. SEARCH AND SEIZURE CANNOT BE SUSTAINED UNLESS IT IS CLEARLY SHOWN THAT IT WAS DONE BY THE AUTHORITY DULY AUTHORIZED AND ANY OF THE CONDITIONS PRECEDENT IN R ELATION THERETO EXISTED. THE OPINION OR THE BELIEF SO RECORDED MUST CLEARLY SHOW WHETHER TH E BELIEF FALLS UNDER CL. (A) OR (B) OR (C) OF S. 132(1). THE SATISFACTION NOTE SHOULD ITSELF S HOW THE APPLICATION OF MIND AND THE FORMATION OF OPINION BY THE OFFICER ORDERING THE SE ARCH. IF THE REASONS WHICH ARE RECORDED DO NOT FALL WITHIN CL. (A), (B) OR (C) THEN THE AUT HORIZATION UNDER S. 132(1) WOULD NOT BE VALID. IN ORDER TO JUSTIFY THE ACTION THE AUTHORITY MUST HAVE RELEVANT MATERIALS ON THE BASIS OF WHICH HE CAN FORM AN OPINION THAT HE HAS REASON TO BELIEVE THAT ACTION TO BE INITIATED AGAINST A PERSON UNDER S. 132 IS NEEDED. THE BELIEF SHOULD NOT BE BASED ON SOME SUSPICION OR DOUBT. SEC. 132 SPEAKS OF REASON TO BE LIEVE AND NOT REASON TO SUSPECT OR REASON TO DOUBT. THE REASON TO SUSPECT THAT THE PET ITIONER IS HAVING UNDISCLOSED ASSET AND THERE IS LIKELIHOOD THAT THE SAME WOULD NOT BE DISC LOSED IS NOT EQUAL TO REASON TO BELIEVE THAT PETITIONER IS IN POSSESSION OF UNDISC LOSED ASSETS AND INTENDS TO EVADE TAX. THEREFORE, SEARCH AND SEIURE CARRIED OUT ON THE BAS IS OF REASON TO SUSPECT IS NOT VALID BECAUSE REASON TO BELIEVE IS MANDATORY REQUIREMENT OF LAW FOR SEARCH AND SEIZURE. MAHESH KUMAR AGARWAL VS DY. DIRECTOR OF IT (2003) 1 80 CTR (CAL) 517: (2003) 260 ITR 67 (CAL) RELIED ON. ITO V/S LAKSHYA EXIM PVT. LTD., 40 DTR 396 (ITAT, D ELHI BENCH) HELD AS UNDER: - SEC. 147 AUTHORIZES AND PERMITS THE AO TO ASSESS O R REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ASSESSM ENT YEAR HAS ESCAPED ASSESSMENT. IT IS ALSO WELL-SETTLED THAT THE WORDS 'REASON TO BELIEVE ' USED IN S. 147 ARE STRONGER THAN THE 27 WORDS 'IS SATISFIED'. THE BELIEF ENTERTAINED BY THE AO FOR THE PURPOSE OF INITIATING PROCEEDINGS UNDER S. 147 MUST NOT BE ARBITRARY OR I RRATIONAL. IT MUST BE REASONABLE. IN OTHER WORDS, IT MUST BE BASED ON REASONS, WHICH ARE RELEVANT AND MATERIAL. IT IS ALSO WELL- SETTLED THAT THE COURT CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE AO IN COMING TO THE BEL IEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER REASONS ARE RELEVANT AND HAVE A BEA RING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN A BELIEF BEFORE H E CAN ISSUE NOTICE UNDER S. 147/148. IF THERE IS NO RATIONAL OR INTELLIGIBLE NEXUS OR LINK BETWEEN THE REASON TO BELIEVE, SO THAT ON SUCH REASONS, NO ONE PROPERLY INSTRUCTED ON FACTS A ND LAW COULD REASONABLY ENTERTAIN THE BELIEF, THE CONCLUSION WOULD BE INESCAPABLE THAT TH E AO COULD NOT HAVE REASON TO BELIEVE THAT ANY PART OF THE ASSESSEES INCOME HAD ESCAPED ASSESSMENT, AND THE NOTICE ISSUED BY HIM WOULD BE LIABLE TO BE STRUCK DOWN AS INVALID. F ORMATION OF THE REQUIRED OPINION AND THE BELIEF BY THE AO IS A CONDITION PRECEDENT TO EX ERCISE JURISDICTION TO INITIATE PROCEEDINGS UNDER S. 147. THE FULFILLMENT OF THIS C ONDITION IS NOT A MERE FORMALITY, BUT IT IS MANDATORY. THE FAILURE TO FULFILL THAT CONDITION WOULD VITIATE THE ENTIRE PROCEEDINGS. THE REASONS FOR THE FORMATION OF THE REQUIRED BELIE F MUST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF BELIEF. THE RATIONAL CONNECTION POSTULATES THAT THERE MUST BE DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE AO AND THE FORMATION OF THE BELIEF THAT THERE HAS B EEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM THE ASSESSMENT IN THE PARTICULAR YEAR . IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER , VAGUE AND INDEFINITE OR DISTANT, REMOTE OR FAR-FETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO THE ESCAPEM ENT OF INCOME OF THE ASSESSMENT. IN LIGHT OF ABOVE JUDICIAL DECISIONS IF THE CASE OF THE APPELLANT IS TESTED YOUR HONOUR WILL OBSERVE THAT NONE OF THE CONDITIONS LAID DOWN U/S 1 32 WERE EXISTED AT THE TIME OF AUTHORIZING THE SEARCH. FURTHER THE SEARCH WAS INIT IATED BY PROVOKING THE INCIDENT OCCURRED AT THE PLACE OF THIRD PERSON WITH WHICH TH E ASSESSEE HAD NO CONCERN. ANY SEARCH AUTHORIZED WITHOUT FULFILLMENT ANY OF THE CONDITION LAID U/S 132 IS INVALID AND LIABLE TO BE STRUCK DOWN AND ANY ASSESSMENT ORDER PASSED ON THE BASIS OF SUCH SEARCH IS LIABLE TO BE QUASHED AND AS SUCH I REQUEST YOUR HONOUR TO QUASH THE ASSESSMENT ORDER PASSED FOR THE BLOCK PERIOD ON THE BASIS OF SEARCH AUTHORIZED AGAI NST THE ASSESSEE WHICH IS NOTHING BUT ABUSE OF THE POWER CONFERRED UNDER THE ACT. 14. WE HAVE SEEN THE WRITTEN SUBMISSION OF THE LD. AR AND THE CASE LAWS ALSO. WE NOTED IN ALL COLUMN OF DATE AND THE DATE HAS BEEN MENTIONED AS 6-02-2003 WHICH IS THE DATE OF SURVEY. IN OUR VIEW, THIS DATE IN EVERY COLUMN AS MENTIONED IN WRITTEN SUBMISSION IS NOT CORRECT AS LD. A.R. HAS MENTIONED SAME DATE I.E. 06.02.2003 EVEN WHERE HE HAS MADE HIS ARGUMENT AFTER DATE OF SURVEY. 15. ON THE OTHER HAND THE LD. D/R SUBMITTED THE FOL LOWING WRITTEN SUBMISSIONS: 28 IN THIS CASE THE HONBLE TRIBUNAL VIDE APPEAL NO.55 /JU/2006 DATED 29.01.2009, WHILE DECIDING THE APPEAL AGAINST THE ORDER NO.185/ 2006-07 DATED 11.09.2006 OF CIT (A) (CENTRAL), HELD AS UNDER:- CONSIDERING THE ENTIRE CONSPECTUS OF THE CASE AND FINDING THAT THE ISSUE, AS RAISED BEFORE US IS ALREADY IN CHALLENGE IN WRIT RE MEDY, BEFORE THE HONBLE HIGH COURT IT WOULD NEITHER BE PROPER NOR JUSTIFIED FOR THIS TRIBUNAL TO CONSIDER THE QUESTION AGAIN IN THE ALTERNATIVE REMEDY SOUGHT TO BE EXERCISED ON THE STRENGTH OF THE JUDGMENT RENDERED IN THE CASE OF SMT. CHITRA DE VI (SUPRA), IN A CASE LIKE THIS WHERE THE ASSESSMENT IS YET TO BE MADE BY THE ASSES SING AUTHORITY. UNDER ARTICLE 227 OF THE CONSTITUTION, THE HIGH COURT EXERCISES T HE POWER OF SUPERINTENDENCE AS WELL AS CONTROL, WHICH IS BOTH ADMINISTRATIVE AND J UDICIAL IN NATURE OVERALL COURTS, INCLUDING THE TRIBUNAL AND AS SUCH, WHEN THE MATTER IS ALREADY CEASED WITH THE HIGH COURT, THERE CANNOT BE A DECISION BY THIS TRIB UNAL OVER A DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT NOR THE PROCEEDIN GS CAN RUN PARALLEL BEFORE THIS TRIBUNAL. IN THESE CIRCUMSTANCES, WE DECLINE T O EXPRESS ANY OPINION ON THE EXISTENCE OF MATERIAL AVAILABLE BEFORE HE COMPETENT AUTHORITY FOR INITIATING ACTION U/S 132 OF THE ACT UNLESS THERE IS APPROPRIATE DIRE CTION FROM THE HONBLE JURISDICTIONAL HIGH COURT IN THAT REGARD. THE GROUN D IN APPEAL RAISED, ALSO, CANNOT BE ENTERTAINED. AGAINST THIS ORDER, THE ASSESSEE PREFERRED AN APPEA L U/S 260A, OF IT ACT 1961, BEFORE THE HONBLE RAJ. HIGH COURT, JODHPUR. THE HO NBLE RAJ. HIGH COURT VIDE I.T. APPEAL NO.161/2011 DATED 25.7.2011, INTER ALIA HELD AS UNDER:- WHETHER THE TRIBUNAL DOES HAVE A POWER TO DECIDE T HE LEGALITY AND PROPRIETY OF THE RAID UNDER SECTION 132 OF THE ACT REMAINS NO LO NGER RES INTEGRA IN THE LIGHT OF THE JUDGMENT RENDERED IN CHITRA DEVIS CASE WHICH I S UPHELD BY THE SUPREME COURT WHERE S.L.P. FILED BY THE DEPARTMENT WAS DISM ISSED AGAINST THE ORDER OF HIGH COURT (SEE 2009) 313 ITR (ST.) 28. ACCORDINGLY AND IN THE LIGHT OF AFORESAID DISCUSSIO N, WE ALLOW THIS APPEAL, SET ASIDE THE IMPUGNED JUDGMENT AND REMAND THE APPEAL T O THE TRIBUNAL FOR DECIDING THE SAME AFRESH ON MERITS STRICTLY IN ACCORDANCE WI TH LAW. WHILE SO DECIDING, THE TRIBUNAL WOULD NOT ONLY DECIDE ALL THE ISSUE ARISIN G IN THE APPEAL ON MERITS BUT WOULD ALSO BE FREE TO DECIDE THE ISSUE RELATING TO LEGALITY AND VALIDITY OF THE RAID CHALLENGED BY THE APPELLANT AFTER GIVING DUE OPPORT UNITY TO THE DEPARTMENT TO JUSTIFY THE RAID PROCEEDINGS CONDUCTED UNDER SECTIO N 132 IBID. THE CAREFUL READING OF THE ABOVE OBSERVATION, REVEA LS THAT THE HONBLE RAJ. HIGH COURT HAS SET-ASIDE THE IMPUGNED JUDGMENT AND REMAN D THE APPEAL TO THE TRIBUNAL FOR DECIDING THE SAME AFRESH ON MERIT, STR ICTLY IN ACCORDANCE WITH LAW. IT IS FURTHER DIRECTED, THAT WHILE SO DECIDING, THE TR IBUNAL WOULD NOT ONLY DECIDE ALL THE ISSUE ARISING IN THE APPEAL ON MERIT BUT WOULD ALSO BE FREE TO DECIDE THE ISSUE RELATING TO LEGALITY AND VALIDITY OF THE RAID CHALL ENGED BY THE APPELLANT, AFTER GIVING DUE OPPORTUNITY TO THE DEPARTMENT, TO JUSTIF Y THE RAID PROCEEDINGS. THE HONBLE HIGH COURT HAS NOWHERE DIRECTED THE DEPARTM ENT TO PROVIDE A COPY OF SATISFACTION NOTE TO THE ASSESSEE, IN ORDER TO DECI DE THE VALIDITY/LEGALITY OF SEARCH. 29 HOWEVER, THE COPY OF THE SATISFACTION NOTE IS BEING PRODUCED HEREWITH, BEFORE THE HONBLE BENCH FOR THEIR KIND PERUSAL TO DECIDE THE LEGALITY/VALIDITY OF SEARCH. THE DEPARTMENT STRONGLY OBJECT THE DECISION, IF ANY, FO R PROVIDING A COPY OF SATISFACTION NOTE TO THE ASSESSEE, AS THE SAME WILL JEOPARDIZE THE FUTURE OF THE INVESTIGATION WING AS WELL AS OF INFORMANTS, AS LOT OF INFORMATION ARE RECEIVED FROM VARIOUS INFORMANTS. THE ASSESSEE MAY GET CLUE FROM SUCH SATISFACTION NOTE AND MAY TAKE FATAL ACTION AGAINST INFORMANTS. THE I NFORMANTS, IF COME TO KNOW ABOUT DISCLOSURE OF THEIR INFORMATION, THEY MAY STO P TAKING SUCH RISK. THE RTI ACT, 2005 ALSO EXEMPT THE INVESTIGATION WING, FOR PARTIN G WITH ANY SUCH INFORMATION TO ANY PERSON INCLUDING ASSESSEE. IN VIEW OF THESE FAC TS, IT IS PRAYED THAT COPY OF SATISFACTION NOTE, MUST NOT BE PROVIDED TO THE ASSE SSEE. IT IS PERTINENT TO MENTION HERE THAT IN THIS CASE, ON THE BASIS OF INCRIMINATI NG DOCUMENTS FOUND DURING THE COURSE OF SURVEY, FROM THE PART OF THE HOUSE, USED FOR THE OFFICE PURPOSE, COVERED U/S 133A AND INFORMATION RECEIVED FROM AUTHORIZED O FFICER, THE SEARCH WAS AUTHORIZED TO COVER UP REMAINING PART OF THE HOUSE, AFTER RECORDING THE NECESSARY SATISFACTION NOTE AND ISSUEING THE VALID WARRANT TO AUTHORIZE THE SEARCH. THUS, THE DUE DILIGENCE/PROCEDURE, AS PROVIDED, IN THE IT ACT , WAS FOLLOWED. THE SEARCH HAS RESULTED INTO SEIZURE OF VARIOUS INCRIMINATING DOCU MENTS/DETECTION OF HUGE UNDISCLOSED INCOME, HENCE THE ENTIRE PROCEEDING IS SQUARELY VALID/LEGAL AND AS PER PROVISION OF THE ACT. IN THE LIGHT OF THE ABOVE FACTS I WOULD LIKE TO DRA W ATTENTION OF THE HONBLE BENCH I.R.O. FOLLOWING FACTS/CASE LAWS, IN SUPPORT OF DEP ARTMENT, OVER AND ABOVE THE ARGUMENT TO BE TAKEN AT THE TIME OF HEARING. ORDER U/S 158 BC/144 R.W.S. 142(2A) COMPLETED-27. 6.2005 HONBLE ITAT SET ASIDE ORDER DATED 27.6.2005-VIDE O RDER DATED 25.10.2007 RECEIVED BY AO ON 4.1.2008. DIRECTIONS OF HONBLE ITAT-WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND RESTORED THE MATTER TO THE FILE OF A.O. FOR A FRESH DECISION ON MERITS AS PER LAW AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. NEEDLESS TO SAY THE ASSESSEE WILL EXTEND THE COOPERATION TO THE DEPARTMENT IN THE DETERMINATION OF SUCH INCOME WHICH IS RIGHTLY TAXAB LE IN HIS HANDS. TIME AVAILABLE FOR COMPLETION OF REASSESSMENT IN NO RMAL COURSE U/S 153(2A) - 31.12.2008 (WORDS USED IN SECTION 153(2A) ARE AN O RDER OF FRESH ASSESSMENT IN PURSUANCE OF AN ORDER UNDER..SECTION 254) SPECIAL AUDIT U/S 142(2A) ORDERED VIDE LETTER DATED 05.08.2008 AFTER GETTING APPROVAL FROM CIT, CENTRAL, JAIPUR VIDE HIS LETTER DATED 29.7.2008 ORDER SERVED UPON ASSESSEE ON 06.08.2008. NO REPORT SUBMITTED BY THE ASSESSEE. OBTAINED FROM THE SPECIAL AUDITOR ON 31.1.2009 BY THE A.O. AUDIT COMPLETED ON 29.1.2009. ASSESSEE DID NOT DISCHARGE HIS LIABILITY CASTED U /S 142(2A). 30 SPECIAL AUDITOR IN HIS REPORT AS MADE OBSERVATIONS REGARDING NON-COOPERATIVE ATTITUDE OF THE ASSESSEE, NON-FURNISHING OF REQUISI TE INFORMATION, PROPER EXPLANATION AND ALSO PROVIDING INFORMATION IN PIECE MEAL, CHALLENGING THE SCOPE OF AUDIT SO THAT SPECIAL AUDIT COULD NOT BE COMPLET ED (PARA 8.2 PAGE 12 OF A.O.). THE SPECIAL AUDITOR VIDE HIS LETTER DATED 3.12.2008 SHOWN HIS INABILITY TO COMPLETE THE AUDIT WITH IN TIME LIMIT PRESCRIBED DU E TO NON COOPERATION OF THE ASSESSEE. TIME EXTENDED UPTO 31.1.2009 BY THE A.O. (A.O. HAS POWERS TO EXTEND THE TIME SUO MOTO U/S 142(2C) VIDE ITS PROVISO INSERTED W.E.F. 1 ST APRIL, 2008. REASSESSMENT COMPLETED U/S 158BC/254 R.W.S. 142(2 A) ON 15.4.2009. SPECIAL AUDIT U/S 142(2A) IN SET ASIDE PROCEEDING S REASSESSMENT IS A PROCEEDING AND AO HAS GOT POWERS TO DIRECT SPECIAL AUDIT AT ANY STAGE OF THE PROCEEDING BEFORE HIM. HENCE, THER E IS NO BAR IN DIRECTING SPECIAL AUDIT IN REASSESSMENT PROCEEDINGS. AO CAN EXTEND TIME SUO MOTO U/S 142(2C). JAGJI SUGAR MILLS CO. LTD. 210 ITR 468 (P&H) D.D. INDUSTRIES LTD.-69 TTJ 877 (DEL) EVEN AFTER EXCLUDING EXTENDED TIME THE TIME FOR COM PLETION OF REASSESSMENT WAS AVAILABLE UPTO 30.4.2009. HOWEVER REASSESSMENT IS C OMPLETED ON 15.4.2009. EXPLANATION 1 U/S 153 IS STATES IN COMPUTING THE P ERIOD OF LIMITATION FOR THE PURPOSES OF THIS SECTION . TIME TAKEN IN SPECIAL AUDIT SHALL BE EXCLUDED. USE OF PHRASE THIS SECTION MAKES IT CLEAR THAT THE DI RECTION FOR SPECIAL AUDIT MAY BE ISSUED FOR MAKING ASSESSMENTS EITHER U/S 153(1) OR 153(1A) OR 153(1B) OR 153(2A) OR 153(2B) OR 153(3). POWERS OF HONBLE ITAT U/S 254(1) ITAT CAN PASS SUCH ORDER AS IT THINKS FI T TO THE APPEAL BEFORE IT. IN THIS CASE ORIGINAL ASSESSMENT IS SET ASIDE TO BE PASSED AFRESH AS IT WAS THOUGHT FIT. THEREFORE, SET ASIDE ASSESSMENT IS TO BE COMPLETED ALSO BECAUSE THE ITAT CANNOT ASK AO TO DO IMPOSSIBLE THING AS ALLEGED BY THE APP ELLANT. IF NO ORDER OF REASSESSMENT CAN BE PASSED, THEN THE ORDER OF HONB LE ITAT IS NOT FIT AS PER LAW AND HENCE DESERVES TO BE RECALLED. TIME LIMIT FOR COMPLETION OF REASSESSMENT U/S 158 BC SECTION 158BE IS APPLICABLE ONLY FOR ORIGINAL BLOCK ASSESSMENT AS IT REFERS TO VARIOUS DATES RELATING TO SEARCH AND SEIZURE. SECTI ON 158BH MAKES ALL OTHER PROVISIONS OF THIS ACT APPLICABLE, SAVE AS OTHERWIS E PROVIDED IN THIS CHAPTER. SAVE AS OTHERWISE PROVIDED MEANS RESTRICTIONS IMPOSED BY THE SPECIAL PROVISIONS. 31 THERE IS NOT RESTRICTION ON APPLICABILITY OF SECTIO N 153(2A) OR 153(3) IN CHAPTER XIV-B. THEREFORE, SET ASIDE ASSESSMENT IS REQUIRED TO BE COMPLETED ACCORDINGLY. PERIOD OF LIMITATION PROVIDED IN SEC. 158BE(2) IS A PPLICABLE FOR COMPLETION OF THE FIRST BLOCK ASSESSMENT ORDER AND NOT TO SET-ASIDE B LOCK ASSESSMENT SEC. 153(2A) APPLIES FOR SUCH SET-ASIDE ASSESSMENT. BHPE KINHILL JOINT VENTURE VS. ADDL. DIT (ITAT, D EL) 116 ITD 123. K.P. MOHAMMED SALIM-300 ITR 302(SC)- HELD THAT THIS CHAPTER LAYS DOWN SPECIAL PROCEDURE FOR ASSESSMENT BUT THEREBY THE EFFECT AND PURPORT FOR WHICH THE ASSESSMENT IS DONE DOES NOT STAND OBLITERATED. IT I S NOT A SELF CONTAINED SPECIAL PROVISION AND HENCE ALL OTHER PROVISIONS OF ACT WIL L APPLY IN VIEW OF SECTION 158BH TO MAKE THE PROVISION WORKABLE. THE PRINCIPLE S OF PURPOSIVE CONSTRUCTION MAY BE RESORTED TO. W.C. SHAW (P) LTD.-93 ITD 535 (KOL)- NO TIME LIMIT HAVING BEING PROVIDED IN CHAPTER XV-B FOR MAKING FRESH BLOCK ASSESSMENT IN P URSUANCE OF ORDER U/S 250/254/263/264,LIMITATION IN SUCH CASES WILL BE GO VERNED BY 153(2A) AS PROVIDED BY SECTION 158BH AND CLARIFIED BY CBDT VID E CIRCULAR NO.717 DATED 14.8.1995. RAJENDRA NATH-120 ITR 14(SC)- TO IMPLEMENT A FINDIN G OR DIRECTION SECTION 153(3)(II) WILL APPLY. DIRECTION TO MAKE FRESH ASSE SSMENT IN THE CASE BEFORE HAND IS A SPECIFIC DIRECTION REQUIRED TO BE GIVEN EFFECT TO. BASU DISTRIBUTED PVT. LTD.-292 ITR 29 (DEL)-ITAT RE MANDED CASE TO RECONSIDER THE ISSUE OF DISALLOWANCE U/S 40A(3)-ENTIRE ASSESSM ENT WAS NOT SET ASIDE-HENCE SECTION 153(2A) IS NOT ATTRACTED. NO PERIOD OF LIMI TATION IS PRESCRIBED AND THEREFORE, ORDER PASSED EVEN AFTER PERIOD OF MORE T HAN 4 YEAR WAS NOT BARRED BY LIMITATION. IF APPELLANTS CASE IS CONSIDERED AS PARTLY SET ASI DE AS CLAIMED BY THE APPELLANT VIDE PARA 5(II) PAGE 3 OF SYNOPSIS OF ARGUMENTS FIL ED ON 18.7.2011, THEN THE REASSESSMENT CAN BE MADE AT ANY TIME, AS NO TIME LI MIT IS PRESCRIBED. SPENCES HOTEL (P) LTD.-289 ITR 145 (KAR)- TO GIVE E FFECT TO FINDING OR DIRECTIONS IN APPEAL, NO TIME LIMIT IS PRESCRIBED U/S 149 AS P ROVISION OF SECTION 150(1) OVERRIDE. VALIDITY OF SEARCH-IN THIS CASE THE SEARCH WAS AUTH ORIZED U/S 132(1) OF THE IT ACT, 1961 AFTER RECORDING NECESSARY SATISFACTION, AS PER PROVISION OF THE ACT. THE SEARCH AND SEIZURE ACTION HAD RESULTED INTO SEIZURE OF INCRIMINATING DOCUMENTS AND DISCLOSURE OF UNACCOUNTED INCOME BY THE ASSESSE E. BASED ON THESE INCRIMINATING DOCUMENTS HUGE UNACCOUNTED/UNRECORDED INCOME/INVESTMENT WAS DETERMINED BY THE AO AND ALSO UPHELD BY THE LD. COM MISSIONER OF INCOME TAX (A) VIDE TWO DIFFERENT AOS AS WELL AS CIT (A). THE RELEVANT CASE LAWS, IN THIS REGARD, ARE DISCUSSED, HERE AS UNDER: 32 DR. PRATAP SINGH & ANR V/S DIRECTOR OF ENFORCEMENT & ORS. (SC) 155 ITR 166- ONCE THERE WAS MATERIAL BEFORE THE AUTHORITY WHICH WOULD FURNISH HIM GROUNDS FOR ENTERTAINING A REASONABLE BELIEF THAT SOME DOCU MENTS ARE SECRETED IN THE HOUSE OF THE APPELLANTS, HE WAS FULLY JUSTIFIED IN ISSUING THE SEARCH WARRANT AND THE FACT THAT THE DOCUMENTS SEIZED DURING THE SEARC H DID NOT PROVIDE SUFFICIENT MATERIAL TO THE OFFICER FOR FURTHER ACTION CANNOT B E A GROUND FOR HOLDING THAT THE GROUNDS WHICH INDUCED THE REASONABLE BELIEF WERE EI THER IMAGINARY OR FICTITIOUS OR MALA FIDE OR CONJURED UP. THE OBSERVATION OF THE FILE SHOWS THAT THERE WAS MA TERIAL BEFORE THE ASSTT. DIRECTOR, WHICH WOULD FURNISH HIM GROUNDS FOR ENTER TAINING A REASONABLE BELIEF THAT SOME DOCUMENTS WHICH WOULD BE USEFUL IN THE IN VESTIGATION OR PROCEEDING UNDER THE ACT WERE SECRETED IN THE HOUSE OF THE APP ELLANTS. HE WAS, THEREFORE, FULLY JUSTIFIED ISSUING THE SEARCH WARRANT. THE FAC T THAT THE DOCUMENTS SEIZED DURING THE SEARCH DID NOT PROVIDE SUFFICIENT MATERI AL TO THE OFFICER FOR FURTHER ACTION CANNOT BE GROUND FOR HOLDING THAT THE GROUND S WHICH INDUCED THE REASONABLE BELIEF WERE EITHER IMAGINARY OF FICTITIO US OR MALA FIDE CONJURED UP. IT IS NOT OBLIGATORY UPON THE OFFICER TO DISCLOSE H IS MATERIAL ON THE MERE ALLEGATION THAT THERE WAS NO MATERIAL BEFORE HIM ON WHICH HIS REASON TO BELIEVE CAN BE GROUNDED. THE EXPRESSIONREASON TO BELIEVE IS TO B E FOUND IN VARIOUS STATUTES. THE EXPRESSION REASON TO BELIEVE IN NOT SYNONYMOU S WITH SUBJECTIVE SATISFACTION OF THE OFFICER. THE BELIEF MUST BE HELD IN GOOD FAI TH; IT CANNOT BE MERELY BE A PRETENCE. IT IS OPEN TO THE COURT TO EXAMINE THE QU ESTION WHETHER THE REASONS FOR THE BELIEF HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING TO THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT TO THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT THE ACTION OF THE OFFICER IN STARTIN G PROCEEDINGS IS OPEN TO CHALLENGE IN A COURT OF LAW. THOUGH UNDER THE SECTION, THE OF FICER CONCERNED NEED NOT GIVE REASONS IF THE EXISTENCE OF BELIEF IS QUESTIONED IN ANY COLLATERAL PROCEEDINGS HE HAS TO PRODUCE RELEVANT EVIDENCE TO SUSTAIN HIS BEL IEF. CIT V/S PARAS RICE MILLS (2009) 313 ITR 182 (P&H)-W HILE HEARING AN APPEAL AGAINST AN ORDER OF ASSESSMENT, TRIBUNAL CANNOT GO INTO THE QUESTION OF VALIDITY OR OTHERWISE OF ANY ADMINISTRATIVE DECISION FOR CONDUC TING SEARCH AND SEIZURE. THE HONBLE COURT FURTHER HELD THAT WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE DELHI HIGH COURT IN VIRENDRA BHATIA V/S CIT (2001) 79 ITD 340, M.P. HIGH COURTS IN GAYA PRASAD PATHAK V/S ACIT & ORS. (2007 ) 290 ITR 128. IT IS FURTHER HELD THAT FOR THE SAME REASON WE RESPECTIVELY DISAG REE WITH THE VIEW TAKEN BY THE RAJ. HIGH COURT IN SMT. CHITRA DEVI SONI (2008) 313 ITR 174. IT IS PERTINENT TO MENTION HERE THAT THE HONBLE RAJ. HIGH COURT, IN T HIS CASE, INTER ALIA HELD THAT TRIBUNAL HAS JURISDICTION TO GO INTO THE QUESTION AS TO WHETHER THE SEARCH WAS CONDUCTED CONSEQUENT UPON AUTHORIZATION HAVING BEEN ISSUED IN THE BACKGROUND OF EXISTENCE OF EVENTUALITIES IN S.132(1)-THOUGH IT IS NOT OPEN TO GO INTO THE QUESTION OF SUFFICIENCY OF THE REASONS, THE QUESTIO N AS TO WHETHER THERE EXISTED ANY MATERIAL AT ALL WHICH CONSTITUTED REASON TO BELIEVE , IS A MATTER WHICH CAN DEFINITELY BE LOOKED INTO BY THE TRIBUNAL. FROM TH IS DECISION IT IS ABUNDANTLY CLEAR THAT THE TRIBUNAL CANNOT EXAMINE THE QUESTION OF SUFFICIENCY OF REASON TO 33 BELIEVE FOR AUTHORIZING THE SEARCH WARRANT. IT IS S UBJECTIVE SATISFACTION OF THE CONCERNED AUTHORITY. THE REASONS FOR BELIEVE HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING TO THE FORMATION OF THE BELIEVE AN D ARE NOT EXTRANEOUS OR IRRELEVANT TO THE PURPOSE OF SECTION. TRILOK SINGH DHILLON & ORS V/S CIT(2011) 332 ITR 18 5 (CHHATTISGARH)- ASSESSEE HAVING PARTICIPATED IN THE ASSESSMENT PROCEEDINGS U NDER S.153C AND NOT CHALLENGED THE VALIDITY AND LEGALITY OF THE SEARCH AND SEIZURE PROCEEDINGS INITIATED AGAINST HIM BY FILING ANY WRIT PETITION I N THE HIGH COURT, IT WAS NOT OPEN TO HIM TO QUESTION THE LEGALITY AND VALIDITY OF SEA RCH AND SEIZURE PROCEEDINGS, DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO OR IN THE APPEALS BEFORE THE CIT(A) OR THE TRIBUNAL. SELF KNITTING WORKS V/S UNION OF INDIA (2009) 179 T AXMAN 139 (P&H)- ALTHOUGH THE PETITIONER HAS MADE SERIOUS ALLEGATIONS THAT TH E ASSTT. DIRECTOR OF IT (INV.) WAS HOSTILE TO IT, AND HAD AUTHORIZED THE SEARCH AG AINST THE PETITIONER ONLY ON ACCOUNT OF SAID HOSTILITY, THE QUESTION OF VALIDITY OF SEARCH IS LEFT OPEN TO BE LOOKED INTO IN APPROPRIATE DEPARTMENTAL PROCEEDINGS IN VIE W OF THE FACT THAT FORMAL SATISFACTION HAS BEEN DULY RECORDED. QUESTION OF LEGALITY AND VALIDITY OF SEARCH CANNOT BE EXAMINED BY CIT(A)/ITAT PROMAIN LTD. VS. DCIT (ITAT, DEL-SB) 95 ITD 489 C. RAMAIAH REDDY VS. ACIT (ITAT, BANG-SB) 87 ITD 439 GAYA PRASAD PATHAK VS. ACIT (MP) 290 ITR 128 M.B. LAL VS. CIT (DEL)279 ITD 298- WHETHER OR NOT T HE CONDITIONS PRECENDENT FOR A SEARCH STIPULATED UNDER CLS. (A), (B) AND (C) OF S. 132(1) ARE SATISFIED IN A GIVEN CASE FALL BEYOND THE SCOPE OF APPEAL PREFERRED AGAI NST THE ORDER MADE UNDER S. 158BC- REMEDY LIES IN A WRIT PETITION UNDER ART. 22 6 OF THE CONSTITUTION. THEREFORE, IT IS NO LONGER OPEN TO THE PETITIONER T O QUESTION THE VALIDITY OF THE AUTHORIZATION AND LEGALITY OF SEARCH PROCEEDINGS EI THER BEFORE THE CIT (A) OR BEFORE THE TRIBUNAL-IN ANY CASE, THE CONVERSION OF SURVEY PROCEEDINGS INTO A SEARCH WAS BASED ON THE SATISFACTION OF THE DIRECTO R OF INVESTIGATION AND THE PETITIONER HAS NOT BEEN ABLE TO FIND ANY FAULT WITH THE SAID SATISFACTION-THUS, THERE WAS NO REASON FOR FINDING FAULT WITH THE SAID PROCE EDINGS. EVEN IF SEARCH IS HELD ILLEGAL, MATERIAL SEIZED CAN BE USED AGAINST ASSESSEE IN ASSESSMENT PROCEEDINGS. POORAN MAL VS. DIRECTOR OF INV. & ORS. (SC) 93 IT R 505 INTERPRETATION OF STATUTE STATE LEVEL COMMITTEE V/S MORGARDASHAMMAR INDIA LTD .-(1996) 101 STC1, 8(SC)- IT IS WELL KNOW PRINCIPLE OF CONSTRUCTION OF LAW TH AT NO PART OF THE STATUTE SHOULD BE CONSTITUTE IN A WAY TO MAKE IT REDUNDANT. 34 GIDC -227 ITR 414, 420 (SC)-EVEN IF A PROVISION IS CAPABLE OF MORE THAN ONE INTERPRETATION, THE INTERPRETATION WHICH SERVES THE OBJECT OF THE ENACTMENT HAS TO BE ACCEPTED. B.POSETTY & CO.-220 ITR 216 (SC) AND BIHARILAL JAIS WAL ETC.-217 ITR 746 (SC)- ONE ARM OF LAW CANNOT BE UTILIZED TO DEFEAT THE OTH ER ARM OF LAW. DOING SO WOULD BE OPPOSED TO PUBLIC POLICY AND BRING THE LAW INTO RIDICULE. 15(I). THE LD. DR HAS PLACED RELIANCE ON VARIOUS CA SE LAWS INCLUDING THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT AND OTHER DECIS IONS IN WHICH IT HAS BEEN HELD THAT TRIBUNAL HAS NO POWER TO GO INTO THE VALIDITY OF TH E SEARCH. HOWEVER, IN THE CASE IN HAND, HON'BLE JURISDICTIONAL HIGH COURT HAS DIRECTED THE TRIBUNAL TO GO INTO THE VALIDITY OF SEARCH AND DECIDE THE ISSUE RAISED BEFORE IT THROUGH GROUND NO . 1 (A). THEREFORE, VARIOUS CASE LAWS RELIED UPON BY THE LD. DR ARE NOT OF ANY HELP TO THE DEPAR TMENT BECAUSE THE DIRECTION OF THE HON'BLE JURISDICTIONAL HIGH COURT IS BINDING ON THE TRIBUNA L HERE AT JODHPUR. ACCORDINGLY THIS CONTENTION OF THE LD. DR DOES NOT HOLD GOOD. 16. WE HAVE HEARD BOTH THE PARTIES. WE HAVE NOTICED THAT THE TRIBUNAL PASSED ORDERS IN THIS CASE AS UNDER: (A) APPEAL OF ASSESSEE AND REVENUE DECIDED VIDE OR DER DATED 25.10.2007. (B) ASSESSEE RAISED TWO ISSUES IN THE APPLICATION U /S 254(2). THE TRIBUNAL VIDE ORDER DATED 19.9.2008 HELD THAT ADDITIONAL GROUND (WHICH IS BEING MENTIONED AS GROUND OF APPEAL NO.14) IS NOT MAINTAIBLE. HENCE ONE ISSUE RAISED IN APPLICATION U/S 254(2) WAS DISMISSED. (C) THE TRIBUNAL PASSED AN ORDER ON 29.1.2009 AND D ISPOSED OFF GROUND OF APPEAL NO.1(A), WHICH REMAINED UNDISPOSSED AND BROUGHT TO THE KNOWLEDGE OF TRIBUNAL, WAS DISPOSED AND HELD THAT SINCE THE HONBLE HIGH C OURT HAS BEEN SEIZED OF THE MATTER ON ACCOUNT OF FILING OF WRIT PETITION BY THE ASSESSEE AND HENCE SUCH ISSUE CAN NOT BE DECIDED BY TRIBUNAL. 17. AGAINST ORDER OF TRIBUNAL DATED 29.1.2009, THE ASSESSEE FILED AN APPEAL BEFORE THE JURISDICTIONAL HIGH COURT AND THE SAME WAS NUMBERED AS 161/2011. IN THIS APPEAL IT HAS BEEN MENTIONED THAT ASSESSEE HAS ALSO FILED APPEAL AGAIN ST ORDER OF TRIBUNAL DATED 26.10.2007 BEFORE 35 THE HONBLE RAJASTHAN HIGH COURT U/S 260A OF I.T.AC T. REFERENCE HAS BEEN MADE TO TRIBUNAL ORDER VIDE WHICH THE MISCELLENOUS APPLICATION WAS A LLOWED AND CASE WAS FIXED FOR HEARING ON 12.8.2008. HOWEVER NO REFERENCE IS MADE TO ORDER DA TED 19.9.2008 VIDE WHICH ADDITIONAL GROUND OF APPEAL WAS DISMISSED. REFERENCE IS MADE TO TRIBU NAL ORDER DATED 29.1.2009. IN THE APPEAL, THE ASSESSEE RAISED THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: WHETHER THE LD. ITAT HAS GROSSLY ERRED IN NOT DECID ING THE GROUND NO.1(A) RAISED BY THE APPELLANT RELATING TO THE VALIDITY OF SEARCH IN ITS IMPUGNED ORDER DATED 29.1.2009 AFTER RECALLING ITS EARLIER ORDER DATED 2 5.10.2007 AND CLEARLY INDICATING THAT SUCH GROUND WOULD BE ADJUDICATED BY IT? WHETHER THE LD. ITAT IS JUSTIFIED IN HOLDING THAT W RIT PETITION FILED BY THE APPELLANT IS AN ALTERNATIVE REMEDY AVAILED BY THE APPELLANT A ND ISSUE RELATING TO VALIDITY OF SEARCH CAN BE DECIDED IN WRIT PETITION NOTWITHSTAND ING THE FACT THAT ALL OTHER ISSUES RAISED IN WRIT PETITION WERE DECIDED ON MERI TS BY THE ITAT ITSELF IN ITS EARLIER ORDER DATED 25.10.2007? WHETHER THE CONVERSION OF SURVEY INTO SEARCH IN THE FACTS OF THE CASE OF THE APPELLANT IS SUSTAINABLE IN THE EYES OF LAW AND WHE THER ALL CONSEQUENTIAL PROCEEDINGS/ORDERS PASSED PURSUANT TO SEARCH ARE VA LID AND JUSTIFIED? WHETHER THE SATISFACTION NOTE CONSTITUTES VALID BAS IS FOR, CONDUCTING SEARCH AGAINST THE APPELLANT IN THE FACTS AND CIRCUMSTANCE S PREVAILING IN THE CASE OF THE APPELLANT? THAT IS SUBMITTED, WITH RESPECT THAT THE IMPUGNED O RDER OF ITAT DATED 29.1.2009 IS APPARENTLY ILLEGAL, ERRONEOUS, ARBITRARY, UNJUST IFIED AND DESERVES TO BE QUASHED OR SET ASIDE. THE AFORESAID QUESTIONS FORMULATED BY THE APPELLANT ARE SUBSTANTIAL QUESTIONS OF LAW CALLING FOR THE ESTEEMED OPINION O F THIS HONBLE COURT AND DESERVES TO BE ANSWERED IN FAVOUR OF THE APPELLANT AND AGAINST THE REVENUE. THAT, THIS HONBLE COURT HAS VAST POWERS TO REFRAME SUITABLE QUESTIONS OF LAW, IF IT IS SO NECESSARY TO DO, IN THE INTEREST OF THE JU STICE. THE APPELLANT SEEKS LIBERTY TO SUGGEST ANY OTHER QUESTIONS OF LAW, IF IT IS CONSID ERED APPROPRIATE BY THIS HONBLE COURT TO REFRAME OR ADD ANY FURTHER QUESTIONS OF LA W AND ALSO SEEKS LIBERTY TO PLACE PAPER BOOK CONTAINING DOCUMENTS FILED BEFORE THE AUTHORITIES BELOW: 18. THE PRAYER OF THE ASSESSEE BEFORE HONBLE HIGH COURT WAS AS UNDER: ALLOW THE INSTANT APPEAL AND SET ASIDE OR QUASH THE IMPUGNED ORDER OF THE ITAT DATED 29.1.2009. 36 DECIDE THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR O F THE APPELLANT AND AGAINST THE REVENUE. REFRAME SUITABLE QUESTIONS OF LAW, IF IT IS CONSIDE RED NECESSARY, TO DO JUSTICE TO THE APPELLANT. HOLD THAT THE ACTION OF SEARCH AGAINST THE APPELL ANT IS ILLEGAL AND QUASH THE SAME. QUASH ALL CONSEQUENTIAL PROCEEDINGS/ORDERS PASSED P URSUANT TO SEARCH IN THE CASE OF THE APPELLANT. ANY OTHER APPROPRIATE RELIEF, AS MAY BE CONSIDERED APPROPRIATE, IN THE INTEREST OF JUSTICE, INCLUDING AWARDING OF THE COSTS. 19. IN THE APPEAL FOLLOWING NOTE WAS ALSO MENTIONED BY THE COUNSEL OF THE ASSESSEE. THAT NO SUCH APPEAL HAS PREVIOUSLY BEEN FILED AGAIN ST THE IMPUGNED ORDER OF THE ITAT DT. 29.1.2009, HOWEVER AN APPEAL U/S 260A HAS BEEN PREFERRED AGAINST EARLIER ORDER OF ITAT DT. 25.10.2007 WHERE THE GROU ND RELATING TO VALIDITY OF SEARCH WAS LEFT UNADJUDICATED. FURTHER, A WRIT PETI TION NO.5626/2005 FILED BY THE APPELLANT BEFORE THIS HONBLE HIGH COURT IN THE MON TH OF SEPTEMBER 2005 IS PENDING. SPECIAL APPEAL NO.311/2006 FILED IN WRIT P ET. NO.5626/2005 BEFORE THIS HONBLE COURT STANDS DISPOSED OFF. 20. THE HONBLE HIGH COURT ADMITTED. THE APPEAL ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW. WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT IT CANNOT EXAMINE THE LEGALITY AND CORRECTNESS OF THE RAID CONDUCTED UNDER SECTION 132 OF THE ACT BECAUSE THE VERY ISSUE IS PENDING BEFORE HIGH COURT AT THE INST ANCE OF THE APPELLANT ASSESSEE IN W.P. NO.5626/2005. 21. THE HONBLE HIGH COURT DIRECTED THE TRIBUNAL TO DECIDE THE ISSUE RELATING TO LEGALITY AND VALIDITY OF THE RAID CHALLENGED BY THE APPELLANT AF TER GIVEN DUE OPPORTUNITY TO THE DEPARTMENT TO JUSTIFY THE RAID PROCEEDINGS CONDUCTED U/S 132 IBID . 22. WHILE GIVING SUCH INSTRUCTION, THE HONBLE HIGH COURT HAS REFERRED TO THE DECISION OF HONBLE HIGH COURT IN THE CHITRA DEVIS CASE AND TH AT DECISION HAS BEEN UPHELD BY THE APEX COURT BECAUSE S.L. P. OF DEPARTMENT HAS BEEN DISMIS SED BY HONBLE APEX COURT 313 ITR(ST.)28. 37 23. BEFORE WE PROCEED FURTHER, IT WILL BE USEFUL TO REPRODUCE SECTION 133A, AND 132(1) OF I.T. ACT : [ POWER OF SURVEY. 133A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, AN INCOME-TAX AUTHORITY MAY ENTER (A) ANY PLACE WITHIN THE LIMITS OF THE AREA ASS IGNED TO HIM, OR (B) ANY PLACE OCCUPIED BY ANY PERSON IN RESPECT OF WHOM HE EXERCISES JURISDICTION, [OR] [(C) ANY PLACE IN RESPECT OF WHICH HE IS AUTHOR ISED FOR THE PURPOSES OF THIS SECTION BY SUCH INCOME-TAX AUTHORITY, WHO IS A SSIGNED THE AREA WITHIN WHICH SUCH PLACE IS SITUATED OR WHO EXERCISES JURIS DICTION IN RESPECT OF ANY PERSON OCCUPYING SUCH PLACE,] AT WHICH A BUSINESS OR PROFESSION IS CARRIED ON, WH ETHER SUCH PLACE BE THE PRINCIPAL PLACE OR NOT OF SUCH BUSINESS OR PROFESSI ON, AND REQUIRE ANY PROPRIETOR, EMPLOYEE OR ANY OTHER PERSON WHO MAY AT THAT TIME AND PLACE BE ATTENDING IN ANY MANNER TO, OR HELPING IN, THE C ARRYING ON OF SUCH BUSINESS OR PROFESSION (I)TO AFFORD HIM THE NECESSARY FACILITY TO INSPECT SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS HE MAY REQUIRE AND WH ICH MAY BE AVAILABLE AT SUCH PLACE, (II) TO AFFORD HIM THE NECESS ARY FACILITY TO CHECK OR VERIFY THE CASH, STOCK OR OTHER VALUABLE ARTICLE OR THING WHICH MAY BE FOUND THEREIN, AND (III) TO FURNISH SUCH INFORMATION AS HE MAY REQU IRE AS TO ANY MATTER WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEE DING UNDER THIS ACT. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, A PLACE WHERE A BUSINESS OR PROFESSION IS CARRIED ON SHALL ALSO INC LUDE ANY OTHER PLACE, WHETHER ANY BUSINESS OR PROFESSION IS CARRIED ON TH EREIN OR NOT, IN WHICH THE PERSON CARRYING ON THE BUSINESS OR PROFESSION S TATES THAT ANY OF HIS BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY PART OF HIS CASH OR STOCK OR OTHER VALUABLE ARTICLE OR THING RELATING TO HIS BUS INESS OR PROFESSION ARE OR IS KEPT. (2) AN INCOME-TAX AUTHORITY MAY ENTE R ANY PLACE OF BUSINESS OR PROFESSION REFERRED TO IN SUB-SECTION (1) ONLY DURING THE HOUR S AT WHICH SUCH PLACE IS OPEN FOR THE CONDUCT OF BUSINESS OR PROFESSION AND, IN THE CASE OF ANY OTHER PLACE, ONLY AFTER SUNRISE AND BEFORE SUNSET. (3) AN INCOME-TAX AUTHORITY ACTING UNDER THIS SECTION MAY, (I) IF HE SO DEEMS NECESSARY , PLACE MARKS OF IDENTIFICATION ON THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS INSPECTED BY HIM AND MAK E OR CAUSE TO BE MADE EXTRACTS OR COPIES THERE FROM, 38 [(IA) IMPOUND AND RETAIN IN HIS CUSTODY FOR SU CH PERIOD AS HE THINKS FIT ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS INSPECTED BY HI M: PROVIDED THAT SUCH INCOME-TAX AUTHORITY SHALL NOT (A) IMPOUND ANY BOOKS OF ACCOUNT OR OTHER DOCUM ENTS EXCEPT AFTER RECORDING HIS REASONS FOR SO DOING; OR [(B) RETAIN IN HIS CUSTODY ANY SUCH BOOKS OF ACCO UNT OR OTHER DOCUMENTS FOR A PERIOD EXCEEDING TEN DAYS (EXCLUSIVE OF HOLIDAYS) WITHOUT OBTAINING THE APPROVAL OF THE CHIEF COMMISSIONER OR DIRECTOR GENERAL THEREFOR, AS THE CASE MAY BE,]] (II) MAKE AN INVENTORY OF ANY CASH, STOCK OR OTHE R VALUABLE ARTICLE OR THING CHECKED OR VERIFIED BY HIM, (III) RECORD THE STATEMENT OF ANY PERSON WHICH MA Y BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT. (4) AN INCOME-TAX AUTHORITY ACTING UNDER THIS SEC TION SHALL, ON NO ACCOUNT, REMOVE OR CAUSE TO BE REMOVED FROM THE PLACE WHEREIN HE HAS E NTERED, [***] ANY CASH, STOCK OR OTHER VALUABLE ARTICLE OR THING. (5) WHERE, HAVING REGARD TO THE NATURE AND SCALE OF EXPENDITURE INCURRED BY AN ASSESSEE, IN CONNECTION WITH ANY FUNCTION, CEREMONY OR EVENT, THE INCOME-TAX AUTHORITY IS OF THE OPINION THAT IT IS NECESSARY OR EXPEDIENT SO TO DO, HE MAY, AT ANY TIME AFTER SUCH FUNCTION, CEREMONY OR EVENT, RE QUIRE THE ASSESSEE BY WHOM SUCH EXPENDITURE HAS BEEN INCURRED OR ANY PERSON WH O, IN THE OPINION OF THE INCOME-TAX AUTHORITY, IS LIKELY TO POSSESS INFORMAT ION AS RESPECTS THE EXPENDITURE INCURRED, TO FURNISH SUCH INFORMATION AS HE MAY REQ UIRE AS TO ANY MATTER WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING U NDER THIS ACT AND MAY HAVE THE STATEMENTS OF THE ASSESSEE OR ANY OTHER PERSON RECO RDED AND ANY STATEMENT SO RECORDED MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THIS ACT. (6) IF A PERSON UNDER THIS SECTION IS REQUIRED T O AFFORD FACILITY TO THE INCOME-TAX AUTHORITY TO INSPECT BOOKS OF ACCOUNT OR OTHER DOCU MENTS OR TO CHECK OR VERIFY ANY CASH, STOCK OR OTHER VALUABLE ARTICLE OR THING OR T O FURNISH ANY INFORMATION OR TO HAVE HIS STATEMENT RECORDED EITHER REFUSES OR EVADE S TO DO SO, THE INCOME-TAX AUTHORITY SHALL HAVE ALL THE POWERS UNDER [SUB-SECT ION (1) OF SECTION 131 ] FOR ENFORCING COMPLIANCE WITH THE REQUIREMENT MADE : [ PROVIDED THAT NO ACTION UNDER SUB-SECTION (1) SHALL BE TAKE N BY AN ASSISTANT DIRECTOR OR A DEPUTY DIRECTOR OR AN ASSESSING OFFIC ER OR A TAX RECOVERY OFFICER OR AN INSPECTOR OF INCOME-TAX WITHOUT OBTAINING THE AP PROVAL OF THE JOINT DIRECTOR OR THE JOINT COMMISSIONER, AS THE CASE MAY BE.] EXPLANATION.IN THIS SECTION, [(A) INCOME-TAX AUTHORITY MEANS A COMMISSIONER , A JOINT COMMISSIONER, A DIRECTOR, A JOINT DIRECTOR, AN ASSISTANT DIRECTOR O R A DEPUTY DIRECTOR OR AN ASSESSING OFFICER, OR A TAX RECOVERY OFFICER, AND F OR THE PURPOSES OF CLAUSE (I) OF SUB-SECTION (1), CLAUSE (I) OF SUB-SECTION (3) AND SUB-SECTION (5), INCLUDES AN INSPECTOR OF INCOME-TAX;] (B) PROCEEDING MEANS ANY PROCEEDING UNDER THIS ACT IN RESPECT OF ANY YEAR WHICH MAY BE PENDING ON THE DATE ON WHICH THE POWERS UNDE R THIS SECTION ARE EXERCISED OR WHICH MAY HAVE BEEN COMPLETED ON OR BEFORE SUCH DATE AND INCLUDES ALSO ALL 39 PROCEEDINGS UNDER THIS ACT WHICH MAY BE COMMENCED AFTER SUCH DATE IN RESPECT OF ANY YEAR.] [ SEARCH AND SEIZURE. 132. (1) WHERE THE [DIRECTOR GENERAL OR DIRECTOR] OR TH E [CHIEF COMMISSIONER OR COMMISSIONER] [OR ANY SUCH [JOINT D IRECTOR] OR [JOINT COMMISSIONER] AS MAY BE EMPOWERED IN THIS BEHALF BY THE BOARD], IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEV E THAT (A) ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTIO N (1) OF SECTION 37 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SEC TION (1) OF SECTION 131 OF THIS ACT, OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX ACT, 1922, OR UNDER SUB-SECTION (1) OF SECTION 142 OF THIS ACT WAS ISSUED TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAS OMITTED OR FAILED TO PRODUCE, OR CAUSE TO BE PRODUCED, SUCH BO OKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMMONS OR NOTICE, OR (B) ANY PERSON TO WHOM A SUMMONS OR NOTICE AS AFO RESAID HAS BEEN OR MIGHT BE ISSUED WILL NOT, OR WOULD NOT, PRODUCE OR CAUSE TO BE PRODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH WILL BE USEFUL FOR , OR RELEVANT TO, ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 (1 1 OF 1922), OR UNDER THIS ACT, OR (C) ANY PERSON IS IN POSSESSION OF ANY MONEY, BUL LION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY [WHICH HAS NOT BEEN, OR WOULD NOT BE, DISCLOSED] FOR THE PURPOSES OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR THIS ACT (HEREINAFTER IN THIS SECT ION REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY), (A) THE [ DIRECTOR GENERAL OR DIRECTOR] OR THE [CHI EF COMMISSIONER OR COMMISSIONER] AS THE CASE MAY BE, MAY AUTHORIZE ANY [ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR ] [JOINT DIRECTOR], [JOI NT COMMISSIONER], [ASSISTANT DIRECTOR [OR DEPUTY DIRECTOR]], [ASSISTANT COMMISSI ONER [OR DEPUTY COMMISSIONER] OR INCOME-TAX OFFICER], OR (B) SUCH [ADDITIONAL DIRECTOR OR ADDIT5IONAL COMMIS SIONER OR ] [JOINT DIRECTOR ] OR [JOINT COMMISSIONER], AS THE CASE MAY BE, MAY AUTHO RIZE ANY [ASSISTANT DIRECTOR [OR DEPUTY DIRECTOR]], [ASSISTANT COMMISSIONER [ OR DEPUTY COMMISSIONER] OR INCOME-TAX OFFICER], (THE OFFICE SO AUTHORIZED IN ALL CASES BEING HEREIN AFTER 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 KE PT; 40 (II) BREAK OPEN THE LOCK OF ANY DOOR, BOX, LOCKER, SAFE, ALMIRAH OR OTHER RECEPTACLE FOR EXERCISE THE POWERS CONFERRED BY CLAUSE (I) WHERE T HE KEYS THEREOF ARE NOT AVAILABLE; [(IIA) SEARCH ANY PERSON WHO HAS GOT OUT OF, OR IS ABOUT TO GET INTO, OR IS IN, THE BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT, IF TH E AUTHORIZED OFFICER HAS REASON TO SUSPECT THAT SUCH PERSON HAS SECRETED ABOUT HIS PER SON ANY SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING:] [(IIB) REQUIRE ANY PERSON WHO IS FOUND TO BE IN POS SESSION OR CONTROL OF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE FORM O F ELECTRONIC RECORD AS DEFINED IN CLAUSE (T) OR SUB-SECTION (1) OF SECTION 2 OF THE INFORMATION TECHNOLOGY ACT, 2000 (21 OF 2000), TO AFFORD THE AUTHORIZED OF FICER THE NECESSARY FACILITY TO INSPECT SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS;] (III) SEIZE ANY SUCH BOOKS OF ACCOUNT, OTHER DOCUME NTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND AS A RESULT O F SUCH SEARCH: [ PROVIDED THAT BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING, BEING STOCK IN TRADE OF THE BUSINESS, FOUND AS A RESULT OF SUCH SE ARCH SHALL NOT BE SEIZED BUT THE AUTHORISED OFFICER SHALL MAKE A NOTE OR INVENTORY O F SUCH STOCK IN TRADE OF THE BUSINESS;] (IV) PLACE MARKS OF IDENTIFICATION ON ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR MAKE OR CAUSE TO BE MADE EXTRACTS OR COPIES THEREFR OM; (V) MAKE A NOTE OR AN INVENTORY OF ANY SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING: [ PROVIDED THAT WHERE ANY BUILDING, PLACE, VESSEL, VEHICLE, OR AIRCRAFT REFERRED TO IN CLAUSE (I) IS WITHIN THE AREA OF JURISDICTION OF ANY [ CHIEF COMMISSIONER OR COMMISSIONER], BUT SUCH [CHIEF COMMISSIONER OR COMM ISSIONER] HAS NO JURISDICTION OVER THE PERSON REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C), THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SECTION [120], IT SHALL BE COMPETENT FOR HIM TO EXERCISE THE POWERS UNDER THIS SUB-SECTI ON IN ALL CASES WHERE HE HAS REASON TO BELIEVE THAT ANY DELAY IN GETTING THE AUT HORIZATION FROM THE [CHIEF COMMISSIONER OR COMMISSIONER] HAVING JURISDICTION O VER SUCH PERSON MAY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE:] [ PROVIDED FURTHER THAT WHERE IT IS NOT POSSIBLE OR PRACTICABLE TO TAKE PHYSICAL POSSESSION OF ANY VALUABLE ARTICLE OR THING AND REM OVE IT TO A SAFE PLACE DUE TO ITS VOLUME, WEIGHT OR OTHER PHYSICAL CHARACTERISTICS OR DUE TO ITS BEING OF A DANGEROUS NATURE, THE AUTHORIZED OFFICER MAY SERVE AN ORDER ON THE OWNER OF THE PERSON WHO IS IN IMMEDIATE POSSESSION OR CONTROL TH EREOF THAT HE SHALL NOT REMOVE, PART WITH OR OTHERWISE DEAL WITH IT, EXCEPT WITH THE PREVIOUS PERMISSION OF SUCH AUTHORIZED OFFICER AND SUCH ACTION OF THE AUTH ORIZED OFFICER SHALL BE DEEMED TO BE SEIZURE OF SUCH VALUABLE ARTICLE OR THING UND ER CLAUSE (III):] 41 [PROVIDED ALSO THAT NOTHING CONTAINED IN THE SECOND PROVISO SHALL APPLY IN CASE OF ANY VALUABLE ARTICLE OR THING, BEING STOCK IN TRADE OF THE BUSINESS:] [PROVIDED ALSO THAT NO AUTHORIZATION SHALL BE ISSUE D BY THE ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR JOINT DIRECTOR OR JOINT COMMISSIONER ON OR AFTER THE 1 ST DAY OF OCTOBER,2009 UNLESS HE HAS BEEN EMPOWERED B Y THE BOARD TO DO SO.] 24. IT IS NOT A DISPUTED FACT THAT ADDL. CIT AUTHOR IZED SURVEYS U/S 133A ON 6 TH FEBRUARY 2003. REASON FOR AUTHORIZING SURVEY ARE AS UNDER: IT HAS BEEN INFORMED BY AN INFORMANT THAT THE ABOVE NAMED PERSON IS INDULGED IN TAX EVASION ON LARGE SCALE. HE OWNS FLEET OF TRUCKS AND DELUXE BUSES NUMBERING IN HUNDREDS IN HIS OWN NAME AND IN THE NAMES OF HIS BROTHER SVS. RAMESH KANA RAM AND DHARMU RAM IN THEIR INDIVIDUAL CAPACITY AS WELL AS IN THEIR H.U.F. CAPACITY. THEY HAVE NUMBER OF FIRMS KNOWN AS CHOUDH ARY TRANSPORT CO. (TCC) CHOUDHARY RAOD LINE, KHARIA KHANGAR, CHOUDHARY FREI GHT CARRIER, CHOUDHARY RAOD CARRIER, MAHADEV TRAVEL AND MAHADEV TRAVEL AGE NCY ETC. RECENTLY HE HAS CONSTRUCTED A VERY GOOD HOTEL AT JAISALMER AND MOUN T ABU, AND HAS INVESTED SUBSTANTIAL FUNDS. THE ABOVE INFORMATION WAS EXAMINED PERSONALLY AND I T WAS SEEN THAT THE ABOVE NAMED GROUP OWN HUNDREDS OF TRUCKS AND VERY GOOD NU MBER OF DELUXE BUSES. THE HOTEL PREMISES RECENTLY CONSTRUCTED AT JAISALMER IS ALSO FABULOUS. THE HOTEL IS SITUATED NEARLY OUR INCOME TAX OFFICE. THE ABOVE NAMED PERSON IS MAINLY ENGAGED IN TRANSPO RTATION BUSINESS OF GRASSIM WHILE CEMENT KHARIA KHANGER. WE HAVE BEEN THERE. AB OUT 125 TO 150 TRUCKS WERE LYING PARKED THERE WHICH WERE WAITING FOR LOAD ING THROUGH TRANSPORT UNION SH. RAMESH THE BROTHER OF THE ASSESSEE LIVES HAVE THERE AND IS HAVING OFFICE IN THE VILLAGE. HE HAS DOCUMENTS AND OTHER PAPERS AT HIS R ESIDENCE ALSO WHICH IS ABOUT ONE FURLONG AWAY FROM HIS OFFICE. THE UNION OFFICES IS AT MAIN TIRAHA OF THE VILLAGE. AT ALL THE THREE POINTS, PAPERS AND DOCUME NTS OF TRANSPORTATION BUSINESS OF C.T.C (CHOUDHARY TRANSPORT CO.) ARE KEPT. SH. RA MESH WAS HAVING A MARUTI CAR 800 AND WAS SIPPING TEA IN THE TEA STALL NERARB Y UNION OFFICE KHARIE KHANGER. AT JODHPUR THEY HAVE THREE OFFICE IN MARKET AND AND BOOKS OF A/C AT THEIR RESIDENCE ALSO. THEY LIVE AT B-1 AND B-6 SHAMIK PUR E, MASSURIA JODHPUR. ONE JEEP HAVING MARKING OF CTC WAS LYING PARKED OUT SID E B-1, MASSURIA, AND ABOUT 8 BUSES, 4 NEW DELUX BUSES AND 4 OLD BUSES HAVING M ARKINGS OF MAHADEV TRAVELS WAS ALSO LYING PARKED OUTSIDE B-6 HOUSE. THEY HAVE VERY GOOD OFFICE NEARBY KALPTARU CINEMA, JODHPUR AND OFFICES AT STATION ROAD (NEAR KALINGA HOTEL) AND ONE OFFICE AT M.G. HOSPITAL ROAD JODHPUR, UNDER THE NAME AND STYLE OF M/S. MAHADEV T RAVEL AGENCY. 42 ON PERUSAL OF THE RETURN FILED BY SH. BADRI RAM CHO UDHARY IT IS SEEN THAT HE HAS SHOWN HIS INCOME IN THE VICINITY OF RS.50,000/-. TH US IT IS CLEAR CASE OF TAX EVASION ON LARGE SCALE. THE ASSESSEE IS REPORTED TO BE VERY POLITICALLY POWERFUL PERSON, AND MANY UNFLUENTIA IN THE AREA. AS THE ASSESSEE ID INDULGED IN TAX EVASION ON VERY LARGE SCALE SO IT IS A FIT CASE TO BE COVERED U/S 133A OF THE ACT. ACCORDINGLY FOLLOWI NG AUTHORIZATION ARE ISSUED TO COVER THE POINTS OWNED/OCCUPIED BY THE ASSESSEE AND HIS FAMILY MEMBERS UNDER VARIOUS NAMES AND STYLIES. (I) M/S. CHOUDHARY TRANSPORT CO. OFFICES PREMISES KHARIA KHANGAR. (II) M/S. UNION OF TRANSPORT ASSOCIATION KHARIA K HANGAR. (III) OFFICE PREMISES IN THE RESIDENTIAL HOUSE OF S H. RAMESH CHOUDHARY KHARIA KHANJAR (SABHARWAL BHAWAN) (IV) OFFICE PREMISES OF CTC IN THE BUSINESS PREMISE S OF DHARM RAM B-1, SHARMIKPURA MASSURIA JODHPUR. (V) OFFICES PREMISES IN THE RESIDENTIAL HOUSE OF SH . BADRI RAM CHOUDHARY B- 6, SHARMIKPURA MASSURIA, JODHPUR. (VI) OFFICE OF M/S. MAHADEV TRAVELS AGENCY NEAR KAL PATRU CINEMA, JODHPUR. (VII) OFFICES OF M/S. MAHADEV TRAVEL AGENCY M.G. HOSPITAL ROAD, JODHPUR. (VIII) OFFICE OF M/S. MAHADEV TRAVEL STATION ROAD ( NEAR KALINGA HOTEL), JODHPUR. THE A.O. AT JAISALMER AND SIROHI MAY ALSO BEING REQ UESTED TO COVER THE HOTEL PREMISES OF M/S. MAHADEV PALACE AT JAISALMER AND MO UNT ABU. THIS INFORMATION HAS BEEN RECEIVED THROUGH CCIT, JO DHPUR. ALL THE ABOVE FACTS AND SENSITIVE NATURE OF CASE HAS ALSO BEEN DISCUSSE D WITH HIM IN THE PRESENCE OF CIT-2, JODHPUR. SD/- ADDL. CIT 26. IT IS TRUE THAT LAW DOES NOT REQUIRE THE AUTHOR ITY IN AUTHORIZING THE SURVEY U/S 133A BUT IT IS USEFUL TO THE REVENUE BECAUSE AUTHORITY AUTHORIZ ING THE SURVEY IS DIFFERENT FROM THE AUTHORITY WHICH ACTUALLY CONDUCTS SURVEY AND THE SURVEY TEAM IS APPRISED OF THE TAX EVASION. THE ISSUE OF AUTHORIZING SURVEY WAS DISCUSSED WITH THE SENIOR OF FICERS AND PERHAPS A DECISION WAS TAKEN TO GO FOR SURVEY U/S 133A. NORMALLY IF A CASE IS FIT F OR SEARCH THEN SURVEY IS NOT CONDUCTED BECAUSE 43 SURVEY CAN BE RESTRICTED TO PREMISES FROM WHERE BUS INESS IS CARRIED AND IN CASE BOOKS OF ACCOUNT AND DOCUMENT OR CASH OR STOCK ARE AVAILABLE AT ANY OTHER PREMISES THEN SURVEY CAN BE AUTHORIZED FOR SUCH PREMISES. 27. WE HAVE PERSUED THE COPY OF SATISFACTION NOTE P LACED BEFORE US BY THE REVENUE. SATISFACTION NOTE HAS BEEN PREPARED AFTER THE OFFIC IALS OF THE DEPARTMENT WERE STONED AND INCRIMINATING DOCUMENTS WERE SNATCHED AT KHARIA KHA NGAR. ADDL. CIT PUT UP A NOTE THAT SURVEYS PROCEEDINGS SHOULD BE CONVERTED TO SEARCH PROCEEDIN GS. THE LD. CIT HAS ALSO REFERRED TO THE REPORTED INFORMATION THAT THERE ARE INCRIMINATING P APERS AND VALUABLES IN THE RESIDENCES. IT IS ALSO MENTIONED IN THE SATISFACTION NOTE THAT OFFICER MEN TIONED ABOVE (IT REFERS TO ADDL. CIT) CONSIDER IT A FIT CASE FOR ACTION U/S 132 (1) OF I.T. ACT. 28. IT IS TRUE THAT REVENUE HAS CONTENDED BEFORE US THAT TRIBUNAL HAS NO POWER TO DECIDE THE ISSUE OF VALIDITY OF SEARCH. CERTAIN DECISIONS HAVE BEEN CITED. HOWEVER, IN THE INSTANT CASE, THE HONBLE JURISDICTIONAL HIGH COURT HAS DIRECTED TO D ECIDE THE ISSUE OF VALIDITY OF SEARCH. 29. ANOTHER ARGUMENT IS THAT THE VALIDITY OF SEARCH SHOULD BE LIMITED TO THE EXTENT THAT THE AUTHORITY CONCERNED HAS RECORDED THE REASONS BEFORE AUTHORIZING THE SEARCH. SUFFICIENCY OF REASONS CAN NOT BE LOOKED. REFERENCE IS MADE TO THE DECISION OF HONBLE APEX COURT IN THE CASE OF DR. PRATAP SINGH & ANR V DIRECTOR OF ENFORCEMENT . 155 ITR 166. 30. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF KUSUM LATA V CIT 180 ITR 365 HAS CONSIDERED THE FOLLOWING JUDGEMENTS: POORAN MAL V DIRECTOR OF INVESTIGATION 93 ITR 505 (S.C) JAIN & JAIN V UNION OF INDIA 134 ITR 655 DR. PARTAP SINGH V DIRECTOR OF ENFORCEMENT 155 ITR 166 (S.C.) 44 S. NARAYANAPPA V CIT 63 ITR 219 (S.C) 31. FROM THE DECISION OF BOMBAY HIGH COURT IN JAIN & JAIN (SUPRA), THE JURISDICTIONAL HIGH COURT HAS REFERRED TO THE FOLLOWING OBSERVATION: THIS BELIEF OF COURSE, CANNOT BE A .MERE PRETENCE NOR CAN IT BE A MERE DOUBT OR SUSPICION. IT IS SOMETHING MUCH MORE THAN THAT. SECTION 132 SP EAKS OF REASON TO BELIEVE AND NOT REASON TO SUSPECT OR REASON TO DOUBT. REASON TO BELIEVE IS TH US A HIGHER TEST TO BE FULFILLED. 32. THE HONBLE JURISDICTIONAL HIGH COURT AT PAGES 371 & 372 OBSERVED AS UNDER: IN THE FACTS OF THAT CASE, THE COURT SAID THAT CONS IDERING THE EXTENSIVE INFORMATION AND ITS DETAILED SCRUTINY AND ANALYSIS, THE CONCLUS ION IS IRRESISTIBLE THAT THE BELIEF FORMED BY THE DIRECTOR OF INSPECTION WAS A BELIEF, GENUINE AND AUTHENTIC. IT WAS NOT A MERE DOUBT OR A MERE SUSPICION. THE COURT FUR THER SAID THAT IT WAS NOT NECESSARY FOR THE DIRECTOR OF INSPECTION TO REACH T HAT BELIEF BY A PROCESS AKIN TO A JUDICIAL PROCESS. HIS REASONS AND HIS BELIEF DO NOT CONSTITUTE A JUDICIAL OR A QUASI- JUDICIAL ACT NOR IS THE ISSUE OF AUTHORIZATION A JU DICIAL OR A QUASI-JUDICIAL FUNCTION. THE COURT ALSO SAID THAT THE MATTER, THOUGH TO AN E XTENT JUSTICIABLE, EXTREMELY LIMITED AND CIRCUMSCRIBED ARE THE COURTS POWER OF SCRUTINY AND REVIEW IN THAT BEHALF. ONE MAY NOT LIKE THE BELIEF OF THE DIRECTOR OF INSPECTION. BUT IF THE BELIEF IS BONA FIDE, IF THE SAME IS IN GOOD FAITH, IF IT IS N OT A PRETENCE AND IF IT IS COGENTLY SUPPORTED, THE COURT WILL NOT INTERFERE THEREWITH O R SIT IN APPEAL OVER IT, RATHER IT HAS NO JURISDICTION TO INTERFERE THEREWITH OR SIT I N APPEAL OVER IT, RATHER IT HAS NO JURISDICTION TO INTERFERE. IN THE CASE OF DR. PRATA P SINGH V. DIRECTOR OF ENFORECEMENT [1985] 155 ITR 166, THE SUPREME COURT, CONSTRUING THE EXPRESSION REASON TO BELIEVE SAID THAT THE EXPRESSION REASO N TO BELIEVE IS NOT SYNONYMOUS WITH THE SUBJECTIVE SATISFACTION OF THE OFFICER. THE BELIEF MUST BE HELD IN GOOD FAIT; IT CANNOT BE MERELY A PRETENCE. IN TH E AFORESAID JUDGMENT, THE COURT ALSO CITED THE CASE OF S. NARAYANAPPA V. CIT [1967] 63 ITR 219 (SC), WHEREIN IT WAS HELD THAT IT IS OPEN TO THE COURT TO EXAMINE TH E QUESTION WHETHER THE REASONS FOR THE BELIEF HAVE A RATIONAL CONNECTION OR A RELE VANT BEARING TO THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT TO THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT; THE ACTION OF THE INCOME-TAX O FFICER IN STARTING PROCEEDINGS UNDER SECTION 34 IS OPEN TO CHALLENGE IN A COURT OF LAW. IT CAN BE SAID, ON THE BASIS OF AUTHORITIES, THAT THERE SHOULD BE SOME MATERIAL FOR FORMING A REASONABLE BELIEF FOR THE EXERCISE OF THE POWERS UNDER SECTION 132(1) OF THE INCOME-TAX ACT TO AUTHORIZE A SEARCH AND IF THE DIRECTOR OF INSPECTIO N OR THE COMMISSIONER, AS THE CASE MAY BE, HOLDS THE BELIEF IN GOOD FAITH, NO CAS E FOR INTERFERENCE BY THIS COURT SHALL BE MADE OUT, BUT IF THE BELIEF IS ONLY A PRET ENCE, THEN THE AUTHORIZATION UNDER SECTION 132(1) OF THE INCOME-TAX ACT WILL NOT BE VA LID AND THE SEARCH CONDUCTED ON THE BASIS OF SUCH AUTHORIZATION MAY BE ILLEGAL, BUT THE QUESTION IS AS TO WHAT 45 WILL BE THE EFFECT OF SUCH ILLEGAL SEARCH AND WHETH ER THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH WILL HAVE TO BE RETURNED OR AR E THEY TO BE USED AS EVIDENCE IN THE PROCEEDINGS UNDER THE PROVISIONS OF THE INCOME TAX ACT? IN THE INSTANT CASE, WE HAVE CALLED UPON LEARNED CO UNSEL FOR THE REVENUE TO SHOW TO THE COURT WHAT WAS THE INFORMATION AVAILABLE WIT H THE DIRECTOR OF INSPECTION FOR ISSUING THE AUTHORIZATION UNDER SECTION 132(1) OF THE INCOME-TAX ACT. IT WILL NOT BE PROPER TO EXTRACT THE SATISFACTION OF THE DI RECTOR OF INSPECTION IN ISSUING THE AUTHORIZATION BUT SUFFICE IT TO SAY THAT IT IS NOT POSSIBLE FOR US TO SAY THAT THERE WAS ANY REASONABLE INFORMATION ON WHICH THE DIRECTO R OF INSPECTION COULD HAVE ANY BONA FIDE BELIEF TO ISSUE THE AUTHORIZATION UND ER 132(1) OF THE INCOME TAX ACT. IT MAY BE STATED THAT ALL THAT HAS BEEN STATED IN THE INFORMATION IS THAT MANUFACTURERS OF BABA BRAND CHEWING TOBACCO, PANM ASALA, ETC; ARE SELLING IT AT HIGH PREMIUM WHICH IS THE RESULT OF ARTIFICIAL S CARCITY CREATED BY THE DEALERS, IT IS NOT POSSIBLE TO SAY THAT IT WAS IN CONSEQUENCE O F THE INFORMATION THAT THE DIRECTOR OF INSPECTION COULD HAVE A BONA FIDE BELIE F THAT HE HAS REASON TO BELIEVE THAT ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1) OF SECTION 37 OF THE INDIAN INCOME TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SECTION (1) OF SECTION 131 OF THE INCOME TAX ACT, 1961, WAS ISSUED, WOULD NOT PRODUCE OR CAUSE TO BE PRODUCED SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS A S REQUIRED OR ANY PERSON IS IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY OR O THER VALUABLE ARTICLE OR THING AND SUCH MONEY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY OF INCOME OR PROPERTY, WHICH HAS N OT BEEN OR WOULD NOT BE DISCLOSED FOR THE PURPOSES OF THE INCOME TAX ACT. I N OUR OPINION THE EXPRESSION HAS REASON TO BELIEVE IN SUB-SECTION (1) OF SECTI ON 132 OF THE INCOME TAX ACT MEANS THE BONAFIDE BELIEF BASED ON SOME REASONABLE OR CREDIBLE INFORMATION AND NOT ON THE INFORMATION WHICH MAY BE IMAGINARY. IT W AS GIVEN OUT BY LEARNED COUNSEL FOR THE REVENUE THAT IT IS NOT POSSIBLE TO PRODUCE THE FILE SO FAR AS SEARCH OF DHARMPAL PREMCHAND AND ITS ALLIED SISTER CONCERN S ARE CONCERNED. THEREFORE, AFTER HAVING GONE THROUGH THE FILE NO.D B I (INV)/U NIT I/ MB-DLH 1987-88 330-E, WE ARE OF THE OPINION THAT THE AUTHORIZATION FOR SE ARCH IN THE INSTANT CASE UNDER SECTION 132(1) OF THE INCOME TAX ACT CANNOT BE HELD TO BE VALID OR LEGAL. 33. THE HONBLE MADRAS HIGH COURT IN THE CASE OF RU GMANI RAM RAGHAV SPINNERS (P) LTD & OTHERS V UOI 196 ITR 674 UPHELD THE VALIDITY OF SEA RCH AS PERUSAL OF REASONS TO BELIEVE SHOWED THAT IT WAS NOT A PRETENCE AND MATERIALS AVAILABLE ARE RELEVANT FOR FORMATION OF BELIEF. 34. THE HONBLE DELHI HIGH COURT IN THE CASE OF L.R . GUPTA & SONS 194 ITR 32 HELD THAT BELIEF SHOULD FALL UNDER SUB CLAUSE (A),(B)&(C) OF SECTION 132. 132 (1)(A) IS NOT APPLICABLE AS NO SUMMON U/S 131 OR NOTICE U/S 142(1) ISSUED TO PRODU CE OR CAUSE TO PRODUCE THE BOOKS OF ACCOUNT. 46 132(1)(B) REFERS WHEN ASSESSEE WILL NOT PRODUCE THE BOOKS OF ACCOUNT OR DOCUMENTS AND 132 (1)(C) PERTAINS TO MOVABLE ASSETS AND NOT IMMOVABLE ASSETS. 35. SO FAR AS THE ASSESSEE IS CONCERNED WE FEEL THA T REQUIREMENTS OF CLAUSES (A),(B) &(C) ARE NOT SATISFIED AS PER THE MATERIALS MENTIONED IN THE SATISFACTION NOTE FOR AUTHORIZING THE SEARCH AT THE RESIDENTIAL AND BUSINESS PREMISES. HAD THERE BE EN MATERIAL DURING THE COURSE OF SURVEY AT THE RESIDENCE OF ASSESSEE OR AT THE PREMISES OWNED BY B USINESS CONCERNS OF ASSESSEE SUGGESTING OF TAX EVASION AND REPORTED TO THE AUTHORITY AUTHORIZE D TO ISSUE SEARCH WARRANT THEN THERE WOULD HAVE BEEN NEXUS TO THE AUTHORIZATION OF SEARCH AND MATERIAL. 35(I). WE FURTHER NOTED THAT THERE HAS BEEN NO INDE PENDENT APPLICATION OF MIND. NO REASON HAS BEEN ASSIGNED AS TO WHY THE SURVEY OPERATION WOULD NOT SERVE THE PURPOSE AND THE SAME WAS REQUIRED TO BE CONVERTED INTO SEARCH AND SEIZURE. N O REASON TO BELIEVE HAS BEEN RECORDED THAT IF THE ASSESSEE IS CALLED UPON TO PRODUCE ANY DOCUMENT RELEVANT TO THE PROCEEDINGS, THE SAME COULD NOT BE COMPLIED WITH. SUCH FINDING WAS REQUIRED TO BE ARRIVED AT. NOTHING HAS BEEN INDICATED AS TO WHICH SUB-CLAUSE OF SECTION 132 WOULD BE ATTRACT ED IN THE MATTER. THOUGH IT WAS CONTENDED ON BEHALF OF THE DEPARTMEN T THAT THERE ARE VARIOUS PLACES OF THE ASSESSEE AND THERE IS EVERY LIKELIHOOD THAT SOME HI DDEN MONEY HAS BEEN CONCEALED BY THE ASSESSEE, HOWEVER, WE FOUND THAT WHATEVER INVENTORY WAS PREPARED BY THE SURVEY PARTY, THEREAFTER NOTHING HAS BEEN FOUND OR NOTICED BY THE DEPARTMENT. THEREFORE, IT SUGGESTS THAT THERE WAS NO APPLICATION OF INDEPENDENT MIND THAT WARRAN TED CONVERSION FROM SURVEY TO SEARCH. THIS OUR VIEW IS FORTIFIED BY THE DECISION OF HON'BLE DE LHI HIGH COURT IN THE CASE OF DR.NALINI MAHAJAN VS. DIRECTOR OF INCOME TAX (INVESTIGATION) 257 ITR 123. FOR THE SAKE OF CLARITY AND BREVITY WE HAVE NOTICED THAT THERE IS NO MATERIAL A S PER INVENTORY TO SUGGEST ANY ITEM FOUND 47 DURING SEARCH AND NOT INVENTORISED DURING SURVEY AS PER THE COPY, WHICH IS PLACED ON RECORD AT PAGES 958 TO 961 OF PAPER BOOK VOL. 13. THEREFORE, WE HOLD THAT THERE WAS NO MATERIAL BEFORE THE DEPARTMENT TO CONVERT THE SURVEY INTO SEARCH. WE AR E NOT REPRODUCING THE CONTENTS OF THE SATISFACTION NOTE SO THAT SECRECY OF THE DEPARTMENT MAY NOT BE DISCLOSED. HOWEVER, AS STATED ABOVE, THERE IS NOTHING IN THE SATISFACTION NOTE WH ICH SHOWS THAT THERE WAS A NECESSITY TO CONVERT THE SURVEY INTO SEARCH AND SEIZURE. 36. THE HONBLE P & H HIGH COURT IN THE CASE OF H.L . SIBAL V CIT 101 ITR 112 HAS MENTIONED THAT CERTAIN SAFEGUARDS ARE PROVIDED TO T AX PAYER AGAINST ARBITRARY ACTION BECAUSE OF APPLICABILITY OF SECTION 165 OF CRIMINAL PROCEDURE CODE BY VIRTUE OF SECTION 132 (13) OF I.T. ACT. REFERENCE WAS MADE TO DECISION OF HONBLE APEX COUR T IN THE CASE OF COMMISSIONER OF COMMERCIAL TAXES V RAMKISHAN SHRI KISHAN JHAVER 66 ITR 664. 37. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF DR. NAND LAL TAHILIANI V CIT 170 ITR 192 HELD THE SEARCH AS INVALID IN CASE THE INFORMAT ION IS GENERAL IN NATURE. 38. AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE LD. AR AND THE SUBMISSIONS OF THE LD. DR WHICH ARE REPRODUCED SOMEWHERE ABOVE IN THIS ORDER AND TAKING INTO CONSIDERATION THE SATISFACTION NOTE, WE HOLD THAT SEARCH IN THIS CASE WAS NOT VALID AS THERE WAS NO PROPER SATISFACTION TO CONVERT THE SURVEY INTO SEARCH. 39. ON THE ISSUE OF CONSIDERING AS TO WHETHER DOCUM ENTS FOUND DURING SURVEY CAN BE CONSIDERED FOR BLOCK ASSESSMENT AS PER ADDITIONAL G ROUND OF APPEAL; THE MATTER WAS DECIDED BY TRIBUNAL VIDE ORDER DT. 19.9.2008. WE CANNOT REVIEW THE ORDER VIDE WHICH ADDITIONAL GROUND OF APPEAL WAS DISMISSED AS THE BLOCK ASSESSMENT ORDER WAS SET ASIDE. 48 40. ON MERITS OF ADDITION, THE MATTER IS PENDING BE FORE TRIBUNAL AS THE A.O. HAS PASSED ORDER AFTER THE ASSESSMENT WAS SETASIDE. THAT APPEAL IS T O BE DECIDED SEPARATELY. 41. WE HOLD THAT THE SEARCH IN THE CASE OF ASSESSEE WAS NOT VALID AND GROUND OF APPEAL NO.1(A) STANDS DECIDED IN FAVOUR OF ASSESSEE. IN THE RESULT THE APPEAL IS ALLOWED. NOTE: THE PHOTOSTAT COPY OF THE SATISFACTION NOTE WAS PROVIDED BY DEPARTMENT DURING THE COURSE OF HEARING OF THIS APPEAL. WE HAD TAKEN A VIEW AFTER CONSIDERING THE NOTE WHICH IS EXPRESSED ABOVE. THE PHOTOSTAT COPY OF THE SATISFACTION NOTE WHICH WAS PROVIDED BY THE DEPARTMENT IS PLACED IN A SEALED CO VER AND THE REGISTRY IS DIRECTED TO RETURN THE SAME TO THE DEPARTMENT AND AN ACKNOWLEDG MENT OF THE SAME MAY BE OBTAINED. THE ORDER IS PRONOUNCED IN OPEN COURT ON 19.01.201 2 SD/- SD/- (N.L. KALRA) (R.K. GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19.01.2012 *S.KUMAR* COPY FORWARDED TO:- 1. SHRI BADRI RAM CHOUDHARY, JODHPUR. 2. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE-1, JODHPUR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JODHPUR 6. THE GUARD FILE IN ITSSA NO.55/JU/2006 BY ORDER A.R., I.T.A.T., JODHPUR 49
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