Sanjay Jain and Rajputana Jewellery Mart and Smt. Mohini Bai and Smt. Baby Jain and Smt. Rashila Jain and Smt. Vimla Jain V. Union of India & Ors

CW/531/1999

AI Insights

The case involves multiple writ petitions filed by different petitioners against the Union of India, challenging the search proceedings conducted under various provisions of the Income Tax Act, specifically Sections 132, 152, 158B, 158BB, and 158BD. The petitioners argued that the competent authority lacked material and reasons to believe that justified the initiation of search proceedings. The court examined the arguments, referenced various judgments, and ultimately found that the authorities had sufficient material and reasons to believe to justify the searches. The court also addressed the validity of the statutory provisions under challenge, concluding that they were not ultravires and did not infringe upon constitutional rights.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 803144 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 16-01-2008
• Assessment Year: misc
• Other Referred Cases: Dr.Pratap Singh & Anr. Vs. Director of Enforcement & Ors., Harvest Gold Foods (India) P. Ltd. & Ors. Vs. Union of India & Ors., Dr.Mrs. Anita Sahai Vs. Director of Income Tax (Investigation) & Ors.
• Laws Referred To: Section 132, Section 152, Section 158B, Section 158BB, Section 158BD
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: ANJAY KOTHARI
• Keywords: Authorisation of search; Consequential reliefs; Quashed; Read down; Reason to believe; Search proceedings; Ultravires
• Section: 132; 158BD; 158BB; 152; 158B

Judgement Text

"1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- (1) CIVIL WRIT No. 531 of 1999 SANJAY JAIN V/S UNION OF INDIA & ORS (2) CIVIL WRIT No. 534 of 1999 RAJPUTANA JEWELLERY MART V/S UNION OF INDIA & ORS (3) CIVIL WRIT No. 535 of 1999 SMT.MOHINI BAI V/S UNION OF INDIA & ORS (4) CIVIL WRIT No. 536 of 1999 SMT.BABY JAIN V/S UNION OF INDIA & ORS (5) CIVIL WRIT No. 537 of 1999 SMT.RASHILA JAIN V/S UNION OF INDIA & ORS (6) CIVIL WRIT No. 396 of 1999 SMT.VIMLA JAIN V/S UNION OF INDIA & ORS Mr. ANJAY KOTHARI, for the appellant / petitioner Mr. KK BISSA, for the respondent Date of Order : 16.1.2008 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI DEO NARAYAN THANVI,J. ORDER ----- 2 All these writ petitions seek to have the search proceedings quashed, and claim consequential reliefs. A prayer has also been made for striking down the provisions of Section 132, 152, 158B, 158BB and 158BD as ultravires, or in the alternative, to be suitably read down. The whole thrust of the writ petition, as was argued was, that there was no material available with the competent authority concerned to have any reason to believe, much less any reasons had been recorded by the competent authority, before authorising initiation of search proceedings, as required by Section 132(1) (Clause (c) in the present case). Then regarding vires of the relevant provisions of Section 132(1), it was contended that the expression used “would not be disclosed in the income tax return” cannot be maintained, as the return for the current period is yet to be filed, the due date of which may fall even after the date of search, and therefore, it cannot be assumed that the assessee would not disclose the income, so as to have reason to believe the existence of requirements of Section 132(1), and authorise search. On the first aspect, about existence of the requirements of Section 132(1), the matter was argued at length, and various judgments were cited by either side. 3 However, learned counsel for the Revenue cited the judgment of Hon'ble the Supreme Court in Dr.Pratap Singh & Anr. Vs. Director of Enforcement & Ors., reported in 1985 (155) ITR 166, wherein it was held that the material on which the belief is grounded may be secret, may be obtained through intelligence, or occasionally may be conveyed orally by informants, and therefore, it is not obligatory upon the officer to disclose his material, on the mere allegation of the petitioner in the writ petition, that there was no material before him on which his reason to believe can be grounded. Likewise, learned counsel for the Revenue also referred to another Single Bench Judgment of this Court in Harvest Gold Foods (India) P. Ltd. & Ors. Vs. Union of India & Ors., reported in 2006(282) ITR 83 (Raj.). While the learned counsel for the assessee laid much stress on the judgment of Allahabad High Court in Dr.Mrs. Anita Sahai Vs. Director of Income Tax (Investigation) & Ors., reported in 2004(266) ITR 597, to contend, that before taking any action under Section 132, a condition precedent is information in possession of the Director, which gives him reason to believe that a person is in possession of some article, jewellery, bullion or money, which represents wholly or partly his income, which was not disclosed, or would not be disclosed, and that if the aforesaid condition is missing, the authority will have no jurisdiction to issue warrant. It was also held therein, that the authority must, on the relevant material, have reason to believe, 4 that the assessee has not, or would not, disclose his income, and reason to believe must exist, and must be taken into consideration at the time of issuing warrant of authorisation, rather if the reason to believe comes into existence later, even though the material may be available earlier, the authorisation of warrant will not be valid. We have examined the judgments. In our view, it should not be in every case, where the assessee simply chooses to make an averment, about absence of existence of reason to believe, with the competent authority, that the assessee would be entitled to challenge the search proceedings. If the things were left to be that, the obvious out come would be, that almost, and practically in every case of search, the assessee may find it convenient to make an averment about absence of existence of any reason to believe before issuance of the authorisation, and/or absence of any material with the authority, in that regard, on the basis of which, the authority may have found any reason to believe, as required by Section 132(1), and then in every case, the department would be required to leave it's regular job, and get indulged in litigation of Court, carrying its record through and all the way to satisfy, about existence. It is hightime that the power to requisition record, for being satisfied about existence of the material, or reason to believe, should be exercised with great care and caution, and circumspection. In our 5 view, the petitioner if he so likes to make such averment, apart from making averment should also plead some facts, and circumstances, and/or may place some material, which may have given him reason to reasonably believe the absence of material, and/or absence of reason to believe on the part of the competent authority. We don't mean to catalogue the circumstances, but may simply illustrate, that it may be, like existence of any malafides on the part of the authority concerned, or any other authority, or person, who may be, or may have been, in a position to influence the decision of competent authority to issue authorisation of search, and so on and so forth. In the present case, from reading of the writ petitions, in our view, no such case has been made out by the petitioner for requiring this Court to call upon the department to disclose to this Court the record in that regard. However, notwithstanding this, since in one of the cases, a direction had already been issued by this Court, and in compliance thereof, the record has been made available by learned counsel for the Revenue, respecting that order, we thought it proper to look into the record, and the perusal of the record revealed telling things against the petitioner, and after going through the detailed long drawn notings, and materials considered therein, it leaves no manner of doubt in our minds, that there was more than sufficient material, and the reasons to believe, had been duly recorded by the concerned authorities in accordance with law [Section 132(1)]. 6 Therefore, this ground does not survive, and help the petitioner. So far as the validity is concerned, in our view, there may be cases and circumstances, where it may appear to the competent authority, that the assessee would not disclose the undisclosed income in the return. Such satisfaction may be arrived at for variety of reasons, may be including prevalent business practices, may be consistent conduct of the assessee, which may have come to notice of the competent authority, or there may be any number of such or other circumstances, whereunder the competent authority may have reason to believe, that the undisclosed income would not be shown in the return to be filed, and may be satisfied about existence of circumstances Section 132(1) to issue authorisation, and as such, it cannot be said that this part of the provision is ultravires. It may be observed here that mere possibility of the provision being abused in some case, by itself, would not be sufficient to strike down the provisions. Even at the cost of repetition, it may be observed, that even this aspect that the assessee would not disclose the undisclosed income in the return is integral part of Section 132(1), whereunder the authority is to have reason to believe to issue authorisation. This does not violate any part of the 7 constitutional guarantees, so as to be struck down. Thus, considered from any standpoint, we do not find any merit in the writ petitions. All the writ petitions are, therefore, dismissed. Interim orders obviously come to an end. ( DEO NARAYAN THANVI ),J. ( N P GUPTA ),J. /tarun/ "