TMI Blog1989 (7) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules"), read with sub-section (5) of section 132 of the Income-tax Act, was issued to the petitioner by the Income-tax Officer, H-Ward, Jaipur, on December 10, 1987, and served on the husband of the petitioner, Shri R. K. Singhal, on December. 16, 1987. The file was transferred from the Income-tax Officer, H-Ward, Jaipur, to the Income-tax Officer, Special Investigation, Circle-I, Jaipur, by the Commissioner, of Income-tax, Jaipur, in exercise of his powers under section 127 of the Income-tax Act. The petitioner has claimed return of the account books and other valuables of the petitioner which were seized on November 26, 1987. The return as aforesaid is claimed because, according to the petitioner, the retention of the books and valuables is in violation of the provisions of section 132 of the Income-tax Act. In the return filed by the non-petitioner, a case has been set up that the petitioner is only a benamidar of her husband so far as the business of Lata and Company being run in the name of the petitioner is concerned and reliance has been placed on the statement recorded on November 25, 1987, of the petitioner as well as of her husband by the authorities at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the search and seizure under section 132 of the Income-tax Act could be legal only if the Director, of Inspection, in consequence of information in his possession, has reason to believe that 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 is undisclosed. It appears that the authorisation under section 132 of the Income-tax Act by the Director of Inspection was to enter into the house No. E-117 situated at Shastri Nagar, Jaipur, where, as per the record, the office of Lata and Company was situated.' Mr. Keshote, learned counsel for the petitioner, has challenged the search and seizure under section 132 of the Income-tax Act on the ground that there was no information in the possession of the competent authority on the basis of which he could have reason to believe that the petitioner was in possession of money, bullion, jewellery or other valuable article or thing, etc., which was undisclosed income or property and, therefore, the search and seizure has been illegal. The account books, mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is name did not figure in the warrant of authorisation. The learned judge said that "information" would mean a statement of facts. It may be supplied to the Director of Inspection or the Commissioner in writing or orally, though when it is made orally to him, propriety demands that he should record notes of the same so as to assist him in coming to the conclusion that there are reasons to believe that there are undisclosed money, ornaments, etc., in the possession of any person, and also to use it to justify the said conclusion in the event of necessity. The learned judge further said that the expression "has reason to believe" would mean that there are grounds for the necessary belief. The said belief is the assent of the mind to the truth of what has been conveyed by the information, whereas mere suspicion may not be sufficient, but then a conviction of the nature required in a criminal case cannot be insisted upon. The learned judge further said that the standard of belief should be that of a reasonable man. But, at the same time, it has to be remembered that it is the belief of the Director of Inspection or the Commissioner that counts and the courts cannot substitute their own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be a mere pretence nor can it be mere doubt or suspicion. It is something much more than that. Section 132 speaks of 'reason to believe' and not 'reason to suspect' or 'reason to doubt' 'Reason to believe' is thus a higher test to be fulfilled." In the facts of that case, the court said that considering the extensive information and its detailed scrutiny and analysis, the conclusion 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 further said that it was not necessary for the Director of Inspection to reach that belief by a process akin to a judicial process. Hip reasons and his belief do not constitute a judicial or a quasi-judicial act nor is the issue of authorisation a judicial or a quasi-judicial function. The court also said that the matter, though to an extent justiciable, extremely limited and circumscribed are the court's 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 not a pretence and if it is cogently supported, the court wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation is that manufacturers of "Baba" brand chewing tobacco, panmasala, etc., are selling it at high premium 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 have a bona fide belief 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 as required or 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 of income or property, which has not been or would not be disclosed for the purposes of the Income-tax Act. In our opinion, the expression "has reason to believe" in sub-section (1) of section 132 of the Income-tax Act means the bona fide belief based on some reasonable or credible information and not on the information which may be imaginary. It was give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act against the real owner of those assets. In this connection, a reference may be made to the case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505 (SC), wherein it was said by the Supreme Court that (at p. 528) even assuming that the search and seizure were in contravention of the provisions of section 132 of the Income-tax Act, still the material seized was liable to be used subject to law before the income-tax authorities against the person from whose custody it was seized and, therefore, no writ of prohibition in restraint of such use could be granted. Again, in the case of Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166 (SC), it was held that illegality of a search does not vitiate the evidence collected during such illegal search. The only requirement is that the court or the authority before which such material or evidence is placed has to be cautious and circumspect in dealing with such material or evidence. In the instant case, at the time of the search, silver and gold ornaments then worth Rs. 4,58,080 were found and some other silver and gold ornaments were also found but they were not seized. It may be stated that we had already ordered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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