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2017 (6) TMI 23 - HC - Income TaxValidity of Search proceedings - whether no action could have been initiated u/s 132(3) without there being any action initiated u/s 132 - no tax demand was pending - recovery of amount by debiting the bank account of the petitioners - bank accounts were put under restraint - Held that:- In the present case, both Petitioners not only suppressed material facts in their petitions in the first place, but after this was pointed out in the Department’s counter-affidavit, the Petitioners were most casual in their response thereto making no attempt to justify the suppression of such material facts. In fact, the length of the respective rejoinders in both petitions only serves to demonstrate the extent to which material facts within the knowledge of the Petitioners were not placed before the Court in the first instance. Whether without a search warrant in the petitioners names, and without there being a demand raised and finalised, there is no power under Section 132 read with Section 132B to require RBL to issue a DD favouring the Department for the balance sum lying in the account that has been frozen? - Held that:- The assertion by both sets of Petitioners that this is ‘realization’ of the debt owed by the bank to the Petitioners and that the amount therein cannot be transferred to the Department is based on an incorrect understanding of the legal position under Section 281B of the Act. The said provision states that in order to protect the interests of the Revenue, it may be necessary to go in for a provisional attachment. Therefore, the direction issued to RBL by the Department does not mean that the money is finally taken over by the Revenue. It will undoubtedly be kept in a suspense account like a PD Account to await the final orders in the assessment proceedings and the issues raised as a consequence thereof. For this purpose, as already observed, the argument that this does not constitute ‘assets’ or ‘money’ within the meaning of Section 132(1) read with Section 133 of the Act has not merit. The decisions citied by learned counsel for the Petitioners do not appear to have discussed the purport of Section 281B of the Act which has a direct bearing in this case. The Department has been able to demonstrate at this stage that the monies in these bank accounts were essentially the undisclosed income of the 'key person' i.e. Mr. Mukkar. The restraint order under Section 132(3) of the Act passed in this case was but a logical corollary of the search action and permissible under the Act. Consequently, even on merits, not even a prima facie case has been made out by either of the Petitioners. Petitioners have made deliberate false statements on oath and have also suppressed material facts in the pleadings before this Court with a clear attempt to mislead the Court. Having regard to the impact this has on the administration of justice, the Court is satisfied that a prima facie case is made out for a complaint being filed against the above persons to be prosecuted under Section 193 IPC.
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