2007 (12) TMI 563 - HC - Income Tax

Summary

The Allahabad High Court addressed whether a search conducted on two directors of a company could be treated as a search of the company itself under Section 132 of the Income Tax Act, 1961, thereby justifying issuance of a notice under Section 153A to the company. The petitioner contended that the search on the individual directors did not amount to a search of the company under Section 132 read with Rule 112, and thus the notice under Section 153A was invalid. The Court emphasized that for issuance of a notice under Section 153A, either a search under Section 132 or requisition under Section 132A must occur. Since no requisition under Section 132A was made, the key issue was whether the search of the directors' premises constituted a search "in respect of" the company. The Court rejected a narrow interpretation of "person" under Section 2(31) that would exclude directors acting as agents or servants of the company, noting such a strict view would produce undesirable results. Relying on the authorization warrant explicitly naming the petitioner company, the Court found prima facie that the directors were searched in their capacity as directors of the petitioner company, notwithstanding the omission of this detail in the search record (punchnama). Accordingly, the Court declined to interfere with the notice under Section 153A, dismissing the writ petition while clarifying that its findings were prima facie and would not bind the Income Tax Authorities in subsequent proceedings.