2013 (10) TMI 1032 - HC - Income Tax

Authority u/s 131 Camping of the officer in the premises of the petitioner for recording statements u/s 131(1)(a) - Whether trespass into the house of the petitioner - Held that - decision of Rajendran Chingaravelu s case 2009 (11) TMI 341 - SUPREME COURT is not application in the present case - first respondent did neither have the authority nor the jurisdiction to enter into the house of the petitioner on January 19 2012 and set up a camp office therein for recording the statement of the petitioner by invoking section 131(1) of the Income-tax Act - Relief granted to assessee. Authority to effect search u/s 132 Search not preceded by warrant Held that - There is force in the submission of the learned counsel for the respondent - Revenue that it was only after surveillance that a detection was made of the unaccounted cash in possession of the petitioner and therefore proceedings under the Income-tax Act was initiated. The question is whether such proceedings did have the authority of law. A perusal of section 131 indicates that a notice must be issued calling upon the petitioner to furnish all relevant material particulars and documents in the matter of allegation of being in possession of unaccounted cash and if the petitioner fails to respond to that notice then section 132(1) comes into play by which the Commissioner Director General or Director or the Chief Commissioner or the Commissioner or Additional Director or Deputy Commissioner or Joint Director or Joint Commissioner may issue warrant for search and seizure. The record made available by the respondent-Revenue discloses the Director of Income-tax (Investigation) on a perusal of the information received approved the issue of warrant for search and seizure on January 19 2012 though the time is not mentioned therein. It is not known as to what time of the day that order was issued. Indeed the first respondent armed with a warrant for search and seizure entered the house of the petitioner on January 19 2012 at 6.25 p.m. along with panchas and conducted a search whence documents and cash of Rs. 40, 00, 000 were seized from the premises of the petitioner as indicated in the panchnama annexure B. Therefore the submission of the learned counsel for the petitioner that the search and seizure was not preceded by a warrant under section 132 of the Income-tax Act is prima facie unacceptable. - It may be that the petitioner had time up to March 15 2012 to pay the advance tax and thereafter time to file his return for the previous year 2011-12 assessment year 2012-13 but that by itself does not mean that the respondent authorities did not have the jurisdiction to issue a warrant and effect search and seizure under section 132 of the Income-tax Act - Decided against the assessee.

Summary

Issues:
1. Validity of summons and panchnama issued under section 132 of the Income-tax Act, 1961.
2. Authority of the first respondent to enter the petitioner's home and issue the notice.
3. Compliance with the provisions of section 131 of the Income-tax Act regarding discovery and inspection.
4. Allegations of trespassing and unauthorized seizure of documents and cash.
5. Jurisdiction of the respondent authorities to issue a warrant for search and seizure under section 132 of the Income-tax Act.
6. Timing and legality of the search and seizure operation conducted by the first respondent.

Analysis:

1. The petitioner challenged the summons and panchnama issued under section 132 of the Income-tax Act, 1961, alleging unauthorized entry into his home by the first respondent. The court noted that the notice issued was without authority of law as it required the petitioner to appear at a camp office set up in his residence, which was not supported by any provision of the Income-tax Act. The court found that the first respondent lacked the authority and jurisdiction to enter the petitioner's house and set up a camp office for recording statements, thereby quashing the notice dated January 19, 2012.

2. The court examined the provisions of section 131 of the Income-tax Act, which grant powers of discovery and inspection similar to those vested in a court under the Code of Civil Procedure. It was observed that the first respondent's actions did not align with the legal framework, as there was no provision allowing the establishment of a camp office in the petitioner's residence. The court emphasized that the notice issued to the petitioner was not in accordance with the law, leading to the conclusion that the first respondent exceeded his authority in this regard.

3. The court considered the argument presented by the respondent's counsel, asserting that the notice issued under section 131(1)(a) was valid and within the scope of the Income-tax Act. However, the court disagreed, highlighting that the first respondent's actions, including the establishment of a camp office in the petitioner's house, were not supported by the legal provisions governing discovery and inspection under the Income-tax Act.

4. The petitioner's claim of trespassing and unauthorized seizure of documents and cash by the first respondent was addressed by the court. It was noted that the allegations of trespass into the petitioner's house and subsequent issuance of the notice were not contested by the respondent. The court emphasized the seriousness of such actions, suggesting that the first respondent could face prosecution before a criminal court for trespassing without legal authority.

5. The court delved into the jurisdictional aspect of issuing a warrant for search and seizure under section 132 of the Income-tax Act. It was observed that the search and seizure operation conducted by the first respondent, armed with a warrant, was not preceded by the necessary legal procedures. The court found the submission that the search and seizure were unauthorized to be prima facie valid, indicating a lack of compliance with the statutory requirements.

6. Regarding the timing and legality of the search and seizure operation, the court noted the absence of specific details regarding the issuance of the warrant and the conduct of the search. While acknowledging the petitioner's pending return for assessment, the court reserved the petitioner's right to challenge any future assessment order. The court limited the scope of the petition to the validity of the initial notice, ultimately quashing the notice dated January 19, 2012, while keeping the possibility of challenging the panchnama and warrant open for future proceedings.