TMI Blog2010 (11) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and validity of the warrant issued under section 132A of the Income-tax Act, 1961. 2. The short facts, briefly stated giving rise to the instant petition, are that the petitioner carries on business of sale and purchase of ornaments of silver and gold. The petitioner deals in the business of manufacture of silver and gold ornaments in the name and style of Singhai Jewellers and is regularly assessed to income-tax and has a permanent account number. The petitioner is also a registered dealer under the provisions of the M. P. Value Added Tax Act, 2002. 3. During the course of routine checking by the G.R.P., Katni, the petitioner's employee, namely, Kamlesh Soni, was found to be in possession of impure silver weighing 54.078 kgs. with pure silver content of 33.738 kgs. and cash of Rs. 16,50,000 in an Indica car bearing registration number M.P.-13/T-5331. The police authorities submitted intimation to the Income-tax Department. On the basis of the information given by the police authorities a warrant of authorization dated December 5, 2008, under section 132A of the Income-tax Act, 1961, was issued. The authorised officer executed the warrant under section 132A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., impure silver weighing 54.078 kgs. with pure silver content of 33.738 kgs. and cash worth Rs. 16,50,000 found in the possession of the employee of the petitioner were accompanied by a travel memo, a perusal whereof would have disclosed that the seized assets belong to a person assessed to income-tax. Hence, its ownership could have been ascertained. It is further contended that there was no material wherefrom a belief could be formed that the assets were undisclosed assets. Therefore, the identity of the assets was well known. It is also contended that business assets should not be seized. Seizure of trading stock is prohibited under section 132(1)(c)(B)(iii) of the Income-tax Act and, therefore, taking of the possession of the trading stock in exercise of power under section 132A of the Income-tax Act is illegal and the same constitutes violation of the fundamental right contained in article 19(1)(g) of the Constitution of India. Learned senior counsel in support of the above submissions has relied on the decisions in Dwarka Prosad Agarwalla v. Director of Inspection [1982] 137 ITR 456 (Cal), Ganga Prasad Maheshwari v. CIT [1983] 139 ITR 1043 (All), L. R. Gupta v. Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant extract of section 132A reads as under : "132A. Powers to requisition books of account, etc.-(1) Where the Director-General or Director or the Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to believe that- . . . (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the Director-General or Director or the Chief Commissioner or Commissioner may authorize any joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he formation of his belief that there has been escapement of the income of the assessee from assessment because of his failure to disclose fully and truly all material facts. 12. In Vindhya Metal Corporation [1997] 224 ITR 614 (SC), it was held by the Supreme Court that mere unexplained possession of an amount, without anything more, cannot be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which had not been disclosed by the person in possession for purposes of section 132A of the Act. 13. A Division Bench of the Delhi High Court in Ajit Jain v. Union of India [2000] 242 ITR 302 (Delhi) held that the expression "reason to believe" mean that a reasonable man, under the circumstances, would form a belief which would impel him to take action under the law. The formation of opinion has to be in good faith and not on mere pretence. For the purpose of section 132 of the Act, there has to be a rational connection between the information or material and the belief about undisclosed income which is not likely to be disclosed by the person concerned. The aforesaid decision was affirmed by the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash and silver seized by GRPF, Katni, is undisclosed and that Shri Vipul Jain or Shri Kamlesh Soni have not disclosed to the Department the true nature of it and thus there is reason to believe that they will not disclose their affairs of business to the Department in response to statutory notices.Under the circumstances, it is proposed that warrant of authorization under section 132A in respect of the abovestated cash and silver be issued to Thana Incharge Railway Police, Katni, so as to seize the undisclosed cash and jewellery." 16. The matter was then put up before respondent No. 1 who recorded his satisfaction under section 132A as under : "I have perused the notes of the Additional DIT (Inv), Jabalpur, and the ITO (Inv), Jabalpur. I have also discussed the details of the case with both of them.In this case, after the receipt of information regarding seizure of cash and silver by the police, subsequent enquiries were conducted by the Income-tax Department to establish the nature of cash and silver. As per the details given in the notice of the ITO (Inv), investigation and enquiry have been carried out from the persons carrying cash and silver and also at place, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X
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