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CONDITIONS PRECEDENT TO SEARCH AND SEIZURE UNDER INCOME TAX ACT, 1961

Income Tax - Direct Tax Code - DTC - By: - Mr. M. GOVINDARAJAN - Dated:- 28-1-2016 - A search is necessary to secure evidence, that may not likely to be made available by issue of summons. The Tax authorities have to resort to search and seizure when there is evidence of undisclosed documents or assets which have not been and would not be disclosed in the ordinary course. Section 132 of the Income Tax Act, 1961 ( Act for short) read with Rule 112 of Income Tax Rules is intended to achieve two li .....

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32(1) of the Act provides that Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, in consequence of information in his possession, 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 192 .....

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d will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income tax Act, 1922 (11 of 1922), or under this Act, 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 income or property7[which has not been, or would not be, disclosed] f .....

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sing the powers conferred by clause (i) where the keys thereof are not available; search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorized officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; require any person who is found to be in possession or control of any books of account or othe .....

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has to be strictly construed and the formation of the opinion or reason to believe by the authorizing officer must be apparent from the note recorded by him. The opinion must show whether the belief falls under clause (a), (b) or (c) of Section 132 (1). No search can be ordered except for any of the reasons contained in clause (a), (b) or (c). The satisfaction note should itself show the application of mind and information of opinion by the order ordering the search. If the reasons that do not .....

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ction under Section 132 would be justifiable. The expression information must be something more than a mere rumor, gossip or hunch. There must be some material which can be regarded as information , which must exist on the file, on the basis of which the authorizing officer can have reason to believe that an action under Section 132 of the Act is called for any of the reasons mentioned in clause (a), (b) and (c). In Harbhajan Singh Chadda V. Director of Income Tax and others - 2015 (4) TMI 14 - .....

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rs were seized/attached. The petitioners filed the present writ petition against the search and seizure operations. The petitioners contended before the High Court, the following: the searched premises are jointly resided by the petitioners; there is no partition by metes and bounds of the premises in question between the co-owners and, by a mutual agreement, each co-owner is residing and living in their residential portions along with their family; the warrant of authorization was not issued in .....

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e petitioners bank accounts and lockers were seized or attached illegally which action was liable to be quashed by the court as no search warrant was served by the department relating to the lockers of the petitioners; The Department contended the following: the search was conducted in the premises which is one composite property and has not been partitioned nor was there anything to show that each person mentioned in the warrant as well as the petitioners had separate identifiable portions; the .....

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in the name of each person; The High Court observed that the authorizing authority is under law expected to sign a warrant of authorization which is complete in all aspect. It should be in the names of the persons whose premises etc, are sought to be searched. When it is not clear whether one or more persons are in occupation or control of the premises, it would be safe and proper to issue the authorization against all the unknown persons, who may be the owners or in possession of the articles .....

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