TMI Blog1967 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... tor and common carrier with over 200 offices situated in various parts of the country including the Mysore State. One of its branch offices is at No. 34, Infantry Road, Bangalore, and another at No. 14, Second Main Road, Taragupet, Bangalore. Two out of the partners are residents of Bangalore. C. Munireddy resides at Nanjappa Road, Shantinagar; Venkatareddy, the 1st petitioner, resides at No. 20(1), Sir M. N. Krishna Rao Road, Basavangudi, Bangalore. The partners also are assessees to income-tax in their individual capacity. So far as the firm is concerned, the assessments for four years 1962-63, 1963-64, 1964-65 and 1965-66 are pending, that is to say, the returns having been filed, they are awaiting scrutiny by the department. It is not clear from the affidavits filed whether the firm has filed its return for the current assessment year 1966-67. The accounting year of the firm is the year commencing from 1st July and ending with the 30th of the immediately succeeding month of June. On October 11, 1966, searches were conducted at various offices of the firm and residences of its partners by the officers of the income-lax department pursuant to authorisations by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax authorising the searches at the four places mentioned above and another business place of the firm at 23-24, Basavaraja Street, Avenue Road, Bangalore. The last-mentioned place, however, was not searched because it appears that the firm had closed down its business in the said premises about two years ago. To the affidavit were also annexed the lists of books and documents seized at the four places actually searched. Annexure "F" relates to the search at Venkatareddy's residence at 20(1), M.N. Krishna Rao Road; annexure "G" to the search at business premises of the firm at Taragupet; annexure "H" to the search conducted at the business premises of the firm at the Infantry Road, and annexure "J" to the search conducted at the residence of Munireddy on Nanjappa Road, Shantinagar, Bangalore. Items Nos.76, 77 and 78 in annexure "F" were three sealed packets containing documents of which a detailed inventory could not be prepared at the search for want of time. They were subsequently opened under orders of this court dated December 5, 1966, made in I. A. No. IV filed on December 2, 1966, in the presence of the III Deputy Registrar of this court, and a detailed inventory was prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners, the fundamental rights guaranteed by articles 21 and 31(1) were also invoked and relied upon to invalidate section 132 of the Income-tax Act. The power of search and seizure was not originally one of the powers conferred on the assessing authorities under the Income-tax Act. Such powers were statutorily conferred on them only in 1956, in circumstances, to which we shall make a reference at a later stage. But such a power of search and seizure is, and has been, regarded in all systems of jurisprudence as an overriding power of the State for the protection of social security and other public interests-the said power however, being controlled or regulated by law. In India, the best example we have of the statutory power of search and seizure and the regulation thereof by the statute is the power under certain sections of the Code of Criminal Procedure. Apart from the power of search and seizure in relation to particular matters or in special circumstances, the general provision we have is the one made in section 96 of the Code of Criminal Procedure. Under the said section, where any court has reason to believe that a person to whom a summons or order or a requisition has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal rights themselves in comparison with the provisions of the IV Amendment of the Constitution of the United States of America. According to the American IV Amendment: " The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the person or things to be seized. " The Supreme Court pointed out that the whole idea conveyed or all the ideas conveyed by the American IV Amendment has not or have not been incorporated in our Constitution and that therefore there is no justification to import into it a totally different fundamental right by some process of strained construction. It may, however, be noted that the first part of the IV Amendment providing against what are described as unreasonable searches and seizures may be regarded as sufficiently dealt with or accepted by the formulation and statement of fundamental rights under articles 14, 21 and 31(1) and also certain attributes of personal liberty enumerated in article 19 as fundamental righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 96(1) of the Criminal Procedure Code." The cases of Wazir Chand v. State of Himachal Pradesh and of State of Rajasthan v. Rehman were cases of searches either without any authority of the law or without proper compliance with the relevant provisions of the law, which were struck down as illegal by the Supreme Court. In the former, the court held that the search was bad because it had no authority of any law at all to support it; in the latter, it was held that an obstruction to the search conducted by an excise officer in disregard of the provisions of section 165 of the Code of Criminal Procedure which applied to the situation did not constitute any offence whatever. In Durga Prasad v. H. R. Gomes the Supreme Court examined the legality of a search conducted under section 105 of the Customs Act. That section empowers the Assistant Collector of Customs either himself to search or authorise an officer to search for goods, documents or things, if he has reason to believe that any goods liable to confiscation or any documents or things which, in his opinion, will be useful for or relevant to any proceedings under the Act are secreted in any place; the provisions of the Code of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts of competence and constitutionality are two-fold. In the first place, the law must be within the legislative competence of the legislature which enacts it whether it be Parliament or a State legislature; secondly, the law should not be violative of any fundamental right guaranteed under Part III of the Constitution. The said two tests are applicable to all laws including the laws relating to taxation. At one time, there was no doubt a general impression that the taxation laws were controlled only by article 265 of the Constitution and that the said article did not enshrine any fundamental right. But the position has been clarified by the Supreme Court in later decisions and the principle clearly laid down that the taxation laws are also laws which must pass the test of being in accordance with, and not violative of, the fundamental rights guaranteed under Part III of the Constitution. In dealing with taxation laws inclusive of provisions not merely for assessment and collection of taxes but also of such provisions as those for searches and seizures, the principal articles in Part III of the Constitution which arise for consideration are articles 14, 19, 21 and 31(1). Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced outside the purview of clause (2) of article 31, because clause (5), inter alia, states that nothing in clause (2) shall affect any law for the purpose of imposing or levying any tax or penalty. What is stated above is the effect of the decision of the Supreme Court reported in Raja Jagannath Baksh Singh v. State of Uttar Pradesh. We might also refer in this connection to what the Supreme Court has stated, with reference to the application of article 14 to taxation laws, in the case reported in Khandige Sham Bhat v. Agricultural Income-tax Offtcer. At page 27 of the report, their Lordships state : " But in the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the legislature in the matter of classification, so long as it adheres to the fundamental principles underlying the said doctrine. The power of the legislature to classify is of 'wide range and flexibility' so that it can adjust its system of taxation in all proper and reasonable ways. " In the case of Kharak Singh, there was a difference of opinion among the learned judges as to the relative position of articles 19 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seizure on the income-tax authorities subject to certain safeguards. In 1948, some rules were framed under the said Act including such powers. Thereafter, certain of the sections of the said Act were declared ultra vires by the decisions of the Supreme Court, to which we shall refer presently. In 1956, a Commission called the Taxation Enquiry Commission appointed by the Central Government made a report and recommended that, with a view to avoid or prevent evasions it was essential to confer such powers on the income-tax authorities. It is pursuant to their recommendation that section 37 of the Income-tax Act, 1922, was recast. The section so recast reads as follows: " 37. Powers of Income-tax authorities.-(1) The Income-tax Officer, Appellate Assistant Commissioner, Commissioner and Appellate Tribunal shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely : (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a banking company, and examining him on oath; (c) compelling the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t were re-enacted as section 131 of the new Act and the provisions of section 37(2) of the 1922 Act were re-enacted in section 132 of the present Act. There is not much difference between the old section and the new one. A further amendment of section 132 took place pursuant to the Finance Act of 1964. It was later amended once again by Ordinance No. 1 of 1965, which came into force on January 6, 1965, which was replaced by Central Act No. 1 of 1965, which came into force on March 15, 1965. The Act also made certain further changes in the section. The section as it now stands, which is the one for detailed consideration in this case, reads as follows : "132. Search and seizure.-Where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that--- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (5) Where any money, bullion, jewellery or other valuable article or thing (hereinafter in this section and section 132A referred to as the assets) is seized under sub-section (1), the Income-tax Officer, after affording a reasonable opportunity to the person concerned for being heard and making such enquiry as may be prescribed, shall, within ninety days of the seizure, make an order, with the previous approval of the Commissioner,- (i) estimating the undisclosed income (including the income from the undisclosed pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. (9) The person from whose custody any books of account or other documents are seized under sub-section (1) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents. (11) If any person objects for any reason to an order made under sub-section (5), he may, within thirty days of the date of such order, make an application to such authority, as may be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the legislature itself to consider based on the experience gained by the actual working of the statutory provisions. But the question whether the attempts made to meet the challenge to the law on the ground of infringement or unreasonable abridgement of the fundamental rights is successful is a question for the courts to examine. From that point of view, the one circumstance which is of considerable importance is the clear identification of the objective of the special provision, viz., prevention of tax evasion. That is of importance because it is with reference to it that the reasonableness of the classification for purposes of article 14 of the Constitution has to be examined. In fact, it is on this footing that the arguments on both sides have been addressed on the question of the constitutionality of section 132 of the Act under or in relation to article 14 of the Constitution. The arguments on behalf of the petitioners in this regard are principally two-fold. In the first place, it is contended that the impugned section deals with the same class of tax evaders as are sought to be dealt with under other relevant provisions of the Income-tax Act like section 147 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass of persons and whether, for the purpose of making a choice between the two in relation to any given case, the section did or did not contain sufficient guidance to the authorities. All the judges, who decided the two cases, appear to proceed on the assumption that the object of section 37(2) was to prevent tax evasion. Although the argument that some sort of unreasonable classification from out of the larger class of tax evaders was sought to be made by the section appears to have been mooted before the court, it does not appear that the argument was developed or pursued except against the background of the relative positions of sub-sections (1) and (2) of section 37. The learned judges, who upheld the constitutionality of the said section, were clearly of the opinion that the powers under sub-section (2) were intended to be exercised and could properly be exercised only in cases where it was apprehended that the exercise of normal powers under sub-section (1) would not yield the desired result of subjecting to tax income, the tax in respect of which was sought to be evaded or was apprehended might be evaded. At the time the action impugned in the Calcutta case was taken, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exercise of special powers under sub-section (2) becomes necessary, are special circumstances incapable of being effectively dealt with under sub-section (1), which means that the field of operation of the two is different and that the invoking of the powers under sub-section (2) can arise and can be justified only upon an opinion reasonably justifiable on the peculiar circumstances of a case that the exercise of the normal powers under sub-section (1) would not help achieve the purpose of preventing evasion. If we may say so with respect, the following observations made by Naidu J. of the Assam High Court appear to miss the above essential feature bearing upon the reasonableness of the classification for the purpose of article 14 : " It is clear that both sections 37(1) and 37(2) of the Act deal with the production of the documents, account books, etc., required in connection with any proceeding under the Act, for the purposes of the Act, namely, the proper assessment of the income-tax leviable on and payable by any person liable for such levy and payment. Both the provisions cover the same subject and answer the same purpose and are capable of being employed against probable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event evasion thereof. Sub-sections (1) and (4) of section 5 of the Act, which were the subject of discussion in the above cases, read as follows : " 5. (1) The Central Government may at any time before the first day of September, 1948, refer to the Commission for investigation and report any case or points in a case in which the Central Government has 'prima facie' reasons for believing that a person has to a substantial extent evaded payment of taxation on income, together with such material as may be available in support of such belief, and may at any time before the first day of September, 1948, apply to the Commission for the withdrawal of any case or points in a case thus referred...... (4) If in the course of investigation into any case or points in a case referred to it under sub-section (1), the Commission has reason to believe---- (a) that some person other than the person whose case is being investigated has evaded payment of taxation on income, or (b) that some points other than those referred to it by the Central Government in respect of any case also require investigation, it may make a report to the Central Government stating reasons for such belief and, on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 34 of the Income-tax Act, 1922, with the right of appeal, etc., amounted to a discrimination in contravention of article 14 of the Constitution. Hence, sub-section (4) of section 5 was struck down as unconstitutional. After the decision---and obviously with a view to meet the criticisms addressed against the constitutionality of section 5(1) of Act 30 of 1947----the Indian Income-tax (Amendment) Act, 1954 (33 of 1954), was passed whereby section 34 of the Indian Income-tax Act was amended by inserting new sub-sections (1A) to (1D). These amendments made it possible to ascertain the class of substantial evaders referred to in sub-section (1) of section 5 of Act 30 of 1947. The result of this amendment was that the class of assessees evading tax sought to be dealt with under sub-section (1) of section 5 of Act 30 of 1947 became incorporated into section 34 of the Indian Income-tax Act, 1922. Consequently, on the reasoning in Mohta's case, cited above, sub-section (1) of section 5 was struck down as unconstitutional in the case of Shree Meenakshi Mills Ltd. The same view was taken by the majority in the case of Muthiah. The difference in principle becomes clear fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been disclosed for purposes of taxation. When the Director of Inspection or the Commissioner of Income-tax in consequence of information in his possession has reason to believe that any person falls under any one or more of the three categories mentioned above, he may authorise one of the officers of the department mentioned in the section to conduct a search and seize any such books of account or documents, money, jewellery or other valuable article or thing found as a result of the search. The searching officer is also empowered by the section to examine any person on oath at the time of the search who is found to be in possession or control of any book, document, money, etc. The provision made in the section for the period of retention of the books or documents goes to show that they are to be used in evidence in connection with any assessment proceedings under the Act and that they are to be returned after the said purpose is served. The money, bullion, jewellery or other valuable article or thing seized at the search is to be dealt with under sub-sections (5) and (6) of the section. The general effect of the said sub-sections is that an estimate of undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that a person to whom the provisions of section 132 are applied is sought to be deprived of his normal right of appeal, second appeal and reference to the High Court as a last resort. Although some special powers are exercised with a view to get hold of evidence which is sought to be withheld, once the evidence is made available, it is dealt with in the same way as evidence produced in the normal way. The only question is whether a further classification of evaders for the purpose of exercising special powers of eliciting evidence as aforesaid is a classification which is not sanctioned by article 14 of the Constitution. For this purpose, as already stated, the starting point of enquiry is what is the object of this legislation. The answer, as already given, is prevention of evasion. That attempts to prevent evasion are or may be in the nature of what is called plugging the loopholes in the law is not and cannot be disputed. The way in which the law seeks to prevent evasion is to make it impossible or more difficult for evaders to pursue several ways in which tax could be evaded. One of the ways certainly is the withholding of evidence on the basis of which a correct computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it difficult to accept the contention. Section 69A forms part of the general scheme for the computation of income and provides for a presumption in the case of money, bullion, jewellery, etc., of which the assessee is found to be the owner in any financial year and in respect of which he is not in a position to offer any explanation about its nature or the source of its acquisition. No such actual computation on the basis of the presumption is permissible under sub-section (5) of the impugned section 132. The estimation, as already pointed out, is only for the purpose of determining the amount to be retained to go in satisfaction of the existing or anticipated tax liability. Regarding the application of the assets towards existing liability, it is contended that the assessee is sought to be deprived of the benefit of a notice of demand under section 156 and of the time for payment provided under section 220 of the Act. But the argument is unavailable because the existing liability referred to in sub-section (5) of section 132 is a liability in respect of which the person concerned is already in default or can be deemed to be in default which clearly gives him the benefit of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority on the basis of information in his possession has reason to believe that the assessee is withholding or attempting to withhold evidence or is in possession of undisclosed income either in the shape of money or in the shape of bullion, jewellery or the like, which belief furnishes the criterion for making a separate classification having a reasonable relation with the object of the law. This answers the first part of the arguments in relation to article 14 of the Constitution. We shall now proceed to examine the second part of the arguments dealing with the alleged arbitrary nature of the powers under section 132 and the alleged absence of guidance therein leading to unconstitutional discrimination. The second part of the arguments appears to us to be weaker than the first one. Even with reference to the old section 37(2), which did not clearly specify the circumstances in which the powers thereunder may be validly exercised, the Calcutta High Court had, as already stated, taken the view that the policy of the statute and the clear purpose underlying the special provisions were sufficient to indicate that those special powers were expected to be and could validly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antial material by the officer acting with a sense of responsibility. If so much can be gathered from the wording of the section,---and we feel convinced that it is the only reasonable and fair way of reading the same the suggestion that the section gives no guidance or that it authorises or renders possible arbitrary exercise of the power becomes difficult of acceptance. The further argument that the section does not make it necessary or obligatory for the authorising officer to specify or particularise the documents or that it permits of the issue of an authorisation for what may be regarded as a general search need not necessarily lead to arbitrary exercise of the power. In the first place, it may not be possible in the nature of things to give a clear description of the books or documents, item by item; secondly, the books and documents to be searched for are described in the section itself as those which will be useful for or relevant to any proceeding under the Act; and, thirdly, the searching officer is also authorised to seize only such books or documents, that is to say, books or documents which will be useful for or relevant to any proceeding under the Act, which means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in sub-rule (3) is obviously intended to empower the officer to test the veracity of the material, if any, already placed on record by the person concerned. But the use of such material against the said person is made conditional upon the person concerned being given reasonable notice to show cause why such material should not be used against him. While showing such cause, we are clearly of the opinion that the person concerned will be entitled to ask for an opportunity to cross-examine any person recorded by the officer in the course of further enquiry under sub-rule (3) and also to call as a witness any person from whom the officer might have gathered material or any other person who may be in a position to speak to the value or veracity of such material. An order made by the officer under sub-section (5) is subject to correction by the prescribed authority under sub-section (11) of section 132. Over and above all these safeguards, the action taken or orders made under section 132 are really in the nature of interlocutory orders in aid of the ultimate order of assesment or reassessment which may be made under the other normal provisions of the statute, in respect of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be. But the result that be is interested in is the same as, and not different from, the object of the statute itself, viz., bringing under assessment all income liable to tax and preventing evasion of tax. Such an interest cannot be said to disable an officer from performing the statutory duties impartially and with a sense of responsibility, unless of course any personal bias is alleged and is proved. Ordinarily, in the case of high-ranking officers functioning under statutes and discharging statutory duties, bias is not to be presumed because they are expected to act with a sense of responsibility appropriate to their position and duties which the statutes impose on them. Wherever personal bias is proved and wherever an officer acts in disregard of his statutory responsibility and issues an authorisation without satisfying himself about the preliminary conditions required by the particular statute, such whimsical act on his part is certainly open to correction by the High Court under article 226 of the Constitution. We are not, therefore, satisfied that the safeguards provided in section 132 of the Income-tax Act are ineffective or illusory for reason only of the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides adequate safeguards. So far as the seizure is concerned, it cannot certainly be said to be excessive in the case of assets for the reasons already stated. In the case of books and documents, an argument is advanced that the period of retention may conceivably be excessive in view of the definition of the word " proceeding " in connection with which the books and papers may be retained, contained in the second Explanation to the section. In the said Explanation the proceedings are said to include not merely proceedings pending on the date of the search or completed prior thereto but also proceedings which may be commenced after the date of such search in respect of any year. So far as the pending proceedings are concerned, the retention of books for their purpose may not be and is not said to be excessive. The proceedings referred to as those which may be commenced after the date of the search are apparently those relating to reopening of closed proceedings under section 147 initiated in the light of the result of the search. The only basis for the argument that the period of retention may be conceivably excessive is the use of the words " in respect of any year " occurring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If therefore, the law is thus a valid law involving no infringement of article 14 or article 19 of the Constitution, there is no violation of the fundamental right of personal liberty under article 21 either, because, to the extent a person is deprived of his personal liberty by reason of the search, such deprivation is in accordance with a valid law. For all these reasons, we hold that the impugned section 132 of the Income-tax Act, 1961, is neither incompetent nor invalid as infringing any of the fundamental rights guaranteed under articles 14, 19, 21 and 31 of the Constitution. We come now to the second point in the case, viz., whether the search itself has been conducted without justification and in a high-handed manner. The first point for consideration under this is whether the Commissioner, in issuing the authorisations, can be said to have entertained such reasonable belief as is required by the first sub-section of section 132. The statement in the authorisation is that he has reason to believe that the circumstances mentioned in clauses (b) and (c) of the first sub-section of section 132 exist; that is to say, the Commissioner believes that the assessee in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el. A perusal of these reports submitted by the Assistant Director of Inspection (Intelligence) to the Commissioner of Income-tax go to show that considerable material had been collected in respect of the alleged loss of books and non-disclosure of income and accumulation of wealth not explicable on the basis of the income actually returned for assessment. The reports also record information made available to the department by certain informants. Such information is to the effect that the reported loss of books by fire on two different occasions made by the assessee is not completely true and that all the books have not been lost, that some books and papers which may be useful for assessment were still available and secreted at certain places. It was also mentioned that a secret circular had been issued to all the branches of the assessee-firm immediately to send up to the head office all papers and documents in their possession, offering cash bonuses for those who did the work briskly. The informants also pointed to the vast growth of wealth of the firm and its partners and alleged that cash, gold, jewellery, documents relating to purchases of properties, etc., could be found ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under section 34 of the Act is open to challenge in a court of law. " We think the same principles would apply to the same expression occurring in section 132 of the Income-tax Act and would indicate the extent of judicial review of the action of the Commissioner of Income-tax in issuing the authorisations for search under the said section. What the High Court has to examine in such a case would be whether there was in fact information in the possession of the Commissioner and whether there is a rational connection between the information and the belief entertained by him. As already explained by us, the information itself will have to be of a fairly reliable character---whatever may be the source of it---because, unless the information is of such a character, it cannot furnish a reasonable basis for entertaining the belief that any of the circumstances mentioned in the section exists. Secondly, the information must have a relevant bearing on the formation of the belief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. We are satisfied, therefore, that the attack by the petitioner that the Commissioner has not had relevant information in his possession or that such information was insufficient to support a reasonable belief of the type stated by him in the authorisations issued by him or that the circumstances justifying the issue of such authorisations did not at all exist in this case is not well-founded. Regarding the manner in which searches themselves had been conducted by the respondents in this case, the allegations contained in the principal affidavit are a little vague and also are not quite accurate. In paragraph 8 of the affidavit it is stated : " In respect of the search carried out in my business premises the first respondent seized about 78 items of documents and about 31 items or articles, and things consisting of jewellery and other items of bank pass books, and cheque books, etc., consisting of 23 items. The items of jewellery taken by him were also sought to be valued by him." The first respondent in his counter-affidavit stated that he did not search the business premises of the first petitioner at all but only his residence on Krishna Rao Road. He denied a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is seen therefrom that of the 256 papers seized at the residence of the 1st petitioner, 120 are documents evidencing investments in property and money-lending relating to the period July 1, 1960, onwards, 71 are similar documents relating to the previous period July 1, 1949, to June 30, 1960, 56 relate exclusively to the firm and the remaining 9 are described as documents such as partition deeds, gift deeds, which may be relevant to or useful for examining the first mentioned 120 and 71 documents. Of the 53 documents seized at the business premises at Taragupet, 16 are accounts relating to pending assessments, 4 relate to the years 1957 to 1960, showing monetary transactions which may be useful to reopen those earlier assessments, and 33 are hundis, payment and receipt sheets, loose sheets showing profit and loss account, etc., none of which relates to a period prior to 1955. Eight out of 11 items, books and documents, seized at the Infantry Road premises, relate to pending assessments and all the 11 relate to the business of the assessee-firm. At the residence of Munireddy at Shantinagar, only 8 papers were seized, of which 7 relate to pending assessments for the year 1962-63 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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