TMI Blog2005 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ized during the impugned search and seizure operations - - - - - Dated:- 31-5-2005 - Judge(s) : N. SURJAMANI SINGH. JUDGMENT N. Surjamani Singh Actg. C.J.- These two writ petitions involve almost the same and similar common questions of facts and law and, as such, this court proposes to dispose of these two writ petitions by this common judgment. These two writ petitions are directed against the issuance of warrant of authorisation dated June 17, 1999, to June 23, 1999, including warrant of authorisation dated June 18, 1999, by the respondents against the petitioners under section 132 of the Income-tax Act, 1961, hereinafter referred to as the "Act", for conducting search and seizure in the premises of the petitioners and the consequent issuance of impugned notice dated February 20, 2001, under section 158BC of the Act directing the petitioners to file returns, etc., by treating the search and seizure operations as valid; for which the petitioners have, inter alia, prayed that such warrant of authorisation and the impugned notices dated February 20, 2001, issued, under section 158BC of the Act be quashed as the same is unconstitutional, illegal and void ab initio and, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t receipts and other documents were seized. In respect of the petitioner firm the said searches were also conducted at Gangtok pursuant to the warrant of authorisation dated June 18, 1999, issued by respondent No. 3, which fact is evident from the panchanama dated June 23, 1999. In Writ Petition No. 11 of 2004, the facts whereof are identical, it is stated that the petitioner-company is a private limited company incorporated and registered under the Registration of Company Act (Sikkim), 1961, and is having its registered office at Syari, Gangtok, Sikkim. The petitioner company was incorporated with the object of undertaking hotel construction at Gangtok. It is stated that during the relevant period, Smt. Jyoti Limbu, Shri S.R. Subba (brother of Shri M. K. Subba) and Shri M. K. Subba were directors of the petitioner-company. Smt. Jyoti Limbu is the wife of Shri M. K. Subba and was/is the managing partner of the firm M/s. M. S. Associates. M/s. M.S. Associates carries on business of selling State organised lotteries. Since September 28, 1993, the said M/s. M. S. Associates was the sole distributor of lotteries organised by the State of Nagaland. In this case also, on different date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted or requisition was made. The expression "undisclosed income" is defined by clause (b) of section 158B of the Act. Thus if the search and seizure is valid and legal, assessments can be made by the Assessing Officer by invoking the provisions of section 158BC of the Act. However, if the search and seizure is invalid and illegal then assessment cannot be made by taking recourse to the provisions of section 158BC of the Act. In respect of the petitioners, respondent No. 6 issued two separate notices both dated February 20, 2001, under section 158BC of the Act purporting to make block assessments of the petitioners for the period ending April 1, 1989, to June 23, 1999. By the said impugned notices, the petitioners were directed to prepare true and correct return of its total income including the alleged undisclosed income for the block period in respect of which the petitioners are alleged to be assessable for the block period. Being aggrieved by the issuance of the impugned notice dated February 10 20, 2001, the petitioners preferred two separate writ petitions being Writ Petition (Civil) No. 2890 of 2001 and Writ Petition (Civil) No. 2889 of 2001 before the Gauhati Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia, violative of the constitutional mandate. It is further stated that the respondent authorities used the Comptroller and Auditor General report in June 1999, much prior to the same being laid before the House, i.e., in August, 1999. The Comptroller and Auditor General report was laid by the Government before the Legislative Assembly in August, 1999, and the Legislative Assembly referred the said Comptroller and Auditor General report in terms of rule 235 of the Rules of Procedure and Conduct of Business in Nagaland Legislative Assembly to the Public Accounts Committee (PAC). In March, 2002, the PAC has submitted its report to the Legislative Assembly of the State and with regard to the Comptroller and Auditor General report regarding the working of the Directorate of State Lotteries has held the said Comptroller and Auditor General report to be unsustainable on facts. The case of the petitioners in the writ petitions is that the executive including the respondents cannot assume jurisdiction and conduct investigation over a matter over which the House or its Committee is investigating. It is stated that in any event the final report of the Public Accounts Committee is bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act were fulfilled. It is further stated that the Comptroller and Auditor General report was not the only basis for the action under section 132(1) of the Act and apart from the Comptroller and Auditor General report, the concerned officer had enough material in their possession from which they could form reason to believe for proceeding under section 132(1) of the Act. Similar admissions have been made in paras. 15,19 to 21 of the counter affidavit. It was further admitted that the said report was used as part of information prior to it being placed in the House, i.e., in August 1999. It was further admitted that the search operation at Gangtok was pursuant to the warrant of authorisation dated June 18, 1999, and was just a part of the nationwide search conducted against the group. Thus the admitted facts are that the concerned officer who had formed the requisite belief that conditions exist for the purposes of initiating action under section 132 of the Act was also guided by the Comptroller and Auditor General report which was in his possession prior to the same being laid before the Legislative Assembly of the State of Nagaland in August, 1999. The said Comptroller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents is that a finding in the Comptroller and Auditor General report can be used against the citizen as there is no bar to such user under the Constitution. It was further submitted that a copy of the Comptroller and Auditor General report was forwarded by the Comptroller and Auditor General to the Union Finance Ministry and as such the concerned officer came into the possession of the said Comptroller and Auditor General report and used the same for forming the requisite belief and as such there is no breach of privilege as the said report was obtained legally. It was further submitted that if the Comptroller and Auditor General report gives indication of evasion of tax then the same can be used by the concerned officer. It is further submitted that the word "information" should be given a wide and not restricted meaning and the executive can use all the "information" from the legislative documents or proceedings in the Legislative Assembly, etc., in a civil or a criminal matter and the proceedings before the Legislative Assembly would not be a bar to investigation in any matter. It is further submitted: that as there is no legal or constitutional impediments to the use of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and seizure the ground is one,. i.e., on the basis of the information in his possession, the concerned officer could form the requisite belief that conditions contained in section 132 exist for issuing search and seizure warrants. As the satisfaction of the concerned officer is "subjective satisfaction" based on the information, i.e., documents, etc., before him on which he forms belief the same cannot be segregated. As such if the designated authority has relied upon the Comptroller and Auditor General report, which it could not have relied upon then the entire action, is unconstitutional, illegal and unsustainable. (c) As the respondents have neither claimed privilege nor disclosed the other information in their possession [other than the Comptroller and Auditor General report], they are required to provide inspection and give copies of the information in their possession to the petitioners. (d) The counter affidavit has not been filed by the persons/authority who had issued the warrants of authorisation and as the formation of belief being a mental satisfaction of the concerned superior officer of the rank as mentioned in section 132 of the Act, it is that officer on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments, property, etc., recovered in such search can be relied upon by the authorities for any other purpose under the Act and that there is no distinction between unconstitutional and illegal search as is being attempted to be made by the petitioners. During the hearings in these matters, counsel for the respondents supporting their case, handed to the court three files, which contained information in the possession of the concerned officer on which the requisite belief was formed for the purposes of issuance of the warrant of authorisation under section 132 of the Act. Before dealing with the contentions of the parties, it is pertinent to mention that in these writ petitions, the petitioners had averred that the provisions of the Act are not enforced in the State of Sikkim and that the residents of the State of Sikkim are paying income-tax under the Sikkim Income-tax Manual to the authorities in Sikkim and are not required to pay income-tax under the Act of 1961. It was stated that as such the question of the petitioners being amenable to the provisions of the Act of 1961 does not arise and consequently, the entire search and seizure operations are void, illegal and non est. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without deciding the issue of the applicability of the Act of 1961 to the State of Sikkim in the present proceedings. The relevant portion of section 132 of the Act of 1961 reads as under: "Section 132. Search and seizure.-(1) Where the Director-General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board, 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 subsection (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 or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent should not only be slow but slowest in acting upon the information being given by an informer. For invoking section 132 of the Act the authority concerned is in "possession" of "information". The expression "information" has been held to be not rumour, gossip or other irrelevant information. Further, the information should be legal and constitutional, i.e., the authority concerned can under the law or the Constitution not only retain such information but can also use the same for any purpose. Thus rumour, gossip, intuition or irrelevant information cannot be termed as "information" as no reason to believe can be formed on such information. In L.R. Gupta v. Union of India [1992] 194 ITR 32 (Delhi) at page 45, it was held that the expression "information" must be something more than a mere rumour or a gossip or a hunch and there must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe. In Dr. Nand Lal Tahiliani v. CIT [1988] 170 ITR 592 (All) wherein the information was that the doctor was having a "roaring practice" and was charging high fees for operations the warrants were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction arrived at by the officer concerned is immune from challenge but where the satisfaction is not based on any material or it cannot withstand the test of reason, which is an integral part of it, then it falls through and the court is empowered to strike it down ... It is the formation of opinion and not the issuing of Form No. 45 which is fundamental ... " Further in C. Venkata Reddy v. ITO [1967] 66 ITR 212 (Mys) at page 28 238, it was held that: "... The basis for the exercise of the power, it should be noticed, is not mere suspicion but a reasonable belief upon information already in possession of the appropriate officer. It would also, in our opinion, postulate that information in the possession of the officer is not a mere canard or an unverified piece of gossip but information which in the circumstances, may be regarded as fairly reliable, because no belief can ever be said to flow reasonably from anything but information which may be regarded as fairly reliable. Hence, the careful selection of these words by the statute and the drastic nature of the powers necessarily point to a judicial application of the mind to some substantial material by the officer ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons to believe and such reasons to believe must be on the basis of the "information" which is "in the possession of" the concerned officer. It is further well settled that there must be a live link between the information and the formation of belief. In Sheo Nath Singh v. AAC of I.T. reported in [1971] 82 ITR 147 (SC) at page 153, it was held in para. 10 that the words "reason to believe" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. In ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) at pages 437-438, it was held that the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief and rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief and the live link or close nexus which should be there between the material before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute its own satisfaction by evaluating the information and/or material before it. The principle argument of the petitioners is that the CAG report cannot be "information" for the purposes of section 132 of the Act and in any event the CAG report cannot be said to be "in the possession of" the concerned officer. It is submitted that the CAG report can never come or be in the possession of the concerned officer under the Constitution or the statute as this is a legislative paper, which is to be placed before the House and is to be dealt with by the House being the property of the House. Accordingly to the petitioners, there can be no legal and constitutional possession by the concerned officer of the said CAG report and in any event the concerned officer cannot use the CAG report for the purpose of forming the "reasons to believe" under section 132 of the Act. Even if the concerned officer, somehow or the other got possession of the said report (as contended by the respondents) by illegal or other means then also the concerned officer could not have used the said report as it was the property of the House. It is not the knowledge of the CAG report, which is relevant but its use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on August 16, 1999, and in terms of rule 235, Legislative Assembly Rules, it was referred to the PAC of the Legislative Assembly. Thereafter, the PAC examines the correctness of the CAG report. Chapter XXVI of the Legislative Assembly Rules deals with procedure to be followed by the Assembly Committees. Rule 201 provides that the sittings of a Committee shall be in private. Rule 210 provides that the Committee may direct that the whole or a part of evidence or a summary thereof may be laid on the table and no part of the evidence, oral or written, report or proceedings of a Committee which has not been laid on the table, shall be open to inspection by any one except under the authority of the Speaker. Rule 210(3) further provides that the evidence given before the Committee shall not be published by any member of the Committee or by any other person until it has been laid on the Table. Rule 212 provides for presentation of the report of the Committee, which may be either preliminary or final and be signed by the chairman on behalf of the Committee. Rule 214 provides that the chairman shall present the report of the Committee to the Assembly and rule 215 provides for the presentati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia, held and observed: "8 .... Once it was proved that Parliament was sitting and its business was being transacted, anything said during the course of that business was immune from proceedings in any court. This immunity is not only complete but is as it should be. It is of the essence of parliamentary system of Government that people's representatives should be free to express themselves without fear" of legal consequences. What they say is only subject to the discipline of the rules of Parliament, the good sense of the members and the control of the proceedings by the Speaker. The courts have no say in the matter and should really have none." Kashyap in his Parliamentary Procedure, 2000 edition at page 673 opined that normally no question on audit reports is permitted to be raised in the House till the PAC has considered the CAG report. At page 2004, Kashyap says that the CAG reports stand referred to the PAC as soon as they are laid on the Table and the PAC after examining the replies and hearing the evidence given before them by the representatives of the Government come to their own conclusions and report to Parliament. At page 2199, Kashyap further states that certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence in connection with the examination of accounts relating to a particular Ministry. When the PAC is examining official witnesses, the CAG (in the case of the State, the Accountant-General) sits to the right of the chairman and assists him as to the evidence being taken and with the permission of the chairman, the CAG may ask a witness to clarify a point and he may further make a statement on the facts of the case. The CAG or any of his senior officers is also present at the other sittings of the PAC and clarifies to the members important points arising out of the accounts to be examined by them. After the examination of the audit reports is completed and all relevant information obtained from the Government, the draft report is prepared by the Secretariat based on evidence, oral and written, given before the Committee by the departmental representatives. The draft report is then submitted to the chairman for approval and a copy thereof is forwarded to the CAG for factual verification. When the PAC sits to consider the draft reports as approved by the chairman, the CAG (in the case of the State, the Accountant-General) is also present at the sitting to point out changes in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e House under article 151(2) of the Constitution. Where a document is presented to the House or furnished to any of its Committees of the Secretariat, it forms part of the records of the House and is the property of the House. The report of the CAG is referred to the PAC under rule 235 of the Legislative Assembly Rules and the House would have exclusive jurisdiction to deal with this report being a matter concerning its internal proceedings. Thus the CAG report is the property of the House and as such the same cannot be in the possession of the respondents for formation of a belief and/or taking an action as envisaged under section 132 of the Act. The question of the scope of the CAG reports and the intervention of the courts came up for consideration before the Division Bench of the Delhi High Court (hon'ble Mr. Justice Arijit Pasayat C.J. and hon'ble Mr. Justice D.K. Jain) in B.L. Wadhera v. Union of India (C.W.P. No. 1716 of 2000) which was decided on May 16, 2001. In this case, the petitioner had on the basis of the CAG reports asked the respondents to perform their constitutional duty to ensure that all the Ministries/Department submit their respective replies/action taken n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nlarge upon it except to say that the House is not responsible to any external authority for following the rules it lays down for itself, but may depart from them at its own discretion. This is equally the case whether a perform their constitutional duty to ensure that all the Ministries/Department submit their respective replies/action taken notes on each paragraph of the CAG report and also sought direction from the respondent to file status report indicating action taken or proposed to be taken on the basis of the irregularities/illegalities, etc., pointed out by the CAG. The issue arose in this case was as to whether the courts can take any action on the basis of the CAG reports. The High Court, inter alia, after considering the constitutional provisions, the provisions of the Act of 1971 and the decided cases held and observed in paras. 9 and 10 as under: "9. ... no court can go into those questions which are within the special jurisdiction of the Legislature itself which has the power to conduct its own business. It was further opined that the Legislature has the jurisdiction to control the publication of its proceedings and to go into the question whether there has been an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts administration of that part of the statute law which has relation to its internal procedure, was finally, established in Bradlaugh v. Gossett [1884] 12 QBD 271 Lord Coleridge C.J. said: "What is said or done within the walls of Parliament cannot be inquired into in a court of law ... Lord Ellenborough, - They would sink into utter contempt and inefficiency without it.' ... If injustice has been done, it is injustice for which the courts of law afford no remedy." For such purpose the House can as held in Bradlaugh [1884] 12 QBD 271, 274: "practically change or practically supersede the law." Further at page 285 Stephen J. concurred and added that the House of Parliament was not a court of justice but the effect of its privilege to regulate its own internal concerns practically invested it with a judicial character when it had to apply to particular cases the provisions of the Acts of Parliament, and if it came to a wrong conclusion, this resembled the error of a court whose decision was not subject to appeal. In Stockdale v. Hansard [1839] 9 AD El 1, it was held that: Lord Denman J.: "Whatever is done within the walls of either assembly must pass without question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment and thus the CAG report is within the special and exclusive jurisdiction of the House and its Committee. The CAG report thus becomes a part of the business of the House and as such anything said or any proceedings undertaken during the course of that business was immune from proceedings before any executive (including the respondents in the present case) or before any court. This is the essence of the parliamentary system of Government. The executive and courts have no say in the matter. As such, in the present case the respondents cannot rely on the said CAG report at all and form a belief for the purposes of initiating an action under section 132 of the Act against the petitioners. The final report of the PAC is binding on the executive particularly any investigating authority that undertakes to perform an investigative function that is to be discharged and/or has already been discharged by the PAC. The very basis of the formation of a belief and the consequent assumption of jurisdiction under section 132 of the Act disappears as the PAC finds that the entire CAG report is untenable. The respondents could not have formed reason to believe on the basis of the said CAG re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is established that the House of Commons is not subject to the control of the executive or the courts in its administration of that part of the statute law which has relation to its internal procedure, was finally established in Bradlaugh v. Gossett [1884] 12 QBD 271. Lord Coleridge C.J., said "what is said or done within the walls of Parliament cannot be inquired into in a court of law ..." Lord Ellenborough said "They would sink into utter contempt and inefficiency without it ... If injustice has been done, it is injustice for which the courts of law afford no remedy." For such purpose the house can as held in Bradlaugh [1884] 12 QBD 271, 274 "practically change or practically supersede the law." Further at page 285 Stephen]., concurred and added that the House of Parliament was not a court of justice but the effect of its privilege to regulate its own internal concerns practically invested it with a judicial character when it had to apply to particular cases the provisions of the Acts of Parliament, and if it came to a wrong conclusion, this resembled the error of a court whose decision was not subject to appeal. The saying that every wrong has a remedy was demonstrably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be information for the purposes of section 132 or be in the possession of the concerned officer and as such the respondents could not have used that information for the purposes of forming the belief. The use of the CAG report and the formation of the belief thereupon would itself vitiate the authorisation in totality as the said CAG report cannot in any event be relied upon by the authorities being a subject within the exclusive domain of the State Legislature. Adverting to the contentions of the respondents in the light of the foregoing discussions on various legal and constitutional issues, it is contended that the CAG report was forwarded to the Union Finance Ministry and as such was legally obtained. The CAG report cannot come into the Department prior to it being laid before the House. The fact that the CAG forwarded the report to the Union Finance Ministry was to facilitate the same to be laid before the House and not to be used by the Ministry or its officials for collateral investigations or purpose. The obligation of the CAG was to forward his report to the Governor who had to lay it to the House and not to forward it to various Government Departments. Documents recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the citizen without any remedy if the limitation, etc., had expired to reopen or review the orders, etc. The answer would be an emphatic "no" as such parallel investigation and findings would lead to a conflict between the two reports- i.e., one by the PAC and another by the Executive in respect of the citizen. Can it be said that the report or finding of the Department would gain supremacy. Saying this would undermine the supremacy of Parliament/Legislative Assembly and this result ought to be avoided. If the contention of the respondents were to be accepted then although in the illustration the PAC report would assume supremacy but still the Department's report recording a contrary finding would co-exist. Such situations could have been avoided, if initially the Department were not permitted to use the CAG's report for any collateral purpose. This is what led to the Division Bench of the High Court of Delhi in B.L. Wadhera's case to hold that the CAG reports are within the special and exclusive jurisdiction of the Assembly and the courts cannot issue directions on that basis. In the present case also, a similar situation has arisen. The CAG had made certain allegations against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parliamentary practice and procedure at page 2335 of his book Parliamentary Procedure, 2000 Edition (extracted at para. 39 hereinabove). As regards the alleged interview of Shri M.K. Subba which is allegedly published in some magazine Rato Gham wherein Shri M.K. Subba is alleged to have made tall claims about his wealth/position/status, which interview was later published in various other magazines in India, it is submitted by counsel for the petitioners that Shri M.K. Subba denied having given any such interview and further this court itself, vide its judgment and order dated October 11, 2001, in Writ Petition No. 508 of 1998, inter alia, held that the magazine, Rato Gham where the interview was published for the first time is fake and fabricated magazine and no such magazine was in fact published. It was contended that the alleged interview of Shri M.K. Subba being a newspaper report cannot be relied on for the purposes of initiating action under section 132. According to me, newspaper reports are second hand secondary evidence. I find merit in the contention of the petitioners. The newspaper reports are hearsay evidence and at best second hand secondary evidence and the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons against his group. So it appears to me that the action taken by the respondent authority as discussed above will be definitely illegal and unconstitutional and it is too much for the respondents authority to initiate the related proceedings on the basis of the said allegations including the alleged personal character and life of Shri M.K. Subba as seen in the related original file No. 1 "DELHI". According to me, it is a case of bias based on non est and unestablished facts. This court would not like to highlight and reproduce this information gathered by the Income-tax Directorate, particularly, the information "A" contained in the confidential file No. 1 as it is not wise on the part of the respondents authority to take action under section 132 read with section 158BC of the Act on the basis of such information including the information as seen in "A" of the original file. According to me, the respondents could not be in possession of the CAG report before it was laid before the House and as such could not have used the same for the purposes of forming the requisite belief under section 132 of the Act. As such, the warrants of authorisation dated June 18, 1999, issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a bad order, the reason being that it could not be said in what manner and to what extent the valid and invalid grounds operated on the mind of the authority concerned and contributed to the creation of his subjective satisfaction which formed the basis of the order. The order has, therefore, to be held illegal though it mentioned a ground on which a legal order of detention could have been based ..." The respondents made an attempt to distinguish these authorities by stating that the first is in the case of a question of law and other is a case of detention where there is an amendment to the said Act. It is stated that the said principle of law is valid and subsisting and is applicable in the facts of the present case inasmuch as unlike the detention laws. There is no amendment of section 132 of the Act providing that the concerned officer can form a belief even if one ground is relevant and the other being irrelevant or non-existent. The satisfaction of the concerned officer is "subjective satisfaction" as 72 the same is based on the information, i.e., documents, etc., before him and it is after evaluating these documents, etc., that he form a belief. As the satisfaction is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... willing to show to the court as well as to the petitioners the reasons which have been recorded for the issuance of the authorisation under section 131(1) of the Act. In Vindhya Metal Corporation v. CIT [1985] 156 ITR 233 (All) [DB], at page 240, wherein in the affidavit filed on behalf of the Department, the Department specifically claimed privilege under section 123 of the Evidence Act from disclosing the records to the petitioners. In H.L. Sibal v. CIT [1975] 101 ITR 112 (P H) at page 128, the respondent-Department claimed privilege in respect of two files marked as I and II, which was turned down by the court by means of a separate order. I do not agree and reject this contention of the petitioners that the documents/information in the possession of the respondents have to be shown to them in the absence of the claim of privilege. In cases where there was no claim of privilege by the Departments, the courts have held that the information is secret and is not to be shown to the petitioners. In this respect, reference is made in Kamal Khosla v. Director of Income-tax (Investigation) [2002] 258 ITR 43 (Delhi) [DB]; Ram Swamp Sahu v. CIT [1992] 196 ITR 841 (Patna); Kalpaka Baz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uash the proceedings under section 132 of the Act as the affidavit was vague. I do not find force in the argument of the petitioners and accordingly, I reject the same. I have held hereinabove that the information in the possession of the concerned officer need not be disclosed to the petitioners and further it is the court and not the petitioners who have to be satisfied of the impugned action of the concerned officer. Further, the respondents can always authorise any officer to file the affidavit who can file the same on the basis of the records. The next argument of the petitioners is that in cases of unconstitutional search as in the present case the property illegally seized has to be returned to the petitioners. It is submitted that in the present case, not only the events on the date of receipt of information and formation of belief are important, i.e., date of issuance of warrants under section 132 of Act for authorising the search and seizure operations, but the events subsequent thereto are equally important as any action taken by the respondents pursuant to the CAG report would not only be illegal and unconstitutional but would also undermine the findings of the PAC as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation gathered from the documents, which had been seized. Counsel for the petitioners contended that in Pooran Mal [1974] 93 ITR 79 505, 524; AIR 1974 SC 348, the apex court was not dealing with unconstitutional searches but illegal searches and as such in that case counsel conceded that there is no specific article of the Constitution prohibiting the admission of evidence obtained in illegal searches. In that view of the matter, the apex court held in that case that neither by invoking the spirit of the Constitution, they cannot spell out exclusion of evidence obtained on an illegal search. Counsel for the petitioners sought to distinguish Pooran Mai's case [1974] 93 ITR 505 (SC) by arguing that in the present case the search and seizure operation is unconstitutional whereas in Pooran Mal's case [1974] 93 ITR 505 (SC), the search and seizure was illegal. It was contended that the respondents cannot use any evidence obtained in the present case as the search herein is unconstitutional. It was further argued that Pooran Mal's case [1974] 93 ITR 505 (SC) did not consider the earlier law laid down by the Constitution Bench of the apex court in CCT v. Ramkishan Shrikishan Jhaver [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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