TMI Blog2003 (9) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... y 16, 2000, and has prayed for a writ, order or direction in the nature of certiorari quashing the search memo/punchanama dated February 26, 2000, and all the proceedings pursuant to and consequential to the said search. A writ in the nature of mandamus directing the respondents not to initiate any proceeding against the petitioner, consequent upon or arising out of the above search has also been sought for. The petitioner is engaged in the manufacture of C.I. pipe fittings and mainholds. The petitioner is also a registered licensee under the Central Excise Act and has to maintain detailed records as prescribed under the said Act and the rules concerning purchases, utilisation and stock of raw material, production, clearance and stock of finished goods, etc. These stocks and books of account are being checked by the officials of the central excise department from time to time, including by making surprise visits to the factory. The petitioner's factory was set up in the year 1971 and has been an income-tax assessee and has indisputably been filing income-tax returns regularly, and the assessments are up to date and have been completed up to the assessment year 1998-99. It has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation was issued mechanically, arbitrarily or without application of mind. Heard learned counsel for the parties and perused the record. By an order dated March 29, 2000, an advocate Commissioner was appointed by this court to prepare an inventory of the goods in question in respect to which the restraint order has been passed. The said advocate Commissioner has submitted his report which is on the record of the case. Learned counsel for the petitioner has relied on several decisions of the Supreme Court and of this court in support of his submission that the action of the respondent was illegal. In CIT v. Vindhya Metal Corporation [1997] 224 ITR 614, the Supreme Court observed: "Mere unexplained possession of the amount, without anything more could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purposes of the Acts." In Dr. Nand Lal Tahiliani v. CIT [1988] 170 ITR 592, the Allahabad High Court held that the averments of information under section 132 must be in good faith and there must be rational relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner's income which has not been or would not be disclosed. A bare intimation by the police, or for that matter by any person, without something more, cannot be considered sufficient for action under section 132 of the Act, for it would be giving naked powers to the authorities to order search against any person and was prone to be abused. This cannot be permitted in a society governed by the rule of law. Even assuming that the said amount was not reflected in the books of account of the company, as claimed by the petitioner, the mere possession of the said amount by the petitioner could hardly 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 or would not have been disclosed by him for the purposes of the Act, particularly when the petitioner as well as the company, of which he was claiming to be the managing director, were regular assessees with the Income-tax Department." In Dr. Nand Lal Tahiliani's case [1988] 170 ITR 592 (All) the report on the basis of which the Commissioner of Income-tax formed his opinion under section 132 read as follows: "Enquiries with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed and not probably it may not have been disclosed'. It is not left to guessing. It carries with it the impress of certainty. The dwelling house of a person is his fortress. 'Every householder, the good or the bad, the guilty or the innocent, is entitled to the protection designed to secure the common interest against unlawful invasion of the house. Ransacking of the house and the act of taking away the property is an inroad on the citizens' right of privacy': one of the values of civilization. Any unwarranted intrusion on it cannot be countenanced. Reasonable belief exists if the information is not only trustworthy but reasonable and sufficient in itself to warrant the conclusion that the provisions of section 132 were being violated. Because if the exercise of power is bad or unlawful in inception, then it is not validated or nor does it change character from its success. It would not, therefore, be asking too much from the authorities to comply with the basic requirements of the section before they are permitted to invade the secrecy of one's home." The court further went on the say: "The statement that the Director of Inspection has sufficient material in his possession t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power under this section. The Director failed to live up to this expectation. He appears to have surrendered his reason to the report made by his Deputy/Assistant Director which was an attempt to initiate a fishing and roving inquiry for reasons best known to him as he did not consider it proper to place the result of 'local inquiry' before the Director. Any complaint made by a person interested or disinterested should not be jumped upon and made an excuse to initiate proceedings unless it is thoroughly examined and the authorities are satisfied not only about its veracity and authenticity but it must be an information in consequence of which the authority must have reason to believe that income had not been disclosed as action under section 132 transgresses liberty of a citizen. To say the least, such an adventure should be avoided as it not only frustrates the objectives sought to be achieved by such salutary provisions but spoils the reputation of the Department and causes incalculable harm to the person concerned. Therefore, the writ petition deserves to be allowed." The judgment of this court in the case of Dr. Nand Lal Tahiliani v. CIT [1988] 170 ITR 592 has been confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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