TMI Blog1998 (11) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... merpur, questioning the legality and validity of the order dated May 4, 1998, passed by the judicial Magistrate First Class and Civil judge (junior Division), Sumerpur District, Pali, holding Shri Suresh Bhai Bhola Bhai jani to be entitled to refund of Rs. 4,80,000 out of Rs. 12,00,000 seized from him by the police on suspicion on the basis of insertion of section 158BFA in the Act of 1961. The petitioner is also aggrieved against the aforesaid order dated May 4, 1998, passed by the judicial Magistrate First Class and Civil judge (J. D.), Sumerpur, in exercise of his power under section 457 of the Criminal Procedure Code, and has filed S. B. Criminal Miscellaneous Petition No. 406 of 1998 seeking a relief to quash the impugned order in so far as it allows income-tax authorities to retain 60 per cent. of the total amount of Rs. 12,00,000 with a direction to return the entire amount of Rs. 12,00,000 seized by the police on the basis of suspicion that the money was either stolen property or had been obtained through some other offence especially when the police failed to prove its suspicion. It is conceded by learned counsel for the parties that in the aforesaid three petitions co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion precedent for its exercise. It is further averred that there was no definable material before respondent No. 2 to arrive at such a reasonable belief as is required under section 132A of the said Act nor any such reasonable belief has been recorded by him. It is alleged in paragraph 14 of the writ petition that the income-tax authority (respondent No.2) is not entitled to issue any direction to the court of the learned Magistrate under section 132A of the said Act in whose custody the money in question is lying as the court of the learned Magistrate does not fall within the definition of "officer or authority" under the aforesaid section. It is also alleged that though the warrant under section 132A of the said Act is addressed to SHO Police Thana, Sumerpur, the Income-tax Department has filed the necessary application dated April 28, 1998 (annexure 8), requesting the court of the learned Magistrate, Sumerpur, in whose custody the money in question is lying, to hand over the cash to the income-tax authority as per warrant of authorisation dated March 27, 1998 (annexure 5). After service of notice a detailed reply has been filed on behalf of answering respondents Nos. 1 to 4 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion of India [1996] Tax LR 960 (Raj). Learned counsel appearing on behalf of the answering respondents opposed the aforesaid argument with vehemence. It is urged by Mr. Bhandawat, learned counsel for the respondents, that the decision rendered by me in the case of Sohanlal Mundra v. Union of India [1996] Tax LR 960 (Raj), is applicable to the facts and circumstances of the present case only in so far as interpretation of scope of section 132A of the Act of 1961 is concerned but as regards interpretation of section 158BC of the said Act it requires reconsideration in view of the insertion of section 158BFA in the Act of 1961 by way of the Income-tax (Second Amendment) Ordinance, 1996, which is made enforceable with effect from January 1, 1997. According to Mr. Bhandawat, at the time of the decision rendered by me in the case of Sohanlal Mundra v. Union of India [1996] Tax LR 960 (Raj), the total undisclosed income of the block period was determinable under section 158BC of the Act of 1961 and tax was leviable at the rate of 60 per cent. only free from interest or penalty, whereas in view of the inserted section 158BFA now interest and penalty are also chargeable on undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas mandatory provisions of section 158BFA of the Act of 1961 were made enforceable with effect from January 1, 1997, therefore, in view of newly inserted section 158BFA of the said Act it can safely be held that respondents Nos. 1 to 4 are entitled to withhold the entire amount of Rs. 12,00,000 in pursuance of warrant of authorisation issued by respondent No. 2 under section 132A of the said Act on March 27, 1998 (annexure 5), and an argument contrary to it is not acceptable. From the aforesaid discussion, I am of the opinion that after enforcement of section 158BFA of the Act of 1961, the order dated May 4, 1998, passed by the Civil judge (junior Division) and the judicial Magistrate First Class, Sumerpur District, Pali, also deserves to be quashed as I am satisfied that the learned Judicial Magistrate, Sumerpur, while deciding Criminal Case No. 135 of 1998 under section 457 of the Criminal Procedure Code, had committed an error in relying upon my decision in the case of Sohanlal Mundra v. Union of India [1996] Tax LR 960 (Raj). It seems to me that the aforesaid mistake has crept in the judgment of the learned judicial Magistrate because the mandatory provisions of the newly i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 132A was called for or not. Suffice it to say that in exercise of extraordinary jurisdiction this court can examine whether the act of issuance of an authorisation under section 132A is arbitrary or mala fide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate authority. According to me the reason to believe must be based on definable material or materials and if the information or the reason to believe has no nexus with the belief or there is no definable material or tangible information for formation of such belief then in such a case action taken under section 132A of the Income-tax Act, 1961, would be treated as illegal." The facts of the case of Vindhya Metal Corporation [1985] 156 ITR 233, rendered by the Division Bench of the Allahabad High Court and affirmed by the Supreme Court (see [1997] 224 ITR 614), reveal that the Corporation filed the writ petition questioning the validity of the warrant of authorisation issued by the Commissioner under section 132A of the Act of 1961. It is held in that case by the learned judges constituting the Division Bench (if the Allahabad High Court that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scrutiny of the original file produced by the Income-tax Department it was found that on the basis of definable materials available before the Income-tax Commissioner such belief was entertainable by a prudent man. After recording the aforesaid finding it was held in the aforesaid case that while the sufficiency or otherwise of the information cannot be examined by the court yet existence of information and its relevance to the formation of the belief can be considered. It was also found from a perusal of the original file that the existence of information and its relevance to the formation of belief by the Income-tax Commissioner was successfully demonstrated, therefore, I refrain from examining the sufficiency or otherwise of the information produced before the Income-tax Commissioner before issuing the warrant of authorisation under section 132A of the Act of 1961. Thus, the interpretation relating to the scope of section 132A of the Act of 1961 still holds water and does not require reconsideration ; however, it is held that in view of the newly inserted section 158BFA of the Act of 1961 the decision rendered by me in the case of Sohanlal Mundra [1996] Tax LR 960 (Raj), relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecutive or high handedness of the party before it against another on the anvil of rationality and reasonableness. With the aforesaid introspection let us examine on the facts of the present case whether reason to believe is based on tangible and credible information having nexus with such belief for taking action under section 132A of the Act of 1961 by way of issuing authorisation under the said section. In the present case also on behalf of the answering respondents, the original record relating to information is produced before me and on a careful scrutiny of the original file produced by the Income-tax Department on the basis of which warrant of authorisation has been issued under section 132A of the Act of 1961, I am satisfied that there were definable materials available before respondent No. 2 to issue a warrant of authorisation under the aforesaid section and an argument contrary to it is not acceptable. The act of issuing the authorisation by respondent No. 2 on March 27, 1998 (annexure 5), in the present case cannot be said to be based on a hunch or incredible information. The act of respondent No. 2 in issuing the authorisation under section 132A of the said Act cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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