TMI Blog2000 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 158BC/144 of the Act by the Deputy Commissioner, Special Range-31, New Delhi-respondent No. 2 herein. According to the petitioner, he and the company, of which he is the managing director, are regular assessees at Delhi with permanent account numbers ; the company is carrying on business of imports in PU synthetic linings along with other items from Taiwan and Korea; on January 7, 1996, the petitioner was informed by his customs clearing agent at Chennai that four consignments imported by his company had arrived at Chennai port and a sum of approximately Rs. 25 lakhs was required for payment of customs duty and allied expenses for getting the goods cleared from the Customs Department ; at that point of time, in its current account with the Corporation Bank, Mint Street branch, Chennai, the company was having approximately Rs. 17 lakhs to its credit and, therefore, a further sum of Rs. 8.5 lakhs was required to be arranged for the aforesaid purpose ; on January 9, 1996, the petitioner went to Chennai with a sum of Rs. 8.60 lakhs, duly reflected in the company's cash book and stayed in Hotel Chola Sheraton, Chennai ; the said money was to be deposited with the bank for making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount, of Rs. 8.5 lakhs, found in his possession at the time of search on January 11, 1996. In response thereto, the petitioner filed the return in his individual capacity declaring nil income. There after, the petitioner received the block assessment order passed by respondent No. 2 in respect of the assessment years 1986-87 to 1996-97 dated January 31, 1997, in the status of "individual" whereby a demand of Rs. 50,13,204 was raised against the petitioner. The action of respondent No. 4 in issuing the authorisation under section 132(1) of the Act and seizure of Rs. 8.5 lakhs is challenged on the ground that there was no "information" on record on the basis whereof respondent No. 4 could form the belief that the said amount recovered from the petitioner represented wholly or partly income which had not been or would not have been disclosed for the purpose of the Act, a condition precedent for exercise of power under section 132(1) of the Act. The contention is that since the authorisation itself was illegal and void ab initio, all proceedings taken consequent thereto are also rendered illegal and void. In support, reliance is placed on a decision of this court in the case of L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended by Mr. Jolly that the information furnished by the CBI provided the foundation for the belief that the amount in question represented undisclosed income of the petitioner and in any case, since the information was coining from the CBI, the action based on it was bona fide. Section 132 of the Act clothes the Director General or the Chief Commissioner and some other officers, in the circumstances mentioned therein, with the power to authorise entry into and search on any building, place, etc., and seizure of any books of account, documents, money, etc., found therein, and prescribes the procedure to be adopted consequent upon such seizures or acquisition. It also specifies the manner in which the documents and the money seized is to be dealt with. Section 132 of the Act has undergone various amendments. The provisions of section 132(1)(c), relied upon by the respondents and material for our purpose, read as follows : "132. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person is in possession of money, etc., which has not been or would not be disclosed for the purpose of the Act. In other words, it must necessarily be linked with the ingredients mentioned in the section. In L. R. Gupta's case [1992] 194 ITR 52 (Delhi), speaking for the court, B.N. Kirpal J. (as his Lordship then was), explained the scope of the expression "information" as under : "The expression 'information' must be something more than a mere rumour or a gossip or a hunch. 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 that action under section 132 is called for any of the reasons mentioned in clause (a), (b) or (c). When the action of issuance of an authorisation under section 132 is challenged in a court, it will be open to the petitioner to contend that, on the facts or information disclosed, no reasonable person could have come to the conclusion that action under section 132 was called for. The opinion which has to be formed is subjective and, therefore, the jurisdiction of the court to interfere is very limited. A court will not act is an appellate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, there has to be a rational connection between the information or material and the belief about undisclosed income, which has not been and is not likely to be disclosed by the person concerned. It is in the light of the above principles of law that we take up the question whether the intimation given by the CBI to respondent No. 5 would constitute "information" and could it be said to be relevant for formation of the belief that the money found in the possession of the petitioner had not been or would not be disclosed for the purpose of the Act. We called for the file containing the reasons recorded and the order passed by respondent No. 4 authorising the search in the room occupied by the petitioner. A xerox copy of the file containing the information and the orders passed by the said respondent has also been placed on record. We are constrained to observe that action under section 132 in the instant case on the basis of material on record has left much to be desired. The file starts with a note dated January 11, 1996, by the ADI, Unit IV(2), to the effect that he had received information from the Superintendent, CBI, that the petitioner, staying in Hotel Chola Sheraton, had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (Investigation), New Delhi, to verify whether the cash of Rs. 8.6 lakhs was reflected in the accounts of the company, but, for reasons best known to the respondents, the outcome of the action has not been disclosed. It can, thus, safely be assumed that nothing adverse was noticed in the books Of account. The normal presumption is that the cash was duly reflected in the books of account. Be that as it may, the intimation simpliciter by the CBI, that the money was found in the possession of the petitioner, which, according to the CBI, was undisclosed, in our view, without something more, did not constitute information within the meaning of section 132 so as to induce a belief that the cash represented the petitioner's income which has not been or would not be disclosed. A bare intimation by the police or for that matters by any person, without something more, cannot be considered sufficient for action under section 152 of the Act, for it would be giving naked powers to the authorities to order search against any person and prone to be abused. This cannot be permitted in a society governed by rule of law. Even assuming that the said amount was not reflected in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for the assessment years 1986-87 to 1996-97 was made on January 31, 1997, creating a total demand of Rs. 50,13,204 on the petitioner in his status as individual. As the title of the said Chapter suggests these are special procedure for assessment of search cases and, therefore, a search under section 132 is a pre-requisite for invoking the provisions of the said Chapter. It is axiomatic that search under section 132, as contemplated in the Chapter has to be a valid search. An illegal search is no search and as a necessary corollary in such a case Chapter XIV-B would have no application. Since, in the instant case, we have come to the conclusion that the search conducted on January 11, 1996, was without jurisdiction and was thus void ab initio, the imminent consequence would be that the provisions of Chapter XIV-B cannot be invoked against the petitioner, pursuant to the said search of his room at Chennai. Consequently, the block assessment order dated January 31, 1997, cannot be sustained. We accordingly quash the same. Before parting with the case we may also deal with the aforenoted two preliminary objections raised by the respondents with regard to the territorial ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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