TMI Blog1995 (7) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ani, who was the managing director of Saraikela Glass Works Ltd., Kandra, Bihar. The said Prem Chandra Varshani died about two years back and on his death his younger brother, Subhash Chandra Varshani, took over as the managing director of the said company. The income-tax authorities conducted a search on February 2, 1989, at the business and residential premises of Subhash Chandra Varshani at Kandra, Calcutta, Madras and Baroda and also at his other sales and business premises in different parts of the country. In that connection, the income-tax authorities also raided the residential premises of petitioners Nos. 1, 2 and 3 on February 2, 1989, along with a large number of Income-tax Officers, inspectors and police force. The team was headed by Sri V. K. Pandey, Director of Investigation, Allahabad, who informed petitioner No. 1 that the search was directed against him in connection with the search against the said Subhash Chandra Varshani, the managing director of Saraikela Glass Works. It is contended that after the death of his sister's husband, the petitioners are remotely connected with Subhash Chandra Varshani and there was no reason for searching the premises of the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the counter-affidavit that Subhash Chandra Varshani aforesaid was the managing director of the said company. During the search conducted at the business and residential premises of Subhash Chandra Varshani and Saraikela Glass Works Ltd., the documents connected with the business transaction between the said company and Hanuman Minerals, proprietary business of petitioner No. 1, were found and seized. Therefore, it is incorrect to say that nothing connected with the petitioner was found during the aforesaid search. It is contended that the search and seizure operations against the petitioners were justified in so far as the concerned authorities had reason to believe that assets and valuables and/or documents connected with the transaction with Saraikela Glass Works Ltd. will be found in the said premises. The search and seizure operations were strictly conducted in accordance with section 132 of the Act and rule 112 of the Income-tax Rules, 1962. It is also alleged that the search party had the necessary authorisation in their possession at the time of the search and the same was shown to petitioner No. 1, who had signed it. It is contended that during the search at the premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been, or would not be, disclosed for the purposes of the Act. Learned counsel for the assessee contended that search is a serious encroachment on the right of privacy of the citizen and, therefore, can be conducted only if the requirements of section 132 are fulfilled. He placed reliance on the two judgments of this court in Dr. Nand Lal Tahiliani v. CIT [1988] 170 ITR 592 and Vindhya Metal Corporation v. CIT [1985] 156 ITR 233 and a judgment of the Punjab and Haryana High Court in Harmel Singh v. Union of India [19931] 204 ITR 334. In Vindhya Metal's case [1985] 156 ITR 233 (All), the power of requisition of books of account, assets was exercised by the income-tax authorities to take possession of certain amount of cash that was in the possession of the railway police. This power was exercised on the basis of the information that a certain person was in possession of a huge amount of cash and did not have documents regarding its ownership and the fact that his name was not found in the list of income-tax assessees. It was held that this information could not be treated as sufficient information leading a reasonable man to the inference that the amount would not be disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in his possession in consequence of which he may form the necessary belief, the matter is not thereby subject to scrutiny by the court. The mere fact that it may ultimately be found hat some documents seized were not directly relevant to any proceeding under the Act or that another officer with more information at his disposal may have come to a different conclusion will not be a ground for setting aside the order and the proceeding for search and seizure. It is in the light of the above law that the validity of the actions under challenge is to be scrutinised. We may first take up the search held on February 2, 1989. This search was completed and was authorised by respondent No. 2, the Deputy Director of Income-tax (Investigation), Allahabad. Learned counsel for the respondents produced before us the record of the proceedings and supplied photostat copies of the report of the Assistant Director asking for the issue of authorisation under section 132 to enable him to search the premises of petitioner No. 1. A copy of the warrant of authorisation has also been placed before us and it bears the signature of petitioner No. 1 under the endorsement dated February 2, 1989, st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiate the search against the petitioner. It was on the request of the Deputy Director of Investigation, Calcutta, who was in the process of search at the business premises of Saraikela Glass Works Ltd. and, as the report of the A. D. I. shows, who had gathered information that the petitioner appeared to be in possession of some incriminating documents and assets pertaining to the said company and its managing director, Subhash Chandra Varshani. It was not even contended that during the search against Saraikela Glass Works Ltd. no such information was gathered. Therefore, the search on February 2, 1989, conducted at the residential premises of the assessee was a consequential search and on the basis of the telephonic information received by the A. D. I., Investigation at Allahabad, the Deputy Director of Investigation could reasonably believe that petitioner No. 1 was in possession of books of account or other documents which will be useful for or relevant to the proceedings under the Income-tax Act, 1961, against the said company or its directors. The close relationship between petitioner No. 1 and the persons in control of the said company would certainly lead one to believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation) Seen. I after that authorisation is permitting for operating it. (Sd.) Illegible <?xml:namespace prefix = st2 /> D. D. I. T. February 27, 1989." This report was made 25 days after the earlier search was conducted and in the meantime, the authorities at Allahabad must have perused the material already seized from the residential premises of petitioner No. 1 and also could have had detailed information from their counterpart at Calcutta to satisfy themselves about the necessity of a search of the locker in question. In spite of this sufficient opportunity, the report, as reproduced above, does not state that there was any information that any valuable assets or documents useful for the assessment of Saraikela Glass Works Ltd. and/or its directors was reasonably expected to be stored in the locker. Nor does the report state that the said locker is believed to contain the unaccounted income/assets of petitioner No.1. The report on its very face does not contain any material or reason to justify a search of the locker. The reluctance of petitioner No. 1 to allow the locker to be searched cannot be the basis of the required reason to believe. In our view, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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