TMI Blog2019 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. The Affidavit-in-reply filed on behalf of the respondent speaks for itself. Initially the writ applicant declared that he had withdrawn the amount from his bank accounts as well as from the accounts of his wife. He also declared that some amount was also taken from his cash book. - When asked to submit the bank account details and cash withdrawals so far as the account of his wife is concerned, the writ applicant declined to submit the details and prayed for some more time to produce the relevant documents. The writ applicant was also asked to submit confirmation from the parties with respect to cash payment along with the relevant cash as well as bills. However, the information provided by the writ applicant was not found convincing. The authority found the statement of the writ applicant recorded periodically quite contrary to each other. In the overall view of the matter, we are convinced that we should not interfere in the present matter. We do not find any palpable error or gross illegality going to the root of the matter in the issue of Warrant of Authorization under subsection (1) of section 132A - R/SPECIAL CIVIL APPLICATION NO. 3347 of 2019 - - - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has 38 bank accounts and 40 offices in all over India. It is submitted that his business is in entire country and mainly dealing with the farmers and therefore, the business is on the basis of the cash amount but the petitioner is regular paying income tax and shown all the transaction is his account. ( 4). It is submitted that the petitioner for the purpose of the business was at Nagpur (Maharshtra) and he collected cash from 01/04/2018 to 28/08/2018 and he was having ₹ 2,45,50,000/- on hand and for security reasons, he has decided to send cash from Nagpur to Ahmedabad by Angadia service and he travelled alone from Nagpur to Ahmedabad and will collect cash from Angadia at Ahmedabad himself. Accordingly he sent the said amount through V.P.Angadia and Courier Services. It is submitted that said courier service provider has packed said cash in seven packs at Nagpur Branch and the petitioner also went to Ahmedabad from where he has to collect the cash. It is submitted that two Angadia person namely Surjabhai Mehta and Rajendrsinh Vaghela were carrying cash from Nagpur to Ahmedabad in bus. It is submitted that when they at the Jurisdiction of Songadh Polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The petitioner has satisfied the department regarding the cash amount. ( 9). It is submitted that the petitioner has shown the entire cash in his cash book and therefore, it cannot be said to be illegal cash. The petitioner has submitted copy of the cash book certified by the Chartered Accountant. ( 10). It is also pertinent to note that recently on 04/01/2019, the cash amount of ₹ 61,82,000/- was seized by the respondent no.1 department and they have immediately investigated the matter with the present petitioner and it is found that on 31/03/2016 ₹ 14,96,62,718/-, on 31/03/2017 ₹ 9,59,38,652/- and 31/03/2018 ₹ 27,75,30,010/- was the balance of cash shown in the balance sheet and even on 04/01/2019 cash balance was of ₹ 3,33,15,028/- was shown for his business. Therefore, the respondent No.1 Department come to the conclusion that it is purely a valid and legal amount and immediately released the amount by his order dated 05/02/2019. ( 11). It is submitted that the date 30/10/2018 is very important because the alleged cash was found on 30/08/2018, the petitioner has filed an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajendrasinh were recorded on oath under section 131 of the Act on dated 7/9/2018. Both made themselves clear that they were not the owners of the cash but they were only employees of the courier service company. 4.04. Thereafter, Summons under section 131 of the Act came to be issued to Kaushikkumar Dahyalal Soni, a Partner of M/s.V.P. Angadiya and Courier Service, Ahmedabad and his statement was also recorded on 7/9/2018 as regards the recovery of the cash. The Partner of the Firm declared that the seized cash is of the writ applicant. The cash was handed over to the courier firm at Nagpur to be delivered to Ahmedabad. 4.05. It appears that the statements of the writ applicant came to be recorded on dated 14/9/2018 under section 131 of the Act. In his statement, the writ applicant stated that he is engaged in the business of trading of vegetables, fruits and flowers in the States of Gujarat, Maharashtra etc. He further declared that he is the proprietor of a Proprietorship firm running in the name of M/s.S.K. Traders. The writ applicant further stated that the said cash of ₹ 2,45,50,000/- was withdrawn from his various bank accounts and also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 132A of the Income Tax Act, 1961 No.000451 To, The Deputy Director, Abhishak Gramin The Deputy Commissioner, The Assistant Director, Aditya Bikram The Assistant Commissioner, The Income-Tax Officer, The assets taken into custody by Shri M.V.Kikani, Police Inspector, Songadh Police Station, (Name and designation of the officer or authority) represent either wholly or partly Income or property which has not been or would not have been, disclosed for the purpose of the Indian Income-Tax Act, 1922, or the Income-Tax, 1961, by Surajbhai P. Mehta, Rajendrasinh V. Vagghela and Kamlesh R.Shah (Name of the person) from whose possession or control such asset have been taken into custody by the officer/authority aforesaid. This is to authorized you as above (Name of the Deputy Director or the Deputy Commissioner or of the Assistant Director or of the Assistant Commissioner or the Income-tax Officer). To require the said. Officer or authority to deliver to you the books of account, other documents or assets as aforesaid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of fruits, vegetables and flowers and that too on large scale. According to Mr.Shah, the amount which has been seized in cash, is to be paid to the farmers from whom the writ applicant purchased the goods to be sold to the retailers. Mr.Shah laid much emphasize on the fact that in the bank accounts, huge amount has been shown which would indicate that the cash was, in fact, withdrawn from the bank accounts as well as from the cash book. 5.05. Mr.Shah also brought to our notice that the writ applicant submitted few documents vide letter dated 18/10/2018. The documents are in the form of (1) Indemnity Bond; (2) Cash Book duly certified by the Chartered Accountant Mr.Mayur Shah, for the period between 1/4/2018 and 21/8/2018; (3) sales of Vegetables and Fruits of dated 10/4/2018, 10/5/2018, 10/6/2018 and 10/7/2018 by 45 offices of the writ applicant all over the India in the name of M/s.S.K. Traders. All these details also were in the form of certified copies duly signed by the Chartered Accountant. 5.06. Mr.Shah, in support of his submissions, has placed reliance on the following decisions : ( 1) Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awad, Police Inspector, Songadh Police Station, Tapi regarding interception of cash of ₹ 2,45,50,000/- from Surajbhai Pravinchandra Mehta and Rajendrasinh Viramji Vaghela. Cash was intercepted from a Shreenath Travels bus on 30.08.2018, in which above persons were travelling from Nagpur to Ahmedabad via Surat. Upon physical search of bus, two bags containing 7 packets of cash totalling ₹ 2,45,50,000/- was found by Songadh Police, Tapi. When enquiries were made from these two persons, no legitimate documentary evidence was produced by them before the police. Therefore, information in this regard was passed on to Additional Director of Income-tax (Investigation), Surat on 30.08.2018 requesting to take over investigation in this matter. The enquires in this case were assigned to the undersigned i.e. Deputy Director of Income-tax (Investigation), Unit-3, Surat by Addl. DIT(Inv.), Surat. Upon receipt of intimation about seizure of cash, investigation was undertaken and statements of the Surajbhai Mehta and Rajendrsinh Vaghela along with panchnama and other documents were called for from Police Inspector, Songarh Police Station vide letter dated 04.09.2018. On perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when his statement on oath was recorded u/s 131 of the Act. The above facts that he did not appear on 11.09.2018 despite being informed about it were again confirmed by him in Statement recorded u/s 131 of the Act. I submit that when asked about the source of ₹ 2,45,50,000/- cash seized by Songadh Police, the Petitioner stated that he had withdrawn amount from his bank accounts as well as from his wife s bank accounts. The Petitioner further stated that some amount was also taken from his cash book. However, when asked to submit bank account-wise and date-wise cash withdrawals along with details about cash withdrawal from his wife s bank accounts to support his claim, the Petitioner expressed his inability to submit the details and asked for some time to produce required documents. The Petitioner was asked that despite the fact that he was informed on 07.09.2018 itself and again on 11.09.2018 about documentary evidences required about the source of ₹ 2,45,50,000/- cash seized, he appeared on 14.09.2018 before the investigating officer without the required documentary evidence in this regard. In reply, the Petitioner merely stated that he needed more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner has not submitted satisfactory explanation about the source of cash seized. After perusing and applying mind on the above information and inquires, warrant of authorization u/s 132A of the Act was issued by the Pr. Director of Income Tax (Investigation), Surat on 30.10.2018. Thus, it becomes clear that that information about cash seizure was passed on to Income tax authority by Songadh Police on 30.08.2018. Further, about two months time was consumed in procuring warrant u/s 132A of the Act because enquiries had to be conducted about the source of cash seized. I submit that in due compliance of principles of natural justice, sufficient opportunities were provided to the Petitioner to submit evidence in support of his claim and thereafter in the absence of any satisfactory explanation, reason to believe had to be formed that prima facie the cash seized was unexplained and unaccounted for. I submit that the warrant of authorization was issued after following the laid down procedures. II. With reference to paragraph 8, the contentions therein are denied. I submit that the following submissions were made by the Petitioner on 18.10.2018: (1) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of cash seized. It cannot be argued that since the investigating officer i.e. DDIT(Inv.), Ajmer was satisfied with the explanation offered related to cash seizure of ₹ 62,82,000/-, the same explanation is sufficient to justify the source of cash seizure of ₹ 2,45,50,000/-. In the instant case, the petitioner has failed to offer a satisfactory explanation about the source of cash seized even after providing multiple opportunities. Thus, the report of DDIT(Inv.), Ajmer dated 05.02.2019 has no relevance to this proceedings. V. With reference to paragraph 11, the contentions therein are denied. I submit that there are laid down rules and procedure to be followed while enquiring about cash seizure information which was passed on to investigation officer by Songadh police. The information was received by the investigating officer on 30.08.2018 and the enquiry into the case began thereafter. Two months time was consumed in procuring warrant u/s 132A of the Act because enquiries had to be conducted about the source of cash seized and as per principles of natural justice, sufficient opportunities had to be provided to the Petitioner to submit eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12(F), I reiterate that ample opportunities were provided to the petitioner to submit documentary evidences on 11.09.2018, 14.09.2018, 18.10.2018 etc. The petitioner stated on oath in his statement u/s 131 of the Income Tax Act, 1961 that the source of cash seized are (1) withdrawals from his bank accounts (2) withdrawals from his wife s bank accounts and (3) cash book. The petitioner was asked to submit date-wise and bank account-wise withdrawals in support of his claim. However, no such required details have been submitted by the petitioner before the respondent till date. Thus, the contention of the petitioner that no opportunity to be heard was given to him is totally false, incorrect and misleading. X. With reference to para 12(G) and 12(H), the Petitioner has reiterated that the cash seized is accounted amount and warrant of authorization is illegal. XI. The said contention is denied. I reiterate that no satisfactory explanation has been provided by the petitioner to explain the source of cash seized. Reasons to believe has been recorded in writing based on the information in possession of the Pr. DIT(Inv.), Surat in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then, the Director General or Director or the Chief Commissioner or Commissioner may authorise any Additional Director, Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer (hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. ( 2) On a requisition being made under sub-section [1], the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. [ 2] Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the court cannot substitute its own opinion for that of the Commissioner. 7.04. It is further true that when issuance of an authorization under section 132A of the Act, is challenged in a court of law, it will be open to the petitioner to contend that on the facts or information disclosed, no reasonable man could have arrived at the conclusion that the action under section 132A was called for although the formation of opinion under the said section is subjective. It is well to remember that the jurisdiction under Article 226 of the Constitution of India of this Court is very limited. In fact, this Court should not act as an appellate or revisional court and as such, has no justification to examine meticulously the information in order to decide for itself as to whether the action under section 132A was called for or not. Suffice it to say that in exercise of the extraordinary jurisdictions this Court can examine whether the act or issuance of an authorization under section 132A is arbitrary or malafide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate authority. According to us, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under the circumstances. 12. Since, this application has been filed challenging the impugned warrant of authorization dated February 16, 2011 issued by the respondent No.1 under section 132A of the Act, we cannot lose sight to of the fact that the scope of investigation is very limited at this stage. 13. The High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a warrant of authorization issued under Section 132A of the Act, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may in such a proceeding, in exercise of its powers, ascertain whether the authority issuing such authorization is the appropriate authority who in consequence of information in his possession, had reason to believe that the conditions mentioned in either of the sub-sections (a) or (b) or (c) of the Section 132A (1) were present. The Court may also decide whether from the circumstances of the case, the appropriate authority might have reason to believe that any of those conditions existed. However, the jurisdiction of the Court extends no further. Whether on the information in his possession, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of justifying the issue of Warrant of Authorization. 7.08. In the case of N.K. Jewellers (supra), an employee of the assessee was returning from Amritsar and he was found to be in possession of ₹ 30,00,000 in cash in a search by the railway police. Upon receipt of the information by the department, a Warrant of Authorization under section 132 of the Act was issued by the Director of Income Tax and the cash of ₹ 30,00,000/- was requisitioned and assessed. The proceedings for assessment for the Block Period from April 1, 1991 to June 3, 2000 under section 158 BD of the Act were initiated. The explanation of the assessee before the Assessing Officer was that his employee had gone to Amritsar to make some purchase of gold but the transaction did not materialize. The Assessing Officer was of the view that the amount represented the sale of goods made by the assessee on the earlier occasions and the sale proceedings were being carried back to Delhi. After considering the statements of various persons and other materials on record, the authorities came to the conclusion that it was concealed income and assessed the assessee to tax. It was argued before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unch. The Court, therefore, while examining the validity of the authorization issued under section 132 of the Act would firstly be required to examine as to whether there exists any information of the nature referred to hereinabove in the possession of the concerned officer, on the basis of which he could have formed a reason to believe. The next requirement which would be required to be satisfied is as to whether before issuance of the authorization, the concerned official has recorded the reasons for his belief. If reasons have been recorded, the opinion which has to be formed being subjective, the jurisdiction of the court to interfere is very limited. The court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether the action under section 132 is called for. But the court would be acting within its jurisdiction in seeing whether the act of issuance of authorization under section 132 is arbitrary or malafide or whether the satisfaction recorded is such which shows lack of application of mind on the part of the appropriate authority. The reason to believe must be tangible in law and if the information or reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction that if summons under section 131 of the Act and notice under section 142(1) is issued, the persons referred to in the satisfaction note would not be produced or cause to be produced, the books of account or other documents which will be useful or relevant to any proceedings under the Income Tax Act within the meaning of section 132(1) (b) of the Act. The respondent No.2, Director General of Income Tax (Investigation) has also perused various notes recorded by the ADIT (Investigation), the Additional DIT (Investigation) as well as the DIT (Investigation) as well as the material on record and has discussed the same with concerned officials. While recording satisfaction, the respondent No.2 has discussed the relevant facts on record and has recorded satisfaction that this is a fit case for issue of warrant of authorization under section 132(1) of the Act. In the affidavit-in-reply filed by the respondent No.2, it has been asserted that the satisfaction note produced for the perusal of the Court shows that pre-search inquiries clearly indicated that the assessee group was in possession of documents which would not be produced by issuance of summons or other notice in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government Railway Police from the possession of one Vinod Kumar Jaiswal, resident of Imamganj, Durga Devi, Mirzapur; ( b) at the time to the seizure by the Railway Police, no papers or documents in regard to the ownership or possession of the amount were in possession of Vinod Kumar Jaiswal, and ( c) no person by the name of Vinod Kumar Jaiswal was borne on the General Index Register of Incometax assessee of the Income-tax Office at Mirzapur. The High Court, after considering the material on which reliance was placed by the Commissioner, has held that on the information in possession of the Commissioner no reasonable person could have entertained a belief that the amount in possession of Vinod Kumar Jaiswal represented income which would not have been disclosed by him for purpose of the Acts. The High Court has observed :- Vinod Kumar Jaiswal, according to the information in possession of the Commissioner, was not borne on the General Index Register of Income-tax assessee of the Income- Tax Offices at Mirzapur to which place he belonged. Obviously, therefore, there was not occasion for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the satisfaction came to be recorded for the perusal of this Court. We have observed above that on scrutiny of the records produced before this Court, it is evident that a detailed proposal / satisfaction note had been prepared by the DIT (Investigation) based on the information collected during the inquiry which has been duly considered by the Principal DIT, who in turn recorded the satisfaction that this was a fit case for action under section 132(1) of the Act. 7.10.2. In the case of Prakash Jaichand Shah (supra), this Court had the occasion to consider the decision of the Supreme Court in the case of Vindhya Metal Corporation (supra). In the said case, the petitioner therein was carrying cash of ₹ 11,00,000 and was detained by the police authorities and the cash of ₹ 11,00,000 was seized by the police authorities under section 102 of the Code of Criminal Procedure. Later, the Police Officer informed the Income Tax department to record the statement of the petitioner therein, thereafter the Dy.Director prepared a Satisfaction Note and placed the same along with the statement and other documents before the respondent No.1 therein who recorded the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e condition for entry into and making search of any building or place is the reason to believe that any books of account or other documents which will be useful for, or relevant to, any proceeding under the Act may be found. If the Officer has reason to believe that any books of account or other documents would be useful for, or relevant to, any proceedings under the Act, he is authorized by law to seize those books of account or other documents, and to place marks of identification therein, to make extracts or copies therefrom and also to make a note or an inventory of any articles or other things found in the course of the search. Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the tax-payer, the power must be exercised strictly in accordance with the law and only for the purposes for which the law authorizes it to be exercised. If the action of the officer issuing the authorization, or of the designated officer is challenged the officer concerned must satisfy the Court about the regularity of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider the reasonableness of the restrictions or curbs placed on the freedoms mentioned in Article 19(1)(f) and (g), one cannot possibly ignore how such evasions eat into the vitals of the economic life of the community. It is a well-known fact of our economic life that huge sums of unaccounted money are in circulation endangering its very fabric. In a country which has adopted high rates of taxation a major portion of the unaccounted money should normally fill the Government coffers. Instead of doing so it distorts the economy. Therefore, in the interest of the community it is only right that the fiscal authorities should have sufficient powers to prevent tax evasion. 8. What is significant and, therefore, must be noticed is that in both the aforesaid two decisions while this Court has emphasized the necessity of recording of reasons in support of the reasonable belief contemplated by Section 132, nowhere, in either of the decisions any view had been expressed that the reasons recorded prior to authorizing the search needs to be disclosed or communicated to the person against whom the warrant of authorization is issued. The same is the view expressed by this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formation of opinion must be honest and bonafide. Consideration of any extraneous or irrelevant material will vitiate the belief/satisfaction. ( iv) Though Rule 112(2) of the Income Tax Rules which specifically prescribed the necessity of recording of reasons before issuing a warrant of authorization had been repealed on and from 1st October, 1975 the reasons for the belief found should be recorded. ( v) The reasons, however, need not be communicated to the person against whom the warrant is issued at that stage. ( vi) Such reasons, however, may have to be placed before the Court in the event of a challenge to formation of the belief of the authorized official in which event the court (exercising jurisdiction under Article 226) would be entitled to examine the relevance of the reasons for the formation of the belief though not the sufficiency or adequacy thereof. 7.12. The Affidavit-in-reply filed on behalf of the respondent speaks for itself. Initially the writ applicant declared that he had withdrawn the amount from his bank accounts as well as from the accounts of his wife. He also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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