TMI Blog1993 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ation were issued under section 132 of the Act. The primary challenge in the writ petition to the action taken under section 132 of the Act is based on the ground that there was no material before the concerned authority for taking action under section 132 of the Act. The action of the respondents under section 132 of the Act is wholly arbitrary, unreasonable and capricious. The respondents have filed written statement and have justified the action taken by them. Mr. H. L. Sibal, senior advocate, for the petitioners, submitted that there was no material before the competent authority for taking action under section 132 of the Act. He further submitted that the tankers which were alleged to be the property of the petitioner were lying usually parked at the petrol pump. These were not concealed goods. For this reason, no action under section 132 of the Act is called for for taking the tankers in possession. He also submitted that the action of the respondent authority being contrary to the provisions of section 132 of the Act is arbitrary, unreasonable and capricious and is, therefore, violative of article 14 of the Constitution. Mr. R. P. Sawhney, standing counsel for the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer, or (B) such Deputy Director or Deputy Commissioner, as the case may be, may authorise any Assistant Director, Assistant Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept ; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available ; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing ; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search ; (iv) place marks of identification on any bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite belief and for reasons recorded by him authorises a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the officer has in executing the authorisation acted bona fide. " Although earlier it was necessary that the authorities concerned should not only have reason to believe but such reason should also be recorded in writing, after the amendment in 1975 of rule 112, it is no longer necessary to record the reason. That rule "after recording his reasons for doing so" has been omitted but the obligation is still there under section 132 that in consequence of information in his possession he had reason to believe, then the concerned authorities may cause search and seizure to be made. The concerned authority, since that amendment, need not record the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to making a roving or fishing enquiry, but could be issued only when there existed a good ground for believing that further proceedings may have to be taken. The Division Bench of the Punjab and Haryana High Court considered the scope of the aforesaid provision of the Act in H. L. Sibal v. CIT [1975] 101 ITR 112 (P H), and observed as follows (at page 138) : "The applicability of section 165, Criminal Procedure Code, to the searches made under section 132(1) give an indication that this section is intended to apply in limited circumstances to persons of a particular bent of mind, who are either not expected to co-operate with the authorities for the production of the relevant books or who are in possession of undisclosed money, bullion and jewellery, etc. Take for instance, a particular assessee who has utilised his undisclosed income in constructing a spacious building. His premises cannot be subjected to a search under this section on this score alone. A search would be authorised only if information is given to the Commissioner of Income-tax that such a person is keeping money, bullion, jewellery, etc., in this building or elsewhere. Further, if an assessee has been regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed must be valid and linked with the ingredients mentioned in this section. There must be rational connection between the information or material and the belief about undisclosed income. While quashing the authorisation which had been issued, the court referred to the note of satisfaction which had been recorded and observed that the reputation of roaring practice or the rumour of charging high rates of fee could not be regarded as tangible material on the basis of which an opinion could be formed as contemplated by section 132 of the Act. The satisfaction of the authorities under section 132 may be subjective but it must be arrived at objectively and on material which is available. In Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639, 689 ; AIR 1967 SC 295, J. M. Shelat J., observed as under (headnote of AIR 1967 SC): "Before the discretion conferred by section 237(b) of the Companies Act, 1956, to order an investigation can be exercised, there must exist circumstances which in the opinion of the authority suggest what has been set out in sub-clause (i), (ii) or (iii). If it is shown that the circumstances do not exist or that they are such that it is impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are circumstances suggesting the existence of one or more of the matters in sub-clauses (i) to (ii) and not about anything else. The opinion must of course not have been arrived at mala fide. It is only after the formation of certain opinion by the Board that the stage for exercising the discretion conferred by the provision is reached. The discretion conferred to order an investigation is administrative and not judicial since its exercise one way or the other does not affect the rights of a company nor does it lead to any serious consequences as, for instance, hampering the business of the company. The investigation undertaken under this provision is for ascertaining facts and is thus merely exploratory. The scope for judicial review of the action of the Board must, therefore, be strictly limited. Now, if it can be shown that the Board had in fact not formed an opinion its order could be successfully challenged. Quite obviously, there is a difference between not forming an opinion at all and forming an opinion upon grounds, which, if a court could go into that question at all, could be regarded as inapt or insufficient or irrelevant. A court cannot go into the question of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition precedent for the exercise of power ; (2) if it is challenged before the court that there was no material before the competent authority to form an opinion, it is incumbent upon the concerned authority to disclose to the court the material on the basis of which action has been taken. If on scrutiny of the material placed before the court, the court comes to the conclusion that there was no relevant material before the authority to come to the conclusion that action under section 132 of the Act is called for, the court in exercise of powers under article 226 of the Constitution can interfere. It is thus clear that power of judicial review in this area is very limited but once the court is satisfied that action has not been taken in accordance with the provisions of the Act and there was no material before the authority to form an opinion, then the court can interfere ; (3) it must also be stated that the court can only see whether relevant material was in existence on the basis of which opinion for taking action under section 132 of the Act could be formed. The court is not entitled to go into the sufficiency of the material. So it is firmly established that even in this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace before the court the relevant material which had been collected to show that the requirements of section 132 of the Act were satisfied. In other words, the Director had information in his possession on the basis of which he had reason to believe that action under section 132 of the Act was called for. Mr. R. P. Sawhney submitted that apart from the complaint and notes of the Assistant Director, Deputy Director and Director, there is no other material on the record. For the purpose of determining the justification of the action, we have to see the material which was available on the date when the search warrant was issued by the Director. At that time, there was no relevant material before the Director to take action under section 132 of the Act. The allegation that Mr. Harmel Singh Gill is having 25 tankers is highly vague and is based upon conjectures. Tankers have to be registered with the licensing authority. No information was collected by the Assistant Director or the Deputy Director to ascertain as to in whose name the tankers are registered and who has made the investment on the purchase of the tankers. It was very easy for the Assistant Director and Deputy Director to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old, on the facts of the present case, that there was relevant material before the authorities for action under section 132 of the Act. The Director relies upon the reports of the Assistant Director and the Deputy Director. No material is disclosed in the report of the Assistant Director or Deputy Director which may justify action under section 132 of the Act. These reports only rely upon the complaint. There is no material in support of the complaint. The allegations made in the complaint are to be duly verified by the concerned authority and there should be material to substantiate the complaint. Although the report of the Director recites that a local enquiry has been made, no material is discussed as to what information has been received by him as a result of the local enquiry. Learned counsel for the Income-tax Department has not placed any information which had been received by the Director as a result of the enquiry. He frankly stated that all the material which was with the Department has been placed before the court. On the basis of the material placed before the court, it appears that there was no material with the respondent authority which may justify the action under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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