TMI Blog1990 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as "the Act"). The impeachment of the searches is on the ground that the ingredients under those provisions or, in other words, the conditions precedent for searches to be made under those provisions were not present in the instant cases. There is no need to go into the facts of the cases in detail, since the scope of the submissions put forth on behalf of the petitioners by their learned counsel, Mr. R. Thiagarajan, impeaching the searches, is confined to specific aspects built on the provisions of section 132(1)(b) and (c) of the Act.. The relevant portion of section 132(1) of the Act may be extracted as follows : "132. Search and seizure. - (1) Where the Director-General or Director or the Chief Commissioner or Commissioner or any such Deputy Director or Deputy Commissioner as may be empowered in this behalf by the Board, in consequence of information in his possession, has reason to believe that (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under subsection (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom ; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : " Before there could be invocation of the power of search and seizure contemplated under section 132(1)(b) and (c), there has got to be, in the possession of either the Director-General or Director or the Chief Commissioner or Commissioner or any such Deputy Director or Deputy Commissioner as may be empowered in this behalf by the Board "the information". That information should have given him reason to believe for purposes of clause (b) that any person to whom a summons or notice has been or might be issued, as contemplated under clause (a), will not or would not produce or cause to be produced any books of account or other documents, which will be useful for or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under the Act for the purpose of clause (c) that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "But the legal position is that if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of underassessment, that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notice under section 34. Whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression reason to believe in section 34 of the Income-tax Act does not mean purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith ; it cannot be merely a pretence. To put it differently, it is open to the court to examine the question whether the reasons for the belief have a rational conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of money, etc., which is undisclosed for the purposes of the Income-tax Act, and the said belief is based on the information in his possession which information has got nexus with two questions, that is, regarding the possession of money, etc., and that the said money, etc., relates to undisclosed income, the court cannot sit in appeal over the decision of the Director of Inspection or the Commissioner regarding the adequacy of the grounds on which the 'reason to believe' entertained by such officer is based. The scrutiny by the court is limited." These pronouncements have exhaustively settled the guidelines with reference to the scrutiny by the court to examine the legal propriety or otherwise of the issuance of search warrants under section 132(1) of the Act. However, Mr. It. Thiagarajan, learned counsel for the petitioners, would submit that, in the present cases, there had been no satisfaction of the conditions precedent for ordering searches and hence this court must strike down the proceedings relating to the searches and inhibit further processes being prosecuted pursuant thereto. Learned counsel for the petitioners was initially insisting that the records relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the petitioners, would submit that, in the instant cases, there were searches conducted on two dates one on November 20, 1987, and the other on November 27, 1987, and for the first search on November 20, 1987, the second respondent is stated to have formed the opinion on the basis of the information in his possession ; and for the search conducted on November 27, 1987, learned counsel for the petitioners states that the third respondent, who issued the search warrants, could not be stated to have had in his possession the requisite information which gave him reason to believe that any one of the contingencies set down in clauses (b) and (c) of section 132(1) of the Act would happen. We concentrated once again on the records produced, taking note of this submission of learned counsel for the petitioners. We find that the third respondent himself was a party to the minutes which preceded the issuance of warrants for searches conducted on November 20, 1987, and even for the search conducted subsequently on November 27, 1987, he has formed his opinion on the information and materials available in his possession before such searches were ordered. What the third respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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