TMI Blog2020 (12) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... tion must be issued. The authority, ought to record their reasons in reaching the conclusion that such proceedings ought to be initiated against the assessee. The jurisdiction of this Court merely extends to keeping a check on the relevance of the reasons recorded and not go beyond in assessing the sufficiency or adequacy of the reasons provided. The Satisfaction Note was clearly concerned with tax evasion activities conducted by various companies and persons mentioned therein and the same has been relied upon by the authority to initiate the proceedings under Section 132. Further it must be kept in mind that the Court cannot substitute its own opinion in this regard. Petitioner's assertion of having resigned from the Company and nothing to do with the same, cannot be accepted as a disputed fact in writ jurisdiction, more so when records of the Registrar of Companies reflected the position to be otherwise. In any event, whether Petitioner, any which way was connected with the Company or not; or the documents reflecting huge amounts of cash transactions stood reflected in the books of accounts and was not an undisclosed income is again a question of fact which can be easil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search, he was Director in M/s Apcon Homes Private Limited. However, since his resignation in the year 2004, Shri Kaushal Kumar Singh and Dhirendra Kumar Singh took over its affairs, with the Petitioner having nothing to do either with the said Company or any one of the persons managing the same or other group companies referred to in the satisfaction note. To support its case, the Petitioner has placed on individual record returns filed under the Companies Act, indicating his intent of change of Directorship. 5. On facts, the Revenue has refuted and disputed the averments made in the petition. Allegedly, Petitioner and one Mr. Kaushal Singh were deeply associated with the affairs of M/s Apcon Homes Private Limited. As on the date of issuance of search warrants, the Website maintained by the Registrar of Companies reflected the Petitioner to be one of its Directors. Further, Kaushal Kumar Singh was indulging into severe violation of provisions of the Income Tax Act and as such was kept under watch. Investigation reveals that at least seven companies, including M/s Aastha Promoters Developers Pvt. Ltd., M/s Kamini Kaushal Kanchan Construction Pvt. Ltd. and M/s Apcon Homes Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter 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 authorized 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; ... (Emphasis supplied) 9. The Section provides when a competent authority can engage in a search and seizure procedure against any person pursuant to fulfilling the requirement of the 'reason to believe.' The law on the process to be followed under the provisions of search and seizure is now well settled. The principles therein have been determined through multiple cases including ITO v. Seth Bros., (1969) 2 SCC 324, Pooran Mal v. Director of Inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant material will vitiate the belief/satisfaction... 8.6. 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. (emphasis supplied) 12. From the above-highlighted principles, it is certain that for the procedure under Section 132 of the Act to be valid, the competent authority ought to apply their mind to the information in possession. Also, their actions called into question in a Court of law, they ought to, satisfy its application. The Court therefore only ought to examine the relevance of the reasons provided by the competent authority and not substitute its own opinion on whether an order ought to have been issued. 13. As per the law propounded above, it is important to probe whether the relevance petitioner's resignation from the impugned Company, is an exercise of questioning the 'sufficiency or adequacy' of the decision of the authority. Hence, it beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say, can be recorded on the file and the Court can scrutinize the file and find out whether the authority has appropriately recorded the reasons for forming of an opinion that there are reasons to believe to conduct search and seizure. As is evincible, the High Court has totally misdirected itself in quashing the search and seizure on the basis of the principles of non- traverse. 11. In our considered opinion, the High Court would have been well advised to peruse the file to see whether reasons have been recorded or not and whether the same meet the requirement of law. (emphasis supplied) 17. The case of Manish Maheshwari v. ACIT (2007) 3 SCC 794, has also observed as under: 17. The provisions contained in Chapter XIV-B are drastic in nature. It has draconian consequences. Such a proceeding can be initiated, it would bear repetition to state, only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened. 18. The nine Judge bench of the Hon'ble Apex Court in the case, K.S. Puttaswamy v. Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded and not go beyond in assessing the sufficiency or adequacy of the reasons provided. 22. The Satisfaction Note was clearly concerned with tax evasion activities conducted by various companies and persons mentioned therein and the same has been relied upon by the authority to initiate the proceedings under Section 132. Further it must be kept in mind that the Court cannot substitute its own opinion in this regard. 23. Petitioner's assertion of having resigned from the Company and nothing to do with the same, cannot be accepted as a disputed fact in writ jurisdiction, more so when records of the Registrar of Companies reflected the position to be otherwise. In any event, whether Petitioner, any which way was connected with the Company or not; or the documents reflecting huge amounts of cash transactions stood reflected in the books of accounts and was not an undisclosed income is again a question of fact which can be easily taken before the authorities in the adjudicatory proceedings. The same was allowed to be completed by this Court by way of the interim order dated 21st of April, 2010 with the only restraint of not passing a final order. 24. The impugned action ..... X X X X Extracts X X X X X X X X Extracts X X X X
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