TMI Blog2020 (12) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... be found - HELD THAT:- In the case of the Petitioner, as explained above, the WoA u/s 132(1) in the case of Kochar Group pertained to the Petitioner s Premises wherein the Issuing Authority had reasons to suspect that the undisclosed income, books of account and documents of the Kochar Group were kept or to be found. Accordingly, the search and seizure under Section 132(1) in respect of the Kochar Group was carried out at the premises of Vikas Chowdhary on 06.02.2019.Also perused the WoAs issued by Respondent No. 2 under which the searches were initiated. As shown to us, both have been issued in Form No. 45, under Section 132 r/w Rule 112(1) of the Income Tax Rules 1962. WoA No. 7257 dated 05.02.2019 was issued to the Primary Persons i.e. the Kochar Group, and was in respect of the Petitioner s Premises. WoA No. 7275 dated 12.02.2019 was issued to the Petitioners Shilpa and Vikas Chowdhary, and was in respect of their Locker No. 150F. Thus, the distinction sought to be drawn by Mr. Shrivastava is wholly irrelevant. Further the assumption and contention that, since Vikas Chowdhary was not the searched person under the WoA dated 05.02.2019, his premises could only be searched und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the impugned WoA against the Petitioners has been issued not merely on the ground of recovery of locker key, as Mr. Srivastava has sought to project. The formation of belief by the authorities is also based on the statements of the Petitioners. The officers made an attempt to ascertain and verify the facts, post the discovery of the locker key. The satisfaction note also records that Petitioners were asked to furnish details of the contents of the locker, but did not provide satisfactory explanation. In these circumstances, we believe that the Revenue was well within its right to proceed to search the Petitioner s locker under section 132(1). Court to not evaluate the adequacy of reason to believe - foundation for having reasons to believe in terms of the statute - The principle, as reiterated time and again by the Courts, necessary to be borne in mind is that the words reason to believe mean that the reason should exist. The existence of such a belief can be challenged by the assessee, but not its sufficiency. The Court can examine whether the reasons to believe have a rational connection or are relevant bearing to the formation of such belief, and are not extraneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering that in both the petitions the factual narrative, nature of reliefs sought and the grounds of challenge are nearly identical, the same are being decided by way of this common judgment. Facts in W.P.(C) 5213/2020 2. The facts of the case, shorn off unnecessary detail, are as follows:- 2.1. On 05.02.2019, WoA were issued under Section 132(1) of the Act in the case of the Kochar Group , comprising of Sh. Avtar Singh Kochar, Sh. Gyandeep Singh Kochar, Sh. Hari Singh Kochar and M/s HL Impex (P.) Ltd. [hereinafter collectively referred to as Primary Persons ]. Of the above WoAs, one in relation to Sh. Avtar Singh Kochar pertained to the residence-cum-office of the Petitioner Shri Vikas Chowdhary at E-12/3, Vasant Vihar, New Delhi [hereinafter referred to as Petitioner s Premises ]. 2.2. On 06.02.2019, a search and seizure operation was carried out at Petitioner s Premises pursuant to the above WoA dated 05.02.2019. The said search commenced at 12:30 PM and was temporarily concluded after a period of four days i.e. on 09.02.2019, at 09:00 PM, as revealed by one panchnama dated 09.02.2019. The said panchnama, prepared under the said WoA issued against the Prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . She also faces the assessment proceedings pursuant to notice issued u/S. 153A/143(3) of the Act. The facts are identical to what has been stated above in W.P.(C) 5213/2020, except that the search and seizure operation carried out on 06.02.2019 at the Petitioner s Premises was in pursuance to the WoA addressed as residence-cum-office of Sh. Vikas Chowdhary bearing No.E-12/3, Vasant Vihar, New Delhi dated 05.02.2019 issued under Section 132(1) of the Act in the case of Primary Persons. Contentions of the Petitioners 4. Mr. Srivastava learned counsel for the Petitioners raised several contentions to assail the WoA. The same are summarized as follows:- 4.1. The search and seizure action is entirely arbitrary and mala fide. The Competent Authority did not apply its mind while issuing the impugned WoA against the Petitioners or in conducting the search. The sequence of events and the actions of the search party reveal that Respondents conducted a general search on the Petitioner without any evidence that the Petitioners were in possession of any documents or valuable articles representing undisclosed income of the Primary Persons. The action is thus abuse of power of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e test of reason to believe , and such reasoning has to be based on, and in consequence of information, which is already in possession of the competent authority. (iii) The existence of locker, its key or its contents was not known prior to search conducted on 06.02.2019, and came to be recorded only in the Panchnama dated 09.02.2019 drawn during search. Thus, the competent authority had no material in its possession to harbour any reasons to believe that the locker contains any jewellery or undisclosed income belonging to the Petitioner. (iv) During the entire search action conducted on 06.02.2019, the Petitioners were not questioned about the locker s key, contents, or the source of acquisition of the contents, until the issuance of the impugned WoA dated 12.02.2019. (v) The process of questioning or recording statements of persons covered u/s 132(1A) must be restricted to the extent the same pertains to the material found/seized in relation to the Primary Persons. (vi) No adverse cognizance can be derived merely on the basis of socalled suspicion, surmises and conjectures. The Courts in several decisions have held that the formation of opinion as to belief must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch was conducted under Section 132(1) of the Act. This understanding forms the basis of the misguided grounds of challenge raised in the Petition. Elaborating on this aspect, Mr. Singh explained that the scope of Section 132(1) and 132(1A) is entirely different. Further, he elucidated that in the present facts, two separate search proceedings took place. He submitted that amongst the WoA dated 05.02.2019 under Section 132(1) issued in the case of the Kochar Group, one WoA pertained to the Petitioner s Premises, because the Issuing Authority had reason to believe that undisclosed income/books of accounts/documents of the Kochar Group were to be found there. The said reason to believe, as noted in the Satisfaction Note alongwith the other relevant material, have been placed by Respondents before the Court in a sealed cover. Thus, the initial search and seizure action, initiated at the Petitioner s Premises on 06.02.2019, was in the case of the Kochar Group. During said search, material and information was discovered which constituted reason to believe for WoA in the case of Vikas Chowdhary and Shilpa Chowdhary. Accordingly, a fresh WoA dated 12.02.2019 (impugned) was issued in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (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-Section (1) of Section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued 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 this Act, or (c) 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 or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income Tax Act, 1922 (11 of 1922), or this Act (hereinafter in this Section referred to as the undisclosed income or property), then,- (A) the Director of Inspection or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able article or thing in respect of which an officer has been authorised by the Director of Inspection or any other Commissioner or any such Deputy Director of Inspection or Inspecting Assistant Commissioner as may be empowered in this behalf by the Board to take action under clauses (i) to (v) of subSection (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under subsection (1), such Commissioner may, notwithstanding anything contained in Section 121, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. X X X 8. The foundation of the petition, indeed, is based on the premise that the search action against the Petitioners is under Section 132(1A) of the Act, as is evident from the grounds of challenge, wherein it was urged that it can be undoubtedly inferred that the search action at the residence of the Petitioner between 06.02.2019 and 09.02.2019 was conducted u/s 132(1A) of the Act . . The Respondents firmly defend their action and argue that no WoA were issued under the said provision. Thus, at the outset, we would li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner. On physical surveillance movement of cash was observed from the Petitioner s premises by motorcycle borne couriers. (viii) On the basis of technical surveillance, it was also discovered that the Kochar Group was involved in illegal betting business. (ix) The reasons to believe identified the key locations where undisclosed income/ assets/ documents and other incriminating evidence is likely to be found. One of the 11 premises was residence cum office of the Petitioner at E12/3, Vasant Vihar, New Delhi. [Emphasis added] 10. The Revenue thus suspected that the Petitioner s Premises was a location where undisclosed income/assets/documents/other incriminating evidence relating to the Kochar Group was likely to be found. Thus, amongst the various WoA dated 05.02.2019 in the case of Kochar Group, one was issued pertaining to the Petitioner s Premises. 11. Let s now examine the relevant provision. A careful reading of Section 132 discerns that the Competent Authority can issue a WoA for search and seizure if such an authority, in consequence of information in his possession, has reason to believe that conditions stipulated in either of clauses (a), (b) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search action at their Premises, between 06.02.2019 and 09.02.2019 was conducted under Section132(1A) of the Act, as a premises suspected to have material belonging to the Primary Persons. As demonstrated from the material placed on record, this is palpably incorrect. The Respondents in their Counter Affidavit have categorically stated that the search was never conducted under Section 132(1A) of the Act. Having perused the WoA, we are inclined to agree. As we have noticed above, the Act distinguishes between search actions under sub Sections (1) and (1A) of Section 132, however the distinction is not of relevance in the facts of the case. Although the Petitioners are correct is submitting that the threshold requirement to determine the validity of the authorisation for such search under Section 132(1A) qua the premises is based on reason to suspect , but they have ignored the vital fact that for search of premises this threshold viz. reason to suspect - is also envisaged in Section 132(1)(i) in the following words (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019 was issued to the Petitioners Shilpa and Vikas Chowdhary, and was in respect of their Locker No. 150F. Thus, the distinction sought to be drawn by Mr. Shrivastava is wholly irrelevant. Further the assumption and contention that, since Vikas Chowdhary was not the searched person under the WoA dated 05.02.2019, his premises could only be searched under Section 132(1A) of the Act, is entirely misconceived and is rejected. VALIDITY OF SEARCH CARRIED OUT ON 06.09.2019 ON PETITIONER S PREMISES 13. We do not find any merit in the challenge raised by the Petitioners to the search carried out at the Petitioner s Premises. Firstly, the Petitioners have asserted that they are not challenging the WoA for search conducted on 06.02.2019. Secondly, no prayer has been made in this regard. Besides, as noted above, this search action in relation to the Petitioner s Premises was under the WoA against the Kochar Group under Section 132(1) of the Act. The gist of the satisfaction note, as documented in the Counter Affidavit, has been extracted in the succeeding paras. The same pertains to the Kochar Group, whereunder the premises of the Petitioner were searched, reveals that the WoA wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 132(1) of the Act, in the case of the Petitioners or their family members. However, during the search of the Petitioner s Premises, material as well as information was discovered, which constituted reason to believe for the Revenue to proceed against the Petitioners. This material comprises of a key to a bank locker which was held in the name of the Petitioners and the statements recorded under Section 132(4) of the Act. 15. At this stage, it would also be relevant to note the Petitioners contention regarding their statements. Mr. G.C. Srivastava, during the course of the argument had contended that the Petitioners were not questioned about the locker key, the contents of the locker or the source of acquisition of these contents. This contention appears to be incorrect in view of the statements recorded by the Respondents which have been shown to us. Specific queries were put to the Petitioners and their responses thereto are germane. The relevant portion of the statement of the Petitioners, recorded under Section 132(4) of the Act is extracted hereinbelow: (a) Extracts from Statement of Shilpa Chowdhary dated 06.02.2019: (b) Extracts from the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on arrived at by the authority meets the conditions stipulated in Clauses (b) / (c) of Section 132(1) of the Act. The factual background noted above demonstrates that the impugned WoA against the Petitioners has been issued not merely on the ground of recovery of locker key, as Mr. Srivastava has sought to project. The formation of belief by the authorities is also based on the statements of the Petitioners. The officers made an attempt to ascertain and verify the facts, post the discovery of the locker key. The satisfaction note also records that Petitioners were asked to furnish details of the contents of the locker, but did not provide satisfactory explanation. In these circumstances, we believe that the Revenue was well within its right to proceed to search the Petitioner s locker under section 132(1) of the Act. COURT TO NOT EVALUATE THE ADEQUACY OF REASON TO BELIEVE 18. A perusal of the satisfaction note reveals that there is foundation for having reasons to believe in terms of the statute. The principle, as reiterated time and again by the Courts, necessary to be borne in mind is that the words reason to believe mean that the reason should exist. The existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estraint order under Section 132(3) was passed, based upon the search warrant in the case of KMJ. Consequential search warrants under Section 132(1A) dated 27.06.2014 were subsequently issued for search of the three lockers, in the name of the Petitioners therein. The lockers were forced open on the same day, and statement on oath recorded. The court had noted (in para 14) that for establishing the validity of these search warrants, the lower parameters for reasons to suspect was sufficient and parties were not required to meet the higher threshold for reason to believe . 21. In the present factual matrix too, the initial search proceedings in the residential premises of the present Petitioner were conducted in relation to Section 132(1) proceedings in respect of the Primary Persons. However, this is where the similarity ends between the two cases. In the present case, when the locker key was recovered, and Vikas and Shilpa Chowdhary were questioned in relation to it, they were unable to give satisfactory answers. On this basis, a fresh WoA dated 12.02.2019 was issued u/s. 132(1) against the Petitioner and her husband. It is important to note that, from this point forth, two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is basis alone the Shah-E-Naaz Judge judgment is not applicable to the present case. 23. Besides, in the Shah-E-Naaz Judge judgment, heavy reliance was placed upon the satisfaction note, wherein unsatisfactory grounds were given by the Officer, which in the eyes of the court did not tantamount to either reason to believe or reason to suspect . On this point, the court had noted in paragraph 17 of the judgment that the satisfaction note was found lacking even a single shred of evidence and material to justify the inference , and that no attempt was made to verify and ascertain when and who had operated the said locker and who was paying rent for the said locker. It then goes on to say that: The satisfaction note is precipitously silent on any business connection, link and association between the petitioners and the Jaiswal Group or Karamjit Singh Jaiswal, who had been subject to search and seizure operations. Lockers were not subjected to search to unearth undisclosed and concealed assets of Jaiswal Group or Karamjit Singh Jaiswal. Accordingly, we have no hesitation in holding that the three consequential WoA issued in the name of persons and lockers for search/seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
