TMI Blog1988 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at Srinagar, while it is not in dispute that the entire business carried on by these companies is in Goa. All these private companies are exclusively held by Bandekar, his wife and his children. The residential as well as the business premises of the Bandekars were searched between December 30, 1985, and January 2, 1986, by the incometax authorities in consequence of an order passed by the Commissioner of Income-tax, respondent No. 3. During the search, fixed deposit receipts in the names of private companies held by the Bandekars and in the names of some other persons to the tune of Rs. 30,01,504 were recovered. Out of these, fixed deposit receipts for Rs. 10,15,000 were standing in the name of Harwan Investment and Trading Private Limited, while of Rs. 16,01,000 in the name of Gulmarg Investment and Trading Private Limited. In addition to the fixed deposit receipts, cash of Rs. 60,000 and jewellery valued approximately at Rs. 12,00,000 was recovered. After search and seizure, the Second Income-tax Officer, Panaji, respondent No. 1 to the petitions, issued notice dated January 16, 1986, in exercise of the power under rule 112A of the Income-tax Rules, 1962, to Bandekar and hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Commissioner, as the case may be, may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax Officer, or (B) such De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s likely to fail to produce the books if so called upon, and (c) any person is in possession of any money, bullion, jewellery or other valuable articles and which are not accounted for and which represent undisclosed income. It hardly requires to be stated that the power conferred upon the Commissioner under section 132 is of a drastic nature and the exercise of power can only be after serious application of mind to the information in the possession of the Commissioner and from which a reasonable person would come to the conclusion that the conditions prerequisite for the exercise of power-existed. Shri Sathe invited our attention to the decision in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, where the Supreme Court, while examining the provisions of section 147 of the Act, observed (at p. 448) : "It is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment." It was observed that the reason for the formation of the belief must be held in good faith and should not be a mere pretence. Reference was also made to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a judicial or quasi-judicial exercise and it is not possible to sit in appeal over that exercise while exercising power under article 226 of the Constitution. It must be borne in mind that resort to power under section 132 is required when the Commissioner, who is senior officer, comes to the conclusion that but for directing search of the premises, the undisclosed income or accounts in respect of that income would not be available to the income-tax authorities. In our judgment, on the facts and circumstances of the case, it is impossible to conclude that the exercise of power was in any manner defective. Shri Sathe also submitted that it was improper for the Commissioner to have exercised power by reference to anonymous petitions received by the income-tax authorities. Learned counsel urged by reference to the decision of the Allahabad High Court in Dr. Nand Lal Tahiliani v. CIT [1988] 170 ITR 592, that reliance should not be placed on anonymous complaints and that the Commissioner should exercise powers only after satisfying himself that the information is true and correct. It is impossible, in our judgment, to lay down any principle that in no case powers could be exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets to the Income-tax Officer, and that not having been done the Income-tax Officer could not have passed the order dated April 29, 1986. It is not possible to accede to the submission of learned counsel. It is not in dispute that the assets seized from the premises of the Bandekars were handed over by the authorised officer to respondent No. 3, who is holding the post of Commissioner, and thereafter they are in the control and custody of the Commissioner. The Commissioner is an officer who is superior to the Second Income-tax Officer, Panjim, and, therefore, it is futile to urge that the failure of the authorised officer to hand over the assets to the Income-tax Officer deprived the Income-tax Officer from exercising powers under section 132(5) of the Act. The Commissioner, being an officer superior to the Second Income-tax Officer, Panjim, handing over of the assets to the Commissioner for custody is more than sufficient compliance with the requirements of section 132(9A) of the Act. The second submission urged by learned counsel, therefore, is required to be repelled. The third contention urged by Shri Sathe is that while exercising powers under section 132(5) of the Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the factors into consideration, we are unable to accede to the submission that the order dated April 29, 1986, should be struck down on the ground that the Second Income-tax Officer, Panjim, relied upon certain statements without giving sufficient opportunity to the petitioners to cross-examine the witnesses who made those statements. We wish to make it clear that we are not accepting the claim of the petitioners that the statements relied upon were used without affording them reasonable opportunity, but even otherwise we would not have quashed the order on the facts and circumstances of the case. The final contention urged by Shri Sathe is that the order passed under section 132(5) against the Bandekars is bad in law because, in respect of the same assets, the Second Income-tax Officer, Panjim, and the Income-tax Officer, Srinagar, have passed orders in exercise, of powers under section 132(7) read with section 132(5) of the Act. To appreciate the submission of learned counsel, it is necessary to refer to the provisions of sections 132(4A), 132(5) and 132(7) of the Act. Section 132(4A) provides that where any books of account, other documents, money, bullion, jewellery or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years spread over ten years from 1977-78 onwards. Shri Sathe complains that the Income-tax Officer cannot exercise powers under sub-section (5) of section 132 of the Act both against the Bandekars and against the companies. Shri Sathe urged that once an order is passed against the private limited companies, then no order is permissible in respect of the same assets against the Bandekars. The submission cannot be accepted for more than one reason. In the first instance, it is not correct to suggest that the order passed under sub-section (5) of section 132 is in respect of the same assets. As regards the cash and jewellery recovered in the search, it is not the claim of either the Bandekars or the companies that the said assets belong to the companies. The Bandekars accepted that the cash and jewellery belonged to them and claimed that it was disclosed income or has been acquired out of lawful sources. As regards the fixed deposit receipts standing in the names of the companies, it is the claim of the Bandekars that the same belong to the companies and so also is the claim of the private limited companies. The Income-tax Officer was not satisfied with the claim of the Band ..... X X X X Extracts X X X X X X X X Extracts X X X X
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