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2009 (8) TMI 102

..... to believe that there had been unaccounted money/assets with the petitioners. It cannot be said that there was no material to initiate proceeding under section 132 of the Act. At the stage of authorisation to search and seizure under section 132 of the Act the consideration is as to whether there is some relevant material so as to warrant proceeding under section 132 of the Act. The question of sufficiency cannot be gone into at the time of initiation of proceeding under section 132 of the Act and consequently the notices issued under section 158BC were valid and were issued in accordance with law. - 169 of 2004 - 26-8-2009 - K. K. AGRAWAL and S. K. GUPTA JJ. S. D. Singh for the petitioners. A. N. Mahajan and Shambhu Chopra for the respondents. JUDGMENT The judgment of the court was delivered by 1. S. K. GUPTA J.-This writ petition has been filed, inter alia, for the following reliefs: (i) Issue a writ, order or direction and declare that the search conducted against the petitioners on September 14, 2002, as illegal and in contravention of section 132 of the Income-tax Act, 1961. (ii) Issue a writ, order or direction in the nature of certiorari and to quash the consequential block .....

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..... t the petitioner is in possession of money, bullion, valuable article or thing, books of account or other documents either representing or divulging any income which had not been or would not have been disclosed for the purposes of the Act and which may be found at any particular place or premises. Such reason to believe has not been recorded. The authorisation has been issued to conduct a fishing and roving enquiry without any base or substance for totally vague consideration. (ii) There existed no material on record before the competent authority before authorizing the search, on the basis of which a prudent man could ever entertain reason to believe. (iii) The entire search conducted under section 132 of the Act is illegal and as such notices issued under section 158BC are illegal and without jurisdiction and are liable to be quashed. (iv) The power of the income-tax authority regarding discovery, production of evidence, etc., is provided under section 131 of the Act. The power of survey is provided under section 133A of the Act and to collect information is provided under section 133B. Other than the aforesaid provisions there is no power vested with the income-tax authority to .....

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..... n conducted in accordance with the provisions of the Act or not. 10. By order dated August 19, 2008, this court had directed the learned standing counsel for the Department to produce the record relating to search operation carried on the business premises of the petitioner and in pursuance of the same relevant record relating to search operation carried on the business premises has been placed before us which, inter alia, indicates as follows: Information has been received that K. R. Agarwal and Dr. Chitralekha Agarwal along with Dr. H. R. Agarwal and Dr. S. R. Agarwal are evading huge amount of taxes by way of suppressing the income they are earning from their business centre the Doctor s X ray and Pathology Institute P. Ltd. and also from their personal practice. It is alleged that the main person of the group is Dr. K. R. Agarwal. In the pathology centre when a patient approaches for test of T3, T4 T145 he has to pay Rs. 700 as fees but the patient is asked to pay the fee directly to the doctor. The doctor gives a plain chit in the form of receipt to the patient on which the name of doctor is written to whom he has to report on the date of the report the patient collects his re .....

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..... need not to have any other receipt. Further enquiry revealed that the elisa test is a costly test for which the fee ranges from Rs.600 to Rs.700. The allegation made appears to be correct that the tests where the fee is more are not entered in the books. Thus, on the basis of allegations and enquiries made by me I am of the opinion that the group of doctors running Doctor s X ray and Pathology institution P. Ltd. are suppressing their actual income, has purchased a large number of K. V. Ps. investing substantial amount and have invested in ultra sound imaging centre. The daily receipts made by doctors from X ray lab and practice is not less than Rs.12,000 to Rs.15,000 a day and yearly income of the group can be worked out to Rs.35 lakhs to 40 Iakhs where as none of the doctors of the group figures in the list of top professionals list where in the last doctor listed at serial No. 90 has shown yearly income of Rs.3.11 lakhs. Thus, the allegation made gains ground that the group of doctors are suppressing their income by a large margin and if at all summons under section 131 is issued and they are asked to submit the books of account bills vouchers in order to work out their correct .....

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..... d money for the purposes of the Act If the action of the officer issuing the authorisation or of the designated officer is challenged, the officer concerned must satisfy the court about the legality of his action. If the action is maliciously taken or power under the section is exercised for a collateral purpose it is liable to be struck down. If the conditions for exercise of the power are not satisfied the proceeding is liable to be quashed. But where power is exercised bona fide and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the officer will not vitiate the exercise of power. Here in the present matter there is no allegation of mala fide or any malicious exercise of power. 15. The Delhi High Court in L. R. Gupta v. Union of India [1992] 194 ITR 32, explained the expression information , observing that it must be something more than a mere rumour or a gossip or a hunch. There must be some material which can be regarded as information, which must exist on the file on the basis of which the Authorizing Officer can have reason to believe that action under section 132 is called for. It has already come on record that detailed secre .....

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..... applicable in the matter. The original record which has been produced before us clearly suggests that the secret information in writing was received from the external source by the authority concerned containing the detailed facts and particulars. Consequent to the said information, which was received from the external source, the authority concerned made a personal visit to the business premises of the petitioners to verify the said information before proceeding against the petitioners and he found that the secret information received was quite authentic. The basis for personal inquiry was the secret information received by the Department. Therefore, the contention of learned counsel for the petitioner that information or knowledge derived was not from the external source is not correct. 19. Learned counsel for the petitioners has cited the following authorities of the apex court as well as of this court in support of his contention: (1) Ganga Prasad Maheshwari v. CIT [1983]139 ITR 1043 (All) (2) Dr. Mrs. Anita Sahai v. Director of Investigation [2004] 266 1TR 597 (All) (3)Ravi Iron Industries v. Director (Investigation) [2003] 264 ITR 28 (All) (4) Smt. Kavita Agarwal v. Director .....

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