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TMI Blog2025 (5) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... the States. The 'CPI(M)', is an assessee to income tax and the Central Committee file the returns every year including the accounts of the State and District Committees. 3. The District Committee of Thrissur CPI(M) has an account at the Bank of India, Thrissur Branch. On 05.04.2024, the bank officials requested an office staff of the party to come to the bank to affix his signature in connection with an amount withdrawn on 02-04-2024. However when the said person reached the bank, he was confronted by the income tax officials and an undertaking was obtained not to utilize the amount withdrawn. A prohibitory order was also issued freezing all operations in the particular bank account since it was noticed that the bank account was not linked to the PAN. Thereafter a summons was issued on 09-04-2024 directing production of certain documents and it was then that the petitioner realized that the PAN was not linked to the bank account due to a typographical error. Petitioner even informed the respondents that non-linking of the bank account with the PAN was an error or omission on the part of the bank, which cannot be attributed to the petitioner or the District Committee of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, on inspection of the returns filed by CPI(M) for the assessment year 2022-23, it was noted that the said bank account was not shown in the returns. 7. Respondents have also averred that enquiry with the bank revealed that despite Annexure A2 letter dated 11.08.2010, issued by the bank to the office bearers of CPI(M) Thrissur District Committee to provide the PAN details for linking the account, the request was not adhered to and thereafter, as per a communication dated 14.08.2010, the Bank of India informed the taxation department that the account holder was completely reluctant to provide the PAN number. Yet again, another letter was addressed on 06.10.2010 by the Bank Manager to the District Secretary of the CPI(M) Thrissur warning that if the account holder is still unwilling to provide the PAN number, a 20% reduction has to be made upon the interest paid by the bank on the deposits. 8. According to the respondents, the income tax return filed by CPI(M) for the assessment year 2022-23 had not revealed the particular bank account from which the huge amount was withdrawn, giving rise to a reasonable belief that petitioner is in possession of money representing wholly or pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and seizure. It was also argued that mere unexplained possession of any amount without anything more could hardly be said to be any information which could be treated as sufficient by a reasonable person as held in Commissioner of Income Tax, Allahabad and Others v. Vindia Metal Corporation and Others (1997) 5 SCC 321. 10. Sri. Jose Joseph, the learned Senior Standing Counsel for the Income Tax Department, on the other hand, contended that there was sufficient information with the Department enabling it to have a 'reason to believe' to conduct the search as contemplated under section 132(1) of the Act. During the course of arguments, the learned Standing Counsel handed over a file containing the 'reason to believe' as noted by the officer and the approval obtained for conducting the search and according to the learned Standing Counsel, the writ petition is devoid of any merit and this Court ought not to interfere with the proceedings initiated under the Act, especially since the particular bank account had never been revealed by the petitioner or the CPI(M) District Committee from 2010 onwards, despite repeated requests by the bank to link the account with the PAN card. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the officer issuing the authorisation or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of his action and if it is maliciously taken or the power is exercised for a collateral purpose, it is liable to be struck down by the court. It was also observed that where power is exercised bonafide and in furtherance of the statutory duties of the tax officers, any error of judgment on the part of the officers will not vitiate the exercise of the power and when the Commissioner entertains the requisite belief and for reasons recorded by him, authorises a designated officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the court, in a petition by an aggrieved person, cannot be asked to substitute its own opinion. It was also clarified that, any irregularity in the course of entry, search and seizure committed by the officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the officer has, in executing the authorisation, acted in a bonafide manner. 14. Relying upon the above mentioned two judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the formation of the belief though not the sufficiency or the adequacy thereof." 15. Invocation of the power under section 132 of the Act is a drastic step and is resorted to when money, income or assets are hidden or are not disclosed to the income tax department. In the instant case, the specific stand of the department is that the account in question i.e No.855010100001687 maintained by the CPI(M) at the Bank of India, Thrissur, had not been linked with the PAN. The said account is also not reflected in the returns filed by the political party. Though petitioner has contended that the failure to link the PAN with the bank account was due to the default of the bank as a result of a typographical error, materials obtained by the Department prima facie indicate that despite the request by the bank from 2010 onwards to submit the documents for providing KYC and also to link the bank account with the PAN, there has been a total refusal on the part of the persons operating the bank account to furnish such records. The department had later obtained information that on 02.02.2024, an amount of one crore rupees was even withdrawn from the said account which has a current balance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney, jewellery etc. if it is not practicable to seize it and direct not to remove or part with or otherwise deal with the said article or thing or money, or jewellery etc, without the previous permission of the officer. However, sub-section (8A) of Section 132 of the Act states that such an order shall not be in force for a period exceeding 60 days from the date of the order. 19. By Ext.P1 prohibitory order issued on 05.04.2024 under section 132(3) of the Act, the Chief Manager of The Bank of India, Thrissur Main Branch was directed not to deal with four specified accounts and all other bank accounts of CPI(M), Thrissur District Committee held in that Branch. However, by virtue of sub-section (8A) of section 132 of the Act, such an order cannot remain valid beyond 60 days. Since the said period of 60 days has already expired, the prohibitory order cannot remain valid beyond that period. As the statute itself operates in favour of the petitioner as far as the prohibitory order is concerned, no further declaration is required by this Court, except to observe that the prohibitory order has already expired by operation of law. With the above observations, this writ petition is dismis ..... 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