TMI Blog1999 (11) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... risation) which could lead to the formation of belief that his case fell in any of the 3 categories mentioned in Section 132(1) of the Act and consequently the block assessment order passed in pursuance of such proceedings is wholly illegal and without jurisdiction." 2.1 It is this preliminary ground alone which as also submitted by both sides is proposed to be disposed of by this order first as it would determine the Tribunal's jurisdiction to call for the records relating to the reasons authorising the search on which shall depend the manner in which the hearing of the appeal on the remaining grounds shall proceed. 3. Elaborate submissions in respect of this ground were made by Shri S.K. Garg, F.C.A. and Shri Bharatji Agarwal, Senior Standing Counsel. 4. Assessee before us is an individual, engaged in the medical profession, inter alia, running a premier private hospital by the name "Jeevan Jyoti" in the holy town of Allahabad. He (and his establishments) were subjected to search under section 132(1) of the Act on 14-9-1996. As per the department, during this search, cash jewellery and other valuables, apart from the stock of medicines and various other documents were fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer within the stipulated period, finally to culminate in an assessment order with the previous approval of the Commissioner. Shri Garg strenuously submitted that if any of these links was missing or legally deficient, it would vitally affect the assessment order making it bad and ineffective in law. It is on the analogy of this stand that he submitted that the assessee was legally entitled to challenge all these stages which went to form and complete the assessment order. Elucidating further and with reference to the first step, he submitted that an assessee was legally vested with the right to challenge that either no search had taken place respecting him or that the conditions for conducting search did not exist. He thereafter invited our attention to the relevant portion of section 132(1) of the Act submitting that the search could be conducted only in consequence of an information in the possession of one of the officers specified by this provision who should have "reason to believe" that either of the 3 conditions enumerated in clauses (a), (b) or (c) of sub-section (1) of section 132 existed. He submitted that none of these conditions existed in the assessee's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first paragraph itself the validity of search operations was challenged. Lastly, reference was made to page 183, yet another petition dated 15-9-1997, addressed to the Assessing Officer where similar challenge was made stating that the assessee had been fully participating in the block assessment proceedings and had filed his return and would need a copy of the 'satisfaction note' authorising the search operation under section 132(1) of the Act. 7. Shri Garg contended that both on factual basis and in law the assessee was fully entitled to know the reasons which actuated the competent authority to form "reason to believe" for authorising the search. In this connection he placed reliance on a decision of the jurisdictional High Court in the case of K.M. Bansal v. CIT [1992] 195 ITR 247/[1991] 59 Taxman 463 (All.) and submitted that although this decision related to the provisions of section 148 of the Act, yet its analogy applied on all fours to the facts of the present case. As per this decision, to eliminate the possibility of an arbitrary action, an officer who is required to record reasons was equally bound to give reasons, which inter alia could be looked into by a superior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst or second appeal provided under the Income-tax Act, Shri Garg submitted that this position held good only till before chapter XIV-B was enacted. In his submission in the earlier provisions relating to the completion of assessments whether it be section 143(3) or 144 of the Act, the Legislature has not drawn any distinction for the completion of assessments in search cases and in cases otherwise, while Chapter XIVB has specifically provided a procedure for the completion of an assessment, but only as a result of search under section 132. Laying special stress to the words "where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person" appearing in section 158BC of the Act, Shri Garg submitted that they acted as a preface for the Assessing Officer to act in taking the second step of issuing notice and proceed further to be able to complete an assessment. He, therefore, submitted that the conduct of a valid search under section 132 of the Act was a condition precedent for the Assessing Officer to assume jurisdiction to take subsequent steps to complete the assessment in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 254(1)(b) of the Act it must be considered that a right to appeal should be construed "reasonably". If done so, it would also go to confer such power in the Appellate Tribunal. In support of this, reliance was placed by him on a decision of the Apex Court in the case of CIT v. Ashoka Engg. Co. [1992] 194 ITR 645. Shri Garg also contended that it is always not necessary to provide an appeal against all the aspects of a matter. Exemplifying, he contended that if the special procedure for the completion of a block assessment provided for the issue of a notice, the factum of such notice or its contents, to say that it did not confirm to the legal requirements, could be challenged during appeal although no appeal was specifically provided on these individual points. He also submitted that 'audi alteram partem' rule which had since assumed the character of a fundamental right also required a person should not be condemned unheard and there was no reason that on this count also the assessee should not be provided with the satisfaction note recorded by the competent authority authorising the search, which seriously affected the life and property of the concerned citizen. On this aspect, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2563 3. ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 (SC) 4. Nathu Ram Welji Bhai Vyas v. Mrs. Luxmibai Lunkaranji Chandak [1983] 139 ITR 948 (Bom.) and 5. Prem Prakash Tripathi v. CIT [1994] 208 ITR 461/75 Taxman 107 (All.). 11. Strongly opposing, Shri Bharatji Agarwal, Learned senior standing counsel contended that the question about the validity of search was in point of time prior to the initiation of assessment proceedings and had nothing to do with the formation of the assessment order. Referring to the provisions of section 158BC, Shri Agarwal submitted that various steps for the completion of a bloc assessment did not visualise anything relating to search, which term had been used only to show a matter of fact to convey that the procedure prescribed by this section shall be followed in a case where a search had been conducted under section 132 of the Act. The search, Shri Agarwal submitted, was a pre-assessment stage. Elucidating, the Ld. Senior Standing Counsel submitted that the appeal to the Appellate Tribunal was provided only against an assessment order framed under the provisions of Chapter XIV-B and as pointed out by him since the search was not a part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used by the Legislature it did not make any difference whatsoever as in both the situations the happening of event of search had already become a fait accompli. Similarly to one another query that if an assessee could challenge that no assessment could be made on him as no search was conducted in relation to him, Shri Agarwal submitted that a notice as envisaged by clause (a) of section 158BC had to be issued only to "such person" who had been subjected to search and that being so by this statutory provision itself an assessee could show that no search had been conducted on him and, therefore, he was not liable to suffer the consequences of such notice. 15. To the non-adjudication of the issue by the Assessing Officer despite being raked up several times by the assessee, Shri Agarwal submitted that it should be impliedly taken to have been rejected by the Assessing Officer particularly in view of the fact that it was abundantly clear that the Assessing Officer had no jurisdiction to decide this question. The Ld. Counsel gave an analogy. According to him, suppose the constitutional vires of any of the provisions of the Income-tax Act had been challenged by the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the 1-7-1995 to provide for a complete and exhaustive procedure for dealing with the assessment of search cases. The title of this chapter reads as "special procedure for assessment of search cases." Exhaustive, we say, as it appears to take care in detail of all situations neccssary for the completion of this special type of assessment, subject however to the reference to certain other provisions of the Act, such as sections 142(2), 143(3) 144 and last but not the least section 132. To this extent, as per the rules of reading and interpreting laws, these sections get bodily lifted and stood incorporated in this special chapter. 18. An important change brought about by the aforesaid legislative amendment is the dispensing with of the assessee's right to make objections in respect of the seized articles etc. under section 132(5) and consequently the appeal provision before the CIT(A) envisaged by sub-section (11) of section 132 of the Act. Another one to point out here is the providing of a regular first appeal before the "Appellate Tribunal" in section 253(1)(b) of the Act, eliminating the intermediately stage of appeal before the CIT(A). 19. Now taking the bull by its horn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as per which, to repeat, a search could have been directed only when one of the three conditions mentioned by clause (a), (b) or clause (c) of sub-section (1) of section 132 existed. The submission made by the Ld. Senior Standing counsel particularly with reference to the decision of the Bangalore Bench in the case of Micro Land Ltd. v. Asstt. CIT [1997] 67 ITD 446 (copy filed) that the Bench had directed the department to place warrant for its perusal only on an objection taken that there had existed no search warrant and that it was for a very limited purpose, in our opinion, does not help the department much, as the decision in any case is a pointer to the acceptance of the assessee's stand that the Appellate Tribunal could go behind the search. If so, we are unable to appreciate as to why, in the event of a challenge by the assessee, the Assessing Officer could not call for the satisfaction note to see that it recorded and conformed to the requirements of sub-section (1) of section 132 of the Act. In saying so we are fully aware and conscious that the rank of the officer authorising a search is mostly fairly higher in the hierarchy than the Assessing Officer but we should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers are entrusted with quasi-judicial functions, often times they are unable to keep aside administrative considerations while discharging quasi-judicial functions. This Court as well as the High Courts had repeatedly tried to impress upon them that their two functions are separate; while functioning as quasi-judicial officers they should not allow their judgments to be influenced by administrative considerations or by the instructions or directions given by their superiors." Reference could also be made to another decision of the Apex Court in the case of Sirpur Paper Mills Ltd. v. CWT [1970] 77 ITR 6 from where the following passage is reproduced for guidance. "The power of revision conferred on the Commissioner by section 25 of the Wealth-tax Act, 1957, is not administrative, it is quasi-judicial. In the exercise of that power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved partly, and decide the dispute according to procedure consistent with principles of natural justice: he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the search, no matter they emanate from authorities which were administratively head and shoulder above him. 22. We also find sufficient force in the submission made by Shri Garg that even it for argument's sake one could say that the Assessing Officer and consequently the Appellate Tribunal were not possessed of the express authority to call for the "satisfaction note" etc. to satisfy themselves about the existence of the grounds leading to the grant of authority by the authorising officer to search an assessee, and issue a search warrant, "doctrine of implied authority" be invoked to hold so. We say so as the Assessing Officer who is vested with the legal jurisdiction to pass an assessment order must be held to have the implied power of going into all aspects of the assessment, including validity of search, a fact mentioned in the Panchnama, which document even as per the Ld. Senior Standing counsel was made available to the Assessing Officer for conveying and informing him of the requisite knowledge about the search. In saying so, we are supported by various case laws. The first reference could be made to a decision of the Apex Court in the case of Smt. Shambhu Narain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be read to exist with the Assessing Officer. 23. Reliance could then be placed on another decision of the Summit Court in the case of National Tobacco Co. Their Lordships, the Supreme Court in this case observed as under: "It is well established rule of Construction that a power to do something essential for the proper and effectual performance of the work which a Statute has in contemplation may be implied." The Court further observed as under: "The rule of Construction that where a mode of performing a duty is laid down by law, it must be performed in that mode or not at all is subservient to the basic principle that courts must endeavour to ascertain the legislative intent and purpose and then adopt a rule of construction which effectuates rather than one that may defeat these. Moreover, the rule of prohibition by necessity implication could be applied only where specified procedure is laid down for the performance of a duty." In yet another case, considered to be landmark judgment, their Lordships of the Supreme Court in M.K. Mohammed Kunhi's case observed as under: ".....The argument advanced on behalf of the appellant before us that in the absence of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppear to be comprehended either within the consequences that may be gathered from it. Maxwell on Interpretation of Statutes, eleventh edition, contains a statement at page 350 that "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdictio data est, ea quoque concessa esse videntur, sine quibus jurisdictio explicari non potuit". An instance is given based on ex parte Martin that "where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be useless if it could not be enforced." 24. Deriving strength from the legal principles enunciated by the Apex Court in those judgments, we are of the view that the Assessing Officer should be read to possess an implied power in a search case to go into the various stages which led to an administrative decision, authorising a search and the "issuing of an authorisation warrant." Even at the cost of repetition it may be stated that the fact that the rank of the authorising officer was far superior to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order search and issue authorisation warrant. Such a power in our well considered opinion is absolutely essential and necessary for the effective making of an assessment order. Law vests the Assessing Officer power to discovery and production of documents etc. under section 131 of the Act. 27. We are, therefore, of the view that the Assessing Officer and consequently the appellate forum, namely, the 'Appellate Tribunal' are under a legal obligation in the event of a challenge made by the assessee (as in the present case) in respect of the validity of search, to call for the relevant records and also provide a copy of the "satisfaction note" or any other document(s) if it/they is/are given different name/names, giving details of the material forming "reason to believe" authorising the search. The department is directed through the Ld. D.R. to produce such material before the Tribunal by ..... and provide copy thereof to the Ld. counsel for the assessee. The department, if they so desire, would however be at liberty to withhold the names of the informants with a view to protect the sources as per which information in respect of the activities and assets etc. of the assessee, leadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the income was earned and as such assessments are unduly delayed. In order to make the procedure more effective, I am proposing a new scheme under which undisclosed income detected as a result of search shall be assessed separately at a flat rate of 60 per cent. An appeal against the order can be filed directly before the Income-tax Appellate Tribunal." The above speech and clause (32) of the notes on clauses of the Finance Bill, 1995, spell out that the Government's own perception in regard to the new provisions is to devise a procedure for assessment in search cases which is cost effective, efficient and meaningful. 4. Chapter XIV-B of the Act, as the heading itself indicates, lays down a "special procedure for assessment of search cases". The new procedure is concerned only with the "assessment" of search cases and everything else relating to search and seizure action continues to be governed by the existing section 132 of the Act, read with Rule 112 of the Income-tax Rule,.,, 1962. Hence, even after the introduction of the new procedure, there has to be a warrant of authorisation issued by a competent authority, execution of the warrant by an authorised officer and sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details, there is a mention of issuance of a search warrant under section 132 of the Income-tax Act and certification of carrying out a search, copy of which was supplied to the assessee also, which fact, according to the Learned Judicial Member, warrants upholding of the submission made on behalf of the assessee that he had a legal right to question and challenge the validity of the search and when so done, the Assessing Officer in his judicial/quasi-judicial capacity could look into the fact whether the warrant conforms to the requirement of section 132 of the Act, I would only like to point out that though rule 112(2) of the Income-tax Rules prescribes the forms for the warrant of authorisation under section 132(1)/132(1A), yet neither the Income-tax Act nor the Rules prescribe any particular format for Panchnama. It appears that the form in use is standardised by the Department for the sake of administrative convenience and uniformity and also keeping in view the various details required to be taken note of as per provisions of section 132 of the Act and Rule 1 12 of the Rules. A copy of the Panchnama is supplied to the Assessing Officer only to apprise him of the factum of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer in this behalf because, as is mentioned above, his jurisdiction starts only after a search is conducted. 5.2 The Kerala High Court decision in the case of C.S. Kesavan from which observations of their Lordships have been extracted by the Learned Judicial Member, lays down a legal proposition that Officers entrusted with quasi-judicial powers have freedom to decide the issues between citizens and Government independently but this proposition is subject to the condition that the issues have to be decided in accordance with law. The law laid down by this decision is that if the Officers exercising quasi-judicial functions decide issues against the interest of the Government, the relevant orders could be challenged before the competent authority but the Officers cannot be subjected to disciplinary proceedings. Since under the Income-tax Act, the Assessing Officer, even while exercising judicial/quasi-judicial power does not have the authority to examine the validity of the search, as has been held by me above, this decision is of no assistance for the view expressed by the learned Judicial Member. The Summit Court decision in the case of Orient Papers Ltd., fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question of relevancy of the material with reference to assessment. 7. I would like to reiterate that there is no provision of law to provide the assessee the "reasons" for authorising the search. Such plea could also not be accepted on principles of equity, because the Assessing Officer himself is not in possession of this information. In any case, the disclosure of the information is bound to affect or hamper the investigation, which would be against the public policy. This is so because many a times, the source of information could easily be inferred from the reasons recorded by the authorising Officer and the other material referred to by him. Generally the information is collected on the promise of secrecy and to avoid embarrassment to the person conveying the information, the material could not be disclosed to the assessee. Moreover when the Assessing Officer made investigation during the course of assessment proceedings, if the assessee is in possession of information on account of which search is conducted, there is every likelihood of some manipulated device being adopted by such person to give a different orientation to the relevant facts. 8. Coming to the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had relied upon the decision of the Bangalore Bench in the case of Microland Ltd. and in reply the learned Senior Standing Counsel had submitted that the direction of the Tribunal to place before them the search warrant was for a very limited purpose. The only inference drawn by the learned Judicial Member from this decision, as recorded in paragraph 19 of his order, is that "the decision in any case is a pointer to the acceptance of the assessee's stand that the Appellate Tribunal could go behind the search." While confining my comments to this aspect of the aforesaid decision of the Bangalore Bench, I would say that one of the challenges of the assessee in that case was that there was no search warrant in its name and that the Panchnama drawn also did not refer its name. With a view to verifying the fact whether any search warrant was issued in the case of the assessee, the Tribunal looked into the photo copy of the search warrant, from the examination of which it found that there was some scope for suspecting that the name of the assessee was interpolated. It was only then that the Tribunal wanted to inspect the original search records as would be evident from the obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances enumerated in clause (a) or (b) or (c) of sub-section (1) of the said section exist. It is within the competence of the High Court in its extraordinary writ jurisdiction to find out if the required belief existed. If it is found that the action is violative of the provisions of the Act, or malicious or the power under the section is exercised for a collateral purpose, a writ will issue to declare the entire act of search and seizure void ab in itio. In this connection, the following observations of the Hon'ble Supreme Court in the oft-quoted judgment in the case of Income-tax Officer, Special Investigation Circle "B", Meerut ITO v. Seth Bros. [1969] 74 ITR 836 (SC) may be conveniently referred to: "Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be exercised strictly in accordance with the law and only for the purpose for which the law authorizes it to be exercised. If the action of the officer issuing the authorization or of the designated officer is challenged, the officer concerned must satisfy the court about the regularity of his action. If the action is maliciously taken or pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal and the CIT(A) had the power to grant stay in appeals which were pending before them is different than claiming the existence of authority with the Assessing Officer and consequently the Appellate Tribunal to go into the reasons for authorising search, because while the power to grant stay is incidental and ancillary to the exercise of appellate jurisdiction, to find out about the existence of the grounds and material for authorising search with reference to clause (a) or (b) or (c) of subsection (1) of section 132 of the Act cannot be so regarded. This, in my opinion, would be a substantive power, which could be exercised only if the Legislature specifically vests an Assessing Officer and the appellate body, namely, the Appellate Tribunal with it but not otherwise. 12. In view of the foregoing, I respect fully dissent with my learned Brother on this aspect of the matter and record that no enquiry about the existence of material which led to the formation of belief by the Authorising Officer that the assessee's case fell in any of the three categories mentioned in sub-section (1) of section 132 of the Act could be directed to be made either by the Assessing Officer or by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd direct the department lo produce such material before it?" 2. I have heard the parties. The assessee's counsel has adopted his submissions advanced before the Division Bench, as contained in paras 5 to 10, and para 16 of tile order of the Ld. Judicial Member which, I consider it necessary to reproduce even at the cost of lengthy order. The submissions advanced are: "... he submitted that Chapter XIV-B of the Act, which was introduced w.e.f. the 1st day of July, 1995 brought about significant changes in the assessments relating to search. While sections 132 and 132A still survived, the necessity of passing any order under sub-section (5) and consequently appeal before the CIT under sub-section 12 of section 132 of the Act was dispensed with. In the submission of Shri Garg, a block assessment had to be completed strictly in accordance with the provisions of Chapter XIV-B, which provided special procedure for assessment of search cases. It was a complete and exhaustive code by itself. Elaborating, it was contended that it required taking of various steps. The 1st being a search should have been conducted under section 132 or books of account etc., requisitioned under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted. He submitted that none of these conditions existed in the assessee's case. In this connection it was contended by him that the reason for saying so was not in any vacuum but founded on concrete facts. In so far as clause (a) of section 132(1) was concerned, the assessee was never issued any summons or notice for producing any document etc. and as such there could not have been any omission or failure on his part in doing so. About clause (b) of the same provision, Shri Garg submitted that since no summons or notice had been issued, there could not have been a situation, occasion or provocation justifying on facts or in law the recording of a conclusion by the authorising officer to say that if such summons or notice was issued, it would not be complied with. In saying so, the assessee was strengthened by the fact that he had been filing his returns of income regularly and assessed thereon excepting for the period 1-4-1996 to 14-9-1996 which was part of the previous year ending 31-3-1997, return for which be came due towards the middle of the calendar year 1997 this is much after the search. Left with clause (c) of section 132(1) of the Act alone, Shri Garg contended that sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to record reasons was equally bound to give reasons, which inter alia could be looked into by a superior authority to satisfy himself that action had not been initiated arbitrarily. It was, however, open to him to withhold the name of informants and/or identify of sources if it was thought necessary to protect the sources and informants as per which after the assessee had participated in the proceedings if asked for, the reasons for forming the belief should be disclosed to him. Shri Garg also submitted that despite having taken objection from the beginning about the non-existence of the 'reason to believe' with the competent officer authorising search and furnishing of the 'satisfaction note' recorded by him, the Assessing Officer developed a cold feet, maintained a stoic silence and even did not consider it necessary to devote any time to deal with this aspect of the matter having far reaching consequences. 8. On the question as to whether the existence or non-existence of reasons or material for the formation of the requisite belief of the competent authority being challenged before the Appellate Tribunal, Shri Garg submitted that once specific right to appeal had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps to complete the assessment in accordance with the special procedure prescribed. Shri Garg further submitted that this being so there was absolutely no reason as to why the assessee could not challenge the validity of the search before the Appellate Tribunal during first appeal. In the same breath he added that there was no reason as to why the Tribunal being a regular court of First appeal for Block assessments could not adjudicate such a controversy, if raised. In this submission, if done so by the assessee, it was a duty cast on the Tribunal to decide the issue. Shri Garg also submitted that the Appellate Tribunal was the most proper legal forum where the assessee in view of the statutory change referred to supra could legally agitate this issue. He also submitted that there was no point to drive an assessee to file a petition for the redressal of this vital and fundamental grievance before the High Court under Article 226 of the Constitution and stall the hearing of the appeal because the issue went to the root of the matter and affected the disposal of the appeal on merits. Shri Garg further submitted that assuming but not admitting even if an assessee was forced to file a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and property of the concerned citizen. On this aspect, reliance was placed by Shri Garg on the celebrated decision of the Summit Court in the case of Maneka Gandhi v. Union of India reported in AIR 1978 page 597. Shri Garg also submitted that an assessment could not be equated with a normal order. He referred to the definition of the term 'assessment' as given in section 2(8) of the Act and placed reliance on a decision of the High Court of Punjab and Haryana, reported in 30 ITR 500 at 509 in the case of Hazari Mal and another decision of the Apex Court reported in 34 ITR 275 in the case of A.M. Lakshman at 294. Shri Garg also submitted that the mere fact that the search was authorised by an officer who was much superior to the Assessing Officer in the hierarchy of the Income-tax authorities did not bind the hands of the Assessing Officer in any manner in not questioning the existence of reasons to believe for authorising it. In this connection reliance was placed on two decisions reported in 82 ITR 347 SC the case of Sheonath Singh and 79 ITR 603. He also contended that if any contrary view was taken, it will render the provisions relating to appeal before the Tribunal otiose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact to convey that the procedure prescribed by this section shall be followed in a case where a search had been conducted under section 132 of the Act. The search, Shri Agarwal submitted, was a pre-assessment stage. Elucidating, the Ld. Senior Standing Counsel submitted that the appeal to the Appellate Tribunal was provided only against an assessment order framed under the provisions of Chapter XIV-B and as pointed out by him since the search was not a part of the assessment, the Tribunal did not have the jurisdiction to adjudicate any controversy or objection raised by an assessee in respect thereof. According to him, the position that was obtainable in respect of such a challenge before the codification of Chapter XIV-B still held good, i.e., an assessee if he so choose could file a petition under Article 226 of the Constitution of India to assail the search itself. Further that the provisions relating to search remained in tact excepting that the rendition of an order under section 132(5) or its appeal under section 132(12) were dispensed with. 12. In reply to the contention of the assessee that, even where a matter had reached the CBDT, an Assessing Officer could go into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer despite being raked up several times by the assessee, Shri Agarwal submitted that it should be impliedly taken to have been rejected by the Assessing Officer particularly in view of the fact that it was abundantly clear that the Assessing Officer had no jurisdiction to decide this question. The Ld. counsel gave an analogy. According to him, suppose the constitutional vires of any of the provisions of the Income-tax Act had been challenged by the assessee before the Assessing Officer while there is no doubt that it would be better if he had stated that being the statute he had no legal authority to consider its vires but even in a situation where he had kept quite, his reticence would not make even the slightest difference because it is too well known that such a challenge could not be made before any statutory authority. He, therefore, submitted that in this case also while it would have been certainly better if the Assessing Officer had devoted some time to discuss this aspect of the matter, yet not doing so will not at all effect the quality of the assessment order. Shri Agarwal also did not agree with the proposition of the invocation and applicability of the 'doctrine of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction to adjudicate any controversy or objection raised by an assessee in respect thereof. 4. Supply of a copy of 'Panchnama' to the Assessing Officer and to the assessee with a mention of issuance of a search warrant under section 132 of the I.T. Act does not in any way allow upholding of the submission made by the assessee that he had a legal right to question and challenge the validity of the search warrant and when so done, the Assessing Officer in his judicial/quasi-judicial capacity could look into the fact whether the warrant conforms to the requirement of Section 132. A copy of the Panchnama is supplied to the Assessing Officer only to apprise him of the factum of search having taken place and seizure etc. made during the course of search. Copy of it is supplied to the assessee for his record. This practice was being followed even in the pre chapter XIV-B days. And has not undergone any change. So not much can be read from the 'Panchnama', the handing over of which is in nature of receipt in token of books of account, assets etc. found during the search. 5. Thus the legal significance and implication of Panchnama vis-a-vis the warrant of search is not even equivale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XIV-B. 11. No analogy can be drawn from the fact that in appeal under section 256(1)(b) the first appellate authority is conferred with powers to look into the sources of reasons recorded for reopening of the assessment under section 147. It is so because the recording of reasons under section 148(2) is an act of the Assessing Officer and requires his satisfaction and not the satisfaction of some other authority. Even when the first appellate authority does not have any jurisdiction. In fact, recording of reasons is a part of the assessment proceeding itself. 12. Thus it follows that if the Assessing Officer did not have jurisdiction over a matter which was not relevant for pressing an order under section 158BC(c), in appeal against that order, the Tribunal also as the first appellate authority could not have any jurisdiction in it. Reliance is placed on the decision in the case of J.K. Cotton Spinning and Weaving Mill Company v. CTO reported in (1997) 91 ELT 34 (SC) which states that in an appeal, the appellate authority cannot expand the scope of the appeal challenging the correctness of order of the lower authority, nor can it deal with the matters which were never in issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not envisaged or conferred explicitly upon it by the Legislature in the first place. 17. Had it been the intention of the Legislature to widen the scope of appeal with the introduction of section 158BC in the act it would have provided for it in the relevant section 253(1) itself. 18. Questioning the validity of section 132 by the Appellate Tribunal would amount to trespassing on the territory that has been the exclusive domain of the High Courts by virtue of the power of Article 226. 19. In view of the above narrated facts it is submitted that an Assessing Officer cannot in law call for the 'satisfaction note' forming reason to believe as envisaged by sub-section (1) of section 132 of the I.T. Act, examine its validity and provide a copy thereof to the assessee. And in the event of Assessing Officer not being able to do so that Appellate Tribunal during the hearing of First Appeal under section 253(1)(b) cannot act similarly and direct the department to do so. 20. Since the issue involved in the case is of paramount importance and the verdict in the case would have far reaching legal implications, it is prayed that the decision in the case may be kept in abeyance til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the assessment framed after the search because in both the situations the assessee was to be taxed at the same rate of income-tax, but, after coming of Chapter XIV-B on the statute, the consequence of search under section 132 leads to different result than the consequences before the coming of the Chapter XIV-B on the statute and the one of the consequence is that as a result of coming of Chapter XIV-B upon the statute an assessee, in whose case search action under section 132 of the Act is taken, is to be taxed at a special rate of 60%. 7.2 On the point of effect of Chapter XIV-B much has been written by the ld. Members constituting the Division Bench in their respective orders, such as, paras 17, 18 and 19 of the order by the ld. Judicial Member and paras 3.1 and 4 of the order of the Id. Accountant Member and I need not repeat the same but would like to state, even at the cost of repetition, some of the important points of difference caused in scope of action under section 132 before and after the coming of the Chapter XIV-B on the statute which, in my opinion, are as under: Consequences of action under section 132 of the Act prior to the coming of Chapter XIV-B on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of search u/s 132 of the Act after coming of Chapter XIV-B on the statute are quite distinct and different and leads to different results. In view of above, it is obvious that introduction of provisions of Chapter XIV-B of the Act has made the consequences of search action u/s 132 of the Act quite different and if that be the case, then the proposition that validity of search action u/s 132 of the Act can be objected to only by way of writ petition under Article 226 of the Constitution of India may not hold good because the provisions of Sec. 132(1) contains two limbs as is evident from the following discussion of the Sec. 132(1), which reads as under: "132. (1) Where the Director General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board in consequence of information in his possession, has reason to believe that-- (a) any person to whom a summons under sub-section (a) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is not so, then there is no question of assessee omitting or failing in complying with. From clause (b) it is evident that the question of circumstances mentioned therein will arise only after the issuance of a summons or a notice as under clause (a) above which again relates to a "fact material". Similarly, so far as clause (c) is concerned, first of all there should be evidence that a person is in possession of money, bullion, jewellery or other valuable articles or thing, secondly, such article or thing should represent wholly or partly income or property and, thirdly, there is apprehension that such income or property either has not been or would not be disclosed for the purpose of the Act. The analysis clearly shows that it is only the existence of certain facts which is the prime requirement. 7.5 Now, since the fulfilment of any of the conditions or existence of any of the circumstances listed in clause (a) or (b) or (c) is wholly dependent on the existence of fact material it could not be accepted that an authority acting as quasi judicial authority or an appellate authority, which, strictly speaking, may not be courts but certainly are carrying on the judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aling with the assessee's right to appeal against levy of interest u/s 215/216 of the Act has held that though there is no specific right of appeal against levy of interest but still the assessee can challenge the same in appeal. On the basis of this decision, the assessee's counsel tried to make out the case that even if there is no specific right to appeal under a particular statute, the subject has a right to appeal against any of the action taken under that statute. 8. The ld. Departmental Representative, however, submitted his submissions in writing in the following terms: "In all the submissions made before the Hon'ble I.T.A.T. in the above case, it has been the consistent stand of the department that the Income-tax Appellate Tribunal has no jurisdiction to go into the validity of search conducted on the assessee under sec. 132 of the I.T. Act and the assessee cannot in law call for the "Satisfaction Note" forming "reason to believe" as envisaged by sub-section (1) of section 132 of the I.T. Act and further the Appellate Tribunal during the hearing of the first appeal under section 253(1)(b) of the I.T. Act, 1961 cannot act similarly and direct the department to produce s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer issuing the authorisation or of the designated officer is challenged, the officer concerned must satisfy the Court (emphasis mine) about the regularity of its action. If the action is maliciously taken or power of the section is exercised for collateral purposes it is liable to be struck down by the court." 6. The question arises - what does the word 'Court' in the above stated extract means - In this regard it would be pertinent to quote from the opening lines of the head notes prefaced to the judgment of the Patna High Court in 167 ITR 652 in the case of CIT v. Dr. (Mrs.) Krishna Rana which states: "The Income-tax Appellate Tribunal is not a court, the Tribunal has no power to review its own orders. Hence, the Tribunal cannot be clothed with some incidental powers permitting it to do indirectly what it cannot do directly." The inference drawn here would be that one of the reasons why a Tribunal cannot be a 'Court' because it does not have the power to review or recall its own orders while a Court, say High Court or Supreme Court always have the powers to review or revise their orders. There can be many other reasons why the Tribunal is not a court. Read in conjuncti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer, Coimbatore (Madras High Court) 'when a challenge is made on the basis of the invalidity of the Act which is sought to be invoked by the Commissioner, such a challenge cannot be made before the Commissioner or in Revision Petition filed against the Commissioner's order. A challenge to the validity of the Act can properly be made only in writ proceedings. Therefore, it cannot be contended that in such cases the assessee has alternative remedies by way of appeal or revision which is bar to the maintainability of the Writ Petition." 9. I have considered the rival submissions, facts and circumstances of the case, the decision relied on by the parties, provisions of law, relevant for the decision of the issue in hand and after consideration of the same, am of the opinion that to consider the scope of Article 226 of the Indian Constitution, it is necessary to consider the scope of Article 32 of the Constitution and the fundamental rights of the citizens of India as enshrined in Part-III of the Constitution, which are as under: "A. Right to equality: (i) Equality before law (Art. 14). (ii) Prohibition of discrimination on grounds of religion, race, caste, sex or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari or any of them, (for the enforcement of any of the rights conferred by part III and for any other purpose. (2)** (3)** From the combined in-depth study of the Articles 32 and 226 on the one hand and the Fundamental Rights on the other hand, what is gathered is that: 1. The subject's right to approach the Hon'ble Supreme Court for the enforcement of any of or all of the Fundamental Rights conferred by Part-III of the Constitution is guaranteed--meaning thereby that there is no bar for any person to approach the Hon'ble Supreme Court if it is of the opinion that its Fundamental Rights is being abrogated or not enforced or is suspended. 2. In addition to aforesaid guaranteed right the subject has been given further right (may be additional one) to approach the H.C. for the enforcement of any of or all of the Fundamental Rights conferred by Part-III of the Constitution, but, (i) The right to approach the High Court is not guaranteed, rather it is the High Court which has been given power to issue to any person or authority, including, in appropriate cases, any Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitions on the short ground that the petitioners have an equally efficacious alternative remedy by way of an appeal to the prescribed authority under sub-section (1) of section 23 of the Act, then a second appeal to the Tribunal under sub-section (3)(a) thereof, and thereafter in the event the petitioners get no relief, to have the case stated to the High Court under section 23 of the Act. In Releigh Investment Co. Ltd. v. Governor--General in Council [1947] LR 74 IA 50 : 15 ITR 332 (PC), Lord Uthwatt, J., in delivering the judgment of the Board, observed that in the provenance of tax where the Act provided for a complete machinery, which enabled an assessee to effectively raise in the courts the question of the validity of an assessment denied an alternative jurisdiction to the High Court to interfere. It is true that the decision of the Privy Council in Raleigh Investment Co.'s case was in relation to a suit brought for a declaration that an assessment made by the ITO was a nullity, and it was held by the Privy Council that an assessment made under the machinery provided by the Act, even if based on a provision subsequently held to be ultra vires, was not a nullity like an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court under section 66A(2) does not enlarge the scope of the jurisdiction of this court as this court can only do what the High Court can under section 66. It would, therefore, appear that the majority decision in Venkataraman's case rests on the principal that: (i) An ultra vires provision cannot be regarded as a part of the Act at all, and an assessment under such a provision is not "made under the Act" but is wholly without jurisdiction and is not directed by section 67 of the Act. And (ii) The question whether a provision is ultra vires or not cannot be decided by any of the authorities created by the Act and, therefore, cannot be the subject-matter of a reference to the High Court or a subsequent appeal to this Court. No such question arises in a case like the present where the impugned orders of assessment are not challenged on the ground that they are based on a provision which is ultra vires. We are dealing with a case in which the entrustment of power to assess is not in dispute, and the authority within the limits of his power is a Tribunal of exclusive jurisdiction. The challenge is only to the regularity of the proceedings before the learned STO as also his autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... best judgment, it cannot be said that he acted in violation of the rules of natural justice. The question whether another adjournment should have been granted or not was within the discretion of the learned STO and is a matter which can properly be raised only in an appeal under sub-section (1) of section 23 of the Act. All that this court laid down in Mohammad Nooh's case [1958] SCR 595, is that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than a rule of law; in other words, it does not bar the jurisdiction of the court." 10.1 The aforesaid decisions leave no room about the proposition that if the relevant statute provides for equally efficacious alternative remedy by way of appeal to the prescribed Authority, the extraordinary jurisdiction of the High Court under article 226 of the Constitution cannot be invoked. 11. What I am able to understand from the above discussions is that one can approach the High Court or the Supreme Court, as the case may be, requesting for invoking of the extraordinary jurisdiction under article 226 or article 32 of the Constitution, as the case may be, if it is found that: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of section 132 are concerned, I am of the opinion that empowerment of the Assessing Officer to make an assessment of block period is an executive act in exercise of powers vested by virtue of provisions of section 120 of the Act and the Assessing Officer has no reason or right to challenge such empowerment but the moment the Assessing Officer proceeds to exercise his power to make assessment of a block period, his action partakes the character of a quasi-judicial act by a quasi-judicial authority and as far as the proceedings for making an assessment of a block period are concerned, the moment the Assessing Officer decides to proceed by way of issuing a notice under section 158BC of the Act, the quasi-judicial proceedings are put in motion and it is at this stage of the matter that the Assessing Officer is supposed to apply his quasi-judicial mind and should not proceed with closed mind. The moment the Assessing Officer is supposed to apply his quasi-judicial mind, he can and is duty bound to go into the question of existence of a search action under section 132 of the Act having taken place in accordance with law which in turn extends his jurisdiction to go into the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 'B', 'C' and 'D' were found during the search of 'A', the Assessing Officer could have, if the circumstances, as enumerated in section 158BD, were satisfied, proceeded in case of 'B' and 'C' for making block assessment and revenue's loss could have been saved. 16. In view of the above discussions, I am of the opinion that the Assessing Officer not only, if called upon by the assessee, but of his own also is duty bound to satisfy himself about the factum of a search in accordance with law which, in turn, amounts to Assessing Officer's having jurisdiction/ power to call for the satisfaction note of the authority authorising the search. 16.1 Here, the fact that the Assessing Officer is subordinate to the authority authorising search is not material because the Assessing Officer is performing his quasi-judicial functions whereas the act of authorisation is neither judicial nor quasi-judicial; rather is an executive function Seth Bros. case. That being the case, the subordination in the hierarchy of the Income-tax authorities is of no relevance. 17. Powers and jurisdiction of the Income-tax Appellate Tribunal: 17.1 Article 323 of the Constitution of India provides for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding before any court or any other authority immediately before the establishment of such Tribunal as would have been within the jurisdiction of such Tribunal, if the causes of action on which such suits or proceedings are based had arisen after such establishment; (f) contain such supplemental, incidental and consequential provisions (including provisions as to fees) as the appropriate Legislature may deem necessary for the effective functioning of, and for the speedy disposal of causes by, and the enforcement of the order of, such Tribunals. (4) The provisions of this article shall have effect notwithstanding anything in any other provision of this Constitution or in any other law for the time being in force. Explanation - In this article "appropriate Legislature in relation to any matter means Parliament or, as the case may be, a State Legislature competent to make laws with respect to such matter in accordance with the provisions of Part XI." 18. If we read clause (1) alongwith sub-clause (a) and sub-clause (2) of article 323B, it is clear that the Tribunal so established can be empowered to adjudicate even the matters incidental to the matters relating to levy, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal can adjudicate upon the matters relating to the validity of search which, in turn, empowers it to go into the establishment of existence for the satisfaction of any of the facts/conditions specified under clause (a) or (b) or (c) of sub-section (1) of section 132 of the Income-tax Act. 21. In view of the above discussion and for the reasons stated in paras 19 to 27 of the order of the ld. Judicial Member constituting the Division Bench, I am of the opinion that in the event of assessee challenging the validity of search under section 132 on the ground of non-existence of any of the circumstances/conditions enumerated in clause (a) or (b) or (c) of sub-section (1) of section 132 or challenging the very factum of search on the ground that there was no search warrant in this case, the Assessing Officer as well as the Income-tax Appellate Tribunal, not only have the powers but are duty bound, in exercise of their quasi-judicial jurisdiction to adjudicate upon the matter and consequently can call for the records of concerned authorities leading to the issue of authorisation of search and can satisfy itself with regard to the authorisation having been issued in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepared by the Department Officer consequent upon the search." Revenue did not produce the requisite records on the ground of privilege. 22.2 It was in these circumstances that the Tribunal negatived the plea of privilege and in view of revenue's failure to produce the records accepted the assessee's plea that his name was not in the original search warrant. The Tribunal also referred to the decision of Karnataka High Court at Southern Herbals Ltd. v. Director of Income-tax (Investigation) [1994] 207 ITR 55 and Nenmal Shankarlal Parmer v. Asstt. CIT[1992] 195 ITR 582/62 Taxman 529 and of Punjab Haryana High Court, at H.L Sibal v. CIT [1976] 103 ITR 606. The relevant part of the Tribunal's order, as contained in para 22 of the order reads as under: "22. Now, we take up the different grounds as contended by the assessee. First of all we will be taking up the preliminary and technical grounds against the validity of the assessment order as such. It is the contention of the assessee that the impugned assessment under Chapter XIV-B of the Income-tax Act is invalid in as much as there was no valid search in the assessee's case. The representative of the assessee, Sri K.R. Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purpose of the Indian Income-tax Act, 1922 or the Income-tax Act, 1961... The search warrant is found to be signed by the Additional Director of Income-tax (Inv.) Unit. It thus appears that at one place of the search warrant, the names of both Sri Pradeep Kar, Chairman Managing Director of M/s. Microland and also Microland Ltd., were mentioned. The learned counsel for the assessee has verbally stated that the name of the assessee-company wag interplated at a later point of time. From a thorough examination of the photocopy of the search warrant, we also feel that there is some scope for suspecting the existence of the name of Microland Ltd., in the search warrant originally. In order to resolve the issue about this suspicion, we wanted to inspect the original search records which led to conducting this search in the premises of the assessee. We felt that an examination of the reasons required to be recorded by the officer authorising the search would be able to throw light as to whether that authority originally had proper reasons for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Karnataka High Court in the case of Southern Herbals Ltd v. Director of Income-tax (1994) 207 ITR 55, which has actually been sought to be relied upon by the learned departmental counsel with regard to certain other issue. The Karnataka High Court clearly stated in the said case that the warrant of authorisation for search has to be in the prescribed form and that it cannot be issued in general terms without specifying the person in respect of whom it is issued. The teamed counsel for the assessee has also relied in this connection on another judgment of the Karnataka High Court in the case of Nenmal Shankarlal Parmer v. Asst. CIT(1992) 195 ITR 582 at page 586. In that case, the search warrant was in the name of the firm but the residential premises of the partners were searched without any warrant in their names. The Karnataka High Court held that the mere mention of the residential premises did not enable the department to effect seizure of assets etc. belonging to the partners from such premises. Dr. Krishna initially tried to argue that Microland was actually the party to be searched although the warrant was in the name of its Managing Director Mr. Pradeep Kar. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndeed a large number of decisions in support of the proposition that the Court cannot put its own judgment as to the reasonability of the reasons required to be recorded by the authority for issuing the search warrant. However, the Court can certainly look into and get itself satisfied as to whether such reasons were at all recorded or not. The onus will lie on the department to prove the existence of such recording. In the instant case, on account of failure of the Department to discharge such onus, we once more reiterate our opinion about the lack of the proper and valid search in the case of the assessee. So far as the provision of section 282(2)(b) is concerned, that particular section merely prescribes on whom the notice may be served. However, it is cardinal principle of law that the notice itself should show the name of the company. In the instant case, all the papers on record are merely in the names of Sri Pradeep Kar. Although he has been stated to be the Chairman Managing Director of M/s. Microland Ltd., that is only an epithet used to describe him and it cannot be said that the departmental authorities have meant Microland itself in place of Sri Pradeep Kar, in all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme 'measure' which leads serious interference with the 'life' and 'liberty' of a citizen) existed. 23. That it is settled law that any action which results into such an interference has to be just and fair and cannot be allowed to be taken by any authority, except by following a valid process of law. 24. That it is specifically stated here that the petitioner was never issued any summons for the purpose mentioned in clause (a) of sub-section (1) of section 132 of the Act (as reproduced in para 22 above) nor there existed any basis for the apprehension mentioned in clause (b) of the said section." 25 to 29** 34. That the authorisation was issued by the resondent No. 2/5 without there being in existence any material which go to satisfy the conditions mentioned in sub-clauses (a), (b) and (c) of sub-section (1) of section 132 of the Income-tax Act, 1961, which had been extracted in paras 11 and 18 above amounts to interference with the 'life' and 'liberty' of the petitioner and violates Article 21 of the Constitution of India. It is settled law that any action which affects the 'life' and 'liberty' of a citizen which is guaranteed to him under Article 21 of the Constitution o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Director. The Hon'ble Supreme Court did not interfere with the said decision, though for different reasons, in the petition filed by the CIT, Allahabad, before it as may be seen from the decision reported in 172 ITR p. 627. 38. That following the decision of this Hon'ble Court in the case of Nand Lal Tahaliyani, the Hon'ble Delhi High Court has held that in the case of LR. Gupta v. Union of India reported in 194 ITR p. 32 at page 45 as under: "The expression 'information' must be something more than a mere rumour or a gossip or a bunch. There must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe that action under section 132 is called for any of the reasons mentioned in clauses for any of the reasons mentioned in clauses (a), (b) or (c). When the action of issuance of an authorisation under section 132 is challenged in a court, it will be open to the petitioner to contend that, on the facts of the information disclosed, no reasonable person could have come to the conclusion that action under section 132 was called for. The opinion which has to be formed is subjective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prehension that the petitioner would not comply with the summons or notice that might be issued under section 131(1) or 142(1) respectively and consequently the condition laid down under section 132(1)(b) has not been satisfied. 4. Because there existed no 'material' that the petitioner was in possession of any unaccounted money, bullion, jewellery or other valuation articles as envisaged in section 132(1)(c) and in the absence of any precise information in this regard, the respondent No. 2 acted in a wholly arbitrary illegal manner in issuing warrant of authorisation for search in his case. 5. Because authorisation of warrant for carrying out search operation and execution of such warrant amounts to serious interference with the 'life' and 'liberty' of the petitioner as has been guaranteed under Article 21 of the Constitution of India and in, the absence of the existence the requisite conditions, as is the case here, the entire process commencing from authorisation of search operation by the respondent No. 2, till execution thereof is liable to be declared as void ab initio and consequently all proceedings initiated/action taken against the petitioner deserve to be quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition and the respondents shall decide the case on merit in accordance with law. The matter is disposed of. Sd/-S.L. Sarraf. Sd/-P.K. Jain." 23. From the order of Hon'ble jurisdictional High Court, which is even otherwise binding on the Tribunal, situated within the state of U.P., I am fortified that the Hon'ble High Court seems to have allowed the petitioner/assessee to raise all the objections, which, inter alia, includes the objections regarding the satisfaction of the conditions or existence of the circumstances specified in clause (a) or (b) or (c) of sub-section (1) of section 132 before the respondents, including the Assessing Officer and has directed the respondents, including the Assessing Officer to decide the case on merits and in accordance with law, only with one thing in mind that the objections - including the one similar to the issue under dispute before me as Third Member, can be decided by the revenue authorities, including the Assessing Officer and if that is the case, then the Appellate Tribunal can certainly decide the issue. 24. So far as the decisions relied on by the ld. Sr. Departmental Representative are concerned, I, after careful consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raid and subsequent proceedings taken by the Income-tax Department against these assessees were actuated by malice and a mala fide motive "to teach them a lesson" and were, therefore, invalid and a nullity. The court dealt with the questions at pages 300 to 304 in the following terms: "The next question for consideration at this stage is the validity of the search and the utility of the documents which were recovered at such search. The contention on behalf of the assessee is that the search was mala fide and was contrary to the provisions of law. The question of mala fide will be considered separately but here I will deal with the illegality alleged to have been committed in this connection. In the first place it is contended that under section 132 of the Income-tax Act, 1961, as amended in 1965, no search warrant could be issued unless the Commissioner (who issued the search warrant) had information in his possession in consequence of which he had reason to believe that the assessee would not produce the books of account which might be useful or relevant in assessing the tax. It is argued that the existence of such information is a matter of fact which can be adjudicated upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were being produced before the income-tax department which the company was not likely to produce. Shri F.D. Helms, the Inspecting Assistant Commissioner, has also stated in his affidavit as follows: "The fact is that some secret information was passed on to me which prima facie gave an indication that the petitioner-company had been carrying on a large scale business in the manufacture and sale of liquid gold and the sale of such liquid gold was being effected through the allied business of Madan Mohan Darmma Mal who were the sole selling agents of the petitioner firm which was not accounted for in the company's books of account ... that the petitioner was maintaining duplicate sets of accounts which were different from the books which were being produced before the Income-tax Department. I referred the matter to the Commissioner of Income-tax U.P. (2), who asked for some further clarification from me. I sent detailed report to the Commissioner through a special messenger and was later on called by the Commissioner for personal discussion together with the records of the case. After the Commissioner was satisfied about the authority of the information he issued the necessary au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. These documents were shown to us by the learned Advocate-General who was appearing on behalf of the department and he explained that these three items were relevant for the purpose in hand. I am satisfied that these documents cannot be said to be wholly irrelevant. No other instance was brought to our notice by the learned counsel appearing for the assessees which was wholly irrelevant for the purpose. The documents taken away at the time of the search were entered in the lists, although some of the items did not indicate the nature of the document but from that alone it is not possible to hold that the documents were wholly irrelevant." 27. From the perusal of the order extracted above, it is revealed that validity of search was objected to on the basis of the following contentions: (1) Search was mala fide and was contrary to law. (2) Statement of a person named Kalicharan was not sufficient to issue search warrant for all the places mentioned in the warrant. (3) Under section 132 of the Act, it was incumbent upon the CIT to specify the particular documents which had to be searched and in the warrant issued in the present case no such documents were specified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussion, I, with respect to the Hon'ble High Court, and in view of the latest decision of the Hon'ble Allahabad High Court itself in the case of P.N. Mishra, am of the opinion that the issue involved in the questions referred to me for my opinion being related to the first limb of the provisions of section 132(1), the decision relied upon by the revenue is distinguishable and, therefore, is of no help to the revenue. 32. To conclude, my answer to both the questions referred for my opinion, in view of the foregoing discussions, reasons stated by the ld. Judicial Member in paras 19 to 27 of his order, the decision of the Income-tax Appellate Tribunal, Bangalore and the decision of the Hon'ble High Court of Allahabad in the case of P.N. Mishra , is 'yes' , i.e., in favour of the assessee and against the revenue and I am of the opinion that the A.0. as well as the Tribunal, when called upon by the assessee to examine the satisfaction of conditions or existence of circumstances specified in clause (a) or (b) or (c) of sub-section (1) of section 132 of the Act have powers and are duty bound to decide the issue by calling for the records of the authority authorising search including " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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