The main legal point established in the judgment is that the search and seizure action under Section 132 of the Income Tax Act must be authorized based on valid reasons to believe, and the action must be in accordance with the law. Failure to adhere to these requirements renders the search and seizure action unauthorized and invalid.

JUDGMENT

Sanjeev Narula, J. (Oral) - The Petitioner-proprietor of M/s Shrimati Gems and Jewels has filed the present writ petition impugning the search and seizure action carried out under Section 132 of the Income Tax Act (hereinafter the Act'') including the order whereby his stock-in-trade (jewellery) was seized.

2. The facts in brief, as set out in the petition are that the Petitioner - is in the business of trading in jewellery since 2010. He travelled from Delhi to Guwahati to attend a jewellery exhibition which was held from 07.09.2018 to 09.09.2018. On his return, he was stopped by Respondent No. 2 at Indira Gandhi International Airport, New Delhi and a search was conducted on him. The jewellery found in his possession was valued by the Revenue through a Registered Government Valuer at Rs. 1,58,62,924/- and the same was seized and panchnama dated 11.09.2018 was drawn in this behalf. Subsequently, Assistant Director of Income Tax (INV)-2 issued summons to the Petitioner under Section 131(1 A) of the Act, dated 10.09.2018 and 11.09.2018, calling upon him to furnish details regarding the seized jewellery. Later, on 13.09.2018, another summon was issued calling upon him to give certain information and documents. In response to the above summons, Petitioner filed a reply dated 17.09.2018, submitting details as required by ADIT, Investigation (AIU). He also made a request for the release of the jewellery, asserting that the same was his stock- in- trade and the seizure has resulted in hampering his business. This was followed by a reminder dated 17.09.2018, submitted with the department on 20.09.2018. On 09.10.2018, a similar request was made to the Pr.CIT-18 calling his attention to the fact that one month had expired since the seizure of stock-in-trade. Petitioner protested against the seizure, pleaded for immediate release of the seized stock-in-trade as he had been deprived of his source of livelihood.

3. At a later date, when Petitioner made further requests to the Tax Officers, he was informed that all the documents furnished by him had been submitted to the Investigation Officer of AIU Wing, who would examine the same and furnish a report to the Assessing Officer, where after the stock-in-trade would be released. However, such representations did not have the desired outcome and the Petitioner continued to make representations to other Tax Officers. On 18.10.2018, ACIT asked further information which was duly furnished vide letter dated 27.12.2018. Since then, there has been no response from the Income Tax Department, constraining the Petitioner to file the present writ petition, impugning the action of search, inter alia, on the ground that it is contrary to the mandate of the Act as the pre-conditions laid down in Clauses (a) to (c) of Section 132 (1) have not been fulfilled.

4. Learned counsel for the Petitioner has contended that to initiate a valid search, it is mandatory for the Respondents to form "reason to believe" and one of the three conditions enumerated in Clauses (a) to (c) of Section 132 (1) of the Act must be satisfied to enable the authority to issue a valid search warrant. Since, the Petitioner was in the possession of jewellery, the only Clause, if any, that can be attracted is clause ''( c )''- In any event, the said Clause is also not applicable since the Petitioner is carrying on the business of sale and purchase of jewellery, and he was legitimately carrying the same as his stock-in-trade, from Delhi to Guwahati for an exhibition. In such a situation, no circumstance existed justifying the initiation of the action of search. Furthermore, evidence of participation in the exhibition at Guwahati is based on documents that had been furnished to the authorities. It conclusively establishes that the jewellery seized is Petitioner''s stock-in-trade. This is also corroborated by the books of account and the supporting vouchers, which were produced before the concerned authorities. Despite justifying the