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HIGH COURT OF ALLAHABAD
M. Katju and Poonam Srivastava, JJ.
Anita Sahal
Versus
Director of Income-tax
Civil Miscellaneous Writ Petition 3005 of 2002
Decided On : 06 February 2004
Civil Miscellaneous Writ Petition 3005 Of 2002
Income-tax - Search and Seizure - Section 132 (1) - Summary of Acts and Sections: Income-tax Act, 1961, Section 132 (1), Section 158bc, Section 142 (1) - The court discussed the validity of the warrant of authorisation under Section 132 (1) of the Income-tax Act, 1961, and the initiation of block assessment proceedings under Section 158bc, and continuation thereof by issue of notice under Section 142 (1) of the Act. The court highlighted the legal provisions of Section 132 (1) and emphasized the requirement for the Director to have a reason to believe that the assessee has not or would not have disclosed his income before authorizing a search and seizure.
Fact of the Case:
The petitioners, both doctors, challenged the validity of the warrant of authorisation under Section 132 (1) of the Income-tax Act, 1961, and the initiation of block assessment proceedings. The search and seizure operation was alleged to be illegal, and the petitioners contended that there was no material which could lead to the formation of reason to believe that any asset owned and possessed by the petitioner was not, or would not be disclosed in due course.
Finding of the Court:
The court found that the search and seizure operation was illegal as there was no material which could lead to the formation of reason to believe that the petitioners had undisclosed assets or income. The court emphasized that the reason to believe must exist and be taken into consideration by the Director/Commissioner at the time of issuing the warrant of authorisation.
Issues: Validity of the warrant of authorisation under Section 132 (1) of the Income-tax Act, 1961, and the initiation of block assessment proceedings under Section 158bc, and continuation thereof by issue of notice under Section 142 (1) of the Act.
Ratio Decidendi: The court held that the reason to believe must exist and must be taken into consideration by the Director/Commissioner at the time of issuing the warrant of authorisation. If the reason to believe comes into existence later, the warrant of authorisation and entire search and seizure will be illegal.
Final Decision: The court ruled in favor of the petitioners, declaring the search and seizure operation as illegal due to the absence of a valid reason to believe at the time of issuing the warrant of authorisation.
M. KATJU, J.
( 1 ) HEARD learned counsel for the parties.
( 2 ) THE petitioners in both the aforesaid petitions are husband and wife and are both doctors. Dr. Mrs. Anita Sahai is a gynaecologist running a maternity centre by the name of Manavi Women clinic and Maternity Centre at B-237, Sector 19, Noida, Dr. Shard B. Sahai, her husband, is a qualified radiologist and is running a diagnostic centre in the name and style of Transmed diagnostics at A-759, Sector 19, Noida, which is also the residence of both the petitioners.
( 3 ) THE petitioners have challenged the validity of the warrant of authorisation under Section 132 (1) of the Income-tax Act, 1961, and the initiation of block assessment proceedings, by issue of notice under Section 158bc of the Act by respondent No. 5, and continuation thereof by respondent No. 6 by issue of notice dated October 26, 2002, under Section 142 (1) of the Act.
( 4 ) THE facts of the case are that on March 19, 2002, at about 8. 00 a. m. the respondents authorities their officers, servants and agents in purported exercise of the powers under Section 132 (1) of the Income-tax Act started search at the aforesaid premises of the petitioners as stated in paragraph 7 of the petition. It is alleged in paragraph 7 of the petition that the aforesaid premises have been disclosed in the returns of the petitioners year after year.
( 5 ) IN paragraph 8 of the petition it is mentioned that during the course of simultaneous search operation at the aforesaid premises the following valuables were found : (a) Household jewellery valued at Rs. 1. 15 lakhs ; (b) Cash amounting Rs. 2. 19 lakhs.
( 6 ) A panchnama was prepared for the same by the authorised officers at the conclusion of the search on March 20, 2002, at 3. 00 a. m. In terms of the panchnama cash of Rs. 1. 50 lakhs was seized. No valuables were seized from the premises B-237, Sector 19, Noida, as nothing was found there except certain documents and patients records which were seized, in terms of the second panchnama. True copies of the panchnama are annexure 4 and annexure 5, respectively.
( 7 ) IT is alleged in paragraph 4 of the petition that the petitioner, Dr. Mrs. Anita Sahai, has been carrying on her profession in the clinic, namely, Manvi Women Clinic and Maternity Centre at b-237, Sector 19, Noida, and has been regularly assessed to tax. She filed her latest return for the assessment year 2001-2002 with the Income-tax Officer, Ward-I, Noida. For the assessment year 2002-2003, she made payment of advance tax in three instalments prior to the date of the search. She had purchased a property No. 759, Sector 19, Noida, on July 9, 1999, and the investment in the purchase of the property was disclosed in the relevant balance-sheets accompanying her income-tax return for the assessment years 2000-2001 and 2001-2002, vide annexures I and II to the writ petition.
( 8 ) THE petitioners husband, Dr. Sharad B. Sahai, who is the petitioner in Writ Petition No. 3005 of 2002 is also a medical practitioner who resigned from CGHS in the year 1996, where he was working as a professor at that time. He has been assessed to tax regularly and his returns for the assessment year 2001-2002 had been filed before the commencement of the search operation. For the assessment year 2002-2003 he had paid three instalments of advance tax. As his professional receipts were within the purview of Section 44ab of the Income-tax Act his return for that year was duly accompanied by the audited balance-sheet and profit and loss account and the tax audit report under Section 44ab, vide annexure III to the writ petition.
( 9 ) IT is alleged in paragraph 9 of the petition that the cash found at the time of search was fully explainable being ; (a) Rs. 1,84,000 cash balance available with the petitioner and her husband out of professional receipts and (b) Rs. 35,000 belonging to Ms. Sharda Saxena aged aunt of the petitioners husband who has been livi
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