The main legal point established in the judgment is the requirement for a rational connection and relevant bearing on the formation of belief for the issuance of a warrant under Section 132A of the Income Tax Act.

S.R. Alam, C.J.

1. In the instant writ petition under Article 226 of the Constitution of India, the Petitioner has questioned the legality and validity of the warrant issued under Section 132A of the Income Tax Act, 1961.

2. Short facts, briefly stated giving rise to the instant petition, are that Petitioner carries on business of sale and purchase of ornaments of silver and gold. Petitioner deals in the business of manufacturing of silver and gold ornaments in the name and style of Singhai Jewellers and is regularly assessed to income tax and has permanent account number. Petitioner is also registered dealer under the provision of Madhya Pradesh Value Added Tax Act, 2002.

3. During course of routine checking by G.R.P., Katni, Petitioner's employee, namely, Kamlesh Soni was found to be in possession of impure silver weighing 54.078 kg. with pure silver content of 33.738 kg. and cash of Rs. 16,50,000/-in an Indica Car bearing registration number M.P.-13/T-5331. Police authorities submitted intimation to the Income Tax Department. On the basis of the information given by the police authorities a warrant of authorization dated 5.12.2008 under Section 132A of the Income Tax Act, 1961 was issued. Authorised officer executed the warrant under Section 132A of the Act. He was informed by G.R.P. Katni that the assets were in possession of CJM, Katni and, therefore, GRP, Katni was not in a position to handover the assets to the income tax authorities. Petitioner submitted an application (Annexure-P/5) dated 2.12.2008 for release of assets before CJM, Katni. Income Tax Department also made application for release of assets in its favour. Both the applications were decided by the CJM vide order dated 24.1.2009. Application preferred by Petitioner was rejected. However, application preferred by the department was allowed and it was directed that assets be handed over to the income tax department on furnishing security to the tune of Rs. 26 Lacs. Against the aforesaid order revision has been filed by the Income Tax Department which is pending before District and Sessions Judge, Katni. Petitioner has assailed the warrant of authorization issued under Section 132A of the Income Tax Act though this petition.

4. Return has been filed by Respondents inter alia, pleading that order dated 24.1.2009 passed by the CJM, Katni is illegal in so far as it directs furnishing of security to the tune of Rs. 26 lacs. Once warrant of authorization is issued under Section 132A of the Income Tax Act, Magistrate or Police has no jurisdiction to deal with the seized assets in the absence of any crime having been registered and the same should be handed over to income tax department. Being aggrieved by the order of CJM, the department has preferred a revision which is pending adjudication before the Sessions Judge, Katni. It is further stated that before issuance of the warrant dated 5.12.2008, appropriate steps were taken by the income tax department and after being satisfied with regard to credibility of the information possessed by the department, the Director of Income Tax has issued the warrant of authorization under Section 132A of the Income Tax Act. It has further been stated that the competent authority has applied its mind and has exercised the power of issuance of warrant of authorization in accordance with law.

5. We have heard learned Counsel for the parties.

6. Shri G.N. Purohit, learned senior counsel appearing for Petitioner vehemently contended that assets i.e. impure silver weighing 54.078 kg. with pure silver content of 33.738 kg. and cash worth Rs. 16,50,000/- found in possession of employee of Petitioner were accompanied by a travel memo, a perusal whereof would have disclosed that seized assets belong to a person assessed to income tax. Hence, its ownership could have been ascertained. It is further contended that there was no material wherefrom a belief could be formed that assets were undisclosed assets. Therefore, the identity of the asset