Harbhajan Singh Chadha And Others v. Director Of Income-tax And Others
[Citation -2015-LL-0327-11]

Citation 2015-LL-0327-11
Appellant Name Harbhajan Singh Chadha And Others
Respondent Name Director Of Income-tax And Others
Court HIGH COURT OF ALLAHABAD
Relevant Act Income-tax
Date of Order 27/03/2015
Judgment View Judgment
Keyword Tags search and seizure operation • warrant of authorization • condition precedent • undisclosed income • movable properties • reason to believe • satisfaction note • search warrant
Bot Summary: Writ Petition No.451 of 2012 Harbhajan Singh Chadha And Others .... Petitioner Vs. Director Of Income Tax And Others .... Respondents Hon'ble Tarun Agarwala, J. Hon'ble Dr. Satish Chandra, J. The petitioners have filed the present writ petition praying for the quashing of the search and seizure operations initiated against the petitioners by the respondents under Section 132 of the Income Tax Act in consequence of a search warrant, which was not issued in the name of the petitioners. The petitioners have also prayed that all the properties, cash, jewellery and other movable properties including books of account and other documents so seized from the petitioners premises including bank lockers should be released. Petitioner nos.4, 5 and 6 are wives of petitioner nos.1, 2 and 3. Petitioner no.7 is the son of petitioner no.2 and petitioner no.8 is the wife of petitioner no.7. The statements of the petitioners recorded under Section 132(4) does not indicate that the petitioners' portion was separate. Admittedly, the warrant of authorisation under Section 132 of the Act was issued in the name of Gurdeep Singh Chaddha, Rajendra Singh Chaddha, Hardeep Singh Chaddha, all sons of Late Sri Kulwant Singh and brother of petitioner no.1 as well as in the name of Ginni Chaddha, S/o Sri Narendra Singh Chaddha, brother of petitioner no.1 and M/s G.S. HUF. The warrant of authorisation indicated the premises where the search and seizure operation was to be conducted, namely, premises no.455, Civil Lines, Moradabad. It is not in dispute that the warrant of authorisation issued in the name of the aforesaid persons were not the residents of the premises in question. We are of the opinion that the petitioners' cannot question the validity or legality of the issuance of the warrant of authorisation in the name of Gurdeep Singh Chaddha and others, on the basis of which, search and seizure operations was conducted at the premises no.455, Civil Lines, Moradabad. We are also of the opinion that the petitioners' cannot allege that there was no information or reasons to believe warranting the issuance of the warrant of authorisation under Section 132 of the Act since the petitioners' name was not mentioned in the warrant of authorisation.


AFR Reserved Civil Misc. Writ Petition (Tax) No.451 of 2012 Harbhajan Singh Chadha And Others ..... Petitioner Vs. Director Of Income Tax And Others ..... Respondents ****************** Hon'ble Tarun Agarwala, J. Hon'ble Dr. Satish Chandra, J. (Per: Tarun Agarwala, J.) (Delivered on 27th March, 2015) petitioners have filed present writ petition praying for quashing of search and seizure operations initiated against petitioners by respondents under Section 132 of Income Tax Act (hereinafter referred to as Act) in consequence of search warrant, which was not issued in name of petitioners. petitioners have also prayed that all properties, cash, jewellery and other movable properties including books of account and other documents so seized from petitioners premises including bank lockers should be released. facts leading to filing of writ petition is, that warrant of authorization dated 31st January, 2012 under Section 132 of Act was issued by Director (2) of Income Tax, Intelligence New Delhi, respondent no.1. This warrant of authorization under Section 132 of Act was in name of Gurdeep Singh Chaddha (Ponty), Rajendra Singh Chaddha, Hardeep Singh Chaddha, all sons of Late Sri Kulwant Singh and brother of petitioner no.1 as well as in name of Ginni Chaddha, S/o Sri Narendra Singh Chaddha, brother of petitioner no.1 and M/s G.S. HUF. Based on this warrant of authorization, search and seizure operation was conducted on 1st February, 2012 by Assistant Director of Income Tax, Intelligence and Criminal Investigation ND, respondent no.2 on 1st February, 2012 at premises no.455, Civil Lines, Moradabad. Petitioner no.1 is father of petitioner nos.2 and 3. Petitioner nos.4, 5 and 6 are wives of petitioner nos.1, 2 and 3. Petitioner no.7 is son of petitioner no.2 and petitioner no.8 is wife of petitioner no.7. On basis of search conducted on 1st February, 2012 and materials seized, respondent issued letter to banks on basis of which bank accounts and lockers were seized/attached on 2nd February, 2012 based upon consequential warrant of authorisation under Section 132 of Act dated 1st February, 2012 issued by Additional Director. It is alleged that petitioners are jointly residing on 1st floor of building situate at House No.455, Civil Lines, Moradabad. petitioners further contend that kitchen of petitioners is common. petitioners contend that plot No.455, Civil Lines, (3) Moradabad was purchased jointly in name of six persons, namely, Late Sri Gurbachan Singh (father of petitioner no.1), Late Kulwant Singh, Harbhajan Singh (petitioner no.1), Late Surinder Singh, Late Gurbax Singh and Surjeet Singh, who are sons of Late Gurbachan Singh. Over period of time residential house was constructed and, it is alleged, that petitioners started residing on first floor. Other portions of residential building was occupied by other co-owners. petitioners contended that there is no partition by metes and bounds of premises in question between co-owners and, by mutual arrangement, each co-owner is residing and living in their residential portions along with their family. It is alleged that each portion of residential complex has separate electric connection. petitioners, however, admit that there is common entrance, common car parking and guard room is also common. However, name plates of each co-owner is shown at main gate as well individual names are affixed at entrance of their residential portion. We have heard Sri S.P. Gupta, learned Senior Counsel alongwith Sri Rakesh Ranjan Agarwal, learned Senior Counsel, Sri Pramod Agarwal and Sri Suyash Agarwal, learned counsel for petitioners and Sri Bharat Ji Agarwal, learned Senior Counsel alongwith Sri Ashok Kumar, learned counsel for Income Tax department. (4) Sri S.P. Gupta, learned Senior Counsel contended that warrant of authorization was not issued in name of petitioners and, therefore, search and seizure operations carried out at their premises was wholly illegal, void and liable to be quashed. learned Senior Counsel contended that there was no material to initiate search and seizure operation against petitioners at their premises and, consequently, respondents have proceeded illegally without any application of mind. Further, no such material or reasons to believe has been produced before Court to justify their action. learned counsel contended that search was only conducted at premises of petitioners and not at premises of persons mentioned in warrant of authorization. It was urged that based on this illegal search, petitioners' bank accounts and lockers were seized or attached illegally which action was also liable to be quashed by Court as no search warrant was served by respondents relating to lockers of petitioners. It was urged that there was no material or information on basis of which lockers of petitioners were seized and, therefore, action of respondents was wholly illegal and without jurisdiction. In support of his submissions, learned Senior Counsel has placed reliance on Jagmohan Mahajan and another Vs. Commissioner of Income Tax, Punjab and others, 103 ITR 579, Manmohan Krishan Mahajan Vs. Commissioner of Income Tax, Patiala (5) and others, 107 ITR 420, Ajit Jain Vs. Union of India and others, 242 ITR 302, Commissioner of Income Tax Vs. Rohini Walia, 289 ITR 328, Commissioner of Income Tax Vs. Ram Singh, 351 ITR 391 and Smt. Kavita Agarwal and another Vs. Director of Income Tax (Investigation) and others, 264 ITR 472. On other hand, learned Senior Counsel for department, Sri Bharat Ji Agarwal justified action of department in conducting search at premises mentioned in warrant of authorization. learned Senior Counsel contended that search was conducted at premises No.455, Civil Lines, Moradabad which is one composite property and has not been partitioned by metes and bounds nor was there anything to show that each person mentioned in warrant of authorization as well as petitioners had separate identifiable portions. statements of petitioners recorded under Section 132(4) does not indicate that petitioners' portion was separate. On other hand, petitioners themselves admit that there is common entrance to premises No.455 and there is common parking lot and common guardroom. learned Senior Counsel submitted that search was conducted at residential premises at 455, Civil Lines, Moradabad as well as business premises at Chaddha Palace, Prince Road, Moradabad on basis of warrant of authorization dated 31st January, 2012 after recording satisfaction separately. learned Senior Counsel submitted that jewellery seized was (6) released subsequently on 16th February, 2012 upon taking bank guarantee. It was further contended that petitioners have business link with Gurdeep Singh Chaddha (Ponty) in company named GSR Granites (P) Ltd. in which some of petitioners are Directors and share same address. learned Senior Counsel further placed reliance on provision of Section 292CC of Act, which was inserted by Finance Act, 2012 w.e.f. 1.4.1976 in which provision has been incorporated that it was not necessary to issue warrant of authorization in name of each person. In support of his submissions, learned Senior Counsel has placed reliance on Dr. Pratap Singh and another Vs. Director of Enforcement and others, 155 ITR 166 and Takshila Educational Society Vs. Director Of Income-Tax (Investigation) and others, 272 ITR 274. Having heard learned counsel for parties, we find that search is necessary to secure evidence, which is not likely to be made available by issue of summons. Tax authorities have to resort to search and seizure when there is evidence of undisclosed documents or assets which have not been and would not be disclosed in ordinary course. Section 132 of Act read with Rule 112 of Rules is intended to achieve two limited objectives, namely, to get hold of evidence bearing on tax liability of person which said person is seeking to withhold from assessing authority and to get hold of assets (7) representing income believed to be undisclosed income and applying so much of them as may be necessary in discharge of existing and anticipated tax liability of person concerned. Section 132 of Act envisages to unearth hidden or undisclosed income or property and bring it to assessment. However, search which is conducted under Section 132 of Act is serious invasion into privacy of citizen. Section 132(1) of Act has to be strictly construed and formation of opinion or reason to believe by Authorising Officer must be apparent from note recorded by him. opinion so recorded must clearly show whether belief falls under clause (a), (b) or (c) of Section 132(1) of Act. No search can be ordered except for any of reasons contained in clause (a), (b) or (c). satisfaction note should itself show application of mind and formation of opinion by officer ordering search. If reasons, which are recorded, do not fall under clause (a), (b) or (c), in that event, authorisation issued under Section 132(1) will become illegal and will have to be quashed as held in L.R. Gupta and others Vs. Union of India and others, 194 ITR 32. In order to attract clause (c) of Section 132(1) of Act, there must be information with authorising authority relating to two matters, namely, that any person is in possession of money, etc. and secondly, that such money, etc. represents either wholly or partly (8) income or property, which has not been or would not be disclosed for purposes of Act. search would be valid if authorising authority had reasonable ground for believing that search was necessary and that he further believes that required object cannot otherwise be obtained without undue delay. In our opinion, clause (a), (b) and (c) of Section 132(1) of Act spells out circumstances under which authorising authority may issue warrant of authorisation. Such authorisation is possible only if authorising authority in consequence of information in his possession has reason to believe existence of circumstances enumerated in clause (a), (b) and (c) of Section 132(1) of Act. In order to justify action under Section 132, it is incumbent upon authority to collect relevant material on basis of which, authority can form opinion that he has reasons to believe that action under Section 132 of Act would be justifiable. expression information must be something more than mere rumour, gossip or hunch. There must be some material, which can be regarded as information , which must exist on file, on basis of which authorising officer can have reason to believe that action under Section 132 of Act is called for any of reasons mentioned in clause (a), (b) and (c). We are also of opinion that merely by alleging that authority had no information nor reason to believe by itself is not sufficient to challenge action (9) taken by authority under Section 132 of Act. contention that whenever action under Section 132 of Act is challenged, authority empowered to issue search warrant should be called upon to disclose information on basis of mere denial by petitioner of valid information in possession of department would frustrate whole scheme of Section 132 of Act. Only where petitioner furnishes adequate and cogent material in support of his denial of valid information that court can justifiably call upon department to disclose information. We may make it clear that disclosure of material or information to persons against whom action under Section 132 of Act is taken is not mandatory because in our opinion very disclosure would affect or hamper investigation. person against whom action is to be taken would be supplied all relevant facts and materials on which further action is proposed after investigation is completed. stage of disclosure consequently is given only when authority resolves to make appropriate order to impose tax liability or penalty, etc. and, at that stage, relevant material would be disclosed. words has reasons to believe as provided in Section 132(1) of Act postulates belief and existence of reasons for that belief. belief must be held in good faith: it cannot be mere pretence. Such belief should not be based on mere suspicion but must be based on information which is in possession of (10) authorising authority. formation of belief within meaning of Section 132(1) is condition precedent to authorisation of search and seizure. It is basically subjective step essentially to make up one's mind as to whether on basis of information available he had or had not formed reasons to believe. This belief, cannot be mere pretence nor can it be mere doubt or suspicion but has to be something more than that. In light of aforesaid, warrant of authorisation issued by authorising authority under Section 132 of Act can authorise Authorised Officer to enter and search any building, place, vessel, vehicle, etc. where he has reasons to believe that such books of accounts, documents, money, bullion, jewellery or other valuable articles or things are kept. authorising authority is under law expected to sign warrant of authorisation, which is complete in all aspect. warrant of authorisation should be in name of persons whose premises, etc. are sought to be searched. When it is not clear whether one or more persons are in occupation or control of premises, it would be safe and proper to issue authorisation against all unknown persons, who may be owners or in possession of articles and occupiers of premises. In light of aforesaid position of law, we find that in instant case there is no challenge on question that warrant of authorisation was not issued (11) by competent authorising authority. petitioners' however, contend that warrant of authorisation was not issued in their names and, therefore, search conducted at their premises was wholly illegal and without jurisdiction. In first blush, proposition appears to be attractive but on closer scrutiny, we find that contention cannot stand test of scrutiny. Admittedly, warrant of authorisation under Section 132 of Act was issued in name of Gurdeep Singh Chaddha (Ponty), Rajendra Singh Chaddha, Hardeep Singh Chaddha, all sons of Late Sri Kulwant Singh and brother of petitioner no.1 as well as in name of Ginni Chaddha, S/o Sri Narendra Singh Chaddha, brother of petitioner no.1 and M/s G.S. HUF. warrant of authorisation indicated premises where search and seizure operation was to be conducted, namely, premises no.455, Civil Lines, Moradabad. It is not in dispute that warrant of authorisation issued in name of aforesaid persons were not residents of premises in question. Some of them were co owners. Consequently, we are of opinion that petitioners' cannot question validity or legality of issuance of warrant of authorisation in name of Gurdeep Singh Chaddha (Ponty) and others, on basis of which, search and seizure operations was conducted at premises no.455, Civil Lines, Moradabad. We are also of opinion that petitioners' cannot allege that there was no information or reasons to believe warranting issuance of (12) warrant of authorisation under Section 132 of Act since petitioners' name was not mentioned in warrant of authorisation. Only persons mentioned in warrant of authorisation can allege that action taken under Section 132 was wholly illegal based on no information and having no reasons to believe or that no satisfaction was recorded on file. Since persons mentioned in warrant of authorisation are not before this Court, it is not necessary for us to go into question whether there was sufficiency of material or existence of information with authorising authority, which led authorising officer to have reason to believe that action under Section 132 of Act was called for any of reasons mentioned in clause (a), (b) or (c) of Section 132 of Act. We are of opinion that persons mentioned in warrant of authorisation alone can contend that on facts or information disclosed, action under Section 132 of Act was wholly illegal. petitioners' contend that they are living on first floor of premises no.455, Civil Lines, Moradabad and that their residence was illegally searched and, therefore, action of respondents was wholly illegal and search and seizure conducted was liable to be quashed. We find that admittedly, premises no.455, Civil Lines, Moradabad was purchased jointly in name of six persons, namely, Late Sri Gurbachan Singh (father of petitioner no.1), Late Kulwant Singh, (Harbhajan Singh) petitioner no.1, Late Surinder Singh, (13) Late Gurbax Singh and Surjeet Singh, who are all sons of Late Gurbachan Singh. We find that property is still joint and no partition by metes and bounds has taken place. petitioners' themselves admit that there is common entrance, common car parking and common guard room. We find that statements of petitioners were recorded under Section 132(4) of Act which does not disclose that premises no.455, Civil Lines, Moradabad was partitioned by metes and bounds. Once valid warrant of authorisation is issued, search has to be conducted at premises in question, namely, premises no.455, Civil Lines, Moradabad. No doubt, while searching premises of persons mentioned in warrant of authorisation portion occupied by petitioners' were also searched, which in our opinion was valid and proper since premises no.455, Civil Lines, Moradabad had not been partitioned by metes and bounds. In such situation when there was no authorisation in respect of petitioners' premises, search and seizure operations would not be held to be illegal and we are of opinion that provisions of Section 158BD of Act would be attracted. For facility, provision of Section 158BD is extracted hereunder:- Undisclosed income of any other person. 158BD. Where Assessing Officer is satisfied that any undisclosed income belongs to any person, other than person with respect to whom search was made under Section 132 or whose books of account or other documents or any assets were (14) requisitioned under section 132A, then, books of account, other documents or assets seized or requisitioned shall be handed over to Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and provision of this Chapter shall apply accordingly. From aforesaid it is clear that jurisdiction to assess undisclosed income, if any, of petitioners' on basis of search vests in assessing officer by virtue of provisions of Section 158BA of Act in case where search under Section 132 of Act is initiated. Such assessment is to be carried out in respect of undisclosed income of person, who was not issued warrant of authorisation by invoking provisions of Section 158BD. We are of opinion that even though no warrant of authorisation was issued against petitioners' under Section 132 of Act, nonetheless, search conducted against them was wholly valid for reasons stated aforesaid. Pursuant to search conducted on first day, respondents found various bank accounts and lockers of petitioners' and, based on search, fresh warrant of authorisation for searching lockers was obtained on 1st February, 2012. contention of petitioners that there was no material or information with authorising authority to believe that there was money, jewellery, etc. in lockers and, therefore, action of respondents was wholly illegal is bereft of merit. It may be noted here that only bald assertion (15) has been made in para 59 of writ petition which paragraph has been sworn on legal advice. Such assertion based on legal advice without making foundational assertion cannot be investigated. Making such allegation without corroborative support is by itself not sufficient to challenge action taken by authority under Section 132 of Act, nor can Court call upon authority to disclose information on basis of allegation made on legal advice. Since petitioners did not furnish adequate and cogent material, we are not inclined to call respondents to disclose information. We are also of opinion, that in given circumstances, information received on first date of search by itself caused reasonable belief for issuance of warrant of authorisation against petitioners' for search of their lockers. Such search conducted and lockers seized on 2nd February, 2012, on basis of search conducted on 1st February, 2012 was perfectly valid. In light of aforesaid, we are of opinion that writ petition is devoid of merit and is dismissed. In circumstances of case, parties shall bear there own costs. Date:27.3.2015 Bhaskar (Dr. Satish Chandra, J.) (Tarun Agarwala, J.) Harbhajan Singh Chadha And Others v. Director Of Income-tax And Other
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