Laljibhai Kanjibhai Mandalia v. Principal Director of Income-tax (Investigation)
[Citation -2019-LL-0222-115]

Citation 2019-LL-0222-115
Appellant Name Laljibhai Kanjibhai Mandalia
Respondent Name Principal Director of Income-tax (Investigation)
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 22/02/2019
Judgment View Judgment
Keyword Tags search and seizure operation • authorisation for search • nature of transaction • application of mind • undisclosed income • books of accounts • electronic record • satisfaction note • valuable article • loan transaction • interest earned • interest income • search warrant • unsecured loan • valid warrant
Bot Summary: The facts as averred in the petition are that the petitioner is a high net worth individual and has been paying tax regularly and the accounts of the petitioner are being audited on a regular basis. According to the petitioner as such no reason to believe was shown to the petitioner; however, in the course of search, the officials told the petitioner that the reason for the search was the fact that the petitioner was a Director of Goan Recreation Clubs Private Limited and the Income Tax Department was conducting a search on the said company and the present search was being conducted since the petitioner was a Director of that company. Being aggrieved, the petitioner has filed the present petition challenging the authorisation issued under section 132 of the Income Tax Act, 1961. The apparent investment made by the petitioner is found to be not a judicious investment choice from the point of view of a prudent business man as the company to which the petitioner provided loan, had no established business, no goodwill in the market, nor was it enlisted in any of the stock exchanges, nor did the petitioner have had any financial dealings with the company previously. Reference to the petitioner finds place in allegations made against Goan Recreation Clubs Private Limited wherein reference is made to the loan given by the petitioner to the said concern, which has given rise to the belief that the transaction of loan was prearranged and was an Page 28 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT accommodation entry provided through some entry operator thereby giving colour of genuineness to an otherwise bogus loan The satisfaction note refers to various other transactions; however, since the same is confidential in nature it would not be prudent to refer to the same. On the contrary, in the facts of the present case, from the record of the case as produced by the respondents as well as by the petitioner, it is evident that the loan transaction whereby the petitioner had advanced Rs.10,00,00,000/- to the borrower company has been duly reflected in the books of account of the petitioner. In the facts of the present case, the petitioner has produced on record a mortgage deed dated 22nd June, 2016 executed by and between Royale Recreation Pvt. Ltd. as the First Party, Goan Recreation Clubs Private Limited as the Confirming Party or the Second Party and the petitioner Shri Laljibhai Kanjibhai Mandalia as the Mortgagee or the Third Party, which had been executed by way of a security for repayment of the amount advanced by the petitioner to Goan Recreation Clubss Private Limited.


IN HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 16360 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE DR.JUSTICE A. P. THAKER = 1 Whether Reporters of Local Papers may be allowed to Yes see judgment ? 2 To be referred to Reporter or not ? No 3 Whether their Lordships wish to see fair copy of No judgment ? 4 Whether this case involves substantial question of law No as to interpretation of Constitution of India or any order made thereunder LALJIBHAI KANJIBHAI MANDALIA Versus PRINCIPAL DIRECTOR OF INCOME TAX (INVESTIGATION) Appearance: MR SN SOPARKAR, SENIOR ADVOCATE with MR P MEHD(3489) for Petitioner(s) No. 1 MRS MAUNA M BHATT(174) for Respondent(s) No. 4,5 NOTICE SERVED BY DS(5) for Respondent(s) No. 1,2,3 CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE DR.JUSTICE A. P. THAKER Date : 22/02/2019 ORAL JUDGMENT Page 1 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Leave to amend prayer clause. 2. By this petition under Article 226 of Constitution of India, petitioner has prayed to quash impugned warrant of authorisation and has challenged proceedings of search initiated against petitioner and all consequential actions taken pursuant thereto. 3. facts as averred in petition are that petitioner is high net worth individual and has been paying tax regularly and accounts of petitioner are being audited on regular basis. petitioner was looking for avenue to invest some money. By that time, company by name of Goan Recreation Clubs Private Limited was in process of setting up new business in Goa. said company was in need of finance for setting up its business and consequently, approached petitioner for loan. On petitioner asking for some sort of security, said company offered that another company being Royale Recreation Private Limited would give its property bearing Sub Plot No.65 admeasuring 346 square metres and Sub-Plot No.68 admeasuring 463.50 square metres, in all, admeasuring 809.50 square metres constituting part of Aldeia De Goa of property known as Nauxim or Chicalium Bhat bearing Survey No.31/1-A admeasuring 1,06,950 square metres situated in village Bambolim, in registration sub-District Ilhas, District North Goa in State of Goa as security for said loan. Subsequently, agreement was reached and registered deed of mortgage came to be executed for property between petitioner, Page 2 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT Goan Recreation Clubs Private Limited (also referred to as borrower company ) and Royale Recreation Private Limited (also referred to as guarantor company ) on 22.6.2016. Pursuant to said agreement, amount of Rs.10,00,00,000/- (rupees ten crore) came to be given by petitioner to borrower company at agreed rate of interest and on agreed terms. So as to avoid any technical breach of law, petitioner was advised to become Director of borrower company at time of giving loan. petitioner, therefore, became Director of Goan Recreation Clubs Private Limited on 18.5.2016. However, soon after loan formalities were completed, petitioner resigned as Director of Goan Recreation Clubs Private Limited on 25.6.2016. Accordingly, petitioner remained as Director of borrower company for little over one month. 4. It is case of petitioner that borrower company which was new venture was in process of setting up its business, had yet to start its business when petitioner resigned as Director of that company and in fact it did not commence business for further period of one month after petitioner resigned as Director of company. According to petitioner, his only role was to give loan of Rs.10,00,00,000/- to company, which amount was completely accounted for and its source was not only disclosed but also very well-known to department. In due course, borrower company repaid loan along with interest due to petitioner. Consequently on 10.7.2017, deed for release of mortgage came to be executed between petitioner, Royale Recreation Private Limited (the guarantor company) and Goan Recreation Clubs Private Limited (the Page 3 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT borrower company). It is case of petitioner that he has diligently paid tax on interest that he had earned from loan. However, on 10.8.2018, officers of Income Tax Department conducted search on residential premises of petitioner which went on till 3.00 a.m. on 11.10.2018. During course of search, petitioner was orally informed that warrant of authorisation in present matter has been issued by Principal Director of Income Tax (Investigation), Kolkata. According to petitioner as such no reason to believe was shown to petitioner; however, in course of search, officials told petitioner that reason for search was fact that petitioner was Director of Goan Recreation Clubs Private Limited and Income Tax Department was conducting search on said company and present search was being conducted since petitioner was Director of that company. It appears that subsequent to search, respondents have been raising query after query and calling for details of assets, etc. from petitioner. It is case of petitioner that respondents are without any rhyme or reason or legal justification harassing petitioner and his family members and are grossly abusing power vested in them under provisions of Income Tax Act. Being aggrieved, petitioner has filed present petition challenging authorisation issued under section 132 of Income Tax Act, 1961. 5. In response to averments made in petition, respondent No.1 has filed affidavit-in-reply, inter alia, stating that search was carried out under valid warrant of authorisation under section 132 after proper recording of 'reasons to believe' in satisfaction note, and approval Page 4 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT of same by competent authority, as prescribed in law. action under section 132 of Income Tax Act, 1961 on 10.8.2018 at residence of petitioner and other subsequent actions taken by respondents by way of post search analysis are good in law and sound as per provisions of Income Tax Act, 1961 and based upon sound and credible information available to department. 5.1 first respondent has sought to explain action taken against petitioner as follows:- a) authorized officers/ investigating officers conducted search and seizure operation at various spots across various states related to case of Shri Sarju Sharma & other associated group of companies which had financial transactions with Shri Sarju Sharma (PAN- AKOPS3325A) and M/s. Goan Recreation Clubs Pvt Ltd., Goa (PAN-ANYPS6038F), hereinafter referred to as company . Shri Sarju Sharma is leading business entrepreneur of Siliguri, Dist-Jalpaiguri, engaged in hospitality business of Hotel, Restaurant and Bar running business under name and style of M/s Hotel Alishan and Restaurant. flagship company M/s. Goan Recreation Clubs Pvt Ltd. after being incorporated in year 2015 has stepped into world of gaming & entertainment unit of Casino industry. casino business is being operated from premises of Grand Hyatt Hotel, Bambolin, Goa w.e.f. 29th Ju1y, 2016. b) name of M/s Goan Recreation Clubs Pvt Ltd. appeared in credible information on high value cash deposits/ data of suspicious cash deposits post demonetization period disseminated by DGIT(Inv.), W.B., Sikkim & NER, wherein it was found that said company had deposited cash to tune of Rs.13,79,10,500/- into its two bank accounts maintained with ICICI Bank and HDFC Bank, North Goa. c) M/s Goan Recreation Clubs Pvt. Ltd. was incorporated Page 5 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT on 28.09.2015 with nominal paid up share capital of Rs 2,00,000/-. initial Directors were Sarju Shanna and Shri Rohit Gurubhakta Sharma. During initial year of its incorporation, i.e., in financial year 2015-16 company raised huge unsecured loan of Rs 5.77 crore from various individuals and companies in very peculiar manner, as company at that juncture was yet to commence any substantive business activities. Again, in financial year 2016- 17 company raised unsecured loan of Rs.34.10 crore from various individuals and companies which includes amount of Rs.10 crore from petitioner viz. Shri Laljibhai Kanjibhai Mandalia from Ahmedabad. details of unsecured loan received by company and credited into bank accounts of company are given below: Financial Name of party Loan Amount Source and Year from whom Loan (in Rs.) Relationship was taken with company 2015-16 Sarju Sharma 75,00,000/- Director Rajputana General 4,27,00,000/- Non related Com. Corp. Pvt Ltd. entity Fairland Sales Pvt. 75,00,000/- Non related Ltd. entity 2016-17 Laljibhai Kanjibhai 10,00,00,000/- Addl. Director Mandalia Viarra Entertainment 25,60,00,000/- Associated Pvt. Ltd. company Rajputana General 1,50,00,000/- Non related Commercial entity Corporation Pvt. Ltd. d) From above chart it is noticed that company raised huge unsecured loans within two years of it incorporation from various individuals and companies. e) Whereas, in pre search analysis, on going through records available with MCA (Ministry of Corporate Affairs) and ITBA (Income Tax Business Application) it came to light that company M/s Goan Recreation Clubs Pvt. Ltd. During financial year 2016- Page 6 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT 17 have introduced three new Directors along with exit of then existing Director Shri Rohit Gurubhakta Sharma on 03.03.2017, details given in following table: Name of PAN Date of Date of No. of Director appointment cessation shares Sarju Sharma AKOPS3325A 28.09.2015 Active 10000 Rohit ANYPS6038F 28.09.2015 03.03.2017 Gurubhakta Sharma Atul Kokas AAAPK5030A 03.03.2017 Active Hifizurrehman AAAPK5030A 03.03.2017 Active Abdul LahKadiwal Laljibhai AEJPS5127D 18.05.2016 23.06.2016 Addl. Kanjibhai Director Mandalia f) It came to light that three new directors had neither been allotted share of company nor subscribed to by them. On going through records of M/s. Goan Recreation Clubs Pvt. Ltd. and its relevant Bank account maintained with HDFC & ICICI Bank, it revealed that on 01.06.2016 and 21.06.2016 petitioner, who was then director of company, brought in Rs.6,00,00,000/- and Rs.4,00,00,000/- respectively into books of company viz. M/s. Goan Recreation Clubs Pvt. Ltd. during Financial Year 2016- 17, details of unsecured loan account is highlighted below: Loan account of Shri Laljibhai Kanjibhaiu Mandalia during F/Y 2016-17 : Date of Fund credited in Payment by Shri transactions bank account of Goan Mandalia through his Recreation Clubs Pvt. Bank Ltd. HDFC A/c. No.50200015405430 01.06.2016 6,00,00,000 Through Kota Mahindra Page 7 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT Bank account No.8011674807 21.06.2016 4,00,00,000 -do- Total Rs.10,00,00,000/- g) From above table, it is seen that total loan of Rs.10 Cr was given by Shri Mandalia (then Additional Director) within short span of two different dates 01.06.2016 & 21.06.2016 respectively. It is seen that Shri Mandalia on 25.06.2016, resigned as additional director from said company. loan was again fully repaid by company in installments on various dates given in table below: Date of Amount of loan Source of repayment back repayment repaid (in Rs.) of loan through Bank account 06.10.2016 27,00,000 Cash deposit in Bank account on 5.10.2016 and paid through cheque 05.12.2016 5,00,00,000 Sweep in Credit on 03.12.2016 12.01.2017 15,51,946 Cash deposit in ICICI Bank account paid through cheque 31.03.2017 2,50,00,000 Loan from Viarra Entertainment Pvt. Ltd. 31.03.2017 2,50,00,000 Loan from Viarra Entertainment Pvt. Ltd. search and seizure operation in premises of petitioner was contemplated and carried out on basis of information gathered as explained in above point nos. (a) to (g) of this para. From above though it is found that Shri Mandalia had resigned as Additional Director of company on 25.06.2016 and loan was repaid by company in same year as noticed from table Page 8 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT given at point no. (g) of this para but chain of events raises credible doubt on transactions entered into by petitioner with company in question as it is familiar modus operandi being practiced by entry operators. Therefore, from foregoing paras it can be concluded that department initiated search and seizure operation in premises of petitioner after conforming to all criteria mentioned in Section 132 sub-section 1 clause (s), (b) and (c) of Income Tax Act, 1961. search and seizure action was initiated after detailed analysis of information, duly recording of reasons in Satisfaction Note and approval of same by competent authorities. 5.2 It is further averred in affidavit-in-reply that in present instance, petitioner was not expected to comply with notice of respondent No.1 or respondent No.5 as it is evident that petitioner would again have brought alibi of 'jurisdiction' to evade or non-comply with notice. Moreover, in interest of revenue, it was judicious that department was not expected to disclose to any outside agency/body or to any of members directly or indirectly involved in cobweb of financial transactions with core group, viz. Sarju Sharma and associated group of companies; inkling of any action being contemplated by Income Tax Department, to keep confidentiality and secrecy of case intact in interest of revenue. 5.3 In paragraph 4.3 of affidavit-in-reply it has inter alia been stated thus:- As far as investment opportunity is concerned, it is quite glaring that petitioner invested 10 crore within Page 9 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT span of one month on 01.06.2016 and 21.06.2016 by way of loan on interest given to Ms Goan Recreation Clubs Pvt. Ltd. investment was made from Kotak Mahindra Bank a/c No. 80116714807 of petitioner and deposited into HDFC Bank a/c No. 50200015405430 of company, M/s Goan Recreation Clubs Pvt. Ltd. Interestingly, loan was repaid by latter in five installments from 06.10.2016 to 31.03.2017 [as shown in point no. (g) of para 4.1]. apparent investment made by petitioner is found to be not judicious investment choice from point of view of prudent business man as company to which petitioner provided loan, had no established business, no goodwill in market, nor was it enlisted in any of stock exchanges, nor did petitioner have had any financial dealings with company previously. quick repayment of loan shows that investment was not meant to earn steady interest income. All this goes on to suggest that investment and nature of transaction entered into by petitioner was akin to familiar modus operandi being employed by entry operators to provide accommodation entry to bring unaccounted black money to books for brief period to run business till sufficient fund is generated by running business or some fund from any other unaccounted source came later on. That is angle of investigative process underway in which fund trail of money paid by petitioner is being investigated. 5.4. said respondent has thereafter referred to post search analysis, which is not relevant for present purpose Page 10 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT as this court is concerned with validity of authorisation issued under section 132 of Act and post search analysis has got no bearing in that regard. 6. Mr. S. N. Soparkar, Senior Advocate, learned counsel with Mr. P. A. Mehd, learned advocate for petitioner submitted that impugned search action is bad in law and in violation of provisions of section 132 of Act. It was submitted that firstly, conditions precedent for any action under section 132 of Act have not been satisfied; and secondly, action under section 132 as well as all further actions of respondents pursuant to said action are illegal and deserves to be quashed. attention of court was invited to provisions of section 132 of Act to submit that for purpose of issuance of authorisation for search under section 132 of Act, concerned authority in consequence of information in his possession should have reason to believe that either of three situations mentioned under sub-section (1) of section 132 exist. It was submitted that in facts of present case, none of three situations exist. It was submitted that insofar as circumstance (a) as envisaged under section 132(1) of Act is concerned, same is not applicable to facts of present case as no summons or notice as contemplated therein has been issued to petitioner. Insofar as circumstance (b) is concerned, it was submitted that there was no reason for respondent to believe that if any summons or notice was issued to petitioner, he would not produce or cause to be produced any books of account or other documents which would be useful or relevant to proceeding under Act. It was submitted that insofar as circumstance (c) is concerned, it is not case of Page 11 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT respondents that petitioner was in possession of any money, bullion, jewellery or other valuable article or thing which had not been or would not be disclosed by him. It was submitted that in present case, search action has been taken in respect of loan advanced by petitioner to Goan Recreation Clubs Private Limited which was duly shown in return of income filed by petitioner. It was submitted that petitioner had disclosed entire transaction and had paid tax on interest earned from loan. whole transaction was by way of cheque. payment was made by cheque and was also received by way of cheque. It was submitted that from facts as emerging from record, it appears that post petitioner s resignation as Director, company namely, Goan Recreation Clubs Private Limited had entered into suspicious transactions and that having regard to facts of case, there was no need to carry out search and that it was always open for respondents to carry out inquiry. 6.1 Referring to affidavit-in-reply filed on behalf of respondents, it was submitted that according to respondents, petitioner was not expected to comply with notice of respondents No.1 or 5 as he would have brought alibi of jurisdiction to evade compliance with notice. It was submitted that respondents have acted upon surmises and conjectures in coming to conclusion that petitioner would not comply with any summons or notice issued to him as contemplated under clause (b) of sub-section (1) of section 132 of Act. It was submitted that there was no reason for Commissioner, Kolkata to form belief that petitioner would not respond to notice and that Page 12 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT only situation which would be applicable in facts of present case is clause (b) of section 132(1) of Act, which would not be attracted having regard to facts of present case. Reference was made to income tax return of petitioner filed for assessment year 2017-18, to point out that in return of income itself, transaction in question has been reflected. It was pointed out that tax has been deducted at source in respect of interest paid on loan given by petitioner and department has also given credit to petitioner. 6.2 Reliance was placed upon decision of this court in case of LKS Bullion Import and Export Pvt. Ltd. v. Director General of Income Tax, rendered on 30.10.2012 in Special Civil Application No.11593 of 2012 wherein court on basis of record and reasons noted by authority was of view that it was not possible to come to conclusion that petitioners had not or would not have disclosed jewellery for purpose of Act. court referred to provisions of section 131 and more particularly sub-section (1A) thereof and observed that under that sub- section mere suspicion that income is concealed or is likely to be concealed is sufficient to trigger exercise of powers under section 131(1) for making inquiry or investigation relating thereto. By contrast, search and seizure authorisation under section 132(1) of Act can be granted only on satisfaction that in consequence of information in its possession, competent authority has reason to believe that circumstances mentioned in clauses (a) to (c) of section (1) have arisen. court further held that onus placed on competent authority to arrive at satisfaction with regard to Page 13 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT factor contemplated under section 132(1) of Act is much greater than one required for exercise of powers under sub-section (1A) of section 131 of Act. 6.3 decision of Delhi High Court in case of L.R. Gupta v. Union of India, (1992) 194 ITR 32 (Delhi), was cited wherein court held thus: (31) Section 132, inter alia, contemplates issuance of authorisation under Section 132(1) empowering authorised officer, inter alia, to search any building, place etc. and to seize books of account, other documents, bullion, jewellery etc. if officer, issuing authorisation has, reason to believe that: "(A)any person to whom summons under section (1) of Section 37 of Indian Income Tax Act, 1922 (11 of 1922), or under sub-Section (7) of Section 131 of this Act, or notice under sub-Section (4) of Section 22 of Indian Income- tax Act, 1922 or under sub-Section (1) of Section 142 of this Act was issued to produced, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceedings under Indian Income-tax Act, 1922 (II of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for purposes of Indian Income-tax, Act, 1922 (II of 1922), or this Act (hereinafter in this Section referred to as undisclosed income or property)." (32) basis of exercise of jurisdiction under Section 132(1) has to be formation of belief and belief is to be formed on basis of receipt of information by authorising officer. Page 14 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT (33) expression ''information" must be something more than mere rumour or 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 is called for any of reasons mentioned in Clauses (a), (b) or (c). When action of issuance of authorisation under Section 132 is challenged in Court it will be open to petitioner to contend that on facts or information disclosed, no reasonable person could have come to conclusion that action under Section 132 was called for. opinion which has to be formed is subjective and, therefore, jurisdiction of Court to interfere is very limited. Court will not act as Appellate Authority and examine, meticulously, information in order to decide, for itself, whether action under Section 132 is called for. But Court would be acting within jurisdiction in seeing whether act of issuance of authorisation under Section 132 is arbitrary or malafide or whether satisfaction which is recorded is such which shows lack of application of mind by Appropriate Authority. reason to believe must be tangible in law and if information or reason has no nexus with belief or there is no material or tangible information for formation of belief, then in such case action taken under Section 132 would be regarded as bad in law. (34) provisions of sub-Clause (a) of Section 132(1) are not relied upon by respondents. In present case. It is admitted that petitioners are not guilty of non-production of documents or bocks of accounts etc. despite notice referred to in said sub-Clause having been issued. We may, however, note that sub-clause (a) refers to facts which must actually exist before belief is formed for taking action under Section 132(1). (35) Sub-clause (b) of Section 132(1) refers to cases where there Is reason to believe that if any summons or notice, as specified in said sub-clause (a) has been issued or will be issued then that person will not produce or cause to be produced books of accounts etc. In other words, said provision refers to belief which may be formed by Appropriate Authority to effect that person concerned is not likely to voluntarily or even after notice produce documents before Income Page 15 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT Tax authorities. Where, for example, there is information that person is hiding or likely to hide or destroy documents or books of accounts which are required or are relevant for purposes of Act then in such case it can be said that unless and until search is conducted said books of account or documents will not be recovered. belief of authority must be that only way in which Income Tax Department will be in position to obtain books of accounts and documents from person is by conduct of search and consequent seizure of documents thereof. In our opinion some facts or circumstances must exit on basis of which such belief can be formed. For example, if Department has information that person has duplicate sets of account books or documents where havala transactions are recorded then Department can legitimately come to conclusion that if notice is sent then that person is not likely to produce said documents etc. Duplicate books of accounts and such like documents are maintained primarily for reason that they are not to be produced before Income Tax authorities. To put it differently, nature of documents may be such which are not, in normal course, likely to be produced before Income Tax authorities either voluntarily or on requisition being sent. It may also happen that documents may exist and be in custody of person which would show existence of immoveable property which he may have acquired from money or income which has been hidden from Income Tax Department. past record of assessed, his status or position in life are also relevant circumstances in this regard. Where, however, documents exist which are not secretly maintained by assessed, for example pass books, sale deeds which are registered and about existence of which Department is aware, then in such case it will be difficult to believe that assessed will not produce those documents. (36) Sub-clause (c) refers to money, bullion or jewellery or other valuable articles which either wholly or partly should have been income of assessed which has not been disclosed for purpose of Act. said sub- clause pertains only to moveable and not immoveable assets. Secondly it pertains to those assets which wholly or partly represent what should have been income. Page 16 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT expression "which has not been or would not be, disclosed for purposes of Income Tax Act" would mean that income which is liable to tax, but which assessed his not returned in his Income Tax return or made known to Income-Tax Department. sub Clause itself refers to this as "undisclosed income or property". In our opinion words "undisclosed", in that context, must mean income which is hidden from Department. Clause (c) would refer to cases where assessed knows that moveable asset is or represents income which is taxable but which asset is not disclosed to Department for purpose of taxation. Those assets must be or represent hidden or secreted funds or assets. Where, however, existence of money or asset is known to Income Tax Department and where case of assessed is that said money or valuable asset is not liable to be taxed, then, in our opinion, provisions of sub-Clause (c) of Section 132(1) would not be attracted. assessed is under no obligation to disclose in his return of income all moneys which are received by him which do not partake of character of income or income liable to tax. If assessed receives, admittedly, gift from relation or earns agricultural income which is not subject to tax, then he would not be liable to show receipt of that money in his Income Tax return. Non-disclosure of same would not attract provisions of Section 132(c). It may be that opinion of assessed that receipt of such amount is not taxable, may be incorrect and, in law, same may be taxable but where, Department is aware of existence of such asset or receipt of such Income by assessed then Department may be fully Justified in issuing notice under Section 148 of Act, but no action can be taken under Section 132(1)(C). Authorisation under Section 132(1) can be issued if there is reasonable belief that assessed does not want Income Tax Department to know about existence of such Income or asset in effort to escape, assessment. Section 132(1)(c) has been incorporated in order to enable Department to take physical possession of those moveable properties or articles which are or represent undisclosed income or property. words "undisclosed income" must mean income which is liable to be taxed under provisions of Income Tax Act but which has not been disclosed by assessed in effort to escape assessment. Not Page 17 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT disclosed must mean intention of assessed to hide existence of income or asset from Income Tax Department while being aware that same is rightly taxable. It was submitted that in facts of present case petitioner has disclosed amount in question in its return of income and has duly paid tax on interest received thereon. None of circumstances contemplated under sub- section (1) of section 132 of Act exist in present case and hence, there was no valid reason for respondents to form requisite belief as contemplated under section 132 of Act, and hence, impugned authorisation is required to be quashed and set aside. 6.4 It was submitted that insofar as authorities at Kolkata are concerned, ordinarily they would have no jurisdiction to take any action to proceed against petitioner, and hence, it is only with view to assume jurisdiction over petitioner that reference has been made to section 132 of Act without satisfying requirements thereof. 7. Vehemently opposing petition, Mrs. Mauna Bhatt, learned senior standing counsel for respondents, initially submitted that present case falls under section 132(1)(c) of Act but subsequently contended that case falls under section 132(1)(b) of Act. 7.1 learned counsel submitted that authority concerned has recorded satisfaction that impugned transaction with Goan Recreation Clubs Private Limited is Page 18 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT non-genuine transaction. It was emphatically argued that satisfaction note clearly reveals connection of petitioner with Goan Recreation Clubs Private Limited and that transaction itself is bogus. It was submitted that competent authority has properly recorded satisfaction and link is duly established and, therefore, there is no warrant for interference by this court. It was contended that this court cannot go into sufficiency of satisfaction recorded by concerned authority. 7.2 Reliance was placed upon decision of this court in case of Neesa Leisure Limited & Ors. v. Union of India, (2011) 338 ITR 460, wherein this court after referring to various pronouncements with regard to conditions for issuance of search warrant under section 132(1) of Act has observed that for purpose of exercise of powers under section 132 of Act, two conditions precedent are required to be satisfied. first condition is that concerned officer must have some information in his possession, and second condition is that, in consequence of such information he must have reason to believe that statutory conditions for exercise of power to order search exist. basis for exercise of power 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 is called for. Such information should be fairly reliable and should not be mere rumour or unverified piece of gossip or hunch. court, therefore, while examining validity of authorization issued under section 132 of Act would firstly be required to examine as to whether there exists any information of nature referred Page 19 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT to hereinabove in possession of concerned officer, on basis of which he could have formed reason to believe. next factor which would be required to be satisfied is as to whether before issuance of authorization, concerned official has recorded reasons for his belief. If reasons have been recorded, opinion which has to be formed being subjective, jurisdiction of court to interfere is very limited. court will not act as appellate authority and examine meticulously information in order to decide for itself as to whether action under section 132 is called for. But court would be acting within its jurisdiction in seeing whether act of issuance of authorization under section 132 is arbitrary or mala fide or whether satisfaction recorded is such which shows lack of application of mind on part of appropriate authority. reason to believe must be tangible in law and if information or reason has no nexus with belief or there is no material or tangible information for formation of belief, action taken under section 132 would be bad in law. If reasons have been recorded and concerned officer is satisfied that there is reason to believe, court cannot sit in appeal over decision of said officer regarding existence of reason to believe nor can court examine adequacy of grounds on which reason to believe entertained by such officer is based. But there is limited area within which such reason to believe entertained by officer can be scrutinised by court. If grounds on which reason to believe is founded are not relevant to subject matter of inquiry or are extraneous to scope and purpose of statute or are such as no rational human being can consider connected with fact in respect of which belief is to be entertained so that no reasonable Page 20 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT man can come to such belief, exercise of power would be bad. In appropriate cases writ petition may lie challenging validity of action on ground of absence of power or on plea that proceedings were taken maliciously or for collateral purpose. 7.3 It was submitted that in facts of present case, officer concerned, based on tangible information received by him, has recorded satisfaction that there is reason to believe as contemplated under sub-section (1) of section 132 of Act and hence, action taken under section 132 of Act is just, legal and proper and does not warrant interference by this court. 7.4 Reliance was also placed upon decision of Supreme Court in case of Director General of Income Tax (Investigation) Pune & Ors. v. Spacewood Furnishers Pvt. Ltd. & Ors., (2015) 374 ITR 595, for similar proposition of law. 7.5 learned senior standing counsel further submitted that transaction in question needs verification and that formation of belief is based on material on record. If jurisdictional assessing authority had issued summons or notice, petitioner may not have produced requisite details for proceedings under Income Tax Act and, therefore, authorisation under section 132 of Act was issued. It was submitted that to realise entire amount, real picture would not have emerged otherwise, and, therefore, there was necessity to issue authorisation under section 132 of Act. It was submitted that today there is satisfaction note Page 21 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT which establishes positive appreciation on part of authorities as contemplated under clause (b) of sub-section (1) of section 132 of Act and hence, there is no warrant for intervention by this court. It was urged that petition being devoid of any merit or substance, deserves to be dismissed. 7.6 learned senior standing counsel further produced copy of satisfaction note recorded by concerned authority for perusal of court and made submissions on basis thereof. 8. In rejoinder, Mr. Soparkar, learned counsel for petitioner submitted that parrot like reproduction of statutory provisions will not vest jurisdiction in respondents and that to vest jurisdiction under section 132 of Act, there has to be reason for issuing authorisation for search thereunder. It was contended that first respondent had no authority to record conclusion that petitioner would not respond to any notice as that may have been issued to petitioner as petitioner is not within his jurisdiction. attention of court was invited to scheme of Part-C of Chapter XIII of Act to point out that there are several provisions under which authorities can act, namely, section 131(1)(a) under which if respondent has reason to suspect, he can seek discovery and inspection. Reference was made to section 133 of Act which empowers Assessing Officer and other officers referred to therein to call for information as provided thereunder. Reference was also made to section 133A of Act which provides for power of survey and 133B which deals with power to collect certain information, as well as section 133 which deals with power to call for information Page 22 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT by prescribed income tax authority. It was submitted that respondents are vested with variety of powers; however, power under section 132 of Act can be exercised only in three situations; firstly, where assessee fails to produce books of account or other documents; secondly, he does not respond to summons or notice; and thirdly, he is in possession of undisclosed income. It was submitted that in this case amount advanced to borrower company has been duly disclosed by petitioner in his books of account and tax has been paid on interest received by petitioner. It was contended that what is disclosed cannot be treated as undisclosed. According to learned counsel, that if reasons are completely oblivious of these facts, reasons must fail as petitioner had duly disclosed transaction in question. It was pointed out that borrower company had deducted tax at source while paying such interest and petitioner has been given credit of tax deducted at source. It was submitted that at time of demonetisation, petitioner was not director and that between March 2017 and May 2017, his money was paid back to him. It was submitted that there is no question of any accommodation entry, as petitioner had given money against mortgage. It was urged that to inquire into transaction which is of suspicious nature, petitioner cannot be searched. It was submitted that petitioner has limited association with Sarju Sharma group which is admitted by respondents. 8.1 Reliance was placed upon decision of Supreme Court in case of Commissioner of Income Tax, Allahabad v. Vindhya Metal Corporation, (1997) 224 ITR 614, wherein court in facts of said case has held Page 23 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT that considering material on which reliance was placed by Commissioner, no reasonable person could have entertained belief that respondent therein would not have disclosed amount in question for purposes of Act. It was submitted that case of petitioner stands on even stronger footing. It was, accordingly, urged that petition deserves to be allowed by quashing and setting aside impugned authorisation. 9. It is in backdrop of above facts and contentions that validity of authorisation issued by first respondent under section 132 of Act is required to be examined. 10. At outset it would be germane to refer to provisions of section 132 of Act, which to extent same is relevant for present purpose reads as under:- 132. Search and seizure.-(1) Where Principal Director General or Director General or Director or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner, or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that - (a) any person to whom summons under sub-section (1) of section 37 of Indian Income Tax Act, 1922 (11 of 1922), or under subsection (1) of section 131 of this Act, or notice under sub-section (4) of section 22 of Indian Income Tax Act, 1922 (11 of 1922), or under sub- section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, or Page 24 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT (b) any person to whom summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under Indian Income Tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for purposes of Indian Income Tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as undisclosed income or property), then,- (A) Principal Director General or Director General or Director or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as case may be may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, as case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer, (the officer so authorised in all cases being hereinafter referred to as authorised officer) to - (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open lock of any door, box, locker, safe, almirah or other receptacle for exercising powers conferred by clause (i) where keys thereof are not available; (ii-a) search any person who has got out of, or is about to get into, or is in, building, place, vessel, vehicle or aircraft, if authorised officer has reason to suspect Page 25 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (ii-b) require any person who is found to be in possession or control of any books of account or other documents maintained in form of electronic record as defined in clause (i) of sub-section (1) of Section 2 of Information Technology Act, 2000, to afford authorised officer necessary facility to inspect such books of account or other documents; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of business, found as result of such search shall not be seized but authorised officer shall make note or inventory of such stock-in-trade of business. (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make note or inventory of any such money, bullion, jewellery or other valuable article or thing: Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within area of jurisdiction of any Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, but such Principal Chief Commissioner or Chief Commissioner] or Principal Commissioner or Commissioner] has no jurisdiction over person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in Section 120, it shall be competent for him to exercise powers under this sub-section in all cases where he has reason to believe that any delay in getting authorisation from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such person may be prejudicial to interests of revenue: Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to safe place due to its Page 26 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT volume, weight or other physical characteristics or due to its being of dangerous nature, authorised officer may serve order on owner or person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with previous permission of such authorised officer and such action of authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that nothing contained in second proviso shall apply in case of any valuable article or thing, being stock-in-trade of business Provided also that no authorisation shall be issued by Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after 1st day of October, 2009 unless he has been empowered by Board to do so. Explanation.-For removal of doubts, it is hereby declared that reason to believe, as recorded by income-tax authority under this sub-section, shall not be disclosed to any person or any authority or Appellate Tribunal. 11. On plain reading of sub-section (1) of section 132 of Act, it is clear that it is in consequence of information in his possession that concerned authority should have reason to believe that any of three circumstances provided under sub-section (1) of section 132 exist. Existence of any one of circumstances is mandatory to justify exercise of power to issue authorisation. condition precedent for exercising power to issue authorisation for search and seizure is hedged in by requirements of these conditions precedent and it is only if these conditions are fulfilled that power can be exercised. facts of present case are required to be examined in light of above statutory provision. 12. Insofar as first circumstance as laid down under Page 27 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT clause (a) of sub-section (1) of section 132 is concerned, same relates to case where any person to whom summons under sub-section (1) of section 131 of Act or notice under sub-section (1) of section 142 of Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account, or other documents as required by such summons or notice, in which case authorisation can be issued. In facts of present case, it is admitted position that no such summons or notice as envisaged under clause (a) of sub-section (1) of section 132 has been issued in present case. Therefore, circumstance envisaged under clause (a) of section 132(1) of Act does not exist in present case. 13. Before adverting to requirements of clauses (b) and (c) of sub-section (1) of section 132 of Act, it may be noted that learned counsel for respondents had produced satisfaction note for perusal of this court. satisfaction note which runs into thirty three pages, has been recorded in case of Shri Sarju Sharma and other related groups. petitioner s name finds place in list of key persons of Group concern and is shown to be associated with Goan Recreation Clubs Private Limited. satisfaction note refers to huge deposits made during periods of demonetisation and introduction of undisclosed income in form of unsecured loans. Reference to petitioner finds place in allegations made against Goan Recreation Clubs Private Limited wherein reference is made to loan given by petitioner to said concern, which has given rise to belief that transaction of loan was prearranged and was Page 28 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT accommodation entry provided through some entry operator thereby giving colour of genuineness to otherwise bogus loan satisfaction note refers to various other transactions; however, since same is confidential in nature it would not be prudent to refer to same. Suffice it to state that allegation against petitioner is limited to above. 14. On reading satisfaction note in its entirety, except for what is referred to hereinabove, this court could not find any other material whatsoever insofar as petitioner is concerned, for purpose of recording satisfaction under section 132(1) of Act. 15. In above backdrop, question as to whether or not provisions of clause (b) and clause (c) of sub-section (1) of section 132 of Act are satisfied is required to be considered. 16. Clause (b) of sub-section (1) of section 132 of Act provides for issuance authorisation in case where authority in consequence of information in his possession, has reason to believe that such person to whom summons or notice has been issued or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which would be useful for, or relevant to, any proceeding under Act. In facts of present case, it may be noted that first respondent, namely authority who has issued authorisation under section 132 of Act, is not jurisdictional Assessing Officer. first respondent Principal Director of Income Tax (Investigation), Kolkata, who has issued impugned authorisation is based in Kolkata and, Page 29 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT therefore, has no jurisdiction over petitioner under normal provisions of Act. only provision under which said respondent can exercise jurisdiction over petitioner is under section 132 of Act in view of CBDT notification dated 3.12.2001 issued under section 120(1) and (2) of Act, whereby Director General of Income Tax have been empowered to exercise jurisdiction in respect of territorial areas of whole of India. In affidavit-in-reply reason given by respondent for issuance of search warrant is that petitioner was not expected to comply with notice of respondent No.1 or respondent No.5 as petitioner would have brought alibi of jurisdiction to evade or non-comply with notice. Thus, as rightly submitted by learned counsel for petitioner, belief that petitioner would not respond to summons or notice issued as envisaged under clause (b) of sub-section (1) of section 132 is not based upon any information or other material but is based upon conjectures and surmises that petitioner would take alibi of lack of jurisdiction on part of respondents. This contention of first respondent also lends support to contention raised on behalf of petitioner that powers under section 132 of Act have been resorted to because that is only provision which vests jurisdiction in Kolkata authorities for taking action against petitioner. Evidently, therefore, circumstance envisaged under clause (b) of sub-section (1) of section 132 of Act does not exist in present case. 17. Insofar as third circumstance as contemplated under clause (c) of section 132(1) of Act is concerned, same relates formation of belief that person concerned is in Page 30 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been or would not be disclosed for purposes of Act. In present case, on perusal of satisfaction note as well as affidavit-in-reply filed on behalf of respondents and submissions advanced by learned senior standing counsel for respondents, it is evident that sole ground on which search is sought to be carried out is that petitioner herein had advanced loan of Rs.10,00,00,000/- (rupees ten crore) to Goan Recreation Clubs Private Limited. There is nothing on record to indicate that any belief has been formed by competent authority to effect that petitioner has in his possession any money, bullion, jewellery or other valuable article or thing which would not have been disclosed by him for purposes of Act. On contrary, in facts of present case, from record of case as produced by respondents as well as by petitioner, it is evident that loan transaction whereby petitioner had advanced Rs.10,00,00,000/- to borrower company has been duly reflected in books of account of petitioner. In his return of income, petitioner has duly shown interest income from such transaction. tax deducted at source in respect of such interest income, has been credited to account of petitioner by concerned authority. Therefore, entire transaction has been disclosed by petitioner. There is no other material on record on basis respondents could have formed belief as contemplated under clause (c) of sub-section (1) of section 132 of Act. Evidently, therefore circumstance envisaged under clause (c) of section 132(1) of Act also Page 31 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT does not exist in present case. 18. In opinion of this court, on information which has come on record there is no material on basis of which reasonable person could have formed belief that action under sub-section (1) of section 132 of Act is called for. It appears that merely because first respondent does not have any other power under Act to directly take action against petitioner herein, resort has been made to provisions of section 132(1) of Act by taking shelter behind notification dated 13th November, 2014 issued by CBDT in exercise of powers under sub-sections (1) and (2) of section 120 of Act, which vests jurisdiction under Chapter XIII of Act in respect of territorial areas of whole of India in Director General of Income Tax specified in column (2) or Principal Director/Director of Income-tax specified in column (4) of Schedule to notification. 19. Another aspect of matter is that respondent authorities have proceeded on footing that Goan Recreation Clubs Private Limited has received various unsecured advances leading to belief that transaction in question is non-genuine. In facts of present case, petitioner has produced on record mortgage deed dated 22nd June, 2016 executed by and between Royale Recreation Pvt. Ltd. as First Party, Goan Recreation Clubs Private Limited as Confirming Party or Second Party and petitioner Shri Laljibhai Kanjibhai Mandalia as Mortgagee or Third Party, which had been executed by way of security for repayment of amount advanced by petitioner to Goan Recreation Clubss Private Limited. genuineness of such Page 32 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 C/SCA/16360/2018 JUDGMENT document has not been disputed by respondents. Under circumstances, on basis of information referred to hereinabove, no reasonable person could have come to conclusion that ingredients contained in clauses (a), (b) or (c) of sub-section (1) of section 132 of Act were attracted. In absence of existence of any of three circumstances envisaged under sub-section (1) of section 132 of Act, impugned authorisation is invalid and cannot be sustained. 20. For foregoing reasons, petition succeeds and is, accordingly, allowed. impugned warrant of authorisation dated 7.8.2018 issued by respondent No.1 under section 132 of Income Tax Act, 1961 and rule 112(1) of Income Tax Rules, 1962 (Annexure-A to affidavit-in-reply filed by respondent No.1) is hereby quashed and set aside. Consequently, all actions taken pursuant to such warrant of authorisation would also be rendered invalid. Rule is made absolute accordingly with no order as to costs. (HARSHA DEVANI, J) (A. P. THAKER, J) Z.G. SHAIKH Page 33 of 33 Downloaded on : Sat Jun 22 11:57:26 IST 2019 Laljibhai Kanjibhai Mandalia v. Principal Director of Income-tax (Investigation)
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