INCOME TAX ACT, 1961

Section 132

Search and seizure - Validity of search - Reasonable cause - Warrant of authorization in name of ex-partner

On 17-8-1992, a search was conducted under section 132 in the business premises of the assessee at Thiruvalla. At the time of search, Sri. Alex C. Joseph, the ex-managing partner of the firm, in whose name the authorization was issued, was present in the premises. He was the brother of the present partners. Assessee had been carrying on a sister-concern by name, M/s. Chekkattu Financiers in the very same premises. From the records and all the available information, the AO found that the firm was actually managed by Sri. Alex C. Joseph. Admittedly, the assessee had not been carrying on any chitty business in the subject years and was involved only in the business of selling imported cars brought to the country in the name of Non Resident Indians (NRI). Assessee filed appeal, in which the validity of the search carried out in the premises of the assessee on a warrant issued in the anme of Alex C.J. as also the additions were challenged. The claim of the assessee of the status of a partnership firm was declined.Held: Court was in perfect agreement with the finding of the appellate authority and the Tribunal. The Tribunal had found that it cannot go into the validity of the search proceedings and that, at best, the Tribunal can examine whether there was a warrant of authorisation for conduct of the search. It was rightly concluded that there was a warrant in the name of Sri. Alex C.J, who was physically present at the premises of the firm when the search was conducted. It had also come out in evidence that despite, this person being not shown as a partner of the firm, he was actively involved in the affairs of the firm and continued to manage its affairs. Also the assessee was not registered as a partnership firm and it was assessed as an Association of Persons. That apart, materials were seized from the premises, which would substantiate the allegations made against the firm, so as to proceed against the firm under the provisions of the Act. Even if the search was illegal, the Department could use the material seized against the person from whose custody it was seized. On both counts, absolutely there was no reason to interfere with the findings of the Tribunal with regard to the legality of the search.

Relied:Pooran Mal v. Director of Inspection (1974) 93 ITR 505 (SC) : 1974 TaxPub(DT) 0353 (SC)

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 1992-93 & 1993-94

INCOME TAX ACT, 1961

Section 68

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