INCOME TAX ACT, 1961

Section 132

Search and seizure - Validity of proceedings initiated in terms of section 131(A) revenue failed to substantiate reason to suspect that any income was concealed - -

Assessee while travelling was intercepted by the Air Intelligence Unit (AIU) at airport. Claim of revenue was that thereafter revenue carried out the investigation under section 131(1A), prior to carrying out the search action under section 132(1). Jewellery found in possession of assessee was seized. Court allowed writ petition and set aside search action and further, seizure of jewellery and consequent proceedings arising there from were declared illegal. Held: Even if proceedings were carried out under section 131(1A), and action under section 132 was taken subsequent thereto, such an exercise by the revenue was nevertheless contrary to the scheme of the Act. Section 131(1A) stipulates that if the officer named in the said statute, before taking action under Clauses (i) to (v) of sub-section (1) of section 132, has reason to suspect that any income has been concealed or is likely to be concealed, by any person or class of persons within his jurisdiction, then for the purpose of making an enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) of section 131, notwithstanding that no proceedings with respect to such persons are pending before any Income Tax Authority. Revenue was asked to set down reason to suspect that any income was concealed, or was likely to be concealed by the assessee non-applicant, before initiating action under section 131(1A). Indeed, there was no such material on record of the revenue. Thus, notwithstanding contention of revenue that proceedings were conducted under section 131(1A), judgment of court and its final outcome were not affected in any manner.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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