Intimation from CBI doesn’t constitute ‘information’, therefore, the authorization to conduct search under Sec 132(1) did not exist and the search became invalid.

Case: Parma Ram Bhakar Vs The DCIT (ITAT Jodhpur)

Facts:  Information was received from CBI that the assessee is carrying undisclosed cash, upon which authorization for search u/s 132(1) were issued. During the course of search operation, some alleged incriminating documents, note books containing details of unexplained payments were claimed to be found and seized. Thereafter, notice under section 153A of the Act was issued by the Assessing Officer. Assessee filed his returns of income for different years on 08/12/2008 and the assessments were completed on 23/12/2008.

On appeal before CIT (A), the assessee challenged the validity of assessments based on said search, but the CIT(A) answered in favour of revenue. Assessee filed an appeal before ITAT.

HELD in favour of assessee:

·         Section 132 contemplates existence of certain eventualities in the event of existence where of the competent authority should have reason to believe the existence of the circumstances mentioned in clause (a) to (c) of sub-section (1) of Section 132 of the Act

·         The existence of reason to believe in consequence of the information in possession of the officer about existence of the reason to believe is not satisfied, there could possibly be no authorization,

·         It appears that the department acted upon the information provided by the police department on 29/03/2007 and on the same day, the warrant of authorisation was issued and the search was conducted, but nothing is brought on record to substantiate that any cash was found, although, search was conducted on the information that undisclosed cash being carried out by the assessee

·         Hon'ble Supreme Court in the case of Union of India Vs. Ajit Jain held as under:- "(iii) intimation simpliciter by the CBI that money was found in the possession of the respondent, which according to the CBI was undisclosed, without something more, did not constitute "information" within the meaning of section 132 of the Income- tax Act, 1961, on the basis of which a search warrant could be issued, and the search conducted on the basis of such information and the block assessment made pursuant to such search was not valid."

·         The search was conducted only on the basis of the information received from S.P. C.B.I. that undisclosed cash being carried out by the assessee, but no such cash or other valuable article or thing were found in the possession of the assessee.

·         Therefore, the authorization to conduct search based on reason under section 132(1) of the Act did not exist and the search became invalid. The assessment order based on the said search cannot stand and to be set aside and the assessment orders passed by the Assessing Officer on the basis of invalid search deserve to be set aside and quashed.

 

Rahul Jain

rahuljain@rpmd.in