The issue before the High Court was:
Whether the undisclosed money in third party bank account can be subject to search and seizure?
Delhi High Court held as under:
1) Section 132(1)(c) permits search to be under taken by the Department if there is reason to believe that a 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 the purposes of the Act, referred to as "the undisclosed income or property".
2) The second proviso to Section 132(1) read with Section 132(3) permits the Department to ask bank to freeze bank account that is subject to search and seizure since it may not be possible "to take physical possession" immediately of such "valuable article or thing and remove it to a safe place.
3) Therefore, a sum in a bank account is not outside ambit of section 132(1) and can be subject to search and seizure as a person can be in possession of undisclosed income not only in his or her own account but in someone else's account.  81 taxmann.com 408 (Delhi)