Thursday, December 5, 2013

Even info from CBI won't authorize search unless it is based on reasons given under sec. 132(1)

Search conducted in pursuance of authorization issued in absence of the eventualities mentioned in clauses (a) to (c) of sub-section (1) of section 132, couldn’t be deemed as valid search.


a) On the basis of information given by CBI that undisclosed cash was being carried by assessee, search proceedings under section 132 were initiated by issuing warrant of authorization by the Director (Investigation);

b) Some alleged incriminating documents containing details of unexplained payments were found and seized. Thereafter, notice under section 153A was issued by the Assessing Officer;

c) The assessee filed his returns of income and the assessments were completed. On appeal, the assessee challenged the validity of assessments based on said search;

d) The CIT (A) held that the search was valid and the proceedings under section 153A were validly initiated by the Assessing Officer. Aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1) From the provisions of section 132(1) it is clear that it contemplates existence of certain eventualities whereof the competent authority can authorize search;

2) In the instant case, there was no complete information in possession CBI about any bullion, jewellery, cash or any other document, which could reveal that the assessee was in possession of undisclosed assets or incriminating documents;

3) It appeared that the department had acted upon the information provided by the police department on 29-3-2007 and on the same day, the warrant of authorization was issued and the search was conducted, but nothing was brought on record to substantiate that any cash was found, although search was conducted on the information that undisclosed cash was being carried out by the assessee;

4) Thus, the authorization to conduct search based on reason under section 132(1) did not exist and search became invalid. Therefore, the assessment order based on the said search was not valid and had to be set aside - Parma Ram Bhakar v. Dy. CIT [2013] 39 119 (Jodhpur - Trib.)