Madhu Gupta vs. DIT(Inv).; 350 ITR 598 (Del): 256 CTR 21 (Del) The assessee challenged the validity of the search action u/s. 132 of the Income Tax Act, 1961 by filing a writ petition.
The Delhi High Court allowed the petition and held as under:
“i) The warrant of authorisation can only be issued by competent person in consonance of information in his possession and after he has formed a reason to believe that the conditions stipulated in cls. (a), (b) and (c) of section 132(1) existed. The information must be credible information and there must be a nexus between the information and the belief. Furthermore, the information must not be in the nature of some surmise or conjecture, but it must have some tangible backing. Until and unless information is of this quality, it would be difficult to formulate a belief because the belief itself is not just an ipse dixit, but is based on reason and that is why the expression used is “reason to believe” and not simply “believes”.
ii) In the present case, the so-called information is undisclosed and what exactly that information was, is also not known. At one place in the affidavit of Dy. Director of IT, it has been mentioned that he got information that there was a “likelihood” of the documents belonging to the DS Group being found at the residence of the petitioner. That by itself would amount only to a surmise and conjecture and not to solid information and since the search on the premises of the petitioner was founded on this so-called information, the search would have to be held to be arbitrary. It may also be pointed out that when the search was conducted on 21-1-2011, no documents belonging to the DS Group were, in fact, found at the premises of the petitioner.
iii) With regard to the argument raised by the counsel for the Revenue that there was no need for the competent authority to have any reason to believe and a mere reason to suspect would be sufficient, it may be pointed out that the answer is provided by the fact that the warrant of authorisation was not in the name of DS Group but was in the name of the petitioner. In other words, the warrant of authorisation u/s. 132(1) had been issued in the name of the petitioner and, therefore, the information and the reason to believe were to be formed in connection with the petitioner and not the DS Group.
iv) None of the clauses (a), (b) or (c) mentioned in section 132(1) stood satisfied. Therefore, the warrant of authorisation was without any authority of law. Therefore, the warrant of authorisation would have to be quashed.
v) Once that is the position, the consequence would be that all proceedings pursuant to the search conducted on 21/01/2011 at the premises of the petitioner would be illegal and, therefore, the prohibitory orders would also be liable to be quashed. It is ordered accordingly. The jewellery/other articles/ documents are to be unconditionally released to the petitioner.”
