TAX LAW – I

PROJECT

TOPIC – SEARCH & SEIZURE

BY-
AYUSH AGRAWAL
B.A. LLB. (HONS)
6TH SEMESTER
REGULAR
ROLL NO. 16

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ACKNOWLEDGEMENT
I am deeply indebted to Ms. Kiran Bala, Faculty of Law, Jamia Millia Islamia, New Delhi for her
continuous encouragement and guidance, without which this work would have been very
difficult for me. If I have failed to come at par to her expectation, both on facts and
improvisation, I alone am responsible.

I would be failing in my obligations if I do not convey my thanks to all the authors of books and
articles from which I have quoted and made references.

I am very thankful to everyone who have had given me their direct and indirect support to
complete my work and give support to the outcome from and difficulty while completing my
work.

I wish to thank my parents and my younger sister for their moral support and constant
inspiration. I am also thankful to those who have not being mentioned by name but nevertheless
having been of invaluable help in their inscrutable ways. Lastly, I would like to thank the
Almighty God without who’s blessing no one can accomplish anything.

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 TABLE OF CONTENTS
S. NO. TITLE PAGE
NO.
1 INTRODUCTION 5

2 OBJECTIVES OF SEARCH & SEIZURE 5

3 CIRCUMSTANCES UNDER WHICH SEARCH & 6

SEIZURE CAN BE CONDUCTED [SECTION
132(1)]
4 WHO IS AN AUTHORISED OFFICER 7

5 POWERS OF AUTHORISED OFFICER IN 7

RESPECT OF SEARCH & SEIZURE
6 DEEMED SEIZURE 8

7 JUDICIAL PRONOUNCEMENTS 9

8 IF BOOKS OF ACCOUNT, ARE KEPT IN A 10

BUILDING NOT SPECIFIED IN A SEARCH
WARRANT [SECTION 132(1A)]
9 POLICE ASSISTANCE [SECTION 132(2)] 10

10 WHERE IT IS NOT PRACTICABLE TO SEIZE 10

BOOKS OF ACCOUNT [SECTION 132(3)]
11 EXAMINATION ON OATH [SECTION 132(4)] 10

12 PRESUMPTIONS [SECTION 132(4A)] 11

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13 TIME LIMIT FOR RETENTION OF SEIZED 11
BOOKS OF ACCOUNT [SECTION 132(8)]
14 TAKING COPIES OF SEIZED DOCUMENTS 11
[SECTION 132(9)]
15 AUTHORISED OFFICER HAVING NO 11
JURISDICTION [SECTION 132(9A)]
16 POWER OF PROVISIONAL ATTACHMENT 12
[SECTION 132(9B)/(9C)]
17 POWER TO MAKE REFERNCE TO 12
VALUATION OFFICER [SECTION 132(9D)]
18 CONSTITUTIONALITY OF SECTION 132 12

19 CASE LAW RELATING TO SEARCH & 14

SEIZURE
20 BIBLIOGRAPHY 18

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 INTRODUCTION
Search in common parlance means to look out, to seek or to find something the presence of
which is suspected etc. Seize means to take possession of goods, contrary to the wishes of the
owner or to take forcible possession. From the income tax point of view, search is commonly
referred to as ‘Raid’. However, there is no such term as raid anywhere in income tax law.

Search operations are exploratory exercises on the basis of information with the income tax
department to find hidden income and wealth in cases of tax payers, who have not disclosed their
true financial state of affairs in discharge of their tax obligations.
Seizure implies taking possession of assets, which have not been disclosed to the Income-tax
Department and of accounts/documents, papers which contain details of unaccounted
wealth/income not disclosed to the income tax authorities.
Thus, search and seizure is a very powerful weapon in the armory of income tax department to
unearth any concealed income or valuables and to check the tendencies of tax evasion thereby
mitigating the generation of black money.
One of the most important powers that the Income Tax Department possesses is the power of
search and seizure. Tax authorities usually exercise their right to conduct raids on individuals or
groups who are suspected of evading tax or who are deemed to be in possession of any property
or income belonging to another party that has not been disclosed. While this might seem like a
drastic step, it is an act that is upheld by the constitution, and is deemed entirely necessary in
cases where the Income Tax Department feels extreme action is needed.

OBJECTIVES OF SEARCH AND SEIZURE

The Income Tax Department exercises its right of search and seizure to achieve the following
objectives:
 To ensure that any threat to social security is dealt with effectively
 To directly address problems and issues that arise due to evasion and avoidance of tax
 To meet the menace of black money head on
 To uphold the law laid down by the constitution of India

Article 132 govern the provisions of search and seizure and lays down the circumstances under
which a person can be raided and person who are authorised to conduct such search and seizure.
Powers of the authorities are also laid down, some of them being, search any person who has got
out of or into or is in the premises, break open the lock of any door, box, locker, safe etc., where
the keys are not available, place marks of identification on or make copies or take extracts of any
books or documents etc.

The provisions regarding search and seizure is given in Section 132 of the Income Tax Act,1961.

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Circumstances in which search and seizure can be conducted
[Sec.132(1)]
The Director General or Director or the Chief Commissioner or Commissioner or Additional
Director or Additional Commissioner or Joint Director or Joint Commissioner, has in his
possession any information through which he has reason to believe that-

(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax
Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under
sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of
section 142 of this Act was issued to produce, or cause to be produced, any books of account
or other documents has omitted or failed to produce, or cause to be produced, such books of
account or other documents as required by such summons or notice, or

(b) any person to whom a summons or notice as aforesaid has been or might be issued will not,
or would not, produce or cause to be produced, any books of account or other documents
which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act,
1922 (11 of 1922), or under this Act, or

c) any 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 Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section
referred to as the undisclosed income or property),
The principles can be summarized as under

1. The authority must be in possession of the information and must form an opinion that
there is reason to believe that the article or the property has not been disclosed for the
purposes of this Act.
2. The information must be something more than mere rumour or gossip or hunch.
3. The information must exist before the opinion is formed.
4. It has been held that the words ‘reason to believe’ means that a reasonable man, under the
circumstances, would form a belief will impel him to take action under the law. The
formation of opinion has to be in good faith and not on mere pretence.

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 5. The opinion must be based on the material that is available at that time and it should not
be formed on the basis of extraneous or irrelevant material.
6. The information of opinion shall have rational connection and bearing to the reasons for
such an opinion. The formation of opinion should be based on active application of mind
and & be bona fide & not based on extraneous or irrelevant material.
7. The courts would examine whether the authorized person had material before it on which
he could form whether there is rational connection between the information possessed
and the opinion formed.
8. The court cannot go into the question of sufficiency of the grounds upon which the
subjective satisfaction is based.

Who is the authorized officer

For the purpose of carrying out search and seizure, if Director General or Director or the Chief
Commissioner has reasons to believe due to the information as given in Sec. 132(1)(A) which he
has in possession, then he may authorize any Additional Director or Additional Commissioner or
Joint Director, Joint Commissioner, Assistant Director, Deputy Director, Assistant
Commissioner, Deputy Commissioner or Income-tax Officer. The authorized officer cannot be
below the rank of Income-tax Officer.

Powers of authorized officer in respect of search and seizure

The authorized officer is empowered to-

i. Error! Bookmark not defined. enter and search any building, place, vessel, vehicle or
aircraft where he has reason to suspect that such books of account, other documents,
money, bullion, jewellery or other valuable article or thing are kept;
ii. Error! Bookmark not defined. break open the lock of any door, box, locker, safe,
almirah or other receptacle for exercising the powers conferred by clause (i) where the
keys thereof are not available
iii. Error! Bookmark not defined. search any person who has got out of, or is about to get
into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has
reason to suspect that such person has secreted about his person any such books of
account, other documents, money, bullion, jewellery or other valuable article or thing;
iv. Error! Bookmark not defined. require any person who is found to be in possession or
control of any books of account or other documents maintained in the form of electronic
record as defined in clause (t) of sub-section (1) of section 2 of the Information

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 Technology Act, 2000 (21 of 2000)37, to afford the authorised officer the necessary
facility to inspect such books of account or other documents
v. Error! Bookmark not defined. seize any such books of account, other documents,
money, bullion, jewellery or other valuable article or thing found as a result of such
search:
Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the
business, found as a result of such search shall not be seized but the authorised officer shall make
a note or inventory of such stock-in-trade of the business
Error! Bookmark not defined. place marks of identification on any books of account or other
documents or make or cause to be made extracts or copies therefrom;
Error! Bookmark not defined. make a note or an inventory of any such money, bullion,
jewellery or other valuable article or thing
Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is
within the area of jurisdiction of any [Chief Commissioner or Commissioner], but such [Chief
Commissioner or Commissioner] has no jurisdiction over the person referred to in clause (a) or
clause (b) or clause (c), then, notwithstanding anything contained in section [120], it shall be
competent for him to exercise the powers under this sub-section in all cases where he has reason
to believe that any delay in getting the authorisation from the [Chief Commissioner or
Commissioner] having jurisdiction over such person may be prejudicial to the interests of the
revenue

Deemed Seizure
Where it is not possible or practicable to take physical possession of any valuable article or thing
and remove it to a safe place due to its volume, weight or other physical characteristics or due to
its being of a dangerous nature, the authorised officer may serve an order on the owner or the
person who is in immediate possession or control thereof that he shall not remove, part with or
otherwise deal with it, except with the previous permission of such authorised officer and such
action of the authorised officer shall be deemed to be seizure of such valuable article or thing
[second proviso to Section 132(1)].However, from June 1 2003, the aforesaid provision shall not
apply in case of any valuable article or thing, being stock-in-trade of the business.

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Where the concerned person is not in the jurisdiction of the Chief Commissioner or
Commissioner
Where the building, place, vessel or aircraft in which search is to be conducted is within the area
of jurisdiction of a Chief Commissioner or Commissioner but such Chief Commissioner or
Commissioner has no jurisdiction over the person in relation to whom search is proposed, even
then he can still exercise the powers if he has reason to believe that delay in getting the
authorization from the proper Chief Commissioner or Commissioner may be prejudicial to the
interest of the revenue.

Judicial Pronouncements

No prior notice is necessary- Prior notice is not required to the person whose account books and
documents are sought to be seized –Lit Light & Co. v. CIT1 , V.K. Jain v. Union of India.2

Reason to believe to conduct a search not be disclosed – The Apex Court in the case of DGIT
v. Spacewood Furnishers(P.) Ltd.3 had held that the Income tax authorities should have
sufficient reasons before issuing warrant of authorization of search/seizure.

Seizure must be physical-The seizure envisaged in Section 132(1)(iii) is effected only when the
authorized officer takes possession of the seized articles to enable the revenue to appropriate the
same towards the payment of the amount that may be determined to be due under the Act. –
Kanwal Shamsher Singh v. Union of India.4

Burden to prove—The burden to prove that the authorization of the search is mala fide is on the
assesssee – Subir Roy v. S.K. Chattopadhyay.5

1
1982 136 ITR 513 (All)
2
1975 98 ITR 469 (Delhi)
3
2015 taxmann.com 292
4
1974 95 ITR 80 (Delhi)
5
1986 158 ITR 472 (Cal)

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If books of account are kept in building not specified in the search warrant [Section
132(1A)] – Where a search for any books of account or other documents or assets has been
authorized by Director General, Director, Chief Commissioner or Commissioner , Joint Director
or Joint Commissioner and the Chief Commissioner or Commissioner has reasons to suspect that
such books of account, other documents, money, bullion, jewellery or other valuable article or
things of the assessee are kept in any building, place, vessel, vehicle or aircraft not specified in
the search warrant, then such Chief Commissioner or Commissioner may authorize the
authorized officer to search such other building, place, vessel, vehicle or aircraft.

Police assistance [Section 132(2)] – The authorized officer may requisition the services of
any police officer or of any officer of the Central Government, or of both, to assist him for all or
any of the purposes specified in sub-section (1) [or sub-section (1A)] and it shall be the duty of
every such officer to comply with such requisition.

Where it is not practicable to seize book of accounts [Section 132(3] – Where in any
particular case it is not practicable to seize books of account, other documents, money, bullion,
jewellery or other valuable article or thing, then in such a case the authorized officer may serve
an order on the owner or the person who is in the immediate possession or control of the books
of account etc., to the effect that such person shall not remove, part with or otherwise deal with it
except with the prior permission of the authorized officer. Such authorized officer may take such
steps as he deems necessary for proper compliance of his orders.

Examination on oath [Section 132(4)] – The authorized officer may during the course of
search and seizure, examine on oath any person who is found to be in possession or control of
any books of accounts, documents, etc. Any statement made by such person during such
examination may thereafter be used in evidence in any proceeding under the Act. However, all
persons who are found at place of search are not automatically covered by action under Section
132.

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According to explanation to sub-section (4) of section 132, the examination of any person may
not be merely in respect of any books of account, documents or other assets found as a result of
search but also in respect of all matters relevant for the purpose of any investigation, connected
with any proceedings under the Act.

Presumptions[Section 132(4A)] – Where any books of account, other documents, money,

bullion, jewellery and other valuable article is found in possession or control of any person in the
course of a search, the following presumption can be made –
1. Those books of account, other documentary, money, jewellery and other valuable article
or thing belongs to such person.
2. The contents of such book of account and documents are true.
3. The signature and every other part of such books of account and other documents which
purports to be in the handwriting of any particular person are in that person’s handwriting
and in the case of a document stamped, executed or attested, that it was duly stamped,
executed or attested by the person by whom it purports to have been so executed or
attested.

Time-limit for retention of seized books of account[Section 132(8)]—When the

books of account or other documents are seized, then authorized officer cannot retain the
possession thereof for a period exceeding 30 days from the date of the assessment under section
158BC or 153A. Retention for a period exceeding 30 days can be made only if reasons are
recorded in writing and the approval of the Chief Commissioner, Commissioner, Director
General or Director is obtained.

Taking copies of seized documents[Section 132(9)] – The person from whom the books
of accounts or other documents were seized is permitted to make copies thereof, or take extracts
therefrom, in the presence of the authorized officer or any other person empowered by him in
this behalf and at such place and time as the authorized officer may provide.

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Authorized officer having no jurisdiction[Section 132(9A)]—Where books of account
or other documents or assets have been seized by a person having no jurisdiction over the
persons, then such an authorized officer is required to hand over the seized papers and assets to
the Assessing Officer who has proper jurisdiction within a period of 60 days from the date on
which the last of the authorization for search was executed. On handling over the seized papers,
the powers referred to in Section 132(8) and Section132(9) shall be exercised by the latter
Assessing Officer.

Power of provisional attachment[Section 132(9B)/(9C)]—Explanation to Section 291B

was omitted by the Finance Act,2016 with effect from June 1,2016. After this omission, the
revenue does not have any power of provisional attachment of property. To overcome this
situation, sub-sections (9B) and (9C) have been inserted in section 132 by the Finance Act,2017.
These sub-sections provide that during the course of a search or seizure within a period of 60
days from the date on which the last of the authorizations for search was executed, the authorized
officer, may attach provisionally any property belonging to the assessee with the prior approval
of Principal Director General or Director General or Principal Director or Director. Such
provisional attachment shall cease to have effect after the expiry of 6 months from the date of
order of such attachment.

Power to make reference to Valuation Officer[Section 132(9D)]—In order to enable

correct estimation and quantification of undisclosed income held in the form of investment or
property by the assessee by the Investigation wing of the Department. Sub-section (9D) has been
inserted in section 132 by the Finance Act,2017 to provide that in a case of search, the authorized
officer may, for the purpose of estimation of fair market value of a property, make a reference to
a Valuation Officer referred to in Section 142A, for valuation in the manner provided under that
sub-section. It also provides that the Valuation Officer shall furnish the Valuation report within
60 days of receipt of such reference.

CONSTITUTIONALITY OF SEC.132

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The Supreme Court of India has held that the search and seizure provisions contained in Sec.132
of the Income-tax Act and the Rules framed under it are not violative of the constitution. Sec.132
of the Income-tax Act, 1961 is neither incompetent nor invalid for infringing any of the
fundamental rights guaranteed under Articles 14, 19, 21 and 31 of the Constitution of India. In
view of the facts that:

(i) section 132 does not to any extent do away with the applicability of the normal procedure
prescribed under the statute for assessment or reassessment of income, and does not deprive the
assessee concerned of his normal right of appeal, second appeal and reference to High Courts;

(ii) the provisions of section 132 made with the object of preventing evasion of payment of tax
are limited to getting hold of evidence sought to be withheld from the assessing authorities and at
getting at getting at income believed to have been undisclosed with a view to bring it under
assessment and to ensure recovery of tax evaded or sought to be evaded; and

(iii) the application of the special provisions of the impugned section is possible only when the
appropriate authority on the basis of information in his possession has reason to believe that the
assessee is withholding or attempting to withhold evidence or is in possession of undisclosed
income either in the shape of money or in the shape of bullion, jewellery or the like, which belief
furnishes the criterion for making a reasonable classification having a reasonable relation with
the object of the law, section 132 cannot be considered as violative of Article 14 of the
Constitution. the fact that the search warrant can be issued by the Commissioner instead of a
magistrate does not offend Article 19(1)(f).

The Constitutionality of the provisions contained ion section 132 was considered by the Supreme
Court in an earlier case. It was held in this case that the provisions of Section 132 of the Income-
tax Act,1961 and Rule 112 of the Income-tax Rules, 1962 do not violate the fundamental rights
under Article 19(1)(f) and (g) of the Constitution of India. The provisions of Section 132(1) and
(5) were held as not discriminatory and as not violating Article 14 of the Constitution of India.
The Supreme Court pointed out that the impugned provisions were directed against persons who
on good grounds were considered to have illegally evaded the payment of tax on their income
and property. Therefore, drastic measures to get such income and property to recover
Government dues would stand justified in itself. Further, it is in the interest of the community

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that the community that the fiscal authorities should have sufficient powers to prevent tax
evasion.

In another case the Court observed that the classification made between evaders of tax with
undisclosed income or property and evaders of tax who are not in such position is reasonable, as
the object of the section is to get hold of undisclosed income or property, and that can only be
done effecting search and seizure from those who are in possession of it. There is no overlapping
between the provisions of section 132 and section 147 and it is not possible to say that it is open
to the income-tax authorities to adopt one procedure or the other according to their absolute
discretion. Section 132 in the circumstances, cannot be said to be violative of the equal
protection clause contained in Article 14 of the constitution.

Thus it is clear from the position of the courts that though the provisions under Sec.132 may be a
restriction on the rights of an individual, it cannot be considered to be a restriction on the
fundamental rights of any person as it is not violative of A.14, 19, 21 and 31. It is a restriction
imposed by the Government to collect revenues that are being unlawfully concealed from them
and the action taken by the Government to ascertain the dues is not a violation of the individuals
fundamental right.

Case law relating to Search and Seizure

ITO v. Seth Brothers and Others 1969 74 ITR 836 SC
The judgment of the court was delivered by
SHAH J.—M/S. Seth Brothers run a flour mill in the name and style of ” Imperial Flour Mills “.
From April 1, 1953, to March, 1956, the business was carried on by M/s. Seth Brothers, of which
the partners were Baikunth Nath and Vishwa Nath. Between March, 1956, and March 31, 1957,
the business was carried on by Baikunth Nath, Vishwa Nath, Dr. Manmohan Nath, Mrs. Rama
Rahi and Mrs. Sushila Devi. On April 7, 1957, Mrs. Prem Lata was admitted as a partner. The
partners were engaged in carrying on other businesses in the names of Seth Brothers (Private)
Ltd., Nath Brothers (Private) Ltd. and Meerut Cold Storage and General Mills.

The owners of the business were, year after year, assessed to income-tax in respect of the income
arising in the course of the business. On March 14, 1963, the Income-tax Officer, Meerut, issued

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a notice under section 148 of the Income-tax Act, 1961, intimating M/s. Seth Brothers that there
was reason to believe that their income chargeable to tax had escaped assessment and it was
proposed to reassess this income for the assessment year 1954-55. In response to the notice,
Baikunth Nath and Vishwa Nath filed a return under protest. In the meantime information was
received by the Income-tax Commissioner, U.P., that M/s. Seth Brothers were maintaining ”
duplicate records ” and were evading assessment of their true income and that it was necessary to
seize the records which may be found at ” Shanti Niketan “, Meerut, in which M/s. Seth Brothers
carried on the business of Imperial Flour Mill and other businesses, The Commissioner of
Income-tax, U.P., on May 29, 1963, drew up a memorandum that on a report of the Income-tax
Officer, D-Ward, Meerut, requesting for authorisation under section 132 of the Income-tax Act,
1961, to enter and search the premises of M/s. Seth Brothers, he was satisfied about the need for
the issue of the authorisation. The Commissioner also issued an order in Form 45 prescribed
under rule 112 of the Income-tax Rules, 1962, authorising two Income-tax Officers, R. R.
Agarwal and R. Kapoor, to enter the premises known as ” Shanti Niketan “, at Meerut and to
search for and seize such books and documents as may be considered relevant or useful for the
purpose of the proceeding of reassessment, and to place identification marks thereon and to
convey them to the income-tax office.
On the 7th and 8th of June, 1963, the premises described in the order were searched and account
books and certain documents found therein were seized and were carried to the Income-tax
Office. M/s. Seth Brothers then moved a petition in the High Court of Allahabad for an order
quashing the proceedings of the income-tax authorities. Petitions were also filed by Nath
Brothers (Private) Ltd., Seth Brothers (Private) Ltd., and Seth Brothers, Meerut, for the same
relief. By these petitions they claimed writs of certiorari quashing the letters authorising search
of the premises at Shanti Niketan, and writs of mandamus directing the Income-tax Officer to
return all the books, papers and articles seized during the search and for writs of prohibition
restraining the income-tax department from using any information gathered as a result of the
search. It was submitted by the petitioners that K. L. Ananda, Income-tax Officer, and Satya
Prakash, an ” exemployee ” of M/s. Seth Brothers, had given false information to the Deputy
Director of Inspection with a view to blackmail the partners of M/s. Seth Brothers, and that the
order of search was made by the Commissioner of Income-tax at the direction of the Deputy
Director of Inspection, that the action of the Income-tax Officer in searching the premises and in

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seizing the books of account was malicious and that in any event section 132 of the Income-tax
Act, 1961, and the rules framed thereunder, were violative of the fundamental freedoms
guaranteed by articles 14, 19(1)(f) and (g) and 31 of the Constitution.
Affidavits were filed on behalf of M/s. Seth Brothers. It was affirmed that ” the so-called-
duplicate records ” seized by the Income-tax Officer were copies of the books of account and
that action had been taken by the Commissioner of Income-tax, not on his own initiative but at
the behest of the Directorate of Inspection. In reply to the contentions raised by the assessees
several affidavits sworn by officers of the income-tax department were filed. The Commissioner
of Income-tax stated in his affidavit that before issuing letters of authorisation and the warrant of
search he was satisfied that it was necessary to take action under section 132 of the (Indian)
Income-tax Act, 1961, and that the letters of authorisation were not issued at the direction of the
Directorate of Inspection. The Income-tax Officers stated that in consequence of the search a
large number of ” duplicate account books and records ” maintained by M/s. Seth Brothers were
recovered, that the search was carried out according to law and in the presence of two of the
partners of the firm and their advocates, that all the documents seized were relevant for the
purpose of reassessment, that there was close connection between the different business activities
of the partners of M/s. Seth Brothers and that all the documents which were seized were in
relation to those activities. The Deputy Director of Inspection in his affidavit stated that he did
not give any direction to the Commissioner to issue authorisation for search and seizure.
The High Court of Allahabad held on a consideration of the averments made in the affidavits
filed on behalf of M/s. Seth Brothers and the revenue that ” there was reason to believe ” that
instructions were issued by the Directorate of Inspection for a general raid and seizure of all
account books and papers which may be found at the premises of the firm ; that some out of the
documents seized by the Income-tax Officers were irrelevant for the purpose of any proceeding
under the Act ; that besides the documents belonging to M/s. Seth Brothers the Income-tax
Officers seized documents relating to the transactions of the allied concerns ; that marks of
identification were not placed on certain documents at the time they were seized ; that the
documents seized were detained by the Income-tax Officer for more than two months ; and that
the police force employed during the raid was excessive. The High Court concluded :

” It is true that there was no ill-will between the … (partners of Seth Brothers) on one side and
respondents Nos. 1, 3 and 4 (Commissioners of Income-tax, U.P. and Punjab and Income-tax

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Officer, Special Investigation Circle A, Meerut) on the other side. But the extent of the seizure
was far beyond the limits of section 132 of the Act. The action was mala fide in the sense that
there was abuse of power conferred on Income-tax Officers by section 132 of the Act. The act
being mala fide, the proceedings should be quashed by this court by issuing a writ of mandamus.
“
The Income Tax Officer appealed against the decision of the High Court of Allahabad in the
Supreme Court of India.
The Supreme after throughly examining the facts and circumstances of the case and taking into
consideration the decision of the High Court held :
In our view, the decision of the High Court that the action of the Commissioner of Income-tax,
U.P., and the Income-tax Officers who purported to act in pursuance of the letters of
authorisation was mala fide, cannot be accepted as correct.
Counsel for M/s. Seth Brothers contended that opportunity may be given to the assessees to lead
evidence viva voce to prove that the revenue officers acted for a collateral purpose. We do not
entertain this request since we propose to remand the case to the High Court to decide questions
which have not been decided. The applicants, if so advised, may move the High Court for leave
to lead evidence. It is for the High Court to decide whether at this stage after nearly six years
leave to examine witnesses should be granted.

The order passed by the High Court is set aside and the proceeding is remanded to the High
Court. The High Court will deal with and dispose of the proceeding according to law. We may
observe that counsel for the Income-tax Officer did not invite us to decide the question of the
vires of section 132 of the Income-tax Act on which the High Court has expressed no opinion.
M/s. Seth Brothers and the other petitioners in the High Court will pay the costs of these appeals
in this court.

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BIBLIOGRAPHY

BOOKS-

 Direct Taxes – Law & Practice by Dr. Vinod K. Singhania, Dr.

KapilSinghania, 60th Edition 2018

ARTICLES-

 https://www.legalcrystal.com/act/51330/income-tax-act-1961-complete-act
 https://taxguru.in/income-tax/ito-seth-brothers-1969-74-itr-836-sc.html
 https://www.bankbazaar.com/tax/income-tax-search-and-seizure.html
 https://cleartax.in/s/income-tax-raid
 https://taxguru.in/income-tax/search-seizure-survey-income-tax-act-
1961.html

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