SEARCH AND SEIZURE

A Project submitted in partial fulfilment of the course TAXATION LAW I,

7th SEMESTER during the Academic Year 2019-2020

SUBMITTED BY:
Shreya Sinha
Roll No. - 1648
B.B.A LL.B

SUBMITTED TO:
Dr. Ganesh Prasad Pandey
FACULTY OF TAXATION LAW I

SEPTEMBER, 2019

CHANAKYA NATIONAL LAW UNIVERSITY, NAYAYA NAGAR,

MEETHAPUR, PATNA-800001
 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.B.A. LL.B (Hons.) Project Report entitled
“Search and Seizure” submitted at Chanakya National Law University; Patna is an authentic
record of my work carried out under the supervision of Dr. Ganesh Prasad Pandey. I have
not submitted this work elsewhere for any other degree or diploma. I am fully responsible for
the contents of my Project Report.

(Signature of the Candidate)

SHREYA SINHA
Chanakya National Law University, Patna

i
 ACKNOWLEDGEMENT

“IF YOU WANT TO WALK FAST GO ALONE

IF YOU WANT TO WALK FAR GO TOGETHER”
A project is a joint endeavour which is to be accomplished with utmost compassion, diligence
and with support of all. Gratitude is a noble response of one‟s soul to kindness or help
generously rendered by another and its acknowledgement is the duty and joyance. I am
overwhelmed in all humbleness and gratefulness to acknowledge from the bottom of my
heart to all those who have helped me to put these ideas, well above the level of simplicity
and into something concrete effectively and moreover on time.
This project would not have been completed without combined effort of my revered
Taxation Law I teacher Dr. Ganesh Prasad Pandey whose support and guidance was the
driving force to successfully complete this project. I express my heartfelt gratitude to him.
Thanks are also due to my parents, family, siblings, my dear friends and all those who helped
me in this project in any way. Last but not the least; I would like to express my sincere
gratitude to our Taxation Law I teacher for providing us with such a golden opportunity to
showcase our talents. Also this project was instrumental in making me know more about the
Search and Seizure. This project played an important role in making me understand more
about Search and Seizure in the Taxation Law. It was truly an endeavour which enabled me
to embark on a journey which redefined my intelligentsia, induced my mind to discover the
intricacies involved in the competency of the people in Search and Seizure.
Moreover, thanks to all those who helped me in any way be it words, presence,
Encouragement or blessings...

- Shreya Sinha
- 7th Semester
- B.BA LL.B

ii
 TABLE OF CONTENTS

Declaration………………………………………………......……………………………….i

Acknowledgement……………………………………………......………………………….ii

Table of Contents…..........…………………………………………......…....……………….iii

Aims and Objectives…………………………………………………......……………….…iv

Hypothesis.................................................................................................................................iv

Research Methodology......................................................................................................…...iv

1. Introduction……………………………………………………….....……......……….1

2. Procedure of Search and Seizure.............................…........................................…...2-3

3. Persons Authorised to Search.....................................................................................4-6

4. Statutory Provisions...........................................................................................…...7-13

5. Conclusion...................................................................................................................14

Bibliography……………………………...………………………….....…….....……......…15

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 AIMS AND OBJECTIVES

The Aims and Objectives of this project are:

1. To study the procedure of search and seizure.
2. To study about the persons authorised to do search and seizure.
3. To study the statutory provisions related to search and seizure.
4. To study various case laws related to search and seizure.

HYPOTHESIS

The researcher considers the following hypothesis:

1. The provision of search and seizure keeps a check on the unauthorised income of the
people as before this provision people with wrongful income easily got away.

RESEARCH METHODOLOGY

For this study, doctrinal research method was utilised. Various articles, e-articles, reports and
books from library were used extensively in framing all the data and figures in appropriate
form, essential for this study.
The method used in writing this research is primarily analytical.

iv
 INTRODUCTION

Search means "not looking for something that is produced or opened, but hidden, not
obvious", which in general means "search", which are well-known meanings attributable to
the word in the section 132, as written. Judicially withheld in case law of "Assainar Vs ITO"
It also means taking possession of the registry, etc., for the purpose of inspection. It includes
a thorough inspection of the building, the place, the ship and the aircraft and the person.
'Seizure' means the authority to take possession of records, etc. outside of the possession of
the person. Therefore, it is something that involves a forced extraction or the taking of
possession of the owner or someone who has possession and who is unwilling to part with the
possession.
The Income Tax Act of 1961 is the Law, as originally enacted, did not contain any special
provisions related to the assessment in the search cases. For the first time, the legislature
enacted special provisions by introducing Chapter XIV-B into the Finance Act of 1995 which
contains sections 158B to 158BH for the assessment of search cases in which the search was
initiated on or after 1.7. 95. Many litigation arose between taxpayers and tax authorities. Most
of the issues arising from the litigation were settled by various decisions of the Court and the
Superior Courts. However, the legislature, for the best known reasons, promulgated new
provisions by inserting articles 153A through 153C in the Finance Act of 2003 for assessment
in search cases in which the search is initiated u/s132 or make the application u/s 132A.

1|Page
 PROCEDURE OF SEARCH AND SEIZURE

Generally the searches are conducted in the fiscal statutes for procuring the evidence which
would not be produced by the tax payer or laying hands on the unaccounted assets,
sales/purchases or ascertaining the unaccounted investments already made or expenditure
already incurred or goods manufactures and sold without paying the duties of the government
or goods are imported or smuggled without paying the customs duty etc.
Procedure – When the search party is about to enter in the residential/business places of a tax
payer, the latter may insist on production of warrant of authorization of search. The
authorised has to show the warrant to the person searched or in his absence to any other
person present at the time of the ingress. If the warrant is not signed and sealed by the
competent authorizing authority or the name of the concerned person is not written on it, he
may decline the ingress. The names of the persons and particulars of the premises to be
searched should clearly be given on warrant of authorization. If the warrant of authorization
contains any cuttings or overwriting‟s, which are not duly authenticated by the authorizing
officer or if the warrant of authorization is mutilated even then the person to be searched
would be within his right to refuse the ingress. But the assessee cannot ask for the supply of a
copy of warrant to him. The assessee may also insist upon the production of evidence with
regard to the identify cards etc. He may also insist to carry out personal search of each and
every member of search team. The assessee may within is right decline the commencement of
search unless two or more respectable witnesses of the same locality are called by the search
team
Legislative Developments:
Search and seizure are the important elements in the assessing the income of assessee or a tax
payer. These provisions introduced originally with a view to prevent large scale evasion have
been amended later in order to plug the loopholes which were brought to light by actual
working and consequent to judicial scrutiny and review It is only thus desirable to have a
look at the legislative developments in this regard.
The authorities under the I.T. Act, 1922 did not originally possess any powers of search and
seizure. It was only after the Second World War, necessity of this provision was felt to tax
the vast profits made by war profiteers.

2
Section 37(2) is introduced by Finance Act 1956 to grant powers of search & seizure to the
Income tax Authorities. The same powers and provisions as listed in section 37(2) of the I. T.
Act 1922 were originally embodied in section 132 of the I.T. Act‟ 1961.
The introduced provision continued, till section 30 of the Finance Act 1964 replaced section
132 by a completely new elaborately provision. This became necessary as the then existing
provisions in section 37 sub-section (2) of the Income Tax Act 1922 were struck down by
Assam High Court being violative of Articles 14 and 19(1 )(g) of the Constitution. “The
substitution of the section resulted into enlargement of powers of CIT and authorized officers
whereby for the first time an order u/s 132 (1) could be issued only if “reason to believe”
existed that books of account or documents were not produced by the person concerned in
response to statutory notices issued or are not be produced even if summons were to be
issued.
The powers under section 132 were further enlarged by an amendment brought about in
1965. Among other changes made, it enabled the authorities to make a seizure of money,
bullion jewellery or other valuable article or thing if the authorized officer considered it
necessary to satisfy the liability estimated by him but the officer had to pass an order u/s
132(5) within 90 days of the seizure. This power to retain the seized assets has now been
diluted as sub-section (5) of section 132 of the I T. Act retrains no more applicable.
The powers of search and seizure were further extended by Taxation Laws Amendment Act,
1975 inter alia to authorize search if the officer issuing a warrant had, „reason to believe‟ that
money, bullion, jewellery would not be disclosed by the person concerned for income tax
purposes in future. Also, Commissioners were empowered to permit entry into any building,
place vessel, vehicle or aircraft not within his territorial jurisdiction.
Subsequent amendments were made by Amendment Act‟ 1 984 and Finance Act‟ 1988
extending time limit to 120 days u/s 132(5) and granting the power to take constructive
possession of the assets seized respectively.

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 PERSONS AUTHORISED TO SEARCH

In accordance with Section 132 (A) of the IT Law, the Director General or the Director or
the Chief Commissioner or the Commissioner may authorize the Joint Director, the Joint
Commissioner, the Deputy Director / Deputy Director, the Deputy Commissioner / to the
Deputy Commissioner or the Tax Officer. Said person, that is, the person authorized under
Sector 132 (A) is called an authorized officer.
During a raid, the authorized officer has powers to:
(i) Enter and search in any residential and commercial establishment, vehicles, bank
lockers, etc. and take account books and other valuables.
(ii) Break the lock of any door, box, cabinet, safe, etc., where the keys are not available
(iii) Register any person who has left or is in the facilities
(iv) Confiscate the books of accounts, money and other valuables found as a result of said
search and make an inventory of said items.
(v) Place identification marks or make copies or extract extracts from books or
documents, etc.
Income tax authorities can also request account books and valuables seized by other
government departments for investigation under the Income Tax Law
Taxpayer’s rights and duties of persons searched1 –
Rights of the person searched -
(i) To see the warranty order duly signed and sealed by the issuing authority.
(ii) To verify the identity of each member of the search group.
(iii) To have at least two respectable and independent residents of the locality as witnesses.
(iv) To have a personal search of all the members of the search group before the start of the
search and at the conclusion of the search.
(v) To insist on a personal search of female members by another female member only with
strict respect for decency.
(vi) To have a copy of panchnama along with all annexures.
(vii) Put their own stamps on the packages that contain the seized goods.
(viii)A woman who occupies any department, etc., to be registered, has the right to withdraw
before the person conducting the search enters, if according to custom it does not appear
in public.

1
(1994) 208 ITR 5 (St.)

4
(ix) Call a doctor if you are not well.
(x) That your children be allowed to go to school, after examining their bags.
(xi) Inspect the seals in various respectable placed in the course of the search and
subsequently reopen with the continuation of the search.
(xii) Have the facilities to have meals, etc., at the normal time.
(xiii)Have a copy of any statement before it is used against him in an evaluation or judicial
process.
(xiv) To inspect account books, etc. seized, or extract extracts from them in the presence of
any of the authorized officers or any other person empowered in this name.
(xv) To make an application objecting to the approval granted by the Commissioner for the
retention of books and documents beyond 180 days from the date of the seizure.
Duties of the person searched
(i) Allow free and unhindered entry into the premises.
(ii) See the warranty of authorization order and put signatures on it.
(iii) Identify all the receptacles in which the assets or accounting books and documents are
kept, and deliver the keys of said receptacles to the authorized official.
(iv) Identify and explain the ownership of the assets, account books and documents found
in the facilities.
(v) Identify each individual in the facilities and explain their relationship with the people
who are being sought. You should not be deceived by impersonation. If he cheats by
pretending to be someone else or knowingly replacing one person with another, it is a
punishable offense under article 416 of the Indian Penal Code.
(vi) Not allow or encourage the entry of unauthorized persons into the facilities.
(vii) Not remove any item from its place without prior notice or knowledge of the
authorized Official. If you save or destroy any document with the intention of
preventing it from being produced or used as evidence before the Court or the public
servant, you will be punished with imprisonment or a fine, or both, in accordance with
article 204 of the Criminal Code from India.
(viii) Answer all questions truthfully and to the best of your knowledge. You must not
allow any third party to interfere or point while the authorized officer registers your
statement. In doing so, you should also keep in mind that:
(a) If you refuse to answer a question on a topic relevant to the search operation,
you will be punished with imprisonment or a fine, or both, according to section
179 of the Indian Penal Code. (second). Being legally bound by an oath or

5
 affirmation to declare the truth or affirmation to affirm the truth, if you make a
false statement, you will be punished with imprisonment or fine or both u / s 181
of the Criminal Code of India. (do). Similarly, if you provide evidence that is false
and that he knows or believes to be false, he is likely to be punished with code 191
of the Indian Penal Code. To place your signature on the registered declaration,
the inventories and the panchnama.
(ix) Ensure that peace is maintained throughout the search, and cooperate with the search
party in all aspects so that the search is concluded as soon as possible and in a
peaceful manner.
(x) Similar cooperation should be extended even after the search action ends, to allow the
Authorized Officer to complete the necessary follow-up investigations as soon as
possible.
There is no power to authorize any Income Tax officer to arrest an assessee or any other
person for owning unaccounted property. In simple words, at the stage of the raid, a person
cannot be arrested by the authorities of the Income Tax. However, if an Income Tax Officer
is assaulted or is subject to some other crime under the Indian Penal Code, the police may
arrest the person who has assaulted the authorized officer. It is necessary to clarify that the
arrest would not be under the Income Tax Law but would be for the offence under the Penal
Code. Arrest at a later stage is possible. This occurs when all of the Department's proceedings
against the assessee is over and a Certificate of Recovery is issued under Section 222 of the
Income Tax Law.

6
 STATUTORY PROVISIONS

The Finance Act 2017 proposes a vital Amendment in the Income Tax Act 1961 relating to
procedure for searches under the Act. Sub-section (1) and (1A) of section 132 provide that
where an authority mentioned therein, based on the information in his possession, has 'reason
to believe' or 'reason to suspect' of circumstances referred to in the said sub-sections, he may
authorize an authority specified therein to carry out search & seizure.
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.
Rights of an assessee during raid is also provided which includes –
 The assessee has the right to see the search warrant and the identification of the
authorized officers,
 The assessee can make copies and take extracts of the books of accounts or
documents seized. Prosecution proceedings under the Income Tax Act, 1961 can be
initiate for offences that are detrimental to the interest of the revenue and the same are
listed from Section 275 to Section 279 of the Income Tax Act, 1961. These offences
are punishable with rigorous imprisonment and fine for a period not less than 3
months but extending up to 7 years. Circumstances and grounds for arrest of an
assessee has been extensively provided in the Act.2
Ram Kumar Dhanuka v. UOI3
The court held that even a non-resident Indian can be subjected to a search under this section
if the department has definitive information that the person in question has income earned in
India that may be subject to taxes under the Act and that they may not have been disclosed or
would not be so declared.
Prabhubhai Vastabhai Patel v. R.P.Meena4
The High Court has discussed the principles for the exercise of the power of search and
seizure. The Court observed that the person who brings gold must satisfy the income tax

2
Search, seizure, survey and Settlement Commission(2004) ; by N. Subramaniam (Retd. Joint Commissioner of
Income
3
(2001) 252 ITR 205 (Raj)(HC)
4
(1997) 226 ITR 781(Guj.)(HC)

7
authorities that he had the means to purchase said gold and that the income of the sale would
be disclosed. On the facts of that case, the Court held that the seizure of gold from the non-
resident Indians was valid, although the gold was placed within the permissible limit of 5 kg
according to the existing scheme. The Court also noted that,
“We cannot accept the contention raised by Mr. Shah that once the gold was lawfully brought
in and proper custom duty was paid, the same should not have been pursued by the income-
tax authorities. Buying gold in a foreign country and bringing it in to this country after paying
custom duty in foreign exchange does not absolve the person bringing the gold from abroad
of his liability to satisfy that the gold was purchased from income lawfully earned by him and
the income earned out of sale of such gold would be disclosed for the purpose of the Act.”
No arrest or detention can be made under this section.
Mere failure to disclose property purchased is not enough. No power to arrest or restraint in
movement of individual. “There is no power contained in the Act or the Rules where by the
movement of a person against search is ordered can be restricted. By refusing to give
permission to the petitioner to attend his work in effect, it amounted to his confinement which
is not permissible in law”.
Arrests- The power of arrest vests with the Customs, Central Excise and Enforcement
Officers. Income-tax Officers have no powers of arrest. Arrests are generally resorted to in
cases where the detected offence is of a serious nature and the case appears to be fit for
criminal prosecution. Persons are generally not arrested when the intention is only to have
departmental proceedings. Persons are arrested when there is a gravity of offence, evidence
of personal culpability, a strong and prima facie case and a likelihood of person tampering
with evidence by remaining at large or absconding.
Can survey be converted in to search?
Under normal circumstances, “no”. However, in exceptional cases, “yes”.
A survey undertaken under section 133A can be subsequently converted into a search if the
conditions of this section are satisfied.
Vinod Goel v. UOI5
Where survey action u/s 133A was taken at the business and consequent search u/s 132 was
authorized at the residential premises without recording independent reasons for satisfaction,
the search was declared illegal.
Dr. Nalini Mahajan and others v. DIT6

5
(2001) 252 ITR 29(P&H)(HC)(40)

8
Survey operation converted into search and seizure – No reason given for such conversion –
No independent application of mind –Search and seizure operation was held to be invalid –
hospital premises belongs to Trust and not assessee.
LEGALITY OF SEARCH AND JURISDICTION
ITO v. Seth Brothers & Ors.7
If the action of the officer issuing the authorization or of the designated officer is challenged,
the Officer concerned must satisfy the court about the regularity of his action. If the action is
maliciously taken or power under the section is exercised for a collateral purpose, it is liable
to be struck down by the court. If the conditions for the exercise of the power are not
satisfied, the proceedings are liable to be quashed. But, where the power is exercised with
bonafide intention and in furtherance of the statutory duties of the tax officer, any error of
judgement on the part of the officers will not vitiate the exercise of the power.
Pooran Mal v. DIT8
The provision relating to the search and confiscation in section 132 and Rule 112 of the
Income Tax Rules of 1962 does not violate fundamental rights under article 19 (1) (f) / (g) of
the Constitution of the India. The restrictions imposed by any of the provisions of section
132, section 132A or rule 112A are reasonable restrictions on freedom under these Articles.
The evidence obtained in the search made in contravention of the provisions may be used,
unless there is a prohibition expressly or necessarily implied in the Constitution or other law,
the evidence obtained as a result of an illegal search or seizure is not susceptible to being
rejected.
Dr. Pratap Singh and Anr v. Director of Enforcement and ors9
"The illegality of a search does not vitiate the evidence collected during the illegal search.
The only requirement is that the Court or the authority before whom such material or
evidence is placed must be cautious and prudent in dealing with such material or evidence. "
Prakash V. Sanghvi v. Ramesh G., Major, DDIT10

6
(2002) 257 ITR 123 (Delhi)(HC)
7
(1969) 74 ITR 836 (SC)
8
(1974) 93 ITR 505 (SC)
9
(1985)155 ITR 166 (SC)
10
(2013) 356 ITR 426 (Karn) (HC),

9
The court held that, in the case of trespassing of as property, delinquent officers can be
prosecuted by a competent criminal court. However, the court order issued warrant was
considered valid.
The Act does not invest in the Deputy Director, the power to have a camp office at the
residence of the assessee and call the assesses attendance in connection with proceedings
under the Act. The allegation that the Deputy Director trespassed into the house of the
assessee and, thereafter, issued the notice to him was not controverted. Therefore, the Deputy
Director without the authority of law, having trespassed into the house of the assessee
deserved to be prosecuted before a competent criminal court, if so advised.
However, the order preceded the search. The assessee had time until March 15, 2012 to pay
the advanced tax and, subsequently, time to file his return of the previous year 2011-12
(assessment year 2012-13), but that did not mean that the authorities did not have the
jurisdiction to issue a search and seizure order under section 132.
DCIT v Mahesh Kumar Agrawal11
Before issue of warrant of authorization, they record the satisfaction and reasoning. Court
cannot sit in appeal over the opinion formed. Existence of materials to be looked into, Court
has to examine whether on such material a reasonable man can form opinion. Change in life
style of assessee not a material for purpose of formation of opinion.
Search and seizures: New Ground rules for search and seizure, framed in the year 1986,
prescribes the guidelines to be followed in the course of a search and seizure.
It is desired that the said charter may be published in all national languages and when the
search and seizure action is carried out, the same must be given to the person in the language
known to him and in which he is comfortable. If the department is not equipped with
resources to translate the charter in different languages, associations like the Chamber or
BCAS may print the copies and may give to the Director General of Income-tax so that he
can hand it over to the person in charge of the search party.
Stock in trade cannot be seized
S.132(1)(iii) Seize any such books of account, other documents, money, bullion,
jewellery or other 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 authorized officer shall
make a note or inventory of such stock in trade of the business.

11
(2003) 262 ITR 338 (Cal) (HC)

10
As per the third proviso to section 132 1)(v), stock in trade cannot be seized even in case of
deemed seizure given in the second proviso.
Sri Pushpa Rajan Sahoo v. ACIT 12
On a writ petition, the court directed the authorities to release the stock in trade and return to
the party, in view of specific provision contained in proviso to section 132(1)(iii) and third
proviso to section 132 (1)(v).
Validity of search - If the search is not in accordance with the law, it can be challenged by
way of a writ. The burden to prove so is on the assessee. Before approaching the court,
assessee must be very cautious. As per section 132(13), the provisions of the Code of
Criminal Procedure 1973, relating to search and seizure apply as far as may be applicable, to
search and seizure proceedings under the Income–tax Act, 1961. By analyzing some of the
decided cases one may be able to take the decision whether it is worth approaching the court.
Some of the instances where the writ petitions can be considered-
Where there is no rational nexus between the information on record and reason to believe that
books of account or other documents would not be produced or the assets representing the
income will not or would not be disclosed – Existence of alternate remedy is no bar when
action is taken without jurisdiction and affects fundamental rights.
Vindhya Metal Corporation and ors v. CIT13
Where the search is conducted for collateral purposes or as a matter of policy decision and
not as a result of cogent information in relation to a particular assessee. Allegation against
advocates were that most of them were submitting estimated income
H. L. Sibal v. CIT14
Where the search is directed on the basis of information that a particular person is in
possession of various assets etc., without any reason to believe that those assets represent
concealed income of that person – Probe into the wealth of assessee – Non application of
mind –Search and seizure action was held to be illegal.
Anand Swaroop v. CIT15
Where there is no application of mind by the Officers of the department who authorized the
search, search was held to be not valid.
Dwaraka Prasad Agrwall v. CIT16

12
(2012) 252 CTR 113/ 75 DTR 341 (Orissa) (HC),
13
(1985) 156 ITR 233 (All) (HC)
14
(1975) 101 ITR 112 (P&H) (HC)
15
(1976) 103 ITR 575 (P&H) (HC)

11
Where the information on the basis of which a search is conducted on based on conjectures
and surmises or on vague information. Mere rumor that Doctor was charging high fees and
living in posh house – Search and seizure was held to be invalid.
Dr. Nand Lal Tahiliani v. CIT17
Where the warrant of authorization is blank or proper name and address is not recorded-
Blank warrant of authorization without filing up the name was issued by the Commissioner-
Search warrant was quashed and the respondents were directed to return the articles
recovered from the possession of the petitioners.
Jagmohan Mahajan & Anr. v. CIT18
Sealing of business premises-Cannot be done-Alternative remedy –Not an absolute bar to the
issue of Writ. Sealing of business premises during the course of survey or section 132,133A,
or any other provision of the IT Act is not permitted, as it would amount to violation of the
fundamental right guaranteed under Article 19(1)(g) &300A of the Constitution of India.
“That the sealing of the business premises, for which there was no provision of law in
violation of the fundamental rights guaranteed to a citizen under article 19(1)(g) of the
Constitution of India which guarantees right to practice any profession, or to carry on any
occupation, trade or business and also under article 300A of the Constitution of India in as
much as the same amounted to temporary deprivation of property without authority of law.”
In the case of Nand Lal Gandhi-vs-ACIT19 search was conducted on 28.7.97 in the course
of which certain incriminating materials including shares and jewellery were found which
were invented. Valuation of jewellery was also made. A panchnama was prepared in which it
was mentioned that only books of account and documents were being seized and the search
was stated to be temporarily concluded. A prohibitory order was issued u/s 132(3) in respect
of the shares and jewellery which was lifted on 8.9.97. A panchnama was also prepared on
that day which merely stated that search was concluded. The block assessment was concluded
on 30.9.99. The question before the Tribunal was whether assessment was time barred.
The tribunal, by majority opinion, held that panchnama dated 8.9.97 as well as restraint order
were invalid and therefore, the period of limitation was to be counted from the end of the
month of July 97. Hence, the assessment was time barred. The reason given by the tribunal

16
(1982) 137 ITR 456(Cal.)(HC)
17
(1985) 170 ITR 592 (All.)(HC)

Affirmed by Supreme Court in CIT v. Dr. Nand Lal Tahiliani (1988) 172 ITR 627 (SC)
18
(1976) 103 ITR 579 (P&H)(HC)
19
115 ITD 1(Mum)(TM),

12
was that every act of search was completed on 28.7.97 and nothing remained to be done with
reference to the shares & jewellery since the same had already been inventorised and valued.
Further nothing was done on 8.9.97 except lifting the order. Therefore, the order u/s 132(3)
was invalid in view of Bombay High Court judgment in the case of Sandhya Naik.

13
 CONCLUSION

Basically search and seizure will be conducted by the IT professionals under Section 132 of
Income tax act, 1962 which generally provides the procedure should be followed in
conducting raids in the assessee house or industry or organization. Before the implementation
of the specific provision in the income tax act i.e. before the existence of the search and
seizure concept there were so many instances where the wrongdoers or the persons with
alleged incomes got free from the search of the wrongful assets of the persons who possessed
such assets. By implementing this particular provision in the act which provides effective
procedure that should be followed by the such persons who is conducting the income tax
raids. As the problem of the black money been increasing day by day the government should
take more necessary steps in reduction of such black money, so that government should make
enough effective legislations or implement other provisions also which guide the search and
seizure of the income of the assessee.
The government should also implement the strict punishments for the persons who convicted
for the unaccounted incomes, so that it will imbibe the fear in the minds of the tax payers of
the punishment, so that the persons will pay the tax and maintain the clear and fair accounts
with the accounted balance sheets. Still the laws relating to the search and seizure should be
made stringent so that the cases of the misappropriation of money, and unaccounted money
will get reduced.

14
 BIBLIOGRAPHY

Books Referred:
1. „Taxmann‟s Direct Taxes Law & Practice‟, Dr. Kapil Singhania & Dr. Vinod K. Singhania
(43rd edn., 2009)
2. “The Law & Practice os Tax Treaties & Indian Perspective‟, Rajesh Kadakar, Nitesh Modi
(2008)

Web Sources:
1. http://www.wirc-icai.org/material/search_seizure_and_survey_new__40_pages_.pdf
2. http://taxguru.in/income-tax/search-and-seizure-under-income-tax-act-1961.html
3. http://www.tnkpsc.com/Image/SurveySearchseizurebySanjayagarwal.pdf
4. http://law.incometaxindia.gov.in/dittaxmann/incometaxacts/2005itact/casesec132.htm

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