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Shah E Naaz Judge Vs. Additional Director Of Income Tax (Inv)-Unit VI And Another
December, 05th 2018
$~
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+               WRIT PETITION (CIVIL) No. 5937/2016
                                            Reserved on :          10th May, 2018
                                           Date of decision: 30th November, 2018
        SHAH E NAAZ JUDGE                                ..... Petitioner
                        Through Mr. Satyen Sethi, Mr. Arta Trana Panda
                        & Ms. Gargee Sethi, Advocates.
                 versus
        ADDITIONAL DIRECTOR OF INCOME TAX (INV)-UNIT VI
        AND ANOTHER                               ..... Respondents
                     Through Mr. Ashok K. Manchanda, Sr. Standing
                     Counsel.
                        WRIT PETITION (CIVIL) No. 11842/2016
        SAHYR KOHLI                                               ..... Petitioner
                                Through Mr. Satyen Sethi, Mr. Arta Trana Panda
                                & Ms. Gargee Sethi, Advocates.
                                versus
        ADDITIONAL DIRECTOR OF INCOME TAX (INV)-UNIT VI
        AND ANOTHER                              ..... Respondents
                     Through Mr. Ashok K. Manchanda, Sr. Standing
                     Counsel.
                        WRIT PETITION (CIVIL) No. 11843/2016
        SANDEEP KOHLI                              ..... Petitioner
                     Through Mr. Satyen Sethi, Mr. Arta Trana Panda
                     & Ms. Gargee Sethi, Advocates.
                     versus

        ADDITIONAL DIRECTOR OF INCOME TAX (INV)-UNIT VI
        AND ANOTHER                            ..... Respondents
                     Through Mr. Ashok K. Manchanda, Sr. Standing
                     Counsel.
        CORAM:
        HON'BLE MR. JUSTICE SANJIV KHANNA
        HON'BLE MR. JUSTICE CHANDER SHEKHAR

W.P. (C) No. 5937/2016+connected matters                               Pag e 1 of 36
SANJIV KHANNA, J.:
        This common judgment would dispose of the afore-captioned writ
petitions preferred by Shah-E-Naaz Judge, her husband Sandeep Kohli and
her daughter Sahyr Kohli, who have challenged notices under Section 153A
of the Income Tax Act, 1961 (Act, for short) dated 3rd May, 2016, 8th
November, 2016 and 8th November, 2016, respectively. They have also
challenged warrant of authorization dated 27th June, 2014 under Section 132
of the Act for search of locker No.7325-A in the joint names of Nagina
Judge and Shah-E-Naaz Judge, locker No.7637-A in the joint names of
Shah-E-Naaz Judge and Sahyr Kohli and locker No. 7712-D in the joint
names of Sandeep Kohli and Shah-E-Naaz Judge in Delhi Safe Deposit
Company Ltd. as illegal, bad in law and without jurisdiction. Other prayers
made in the writ petition include quashing of proceedings initiated pursuant
to notice under Section 153A of the Act. The notices under Section 153A
and the proceedings initiated under Section 153A of the Act         relate to
Assessment Years 2009-10 to 2014-2015.

2.      Nagina Judge is sister of Shah-E-Naaz Judge and is a Non-Resident
Indian. Nagina Judge has not filed any writ petition. Nagina Judge, it was
stated, has filed a statutory appeal challenging the assessment order dated
10th March, 2017 under Section 153A of the Act.

3.      Precursor to the search warrants noted in paragraph 1 above, were
search and seizure operations under Section 132 of the Act at the residential
and business premises of Karamjit Singh Jaiswal on 10th June, 2014.
Karamjit Singh Jaiswal is the first cousin (Buas son) of Shah-E-Naaz
Judge. During the course of search at the residential premises of Karamjit
W.P. (C) No. 5937/2016+connected matters                          Pag e 2 of 36
Singh Jaiswal, key of locker No. 7325-A in the Delhi Safe Deposit
Company in the joint names of Nagina Judge and Shah-E-Naaz Judge was
found and seized. The panchnama/seizure memo specifically records that the
locker was in the name of Nagina J. Water and Shah-E-Naaz J. Kohli. We
are not concerned with the search and seizure operations and consequent
proceedings against Karamjit Singh Jaiswal.

4.      On 10th June, 2014 itself, a search team had visited Delhi Safe Deposit
Company Ltd. and on inquiry had learnt about locker No.7712-D in the joint
names of Sandeep Kohli and Shah-E-Naaz Judge and locker No. 7637-A in
joint names of Shah-E-Naaz Judge and Sahyr Kohli. On 10th June, 2014, a
restraint order under Section 132 (3) in respect of locker Nos.7325-A, 7712-
D and 7637-A was passed based upon search warrants under Section 132(1)
of the Act in the case of Karamjit Singh Jaiswal.

5.      For the purpose of present decision, we have gone through and
examined the satisfaction note in the case of Karamjit Singh Jaiswal or
Jaiswal Group. Three petitioners are not mentioned and their involvement is
not alluded to and alleged. The petitioners have stated that they do not have
any commercial, business or financial relation with Karamjit Singh Jaiswal,
Jaiswal Group or business entities managed by them. This factual position
is not denied by the respondents in the counter affidavit. The respondents,
however, rely on seizure of the key of locker No.7325-A from the residential
premises of Karamjit Singh Jaiswal on 10th June, 2014, which locker was in
the names of Nagina Judge and Shah-E-Naaz Judge.

6.      On 10th June, 2014, statement of Karamjit Singh Jaiswal was recorded
on oath under Section 132 (4) of the Act. Second and third question posed

W.P. (C) No. 5937/2016+connected matters                            Pag e 3 of 36
and the answer given by Karamjit Singh Jaiswal, which relate to locker
No.7325-A read as under:-

            "Q No.2 During the search at your residence i.e. The
            Green Rajokari a loker (sic) key mentioning locker
            No.7325 A with The Delhi Safe Deposit Co. Ltd was
            found. Please state to whom it belong?
            Ans.    The locker belongs to Ms. Nagina J. Water &
            Ms. Shah-e-naaz J. Kohli.
            Q. No.3 What is the relationship with Ms Nagina J.
            Water & Ms. Sheh-E-naaz J. Kohli and why there keys
            are kept here?
            Ans.     Ms. Nagina J. Water is my first cusion (sic) &
            Ms. Sheh-e-naaz J. Kohli is Nagina J. Waters sister. she
            (sic) was staying here till April 15, 2014. she (sic) is the
            resident of London and British Passport holder."
No other question or suggestion was put to Karamjit Singh Jaiswal.


7.      On 27th June, 2014, search warrant was issued in the names of Nagina
Judge, Shah-E-Naaz Judge, her husband Sandeep Kohli and her daughter
Sahyr Kohli in respect of three lockers. For the sake of convenience, we
would reproduce the relevant portions of the search warrant in the names of
Nagina Judge and Shah-E-Naaz Judge Kohli, which reads as under:-

            "Whereas information has been laid before me and on the
            consideration thereof I have reason to believe that:-
            x x x x xx
            ..........It a summons under sub-section (1) of section 37
            of the Indian Income-tax Act, 1922, or under sub-section
            (1) of section 131 of the Income-tax Act, 1961, or a
            notice under sub-section (4) of section 22 of the Indian

W.P. (C) No. 5937/2016+connected matters                              Pag e 4 of 36
            Income-tax Act, 1922, or under sub-section (1) of section
            142 of the Income-tax Act, 1961, is issued to Ms. Nagina
            Judge and Ms. Shah Naaz J. Kohli [name of the person]
            to produce, or cause to be produced, books of account or
            other documents which will be useful for, or relevant to,
            proceedings under the Indian Income-tax act, 1922, or
            under the Income-tax Act, 1961, he would not produce, or
            cause to be produced, such books of account or other
            documents as required by such summons or notice.
            Sarvashri/Shri/Shrimati Ms. Nagina Judge and Ms. Hah
            Naaz J. Kohli possession of money, bullion, jewellery or
            other valuables articles 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, or the Income-tax, 1961;
            And whereas I have reasons to suspect that such books of
            account, other documents, money, bullion, jewellery or
            other valuable articles or thing have been kept and are to
            be found in Locker No.7325-A, The Delhi Safe Deposit
            Co. Ltd., 86, Janpath, New Delhi
            (Specify            particular                of         the
            building/place/vessel/vehicle/aircraft);
            This to authorise and require you as mentioned over leaf
            [Name of the Deputy Director or of the Deputy
            Commissioner or of the Assistant Director or of the
            Asistant Commissioner or the Income-tax Officer]
            (a) to      enter      and       search            the   said
                building/place/vessel/vehicle/aircraft;
            (b) to search any person who has got out of, or is about to
                get        into,       or        is       in       the
                building/place/vessel/vehicle/aircraft if you have
                reason to suspect that such person has secreted about
                his person any such books of account, other


W.P. (C) No. 5937/2016+connected matters                               Pag e 5 of 36
                documents, money bullion, jewellery or other valuable
                article or think;
            (c) to place identification marks on such books of account
                and document as may be found in the course of search
                and as you may consider relevant to or useful for the
                proceeding aforesaid and to make a list thereof
                together with particular of the identification mark;
            (d) to examine such books of account and documents and
                make, or cause to be made, copies or extracts from
                such books of account and documents
            (e) to seize any such books of account, documents, money
                bullion, jewellery or other valuable article or thing
                found as a result of such search and take possession
                thereof;
            (f) to make a note or an inventory of any such money
                 bullion, jewellery or other valuable article or thing;
            (g) to convey such books of account, documents, money
                bullion, jewellery or other valuable article or thing to
                the office of the Deputy Commissioner of Income-tax
                or any other authority not below the rank of Income-
                tax Officer employed in the execution of the Income-
                tax Act, 1961: and
            (h) to exercise all other powers and perform all other
                functions under section 132 of the Income-tax Act,
                1961, and the rules relating thereto.
            You may requisition the services of any police officer or
            any officer of the Central Government, or of both, to
            assist you for all or any of the purposes specified in sub-
            section (1) of section 132 of the Income-tax Act, 1961. "
[We have omitted the portion which has been scored off in the warrant of
authorization dated 27th June, 2014 issued by the Additional Director of
Income-tax (Inv.)].

W.P. (C) No. 5937/2016+connected matters                              Pag e 6 of 36
8.      On opening, locker Nos. 7712-D and 7637-A were found to be empty.
Accordingly, nothing was seized and recovered. In locker No.7325-A in the
name of Nagina Judge and Shah-E-Naaz Judge, jewellery worth
Rs.49,73,295/- was found. Nagina Judge was questioned and her statement
on oath under Section 132 (4) of the Act was recorded on 27th June, 2014.
Nagina Judge had confirmed that she was a Non-Resident Indian residing in
the United Kingdom. For the last 2-3 years, she had been filing her wealth
tax and income tax returns in India. She would frequently visit India and
mostly reside with her cousin Karamjit Singh Jaiswal. With reference to the
locker key and jewellery found, the following questions and answers were
put to and given by Nagina Judge:-

                "Q. No.9        Where do you keep your locker key
                usually?
                Ans Generally, I keep my locker key in my sister
                house S-137, Panchsheel Park, New Delhi or in
                London or in Chandigarh or in Rajokari.
                Q. No.10        When you have operated your locker last
                time?
                Ans. 27th March, 2014 or in last week of March,
                2014.
                Q. No.11 Please explain how your locker key has
                gone at 6, The Green Rajokari, New Delhi in Karamjit
                Singh Jaiswal Houses.
                Ans. I was staying with him before I left for London
                in first week of April, 2014 and I was due to return
                shortly after. So I left the key alongwith other
                personal affect in his residence.
                Q. 12.            As per the valuation of your
                jewellery total Net weight is 1868.900 gms whereas
W.P. (C) No. 5937/2016+connected matters                             Pag e 7 of 36
                no wealth tax return is filed by you. So you are
                entitled only 500 gms of jewellery. Please explain
                why rest of the jewellery may be seized?
                Ans. It was not filed previously as I only acquired the
                jewellery in March, 2014.
                Q. No.13. Please explain from where you have
                acquired the jewellery in March, 2014?
                Ans. My sister & I divided my late mother jewellery
                in March 2014. Although she had passed away in
                November 2011.
                Q. No.14. Do you have any proof that you and your
                sister have divided the jewellery in the m/o March
                2014 which pertain to your deceased mother?
                Ans. We have no return (sic) proof but we have a
                witness and we both can swear an affidavit to that
                affect.
                Q. No.15 How much jewellery you have received
                from the said distribution of your mother jewellery?
                Ans. As of today it was evaluated at Rs.49 lacs. Out
                of this most of it pertains to my mother.
                Q. No.16. Please explain did your mother was filing
                wealth tax return before expire as most of the share of
                jewellery as stated by you pertains to your mother?
                Ans. I am not sure.
                Q. No.17.       Do you want to say anything else?
                Ans. No. Thanks. "

        Nagina Judge had subsequently filed an affidavit dated 18th
November, 2016 accepting that the jewellery found belonged to her and not
her sister.


W.P. (C) No. 5937/2016+connected matters                             Pag e 8 of 36
9.      Pertinently, Shah-E-Naaz Judge was not examined on oath under
Section 132 (4) of the Act, though she was present when the three lockers
were forced open on 27th June, 2014.

10.     We, however, would notice the contention of the Revenue that
Nagina Judge had subsequently oscillated as in her subsequent letter dated
27th February, 2017, she had stated:-

                "As per the last Wealth Tax Return the jewellery of
                Mrs. Surinder Ajeet Judge (mother) was 740 gms.
                Thus the balance jewellery owned by both sisters is
                1128.90 gms. as computed below:-
                Jewellery accounted by M/s Swastic                 1868.90 gms
                Jewellers, 1668, Dariba Kalan, Delhi-110006

                Less Jewellery declared by Mrs. Surinder Ajeet Judge 740.00 gms

                Balance jewellery jointly owned by Mrs.Nagina
                Judge and Mrs. Shah Naaj. J. Kohli                 1129.90 gms

                The Jewellery in the hands of Mrs. Nagina Judge
                is 1 ½ of the aforesaid quantity i.e.               564.45 gms"


        We shall subsequently deal with the said contention and the argument
of the respondent that "statements of the petitioners and Nagina Judge were
not credible and ex-facie untruthful and designed to pervert the cause of
justice."

11.     The primary contention and submission of the respondents is that on
discovery of key of locker No.7325-A, consequential search warrants dated
27th June, 2014 were issued under Section 132 (1A) for search of the three
lockers. These consequential warrants of authorization under sub-section
(1A) to Section 132 were issued against the searched person i.e. Karamjit
W.P. (C) No. 5937/2016+connected matters                                   Pag e 9 of 36
Singh Jaiswal and not the petitioners. Validity of these search warrants should
meet the parameter and the test of "reasons to suspect" and not on the legal
requirement of "reason to believe". A lower test and requirement of "reason to
suspect" is sufficient. This plea and reference to Section 132 (1A) of the Act
was specifically taken and made in the written submissions dated 6 th
December, 2017, described as written statement, filed before us by the
respondents. The submission asserts that the petitioners have misinterpreted the
search and seizure actions as the search was in respect of the lockers and not
against the petitioners in person. However, in the counter affidavit dated 27th
March, 2018 filed to the amended W.P. (C) No.5937/2016 in the case of Shah-
E-Naaz Judge, the respondents had taken a different stand and stance. They
have stated that warrants of authorization dated 27th June, 2014 in the present
case were issued under clause (i) to sub-section (1) to Section 132 in respect of
the place i.e. locker, on the basis of "reasons to suspect" as key of locker
No.7325-A was discovered and seized during the course of search under
Section 132(1) in the case of Karamjit Singh Jaiswal and it was learnt
subsequently that Shah-E-Naaz Judge, who was joint holder of locker No.7325-
A with Nagina Judge, was also joint holder with her husband Sandeep Kohli and
daughter Sahyr Kohli of locker Nos.7712-D and 7637-A respectively, in Delhi
Safe Deposit Company Ltd. "Reasons to believe" with reference to sub-sections
(a) (b) and (c) to Section 132(1) was against or qua the person, whereas warrant
of authorization qua place or location under clause (i) to Section 132 (1) do not
require recording of "reasons to believe". Warrants of authorization qua the
place/location i.e. the lockers, was issued on the basis of "reasons to suspect".
For clarity, we would like to reproduce the stand taken by the respondents in









W.P. (C) No. 5937/2016+connected matters                              Pag e 10 of 36
response to ground V and paragraph 29 of the counter affidavit, which
reads:-
                "V. During the search and seizure operation under
                section 132(1) of the Act on 10.06.2014 in the case of
                Mr. Karamjit Singh Jaiswal (the "searched person") at
                6, The Green Rajokari, New Delhi which was duly
                authorized by the Director of Income-tax
                (Investigation)-II, Delhi after recording the 'reason to
                believe' with respect to conditions of section 132(1)(b)
                and 132(1)(c) of the Act qua person, key of the subject
                locker no. 7325-A maintained with The Delhi Safe
                Deposit Co. Limited, New Delhi was unearthed. The
                petitioner was the joint holder of the said locker No.
                7325-A with her sister Ms. Nagina Judge. Following
                discovery of the key of the Locker No. 7325-A, a
                restraint order under section 132(3) of the Act was
                issued in respect of the locker on 10.06.2014.
                Subsequently, the locker was searched by the warrant
                issued under section 132(1) of the Act."
                xxx
                "29. That before issuing the warrant of authorization
                under section 132(1) of the Act, reason to believe with
                respect to conditions mentioned under section
                132(1)(a) or 132(1)(b) or 132(1)(e) of the Act is qua
                person. Under section 132(1)(i) of the Act, the
                warrant of authorization qua place is on the basis of
                reason to suspect. In the present case, as mentioned
                above, pursuant to discovery of the key of the locker
                no. 7325-A during the search under section 132(1) of
                the Act in the case of Shri Karamjit Singh Jaiswal
                from his residential premise on 10.06.2014 which was
                duly authorized by the Director of Income-tax
                (Investigation)-II, Delhi after recording the 'reason to
                believe/satisfaction note with respect to conditions of
                section 132(1)(b) and 132(1)(c) of the Act qua person
                and detection of the other two lockers during
                subsequent investigation, consequential warrants of
W.P. (C) No. 5937/2016+connected matters                              Pag e 11 of 36
                authorization dated 27.06.2014 were issued as per the
                provisions of section 132(1)(i) of the Act to search the
                above-mentioned three lockers. The consequential
                warrants of authorization under section 132(1) of the
                Act were issued to search these lockers after
                recording the satisfaction note with respect to the
                requisite conditions including under section 132(1)(b)
                and 132(1)(c) of the Act. Once a warrant of
                authorization under section 132 of the Act is issued
                and executed, the Assessing officer is required to
                issue notice under section 153A of the Act."

 12. Search and seizure provisions in the Act introduced by Finance Act,
1964 have undergone a number of amendments including substantial
amendments made by the Taxation Laws (Amendment) Act, 1975 and
Direct Tax Laws (Amendment) Act, 1987. Sections 132(1) and 132(1A) of
the Act as they exist read as under:-

                "132. (1) Where the Principal Director General or
                Director General or Principal Director or Director or
                the Principal Chief Commissioner or Chief
                Commissioner or Principal Commissioner or
                Commissioner or Additional Director or Additional
                Commissioner or Joint Director or Joint
                Commissioner in consequence of information in his
                possession, 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


W.P. (C) No. 5937/2016+connected matters                              Pag e 12 of 36
                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),
                then,--
                (A) the Principal Director General or Director General
                or Principal Director or Director or the Principal
                Chief Commissioner or Chief Commissioner or
                Principal Commissioner or Commissioner, as the case
                may be, may authorise any Additional Director or
                Additional Commissioner or Joint Director, Joint
                Commissioner, Assistant Director or Deputy Director,
                Assistant Commissioner or Deputy Commissioner or
                Income-tax Officer, or
                (B) such Additional Director or Additional
                Commissioner or Joint Director, or Joint
                Commissioner, as the case may be, may authorise any
                Assistant Director or Deputy Director, Assistant
                Commissioner or Deputy Commissioner or Income-
                tax Officer,


W.P. (C) No. 5937/2016+connected matters                              Pag e 13 of 36
                (the officer so authorised in all cases being hereinafter
                referred to as the authorised officer) to--
                (i) 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) 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;
                (iia) 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;
                (iib) 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 Technology Act, 2000 (21 of
                2000), to afford the authorised officer the necessary
                facility to inspect such books of account or other
                documents;
                (iii) 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;


W.P. (C) No. 5937/2016+connected matters                                 Pag e 14 of 36
                (iv) place marks of identification on any books of
                account or other documents or make or cause to be
                made extracts or copies therefrom;
                (v) 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 Principal Chief
                Commissioner or Chief Commissioner or Principal
                Commissioner or Commissioner, but such Principal
                Chief Commissioner or Chief Commissioner or
                Principal 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
                Principal Chief Commissioner or Chief Commissioner
                or Principal Commissioner or Commissioner having
                jurisdiction over such person may be prejudicial to the
                interests of the revenue :
                Provided further that 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 under
                clause (iii):



W.P. (C) No. 5937/2016+connected matters                                 Pag e 15 of 36
                Provided also that nothing contained in the second
                proviso shall apply in case of any valuable article or
                thing, being stock-in-trade of the business:
                Provided also that no authorisation shall be issued by
                the Additional Director or Additional Commissioner
                or Joint Director or Joint Commissioner on or after
                the 1st day of October, 2009 unless he has been
                empowered by the Board to do so.
                37[Explanation.--For the removal of doubts, it is
                hereby declared that the reason to believe, as recorded
                by the income-tax authority under this sub-section,
                shall not be disclosed to any person or any authority
                or the Appellate Tribunal.]
                (1A) Where any Principal Chief Commissioner or
                Chief Commissioner or Principal Commissioner or
                Commissioner, in consequence of information in his
                possession, has reason to suspect that any books of
                account, other documents, money, bullion, jewellery
                or other valuable article or thing in respect of which
                an officer has been authorised by the Principal
                Director General or Director General or Principal
                Director or Director or any other Principal Chief
                Commissioner or Chief Commissioner or Principal
                Commissioner or Commissioner or Additional
                Director or Additional Commissioner or Joint
                Director or Joint Commissioner to take action under
                clauses (i) to (v) of sub-section (1) are or is kept in
                any building, place, vessel, vehicle or aircraft not
                mentioned in the authorisation under sub-section (1),
                such Principal Chief Commissioner or Chief
                Commissioner or Principal Commissioner or
                Commissioner may, notwithstanding anything
                contained in section 120, authorise the said officer to
                take action under any of the clauses aforesaid in
                respect of such building, place, vessel, vehicle or
                aircraft.


W.P. (C) No. 5937/2016+connected matters                             Pag e 16 of 36
                [Explanation.--For the removal of doubts, it is hereby
                declared that the reason to suspect, as recorded by the
                income-tax authority under this sub-section, shall not
                be disclosed to any person or any authority or the
                Appellate Tribunal.]"
13.     In Pooran Mal Vs. the Director of Inspection (Investigation), New
Delhi and Ors. (1974) 1 SCC 345, constitutional and legal validity of
Section 132 was upheld relying on the inbuilt safeguards in the section itself
including the condition that exercise of this power of search and seizure can
follow only on a reasonable belief being entertained by an officer that any of
the three conditions mentioned in clauses (a), (b) and (c) to Section 132(1)
are satisfied.       These reasons have to be recorded in writing before
authorization is issued to the officer to conduct search and seizure. The
Supreme Court observed that the provisions were evidently directed against
persons who are believed on good grounds to have illegally evaded the
payment of tax on their income and property. Drastic measure to get at such
income and property for recovery of government dues were justified and
required. The search and seizure provisions were reasonable restrictions and
curbs on the freedoms mentioned under Article 19 (1)(f) and (g) of the
Constitution.

14.     The aforesaid legal position, viz., on the statutory mandate to record
"reasons to believe" and their nexus with the three pre-conditions in clauses
(a), (b) and (c) to Section 132 was thereafter emphasized and elucidated by
the Supreme Court in Director General of Income Tax (Investigation),
Pune and Ors. Vs. Spacewood Furnishers Private Limited and Ors. (2015)
12 SCC 179, which also refers to an earlier decision of the Supreme Court in
ITO Special Investigation Circle-B, Meerut Vs. Seth Brothers & Ors.etc.

W.P. (C) No. 5937/2016+connected matters                             Pag e 17 of 36
(1969) 2 SCC 324 and Partap Singh Vs. Director of Enforcement Foreign
Exchange Regulation Act & Ors. (1985) 3 SCC 72. Spacewood Furnishers
Private Limited (supra) has laid down the following principles:-

            "8. The principles that can be deduced from the
            aforesaid decisions of this Court which continue to hold
            the field without any departure may be summarised as
            follows:
            8.1. The authority must have information in its
            possession on the basis of which a reasonable belief can
            be founded that--
            (a) the person concerned has omitted or failed to produce
            books of account or other documents for production of
            which summons or notice had been issued
            Or
            such person will not produce such books of account or
            other documents even if summons or notice is issued to
            him
            Or
            (b) such person is in possession of any money, bullion,
            jewellery or other valuable article which represents
            either wholly or partly income or property which has not
            been or would not be disclosed.
            8.2. Such information must be in possession of the
            authorised official before the opinion is formed.
            8.3. There must be application of mind to the material
            and the formation of opinion must be honest and bona
            fide. Consideration of any extraneous or irrelevant
            material will vitiate the belief/satisfaction.
            8.4. Though Rule 112(2) of the Income Tax Rules which
            specifically prescribed the necessity of recording of
            reasons before issuing a warrant of authorisation had

W.P. (C) No. 5937/2016+connected matters                            Pag e 18 of 36
            been repealed on and from 1-10-1975 the reasons for the
            belief found should be recorded.
            8.5. The reasons, however, need not be communicated to
            the person against whom the warrant is issued at that
            stage."
15.     The Supreme Court in H.L. Sibal Vs. CIT (1975) 101 ITR 112
(P&H), Dr. Nand Lal Tahiliani Vs. CIT & Ors. (1988) 170 ITR 592 (All),
L.R. Gupta & Ors. Vs. UOI & Ors. (1992) 194 ITR 32 (Del), Ajit Jain Vs.
UOI (2000) 242 ITR 302 (Del) and Madhu Gupta Vs. DIT (Inv.) & Ors.
(2013) 350 ITR 598 (Del.), elucidate on compliance and satisfaction of the
conditions of sub-clauses (a), (b) and (c) to Section 132 of the Act as
recorded in the "reasons to believe", which formation of opinion must be in
good faith and not mere pretence and subterfuge on the part of the
authorities. The Court while examining the said reasons would not adjudge
or test adequacy and sufficiency of the grounds, but could go into the
question and examine rational connection between the information or
material recorded and formation of the belief as to satisfaction of conditions
specified in clauses (a), (b) and (c) to Section 132 (1) of the Act. The
"reasons to believe" as recorded should have relevant bearing on formation
of the belief, for the search warrants cannot be issued for making a fishing
and roving inquiry. The test and parameters of reasonable man is applied.
We would to avoid prolixity not quote from the aforesaid decisions, except
the decision in the case of Madhu Gupta (supra) as in the said case, an
identical plea relying upon the language of clause (i) to Section 132(1) of the
Act was raised to submit that "reasons to suspect" and not "reasons to
believe" were suffice in cases of consequential search. In the said case
widow of the ex-Director, who had died, had been subjected to search on the
W.P. (C) No. 5937/2016+connected matters                            Pag e 19 of 36
ground that there was evidence and material that the assessee as a group was
in possession of unaccounted income in the form of money, bullion,
jewellery and other valuable articles or things or papers relating to the
undisclosed or benami properties as "these are likely to be found at the
residence and business premises of the group members, their associates and
family members". The reasons recorded to justify the search had stated
there was a close relationship between the widow of the ex-Director and the
group and it was likely that accounts relating to undisclosed income, sales
etc. would be kept at her premises. The search was held to be illegal and
violating Section 132 (1), as the provisions permit and authorize search on
the basis of credible information and not mere suspicion. There must be
nexus between the information and the "reasons to believe". Information,
which is relied upon must not be in the nature of surmise or conjecture but
must have tangible backing and some basis. It should not be mere ipse dixit
but based upon reason. Simple "believe" was not sufficient, albeit
satisfaction note must itself indicate and show whether the belief falls under
clause (a), (b) and (c) to Section 132 (1) of the Act. "Likelihood and
predisposition" in the "reasons to believe" for authorizing search at the
residence of Madhu Gupta, widow of the ex-Director were held to be in
nature of surmise and conjecture. Hence, the authorization was not
predicated on information. Another reason given for accepting the writ filed
by Madhu Gupta was that warrant of authorization under Section 132(1) had
been issued in the name of Madhu Gupta. Therefore, there was need and
requirement that "reasons to believe" should have recorded the connection
between her and the group subjected to search. The "reasons to believe" thus


W.P. (C) No. 5937/2016+connected matters                           Pag e 20 of 36
did not satisfy the requirement of clauses (a), (b) and (c) to Section 132(1) of
the Act.

16.     Before we delve on some other decisions striking down searches in
cases of bank lockers, it would be appropriate and proper to quote the
satisfaction note recorded in the present cases dated 27th June, 2014 on the
basis of which warrants of authorization quoted above have been issued. The
satisfaction note reads as under:-

                "During the course of search on 10.06.2014 at the
                residential premise of Shri Karamjit Singh Jaiswal, 6,
                The green Rajokar, New Delhi in the case of Jaiwal
                Group of cases, information has been received that
                following persons are maintaining lockers in
                banks/Vaults mentioned against each of them:
                SI      Name of Locker holder   Name of bank Locker No.
                No.                             and Branch

                1       Ms. Nagina Judge Ms. The      Delhi Locker
                        Shah e Naaj J. Kohli Safe Deposit No.7325A
                                             Co. Ltd, 86,
                                             Janpath, New
                                             Delhi
                2       Sandeep Kohli & Ms. The       Delhi Locker
                        Shah e Naaz J. Kohli Safe Deposit No.7712 D
                                             Co. Ltd, 86,
                                             Janpath, New
                                             Delhi
                3       Ms. Shah e Naaz J. The       Delhi Locker
                        Kohli & Sahyr Kohli Safe Deposit No.7637-A
                                            Co. Ltd, 86,
                                            Janpath, New
                                            Delhi


                In my opinion, the lockers may contain valuables such
                as cash, jewellery, FDRs and other important
                documents, etc, which represent either wholly or
W.P. (C) No. 5937/2016+connected matters                              Pag e 21 of 36
                partly income or property not disclosed or would not
                be disclosed for the purpose of Income Tax Act, 1961,
                even if, summons u/s 131 of the I.T. Act, are issued to
                them. Accordingly, it is requested that three (3
                warrants) consequential warrants of authorization in
                the name of persons and lockers as mentioned above
                may be issued to search/seal the above lockers in the
                banks."
17.     The satisfaction note dismally ignores the statutory mandate and
requirements of clauses (a), (b) and (c) of Section 132 (1) of the Act. Note
begins by referring to the factum that residential premise of Karamjit Singh
Jaiswal was subjected to search on 10th June, 2014. Thereafter, it states that
information had been received that three bank lockers were being
maintained in Delhi Safe Deposit Co. Ltd. at Janpath, New Delhi. Without
referring to any "information" in the form of material and evidence, the note
proceeds to imprudently and on pretence record "In my opinion, the lockers
may contain valuables such as cash, jewellery, FDRs and other important
documents, etc, which represent either wholly or partly income or property
not disclosed for the purpose of Income Tax Act, 1961, even if, summons
u/s 131 of the I.T. Act, are issued to them." The satisfaction note woefully
forms the negative conclusion and finding without referring to material and
evidence that had led and prompted the author to reach the denouncement.
Use of the word "may" to presume presence of undisclosed assets in the
locker, given the absence of reference to even a single shred of evidence and
material to justify the inference, reflect and establishes supine indifference
to the statute and constitutional guarantee that "right to privacy" should not
be impinged and violated on mere posturing and pretentiousness. The first
paragraph does not elucidate the information and details available with the

W.P. (C) No. 5937/2016+connected matters                             Pag e 22 of 36
authorities. Indeed, none are available to be found in the original produced
before us. Conspicuously, the note does not refer to the statement of
Karamjit Singh Jaiswal recorded on 10th June, 2014 in respect of locker
No.7325-A. No attempt was made to verify and ascertain when and who
had operated the said locker and who was paying rent for the said locker.
Keys of locker No.7712-D and locker No.7637-A were not found during the
course of search at the residential premises of Karamjit Singh Jaiswal.
Details with regard to operation of these lockers had not been ascertained on
10th June, 2014, when the search team had visited Delhi Safe Deposit Co.
Ltd. at Janpath. The satisfaction note is precipitously silent on any business
connection, link and association between the petitioners and the Jaiswal
Group or Karamjit Singh Jaiswal, who had been subject to search and
seizure operations. Lockers were not subjected to search to unearth
undisclosed and concealed assets of Jaiswal Group or Karamjit Singh
Jaiswal.     Accordingly, we have no hesitation in holding that the three
"consequential" warrants of authorization issued in the name of persons and
lockers for search/seizure, therefore, do not meet the mandate and
requirement of clauses (a), (b) and (c) of Section 132 of the Act. We would
now refer to some judgments relating to search and seizure operations in
case of lockers.

18.     In Lajpat Rai v. Commissioner of Income Tax (1995) 215 ITR 608
(All), locker key was found in residence of petitioner no. 1 therein during
search and seizure operation. Request for issue of consequential warrant of
authorization for search of locker was made 25 days after the earlier search.
The Court observed that the authorities had sufficient opportunity to peruse
the material already seized from the residential premises and inspite of time
W.P. (C) No. 5937/2016+connected matters                           Pag e 23 of 36
and opportunity, the report did not contain any material or reason to justify
search of the locker.            Consequently, the authorization was based on
irrelevant consideration and was quashed. This verdict highlights need to
protect citizens from unnecessary and unsubstantiated assertion resulting in
breach and violation of right to privacy. Search is not valid when there was
no material and evidence to justify intrusion and interference. In the present
case also, there was time gap between the date of search on 10th June, 2014,
i.e., the date of the seizure of locker key, and the date of authorization i.e.
27th June, 2014. The respondent authorities, therefore, had sufficient time to
ascertain and verify facts and form an informed and considered opinion. We
have also quoted the questions put and answers given by Karmajit Singh
Jaiswal on 10th June, 2014 on the locker key. Satisfaction note does not state
that any attempt was made to verify and ascertain facts post discovery of the
locker key.      The note had not indicated that the statement on oath by
Karamjit Singh Jaiswal was incorrect and false. On the other hand, assertion
of Karamjit Singh Jaiswal that the locker key belonged to his cousins was
found to be correct. On 10th June, 2014 and even subsequently Karamjit
Singh Jaiswal was not questioned that the locker belongs to him or stores
assets belonging to him. No attempt was made to verify and question Shah-
E-Naaz Judge on these aspects. As stated above, the last paragraph of the
satisfaction note, without adverting to any fact and evidence records that the
authors opinion that the locker "may" contain valuables such as cash,
jewellery, FDRs and other important documents etc. This would not meet
the statutory requirement on formation of opinion with reference to
information and material.


W.P. (C) No. 5937/2016+connected matters                            Pag e 24 of 36
19.     In Ameeta Mehra Vs. Additional Director of Income-tax (Inv)-Unit
(2017) 395 ITR 185 (Delhi) in similar circumstances a locker key belonging
to Ameeta Mehra was found in the residential and business premises of the
person searched. Consequential search warrant was issued after recording
the satisfaction note. Consequential search was struck down observing that
the satisfaction note must contain credible information to trigger search
action. Mere recovery of a lockers key by itself would not be sufficient
justification for such search unless the person searched had some link in the
business or otherwise connected activities of the person searched. Secondly,
the opinion recorded in the satisfaction note must show nexus to the
formation of the belief that Ameeta Mehra was in possession of money,
jewellery or valuables representing her income which had not been
disclosed.       The decision upholds that the courts in a limited way can
examine whether the belief formed was devoid of any basis and irrational in
the extreme sense to fall foul of the Clapham Omnibus test. It was observed
as under:-






             "20. Turning to the case on hand, in the first place there
             is nothing in the Satisfaction Note to indicate that there
             was any credible information available with the
             Department that the Petitioner belonged to the ,,Nanda
             Group who were being searched. It must be recalled
             that the Petitioner is a regular Assessee. The information
             needed to trigger the search action against the Petitioner
             had to be such that would show that she is linked in
             some manner to the business or other activities of the
             ,,Nanda Group. Secondly such information had to have
             a nexus to the belief that could be reasonably formed
             that she is in possession of any money, jewellery or
             valuable representing her income which has not been or
             would not be disclosed by her. The mere fact that the

W.P. (C) No. 5937/2016+connected matters                              Pag e 25 of 36
            key to the locker which she was operating was found
            during the search of her uncle Mr Suresh Nanda would
            not constitute 'information' leading to the reasonable
            belief that the locker would contain jewellery, or other
            valuable articles which she would not have disclosed in
            her returns. There obviously had to be something more.
            Therefore the jurisdictional pre-condition justifying the
            invocation of the power of search under Section 132 (1)
            of the Act against the Petitioner, was not fulfilled in the
            present case.
            21. The counter affidavit filed by the Respondents
            suggests that they were not treating the Petitioner as part
            of the Nanda Group. In such event, there was no basis at
            all in proceeding to issue a search authorisation in the
            name of the Petitioner since the locker key was found
            during the search of the Nanda Group. Mr. Ruchir
            Bhatia, learned counsel appearing for the Revenue,
            however, urged that this Court should not go by what is
            stated in the counter affidavit but only by what is stated
            in the Satisfaction Note. Even then, the Satisfaction Note
            does not throw any further light on how the authority
            could form a reasonable belief that the Petitioner was
            connected with the Nanda Group and that her locker
            would contain money, jewellery etc that constituted her
            undisclosed income.
            22. Mr. Bhatia repeatedly urged that the mere fact that
            nothing was found in the locker, would not for that
            reason alone, render the search illegal. This proposition
            is unexceptionable and to be fair to Mr M. S. Syali,
            learned Senior counsel for the Petitioner, he did not
            contest it. In fact the legal position in this regard stands
            settled in Income Tax Officer v. Seth Brothers (supra).
            However, the issue here is not what happened during or
            after the search but the absence of the jurisdictional pre-
            condition justifying it. In the absence of any credible
            information that could lead to the reasonable belief that
            the Petitioner was in possession of money, jewellery etc

W.P. (C) No. 5937/2016+connected matters                               Pag e 26 of 36
            that constituted income that she has not or would not
            have disclosed, no search warrant qua her locker could
            have been issued. Further, the Satisfaction Note had to
            reflect the basis on which the reasonable belief was
            entertained. The one shown to the Court fails on this
            score.
            23. The Respondent's search of the Petitioner was a
            classic case of a ,,false start. It was without legal basis.
            What were the options available to the Respondents
            when they came across the locker key when they
            searched Mr Suresh Nanda? The first step was to seal
            the locker. In fact they did so by issuing an order under
            Section 132 (3) of the Act. However, instead of
            immediately jumping to conclusions against the
            Petitioner, and before actually searching the locker by
            lifting the restraint order, the Respondents ought to have
            investigated further and gathered some credible
            information that could lead them to form a reasonable
            belief that (i) she was linked to the activities of the
            Nanda Group and (ii) her locker might contain money,
            jewellery etc that constituted undisclosed income. Only
            then was a search warrant qua her justified.
            Alternatively, they may have opted to proceed against
            her under Section 153 C of the Act. That too would have
            required two Satisfaction Notes: one by the AO of the
            searched person followed by one by her own AO.
            However, in the present case, the Respondents did not
            opt for the alternative."

20.     This judgment refers to an earlier decision of Allahabad High Court in
the case of Smt.Kavita Agarwal & Anr. v. Director of Income Tax
(Investigation) & Ors. (2003) 264 ITR 472 (All). This again was a case in
which during the course of search, keys of three lockers were found and
seized. Thereafter, search warrants were issued simply on the ground that
the keys of the lockers have been found during the course of search. The

W.P. (C) No. 5937/2016+connected matters                               Pag e 27 of 36
warrants of authorization were struck down observing that the respondent
authorities had failed to disclose the material and information on the basis of
which they had entertained the belief recorded that the lockers contained
money, jewellery, valuables and other articles representing disclosed
income. Formation of belief by the authorities justifying the search must be
based upon relevant information or material to satisfy the mandate of
Section 132 (1) of the Act. This decision clearly holds that the law requires
existence of "reasons to believe" and not "reasons to suspect". This was
despite use of the expression "reasons to suspect" in clause (i) to Section
132 (1) of the Act.

21.     Notwithstanding use of the expression "reason to suspect" in clause
(i) to Section 132 (1) of the Act, the Supreme Court in its earlier judgments
in Seth Brothers, Pooran Mal and Spacewood Furnishers Private
Limited(supra) has consciously emended to the effect that satisfaction in the
form of "reasons to believe" is required and mandated by law. Decision of a
Division Bench of this court in Madhu Gupta (supra) had rejected a similar
argument that "reasons to suspect" and not "reason to believe" are sufficient.
In the present case like in the case of Madhu Gupta, warrants of
authorization was issued in respect of three lockers in the name of
petitioners and Nagina Judge. These warrants of authorization were not
issued and executed against Karamjit Singh Jaiswal.

22.     There could be a good ground and reason why the legislature has used
expression "reasons to suspect" in clause (i) or even for that matter in sub -
section (1A) to Section 132 of the Act, while the expression "reasons to
believe" is used in sub-section (1) to Section 132 of the Act. Clause (i) to


W.P. (C) No. 5937/2016+connected matters                            Pag e 28 of 36
Section 132 (1) refers to search of any building, place, vessel, vehicle or
aircraft where it is suspected that ,,such books of account, other documents,
money, bullion, jewellery or other valuable articles or things are kept. The
word ,,such is with reference to books of account, documents, money,
bullion, jewellery or other valuable articles or things etc. referred to in
clauses (a), (b) and (c) to Section 132 (1) of the Act. The legislature felt it
appropriate to state and clarify that the same quality or material and
information was not required to justify when consequential search of
a building, place, vessel, vehicle or aircraft under clause (i) of the Section
132 (1) of the Act is undertaken, for search would be in continuation of the
authorized search recording the "reasons to believe".               Consequential
warrants would be justified in cases where the exact location of the
offending articles, books of accounts etc. for which search had been initiated
by recording reasons to believe is unknown or had been shifted and re-
located to avoid detection and seizure. In such circumstances, the "reasons
to believe" must meet the requirements of clauses (a), (b) or (c) of Section
132(1) of the Act, albeit the authorized officer directing consequential
search must record and state the reason why another place, building, vehicle
etc. was being subjected to search. Some latitude and stringent requirements
in comparison may not be required when the satisfaction note records the
reason for issue of warrants of authorization under clause (i) of Section
132(1) of the Act. However, the satisfaction note in such cases must evince
and bespeak this reason.                   Confluence and connection between the
justification and reasons to believe recorded earlier meeting the mandate of
clause (a), (b) and (c) of Section 132(1) and the consequential warrant of
authorization under clause (i) of Section 132(1) of the Act should be

W.P. (C) No. 5937/2016+connected matters                               Pag e 29 of 36
indicated and so stated. Clause (i) of Section 132(1) of the Act is not a
substitute and an independent provision to authorize search and seizure
operations against third persons not included and subjected to the search
after recording "reasons to believe". Connection and link between "such"
assets, articles etc. of the person subjected to search and the place, building
etc. to be intruded and subjected to search must be elucidated by setting out
"reasons to suspect" why "such" infringing articles could be found in the
place, building, vehicle etc. mentioned in the authorization under clause (i)
to Section 132(1) of the Act. Appropriate in this regard would be the
following observations of the Allahabad High Court in Motilal and Ors. Vs.
Preventive Intelligence Officer, Central Excise and Customs, Agra & Ors.
(1971) 80 ITR 418 (All), wherein it was observed as under:-

            " It is clear that the articles or things referred to in Sub-
            section (3) of Section 132 are those which the authorised
            officer was empowered to search for and seize and no
            other. That is plain from the language of subsection (3),
            which refers to "such books of account, other document,
            money, bullion, jewellery...", that is, those articles or
            things which are the subject of authorisation
            under Section 132(1)(c). They must be articles or things
            which may be necessary to search for before they can be
            seized. That is clear from the nature of the powers
            conferred upon the authorised officer under Clauses (i)
            to (v) contained in Section 132(1). Clause (i) empowers
            him to enter and search a building or place where he has
            reason to suspect that the article or thing is kept.
            Obviously, that would not include a case where it is
            already known that the article or thing is kept in a certain
            building or place and will ordinarily be yielded up by the
            person holding custody of such article or thing. That
            conclusion is reinforced when we refer to the further
            power conferred by Clause (ii) which enables the

W.P. (C) No. 5937/2016+connected matters                                Pag e 30 of 36
            authorised officer to break open the lock of any door,
            box, locker, safe, almirah or other receptacle when the
            keys thereof are not available. The power to seize, it is
            clear from Clause (iii), is contemplated in the case of
            those articles or things found as a result of such search.
            In my opinion, the power conferred under Section
            132(1) is contemplated in relation to those cases where
            the precise location of the article or thing is not known
            to the income-tax department and, therefore, a search
            must be made for it, and where it will not be ordinarily
            yielded over by the person having possession of it and,
            therefore, it is necessary to seize it. If it is only such
            article or thing which is contemplated by Section 132(1),
            then it is such article or thing alone which can be the
            subject of an order under Section 132(3), I am unable to
            accept the contention on behalf of the income-tax
            department that Section 132(3) will include a case where
            the location of the article or thing is known and where
            ordinarily the person holding custody of it will readily
            deliver it up to the income-tax department. Such article
            or thing, I think, requires neither search nor seizure."

23.     In Motilal and Ors. (supra), it was held that where an article, money
or bullion is already seized, search under clause (i) to Section 132(1) of the
Act cannot be authorized. Ratio of this decision was upheld by the Supreme
Court in Commissioners of Income Tax Haryana, Himachal Pradesh and
Delhi & Ors. Vs. Tarsem Kumar and Anr. (1986) 161 ITR 505 (SC). The
aforesaid ratio exposits the object and purpose behind using the expression
"reasons to suspect" with reference to "such" books of account, bullion,
articles etc. The expression "reasons to suspect" used in clause (i) and sub -
section (1A) to Section 132 is not to dilute the requirement of "reasons to
believe" but to only clarify that on occasions authorities will not know the
exact location or the place where the offending books of account, money,

W.P. (C) No. 5937/2016+connected matters                             Pag e 31 of 36
bullion etc., may be kept for which consequential warrant of authorization
can be issued. We are conscious and aware that "such" documents, articles
etc. can be hidden off and kept with third parties and clandestinely
concealed at different places and locations to prevent seizure and hamper
investigation. It is in this context that a Division Bench of this Court in
Strategic Credit Capital Pvt. Ltd. & Ors. Vs. Ratnakar Bank Ltd. & Anr.
(2017) 395 ITR 391 (Del) had observed that Section 132 (1) of the Act
envisages that a person could be in possession of undisclosed income not
only in his or her own bank account but in the bank account of someone
else. Thus, the legislature had deliberately used the word "any" to preface
safe, locker, place, books of accounts and not "his" "her" or "its".
Therefore, in a given case, the satisfaction note which records reasons to
believe could also record the reasons why a third person is being searched
not for his own income, books of account etc. but because he has in his
custody the books of account, money, bullion etc. belonging to a third
person, who is subjected to search.

24.     We would, therefore, not re-write the decisions of the Supreme Court
and Delhi High Court and hold that "reasons to suspect" and not "reasons to
believe" were sufficient to conduct a search of the lockers in question. The
need and requirement to record "reasons to believe", which is the statutory
mandate was required and necessary in the present case, in the absence of
the satisfaction of the condition and requirements of clause (i) to Section
132(1) of the Act in the satisfaction note.

25.     Having recorded the aforesaid findings, we would now deal with
supplementary or ancillary arguments raised by the respondents in the


W.P. (C) No. 5937/2016+connected matters                          Pag e 32 of 36
counter affidavit. Shah-E-Naaz Judge in the original writ petition had not
specifically challenged the search in her locker No.7325-A. Her stand and
stance was that she was a second account holder and had not operated the
locker in question from 2007. Therefore, Section 153A was not attracted
and she should not be subjected to the procedure prescribed under the said
section. The respondents do not deny and have not controverted the fact that
she had not operated the locker since 2007. The respondents had pleaded
and asserted that in the absence of challenge to the warrant of authorization
to the search of lockers amounts to admission accepting validity of search in
respect of locker No.7325-A.               Shah-E-Naaz Judge had in light of the
objection amended the writ petition to challenge validity of search of locker
No.7325-A. The aforesaid "defect" or lapse was noticed during the course
of hearing as recorded in the order dated 15th January, 2018. We would
observe that this was a legal flaw and defect in the writ petition,
consequences whereof were not understood by the counsel for Shah-E-Naaz
Judge till arguments by the Revenue were made. Amendment application,
C.M. No. 3504/2018 was filed and allowed by order dated 29 th January,
2018 permitting Shah-E-Naaz Judge to challenge the warrant of
authorization. This order also records that merits were not required to be
gone into at that stage and that all issues were left open. The respondents
have filed reply to the amended writ petition.

26.     Shah-E-Naaz Judge, we state at the risk of repetition, had not
accepted validity of search of locker No.7325-A as is apparent from the
pleadings even in the original writ petition. She had challenged proceedings
under Section 153A of the Act, which proceedings were initiated in view of
the search of the locker. The original writ petition had proceeded on the
W.P. (C) No. 5937/2016+connected matters                              Pag e 33 of 36
basis that the respondents had assessed and taxed the jewellery found in the
said locker in the hands of Nagina Judge.         We have also quoted the
statement of Nagina Judge recorded on 27th June, 2014 on the said aspect.
Given the background we would not apply the principle of estoppel to
dismiss the writ petition filed by Shah-E-Naaz Judge.

27.     We also do not agree with the respondents that the amendment
application should not have been allowed as trial had commenced. This is
not the correct way to interpret the power of the writ court to permit
amendment to the writ petition. The amendment made and permitted was to
meet the technical objection raised by the respondents as the legal impact
was not at first understood.

28.     Similarly, the contention of the respondents that jewellery was found
in locker No.7325-A and Nagina Judge has taken contradictory stands is of
no avail. Validity or invalidity of search is not to be judged and decided on
the basis whether or not anything was found in the locker including locker
Nos. 7712-D and 7637-A, which were empty. Validity of search has to be
decided and adjudicated on the basis of satisfaction note; whether
satisfaction note satisfies the statutory requirements and the respondents
have acted in accordance with law. In fact, there is contradiction in the plea
raised by the respondents for nothing was found in locker Nos.7712-D and
7637-A. In Seth Brothers (supra), the Supreme Court had distinguished
between bona fide exercise of power in furtherance of statutory duty, which
it was observed would not vitiate exercise of power when the authority that
had granted the sanction had the requisite belief and reason to authorize the
officer to enter and search the premises, for the Court does not substitute its


W.P. (C) No. 5937/2016+connected matters                            Pag e 34 of 36
opinion with that of the order authorizing search and decide whether they
should have been issued. Similarly, an irregularity in exercise of search and
seizure would not affect the authorization or search. It could in a given case
vitiate the action taken when the officer executing the search and seizure has
acted malafidely. Clearly, therefore, legal validity of issue of warrant of
authorization is distinguished from the manner and method in which it has
been executed.

29.     The respondents have also placed reliance on Section 292CC of the
Act. The said section is of no relevance to the present case. It was inserted
by Finance Act, 2012 with retrospective effect from 1st April, 1996 in view
of some judgments holding that authorization for search must be separately
issued in the name of each person and when warrant of authorization is
issued in the name of more than one person, the assessment is to be made
against all of them as Association of Persons and not as separate individuals.
We fail to understand relevance of the said provision in the factual matrix of
the present case.

30.     In view of the aforesaid discussion, the supplementary or secondary
contentions raised by the respondents have to be rejected.

31.     Authority and power to conduct search and seizure operations is
strident and caustic power authorized by law to be taken recourse to when
the conditions mentioned under different clauses of Section 132 (1) of the
Act are satisfied. Constitutional validity of the said provision has been
upheld due to the safeguards provided by the section itself, to prevent and
check cases of abuse and misuse. Investigation and detection of economic
offences is onerous and a difficult task, for often evidence and material is

W.P. (C) No. 5937/2016+connected matters                           Pag e 35 of 36
concealed and subterfuge is adopted to prevent and deflect detection. This,
however, does not give liberty to the authorities to disregard and authorize
search and seizure operations without formation of requisite belief. Power
and authority given to the authorities must be exercised in terms of the
statute and not contrary to and in violation of jurisdictional requirements.
Power, as given, also imposes an obligation on the authorities to satisfy
jurisdictional pre-conditions for the exercise of power to be held to be valid
and not bad and contrary to law.

32.     In view of the aforesaid discussion, we find merit in the present writ
petitions and hold that the warrants of authorization for search and seizure
operations in respect of the three lockers in the case of three petitioners are
vitiated and illegal. Warrants of authorization against the petitioners are
quashed and set aside. Consequently, proceedings under Section 153A of
the Act are also set aside and quashed. We, however, clarify that we have
not commented on evidence, if any, collected during the course of search
and whether the said evidence or material can be used in any proceedings
initiated by the income-tax authorities in accordance with law.            Writ
petitions are allowed in the aforesaid terms. In the facts of the present case,
there would be no order as to costs.



                                                    (SANJIV KHANNA)
                                                        JUDGE



                                                  (CHANDER SHEKHAR)
                                                       JUDGE
        NOVEMBER 30th, 2018 NA/ssn

W.P. (C) No. 5937/2016+connected matters                            Pag e 36 of 36

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