ORDER
1. Heard Sri S.K. Garg, learned counsel for the petitioner and Sri D.D. Chopra, the learned Senior Standing counsel for the Income-tax Department appearing on behalf of the respondents.
2. The petitioner has approached this court for quashing of the warrant of authorisation issued under Section 132(1) of the Income Tax Act. The petitioner has alleged that he: is a practising Doctor and also a partner of Saroj Nursing Home, Lucknow and he himself, his wife and Saroj Nursing Home are assessed to Income-tax at Lucknow. The petitioner has further alleged that for the morning of 21-2-2006, the petitioner was having an air ticket for travel from Lucknow to Delhi by Sahara Flight No. S2-6138 and the said flight was cancelled and while he was at the airport there was announcement to the effect that the passengers waiting to board the Sahara flight which was cancelled has the option to take the International Jeddah-Delhi flight and in order to avail th e facility of alternative flight the petitioner got his Sahara Air ticket cancelled and bought another ticket for the International Jeddah-Delhi flight. At the security check, the petitioner was required to submit a declaration form and accordingly he collected the form from the ticket counter and declared that he was carrying a sum of Rs. 10 lakh in cash in his brief case. The petitioner has further alleged that after receiving the declaration form, the Customs Officials made enquiries about the status of the petitioner and then he produced a photocopy of his PAN Card and further informed the Official concerned that the amount which he is carrying forms part of the income. The petitioner has further alleged that after a long waiting in the chambers of Customs Officials, the Officers of the Income-tax department who introduced themselves as Officers authorised by the Director of Income-tax (Investigation), Kanpur seized the cash which was in possession of the petitioner in spite of his strong protests.
3. Learned counsel for the petitioner submits that the proceedings initiated by the respondents under Section 132(1) of the Income Tax Act were arbitrary and illegal as the amount of Rs. 10 lakh which the petitioner was carrying in his brief case to Delhi by the International Jeddah-Delhi flight was disclosed to the Customs authorities through the declaration form which was provided to the petitioner at the security check. He further submits that the petitioner is a respectable person whose annual income for the year 2005-06 was Rs. 12,77,926 and the income of the wife of the petitioner for the year 2005-06 was Rs. 23,58,483 and the income of Saroj Nursing Home after availing all the admissible deductions was Rs. 7,99,410. He further submits that on 20-2-2006, the cash in possession of the petitioner was Rs. 10,07,780 and there was no material before the Income-tax authorities for initiating proceedings under Section 132(1) of the Income Tax Act except the information communicated by the Customs Officials. Learned counsel for the petitioner has relied upon the decision of this court in Dr. Mrs. Anita Sahai v. DIT (Inv.) and a decision of the Delhi High Court in Ajit Jain v. Union of India which was affirmed by Hon'ble the Supreme Court in Union of India v. Ajit Jain (2003) 260 ITR 803.
4. Sri D.D. Chopra, the learned Senior Standing counsel appearing on behalf of the respondents submits that there is no illegality in the proceedings initiated by the respondents under Section 132(1) of the Income-tax Act as there was sufficient material before the Director of Income-tax(Investigation). He further submits that the petitioner was carrying undisclosed money and on enquiry by the Customs Officials there was suspicion as the petitioner was trying to cancel the air ticket of the International Jeddah-Delhi flight. He further submits that the amount, which was recovered from the petitioner, was not mentioned in the books of account and there were reasons to believe that the said amount was undisclosed income and would not be disclosed. He further submits that the petitioner himself has admitted in his statement before the authorised Officer that the money kept in the locker is not entered in any books of account. He has relied upon a decision of the Gujarat High Court in Praful Chunilal Patel v. M.J. Makwana, Asstt. CIT .
We have considered the submissions made by the learned counsel for the parties and gone through the record.
It is the admitted case of the parties that on 21 -2-2006 the petitioner was to travel from Lucknow to Delhi by Sahara Flight No. S2-6138, which was cancelled, and thereafter the petitioner purchased another ticket for Delhi of the International Jeddah-Delhi flight. It is also the admitted case of the parties that the petitioner was carrying the cash of Rs. 10 lakh in his brief case which was disclosed by the petitioner at the security check counter through the declaration form. The proceedings under Section 132( 1) of the a Income Tax Act was initiated by the respondents on the basis of the communication sent by the Assistant Commissioner Amausi Air Customs, Lucknow to the Joint Director (Investigation), Income-tax department, Lucknow. The said communication reads as under :
Sub: Intimation of Cash of Rs. 10 lakhs being carried by a passenger-C/ reg:
Madam, It is being brought to your kind notice that one of the passengers named Dr. Dinesh Chandra Srivastava S/o Sh. Jai Bhushan Lai, was flying on a domestic circuit from Lucknow to Delhi on an International flight AI891 on 21-2-2006 vide Ticket No. 098-4215120647 and Boarding Pass for seat No. 6E, issued against the same.
The passenger gave a written declaration to the Customs that he wascarrying cash amount 10 lakhs, to Delhi.
On being asked further, he also showed a Xerox copy of his PAN Card (AAJFS1535P) (copy enclosed).
On being suspicious of any eventuality he verbally stated that he does not want to go to Delhi and he got his ticket cancelled.
As a normal routine, the matter was intimated to you over phone No. 2307176 and as per your directions the person was asked to wait till the officers from the Income-tax department take the stock of the situation p for further action.
In light of above, the matter has been brought to your notice for further action.
7. This fact is also not disputed that except for the above communication there was no other material before the Respondent No. 1 when he issued warrant of authorisation under Section 132(1) of the Income-tax. Hon'ble the Delhi High Court in the case of Ajit Jain v. Union of India has observed as under:
Even assuming that the said amount was not reflected in the books of account of the company, as claimed by the petitioner, the mere possession of the said amount by the petitioner could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which had not been or would not have been disclosed by him for the purposes of the Act, particularly when the petitioner as well as the company, of which he was F claiming to be the managing director, were regular assessees with the Income-tax department.
8. This view of the Hon'ble Delhi High Court has been upheld by the Apex Court in the case of Union of India v. Ajit Jain (2003) 260 ITR 802.
9. Keeping in view of the above law when we examine the facts of the instant case it appears that the petitioner had declared before the custom authorities that he was carrying Rs. 10 lakh in cash in his brief case. He had also given has PAN card number to the authorities as is clear from the communication of Assistant Commissioner (Custom) Amausi Airport, Lucknow to the Joint Commissioner, Lucknow Income-tax department, Kanpur. Therefore, we find that the petitioner had declared that he was carrying Rs. 10 lakh in cash and had also given his PAN number to the Custom Authorities. Even if the petitioners stated subsequently to the Income-tax Authority that this sum was not entered in the account books, as alleged by the respondents, the condition precedent for the exercise of the power under Section 132 was utterly lacking in view of the law laid down by Hon'ble the Apex Court in the case of Ajit Jain (supra). In the present case, the authorisation issued by the respondent No. 1 under Section 132 of the Income Tax Act was without jurisdiction. On the basis of information given by the Officers of Custom department to the effect that the petitioner had made a declaration of sum of Rs. 10 lakhs and had given his PAN number to the respondent No. 1 he could not have entertained this information for initiating the proceedings under Section 132(1) of the Income Tax Act. This information can hardly be said to constitute information which would be treated as sufficient to believe that the amount of Rs. 10 lakhs was unaccounted money which was not disclosed or would not be disclosed.
10. Before taking any action under Section 132 of the Income Tax Act, 1961 the condition precedent is information in the possession of the Director of Income-tax (Investigation) which gives him reason to believe that a person is in possession of some article, jewellery, bullion or money which represents wholly or partly his income which was not disclosed or would not be disclosed. If the aforesaid condition is missing the Commissioner or Director of Income-tax (Investigation) will have no jurisdiction to issue the warrant of authorisation under Section 132(1) of the Income Tax Act. Search and seizure cannot be a fishing expedition. Before search is authorised the Director must on the relevant material have reasons to believe that the assessee has not or would not disclose his income. If the reason to believe comes into existence later, i.e., after issuance of the warrant of authorisation the entire search and seizure will be illegal.
11. In this case, there was no material except the communication of Customs Officer before the Director of Income-tax (Investigation) for issuance of warrant of authorisation under Section 132 of the Income Tax Act. The information given to the Director clearly indicated that the petitioner is an assessee and he had declared before the custom authorities that he is carrying Rs. 10 lakh in cash and to our mind this was not sufficient material before them to believe that the assessee has not or would not disclosed the income.
12. The decision in the case of Praful Chunilal Patel (supra) is not applicable to the facts of the present case. That case related tore-assessment of an assessee on discovery of mistake in the assessment where it was held that if the assessing officer has a cause or justification to think or suppose that Income had escaped the assessment, he can be said to have a reason to believe that such income had escaped assessment.
13. In the result, the writ petition succeeds and a writ in the nature of certiorari is issued quashing the proceedings initiated by the respondents by issuing warrant of authorization dated 21-12-2006 in Form No. 45under Section 132 of the Income Tax Act against the petitioner and a writ in the nature of mandamus is issued directing the opposite parties to refund the amount of Rs. 10 lakhs forthwith to the petitioner.