Law:

Section:

Section 132 of the Income-tax Act, 1961 - Search and Seizure - General - Where authorized officer is not satisfied that a particular asset found during search is undisclosed property of assessee, he cannot have recourse to provisions of section 132(3) [In favour of assessee] Law is well-settled that in order to make a seizure of the assets in exercise of power under section 132(1)(iii) assessee's possession over the assets is not sufficient. The authorized officer must have reason to believe that the assets represent wholly or partly the undisclosed income of the person in whose possession the assets are found. Similarly, where the authorized officer is not satisfied or he has doubt to believe that a particular asset found on search is undisclosed property of the assessee, he cannot have recourse to the provisions of section 132(3). It is only when the authorized officer has reasonably believed that incorporeal assets such as bank deposits or deposits in pass books, documents, etc., found on a search represent wholly or partly the undisclosed property of the assessee and the circumstances of the given case [for reasons other than those mentioned in the second proviso to sub-section (1)] do not permit immediate seizure of the same, the provision of sub-section (3) of section 132 may be resorted to. Thus, section 132(3) can be resorted to only if there is any practical difficulty in seizing the asset which is liable to be seized. During search and seizure operation carried on in premises of assessee-company, the authorized officer issued prohibitory order under section 132(3) in respect of current/saving banks accounts of the assessee. The assessee challenged impugned prohibitory order in instant petition. Held that it was not the case of the IT authorities that any deposit/transaction made in the various bank accounts, in respect of which prohibitory order under section 132(3) had been issued, represented wholly or partly the undisclosed income of the assessee. On the contrary, the stand of the IT authorities was that the prohibitory order under section 132(3) had been issued for the purpose of finding out whether any transaction made in those accounts…

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