Law:

Section:

Section 132(1) of the Income-tax Act, 1961 - Search and seizure - Based on report and opinion of assistant director of inspection about accumulation of huge unaccounted money and jewellery, director of inspection authorised under section 132(1) search of petitioner's residence and office - Books, documents, cash and jewellery were consequently seized therefrom - Whether impugned authorisation under section 132(1) and subsequent search and seizure of petitioner's assets legal - Held, on facts, no, but material gathered from search would not cease to be evidence if these were otherwise relevant evidence FACTS Since 1957, the petitioner carried on his business at premises K which fell within the territorial jurisdiction of the Commissioner, A and his subordinate ITO. At all material times, he resided at premises R. The Assistant Director of Inspection (ADI) had reported to his Director of Inspection (DI), inter alia, (i) that there was specific information that the petitioner and his two sons had accumulated huge unaccounted money by manipulation of their account books and were keeping the same in the form of cash, jewellery and concealed stock of raw materials and finished goods at other godowns and factory ; and (ii ) that, on the basis of his discreet inquiries, he was of the opinion that, apart from detection of huge discrepancy in stocks, a substantial amount of unaccounted cash and jewellery could be recovered from their residence and office if action under section 132(1) was taken. The DI. accordingly, issued the required warrant of authorisation under section 132(1). In pursuance thereof, the ADI searched on 14-1-1977 the petitioner's residence and also the office and seized therefrom cash, fixed deposit receipts, jewellery and ornaments, books of account and documents, etc. In response to his requests for copy of the reasons recorded by the DI for the search and seizure, the petitioner was informed that he was not entitled to know the reasons. The petitioner eventually received a notice under rule 112A(1) from the ITO, K, who made on 13-4-1977 a summary assessment under section 132(5), treating the value of all the assets seized as concealed income of the…

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