Law:

Section:

Section 132 of the Income-tax Act, 1961 - Search and seizure - Assessment year 1988-89 - Petitioner was an authorised stockist of a particular brand of tobacco - A search was conducted at house of petitioner and her husband on basis of information that manufacturers of said brand of chewing tobacco, pan masala, etc., were selling it at high premium which was result of artificial scarcity created by dealers - Whether search was valid and legal - Held, no - Whether assets seized in an illegal search could be used in proceedings against real owner of these assets under the Act - Held, yes - Whether assets seized from a benamidar could be used in proceedings against real owner of assets under Act - Held, yes FACTS The petitioner was the authorised stockist of 'Baba' brand of tobacco. A search was conducted at the house of the petitioner and her husband on the basis of the information that manufacturers of 'Baba' brand of chewing tobacco, pan masala, etc., were selling it at high premium which was the result of artificial scarcity created by the dealers. During the search, valuables and books of account of the petitioner were seized. After the search and after recording the statements of the petitioner and her husband, the department was satisfied that the business of the petitioner was in fact that of the husband of the petitioner and the petitioner was only a benamidar. The department dropped the proceedings against the petitioner and an order under section 132(5) was passed against the petitioner's husband. The department retained the books and other documents and valuables on the ground that the final assessment had not been made. The petitioner challenged the search and seizure on the ground that there was no information in possession of the Director of Inspection on the basis of which he could have reason to believe that the petitioner was in possession of undisclosed money, bullion, jewellery and other property and thereby issued an authorisation of search and seizure and, therefore, the search and seizure was illegal. The petitioner further contended that as the search was illegal, the department could not retain the account books, money and the jewellery…

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