NDLI: Principal Director of Income Tax (investigation) & Ors. Vs. Laljibhai Kanjibhai Mandalia

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 1961: ss. 132 and 133 – Search and Seizure under – Reason to believe –Assessee during the financial year transferred a sum of 10 Crores to a company
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Income Tax Act, 1961: ss. 132 and 133 – Search and Seizure under – Reason to believe – Assessee during the financial year transferred a sum of 10 Crores to a company – Assessee secured the loan by way of a mortgage of the property – Assessee became director to the company and ceased to be so the next month – Amount of Rs. 10 crores was repaid with interest on different dates and after repayment of the loan, mortgage was released – Assessee filed his income-tax return showing the interest income which has been taxed as well – After recording reasons to believe in the satisfaction note, search was conducted in terms of s. 132 – Satisfaction note was not supplied to the assessee nor was required to be disclosed in terms of Explanation to s. 132(1) – Assessee challenged the warrant of authorization issued by Revenue – High Court quashed the warrant of authorization – On appeal, held: The view of the High Court that the authorization to search the premises of the assessee is invalid, cannot be sustained – Detailed satisfaction note shows multiple entries in the account books of Company’s Director – Manner in which Director contacted the assessee in Ahmedabad for a loan of Rs. 10 crores does not appear to be a normal transaction – Subsequent repayment of mortgage and the interest income reflected in the relevant assessment year appears to be the steps taken by the assessee to give a colour of genuineness –Investment of Rs. 10 crores for a short period was not for earning interest income as the same was repaid in the same assessment year – Revenue intends to investigate the fund trail of the money paid by the assessee – Such belief is not out of hat or whimsical – It was a reasonable belief drawn by the Revenue that the assessee shall not produce or cause to be produced any books of accounts or other documents which would be useful or relevant to the proceedings – Such believe was not based upon conjectures but on a bona-fide opinion framed in the ordinary conduct of the affairs by the assessee generally Revenue wishes to find out as to whether amount is an undisclosed income – Sufficiency or inadequacy of the reasons to believe recorded cannot be gone into while considering the validity of an act of authorization to conduct search and seizure – Thus, the High Court not justified in setting aside the authorization of search. s. 132 –Search and seizure under – Principles to be followed – Stated.
Judge	Hon'ble Mr. Justice Hemant Gupta
Neutral Citation	2022 INSC 719
Petitioner	Principal Director Of Income Tax (investigation) & Ors.
Respondent	Laljibhai Kanjibhai Mandalia
SCR	[2022] 15 S.C.R. 232
Judgement Date	2022-07-13
Case Number	4081

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Principal Director of Income Tax (investigation) & Ors. Vs. Laljibhai Kanjibhai Mandalia

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