PCIT (Investigation) & Ors v. Laljibhai Kanjibhai Mandalia

Case snapshot

Sections / provisions: 132 of Income-tax Act; 1961

Questions before the Court / Tribunal

• PCIT (Investigation) & Ors Vs Laljibhai Kanjibhai Mandalia (Supreme Court) Date-13th July,2022 Sub-Whether the sufficiency or inadequacy of the reasons to believe recorded can be gone into while considering the validity of an act of authorization to conduct search and seizure- Supreme Court lays down principles on which the Courts can interfere when action is taken u/s 132 to conduct search and seizure? The highest court of the Country in this case was considering SLP of the department when the high court quashed the search proceedings on the basis that the conditions for issuance of warrant of authorisation as…
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

PRINCIPAL DIRECTOR OF INCOME TAX .....APPELLANT(S) (INVESTIGATION) & ORS.

warrant of authorization dated 07.08.2018 issued by the appellant 1

1 For short, ‘Revenue’ 2 For short, ‘Act’ 3 For short, ‘Assessee’

satisfied. It is the stand of the assessee that he was looking for an

hence consequently approached the assessee herein for a loan. As a

Appellant / assessee submissions

for the Revenue argued that the High Court has completely misdirected

while exercising judicial review is very limited. It was contended that

“16……Thus, as rightly submitted by the learned counsel for the petitioner, the belief that the petitioner would not respond to a summons or notice issued as envisaged under clause (b) of sub- section (1) of section 132 is not based upon any information or other material but is based upon conjectures and surmises that the petitioner would take the alibi of lack of jurisdiction on the part of the respondents. This contention of the first respondent also lends support to the contention raised on behalf of the petitioner that powers under section 132 of the Act have been resorted to because that is the only provision which vests jurisdiction in the Kolkata authorities for taking action against the petitioner. Evidently, therefore, the circumstance envisaged under clause (b) of sub-section (1) of section 132 of the Act does not exist in the present case.

questioned in court, however, it was argued that the jurisdiction of the

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

12. We have heard learned counsel for the parties and find that the view of

that income had escaped assessment, this Court held the Revenue

chargeable to income tax had been underassessed. The Court held as

Court held as under:- “25. ……. Since, the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income Tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if on the basis of subsequent information, the Income Tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not

132(1) of the Act. The High Court held thus:-

recording satisfaction under Section 132 of the Act. We find that

Operative decision and relief

Section 132 of the Act. This Court set aside the findings recorded by

set aside the order of the High Court, wherein it had interdicted with

Consequently, the appeal is allowed and the order passed by the High

Court is set aside. As a consequence thereof, the Revenue would be at

Ratio and legal principle

• The packaged judgment addresses PCIT (Investigation) & Ors Vs Laljibhai Kanjibhai Mandalia (Supreme Court) Date-13th July,2022 Sub-Whether the sufficiency or inadequacy of the reasons to believe recorded can be gone into while considering the validity of an act of authorization to conduct search and seizure- Supreme Court lays down principles on which the Courts can interfere when action is taken u/s 132 to conduct search and seizure? The highest court of the Country in this case was considering SLP of the department when the high court quashed the search proceedings on the basis that the conditions for issuance of warrant of authorisation as…. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with pcit (investigation) & ors vs laljibhai kanjibhai mandalia (supreme court) date-13th july,2022 sub-whether the sufficiency or inadequacy of the reasons to believe recorded can be gone into while considering the validity of an act of authorization to conduct search and seizure- supreme court lays down principles on which the courts can interfere when action is taken u/s 132 to conduct search and seizure? the highest court of the country in this case was considering slp of the department when the high court quashed the search proceedings on the basis that the conditions for issuance of warrant of authorisation as… Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• 132 of Income-tax Act - apply the exact version considered in the judgment.
• 1961 - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• Pr. CIT v. Tata Power Company Ltd. - Bombay High Court
• Merchant Association v. ITO - ITAT Pune
• M D Sons & Ors. v. ITO (Special Bench) - ITAT Bangalore Special Bench

Different outcome / possible distinction

• Pr. CIT v. Persistent Systems Pvt. Ltd. - Dismissed
• CIT(E) v. Hyderabad Cricket Association - Operative order controls

Related Finin2min resources

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Source class: SANITIZED_OFFICIAL_PRIMARY_JUDGMENT_COPY · Repository status: PUBLISH_READY