Supreme Court lays down principles for courts while examining matters of search

NEW DELHI: In a significant verdict, the Supreme Court on Wednesday laid down principles for High Courts in matters of search and seizure under Income Tax rules, and said formation of opinion and reasons to believe recorded by revenue department is not a judicial or quasi-judicial function, but administrative in character.

A bench of Justices Hemant Gupta and V Ramasubramanian set aside the Gujarat High Court order quashing the warrant of authorization of search and seizure dated August 7, 2018 issued by Principal Director of Income Tax (investigation).

“We find that the High Court was not justified in setting aside the authorization of search dated August 7, 2018. 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 liberty to proceed against the assessee in accordance with law,” the Apex Court ruled. The High Court had passed the order on a plea of an Ahmedabad-based businessman who invested money in a recreation company in Goa and on whose premises search and seizure were conducted by the revenue department.

The bench said in light of earlier judgments, the sufficiency or inadequacy of reasons to believe recorded cannot be gone into while considering the validity of an act of authorization to conduct search and seizure. “The belief recorded alone is justiciable, but only while keeping in view the

Wednesbury Principle of Reasonableness. Such reasonableness is not a power to act as an appellate authority over the reasons to believe recorded,” it said. The bench said it would like to elaborate the principles in exercising the writ jurisdiction in the matter of search and seizure under Section 132 of the Income Tax Act.

“The formation of opinion and the reasons to believe recorded is not a judicial or quasi-judicial function, but administrative in character,” it said.