The Gujarat High Court has validated the legality of an Income Tax search conducted at the premises of a practising advocate with the aim of uncovering evidence of tax evasion by his clients.
Following a petition filed by Advocate Maulik Sheth, whose office and residence underwent a four-day search by Income Tax officials, Justices Bhargav Karia and Niral Mehta ruled that the incriminating material seized from the lawyer could be used by the department against third parties, specifically the advocate’s clients, under certain circumstances.
The court clarified that the attorney-client privilege, outlined in Section 126 of the Evidence Act, does not apply in this case. It stated that incriminating material can be utilised against third parties if the lawyer becomes aware of any fraudulent or illegal activities committed by his clients after being engaged by them. However, if the lawyer is found in possession of documents belonging to his clients prior to being hired by the alleged tax evaders, the Income Tax department cannot take action based on such documents, even if they are incriminating.
The High Court has entrusted the decision regarding the use of documents seized from advocate Sheth’s office during the search operation to the discretion of the Income Tax department.
Despite affirming the legality of the Income Tax officials‘ search, the judges strongly criticised their conduct, particularly regarding the detention of the lawyer’s family members in their residence for four days without access to mobile phones.
Additionally, the court condemned the manner in which the officials visited advocate Sheth’s colleague, advocate Ms/Mrs. Patel’s house early in the morning to serve summons, without the presence of any female constable, and instead accompanied by two armed policemen.
Expressing their dissatisfaction, the judges demanded that the officials issue an apology to advocate Ms./Mrs. Patel for their actions, which they deemed contrary to basic human decency. They emphasised the importance of maintaining a citizen-centric and cordial approach, highlighting the discrepancy between the authorities’ conduct and their claimed approach to conducting searches.
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