A two-judge bench of the Supreme Court, by relying on the recent amendment in section 132/132A of the Income Tax Act held that the authorities shall not disclose the ‘reason to believe’ or ‘reason to suspect’ in view of the recent amendment to the provision vide the Finance Act, 2017.
Further, SC cites Finance Act, 2017 amendment to Sec. 132A whereby the Income Tax Authority shall not disclose the ‘reason to believe’ or ‘reason to suspect’, as recorded u/s. 132/132A, to any person or any authority,
Coming to the facts of the case, in the year 2000, one of the assessee’s employee was found in possession of Rs.30 lacs cash pursuant to search carried by Railway Police (‘GRP’) while returning by train. The cash was requisitioned and seized u/s 132A of the Income Tax Act. Consequently, block assessment proceeding was initiated against assessee u/s. 158BD treating the same as assessee’s concealed income.
The assessees’ main contention was that the search proceedings initiated u/s 132 are invalid and that the block assessment proceedings are without jurisdiction since it cannot be based on a search conducted on a train by the police authorities.
The order was confirmed by the Appellate Tribunal and the High Court later.
The two judge bench comprising of Justice R.K Agrawal and Justice D.Y Chandrachud noted that the appellant-assessee has not raised this contention before any of the authorities. Further, the bench observed that “in view of the amendment made in Section 132A of the Income Tax Act, 1961 by Finance Act of 2017, the ‘reason to believe’ or ‘reason to suspect’, as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal as recorded by Income Tax Authority under Section 132 or Section 132A. We, therefore, cannot go into that question at all. Even otherwise, we find that the explanation given by the appellant regarding the amount of cash of Rs.30 lacs found by the GRP and seized by the authorities has been disbelieved and has been treated as income not recorded in the Books of Account maintained by it.”
Read the full text of the Order below.
