Madras HC quashes Assessment Order for not conducting Search u/s 132 of Income Tax Act [Read Order]

The Madras High Court quashed assessment order for not conducting search under Section 132 of the Income Tax Act, 1961.

The petitioner in the present matter is Pavithra Sugichandran.

The Writ Petitions have been filed challenging the respective assessment orders in respect of three assessment years viz., 2018-19, 2019- 20 and 2020-21 on the ground that by total non-application of mind to Section 153A of the Income Tax Act, even without any authorization for search in respect of the petitioner, search was conducted as per the provisions of Section 132 of the Income Tax Act.

The Standing Counsel appearing for the respondent has also received a written instruction from the Department, admitting to the said fact. However, based on the said unauthorized search, the assessment orders have been passed, which have been challenged in the Writ Petition.

Admittedly, if a search is conducted by applying Section 153A of the Income Tax Act, there should be a specific authorization. In the instant case, admittedly, there is no warrant authorization to conduct search as per Section 132 of the Income Tax Act on the petitioner.

Power to carry out search under section 132 of the Income Tax Act and survey under section 133A are important tools in the armoury of the Income–tax department for detecting and preventing tax evasion. The powers of search can be exercised when the authorised officer has reason to believe that:

1. Any person has omitted or failed to produce books of account or documents as required by any summons or notice issued,
2. Any person to whom, when so summoned to produce the documents, etc., will not or would not produce books of account or documents,
3. Any person is in possession of money, bullion, jewellery or other valuable article or thing representing, income or property which has not been disclosed or would not be disclosed for purposes of the Income-tax Act.

The Single Bench of Justice Abdul Quddhose observed that “Since search under Section 132 of the Income Tax Act has not been conducted on the petitioner in accordance with law, the impugned assessment orders have to be necessarily quashed and the Writ Petitions will have to be allowed.”

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