Income Tax Dept can Conduct Surprise Searches on Family’s Lockers over Suspicion of Undisclosed Assets: Delhi HC [Read Order]
Delhi HC rules that Income Tax Dept can conduct surprise searches on family lockers under Section 132 if there is suspicion of undisclosed assets
In a recent ruling, the Delhi High Court held that the Income Tax Department can conduct surprise searches on family lockers under Section 132 of the Income Tax Act, 1961, if there are valid reasons to suspect undisclosed assets.
Raj Krishan Gupta and his family filed a writ petition challenging the search and seizure carried out on 11 May 2024 at their lockers in South Delhi Vaults, Greater Kailash-II, New Delhi. The petitioners’ counsel argued that the valuables found were either disclosed income, ancestral property, or belonged to their daughters, and that the searches violated CBDT Instruction No. 1916 regarding permissible quantities of jewellery.
The petitioners’ counsel also argued that the department lacked proper reasons to believe and that the searches amounted to fishing and roving enquiries.
Your Ultimate Guide to India’s Latest Income Tax Laws - Click here
The petitioners’ counsel argued that no summons or notices were issued before the search and that the family were regular income tax filers. They also argued that the searches deprived them of their right to property under Article 300A of the Indian Constitution.
The department’s counsel explained that summons under Section 131(1A) had been issued to two of the petitioners, and their statements were recorded under oath, during which they failed to produce bills or supporting documents. They further explained that bullion was also discovered, and CBDT Instruction No. 1916 applied only to limited jewellery, not large bullion.
The counsel pointed out that proper reasons to believe were recorded, approved by the competent authority, and that each locker was searched under separate authorization.
The Division Bench comprising Justice V. Kameswar Rao and Justice Saurabh Banerjee observed that Section 132 permits search if any one of the conditions in its clauses is satisfied and the sufficiency of the reasons is not open to judicial review. The court explained that a discreet enquiry had revealed misuse of benami lockers and that the petitioners’ financial profile did not justify the possession of multiple high-rent lockers, raising suspicion of undisclosed wealth.
The court observed that the material on record showed the existence of bona fide reasons to believe and that the searches were not arbitrary. The court held that the searches and seizures carried out on the petitioners’ lockers were lawful. The writ petition was dismissed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
