# Pramod Swarup Agarwal Revisionist v. Prin. Director of Income Tax (Inv.) Lko & Ors. Opp. Parties

- **Citation:** (2025) 6 ILRA 183
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-06-03
- **Case number:** Writ Tax No. 30 of 2025
- **Bench:** Rajan Roy, Om Prakash Shukla
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/pramod-swarup-agarwal-revisionist-v-prin-director-of-income-tax-inv-lko-ors-opp-53574
- **Pages:** 25

## Headnote

A. Taxation Law- The Constitution of
India, 1950-Article 226 - The Income Tax
Act, 1961-Sections 131(1A) & 132---Writ
petition challenging warrant of authorization
and
the
validity
of
search
proceedings
conducted at the premise of the petitioners as
well as notice issued U/S 131(1A) of the Act----
In order to initiate any action section 132, first
of all, there has to be information in possession
of the officers referred thereunder. Secondly,
such officers should have reason to believe as a
consequence of such information and based
thereon. Thirdly, this information and reason to
believe should have a relation with any of the
three clauses (a), (b) or (c) contained therein,
otherwise such exercise would be bad in law.

B. The information and reason to believe has to
be related/ referrable to clause (b) aforesaid
and should have a rational connection with the
said clause (b) and if it is not then it can be a
ground for interference under Article 226 of the
Constitution of India because then it would be a
case of absence of such information/ reason to
believe in the context of said clause (b) of subSection (1) of Section 132 and would lead to a
conclusion that it is an arbitrary exercise of
power, without application of mind to the
provisions of law and legal requirements
contained therein.

C. The jurisdictional prerequisites for exercise of
power under Section 132 are / were woefully
absent in this case and consequently entire
search operations based on such satisfaction
note and warrant of authorization are illegal---
The authorised officer does not have any power
to issue notices under section 131(1A) post-
184 INDIAN LAW REPORTS ALLAHABAD SERIES
search, at best issuance of such notice would
render the notice invalid. But issuance of notice
under s. 131(1A) post-search would not in any
manner render the proceedings under section
132 invalid, if they were otherwise initiated
pursuant to a valid authorization issued after
recording satisfaction on the basis of the
material available on record.

Petition allowed. (E-15)

List of Cases cited:

## Text

_Characters 0–39,891 of 81,673. This is a partial read: ask again with offset=39891 for what follows._

6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
183
10.01.2019 & dated 18.11.2019
passed by the District Supply Officer and
Appellate Authority in Writ C No. 1852 of
2020, impugned order dated 10.01.2019 &
dated 18.11.2019 passed by the District
Supply Officer and Appellate Authority in
Writ C No. 1866 of 2020 impugned order dated
05.03.2019 and 15.03.2019 & dated 08.11.2019
passed by the District Supply Officer and
Appellate Authority in Writ C No.2382 of
2020, impugned order dated 22.01.2019 &
dated 14.11.2019 passed by the District Supply
Officer and Appellate Authority in Writ C No.
5595
of
2020,
impugned
order
dated
05.03.2019 & dated 24.02.2019 passed by the
District Supply Officer and Appellate Authority
in Writ C No.21467 of 2020 impugned order
dated 05.03.2019 & dated 24.02.2020 passed
by the District Supply Officer and Appellate
Authority in Writ C No. 21533 of 2020,
impugned order dated 01.04.2019 & dated
24.02.2020 passed by the District Supply
Officer and Appellate Authority in Writ C No.
22154 of 2020, impugned order dated
08.01.2019 & dated 07.09.2022 and 05.03.2020
passed by the District Supply Officer and
Appellate Authority in Writ C No. 17812 of
2020 are liable to be set aside and the same are
hereby set aside.

36. All the writ petitions are
allowed and the concerned-respondents are
directed to restore the fair price shop
licence of the petitioners forthwith.
----------
(2025) 6 ILRA 183
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 03.06.2025

BEFORE

THE HON'BLE RAJAN ROY, J.
THE HON'BLE OM PRAKASH SHUKLA, J.

Writ Tax No. 30 of 2025
With
Writ Tax No. 31 of 2025

Pramod Swarup Agarwal ...Revisionist
Versus
Prin. Director of Income Tax (Inv.) Lko &
Ors. ...Opp. Parties

Counsel for the Revisionist:
Anupam Mishra, Shalabh Singh

Counsel for the Opp. Parties:
Neerav Chitravanshi, A.S.G.I., Dr. Ravi
Kumar Mishra

A. Taxation Law- The Constitution of
India, 1950-Article 226 - The Income Tax
Act, 1961-Sections 131(1A) & 132---Writ
petition challenging warrant of authorization
and
the
validity
of
search
proceedings
conducted at the premise of the petitioners as
well as notice issued U/S 131(1A) of the Act----
In order to initiate any action section 132, first
of all, there has to be information in possession
of the officers referred thereunder. Secondly,
such officers should have reason to believe as a
consequence of such information and based
thereon. Thirdly, this information and reason to
believe should have a relation with any of the
three clauses (a), (b) or (c) contained therein,
otherwise such exercise would be bad in law.

B. The information and reason to believe has to
be related/ referrable to clause (b) aforesaid
and should have a rational connection with the
said clause (b) and if it is not then it can be a
ground for interference under Article 226 of the
Constitution of India because then it would be a
case of absence of such information/ reason to
believe in the context of said clause (b) of subSection (1) of Section 132 and would lead to a
conclusion that it is an arbitrary exercise of
power, without application of mind to the
provisions of law and legal requirements
contained therein.

C. The jurisdictional prerequisites for exercise of
power under Section 132 are / were woefully
absent in this case and consequently entire
search operations based on such satisfaction
note and warrant of authorization are illegal---
The authorised officer does not have any power
to issue notices under section 131(1A) post-
184 INDIAN LAW REPORTS ALLAHABAD SERIES
search, at best issuance of such notice would
render the notice invalid. But issuance of notice
under s. 131(1A) post-search would not in any
manner render the proceedings under section
132 invalid, if they were otherwise initiated
pursuant to a valid authorization issued after
recording satisfaction on the basis of the
material available on record.

Petition allowed. (E-15)

List of Cases cited:

1. L.R. Gupta & ors. Vs U.O.I.& ors. (1992)
Income Tax Reports Volume-194 Page 32

2. H.L. Sibal Vs Commissioner of Income Tax &
ors.(1975) 101 ITR 112 (P&H)

3. Ganga Prasad Maheshwari Vs CIT' reported in
(1981) 6 Taxman 363

4.
Principal
Director
of
Income
Tax
(Investigation) & ors. Vs Laljibhai Kanjibhai
Mandalia' (2022) 446 ITR page 18 (SC)

5. Spacewood Furnishers (P) Ltd. Vs DG of
Income Tax', reported in (2012) 340 ITR 393

6. Vindhya Metal Cooperation & ors. Vs
Commissioner of Income Tax & ors. (1985)' ITR
Vol.156 page 233

7. Writ Petition No.122 of 2009 'H.J. Industries
Pvt. Ltd. & ors. Vs Mr. Rajendra & ors.

8. Writ Petition No.1729 of 2024 Bal Krushna
Gopalrao Buty & ors. Vs Principal Director
(Investigation), Nagpur & ors.'

9. Emaar Alloys Pvt. Ltd. Vs Director General of
Income Tax (Investigations) & ors.

(Delivered by Hon'ble Rajan Roy, J.)

(1) Heard Sri Jahangir Mistri and Sri
J.N. Mathur, learned Senior Advocate
assisted by Sri Shalabh Singh, Sri Satish
Mody, Sri Anupam Mishra, Sri Mudit
Agarwal and Ms. Aishwarya Mathur, learned
counsel for the petitioners as well as Sri N.
Venkataraman, learned Senior Advocate &
Additional Solicitor General of India assisted
by Sri Neerav Chitranshi, Sri Kushagra
Dikshit and Sri Ravi Kumar Mishra, learned
counsel for the opposite parties.

(2) Petitioners of both the above
mentioned petitions are husband and wife.

(3) In both the writ petitions,
Warrant of Authorization dated 11.12.2024
and issued on 12.12.2024 under Section 132
of the Income Tax Act, 1961 and the validity
of search proceedings conducted at the
premise of the petitioners based thereon
under Section 132 of the Income Tax Act,
1961 has been challenged.

(4) In Writ Tax No.31 of 2025, in
addition to the aforesaid challenge, as, a
notice was issued to the said petitioner under
Section 131(1A) of the Act, 1961, therefore,
by way of an amendment, the said notice
dated 27.01.2025 has also been challenged.

(5) Inspite of sufficient opportunity,
the Revenue did not file any counter affidavit
to the writ petitions and in fact, on 11.03.2025,
learned Senior counsel appearing for the
Revenue made a statement as has been
recorded by us in the ordersheet that pleadings
are not required to be filed and that he would
argue on the basis of facts on record.

(6) Petitioner of Writ Tax No.30 of
2025 is said to be an eighty years old doctor.
Though not very relevant but it is said that he
is suffering from Alzheimer. He is a promoter
shareholder of a company, namely, India
Pesticides Limited.

(7) Petitioner of Writ Tax No.31 of
2025 is also aged about eighty years, as
claimed and a promoter shareholder of the
aforesaid company.
6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
185
(8) Both the petitioners have been
filing their income tax returns for the last
more than eighteen years and it has never
been the case that any notices were issued
to which they did not respond or for that
matter any summons for producing any
document or information or for appearance
may have been issued to the said petitioners
but they did not respond. They claim to be
filing their returns regularly and disclosing
their income.

(9) On 01.07.2021, the petitioners
had sold/ transferred equity shares of
company under Offer For Sale (O.F.S.) to
the public as part of I.P.O. In the case of
Pramod Swarup Agrawal, 11,11,486 equity
shares
were
transferred
for
total
consideration of Rs.33,00,00,000/- whereas
in the case of Sneh Lata Agarwal, she sold/
transferred 14,05,405 equity shares for a
total consideration of Rs.41,59,99,880/-. At
the time of such transfer, the company was
not a listed company. It was listed on
recognized stock exchange on 05.07.2021. It
is claimed that the proceeds from the sale of
shares were received in the bank account of
the petitioners. They paid advance tax on the
income arising out of sale of O.F.S. share in
I.P.O. but before filing their income tax
returns for A.Y.2022-23 after seeking
consultations and opinion from various tax
consultants they came to the conclusion that
consideration received by them on sale/
transfer of shares to public through O.F.S.
was not liable to capital gains tax under
Section 45 of the Income Tax Act, 1961
(hereinafter referred to as 'the Act, 1961').
For this reason, they did not offer any tax on
the said transaction in their returns filed for
A.Y. 2022-23 and in fact, claimed refund of
the advance tax paid.

(10) According to learned counsel
for the petitioner, there was no column in
the income tax return which permitted
petitioners
to
inform
that
the
said
transactions were not taxable otherwise as
claimed
they
would
have done
so.
However, the petitioners through their
Chartered Accountants/ Consultants filed a
letter dated 16.01.2023 before the opposite
party no.5 i.e. the jurisdictional assessing
officer as this is the most they could do,
there being no provision for uploading of
such information upon the relevant portal
of the Income Tax Department. Copy of the
said document is annexed as Annexure no.1
in both the writ petitions. It details the
reasons why petitioners were not liable to
capital gain tax.

(11) The provision contained in
Section 55(2)(ac) of the Act, 1961 did not
contain any such mechanism under which
the 'fair market value' of the shares sold by
the petitioners could be calculated which
was necessary for calculating the capital
gain and paying tax thereon. In the absence
of this mechanism, there is no way that
Capital Gain Tax could be calculated and
paid. Most important, the assessing officer
ordered refund of the advance tax paid by
the
petitioners.
Therefore,
even
the
Department understood that the income
was
not
liable
to
tax,
otherwise,
proceedings would have been initiated
against the petitioners for sentencing etc.

(12) As many similarly placed
persons were claiming advantage of not
being liable to tax in respect of such
transactions,
therefore,
realizing
the
lacunae, an amendment was brought in
Section 55 of the Act, 1961 on 01.09.2024
making such transactions liable to capital
gain tax by providing a mechanism for
calculating their fair market value. The
absence of any such mechanism in the
unamended provision made it impossible
186 INDIAN LAW REPORTS ALLAHABAD SERIES
for any willing person to pay the tax. The
amendment was made effective from
01.04.2018. It is on account of the
aforesaid that petitioners were illegally
subjected to search operations under
Section 132 of the Act, 1961.

(13) It was contended by Sri Mistri,
learned Senior Counsel appearing for the
petitioners that in view of this retrospective
amendment, the petitioners were liable to
pay the tax on the transaction but on
account of the search operation conducted
by the opposite parties on 12.12.2024, in
view of the second proviso to Section 139
(8A) of the Act, 1961, they were statutorily
prohibited from doing so. The said proviso
provides that a person shall not be eligible
to furnish an updated return under the said
sub-Section where (a) a search has been
initiated under section 132 or books of
account or other documents or any assets
are requisitioned under section 132A in the
case of such person. He also invited our
attention to the consequences of initiation
of search operations.

(14) It is only when persons similar
to the petitioners started claiming the said
benefit that the department woke up to amend
the provision. Petitioners, according to him,
could not be subjected to search operations
under Section 132 on account of nonpayment of capital gains tax on account of an
admitted lacunae in the law which has been
rectified only subsequently and this fact could
not be the basis for any action under the said
provision of the Act, 1961.

(15) According to him, there was
no information referable to Section 132(1)
(b) and no prudent person could in the facts
of this case have a reason to believe
referable to clause (b) of sub-Section (1) of
Section 132 of the Act, 1961.
(16) He also emphasized upon the
fact that normally capital gain tax is
payable at the relevant time at the rate of
ten percent, however, after the search
operations if the assessment takes places,
the liability would be sixty percent. In this
regard, he referred to Section 113 of the
Act, 1961, which refers to tax in the case of
block assessment of search cases, a position
which could not be refuted by learned
counsel for the Revenue. He submitted that
the petitioners would now be subjected to
block assessment. Therefore, the action in
question apart being illegal is highly
prejudicial to the petitioners.

(17) Learned counsel for the
Revenue, of course, submitted that the
scope of judicial review in such matters is
very limited and the Court should keep in
mind the pronouncement of Hon'ble the
Supreme Court especially in the case of
'Principal Director of Income Tax
(Investigation) and ors. vs. Laljibhai
Kanjibhai Mandalia' reported in (2022)
446 ITR page 18 (SC) on the subject and
should not decide the matter as an appellate
court. There was sufficient information and
based thereon, reason to believe was
formed for the search operation by a
competent officer and within the limited
bounds of judicial review, this was not a
case for interference. He contended that
argument of Sri Mistri, learned counsel for
the petitioners that the search operations
were invalid because of the fact that though
the search operations under Section 132
required the competent authority to form a
reason to believe which was on a higher
footing than the requirement under Section
131 (1A) which only required a reason to
suspect, therefore, as in the case of Sneh
Lata Agarwal, a notice under Section
131(1A) had been issued subsequent to the
search operations, therefore, the search
6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
187
operations were invalid, was not acceptable
and was contrary to law. He also stated that
reliance placed by Sri Mistri upon the
judgment of Division Bench of this Court
in 'Dr. Anita Sahay vs. Director of Income
Tax (Investigation) & ors.' reported (2004)
ITR Vol.266 597 is misplaced for the
reason that the said judgment has been
clarified subsequently by another Division
Bench in the case of 'Dr. V.S. Chauhan
vs.
Director
of
Income
Tax,
Investigations' reported in (2011) 200
Taxman 413 (Allahabad). Secondly,
Jharkhand High Court
had
taken
another view and held that this by itself
will not validate the search operations
which according to him displays a
correct understanding of the legal
position.

(18) During course of hearing, an
envelope containing the satisfaction note in
the context of proceedings under Section
132 of the Act, 1961 was placed before the
Court which was sealed and kept on record.
We have perused the same. In addition to
it, on a subsequent date, another sealed
envelope containing certain documents
were placed before us which we will refer
to hereinafter.

(19) As far as challenge to warrant of
authorization and search proceedings under
Section 132 of the Act, 1961 both the
petitioners being husband and wife reside at
the same residence where the search took
place on 12.12.2024 and the grounds of
challenge in this context are same in both the
writ petitions. We will, therefore, first of all
deal with this aspect of the matter and in that
process, we will consider the arguments and
counter-arguments of the rival parties.

(20) Section 132 of the Income Tax
Act, 1961 reads as under:-
 "Search and seizure.

 132.(1) Where the Principal
Director General or Director General or
Principal Director or Director or the
Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner
or Commissioner or Additional Director
or Additional Commissioner or Joint
Director
or
Joint
Commissioner
in
consequence
of
information
in
his
possession, has reason to believe that-

 (a) any person to whom a
summons under sub-section (1) of section
37 of the Indian Income-tax Act, 1922 (11
of 1922), or under sub-section (1)
of section 131 of this Act, or a notice
under sub-section (4) of section 22 of the
Indian Income-tax Act, 1922, or under
sub-section (1) of section 142 of this Act
was issued to produce, or cause to be
produced, any books of account or other
documents has omitted or failed to
produce, or cause to be produced, such
books of account or other documents as
required by such summons or notice, or

 (b) any person to whom a
summons or notice as aforesaid has been
or might be issued will not, or would not,
produce or cause to be produced, any
books of account or other documents
which will be useful for, or relevant to,
any proceeding under the Indian Incometax Act, 1922 (11 of 1922), or under this
Act, or

 (c) any person is in possession of
any money, bullion, jewellery or other
valuable article or thing and such money,
bullion, jewellery or other valuable article
or thing represents either wholly or partly
income or property which has not been, or
would not be, disclosed for the purposes of
188 INDIAN LAW REPORTS ALLAHABAD SERIES
the Indian Income-tax Act, 1922 (11 of
1922), or this Act (hereinafter in this
section referred to as the undisclosed
income or property),

 then,-

 (A)
the
Principal
Director
General or Director General or Principal
Director or Director or the Principal Chief
Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner,
as the case may be, may authorise any
Additional
Director
or
Additional
Commissioner or Joint Director, Joint
Commissioner,
Assistant
Director
or
Deputy Director, Assistant Commissioner
or Deputy Commissioner or Income-tax
Officer, or

 (B) such Additional Director or
Additional Commissioner or Joint Director,
or Joint Commissioner, as the case may be,
may authorise any Assistant Director or
Deputy Director, Assistant Commissioner
or Deputy Commissioner or Income-tax
Officer,

 (the officer so authorised in all
cases being hereinafter referred to as the
authorised officer) to-

 (i) enter and
search any
building, place, vessel, vehicle or
aircraft where he has reason to suspect
that such books of account, other
documents, money, bullion, jewellery
or other valuable article or thing are
kept;

 (ii) break open the lock of any
door, box, locker, safe, almirah or other
receptacle for exercising the powers
conferred by clause (i) where the keys
thereof are not available
 (iia) search any person who has
got out of, or is about to get into, or is in,
the building, place, vessel, vehicle or
aircraft, if the authorised officer has reason
to suspect that such person has secreted
about his person any such books of
account, other documents, money, bullion,
jewellery or other valuable article or thing;

 (iib) require any person who is
found to be in possession or control of any
books of account or other documents
maintained in the form of electronic record
as defined in clause (t) of sub-section (1) of
section 2 of the Information Technology
Act, 2000 (21 of 2000), to afford the
authorised officer the necessary facility to
inspect such books of account or other
documents;

 (iii) seize any such books of
account, other documents, money, bullion,
jewellery or other valuable article or thing
found as a result of such search:

 [Provided that bullion, jewellery
or other valuable article or thing, being
stock-in-trade of the business, found as a
result of such search shall not be seized but
the authorised officer shall make a note or
inventory of such stock-in-trade of the
business]

 (iv) place marks of identification
on any books of account or other
documents or make or cause to be made
extracts or copies therefrom;

 (v) make a note or an inventory of
any such money, bullion, jewellery or other
valuable article or thing:

 Provided
that
where
any
building, place, vessel, vehicle or aircraft
referred to in clause (i) is within the area of
6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
189
jurisdiction
of
any
Principal
Chief
Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner,
but such Principal Chief Commissioner or
Chief
Commissioner
or
Principal
Commissioner or Commissioner has no
jurisdiction over the person referred to in
clause (a) or clause (b) or clause (c), then,
notwithstanding
anything
contained
in section 120, it shall be competent for him
to exercise the powers under this subsection in all cases where he has reason to
believe that any delay in getting the
authorisation from the Principal Chief
Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner
having jurisdiction over such person may
be prejudicial to the interests of the
revenue :

 Provided further that where it is
not possible or practicable to take physical
possession of any valuable article or thing
and remove it to a safe place due to its
volume,
weight
or
other
physical
characteristics or due to its being of a
dangerous nature, the authorised officer
may serve an order on the owner or the
person who is in immediate possession or
control thereof that he shall not remove,
part with or otherwise deal with it, except
with the previous permission of such
authorised officer and such action of the
authorised officer shall be deemed to be
seizure of such valuable article or thing
under clause (iii):

 Provided
also that
nothing
contained in the second proviso shall apply
in case of any valuable article or thing,
being stock-in-trade of the business:

 Provided
also that
no
authorisation shall be issued by the
Additional
Director
or
Additional
Commissioner or Joint Director or Joint
Commissioner on or after the 1st day of
October,
2009
unless
he
has
been
empowered by the Board to do so.

 Explanation.-For the removal of
doubts, it is hereby declared that the
reason to believe, as recorded by the
income-tax authority under this subsection, shall not be disclosed to any
person or any authority or the Appellate
Tribunal.

 (1A) Where any Principal Chief
Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner,
in consequence of information in his
possession, has reason to suspect that any
books of account, other documents, money,
bullion, jewellery or other valuable article
or thing in respect of which an officer has
been authorised by the Principal Director
General or Director General or Principal
Director or Director or any other Principal
Chief
Commissioner
or
Chief
Commissioner or Principal Commissioner
or Commissioner or Additional Director or
Additional Commissioner or Joint Director
or Joint Commissioner to take action under
clauses (i) to (v) of sub-section (1) are or is
kept in any building, place, vessel, vehicle
or
aircraft
not
mentioned
in
the
authorisation under sub-section (1), such
Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner
or Commissioner may, notwithstanding
anything contained in section, authorise the
said officer to take action under any of the
clauses aforesaid in respect of such
building, place, vessel, vehicle or aircraft.

 Explanation.-For the removal of
doubts, it is hereby declared that the
reason to suspect, as recorded by the
income-tax authority under this sub-
190 INDIAN LAW REPORTS ALLAHABAD SERIES
section, shall not be disclosed to any
person or any authority or the Appellate
Tribunal.

 [(2) The authorised officer may
requisition the services of,-

 (i) any police officer or of any
officer of the Central Government, or of
both; or

 (ii) any person or entity as may
be approved by the Principal Chief
Commissioner or the Chief Commissioner
or the Principal Director General or the
Director General, in accordance with the
procedure, as may be prescribed, in this
regard,

 to assist him for all or any of the
purposes specified in sub-section (1) or
sub-section (1A) and it shall be the duty of
every such officer or person or entity to
comply with such requisition.]

 (3) The authorised officer may,
where it is not practicable to seize any such
books of account, other documents, money,
bullion, jewellery or other valuable article
or thing, for reasons other than those
mentioned in the second proviso to subsection (1), serve an order on the owner or
the person who is in immediate possession
or control thereof that he shall not remove,
part with or otherwise deal with it except
with the previous permission of such officer
and such officer may take such steps as
may be necessary for ensuring compliance
with this sub-section.

 Explanation.-For the removal of
doubts, it is hereby declared that serving of
an order as aforesaid under this sub-section
shall not be deemed to be seizure of such
books of account, other documents, money,
bullion, jewellery or other valuable article or
thing under clause (iii) of sub-section (1).

 (4) The authorised officer may,
during the course of the search or seizure,
examine on oath any person who is found to
be in possession or control of any books of
account,
documents,
money,
bullion,
jewellery or other valuable article or thing
and any statement made by such person
during such examination may thereafter be
used in evidence in any proceeding under the
Indian Income-tax Act, 1922 (11 of 1922), or
under this Act.

 Explanation.-For the removal of
doubts, it is hereby declared that the
examination of any person under this subsection may be not merely in respect of any
books of account, other documents or assets
found as a result of the search, but also in
respect of all matters relevant for the
purposes of any investigation connected with
any proceeding under the Indian Income-tax
Act, 1922 (11 of 1922), or under this Act.

 (4A) Where any books of account,
other documents, money, bullion, jewellery or
other valuable article or thing are or is found
in the possession or control of any person in
the course of a search, it may be presumed-

 (i) that such books of account,
other documents, money, bullion, jewellery or
other valuable article or thing belong or
belongs to such person;

 (ii) that the contents of such books
of account and other documents are true;
and

 (iii) that the signature and every
other part of such books of account and
other documents which purport to be in the
handwriting of any particular person or
6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
191
which may reasonably be assumed to have
been signed by, or to be in the handwriting
of, any particular person, are in that
person's handwriting, and in the case of a
document stamped, executed or attested,
that it was duly stamped and executed or
attested by the person by whom it purports
to have been so executed or attested.

 (5) [***]

 (6) [***]

 (7) [***]

 (8) The books of account or other
documents seized under sub-section (1) or
sub-section (1A) shall not be retained by
the
authorised
officer
for
a
period
exceeding 76[one month from the end of
the quarter in which the order of
assessment
or
reassessment
or
recomputation is made] under sub-section
(3) of section 143 or section 144 or section
147 or section 153A or clause (c) of section
158BC unless the reasons for retaining the
same are recorded by him in writing and
the approval of the Principal Chief
Commissioner or Chief Commissioner,
Principal Commissioner or Commissioner,
Principal Director General or Director
General or Principal Director or Director
for such retention is obtained :

 Provided that the Principal Chief
Commissioner or Chief Commissioner,
Principal Commissioner or Commissioner,
Principal Director General or Director
General or Principal Director or Director
shall not authorise the retention of the
books of account and other documents for a
period exceeding thirty days after all the
proceedings under the Indian Income-tax
Act, 1922 (11 of 1922), or this Act in
respect of the years for which the books of
account or other documents are relevant
are completed.

 (8A) An order under sub-section
(3) shall not be in force for a period
exceeding sixty days from the date of the
order.

 (9) The person from whose
custody any books of account or other
documents are seized under sub-section (1)
or sub-section (1A) may make copies
thereof, or take extracts therefrom, in the
presence of the authorised officer or any
other person empowered by him in this
behalf, at such place and time as the
authorised officer may appoint in this
behalf.

 (9A) Where the authorised officer
has no jurisdiction over the person referred
to in clause (a) or clause (b) or clause (c)
of sub-section (1), the books of account or
other documents, or any money, bullion,
jewellery or other valuable article or thing
(hereafter in this section and in sections
132A and 132B referred to as the assets)
seized under that sub-section shall be
handed over by the authorised officer to the
Assessing Officer having jurisdiction over
such person within a period of sixty days
from the date on which the last of the
authorisations for search was executed and
thereupon the powers exercisable by the
authorised officer under sub-section (8) or
sub-section (9) shall be exercisable by such
Assessing Officer.

 (9B) Where, during the course of
the search or seizure or within a period of
sixty days from the date on which the last of
the authorisations for search was executed,
the authorised officer, for reasons to be
recorded in writing, is satisfied that for the
purpose of protecting the interest of
192 INDIAN LAW REPORTS ALLAHABAD SERIES
revenue, it is necessary so to do, he may
with the previous approval of the Principal
Director General or Director General or
the Principal Director or Director, by
order in writing, attach provisionally any
property belonging to the assessee, and for
the said purposes, the provisions of the
Second
Schedule
shall, mutatis
mutandis, apply.

 (9C)
Every
provisional
attachment made under sub-section (9B)
shall cease to have effect after the expiry of
a period of six months from the date of the
order referred to in sub-section (9B).

 [(9D) The authorised officer may,
during the course of the search or seizure
or within a period of sixty days from the
date on which the last of the authorisations
for search was executed, make a reference
to,-

 (i) a Valuation Officer referred to
in Section 142A; or

 (ii) any other person or entity or
any valuer registered by or under any law
for the time being in force, as may be
approved
by
the
Principal
Chief
Commissioner or the Chief Commissioner
or the Principal Director General or the
Director General, in accordance with the
procedure, as may be prescribed, in this
regard,
who shall estimate the fair market value of
the property in the manner as may be
prescribed, and submit a report of the
estimate to the authorised officer or the
Assessing Officer, as the case may be,
within a period of sixty days from the date
of receipt of such reference.]

 (10) If a person legally entitled to
the books of account or other documents
seized under smissioner, Principal Director
General or Director General or Principal
Director or Director under sub-section (8),
he may make an application to the Board
stating therein the reasons for such
objection and requesting for the return of
the books of account or other documents
and the Board may, after giving the
applicant an opportunity of being heard,
pass such orders as it thinks fit.

 (11) [***]

 (11A) [***]

 (12) [***]

 (13) The provisions of the Code
of Criminal Procedure, 1973 (2 of 1974),
relating to searches and seizure shall
apply, so far as may be, to searches and
seizure under sub-section (1) or sub-section
(1A).

 (14) The Board may make rules
in relation to any search or seizure under
this section ; in particular, and without
prejudice to the generality of the foregoing
power, such rules may provide for the
procedure to be followed by the authorised
officer-

 (i) for obtaining ingress into any
building, place, vessel, vehicle or aircraft
to be searched where free ingress thereto is
not available ;

 (ii) for ensuring safe custody of
any books of account or other documents
or assets seized

 [Explanation
1.-For
the
purposes of sub-sections (9A), (9B) and
(9D), the last of [authorisations] for search
shall be deemed to have been executed,-
6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
193
 (a) in the case of search, on the
conclusion of search as recorded in the
last panchnama drawn in relation to any
person in whose case the warrant of
authorisation has been issued; or

 (b) in the case of requisition
under section 132A, on the actual receipt of
the books of account or other documents or
assets by the authorised officer.]

 Explanation 2.-In this section,
the
word
"proceeding"
means
any
proceeding in respect of any year, whether
under the Indian Income-tax Act, 1922 (11
of 1922), or this Act, which may be pending
on the date on which a search is authorised
under this section or which may have been
completed on or before such date and
includes also all proceedings under this Act
which may be commenced after such date
in respect of any year.

 Powers to requisition books of
account, etc.

 132A. (1) Where the Principal
Director General or Director General or
Principal Director or Director or the
Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner
or Commissioner, in consequence of
information in his possession, has reason to
believe that-

 (a) any person to whom a
summons under sub-section (1) of section
37 of the Indian Income-tax Act, 1922 (11
of
1922),
or
under
sub-section
(1)
of section 131 of this Act, or a notice under
sub-section (4) of section 22 of the Indian
Income-tax Act, 1922, or under sub-section
(1) of section 142 of this Act was issued to
produce, or cause to be produced, any
books of account or other documents has
omitted or failed to produce, or cause to be
produced, such books of account or other
documents, as required by such summons
or notice and the said books of account or
other documents have been taken into
custody by any officer or authority under
any other law for the time being in force, or

 (b) any books of account or other
documents will be useful for, or relevant to,
any proceeding under the Indian Incometax Act, 1922 (11 of 1922), or under this
Act and any person to whom a summons or
notice as aforesaid has been or might be
issued will not, or would not, produce or
cause to be produced, such books of
account or other documents on the return
of such books of account or other
documents by any officer or authority by
whom or which such books of account or
other documents have been taken into
custody under any other law for the time
being in force, or

 (c) any assets represent either
wholly or partly income or property which
has not been, or would not have been,
disclosed for the purposes of the Indian
Income-tax Act, 1922 (11 of 1922), or this
Act by any person from whose possession
or control such assets have been taken into
custody by any officer or authority under
any other law for the time being in force

 then,
the
Principal
Director
General or Director General or Principal
Director or Director or the Principal Chief
Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner
may authorise any Additional Director,
Additional Commissioner, Joint Director,
Joint Commissioner, Assistant Director or
Deputy Director, Assistant Commissioner
or Deputy Commissioner or Income-tax
Officer (hereafter in this section and in
194 INDIAN LAW REPORTS ALLAHABAD SERIES
sub-section (2) of section 278D referred to
as the requisitioning officer) to require the
officer or authority referred to in clause (a)
or clause (b) or clause (c), as the case may
be, to deliver such books of account, other
documents or assets to the requisitioning
officer.

 Explanation.-For the removal of
doubts, it is hereby declared that the
reason to believe, as recorded by the
income-tax authority under this subsection, shall not be disclosed to any
person or any authority or the Appellate
Tribunal.

 (2) On a requisition being made
under sub-section (1), the officer or
authority referred to in clause (a) or clause
(b) or clause (c), as the case may be, of that
sub-section shall deliver the books of
account, other documents or assets to the
requisitioning officer either forthwith or
when such officer or authority is of the
opinion that it is no longer necessary to
retain the same in his or its custody.

 (3) Where any books of account,
other documents or assets have been delivered
to the requisitioning officer, the provisions of
sub-sections (4A) to (14) (both inclusive)
of section 132 and section 132B shall, so far as
may be, apply as if such books of account, other
documents or assets had been seized under subsection (1) of section 132 by the requisitioning
officer from the custody of the person referred
to in clause (a) or clause (b) or clause (c), as
the case may be, of sub-section (1) of this
section and as if for the words "the authorised
officer" occurring in any of the aforesaid subsections (4A) to (14), the words "the
requisitioning officer" were substituted.

 Application
of
seized
or
requisitioned assets.
 132B. (1)
The
assets
seized
under section
132 or
requisitioned
under section 132A may be dealt with in
the following manner, namely:-

 (i) the amount of any existing
liability under this Act, the Wealth-tax Act,
1957 (27 of 1957), the Expenditure-tax Act,
1987 (35 of 1987), the Gift-tax Act, 1958
(18 of 1958) 79a[the Interest-tax Act, 1974
(45 of 1974) and the Black Money
(Undisclosed Foreign Income and Assets)
and Imposition of Tax Act, 2015 (22 of
2015)], and the amount of the liability
determined
on
completion
of
the
assessment
or
reassessment
or
recomputation and the assessment of the
year relevant to the previous year in which
search is initiated or requisition is made,
or the amount of liability determined on
completion
of
the
assessment
under
Chapter XIV-B for the block period, as the
case may be (including any penalty levied
or interest payable in connection with such
assessment) and in respect of which such
person is in default or is deemed to be in
default, or the amount of liability arising
on an application made before the
Settlement Commission under sub-section
(1) of section 245C, may be recovered out
of such assets :

 Provided that where the person
concerned makes an application to the
Assessing Officer within thirty days from
the end of the month in which the asset was
seized, for release of asset and the nature
and source of acquisition of any such asset
is explained to the satisfaction of the
Assessing Officer, the amount of any
existing liability referred to in this clause
may be recovered out of such asset and the
remaining portion, if any, of the asset may
be released, with the prior approval of the
Principal Chief Commissioner or Chief
6 All. Pramod Swarup Agarwal Vs. Prin. Director of Income Tax (Inv.) Lko & Ors.
195
Commissioner or Principal Commissioner
or Commissioner, to the person from whose
custody the assets were seized:

 Provided further that such asset
or any portion thereof as is referred to in
the first proviso shall be released within a
period of one hundred and twenty days
from the date on which the last of the
authorisations for search under section
132 or for requisition under section 132A,
as the case may be, was executed;

 (ii) if the assets consist solely of
money, or partly of money and partly of
other assets, the Assessing Officer may
apply such money in the discharge of the
liabilities referred to in clause (i) and the
assessee shall be discharged of such
liability to the extent of the money so
applied;